THE BOURSE WHISPERER: Australian gold producer and mineral explorer St Barbara has commenced gold production from its King of the Hills underground mine at Leonora.

The King of the hills mine has had a fairly impressive development run having first been approved just over a year ago in March 2010.

By September a Definitive Mine Study was well underway, which confirmed the mine’s viability, and then mining of the access decline commenced in October.

In March this year the mine produced its first development ore.

Processing of previously stockpiled development ore has confirmed the metallurgical characteristics of the ore body.

The new mine complements existing operations at Leonora and provides additional ore to fully utilise available milling capacity in the nearby Gwalia treatment plant, where the latest ore was processed.

The King of the Hills mine is expected to produce 55,000 to 60,000 ounces of gold per annum for the next five to six years, with potential for mine life extension.

“The commencement of gold production from King of the Hills is an important demonstration of St Barbara’s organic growth potential,” St Barbara managing director and CEO Tim Lehany said.

“It is also pleasing that the project has achieved, or bettered, each of the key project milestones since being approved just over 12 months ago.”

 

THE BOURSE WHISPERER: Australian-based mineral exploration and development company Vital Metals has entered into an Earn-In Agreement over its 100% owned Watershed tungsten project in Queensland, with Japan Oil, Gas and Metals National Corporation (JOGMEC).

According to Vital Metals chairman David Macoboy, under the terms of the Agreement, JOGMEC can earn 30% of the Watershed Project by spending $5.4 million over a period of just under two years (by March 2013) to fund completion of a Bankable Feasibility Study for the Project.

This has attracted renewed market interest following Chinese export restrictions of tungsten to meet that country’s own internal demands.

“This has the potential to be a defining agreement in the history of the Watershed Project,” Macoboy said in a company announcement.

“Our ability to attract such a credible partner reinforces our own confidence in the value of this Project, particularly against the backdrop of reduced global supply and rising tungsten prices.

“Watershed is a highly prospective tungsten project; with a JORC code compliant Indicated Resource of 15.3 million tonnes at 0.46 per cent tungsten trioxide (WO3) and with a Prefeasibility Study previously completed.

“Importantly, Chinese export restrictions have given rise to a marked increase in the price of tungsten with the status quo unlikely to change significantly in the near-term.”

Macoboy said the agreement is subject to a number of conditions precedent, including a 90-day due diligence period by JOGMEC, and Foreign Investment Review Board approval.

Should the Agreement proceed, JOGMEC will make the $5.4 million payment in a series of instalments over the Earn-In period, including an initial payment of $800,000 by 30 September 2011, and subsequent payments of $2.0 million and $2.6 million by 31March 2012, and 31 March 2013 respectively.

Vital would continue to operate the Watershed Project on behalf of the Joint Venture, and has appointed consultant, Doug Stewart as Special Advisor to the Joint Venture, to advance the Project to BFS stage.

Stewart is a Fellow of both the Australian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists with 40 years technical and commercial experience in the resources sector in a broad range of consulting, senior technical and operational roles in multiple commodities and across three continents.

 

THE BOURSE WHISPERER: If there is to be at least one certainty to emerge out of the current burgeoning mining industry boom in Australia it is that we will run out of skilled workers.

It happened last time and mining companies spent a lot of time complaining about the shortage.

Mining companies also spent a lot of money paying for workers that many admit probably weren’t worth the financial remuneration they were receiving.

When the Global Financial Crisis hit, the companies that still had some cash in the bank were able to attract the better candidates to their projects.

Those candidates were in a good place at the time as they were well aware of the demand for their services and were still able to push for better pay and conditions at a time when others were falling by the employment wayside.

As the next skills shortage wave builds, peak resources bodies in Western Australia and Queensland, along with a national industry skills council, have teamed up to tackle the issue.

The Chamber of Minerals and Energy of Western Australia (CME), Queensland Resources Council (QRC) and SkillsDMC have struck a Memorandum of Understanding (MoU) to identify strategies to source the increasing number of skilled people the industry will require over the next 5-10 years.

Central objectives of the three-year agreement are a collaborative approach to policy development and implementation of skills initiatives.

Projects under the MoU include: 
    – Defining and implementing a national skills policy for the resources     sector;
    – Providing timely workforce planning data, to support skills advocacy functions with state and federal governments;
    – Knowledge transfer for local/state operational outcomes;
    – Brokering funds to support commonly agreed skills objectives;
    – Enhanced consultation and consistency on skills-related submissions; and
    – Establishing lead agencies for projects and issues to maximise the strengths and opportunities provided by the MoU partners.

It is hardly surprising that the two peak bodies of the two main mining states have collaborated in this offensive.

CME chief executive Reg Howard-Smith said the WA and Queensland sectors were both facing a significant period of project development, where tens of thousands of additional workers would be required over the next few years.

According to the CME it is estimated the WA sector alone will require an extra 33,000 workers by the end of 2012.

