Rambler Acquires Crew Gold’s Nugget Pond Processing Facility, Turning The Ming Copper Project Into A Very Bankable Proposition
By Alastair Ford
miningmx.com
It’s been a fairly quiet year thus far for Rambler Metals, even if you could sense that with the copper price showing consistent strength things might be going the company’s way. Rambler booked over 100,000 tonnes of contained copper at its Ming Mine in its latest 43-101 resource report, which was compiled from data acquired up until February and then issued in April. But in the time it took between closing off the books to any new data and getting the numbers out to market the copper price rose by almost 25 per cent, from around US$1.50 per pound, to around US$2.00 per pound. Since then the price has surged by a further 33 per cent or so, to just under US$3.00.
What’s behind that price strength is open to debate. Increasing dollar weakness plays a part, as does the tendency of Chinese buyers in recent months to stockpile. But there’s genuine demand too, as stimulus packages kick in and some of the world’s major economies look to move out of recession and back into growth. And George Ogilvie for one, from his vantage point as Rambler’s chief executive, is very bullish on the long-term outlook for copper. “I think some of the highs that we’ve seen in copper before will be reached again.” True, as the spectrum goes, that’s on the bullish end, and you might expect him to say that, given that he’s got 100,000 tonnes of copper to sell. On the other hand, his isn’t exactly a voice in the wilderness either. Some analysts believe that in the wake of the recent commodities boom and bust base metals prices have new floors. Jennings Capital for one, says the new floor will be around US$2.00 per pound.
If that prediction turns out to be accurate, then payback on the US$30 million that Rambler is looking to borrow to get Ming into production, will take less than two years. That’ll look nice to the banks, especially since the commodities that Rambler has in Ming – copper, gold and silver -are currently trading well above the assumptions the company has been using in its financial models. With Rambler’s chairman, veteran mining financier Harry Dobson, available to help things along, raising that US$30 million ought not to be an insuperable challenge.
And now that George has nailed down a deal to acquire Crew Gold’s Nugget Pond processing facility in Newfoundland, raising that money will be the last major hurdle Rambler will have to jump over before Ming goes into production. The two are not separate of course. With Nugget Pond now in picture, the banks will be a lot less nervous about stumping up cash. Nugget Pond is just 40 kilometres away from Ming, and with a little bit of jiggery pokery ought to be able to handle Rambler’s copper ore without too many problems, even though it’s currently processing gold ore. George has been talking about getting hold of a mill on the cheap for a while now, so in a sense the Nugget Pond deal doesn’t come as a complete surprise. But having it all out in the open and on the table means that investors can cross financing plant purchase or construction off the list of risks that they’ll have to contend with over the next 12 months or so. Hence the company’s shares have risen by around 15 per cent since the Nugget Pond deal was announced on 12th August, to 17.75p in London and C$0.36 in Canada.
George is clearly pleased with the Nugget Pond deal, even if it did require a fair amount of man hours to nail down. Rambler will pay C$3.5 million for a carbon-in-leach gold mill capable, says George, of handling 1,000 tonnes per day of sulphide ore. It’s fully permitted, and indeed up and running. Currently Nugget Pond handles 500 tonnes per day of much harder rock. The copper components that Rambler will require, including flotation cells, will have to be retrofitted, but the whole “front end of the mill will be applicable” to Rambler’s requirements, says George. “Beside the existing building we’ll erect the copper flotation building”. So that all seems to fit together nicely. And there’s more. Under a pre-existing contract Nugget Pond will be milling gold ore from another project until July 2010, an arrangement that actually suits Rambler very nicely, since the copper retrofit will take around nine months. And that all ought to sit nicely with the banks too. We’ll know more on the financing in the autumn, and investors should keep their eyes peeled for further developments once the Crew board has met for discussions later this month. |
