What the Brokers Say
WHAT THE BROKERS SAY: Interesting news and views from across the Resource Analyst universe.
Australian Bauxite (ASX: ABZ)
ABZ’s strategy has consistently been to identify quality bauxite close to infrastructure and with low socio-environmental impacts.
Tasmania emerged in 2010 as a possible destination with the discovery of bauxite similar in nature to Taralga and nearby deposits.
With costs being the key, focus shifted to Tasmania where a positive scoping study is being completed on a possible mining operation at Bald Hills.
The scoping study will most likely reveal a relatively low cost project underpinned by simple mining methods, short distance to port and existing infrastructure.
The plan is to mine Bald Hill, mine nearby deposits and develop a Tasmanian bauxite industry.
TASMANIAN BAUXITE KEY POINTS
Tasmanian bauxite is gibbsite rich, which only requires low temperature for processing at an alumina refinery thus aiding in reducing alumina production costs.
Identified deposits are located close to existing infrastructure such as roads and rail, on land with little to no environmental issues, and free of socio-political opposition.
With the nation’s highest unemployment, Tasmania offers an eager and experienced workforce having a rich mining history.
Port of Bell Bay is underutilised and spare capacity exists for exports which is advantageous as it could aid in reducing infrastructure spend. A Memorandum of Understanding has been executed between ABZ and Tasmanian Ports Corporation for access to Port of Bell Bay.
Existing rail and road networks are excellent and offer low transport costs as deposits are in close proximity to port.
Tasmania seems abundant with bauxite and offers great potential to establish a long life bauxite mining industry.
BALD HILLS
Bald Hills is the first project for ABZ in Tasmania as it’s ideally situated, being close to port, in close proximity to associated infrastructure and four kilometres from Campbell Town, which could provide some of the workforce.
One of the key reasons Bald Hills was selected as the first mining project in Tasmania was the approvals process, which seems straight forward enabling mining to commence from late 2014. The mining lease application was submitted in early May and a Notice of Intent was lodged with the EPA at the same time.
Bauxite at Bald Hills is very good quality and ideal for special purpose blending, enhancing final alumina quality at refineries.
The expected capital cost at Bald Hills is approx. $8 to 10 million, with total operating costs approx. $30 per tonne. Using long term bauxite price assumptions, we expect margins between $15 and $17 per tonne.
MINING
ABZ is planning to start production at Bald Hills at approx. 500,000 tonnes per annum. We see this increasing to approx. 2.5 million tonnes per annum as more new mines come on stream. On current numbers we expect a mine life of around six years but we are confident that new mines will be added and production extended well beyond 2020. Second mine has already been put forward at Fingal Rail which is in close proximity to Bald Hills and will only require a modest cap-ex to bring into production.
Vital Metals (ASX: VML)
Vitals Metals is an advanced exploration company with its flagship Watershed tungsten project located in northern Queensland.
Watershed currently hosts a JORC Resource of 49.3 million tonnes at 0.14 per cent tungsten-trioxide (WO3) for 70,400 tonnes of contained WO3.
Japan Oil, Gas and Metals National Corporation (JOGMEC) have earned a 30 percent interest in the Watershed project by spending $5.4 million to fund completion of a Definitive Feasibility Study (DFS).
Initially the DFS was designed to assess a one million tonnes per annum capacity processing scenario, however this capacity was recently increased to three million tonnes per annum following a resource upgrade – creating more robust financial outcomes.
JOGMEC will not take Watershed into production but rather act as a match maker to third party Japanese corporation; however, it may act as a bank guarantor during the project finance stage.
Vital also holds a 100 per cent interest in a series of exploration projects in southern Burkina Faso, comprising over 850 square kilometres of contiguous tenements in highly-prospective Birmian Greenstone terrain – collectively known as the Doulnia project.
Early stage drilling programs have been particularly encouraging at the Kollo prospect, encountering significant ‘ore grade’ gold mineralisation. The Burkina Faso tenements are also prospective for VMS style zinc mineralisation.
In 2009 Vital enhanced and diversified its exploration interests to include gold and base metal prospects in southern Burkina Faso, West Africa. It currently holds four permits in a favourable geological setting within the prospective Markoye Fault Corridor.
The Markoye Fault Corridor is host to the Essakane (5.1Moz), Tarpako (1.3Moz), Bombore (5.2Moz) and Kiaka (5.2Moz) gold deposits.
Exploration within the project area is being steadily advanced, with early drill programs intersecting multiple high-grade gold intercepts. Planned drilling campaigns are aimed at extending the limits of the known near surface (open pitiable) mineralisation, as well as identifying additional deposits that will provide the critical mass for a stand-alone project.
An early drilling campaign intersected 44 metres at 6.39 grams per tonne gold from 8 metres depth, highlighting the potential to delineate meaningful scale, shallow resources within the project area.
Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.