FOCUS MINERALS LTD
FML - Resource Rising Stars - Peter Williams, MD
Fri, 3 Oct 2008 12:30PM
Mr Peter Williams
Fri, 3 Oct 2008
12:30PM Australia/NSW
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FOCUS MINERALS LTD (FML)
ASX code: FML
Website: http://www.focusminerals.com.au
Industry: Materials
Principal Activities:
Gold production and exploration in the Coolgardie Gold Belt of Western Australia
Address:
, 68 St Georges Terrace, Level 10 Exchange House,
PERTH
WA
Phone: 08 9215 7888
Fax: 08 9215 7889
Executives & Directors
Mr Donald Taig , Chairman, Executive Director
Mr Campbell Baird , CEO
Mr Phil Lockyer , Non Exec. Director
Mr Christopher Hendricks , Independent Director
Mr Peter Williams , Chief Op. Officer
Mr Peter Cash , Investor Relations
Mr Jon Grygorcewicz , 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
FOCUS MINERALS LTD (FML) Events
Australia/NSW
FOCUS MINERALS LTD (FML)
| Production Update | Tue, 30 Jun 2009 |
| Achieves First Tonne Gold Production | Wed, 27 May 2009 |
| CEO AMEC Conference Broadcast | Mon, 25 May 2009 |
| Change in substantial holding | Fri, 8 May 2009 |
| Change of Director`s Interest Notice | Thu, 7 May 2009 |
| Change of Director`s Interest Notice | Wed, 6 May 2009 |
| Top 20 securityholders | Wed, 6 May 2009 |
| Appendix 3B | Wed, 6 May 2009 |
| VMG: Como Engineers Awarded Three Mile Hill Contract | Mon, 4 May 2009 |
| SPP Closes Oversubscribed | Fri, 1 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 PETER WILLIAMS, MANAGING DIRECTOR OF FOCUS MINERALS LTD (FML)
“Resources Rising Stars”
http://www.brr.com.au/event/52038
FRIDAY, OCTOBER 3, 2008, 12:30 PM.
FML Thanks, Jackie. Good afternoon, ladies and gentlemen. We’ve got the disclaimer for a moment. Look, quick overview of the company, we’ve got
10 cash on hand of about A$8.5 million at the moment, over 1.2 billion shares on issue, which is a lot and our market cap in this very depressed market is about 37 million. Our largest shareholder is a company called Matador Mining. These people were joint ventures in our gold projects until a couple of months ago when we raised some money to buy them out. They’ve insisted
15 on taking shares because they believed in the upside of our operations and happy to stay in there as our main investor.
I won’t dwell too much on the Board. We are very smart fellows. Between us, we’ve got about eighty years of practical mining experience and about fifty
20 years of resource finance experience. You may have heard of Phil Lockyer, he serves on the Board with some very large mining companies and who have worked together extensively in the past.
Why should you invest in us? Well, we’ve got two valuable commodities.
25 We’re in production in our gold mine and our nickel mine is ready to go, but the price is just a little too low at the moment and we’re waiting for a bit of a kick in that and then we’ll press the button. We’ve got a 100% ownership of all the Coolgardie greenstone bulk and this is the first time as well being put into the hands of one operator and we’ve got the 1.2 million tonne per annum
30 Three Mile Hill processing plant and we’re targeting 80,000 to 100,000 ounces of gold production in the next two to three years. The exploration upside is outstanding.
Our operations are focused on the Coolgardie area which is about 35 km
35 from Kalgoorlie. We’re on the main road between Kalgoorlie and Perth. We’re on the Kalgoorlie electricity grid and we’re on skiing water, so we don’t have to worry about James Smithson, (inaudible) (00:02:15). We are the consumers of some other people there.
40 So a snapshot of our lease holdings in the area, the red areas are supposed to be our gold prospects, but nobody has done any exploration on that ground in the last 200 years for nickel and (inaudible) (00:02:34) this coming calendar year. The dark little areas are areas we know that are highly mineralised with nickel. We’ve got several hits from some drilling which have been done but
45 hasn’t been followed up and we’ll be drilling that in the near future. The Nepean Nickel mine, crystal light blue area there, at the bottom there.
So just a bit of an overview, we’ve got 210 km2 in what we think is the most prospective gold and nickel ground in the Australia. You know, there’s a lot of people who got a lot more down that I’ve… there’s a lot of Australia in between the bits and pieces of minerals that are on their ground. We’ve got 1.6 million ounces in resources. We’ve got the Nepean Nickel Project and the processing plant which we’re not using at the moment, but I’ll come back and
5 explain to you why we aren’t running around (inaudible) (00:03:25).
