Here's an interview with the president of BMC from David Pescod's newletter.
Q & A with Mike Sieb President of Brilliant Mining Corp
(From February 26, 2007)
While we may worry about the mining sector and the correction it seems to have every spring, we also note that Brilliant Mining has been a top pick of many market watchers, analysts and the like over the last few weeks since results started coming out on their Lanfranchi Nickel play in the Kambalda Nickel District of Western Australia.
Brilliant holds a 25% interest in the operating Lanfranchi Nickel Mine which has seen a real growth in nickel production over the past year. It’s probably time to talk to the President of Brilliant Mining, Mike Sieb, who we caught up with just before he ran away to the PDAC in Toronto.
David: To start with…..nickel prices, are they sustainable or are we just getting carried away like uranium?
Mike: That is a very tough question, because nickel has never been here before. Basing a response on demand versus supply, I figure demand is fairly robust and projected not to slow down by a significant degree. Supply is extremely short and not expected to quench demand anytime soon but over short intervals may contribute an erratic component to the equation.
For example there is the future threat of a number of significant laterite mines potentially coming on-stream, however many of them have witnessed delays and problems associated with the construction or operation of bringing those additional sources of nickel on-stream. So to answer your question I think yes nickel prices are sustainable over the long term, but we may enter into sporadic volatile periods.
D.P: Now of course, this is all an India/China story for the demand side to, isn’t it?
M.S: That is correct, yes!
D.P: Okay now, what should we know about the mining business in Australia? One would assume it’s much like in Canada?
M.S: That is correct. Australia is very similar to Canada. It’s a very stable, geo-political climate similar to Canada but it doesn’t suffer the same climate fluctuations as some locations in Canada and Australia’s mining regions are probably more accessible then many of the remote areas in Canada.
D.P: The Lanfranchi Nickel Mine is already in production, but you have had some real exploration success lately that has caught the market’s attention. Now some of these latest drilling results you’ve had – 4 ½% nickel over 33 meters and the like…..these are nothing less than spectacular.
M.S: They are absolutely spectacular! There is nothing like the Kambalda Camp or Kambalda area for nickel grade and thicknesses. For people who aren’t familiar with Kambalda – Kambalda is located approximately 600 kilometers east of Perth and it is in the last 40 or so years one of the largest nickel producing areas in the world – probably just behind Sudbury and Norilsk for production. Kambalda itself was discovered in the 60’s, put into production in the late 60’s and in the intervening 40 years, at today’s nickel prices, approximately $35 billion worth of nickel have been produced from the Kambalda region.
D.P: Wow! And yet, you’re right, it has no P.R. – no one has probably heard of it!
M.S: No. I wouldn’t call it a unique environment, but a region where the factors have definitely conspired to create a real high concentration of nickel sulphide in a small area.
D.P: Okay. Now, I guess the big question is how big is the resource reserves etc?
M.S: In the next week or so operations at the Lanfranchi
Nickel Mine will complete an initial resource delineation drilling program on the Deacon, which is the new zone of mineralization discovered in October. Therefore I need to await the results of the resource estimate sometime in March however a realistic expectation or target would be a million tonnes grading around 3% nickel.
D.P: Does that include the other areas or is that just for the
Deacon?
M.S: That would be just for the Deacon zone itself. And this initial Resource will only factor in around 375 metres of strike length – the Deacon is open both up and down dip… i.e. there is still great potential for growth.
D.P: If you were adding in the other areas, what kind of numbers are you now looking at or hoping for?
M.S: We have reserves for about two years and additional
resources in the indicated and inferred resource categories for an additional five years if successfully converted into reserves.
If the Deacon does continue to develop and evolve the way that I think it will and it does achieve the million tonne target, the upcoming Deacon resource may add approximately three to four years of mine life in the resource category. I expect very shortly thereafter, operations will incorporate the production of the Deacon zone into the mine plan.
D.P: Now is the drilling there open on certain sides or have
you just about defined it?
M.S: The Deacon zone is completely open to depth and open up-plunge – I wouldn’t necessarily over promote and project the nickel channel to surface, but there is definitely a corridor open up-plunge that requires additional drilling to trace its extent.
