Greg Jones: Variscan Mines

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ONE OFF THE WOOD: Francophile VMS exploration play Variscan Mines (ASX: VAR) watched its share price run rampant this week after it announced initial assays of historic drill core from the company’s Porte-aux-Moines volcanogenic massive sulphide (VMS) deposit in Brittany, France.

High-grade intersections from the first hole (PAM5) included:

31 metres at 10.4 per cent zinc, 2.1 per cent lead, 1.2 per cent copper, 105.5 grams per tonne silver, 1g/t gold from 236m (zinc equivalence of 19.6 per cent).

 

The assays also included very high-grade zinc equivalent intercepts in excess of 25 per cent within the broader mineralised zones including:

8m at 25 per cent zinc, 5.4 per cent lead, 1.6 per cent copper, 208.5g/t silver, 1.39g/t gold from 236m (zinc equivalence of 41.5 per cent).

Variscan’s managing director Greg Jones dropped by The Roadhouse to provide the lowdown on what’s happening.

Resources Roadhouse: You caused a bit of a commotion with your announcement this week. You appear to have an excellent project in your Porte-aux-Moines deposit, but could it also be an indication that zinc has ‘arrived’?

Greg Jones: I think it could. The prognosis for zinc in the future is pretty strong. There are supply issues ahead with the upcoming closure of some large zinc mines, such as Century, so there is a sense there could be a lack of zinc availability.

People are starting to look at the fundamentals and are coming to the realisation that an improvement in the zinc price is definitely on the cards.

RR: So the closure of Century and other zinc mines means the market will be looking for other zinc opportunities to fill the impending void?

GJ: That’s right. And when you look around there are not really a lot of high-grade, high-quality zinc deposits ready to come on stream to replace them.

That’s the other side of the story; that zinc is common, but to fill that emerging gap requires some fairly decent production sources not all that evident at this stage.

RR: That segways nicely into speaking about the Porte-aux-Moines project. From what I can see it’s not a new project by any means?

GJ: The Porte-aux-Moines project has been around for some time. It was discovered by the BRGM (Bureau de Recherches Géologiques et Minières – the French geological survey) in the mid-1970s.

They worked on in up until the mid-1980s, completing around 9,700 metres of drilling and some two kilometres of underground development.

They never did any actual stope mining, however they did carry out a good amount of metallurgical work, resources estimation work, and underground drilling – getting it prepared to hand over to a French mining company.

That’s how they used to work, the BRGM was the French Government-owned exploration arm. They would do the exploration work, find a deposit and eventually hand it over to a government-owned mining company.

 

RR: So how did the project come to Variscan and not a French-owned company?

GJ: We visited France in 2010, looking at different projects. We approached the BRGM and asked about mineral mines and exploration licences, but there were none to be had.

However we did like the geology of the region and thought it looked quite prospective, especially for the deposit styles we were interested in.

It became clear that although the potential was good, exploration activity had stopped as the government had decided in the 1980s to basically close down its mining industry.

So after reviewing the mining laws and political situation and defining some good advanced projects we decided to establish a French subsidiary and put together French team of experienced geologists to apply for exploration licences in the country.

RR: In a sense that seems to have worked in Variscan’s favour, because it wasn’t because the project wasn’t up to scratch that it wasn’t mined way back then, but because they closed it all down?

GJ: That’s right, which meant the project remained with the BRGM and couldn’t be transferred and they don’t have the mandate to mine. So it sat there for a couple of decades until we came along and made the application over the region for base metals deposits.

We then gained ownership of the property in November last year – the Porte-aux-Moines deposit lies within our licence area.

RR: So the announcement you released had some encouraging news, which managed to grab some market attention?

GJ: We just have to step back a bit to mention the work originally carried out by the BRGM – over nine kilometres of drilling – but from what we have been able to locate so far there are only three holes still preserved.

We have accessed those three holes and logged them, and with the assistance of the BRGM we are resampling the massive sulphide zones and sending the samples to an independent laboratory in Ireland for re-assaying.

From those results, we compare them to the old BRGM data and look at whether the two assay sets match – and they do – from that point we can then use the remaining BRGM information – assays, drilling, and logging – to calculate a JORC compliant Resource.

There is more than enough drilling and underground development been done at Porte-aux-Moines to allow a company to calculate a Resource – it is a question of the veracity of information and that is what we have to confirm.

