REPUBLIC GOLD LIMITED
RAU - Latin America eConference - John Kelly, Managing Director
Fri, 26 Sep 2008 10:00AM
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REPUBLIC GOLD LIMITED (RAU)
ASX code: RAU
Website: http://www.republicgold.com.au/
Industry: Materials
Principal Activities:
Gold explorer
Address:
, , 144 Cobra Road,
MAREEBA
QLD
Phone: (07) 4092 2594
Fax: (07) 4092 3797
Executives & Directors
Mr Peter Wicks , Non Exec. Chairman
Mr John Kelly , Managing Director
Mr Greg Barns , Director
Mr Neb Zurkic , Director
Mr Dato Choo Beng Kai , Non Exec. Director
Mrs Roslynn Shand , Company Secretary
Company Podcasts
Company ASX Announcements
Company ASX announcements can be viewed on the ASX website.
Announcements from the preceding six months are shown below.
Please refer to the relevant stock exchange if any of the above information is incorrect
REPUBLIC GOLD LIMITED (RAU) Events
Australia/NSW
REPUBLIC GOLD LIMITED (RAU)
| Boardroom radio presentation | Thu, 2 Jul 2009 |
| FNQ Drilling Programme Commenced | Tue, 30 Jun 2009 |
| Change of Director`s Interest Notice x 5 | Thu, 25 Jun 2009 |
| s.708A notice and Appendix 3B | Thu, 18 Jun 2009 |
| Rights Issue Allotment | Wed, 17 Jun 2009 |
| Prospectus timetable amendment | Fri, 12 Jun 2009 |
| Rights Issues Concluded Oversubscribed | Wed, 10 Jun 2009 |
| Amayapampa Sampling Update | Tue, 2 Jun 2009 |
| Competent Persons Statement Amayapampa Update | Tue, 2 Jun 2009 |
| Bolivian Government and Legal Framework | Tue, 26 May 2009 |
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.
PRESENTATION BY JOHN KELLY, MANAGING DIRECTOR OF REPUBLIC GOLD LIMITED (RAU)
“Latin America eConference”
http://www.brr.com.au/event/51716
FRIDAY, SEPTEMBER 26, 2008, 10:00 AM.
RAU Republic was floated in 2004, so a little bit over four years ago when we initially floated the Company’s projects exclusively. We started in Australia
10 with the main projects in Hodgkinson Basin up in Far North Queensland. Then about three years ago, we turned our attention to Bolivia, the country that’s right in the very middle of Latin America, and we’ve been working on a project in Bolivia called Amayapampa for the last three years.
15 For some statistics for listeners on Amayapampa, it’s been a Democratic republic since 1982. It’s about the equivalent in size to New South Wales of South Australia with a population of about 9 million, so less than half of Australia. Our gross domestic product is about $26 billion, about 5% of that of Australia, and a GDP per capita of less than US$3000. So putting it at about
20 number 146 in the world with Australia ranking at number 14. Bolivia runs a budget surplus and has a current account surplus, and its main exports are gas, soybeans, petroleum and minerals. So, the minerals industry is a very, very important one for Bolivia, for employment in Bolivia, and for earning export dollars for Bolivia.
25
As I said in the introduction, we’ve been in Bolivia for about three years. So, we’ve been able to develop a really good feel for the country and a confidence in its politics, and most definitely a confidence in the projects of Bolivia in the mineral prospectivity of the country. We’ve been able to develop
30 a very close working relationship with the Minister and the Vice Minister of Mines in the Mali’s government. There have been three ministers of mine in the time that we’ve been there, and all of them have made themselves available to the company at very short notice to meet with. Each of the ministers that we’ve met with over the years, including the current one, as
35 recently as only 3 or 4 weeks ago, continue to make assurances to the company that the government security of private property, and mineral tenure in the country is very, very important, and they understand the need for Western investment into Bolivia.
40 The current government ran by President Evo Morales was elected by the Indian majority in the country. He is the first Indian president since the Spanish arrived 500 years ago, and the mandate that he was elected on was to make the lives of native Indians particularly in rural and remote areas much, much better than they are, and to this end, the mining industry and
45 Western investment is important in the country because that’s one way that the lives of the Indian majority can be directly impacted on positively.
