STTCOMP BAR, FA Long
Australian focused gold and base metal (Cobalt/Ni) exploration company and near term risk neutral gold producer
373,247,883 shares on issue.
Market Cap $18.6m, Cash $770k. No debt
Accumulated losses are $39,848,795 (lots of money invested in previous years)
Barra Resources Limited was incorporated on 20 June 2000. The Company's portfolio of projects was compiled largely from the expertise of its major shareholder, Barminco Pty Ltd, one of Australia’s largest underground mining contractors.
Barminco, founded in 1989 by Peter Bartlett, is now known as FMR investments. FMR owns a Greenfield’s Mill 3 kms east of Coolgardie. The mill has provided a first class toll milling facility to the gold industry for over twenty years.
FMR owns 21.89% of the issued capital.
BAR Management
Jon Young- He actually owns the most shares of any of the directors. He is chairman of Barra’s major shareholder, FMR Investments and also director private clients with Perth based national stock broking firm Patersons Securities Limited.
Gary Berrell- MD, former Executive Director of Macquarie Bank for seven years, and from my research an ultra-conservative, very astute numbers man. With poor SP performance over the years, he took a pay-cut and now earns a very most $95k per annum. This is peanuts for his calibre.
Grant Mooney- As Company Secretary, his experience extends to advice on capital raisings, mergers and acquisitions and corporate governance. Former executive Chairman of NUH (Nuheara), leaving on a high.
Gary Harvey- Exploration manager. He has over 20 years’ experience in gold and nickel exploration with extensive experience ranging from grass-roots exploration through to near-mine evaluation and resource definition on a range of gold and nickel projects throughout the Eastern Goldfields of Western Australia. He has stuck it out at Barra since 2005.......why?
Ultra Conservative Management
As per the annual report 2015 -
"Barra has worked hard to maintain financial discipline and self fund all activities. We have not had to go to the equity market in many years to fund working capital requirement. Our absolute focus is to protect and and improve the value of our shareholder investment"
Management have been very conservative and astute with their risk-neural defensive approach to running the business, turning around Barra's fortunes.....extracting every cent from assets without diluting and coming out stronger, leaner....
Balance Sheet and Kidman royalty
Currently Barra has $770,000 cash - They are due $70k in royalty subsequent to reporting period.
Outgoing expenses are currently budgeted $150,000 on exploration and development, and a very low admin burn $100,000 of per quarter. So they are running at budgeted expenses of $1m annually, and give or take some quarterly deviations these budgets have been adhered.
Besides Barra's own planned near term cash flow activities, they only have Kidman (ASX-KDR) royalty at present to rely on to cover outgoings. Their royalty from Burbanks (historical 820,00t grading 13.9g/t Au for 366,340ozs) is $25/oz, which means they require KDR to produce 40,000oz annually to cover outgoings
Several months ago Kidman changed mining contractors to highly regarded Pybar, and ceased production to undertake significant capital improvements, which effected royalty inflow, however production has now recommenced from Dahmu lode with implementation of hand held mining methods of Dahmu and Taylor.
Since Pybar mobilised to site, more than 240m of development has been completed and significant improvements have been made to the mine, including capital works to improve the underground infrastructure such as upgrading escapeways and increasing both primary and secondary ventilation capacity. Improvements have also been made to the dewatering system, the electrical reticulation and power supply and to safety standards throughout the mine. Kidman has also commenced planning for an improved water management system that will allow it to consider accessing “Burbanks Deeps”. This area around the historic 7 level is 100 vertical metres below the current limit of mine workings.
I have not seen any announcement changes to Kidman targeting 30,000oz annually. Kidman's Burbanks resource is 99,000oz oz JORC, and they completed drilling to further delineate mineralisation along extensions of the Tailor, Jesson and Hadfield Lodes and has also further defined up-dip mineralisation in the Dahmu lode. Previous reports indicated a targeted resource increase by an additional 80,000-120,000oz which would add to Barra's security.
This production target of Kidman will either be exceeded or fall short, its very much an unknown quantity, which is why Barra has mobilised with its largest shareholder FMR to create near term cash-flow generation at Burbanks North.
Burbanks North- near term cash-flow opportunity.