RR: What sort of a time frame do you have on that?

GJ: It really all depends on how quickly we can obtain the re-assays for the remaining two holes and get access to the data held by the BRGM.

Once we have access to the data we will convert it from hard copy to digital formats and create 3D geological and mineralisation models. We can then use these to calculate a Resource.

There is a possibility we may have to do some work to make it JORC Code-compliant, perhaps some shallow drilling, but we won’t know until we have converted everything to the digital format and review.

From what we have seen so far, the grades are certainly high enough to support an operation – it really comes down to defining enough tonnes – that’s our goal.

RR: If you can repeat some of those historic intersections I’m sure you’ll be very happy?

GJ: (Laughs) Yes! I would like to think we could do it, but those results were unusually good intersections, particularly the high-grade thinner intersection (8m at 25 per cent zinc).

I would suspect the thicker intersection with the total grades will be more like what we will see in the future, but you never know until you drill.

RR: It seems like you have acquired the project at a point that compares to hitting a discovery hole, only you haven’t had to do as much work, or spend as much money to get there. You’re basically 12 months ahead of yourself?

GJ: At least 12 months. The amount of work they have done – which is of very high quality – including the underground development, probably saves us years of work, without of course saying that we would have had to discover the deposit in the first place.

We are well ahead of the curve. The amount of money we would have had to spend on that exploration to get to where we are now would run into the millions of dollars.

Website: www.variscan.com.au

What the Analysts Say

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WHAT THE ANALYSTS SAY: Interesting news and views from across the Resource Analyst universe.

Website: www.breakawayresearch.com

Company: Metallica Minerals Limited (ASX: MLM)

The recently completed initial resource estimation for Metallica’s 60 per cent held (reducing to 50 per cent in a JV with Ozore) Urquhart Point bauxite project supports the company’s plan to develop an initial 1.5 to 2 million tonnes per annum low capital and operating cost DSB operation (i.e. no screening or upgrading required).

7.5 million tonnes inferred resource grading at 51 per cent total aluminium and 16.3 per cent silicon dioxide (SiO2).

This includes a marketable 4 million tonnes higher grade domain (just in Area A) grading at 53.3 per cent total aluminium and 13 per cent SiO2, with 40.6 per cent available aluminium and 4.9 per cent reactive SiO2.

The resource will form the basis of an internal Scoping Study or Conceptual Development Study to be completed in June.

This resource comprises two areas – the northern Area A and southern Area B, with Area A generally being of higher quality.

The bauxite stratigraphy is also subdivided between a higher quality lower domain defined by less than 15 per cent SiO2and +48 per cent total aluminium, and a higher silica upper domain, with lower domain resources.

The quality results from Area A, which has a more continuous lower domain, indicate a marketable product, with low temperature, 150o C analyses returning an average available alumina (AAI) grade of 40.6 per cent and 4.9 per cent reactive silica (RxSi), from the lower domain resource of 4 million tonnes grading at 53.3 per cent total Al2O3 and 13.0 per cent SiO2.

These results indicate the majority of the silica is in quartz, and not clays.

No AAI or RxSi assays have been carried out as yet on Area B (or for that matter on the upper domain in both areas), however we still see the potential for readily marketable material to be produced from Area B, which has 777,000 tonnes grading at 52.7 per cent aluminium and 13.2 per cent SiO2 in the lower domain, which are similar grades to those at Area A.

In addition in the later years of the proposed operation there is potential for upgrading the remaining resource by dry screening the bauxite to exclude a major portion of the fines (less than 1.5mm) to make the bauxite marketable, albeit with slightly higher operating cost and likely discount compared to the dsb sale price.

The resource size will support only a modest operation (potentially 4 to 6 years if operated in conjunction with Hey Point), however we do consider this feasible, given the potentially low operating and capital costs, and thus with the capacity to return healthy margins – we consider our previously reported operating margin estimates of $10 to $20 per tonne as very feasible.

There are potential synergies with the nearby 2.5 million tonnes Hey Point resource, owned by a private company, Victorian Ferries, a major shareholder of Metallica.

The location of the mineralisation, immediately south of the Embley River at Weipa will result in a short (less than 12km) trucking distance to barge loading facility adjacent to the main Embley River shipping channel at Urquhart Point (or alternatively Hey Point), and an approximately 2km barge to self-loading Handimax vessels moored in the Jackson Channel at the mouth of the river on the gulf coast.

