Beaconsfield set to resume full-scale production
theage.com.au
Barry Fitzgerald
September 17, 2007
GUNNS faces an almighty struggle to get its proposed kraft pulp mill up and running in Tasmania's Tamar Valley.
But on the western side of the river valley, another struggle is close to being won. It's the struggle by Melbourne's Beaconsfield Gold NL (BCD) to get its namesake goldmine back to full production.
Assuming the fourth approval in a series of "Case for Safety" applications to authorities is approved in coming weeks, Beaconsfield should be back in full production by the end of the calendar year.
With the gold price holding at levels well above $US700 an ounce, it's a good time to be bringing back a 100,000 ounce-a-year operation with known fat margin capabilities.
The high-grade operation was the scene of last year's Anzac Day rock fall that tragically killed Larry Knight and trapped Todd Russell and Brant Webb for two weeks 925 metres underground.
BCD was the junior partner at the mine before the tragedy but has since moved to an effective 100 per cent economic interest and management control in a series of deals.
The most important of those was the takeover of the previous mine manager, Allstate Explorations NL — the mob that was in administration when the accident occurred.
The financial aspects of the deal were important, most notably including the acquisition of the controversial Macquarie Bank debt position.
But in terms of the mine's long-term future, the best aspect of BCD's clean-up of the mine's corporate structure has been that the mine is at last run by a single mining company stacked with industry professionals capable of returning it to full and safe production.
Before the Anzac tragedy, BCD was valued by the market at about $67 million. While it has since effectively doubled its interest in the mine's cash flows to 100 per cent, its market value has only advanced to $80 million (29¢ a share).
A re-rating by the market will come once the final clearance needed to get back to full production is received.
That is expected soon and means BCD will be able to resume mining in the high-grade western zone of the mine, which is where the accident occurred.
Mining costs are going to be higher on account of the safer mining methods that have been adopted since the rock fall.
But thanks to the mine's high-grade ore, small tonnages will be needed to get to the 100,000-ounce-a-year production rate.
So while costs will be more than the $A450 an ounce that was achieved before the accident, they won't be much more.
That pretty much ensures a fat margin for the operation at a time when investors are hunting around for some exposure to gold, but when listed investment options are few and far between.
It was no surprise then that BCD pulled in $8.2 million last week from a share placement at a price of 23¢ a share and convertible notes issue at 25¢ each to fund the push to full-scale mining operations.
The investors that injected their funds know all too well that there aren't many listed gold companies out there with the ability to pump out gold with cash margins of nearly $A400 an ounce.
Glengarry Resources
DAVID Richards has been paid a compliment for his efforts since 2003 in firing up the former sleepy explorer, Glengarry Resources.
The highly rated Kagara paid the compliment in the form of taking up a 12.3 per cent placement of Glengarry shares at a premium to the market back in August.
Buying on market since has taken Kagara's stake to 15 per cent of Glengarry, with Kagara's interest being the potential of Glengarry's Maitland copper/molybdenum project in north Queensland to become a sizeable mine inside of two years.
Maitland is strategically located in Kagara's mining and milling sphere of influence in north Queensland. It is also just down the road from Copper Strike's proposed Einasleigh development. But if Maitland becomes big enough in its own right, it could pursue its own development path.
Either way, Kagara's interest has sparked interest by others in Glengarry, valued by the market on Friday at $35 million (12¢ a share).
Thanks to the Kagara placement and some astute trading of some lesser ranked exploration properties, Glengarry's hunt for the company-making project is well funded.
At last count, it was holding about $6 million in cash and $3 million in listed investments.
The property portfolio is bigger than just Maitland but it is one set to get a serious workover in a 10,000-metre drilling program to be completed by the end of the year.
The drilling is expected to lead to a substantial upgrade in the size and status of the 2006 (inferred) resource estimate of 1.6 million tonnes grading 1.3 per cent copper.
High-grade intersections since of up to 41 metres at
3.25 per cent copper and up to five metres of 0.47 per cent molybdenum suggest as much.
The wild card could be with the molybdenum. Anything around 0.5 per cent molybdenum is worth writing home about. But having said that, the plan is to make Maitland fly on the copper alone, with molybdenum viewed as a potential project sweetener. |