Howard-Smith said proponents in both states were confronted by similar workforce issues.

“Our ability to source skilled labour will prove vital in the delivery of projects on time and on budget,” he said.

“Where there is mutual benefit, this new, non-binding collaboration, allows the partners to work towards securing policy and initiatives that will underpin national prosperity for decades to come.”

QRC chief executive Michael Roche said the partnership would result in unprecedented collaboration between the key mining states, and the training and education sector to tackle a complex, national issue.

“The MoU comes at a crucial moment in time to work towards ensuring the development and long-term sustainability of the resources sector in Queensland and Australia,” Roche said.

“In the wake of a record $31 billion of new investment recently committed in Queensland alone by LNG developers, it is imperative we band together in order to meet the sector’s increasing workforce needs to support this unprecedented growth.

“No single state can resolve the skills issues we face on its own.”

SkillsDMC chief executive Steve McDonald greeted the development of the MoU as, “great news”.

“The enterprises with which we work understand the importance of continual upskilling and training and understand the need to plan for the prosperity of the industry, to ensure that even more critical skills gaps are avoided in the future,” McDonald said.

“Industry must position itself to minimise the impact of a retiring workforce, and one that is not currently upskilled to levels that are crucial to industry productivity. It is the goal of this collaborative partnership to find solutions to these issues.”

THE DRILL SERGEANT: Helix Resources recently completed a total of 59 drill holes, completing around 6,000 metres of RC drilling, on its Restdown gold joint venture (Helix earning 70% by expending $700,000 by June 2012; Glencore International AG 100%) during April.

The program was carried out to test extensions and continuity of significant gold results identified in Helix’s initial drilling program undertaken in the fourth quarter of last year to test several regional prospects.

Helix has received results from the first 14 holes of aqua regia assays (from the southern end of the Sunrise Prospect), in which all holes intersected mineralisation greater than 0.2 grams per tonne gold.

The better results received included: 42m at 1.5g/t gold from 15m (incl. 5m at 3.3g/t, 6m at 3.0g/t and 7m at 2.7g/t); 32m at 1.0g/t gold from 16m (incl. 5m at 5.4g/t); 17m at 1.5g/t from 19m (incl. 4m at 4.6g/t gold); and 14m at 2.0g/t gold from 40m (incl. 5m @ 4.0g/t).

“The width and continuity of grade in these drilling results complement those intersected in the 4Q10 drilling program (13m @ 4.2g/t Au in HRRC006 and 18m @ 2.7g/t Au in HRRC008) giving the mineralisation a strike of +200m with results still to come from the extensions of the mineralised zone,” Helix said in an anouncement.

The results have given the company confidence a maiden Resource estimation can be completed at Sunrise.

All zones returning greater than 0.1g/t gold are being re-sampled with a riffle splitter at 1m intervals and fire assayed with those results to form the basis for the resource model.

The logging of lithology in drill cuttings suggests a good correlation between quartz vein content and higher gold grades.

As manager of the JV, Helix has met the $700,000 expenditure required to earn a 70% interest in the Restdown JV tenements. A JV meeting to discuss an aggressive forward work program is scheduled for June.

Preliminary Scoping Studies have commenced to investigate development options concurrent with a High Level Environmental Impact Study

A detailed aeromagnetic survey (50m lined spacing) recently completed has highlighted a large zone of interest to the JV (9km wide by +20km long) within a regional-scale fold structure on Restdown.

Broad spaced soil geochemistry has confirmed the presence of new areas of gold anomalism to the south of the known prospects.

A soil sampling program over untested extensions to the north (Including extensions into Helix’s 100% owned EL7567) will be carried out and interpreted to define targets for drill testing in the third quarter of this year.

 

A lot of junior resources companies claim to be flying under the market radar but there are times when you actually have to ask if that radar is really turned on.

One case in point is Perth-based base metals explorer Laconia Resources.

Having listed in 2009 Laconia has put together an impressive portfolio of advanced gold and base metals projects across 35 granted tenements covering a total of just under 1000 square kilometres.

These projects are all located within, or close to, historic mining regions of Western Australia including Kalgoorlie, the Murchison and the Pilbara.

The company’s most recent addition, and its major focus, is a 95% interest in the Lennons Find base metals project acquisition from Jabiru Metals.

“We think it has been a good deal that we have completed with Jabiru Metals,” Laconia Resources managing director Ian Stuart told The Inside Story.

“They are currently more interested in concentrating on projects they have further south, which is entirely understandable, but they were still keen to see a concise exploration package carried out on this ground, which is now what we also want to do.”

Not only did Lennons Find extend Laconia’s land holding in the Pilbara it also came with a JORC compliant Inferred Resource of 853,000 tonnes grading 7.7% zinc, 1.8% lead, 0.7% copper and 115 grams per tonne silver at what is known as the Hammerhead sulphide zone with mineralisation open down dip and along strike.

“The Lennons Find acquisition was an all-scrip deal, we paid ten million shares, so we preserved our cash,” Stuart said.