Mining costs will also be low, by virtue of the shallow (less than 7m) and free dig nature of the lateritic mineralisation.

Again, by virtue of location, capital costs are expected to be very low with expected early payback, and there may also be synergies with the Urquhart Point HMS Project which the JV is currently developing.

Website: www.breakawayresearch.com

Company: Forte Consolidated (ASX: FRC)

Forte has recently commenced drilling on its high-quality Sledgehammer and Szarbs prospects, which have been delineated through a methodical and thorough exploration program completed largely during the 2014 field season.

Both prospects, which are compelling targets, exhibit coincident geological, geochemical and geophysical anomalism; in the case of Sledgehammer akin to low to medium sulphidation epithermal mineralisation, and in the case of Szarbs both Mount Carlton style high sulphidation epithermal mineralisation and diatreme hosted mineralisation similar to the Mount Leyshon deposit, which is of a similar age to the Johnnycake geology.

The Johnnycake project is located within the highly gold/silver prospective Lizzie Creek Volcanics, the lowermost unit within the Permian Bowen Basin of north and central Queensland.

Since acquiring the tenement in 2013, Forte Consolidated has gone back to first principles in their exploration work, and defined two key targets – Sledgehammer and Szarbs.

Work completed since our August 2014 note includes IP surveying, with the results of this supporting the prospectivity of the targets, again, like previous work returning signatures typical of the target epithermal and diatreme hosted mineralisation styles.

Initial drilling on these high quality targets has commenced, being fully permitted and cleared by all stakeholders, and fully funded by virtue of the very well supported recent rights issue.

Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.

The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.

The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.

The Key Factors Driving Gold: Part 1

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GAVIN WENDT: Gold continues to defy the skeptics, demonstrating robust price support as we’ve previously advocated around the $1,200 per ounce mark.

A host of positive factors are driving gold’s resilience – and most of them aren’t new.

US Interest Rate Speculation

Speculation regarding the US Federal Reserve’s potential moves on interest rates is the biggest game in town – and has been for some time now.

Over the past couple of years the Fed has tried to talk tough with respect to interest rates, admitting it recognises the dangers of keeping rates too low for too long.

At the same time it points to economic growth in the US as clear evidence that its ‘easy money’ policies are working.

But the ongoing problem is that whilst the Fed is prepared to talk the talk, it seemingly isn’t prepared to follow through, with rate rises in a perpetual state of deferral.

What the situation underlines is the fragility of the US economic recovery – something the Fed won’t directly admit for fear of spooking markets.

The Fed’s easy money policies have distorted market prices and encouraged destabilizing financial speculation – as well as unfairly punishing savers.

Even more importantly, the US economy and financial markets have become so heavily dependent on artificially-suppressed interest rates that it is extremely difficult for the Fed to wean markets off low rates without major repercussions.

The danger of course is that the situation won’t be reversed in time, resulting in dangerous potential consequences.

Unfortunately, the Fed has a well-established tendency of not recognizing the consequences of loose monetary policy, nor tightening, until it’s far too late.

Now let’s turn our attention to the issue of a potentially rising interest rate environment (when it eventually happens), as there is quite a bit of ignorance around the topic.

There are firstly many doubters whose firm belief is that a rising US interest rate environment is bad for gold – when in fact, the opposite is true.

The ultimate and real driver of the price of gold is a negative real interest rate environment, which is defined by nominal interest rates minus inflation.

In the real world, central bank policies of inducing negative real rates in order to ‘incentivise’ borrowing have had the effect of expanding the money supply and devaluing currencies.

We have seen this happen since the GFC, with virtually all major currencies declining substantially in value. Debt is inherently inflationary if you have the ability to print your own currency.

If we refer back to the period of significant commensurate interest rate and gold price increases during the 1970s, the gold bull market of the 1970s was dominated by inflation – interest rates rose steadily to keep up with it, but real interest rates were mostly negative for the entire period.

Indeed, the embryo of the gold bull market was formed back in the days of real interest rates and coincided with the commencement of a huge imbalance in key global economic factors, particularly in the USA.

Importantly, many of those same economic factors have failed to improve.