We’re working very closely with the village of Amayapampa which is right next to where the project is and the surrounding villagers to develop this project, and right now, the relationship between the Company and the locals is as good as it’s ever been, very, very positive. One of the other positive things about Bolivia is that it does have a strong mining culture. Mining is very important to the country, as I’ve said previously, and it’s got a well-developed
5 regulatory framework for the mining industry business. Well, no doubt, you have seen on the news over the last 10 days or so that there’s been a political strife in the country, but the good news is that in the last couple of days, the President and the protectors of the Far Eastern Departments have been able to sit down and are working at a deal so that those political
10 difficulties are a thing of the past.
The thing that attracts Republic and attracted us to Bolivia in the first place was its mineral potential. When we first set the Company up, our technical people, our geologists, had a lot of experience in the orogenic sediment
15 hosted gold province of Central Victoria. Republic’s first projects as I said were in Far North Queensland where the geology is exactly the same, and that’s what took us to Bolivia in the first place, the geology of the Altiplano in large measure is exactly the same as Central Victoria and exactly the same as Far North Queensland and offers the same huge potential.
20
That’s the geological belt. It’s in the western part of the country, the Andes Mountains, in the low lands in the east bordering onto the Western border with Brazil. There’s a very large, what is called, the Bolivian Precambrian Shield, and very large greenstone belt that offers great potential as well.
25
Bolivia is being well looked at over the last 30 years by many of the world’s geological surveys and there’s a lot of good information available in Bolivia from the federal government Geological Survey agency, Sergiotechmin, which is modernized its operations with the assistance of the Geological
30 Survey from Canada in very recent times so that much of the information it’s got is available digitally and much of it in English.
Bolivia has some of the world’s largest historic silver and tin deposits, but it’s also very prospective for gold, which is where Amayapampa is, for antimony,
35 tungsten, copper, lead, zinc, iron ores -- it’s got one of the world’s biggest undeveloped iron ore projects, nickel, uranium, manganese, the list goes on. It’s a very, very well-endowed country for the minerals prospective. The new government is modernising Bolivia’s Mining Code to reflect conditions that exist in Australia in an effort to stimulate exploration and to further the mining
40 industry.
The next slide looks at some of the major projects that are in Bolivia, and I’ll talk a bit more about those in a few seconds. But listeners will be able to see the San Cristobal project in the southwest of the country and the San
45 Bartolome project not really far from it. Amayapampa sits just to the north of those two projects. Off in the east on the border with Brazil is the El Mutun iron ore project.
There have been a number of very big projects commenced in the last 3 or 4 years or committed to. The three biggest: Apex Silver is at San Cristobal project which costs around about US$750 million to construct. That’s been in production now for about 12 months and is progressing very, very well. In
5 more recent times, Coeur d’Alene has just completed construction of its US$135 million San Bartolome silver mine on the side of the Cerro Rico in Potosi, the world’s most famous and richest silver region. Then 12 months to 2 years ago, the Indian company, Jindal Steel and Power has been negotiating a contract with the Bolivian government to develop the massive El
10 Mutun iron ore project that sits on border with Brazil. Jindal had committed to spending US$2.3 billion on this project over the next 10 years to build an integrated iron ore and steel development, and there are lots of other Western companies, the same size as Republic or even larger, that are looking and exploring and developing projects that is similar to the republics
15 at Amayapampa project. So, it is a country where the projects of first class and people are coming there to work and spend significant amounts of money.
One of the Republic’s strengths in being able to operate in a country that is
20 remote from Australia such as Bolivia is the fact that we’ve been able to assemble a fantastic team of people. We’ve got a mining engineer from Bolivia, a man named Juan Cabrera. He’s probably the most pre-eminent mining engineer in the country, formerly a President of Comibol – the state-owned mining company. One of the most crucial things in dealing in a foreign
25 regime that we have is to make sure that your people are well connected and Juan is very, very well connected in the mining industry. We have a lady by the name of Maria Esther Jitton, a lawyer with over 10 years of experience in the mining industry in Bolivia who does the administration work. We’ve got two very senior geologists, Herbert Chavez and Guillermo Cordero -- both
30 with many, many years of experience in Bolivia and in other countries in Latin America. We’ve got a gentleman by the name of Ademar Pinto, who’s the Manager at the camp at Amayapampa. A role that he fulfilled for about the last eight years and one of the important things about Ademar is that he’s been able to get a real relationship with the locals so he knows what’s going
35 on and to have somebody on the ground who knows exactly what’s happening has been vital.
