MALACHITE RESOURCES NL
MAR - Excellence in Mining and Exploration Presentation - Dr Garry Lowder, Chairman and MD
Wed, 17 Sep 2008 01:45PM
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MALACHITE RESOURCES NL (MAR)
ASX code: MAR
Website: http://www.malachite.com.au/
Industry: Materials
Principal Activities:
Mineral explorer focussed on intrusive-related mineral deposits in eastern Australia, with emphasis on gold, silver and associated metals.
Address:
799 Pacific Highway, Keycorp Tower B, Suite 1502
Chatswood
NSW
Phone: (02) 9411 6033
Fax: (02) 9411 6066
Executives & Directors
Mr Andrew J Cooke , Company Secretary
Mr Peter Hopkins , Assist.Co. Secretary
Dr Garry G Lowder , Chairman, Managing Director
Mr Russell Meares , Executive Director
Mr Warren J Staude , Non Exec. Director
Mr Denis O'Neill , Non Exec. Director
Mr Roy M Randall , Non Exec. Director
Mr Peter Hopkins (Assist.Co. Secretary) , Company Secretary
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Company ASX Announcements
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MALACHITE RESOURCES NL (MAR) Events
Australia/NSW
MALACHITE RESOURCES NL (MAR)
| Directors Options to be Amended | Fri, 28 Nov 2008 |
| Appendix 3B - Director and Mt Lidster Options | Thu, 27 Nov 2008 |
| Change of Director`s Interest Notice - Dr. Garry Lowder | Wed, 26 Nov 2008 |
| Change of Director`s Interest Notice - Denis ONeill | Wed, 26 Nov 2008 |
| Change of Director`s Interest Notice - Roy Randall | Wed, 26 Nov 2008 |
| Change of Director`s Interest Notice - Russell Meares | Wed, 26 Nov 2008 |
| Change of Director`s Interest Notice - Warren Staude | Wed, 26 Nov 2008 |
| Chairman`s Address to Shareholders | Tue, 25 Nov 2008 |
| Results of Meeting | Tue, 25 Nov 2008 |
| Annual General Meeting Presentation | Tue, 25 Nov 2008 |
Please note: This company appears on this website as a result of its listing on the Australian Securities Exchange. Boardroom Radio does not claim any association with any company listed on this site.
MALACHITE RESOURCES NL (MAR)
Excellence in Mining and Exploration Presentation - Dr Garry Lowder, Chairman and MD
http://www.brr.com.au/event/51323
WEDNESDAY, SEPTEMBER 17, 2008, 1:45 PM
MAR Thank you, Mr. Chairman. Good morning ladies and gentlemen. It's a great pleasure for me to be participating in this conference. I've been listening to a lot of very interesting and very encouraging stories over the last couple of
10 days and, of course, it's just a pity that this is taking place against such turmoil and unhappiness in the market. But, bear with us. It will change. It will turn around and certainly after 40 years in the business I guarantee that. And today, I'd like to bring to you another interesting and I think encouraging story and that of Malachite Resources.
15
We are, perhaps, a uniquely focused company in that we have a very strong geographic focus and we give particular emphasis to silver and tin. And if a single line can sum us up, we are an explorer currently making the transition to a miner. You've seen a lot of statements like this in the last couple of days.
20 This is the same as everybody else. A little bit of background information on the company and it's pretty self explanatory. A key thing I want to draw your attention to on that slide is our key shareholders. Anglo Pacific Group, a London-based institution, and Straits Resources -- both key shareholders, both very supportive and both, I think we're really with us for the long term.
25
Our Board is very experienced particularly in regard to exploration and project evaluation. As we move to become a mining company, we will add to our board mining expertise and we have moved away - underway now in that regard. So, we have a very clearly defined strategy for the company and that
30 is to become a mid-tier -- profitable mid-tier dividend-paying mining company. We already enjoy the economic efficiencies that come from a strong geographic focus. We have the strength represented by sufficient diversity to withstand the swings of roundabouts of the commodity markets, and so we are targeting a limited range of high value metals in Eastern Australia.
35
Our metals are silver and tin, copper and gold, and our target areas are Northern New South Wales and North Queensland. We have four key projects, only two of which I wish to talk about today. Conrad Silver, our flagship; Elsmore Tin where we think our cash flow will come from, and we
40 have exposure to copper in the Mt. Isa region and gold also in Northern New South Wales.
So why silver and tin? You've probably heard a little bit about these over the last couple of days but let me just remind you if you're not familiar with it why
45 tin is of such interest to us. My sources in London tell me that tin is in critically short supply. In my own visits to Kuala Lumpur and talking to tin miners, there has certainly -- endorsed that. The demand growth outlook for tin is very positive. And if you heard Allan Trench on Sunday morning, you'd know that tin is hot and likely to remain hot for some years to come. And the reason for that basically is that tin is non-toxic and is being used as a substitution for toxic lead in solder. And more than half of all the tin consumed in the world simply goes into solder.