Rock-bottom interest rates have forced older savers as well as others to take risks with their money in search of decent returns.

This greater risk-taking has manifested itself in the form of US share and property bubbles, incentivized by the zero-interest rate environment and the Fed’s easy money policies generally.

The key is that the latest economic statistics do not support an early interest rates rise.

The US Federal Reserve has admitted that the American economy has lost juice, with the latest data revealing March quarter growth of just 0.2 per cent.

The combination of the lower-than-expected GDP figures and the Fed statement, has led to markets lengthening the timeframe of any interest rate move – something we have been skeptical anyhow about for some time.

Ultimately, the Fed will likely have to raise interest rates, probably as a litmus test to see how the market reacts, but we anticipate no negative impact on the price of gold.

Don’t miss Part 2 of Gavin’s look at What’s Driving Gold next week.

Gavin Wendt is the founder of MineLife, publisher of the MineLife Weekly Resource Report

 

This article originally appeared in


Note to explorers: Start exploring

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CONFERENCE CALLER: In what was possibly the most sobering performance at the RIU Sydney Resources Round-up, BDO partner-corporate finance Dan Taylor presented the findings of the company’s latest Explorer Quarterly Cash Position report.

For some, reading the report could be as frightening as a Stephen King novel as it produced numbers showing that, compared to previous quarters we have just had the lowest number of companies providing appendix 5B reports to the ASX in the March 2015 quarter.
 
Appendix 5B reports are lodged by companies to declare their exploration activities and a downturn in the lodgement of these can really only mean one thing – that there are less exploration companies actually exploring than there has been.

The BDO report found only 793 reports lodged for the March quarter, which has dropped from, what was until now, the previous low in the December 2014 quarter of 814.

BDO put the reduction in the number of Appendix 5B lodgements down to there being just one new listing while four companies made the transition from explorer to becoming producers.

Three were the subject of backdoor listings – most probably taking advantage of the recent interest in technology stocks.

Of particular note was the fifteen companies that either delisted, were suspended or did not provide a response for non-listing;

“Typically we have three or four new listings every quarter, in March we only had one,” Taylor said.

“We had four companies that didn’t lodge [Appendix 5Bs] because they went into production, and obviously that is a positive sign and we are looking for as much of that to happen as possible.

“The concerning thing is we have 15 company’s delisting suspending or giving no reason for not lodging – that is the biggest number of companies that haven’t lodged for those reasons that we have seen in the series of eight quarters since we started producing these reports.”

According to the BDO report the number of explorers who are not conducting any exploration activity has increased to 12 per cent, which the firm noted to be the highest level since it began analysing the quarterly cash expenditure of exploration companies.

The analysis also looked at explorers who had spent less than $10,000 in the quarter on exploration expenditure, which produced a worrying trend showing one in five explorers either spent less than $10,000 or nothing at all.

Source: BDO

“The number of companies not exploring has increased,” Taylor continued.

“The percentage is increasing at the moment, just based on the fact that there is a reduction in the number of exploration companies that are lodging 5Bs – and we are getting up to around 100 companies that are doing nothing.

“In the March quarter there were, around 150 companies that effectively did no exploration by doing nothing or spending less than $10,000.”

Another worrying trend shown up by BDO’s analysis is the reduction in the number of explorers exploring.

There has been a reduction in overall spend, with only 11 per cent (86) of ASX-listed explorers spending more than $1 million on exploration in the quarter.

This number easily surpassed the previous lowest number of 122 recorded in the December 2014 quarter.

“One of the more concerning things is the number of companies that are spending less than $1 million.

“From June 2013 to the recent March quarter less than half of the companies that were spending over $1 million previously are spending less.”

BDO did acknowledge resources price uncertainty as having been a major reason for the reduction in exploration expenditure.

Other factors to blip on the radar screen included:

Only 38 per cent of explorers had positive financing cash flows;

Only 34 per cent of explorers had a net investment in capital expenditure; and

Average exploration expenditure has fallen for the fifth straight quarter to $539,000 per company.

This figure is concerning when lined up against the average expenditure BDO identified in the
June 2013 quarter of $980,000 per company.

This is the first time this figure has fallen below $600,000.