The Company is very aware of what it needs to do from a social perspective, and to that end, they’re currently employing seven teachers for the local
40 schools. The local schools, as of last month, have got 525 kids being taught, so we’re contributing to the salaries of the seven teachers at the local schools. We’re also paying the salary of a nurse in a clinic in the village of Amayapampa and we’ve got a major training program on for our workforce in the village of Amayapampa and the surrounding villages where we’ve got 265
45 people employed with six people from a contract training company carrying out that training project for the company.
The next slide shows a picture of the hill at Amayapampa (inaudible) (0:11:36) workings. We sort of photographed it. The mining industry was used to seeing in Western Australia 20 or 25 years ago. This sort of thing does not exit in Western Australia or indeed anywhere in Australia now because there’s been more depth. But projects like Amayapampa are relatively common still in Bolivia. As I said earlier on, the geology, Amayapampa and a
5 large part of the Andes in Western Bolivia is exactly the same as what we used to in Far North Queensland and exactly the same as what we were used to when we worked in Central Victoria. We’ve got an ore body there that’s between 30 m and 70 m in width, about a kilometre-and-a-half long, and it’s still open along strike and at depth. The project where the original owners did
10 enough drilling to develop a resource to get the feasibility study finished, but there’s still a lot more potential at Amayapampa around in the surrounding concessions that the company owns. Importantly, the ore at Amayapampa is free milling with most of the gold to be recovered by gravity techniques.
15 Amayapampa is a mature project. It’s been around for a number of years. It’s had a number of feasibility studies carried out on it, so nearly all the work has been done. It hasn’t gone into production because those feasibility studies all coincided with periods poor gold price. The current gold price is in the US$900 region. Completion of the updated feasibility study by Republic on
20 Amayapampa is a crucial aspect that the Company is working towards, so that Amayapampa can transform Republic Gold from being an exploration company into a producing company.
The next slide gives some statistics of the most recent update of
25 Amayapampa’s feasibility carried out in 2005. There’s a resource there, mostly in the Measured and Indicated categories of 720,000 ounces. The feasibility studies have been done with the view to treatment plant, treating about 850,000 tonnes a year. It’s got a very low stripping ratio, less than 2:1 based on the work done in 2005. Back then, initial production was being
30 targeted at 50,000 ounces a year and the start-up capital cost is relatively low. Those costs will certainly rise by the time Republic’s finished its feasibility study, but again, in the $900 announced gold market, the projects can be very exciting.
35 There are a number of things that we’re doing to enhance the project, incomplete economic modelling that the company has recently carried out at the current gold price suggested the cash flow before tax of about US$150 million and an NPV at 10% discount rate at US$67 million, so pretty good result. We’ve got the Denver-based engineering firm, Lyntek, working on our
40 feasibility re-costing and re-designing the plant. Lyntek has done the engineering studies for all the previous feasibilities, so he is well versed with Amayapampa, and what the company is looking at doing is, starting initially at 2,400 tonnes a day which is about the 850,000-tonne-a-year mark and rapidly looking to increase the size of the plant to the 4800-tonne-a-day mark. The
45 previous conceptual work that we’ve done on the project suggests that there is very good potential for a much larger open pit than has been envisaged in previous feasibility studies with the current gold price and with the Inferred material that sits largely beneath the pit. So, the company has just started the drilling program in part seeking to investigate the Inferred material at the bottom of the pit and trying to prove more of that material up and put that material into the high quality resource categories of Measured and Indicated. In my mind, I’m looking for a resource upgrade once we’ve finished this drilling program to get the Amayapampa resource up to somewhere between
5 1 million and 1.5 million ounces and that’s the fairly realistic target.