“The significant aspect to the deal is that we haven’t blown out our capital structure.

“We sit here with a new project acquisition, complete with a JORC compliant Inferred Resource, some 80 million shares on issue and, as at the last quarter, $2.8 million in cash.”

Laconia has already begun putting that money to good work at Lennons Find with a recent review of the resource model indicating significant silver mineralisation, near surface.

“The high silver is significant, even with the silver price slipping lately, because when you factor in current commodity prices the  grade comes out at 16% zinc equivalent,” Stuart explained.

Precious metals are commonly associated with VHMS deposits and it is reasonable for gold mineralisation to be associated with the assemblage of zinc/copper/lead/silver found at the Lennons Find project.

Gold values are not included in the resource calculation so far ; however the company willsystematically incorporate this into the assay suite in any new drilling it conducts.

“The thing about VMS deposits is that they commonly occur in clusters,” Stuart said.

“There are five prospects on this project, of which only one has undergone sufficient drilling in order to define a Resource.

“Now we are incorporating that data in order to put together a model we can then take up there and drill more targets in order to build on the current Inferred Resource.

“Our first strategy is to drill what we already have. We have a Resource so we want to do some further drilling on that in order to increase the tonnes there.”

As part of its systematic review of Lennons Find historical data, Laconia initiated a state-of-the-art, fixed-loop electromagnetic survey, using 100m line spacing, covering 5km of mineralisation.

Laconia aims to incorporate this data when it comes to identifying new drill targets in order to further define and delineate the current resource base.

The current historically high price for precious metals is providing the company with the impetus to advance Lennons Find as quickly as possible.

“The Lennons Find project has been around for quite some years; however, the exploration effort there to date has been somewhat disjointed,” Stuart said.

“Jabiru Metals is probably the most recent player to have put any reasonable effort into it.

“It is worth noting that they now hold twelve per cent of our stock so it is in their interest also that we actually get stuck in and put a concerted exploration effort into it.”

The company has planned a shallow Reverse Circulation drilling program in June, to define the extent of mineralisation.

This will be carried out in conjunction with further resource definition drilling on the current Resource at Lennons Find.

“We consider this to be an advanced exploration play,” Stuart said.

“We do have a Resource, which is good place to start from, but we need more tonnes and we are highly confident that we can go out and get them.”

Shrewd acquisitions seem to be part of the Laconia mantra with another recent purchase, the nearby Yandicoogina project, also displaying encouraging prospects.

Yandicoogina was another all-scrip acquisition, this time for just 1.7 million shares, from Shaw River Resources and is less than 10km southwest along strike from the Lennons Find massive sulphide resource.

Shaw River carried out a rock chipping sampling program in November 2010, collecting over 120 samples that were analysed for a suite of precious and base metals.

These efforts confirmed the prospectivity of the Duffer Formation, which hosts both Yandicoogina and Lennons Find, to contain significant base metal and precious metal mineralisation.

Further north Laconia is keeping a very close eye on developments at its 100% owned Barramine gold and base metals project.

Geophysical data and interpretation from Barramine has indicated a number of electromagnetic (EM) anomalies.

Laconia carried out further evaluation of these geophysical anomalies via a preliminary geochemical orientation survey with the preliminary data.

Sampling focused over EM anomalies provided strong encouragement for base metal mineralisation in this area.

“We have had some really good exploration success at Barramine over the past twelve months,” Stuart said.

“We have been able to successfully move Barramine from being something with very little work having been conducted over it, to an exploration project that has undergone an EM survey, good geological mapping and geochemical sampling.

“As a result we now have a number of drill targets identified there.”

With the combination of the Lennons Find, Yandicoogina and Barramine projects, along with the Rare Earth Elements potential of the 701 Mile project it is probably fair to say Laconia has a well sharpened Pilbara focus.

The company has a full understanding of the deposit styles synonymous with the region with the deals it struck with Jabiru Metals and Shaw River Resources easily demonstrating that understanding.

“We have a Joint Venture with Shaw River Resources on the Barramine project. They hold the manganese and iron ore rights so we have a close relationship with those guys,” Stuart said.

“In constructing the deal with Jabiru Metals, it was a logical deal for us to pursue. We were looking for something with earlier exploration. It came with a Resource and we are happy to be taking it that next step.”

 

Laconia Resources Limited (LCR)
…The Short Story

HEAD OFFICE
Level 1, 41 – 43 Ord Street
West Perth WA 6005

Ph: +61 8 9486 1599
Fax: +61 8 9486 7899

Email: info@laconia.com.au
Web: www.laconia.com.au

DIRECTORS
Michael Sharwood
Ian Stuart
Matthew Howison

MAJOR SHAREHOLDERS
Pandell Pty Ltd 12.32%
Jabiru Metals Ltd 12.21%
Oakover Gold Ltd 6.10%

SHARES ON OFFER
81.92 Million (11.5 million escrowed)