Website: www.bdo.com.au

Gold Road welcomes Independence group to its share registry

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THE CONFERENCE CALLER: Being on the ground at the RIU Sydney Resources Round-up enabled The Roadhouse to gain exclusive access to Gold Road Resources (ASX: GOR) management for an inside look at the share buying spree by Independence Group (ASX: IGO).

Gold Road share went nuts on Wednesday, which resulted in the company receiving some interest and the obligatory speeding ticket from the Australian Securities Exchange.

“We have noted a change in the price of the Company’s securities from a closing price of 36 cents on Tuesday, 12 May 2015, to an intra-day high of 41 cents today,” the ASX said in its queries.

“We have also noted an increase in the volume of trading in company’s securities over this period.”

At the wash up at the end of the day, it emerged that Gold Road has acquired a new admirer.

“The company has become aware that a substantial shareholder sold down a significant portion of its shareholding in the company…which was crossed in the market at 38.5 cents,” Gold Road told the ASX.

“Further the company has been advised that the shares were acquired on behalf of Independence Group Limited.

“The company welcomes such a well credentialed corporate as IGO to its register of members.”

Speking exclusively to members of Gold Road’s management team at the RIU Sydney Resources Round-up we were told that the company had no idea what motives were behind the IGO move.

“We can’t speak for what IGO might be thinking,” The Roadhouse was told.

“All we can take from the purchase of the shares by a company such as IGO is that it vindicates the work we have done on our Yamarna gold project to date.”

In its announcement to the ASX, Gold Road indicated it is continuing to advance its Yamarna gold project with an upgrade to the Resource on the Gruyere deposit due in the September 2015 quarter.

A Pre‐Feasibility Study is expected to be released in the March 2016 quarter.

Email: perth@goldroad.com.au

Website: www.goldroad.com.au

It’s a long way to the top when the bottom keeps stretching

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CONFERENCE CALLER: The question most asked on any long journey is, ‘are we there yet?’ which is a good question, especially if you don’t know where it is you’re going.

What we should really be asking at present is, does the question maintain its relevance when we’ve been ‘there’ before?

According to Far East Capital executive chairman Warwick Grigor the fact that we are still wondering how far off that destination is doesn’t mean there is no value in the sector today

Opening the RIU Resources Round-up in Sydney, Grigor told delegates there is excellent value, what is missing is a lack of willingness to act from investors.

“The concept of value is a moving feast,” he said.

“If you ran the numbers on iron ore stocks a year ago against the oil producers the value would have been apparent.

“Since then the price of both of these commodities have collapsed.

“Only those who could have seen the future of these commodities would have had insight as to where the share prices would go.”

Ah yes, insight. Along with foresight it is one of the valued tools of any speculative decision. Which commodity will have a good run over the next six months? Which companies will benefit from such a run? Who will be the leading goal kicker at the end of the AFL season? Who will win the Melbourne Cup?

All very good questions and all covered by a raft of writers and analysts qualified to speak as to what the outcome for each could be, but none with the ability to actually predict what will be.

“How can you or I gain access to this sort of knowledge?” Grigor asked rhetorically.

“You could ask the analysts – but how many of you know of any fully-visionary analyst with such foresight?”

Foresight – there it is – something Grigor suggested even the industry’s best analysts lack.

“How many have not been compromised by group think?” he proposed.

“In most cases they are writing research to support corporate deals or House Stocks.

“The independence of Broke analysts is very circumspect – no matter how hard the individuals try to be objective.”

There are many investors and analysts, and brokers, out there who are still suffering from the beating they may have taken from the great bear market in mining and commodities.

“While it is true that if you get the cycles right you will always make money – how many investors really do get it right?” Grigor said.

“How many confuse the concept of value – particularly relative value – of different companies across a sector without considering the big picture? Too many I would suggest.”

And so it has come to pass that while the journey we currently find ourselves on today is bumpy to say the least, we are back at the same place we have been many times before in markets.

We are at the bottom of a cycle – with the turning point somewhat elongated – as we seek to flush out the excesses of the previous bull market.

Like a really bad hangover – one of those that lasts into a second day – this current bear market doesn’t appear to be fading any time soon.

Two years ago many analysts suggested there were too many junior companies listed on the ASX and that they would be cleared out by an investment climate in which too many would not be able to survive.

Two years on and they still hang in there – like Mr Frodo, perch perilously over the molten lava pits of Mordor with the welcome hand of Sam the money man pulling them back to safety again and again.

