Rambler Metals Is Now Less Than A Year Away From Production At Its Ming Copper-Gold Mine In Newfoundland And Labrador
By Alastair Ford
minesite.com
“We’re in the process of completing our feasibility study”, says George Ogilvie, chief executive of Rambler Metals, the company in the process of redeveloping the Ming copper mine on the Rambler project in Baie Verte, Newfoundland. “It should be out in three to four weeks time.” Rambler first listed on London’s Aim market back in the early part of 2005, shortly after it completed on its acquisition of the Rambler project from Canadian mining and investment company Altius. Since then, the company has made steady, unspectacular but consistent progress in bringing the mine back into production - to the point where the milestone of the feasibility study won’t be of such critical importance as it might otherwise have been.
Plenty of companies wait for the release of a feasibility study before raising development funding, but in Rambler’s case the money’s already in place thanks to a forward sale of a percentage of the project’s gold production to Canadian junior Sandstorm Resources. The US$20 million raised through the deal will come in staged payments as the project progresses through development and into production. Rambler’s already had the first US$5 million, and a second tranche of US$2 million is due on completion of the feasibility study. George Ogilvie seems to have little doubt that this study will show a project that’s economically robust at current metals prices, with some room to spare. The remaining US$13 million will come into the project once all the necessary permits have been granted.
And permitting, says George, is in hand. The critical remaining permits relate to the future rehabilitation and closure of the Ming mine, and are due to be submitted in July. Such a permit, says George, is usually granted in a month or so, cueing the company up nicely for construction to commence in August, well ahead of the Canadian winter. At that stage all of the Sandstorm money will be in, and the long lead items that the company ordered back in the spring when the funding deal was struck, will have been delivered. What’s more, earlier in the year, in a C$3.5 million deal, Rambler bought a mill up at nearby Nugget Pond, through which it plans to process the Ming ore.
So from the perspective of capital expenditure, all the likely further outlay is covered by the Sandstorm deal. However, it does look as though there might be something of a working capital deficit as the project moves towards production, and George has recently been in the UK consulting with his institutional shareholders about how best to address this issue. One option is to revisit those banks who came up with offers of debt financing when it looked as though the Ming mine might be funded through a traditional debt/equity split. “We have several term sheets for a US$10 million debt facility”, says George. So it’s highly likely that Rambler might go into production with some debt on its books, albeit not too much.
Having said that though, George is also keen to chat to potential buyers of the concentrate that Rambler will produce, to see if there’s any possibility of raising the extra funds through an off-take deal. The attraction of such a deal, says George, is that the counter-party would effectively be a partner in the Rambler operation, rather than just a supplier of finance. What’s more, banks are still quite risk averse, and it remains to be seen on what terms any debt would be offered. Sandstorm already has a claim to 25 per cent of the first 175,000 ounces of payable gold that Rambler produces, which equates to 43,750 ounces, and, following that, to 12 per cent of all gold produced from the Ming mine. But the rest of the concentrate still looks an attractive proposition. Overall, says George, it will comprise 29% copper, between 12 and 16 grammes per tonne gold, and between 70 and 80 grammes per tonne silver.
The current plan is to have Ming up and running next year, at which point it will have a projected life of seven years, under the parameters of the 43-101 feasibility study. A previous scoping study, completed by SRK in 2008 was based on a 4,000 tonnes per day underground operation, but we’ll have to wait and see what sort of fine tuning has been done to make the operation fly two years, and one global financial crisis, later. Still, George reckons that taking into account the company’s inferred resources, he can add a further three years worth of mining in the massive sulphide zone to the seven year mining reserve that the study will show. After all, the mineralisation is still open in multiple directions and offers plenty of grounds for thinking there’s a fair bit yet still to come from Ming.
Partly in an attempt to get started on working up those resources, and partly in an effort to give the market something to chew over during the construction period when interest is likely to wane, George is cranking up the diamond drill rigs once again this summer. Precisely where that drilling takes place hasn’t yet been decided. It could be within the mine itself, but George also mentions that there are some near surface targets that might be worth a speculative look. In addition to that, the company will increasingly look upwards and outwards. “Rambler is not going to be a one mine company”, says George, in a clear statement of intent. Don’t expect a deal next week, but don’t be too surprised either if, when things seem to have gone a little quiet, Rambler suddenly pops up and announces a deal. |
