The Capacity Crowd At Minesite’s October Forum Showed Plenty Of Appetite For Mining Investment Opportunities
By Alastair Ford
minesite.com
What a time for Centamin Egypt to be putting a 13 million ounce gold project into production! With gold pushing on towards the US$1,100 mark, it was no surprise that Centamin’s Josef El-Raghy was a big draw at Minesite’s October forum, helping to bring in yet another capacity crowd. Production at Centamin’s company’s Sukari project commenced in June of this year, and is ramping up rapidly. London’s investment community liked that story so much that it was standing room only at the back as Josef spoke, and at one stage there was even someone scrambling about on the roof, although whether it was someone desperately trying to get in to hear the story, or out to place a buy order, wasn’t clear. “We should exit this year with a production rate of 200,000 ounces per year”, Josef told our audience a short way into his polished presentation. And, he added, by the time underground development work at Sukari is complete in 2012, the production rate should have risen to around 500,000 ounces. Not small beer at all, and in light of that some corporate adjustments have become necessary – the company will move up from Aim to the full list in London, and the Aussie listing will be scrapped, although the Canadian listing will be retained.
These moves really mark the final stages in the transformation of Centamin from an Aussie junior with an unfeasibly good project into a world class gold mining company. Somebody somewhere will surely now be beginning to run the rule over Sukari and Centamin with a view to making a bid. That was an eventuality only briefly alluded to by Josef, however, as his focus remains on mining what he emphasized are “very profitable ounces”, and on delivering up new ones. He’s got no debt, and no hedging to contend with, so the rapidly increasing cash flow can be ploughed straight back into the company.
Josef’s talk rounded off a very successful morning in which an audience liberally sprinkled with mining analysts and elaborately endowed with high net worth individuals had been treated to a recovery story from Frontier Mining; a uranium story from Energy and Metals Australia; an exploration and production story with a big of corporate intrigue thrown in from European Goldfields; an award-winning development story from Donner Metals; and the story of a new 20 million ounce gold deposit from Exeter Resources. It’s not often that Josef El-Raghy attends a junior company mining conference at which he doesn’t have the biggest gold deposit by some margin, but Exeter managed to make that happen in this instance.
Exeter’s low grades don’t quite match up to some of the more spectacular 1,000 grammes per tonne gold intersections delivered by Centamin, but the address certainly bodes well as far as potential development is concerned. Not far from huge Kinross and Barrick projects in Chile, Exeter’s Caspiche project will eventually, according to the company’s chairman Yale Simpson, be offered up for sale to a major. But not before plenty more value has been added by further drilling and metallurgical studies. Aside from having more ounces than Centamin, Exeter also has 4.84 billion pounds of copper at 0.22 % to bring to the table. Interest in Caspiche, Yale told the Minesite audience, is already high. But while work on Caspiche is ongoing the company is also working up another property at Cerro Moro in Argentina, which ought to provide some early cash flow to keep the lights on.
Talking of which, keeping the lights on was one of the themes of Chris Davis’s talk on Energy and Metals Australia (EMA). Chris argued that the contribution of nuclear power will be essential in meeting the world’s power needs in the future. That’s partly why, in a stunning volte face, the local government in Western Australia has suddenly turned favourable to uranium mining, a political development which has made the case for development at EMA’s Mulga Rock property near Kalgoorlie all the more compelling. Back in the day, Mulga Rock was extensively drilled by the Japanese, so it wasn’t too heavy a lift for EMA to put some JORC numbers on top of the property in relatively rapid time following the listing. That’s about to get updated though, as the current drill programme is aims to put down 400 holes by Christmas.
Last year, Christmas came late for Frontier Mining’s shareholders. But it came in the end, in the shape of Erlan Sagadiev, who put US$10 million into the company to rescue it from the teeth of credit crunch. He also took a nice slug of warrants too, well in the money now following his own rescue package, but as he explained in response to a question from a Minesite audience member, given that there was no percentage on arranging the new money and no legal fees either, that was hardly unreasonable. Having righted the ship, Erlan’s plan now is to get the Benkala copper operation up and running within two years.
European Goldfields already has some production from the Stratoni lead-zinc-silver mine, as executive director Mark Rachovides explained, although plans for a ramp up from three other projects are well advanced. A key permit has just been granted, and although welcome news, the real buzz around the floor during the coffee break related to the recent sudden and unexpected departure of former chief David Reading. David’s replacement Martin Konig was on hand to field individual questions about how he plans to take European Goldfields forward from here, but the feeling remained that for now some questions remain unanswered. But David himself may break cover before too long, and then we may know more.
Far more straightforward was David Patterson’s presentation on Donner Metals. Donner’s sitting on top of an award-winning discovery in the shape of the Bracemac-McLeod property in the prolific Matagami mining camp in Quebec. Currently an accelerated feasibility study is underway at Bracemac-McLeod under the watchful eye of Donner’s heavyweight partners, Xstrata Zinc. That should be ready in June 2010, but in the meantime David noted that Bracemac-McLeod is already set up with nearby utilities, railway connection, a mill owned by Xstrata, and even a local airport. None of that will need to be permitted, so when the feasibility study results come through it will be the equivalent of picking up the “advance to Go” card in monopoly. Well, almost. |