Our first drill was in April this year from our Perseverance Deposit. Perseverance started out with a reserve of 76,000 ounces, which isn’t a lot, but I’ll elaborate on that in a minute. So I said, we’re targeting 80,000 to
10 100,000 ounces production very shortly. This year, we reduced somewhere between 55,000 and 60,000 ounces as we ran about into production. The plant that we’ve talked about and the toll treatment, we’ve mentioned a bit about that. (inaudible) (00:04:04) plant is 1.3 million tonne per annum (inaudible) (00:04:09) it’s quite a lot. (inaudible). (00:04:16) We don’t have
15 the (inaudible) (00:04:18) at the moment. So fortuitously for us on our lease at about 300 m from our own processing plant, there’s another one. The lease on that plant came up in April and as a condition of the renewal we were able to negotiate a very attractive toll milling agreement. So we have throughput capacity of 480,000 tonnes per year for ten years at a very attractive price,
20 probably just a few dollars more (inaudible) (00:04:56) plant. We’ll start our plants when we have five years (inaudible) (00:05:02) at more than a million tonnes per annum in front of us and we’ve got a significant pipeline of projects going through as I’ll explain in a minute.
25 This is the photo of going into our underground workings at the Tindals Mining area. Now, we’re currently mining from Perseverance which is the purple blob on the right there as we started out with our reserve at 76,000 ounces. We’ve been drilling it March of this year and we’re actually mining outside that original envelope. Now, it’s growing like (inaudible) (00:05:38) but
30 we haven’t had enough geologists to sit down and actually calculate what the new resource is. But my exploration manager assures me that at the end of October, his best guess was it’s well over a million tonnes now. We’re also putting a decline at this time from, if I zoom out button, from here into this area, in that blue area that’s called Countess. It has a resource of around
35 35,000, 45,000 ounces. We could have drilled it from outside and spend a bit of money out of it but we thought it would be far more effective to start mining it and drill it from inside the orebody. It also gives us a platform to drill back into the Empress steeps down here, but we already have a small resource but not nearly enough drilling to give us some new information we need, and
40 this area in here below the old Tindals mine has not been tested at all. What we’re thinking at the moment with our (inaudible) (00:06:40) all of these becomes one large orebody. (inaudible) (00:06:50) particular for several years. At the moment, we’ve got 550,000 ounces confirmed in resources. A 349,000 ounces in Indicated and a couple of 100,000 in Inferred, but as I say
45 this is quite out of date now.
Now, Coolgardie is being mined continuously since 1893, 2.4 million ounces are being taken out of there. About 2 million of those ounces have come out of that 7 km strip area where the red line is. This is the first time, as I mentioned earlier, that the whole of the Coolgardie area has been able to be amalgamated into one company’s hands and we’re now able to sit back and take a more wholistic view of the area and what we can do with it. In the past, a lot of the orebody has been actually cut by (inaudible) (00:07:53) been able
5 to exploit it properly.
The other interesting things that… nearly all the exploration that’s been done in Coolgardie is done to locate shallow oxide pits and (inaudible) (00:08:09) the extent has been very little drilling below 100 m, and most of the drillings
10 that has been done below the 100 m we’ve done. So we now have a greater understanding of the mineralisation infer of the area on how we think it gets us all hanging together and we’re targeting our exploration to make some use of that information.
15 So I’ve mentioned before about the lack of deep drilling down in Coolgardie. The green line, down the bottom, represents the surface and it’s the same line as the red line in the photograph (inaudible) (00:08:56). The location (inaudible) (00:08:57) no drilling whatsoever (inaudible) (00:09:02) about 100 m in just couple of deep holes in around here and a few more down there,
20 most of these have been run by us and we believe that the real future for Coolgardie is at the (inaudible) (00:09:17) before us.
(inaudible) (00:09:22) that all of our gold projects, but I’ll quickly go to the map. The map is about 90 km south of Coolgardie, the place for (inaudible)
25 (00:09:30). It is mined by a single guy. This is one man working by himself down there for a quite a few years. He was pulling out about a million bucks worth of gold for himself for each year and unfortunately got (inaudible) (00:09:43) and we’re able to buy the project from him. It currently has an Inferred resource of about 370,000 ounces and it’s quite a large area. The
30 individual miner, as I said, working by himself pulled up about 36,000 tonnes just under 10 g and a lot of that was treated at Jubilee Gold Mine that I was managing at the time so I had a fair idea of how good the project really was. The problem that it has 25 parallel lines that (inaudible) (00:10:17) about 4 m but generally they are less than a meter wide and the problem for us is being
35 try to determine the mining that has (inaudible) (00:10:26) and we could put another million dollars with the holes in there and still be scratching our heads about how we’re going to do it. So we came up with the idea of (inaudible) (00:10:40) putting a decline into it and driving across the ledge so (inaudible) (00:10:53) the total of the individual (inaudible) (00:10:57) it’ll give us a 3 m
40 by 3 m holes on to exploration hole (inaudible)(00:11:07) small information (inaudible) (00:11:09) for any drilling and what’s been better is it will pay for itself couple of cuts out of each of them and generate a little bit cashflow as well. At the end of that, we’ll be able to determine whether we’ve managed our small underground operation or large underground operation or whether
45 we’ve been (inaudible) (00:11:32) preference.