“There are too many junior companies [that] need to fail because they are distracting us from those that do have a future,” Grigor said.

We really are back to where we have been before, which Grigor indicated by referring to the early noughties when the dotcom boom was raging.

“No one wanted to know about mining but a junior company that announced it was considering a dotcom deal could easily see its share price double – or triple – on no detail,” he said.

“It is a little more considered today, but we are at a similar stage of the cycle.

“The best way to breathe life into the share price of a junior mining company today is to announce a technology deal.”

Empire sell last Carnarvon asset to concentrate on Perth Basin

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THE ROADHOUSE BOWSER: Empire Oil & Gas (ASX: EGO) announced the sale of the company’s remaining tenements in the Carnarvon Basin region of Western Australia.

Empire said the final sale will allow the company to focus solely on unlocking the value of its vast acreage in the Perth Basin.

The deal entails the sale of Empire subsidiary company Rough Range Oil Pty Ltd, which holds the Carnarvon Basin tenements, to private company Kestrel Petroleum Pty Ltd for a small cash payment and a royalty on future production.

“The sale will enable Empire to concentrate its resources on creating shareholder value at the company’s flagship assets in the Perth Basin, where it has the Red Gully gas and condensate project and the biggest acreage holding,” Empire Oil & Gas said in its ASX announcement.

Email: admin@empireoil.com.au

Website: www.empireoil.com.au

Titan Energy commences flow testing at Allen Dome

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THE ROADHOUSE BOWSER: Titan Energy (ASX: TTE) has commenced commercial production on the initial test well of the company’s 2015 multi-well developmental drilling program on Allen Dome.

The company announced the JT Reese #14 to be flowing 100 per cent high gravity (44°) oil at 80psi on a 16/64 choke.

In the first 72-hours of testing the well produced flush production of 348 barrels (116 BOPD) after it was perforated from 3932 to 3942 feet, a 10 foot section of the approximately 70 feet of net pay as defined by logging in this particular zone.

Titan explained this to be the first zone of an estimated eight prospective pay zones which both open hole and cased hole logging has indicated to be hydrocarbon bearing.

Titan paid 25 per cent of the drilling and completion costs and owns a 50 per cent Working Interest in the well.

“The JT Reese #14 is the most significant well drilled in Titan’s history,” Titan Energy CEO Brad Simmons said in the company’s announcement to the Australian Securities Exchange.

“It is not the production rate alone that makes this the case but the process.

“We overcame technical drilling and downhole conditions that have caused major issues for other operators on Allen Dome.

“It paid off. I would match the ground team that made this happen against anyone in the business.”

Titan indicated the second test well of the planned five-well program, the JT Reese #15, is currently drilling ahead at 2,450 feet.

The company said its appears to have completed drilling through the overhang and is now targeting potential oil pay zones identified in offset wells from 2,600 feet to 4,300 feet.

All operations are said to be running normal.

Email: info@titanenergy.com.au

Website: www.titanenergy.com.au

What the Analysts Say

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WHAT THE ANALYSTS SAY: Interesting news and views from across the Resource Analyst universe.

Website: www.breakawayresearch.com

Company: Linclon Minerals Limited (ASX: LML)

Having recently lodged the Mining Lease application, Lincoln is looking towards developing its 100 per cent-owned Kookaburra Gully graphite project located on the southern Eyre Peninsula in South Australia, with production targeted for 2016.

Recent work has included drilling over the nearby historic Koppio graphite mine, and drilling is planned on the Kookaburra Gully Extended prospect, immediately to the south of Kookaburra Gully, supported by a SA Government PACE grant.

The results of this work, and the subsequent resource estimations, are expected to significantly increase the current high-grade resource of 2.2 million tonnes at 15.1 per cent total graphitic carbon (TGC), already sufficient to support a seven year mine life.

The company is now working closely with Chinese partners, including very supportive major shareholders to secure offtake and funding agreements for the estimated $40.4 million project and as part of this is planning pilot plant scale testwork to verify the positive metallurgy and produce concentrate samples to supply to potential customers.

In addition to Kookaburra Gully, the company has a number of other prospective tenements, all located on the Eyre Peninsula of South Australia.

These tenements include Gum Flat, which has a development ready iron ore project and others that have returned positive exploration results for base and precious metals, uranium, additional graphite and iron ore.

