John Nitschke, the well-credentialed chief executive of the lightly capitalised Venturex Resources (ASX:VXR), has been out and about telling the market that the group has the right metals from the right project at the right time.
Nitschke was talking about Venturex’s Sulphur Springs zinc/copper project, about 145km south-east of Port Hedland in Western Australia. Funnily enough, it has long been considered of secondary interest to the group’s plans to revive its Whim Creek copper/zinc project to the west of Port Hedland as a producer by the end of 2018.
But a value enhancing study on Sulphur Springs has come up trumps, giving real legitimacy to Nitschke’s call that it’s one for the times, assuming of course that the $18 million company (after its shares popped a none too shabby 28 per cent to a princely price of 0.9c in response to the study) pins down the $180m or so to get the thing in to production.
Whim Creek represents a quicker and lower cost route to first production but at least it can now be said that if it is exposure to zinc’s leading price strength, and copper’s rebuilding to more attractive levels, that investors want, Venturex comes with two bangs for the investor’s buck, or more correctly the investor’s cent.
Northern Star’s bustling chief executive Bill Beament saw all this coming, having positioned the gold producer on the Venturex share register with a holding of about 14 per cent. His mantra is that it is return on equity that counts. And as a substantial shareholder, the Northern Star team won’t be disappointed with key outcomes of the value enhancing study (VES), so named because after the 2012 feasibility study in to Sulphur Springs, and a 2015 optimisation study, what else could it be called?
The base case assumes a one million tonne-a-year project with an initial mine life of 12 years, producing an average of 32,000 tonnes of zinc and 12,000 tonnes of copper (in concentrates) annually. It put the pre-tax net present value at $338m, with an estimated $601m of pre-tax cash flow over the project life at a cash cost of US14c a pound.
The big game changer in the VES is that it takes in the potential to process the 800,000-odds tonnes of enriched supergene material (4.2 per cent copper) through the proposed flotation plant. Needless to say, the ability to mine high-margin near-surface material at the start of the development works wonders on project economics and capital payback, the later estimated at all of 1.6 years on quite reasonable metal price assumptions.
A permit change to accommodate the mining of the supergene material in an open-cut as distinct from the previous underground-only scenario will be required, as will confirmation that the inferred supergene resource can become an ore reserve. And then the issue of financing will need to be resolved.
But as Nitschke said earlier, we are talking about the right metals at the right time.
Platina Resources’ (ASX:PGM) managing director Rob Mosig is an affable bloke so he won’t mind it being said that he does not have the promotional skills of billionaire mining financier Robert Friedland, whose many interests include his co-chairmanship and 19.35 per cent stake in Clean TeQ (ASX:CLQ).
Having said that, the valuation difference between Platina ($32m at 13.5c a share) and Clean TeQ ($354m at 72.5c a share) is nonetheless prompting a bit of head scratching. Read More.