We’ve talked about the gold treatment and the opportunities we have to use our own mill over (inaudible) (00:11:44). Now, let’s start to talk about our Nepean Nickel Project. Nepean was the second nickel mine in Australia after Windarra. It’s 25 km south of Coolgardie on the Beechman Road. It has an Inferred resource of 591,000 tonnes at 2.2% nickel. We’ve done the feasibility study on it. We believe we can take out of that 13,000 to 15,000 tonnes of remnants that were left behind, fairly high cost and too expensive to do just
5 that at this particular nickel price. But it’s been (inaudible) (00:12:22) at the moment. It’s ready to go. Historically, it produced 32,000 tonnes at nearly 3%, all of which was treated through Western Mining’s concentrate at Kambalda. We actually refurbished the shaft and they put a (inaudible) (00:12:39) down, some geos and some miners, and the object of it was to confirm if the
10 remnant ore that we’ve been told there was actually there. So we actually mined a little bit of our nickel. We’ve had some metallurgical testing done. (inaudible) (00:12:55). It confirms the historical recoveries of about 90% and we’ve got a little part more on the surface there if you want to do some further test for (inaudible) (00:13:06).
15
There are some areas in the mine, in the upper levels, the diamond included in the reserve that I was just talking to you about, that’s slightly oxidized and there’s....but material can’t be treated through conventional concentrate because (inaudible) (00:.13:26). So we’re running a couple of (inaudible)
20 (00:13:29) test at the moment to see if we can buy a re-stock material (inaudible) (00:13:24) and if does work we’ll increase reserves significantly. But the real price for said Nepean it’s not what we know about it, but what we don’t know about it.
25 In 1987, when they stopped mining here, the gold was, you know, (inaudible) (00:13:54) a tonne, not very much, and having a bit of difficulty with the mine and they made sure that (inaudible) (00:14:00) down the bottom (inaudible) (00:14:03) material and they decided that it was sort of uneconomic to continue to mine it, so nobody knows what’s below there. So it’s currently
30 mined. We’ve finished the 500 m and we’re about to put in four 1,000 m holes and do some electromagnetic work down there to see if we can find the extents into the orebody. I mean, not one of these old nickel mines in Western Australia has ever finished that (inaudible) (00:14:29) and everyone, all the other guys who have gone back into these old mines have found more
35 ore high grade at depth. So,we don’t think that we are the only ones that God didn’t look after. I guess, those are just few examples. The Managing Director of Western Areas had a look at our work on Nepean and his opinion is that this was in fact, (inaudible) (00:14:54) of what they’ve found in Flying Fox which has just discovered another 84,000 nickel tonnes at the bottom.
40
So there are actually questions before, why should you invest in us? Well, we are gold producers. We will be nickel producers. We’ve got extremely perfective resource and we will be producing 80,000 to 100,000 ounces during the year or two and our exploration upside in both nickel and gold is
45 outstanding, and we are cash flow positive. All foreseeable future projects, we’ll fund out of our cash flow. We don’t have to go back to the market or borrow any money. We’ve got A$8.5 million bucks in the bank at the moment. They’ve not allowed any increase as we process more of our ore. In fact, right now we’re doing our (inaudible) (00:15:55) campaign and we’ll probably have about 22,000 ounces by the end of this calendar year and as I said for the financial year will be 55,000 to 60,000 ounces. Our cash-cost at the moment of $470, it could be a little artificially low because we’re mostly in development at the moment, but the…oh, you will be surprised that
5 (inaudible) (00:16:19)
We have a very strong pipeline of projects (inaudible) (00:16:24) underground Tindal’s mining centre, all of that is going to keep us going for a long time. We will also do a pre-feasibility studies on a couple of underground projects.
10 There’s one right beside that processing plant, about 2 km away, and we’ve already identified a 196,000 ounces in resources in that one and we’ll do a bit more drilling and a bit more work on, we’ll probably be mining that I’d say towards the middle of next year.
15 The Nepean Nickel Project, if we do find significant amounts of ore below the mine, the fact that the remnant mining is high cost, it will be negated by the fact that (inaudible) (00:17:04) bottom of the mine and mine the nickel that we haven’t yet discovered. We have a very experienced Board but heard everyone say this but we are all practical guys, all miners apart from two
20 resource finance guys and we have a very experienced management team, young guys (inaudible) (00:17:11) two to three days every week at the main site (inaudible) (00:17:36) like yourself and it’s all going extremely well for us.
Thank you very much.
PRESENTATION CONCLUDED
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