5 Silver, of course, is a precious metal. It's a store of wealth. Long has been and will be, but it's also a crucial industrial metal so silver is consumed and it has an amazing diversity of uses with new uses appearing all the time. It may interest you to know that there are more patents lode each year for new uses of silver than there are patents for new uses of all other metals combined.
10 And that will continue. And of course, from our point of view and our geography, tin and silver commonly occur together in our areas if interest.
And as you can see from the map, you can see our Northern New South Wales concentration. The Conrad project, our flagship, is about 25 km south
15 of the town Inverell, the Elsmore Tin is about 20 km east of Inverell, our copper exposure is up to the northeast of Mt. Isa, and our gold exposure -- also in Northern New South Wales -- is a major goldfield long forgotten and so is the Conrad, our flagship project. They say that the best place to find a new mine is alongside an old one. And we certainly adopted that strategy at
20 Conrad. Conrad has had two previous periods of production. It's the largest producer of silver, historically, in the Northern New South Wales, Southern Queensland silver province. Its location means it has excellent local infrastructure and we are sitting there with a 100% ownership of the project, and that includes a 340 hectare freehold property joining the mining leases
25 which is where we would propose to put our mine infrastructure.
Conrad is a true polymettalic. It has six metals all of which potentially are payable -- silver and tin which represent most of the value, but also copper, lead and zinc, and the rare and highly valuable metal, indium. So it's high
30 value ore. We have some spectacular grades in some of our intersections. And if you want to make a comparison between what we have at Conrad, probably, the best analogy is with the famous silver mines of Coeur d'Alene in Northern Idaho in the USA. So at Conrad most of the ore occurs in high grade narrow lodes which fortunately for us have a lower grade mineralized
35 envelope.
We also have a second style of mineralisation, 30 metres wide bulk-tonnage style mineralisation of lower grade which we call the Greisen Zone. The sulphides, as you can see in the pictures, perhaps are very coarse grained.
40 That makes good metallurgy and the test work we've done, so far, also suggests that we can actually upgrade this ore significantly by gravity concentration before taking it to a small sulphide mill.
Our economic modelling so far is pretty basic and pretty -- it makes quite a lot
45 of assumptions, but we think a million tonnes of about 12 ounces of tonne silver equivalent would be enough to get us started at the scale we are planning. In August we put out a resource statement based on drilling up until about mid June and that identified 3-1/2 million tonnes at 5 ounces of tonne silver equivalent. In other words, a global resource about three times as many tonnes as we need, but about 1/3 the grade. And so, now, what we're doing since then is focusing on grade. In-filling around some of our high grade intersections, we're pretty confident that as we continue to drill, we'll be able to define within the global resource the sort of start-up tonnage and grade
5 that we need. And it's encouraging that in doing so, already, in the August figure, we're able to quote 180,000 tonnes at pretty much the grade we're looking for.
This is what the ore body looks like. The main lode itself is only about a metre
10 wide. It has a metre or two either side, lower grade and the old timers mine is pretty much just the central lode. And in its first incarnation, the Conrad mine was quite a substantial mine. It employed several hundred people. It operated from about 1890-1912. And then it operated again on the Broken Hill South after World War II, but it closed in 1957 when the lead price crashed. And this
15 was what they left behind. You can see in this the stopes from the underground mining of past production. You can also see the extent of our drilling. We've drilled something like 105 drill holes now. We've drilled at over about 2 kilometre strike length. It's open in both directions, but particularly to the southeast, we drilled the deepest hole to 500 metres below surface where
20 it still continues and so we think there's a lot of upside potential.
Some preliminary resource modelling, the top left hand picture just shows the geological model. You can see the purple is the main Conrad Lode. The green is an offshoot or a split from that called the King Conrad. And in
25 between is the Greisen Zone. On the bottom right the block model based on the results up until June drilling. A key thing to note, there's a couple of zones of high grade emerging from the drilling and continuing drilling since June has not only strengthened those but has identified a further high grade zone further out to the southeast of the section shown there. And if you look at the
30 bottom left hand picture -- that is information that was compiled by Broken Hill South in the 1950s -- from underground sampling. The key thing in there is that shows that firstly, most of the production came from that central area near the main Conrad shaft and it plunges down to the southeast. And if you look at where that is in the diagram on the bottom right, most of that
35 production sits in there.
Now, our drilling suggests the grade is low below that, but given that most of the production is just above it, we suspect that's more to do with the lack of drilling density than anything else. Just blowing up the north western end so
40 you can see where the Greisen Zone is. It sits sin between the Conrad and the King Conrad Lodes. It's much lower grade but it’s potentially often pittable and we're looking at potential star-up pit out there taking in one end of the Conrad Lode to King Conrad Lode in the Greisen Zone.