Working in a country like Bolivia and particularly in the Altiplano is not without its challenges. It’s not straightforward. There’s a lot of hard work that’s got to be done. Some of the challenges that we’re facing is the need to relocate the
10 site of the tailings dam to one that’s more socially acceptable. We’ve chosen a site. We started initial geotechnical investigations. Everything that we’ve done so far says that this is a very good site and has the added benefit of being a lot more amenable to a tailings dam. So, the tailings dam wall is expected to be a lot cheaper than the wall for the original site. Because we’re
15 working in the Altiplano, it’s quite an arid part of the world, so we’ve got to look at water supply issues very carefully. We’re at 4000 m to 4100 m above sea level, so the altitude is definitely an issue. It will take time to adjust to the altitude of the Bolivia in Altiplano. For us, Westerners, going there, it’s not particularly easy. We have started a training program, as I’ve mentioned, for
20 our local workforce and that’s not without its challenges. A lot of the local people haven’t had adequate schooling. Some haven’t had any schooling at all, so we’re having difficulties with the basics – reading, writing, and getting them good discipline to turn out for work each day and work there 8 hours, but with those difficulties, the training company and the trainers that we’re
25 using are doing a very, very good job. We’ve got a number of social issues we’ve got to look at. The main one is to get general acceptance in the community for the project. We do have a workforce that’s very content and is very supportive. Relation between the Company and the local union and the federal union as miners in Bolivia and the community leaders is an all-time
30 high. One of the other issues that companies have always got to address in South America is tenure. There’s always a tenure issue. Amayapampa is no different to any other project.
The work that we’ve got to do – importantly, we’ve got to continue addressing
35 the social matters. We can’t think that just because we’ve got a good relationship with the locals at the moment, it doesn’t mean that we can stop doing that work, we can’t drop the ball. We’ve got to keep progressing on the social front. We’ve got to monitor the tenure issues of the company at the project. There were two that we were faced with when we worked at
40 Amayapampa just at the start of this year. The first one of those we’ve successfully concluded. We’re working through on the previous geological data and issues that have come out of that and we’re looking at a new approach to the resource estimation modelling that will carry out once this current drilling program is complete.
45
We’ve got to deal with three sorts of data in a resource model – diamond drill core, reverse circulation chips, and undergoing channel sampling, and each of those has got its own issues, and having three sets of different data in a geological model brings about some issues that we’ve got to deal with. We’ve got to look carefully at the channel sampling – the underground channel sampling that carries a large proportion of the data and it carries the highest grades. So one of the objectives of the current drilling program is to validate the sample grades of some of these channel samplings so when we do our
5 data resource approximately in 2 or 3 months’ time when the drilling programs finished, we’ll include the major data validation project within that resource upgrade and look to lower the risk on the grade estimate. Although we’ll probably find that our risks increase on a marginal tonnages associated with this resource but not on the core tonnage of the whole resource that’s
10 going to be based on.
So, we have started the 10-drillhole diamond program. It started on the weekend to confirm the good grades from the channel samples and to increase the resource base particularly at the bottom of the pit and probably
15 on the western side of the pit. We’re also going to do quite a bit of surface work, some surface costing and mapping and some short precaution call so that we can get some detailed information on the resource in about 10 m or so of the ore body as with many open pits. That’s an area that’s least understood because there’s least data, so in tandem with the drilling, it’s
20 going to be a surface sampling and mapping program so that we can get the best information we can for that crucial first production area that’s sort of 10 m of the pit.
Next slide is showing the Amayapampa block model. The gold bits, and a
25 conceptual optimised open pit draped around it, the blue outline. (Inaudible) (0:21:52) can see, looking at the slide that a lot of the resource does sit beneath the existing optimised pit and that’s the resource that we want to take from the Inferred category up into the Measured and Indicated categories so that we can have a significantly larger project when we
30 conclude our feasibility study.
My last slide concludes with a few points – Bolivia is a challenging country. There’s no question. It’s challenging from a social perspective. It’s physically challenging because of the altitude, but it has incredible geological potential.
35 The projects in Bolivia are quite extraordinary. So the challenges that we face are more than offset by the geological potential of the country. We have been there for three years now. We’ve done the hard yards, I think, and we’re now in a position to strike, first of all, with the conclusion of the Amayapampa feasibility study which I hope will be fairly next calendar year, and then get
40 Amayapampa into production, and look at other projects that are sitting there, lying idle at the moment that are very, very worthwhile.
One of the important points for people to live with this that we did go there because of the geological setting of Altiplano. Those team of geologists
45 knows a lot about the geological setting of the areas that we’re looking at so we are in the right part of the world and Amayapampa as I said (inaudible) (0:23:34) feasibility study should be concluded earlier,. These are near-term production opportunities with great potential, the project that can turn Republic Gold from being an explorer into being a producer, and there are lots of exciting opportunities, some of which we’re looking at and hopefully there’ll be some news coming out on one or more of those over the next six months.
5 Thanks for listening very much.
PRESENTATION CONCLUDED
Contact brr@brr.com.au for more information
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