Timed to Take Advantage of a Growing Market

The company is in position to take advantage of a forecast growth in the graphite market, driven largely by forecast demand increases for batteries, the expected decrease in supply from China, and the wish of customers to diversify sources of supply.

High Quality Resource, Simple Mineralisation

At a grade of over 15 per cent TGC in flake graphite, Kookaburra Gully is one of the top 10 graphite resources globally, and one of the highest grade resources for ASX-listed companies.

Website: www.beerandco.com.au

Company: Syndicated Metals (ASX: SMD)

Syndicated Metals has over 5.9 million tonnes of Resources containing 83,000 tonnes copper, 27,000 ounces gold and over 400,000 ounces silver in its 2,469 square kilometre tenement package N‐W of Cloncurry in Queesland.

SMD has a JV with CopperChem, a wholly-owned subsidiary of W H Soul Pattinson (ASX: SOL).

On 21 Jan 2015, SMD announced that the JV has decided to expand the feasibility study, to increase the volume of mining inventory so that the plant could be shifted to near the mine, saving US32 cents per pound in cash costs for minimal capital to SMD.

Feasibility Study during September quarter

SMD is managing the Feasibility Study, while CopperChem funds it.

The plan is now to prove a 5 to 7 year mine life to feed a transportable processing facility that will be sited at the Barbara mine site.

A much better project

Beer & Co estimate that the total capital cost will now be $27 million, and that the project will produce about 11,000 tonnes per year of copper for 7 years at an all in cost of $2.12 per pound, or US$1.60 per pound (AUD‐USD = 0.750).

By shifting at least primary processing to the Barbara site, Beer & Co estimate that cash costs are reduced by 14 cents per pound, or $24 million for the Life of Mine, for an incremental $7 million in cap.ex.

SMD fully funded

While SMD is executing the feasibility study, it is being funded by CopperChem as part CopperChem’s earn‐in to 50 per cent of the JV areas.

SMD recently raised $1.996 million in equity through an under‐written rights issue.

These funds provide SMD with working capital and also the funds to drill mineralisation in SMD tenements that are outside the JV area.


Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.

The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.

The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.

Save a life, before it becomes a lifetime

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RED SHIELD APPEAL 2015: There is something remarkably familiar and reassuring about hearing a Salvation Army Band playing Onward Christian Soldiers.

I can never put my finger on what it is, but there is something about the way all Salvo Bands play this tune that, even when you can’t see them, you know they’re there.

As reliable as that signature style has remained throughout the years, so has the mission of the organisation and its members, to reach out and help those members of our community who, for one reason or another, need a helping hand.

The Roadhouse was greeted by a rendition of the tune when we were privileged to be invited to the recent Perth launch of the Salvation Army Red Shield Appeal.

The Appeal is celebrating 50 years in Australia as the Salvation Army celebrates its 150th birthday worldwide.

To kick the Western Australian effort off, Premier Colin Barnett presented a cheque of $60,000 to Major Wayne Pittaway, Divisional Commander of the Army’s WA division, while assuring the audience there was still plenty of money in the bank to keep WA running.

 

Mention homelessness and the same old stereotype images of people living it rough on the fringes of our society come to mind, however, as true as that image may be, the current economic climate has forced other members, from all walks of life, to knock on the Salvo’s doors.

These people still have homes, but circumstances may mean they are unable to meet their rent or mortgage payments or pay utility bills.

Domestic violence drives many women from their homes in need of accommodation and food for themselves, and in too many cases, their children.

“When they have nowhere to go, we help end homelessness,” Commissioner Floyd Tidd said.

Tidd explained that donations to the Red Shield Appeal had a positive effect on the community as the funds raised enable the organisation to provide food warmth and shelter to the hundreds of thousands of people who need it year in year out across the country.

“We know you are fighting alongside with us,” he said.

The target for this year’s Appeal – Australia-wide – is $74 million, which when you think about it, comes down to donations of just under $3.50 per person.

Every Friday night, in all Australian pubs and clubs, one constant feature is the Salvation Army Soldier rattling their tin for donations.

As insignificant as it may seem at the time, each coin that jangles at the bottom of that collection tin is just as valuable as the cheque handed over by Premier Barnett.

Please – give generously, and give often.

For information about the Red Shield Appeal and how you can donate please click here.