45 And I mentioned the analogy with the Coeur d'Alene area. Just in this chart one of my colleagues went to Coeur d'Alene last year and put together this little chart. You can see that Conrad compares with two of the great mines in Coeur d'Alene -- Galena or Lucky Friday. It compares pretty well in terms of strike length, lode width, historical production grade. The big difference is that, currently, in Coeur d'Alene, their mining is as deep as 2-1/2 kilometres below the surface. The deepest mining at Conrad so far is only 260 metres. And as a result, the Galena and Lucky Friday both produce 100 or 150 million ounces of silver with Conrad so far only about 3-1/2 million ounces. And we
5 think that simply means that most of Conrad's silver is still in the ground waiting for us to come and dig it up. Now, that's not going to happen overnight. We've got a lot of work to do yet to bring Conrad to production.
So, how are we going to survive in the meantime? We think Elsmore is the
10 answer. We've become really very interested in tin given that we are in the heart of one of the major tin provinces of the world, in Northern New South Wales, and our Elsmore project is where we see a great opportunity to develop short-term cash flow to pay our bills until Conrad comes on stream for the long term. It's wholly owned. We have a very good land position. We
15 have both alluvial and hard rock prospects, but the key thing that's got us excited recently is what we now are calling the Karaula deposit. It was known as historically. It's a semi-consolidated palaeo-alluvial. It's not a current modern alluvial. It may be something like a lake bed. It forms a horizontal blanket right at surface, literally right at grassroots covering at least 1 square
20 kilometre an area. That occurs on freehold land and we've just done some air core drilling in this deposit and we know that it’s up to 20 metres thick and probably averages more like 5 or 6 from the surface. That gives us something like 5 million cubic metres of this material. We don't yet know the average grade, but from sampling the outcrop, we know that it's at least as much as 3
25 kilogram a cubic metre in places. And we think if we can average something like 1 kilogram per cubic metre that will be ore. And we'll know that pretty soon. And especially as we have some accessory zircon that would probably be recovered as well.
30 The important thing is, if you look at this picture, that's money lying on the ground and I don't mean the dollar coin. The black grains are grains of cassiterite, a tin mineral, which are just lying on the surface of this deposit when you walk on the ground, wherever rainwater has washed the surface a bit, there's the tin waiting for us to come and dg it up. So our plans are to
35 begin mining here as soon as we can, probably at a product scale to begin with and then scaling out once we demonstrate the economics. MAR produce about 1000 tonnes per annum of tin and in doing so we think we can make somewhere in the order of $5 million to $10 million a year in cash flow and this can all happen very quickly. Until recently, we thought the Karaula
40 deposit, although it was recognized as a palaeo-alluvial, we thought it was younger than the nearby tertiary basalt. It's very widespread in this part of New England. Just likely, we've come to realize that it's very likely to be older than the basalt which implies that it could well extend beneath the basalt. And if it does, then that greatly increases the potential volume of minable material.
45 So far we have only one drill hole through basalt. I guess it's pretty encouraging that when that drill hole went through the basalt, it hit alluvial material grading 5 kilograms of tin per cubic metre. So, we're about to do some more drilling through the basalt and see if we can enhance and expand the scale of this.
So, over the next 12 months, we have two clear sets of priorities. Firstly in regard to Conrad, we will continue to enhance the project enhancing and emphasizing grade. We'll continue our metallurgy. We were fairly severe on
5 ourselves in terms of calculating our silver equivalent grades in terms of payable metals in terms of metal recovery at the metallurgical stage. We only assume, for example, a 50% or 55% recovery of tin. And if we can increase those recovery estimates based on extra metallurgical test work, the silver equivalent calculation will go up by several ounces per tonne. So obviously
10 that's important to do and we're working on that. We'll continue to refine our economic model as we do so and that will determine how best to bring this project to production. Do we go alone, do we bring in a mining company partner and leverage our interest off that. And that's a decision we should make next year. In the meantime we'll push ahead very quickly and very
15 strongly with Elsmore. We think there is a great opportunity to get into this tin market.
With the tin price where it is it's certainly potentially a very profitable business. In the background we have our copper projects up at Mt. Isa and our gold
20 exploration. That will continue and you'll hear more about those perhaps in future conferences. So, the reason perhaps you should be looking at Malachite and thinking in terms of where we're headed is firstly our management, a strong track record of success. The Conrad mine which is there to be, a long term mine. Once it opens there's every reason to expect it
25 to run for decades just as the mines in Coeur d'Alene have done. To get to that stage we should be able to sustain ourselves with cash flow from Elsmore, and then in the background we have these other copper and gold projects that we think will be material to us in the coming years. And everybody loves nuggets. We've got nuggets to burn -- nuggets of tin and –
30 or nuggets of gold. And I leave you to work out which is which. So, that's our story and thank you for your attention. Please come and see us at our booth outside if you'd like some more information. Thank you.
INTERVIEW CONCLUDED
Contact brr@brr.com.au for more information
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