D.P: Okay. Are there additional areas in Australia that you are exploring or is this your major project.
M.S: This is currently our major interest and focus in Australia.
D.P: Are there are many difference between taxation policies
for a potential producer in Australia versus Canada and also how soon could this be mined?
M.S: The Australian tax regime is fairly similar to Canada’s,
on a corporate tax level it is 30% and state royalties (for gross nickel sales) would be 2.5%. There are no other royalties
on the Lanfranchi Nickel Mine itself. To put the Lanfranchi Nickel Mine in perspective, whereas the mines at Kambalda were discovered in the 60’s the Lanfranchi Mine located in close proximity, only 40 kilometers south of Kambalda, was discovered 20 years later. The nickel sulphide occurrences at Lanfranchi exist on trend and are assumed to be the same nickel channels as are observed at Kambalda.
So it appears to be part of the same prolific nickel system. Because Lanfranchi was discovered 20 years later, it has only seen a fraction or a portion of the mining that Kambalda has seen. So I think that there is a realistic expectation to be able to significantly extend the life of the mine. To put it in perspective the lowermost underground workings, at the point and time that the Lanfranchi Joint Venture re-commenced mine operations, were at a vertical depth of 700 meters below service. Utilizing current mining techniques, operations can probably develop down to about 1.4 to 1.5 kilometers.
D.P: Wow!
M.S: Again with all the ore bodies open down plunge we can reasonably expect to be mining for a quite a number of years. The Deacon zone should assist us in achieving this goal.
D.P: How soon can it start?
M.S: The discovery of the Deacon zone occurred in October. The Lanfranchi Joint Venture should complete resource delineation drilling in the first week of March and hopefully produce a resource estimation by the end of March. The next step will be to perform a detailed mine design and contingent upon a positive economic feasibility which may be completed by early-mid year upgrade the Deacon into the reserve category.
D.P: That would be quite quick, most mines these days are three-five years down the road from discovery.
M.S: Well there is nothing like it. To go from discovery to possible production, again contingent upon a positive economic engineering review, in less than 12 months is a phenomenal aspect of the Lanfranchi Mine and ultimately the Brilliant story.
D.P: That’s incredible! Okay, well let’s take you to outside your little world and ask you what your thoughts these days are about metal prices in general with gold looking like it is going to flirt with $700.00, uranium through the roof – any metals that are your favorites or ones that you would avoid at this point?
M.S: Of course my favorite is nickel, which is very near and dear to my heart. I see approximately 70% of the nickel produced today slotted for the stainless steel industry with a component of the remaining production going into nickel hydride batteries. It is projected that both the stainless steel industry and the development of alternate energy vehicles are both growing sectors and I think that is only going to increase the demand for nickel with it.
D.P: Okay, what about gold, uranium, copper, lead………
M.S: I see continuous strength for gold and I do (probably) see elevated prices here in the near future. Uranium, I see continuous strength. That sector itself is growing and we’ll probably see more and more plants come on-stream. Also with uranium as a consumable product of that process and only a real small component on a dollar value for the capital development requirement associated with the construction and operation of a power plant.
Copper I am probably a little less sure of, but overall I do see continuous strength in the commodity sector of the market.
D.P: Okay, now our favorite and last question, is always the same. If you had to pick a stock, other than your own, and one that you had no conflict of interest in and of course it would be expected to double, what would it be?
M.S: That would have been an easy one probably a few weeks ago, because the one that I did pick and the one that I was following is a uranium company called Purepoint Uranium Group (V-PTU). They performed quite nicely in recent months and boast some real projects with real potential.
D.P: All of this of course, doesn’t count today!
M.S: I know that’s in the past and doesn’t qualify as a response. I am probably a bit of a fan of the Wildrose Resources’ and Skygold Ventures’ Spanish Mountain project.
D.P: Why?
M.S: I think that it’s going to take a bit of a time for the story to grow. I believe that they are going to continue to expand and develop their understanding and the resources of their Spanish Mountain Gold project in B.C. and I think that it will eventually become a mine.
D.P: Thank you very much for your time Mike!
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