Barra recently formalised an agreement with its largest shareholder FMR Investments to evaluate and potentially commence an open-cut mining operation at Burbanks North within Barra’s Burbanks Project.
Under the Agreement, FMR and Barra jointly funded an 80 hole 2,450 metre infill aircore program at the Burbanks North deposit
specifically targeting the shallow oxide zone to a depth of about 40 metres, and seeking to confirm and expand the existing mineralized zone over a strike length of 200m with the aim of defining a mineable resource.
Results were spectacular and best Results Include:
15.0 metres grading 9.87 grams per tonne gold
8.0 metres grading 6.22 grams per tonne gold
5.0 metres grading 7.89 grams per tonne gold
3.0 metres grading 9.94 grams per tonne gold
3.0 metres grading 3.98 grams per tonne gold
4.0 metres grading 5.63 grams per tonne gold
5.0 metres grading 3.80 grams per tonne gold
Following a review of drilling results, the parties will enter a tribute mining agreement with the intent that FMR will mine and mill the ore. Profits will be split 35:65 in FMR’s favour, with Barra not being liable for any loss which may result from the mining, transport and milling of the ore.
The parties will now move to complete a new resource estimation and scoping study to determine whether to proceed to mining, and with those results at that shallow depth it seems inevitable.
"a decision on mining will be made in early September"
Approximately 900 metres south along strike from Burbanks North is the historical Main Lode underground mine (146,000t grading 18.3 g/t for 85,900 ozs) where the Company is planning reverse circulation (RC) and diamond drilling to test the depth extensions to the high-grade system.
Barra sees the Burbanks project area, specifically the Main Lode deposit as having excellent potential to host larger high-grade lodes at depth. An example of this potential is best demonstrated by channel sampling of the historic Level-8 by Western Mining Limited in the 1940’s which returned a spectacular pay-run of 160 metres grading 16.1g/t gold at an average width of 0.4 metres. This zone remains untested by modern drilling and will be a focus for Barra under its gold strategy moving forward.
Philips find Newminster deposit- serious potential
I really believe this is where Barra will make some real money.
Due to the sale of the Birthday Gift Mine Area to Kidman resources, Barra’s previous strategy to access Main Lode via an extension of the Birthday Gift decline is no longer a readily accessible option, and the Company restrained its activities at Main Lode and shifted its focus to Phillips Find where it successfully mined at Newminster to generate cash to maintain survival through the GFC and the ensuing period of poor market sentiment.
With market conditions now more favourable and the rise in the Australian dollar gold price, the Company believes now is the time to revisit Main Lode to realise its untapped potential.
Following the completion of recent RC drilling in May 2016 with outstanding Drilling Results the Company is
presently working on establishing a maiden JORC 2012 mineral resource for the Newminster Deposit.
This will
allow the Company an immediate option to consider the viability of early underground mining at Newminster to generate cash flow and open up further underground mining potential within the PFMC.
Approximately 10,000m of RC drilling is planned to further test down-plunge extensions to mineralisation beneath Newminster, Newhaven and Bacchus Gift.
Following RC drilling, a JORC 2012 combined mineral resource estimation for the PFMC (encompassing all three deposits) will be established.
The Company believes there is considerable potential to identify further mineralised zones which may ultimately be amenable to mining along strike and at depth, adding to the existing resource inventory to sustain a medium to long-term mining operation at Phillips Find. Previous reports indicate a
50,000-100,000oz annual target. The fact management are so conservative make this target more impressive.
History of Newminster
Mining commenced in Jan 2013, on a JV with Blue Tiger Mining starting with stage 1 JORC 28,825 tonnes grading 3.04 g/t (2817oz) to an estimated depth of 30m.
Stage 1 finished in April 2013 with 53,986 tonnes grading 2.7 g/t and took it to a depth of 42.5 metres.
For stage 2, follow up drilling was completed in July 2014, and stage 2 recommenced in May 2015 with Blue Tiger JV to take the pit 65 metres below the surface, with estimated 43,398 tonnes grading 2.83 g/t (3630 oz).
Stage 2 finished in Sept 2015 with 56,996 tonnes grading 2.4 g/t taking it to 65m depth.
Final open pit production from both stages was 111,082 tonnes grading 2.52 g/t for 9018 oz (8410 recovered)- target well and truly exceeded- And management achieved this on a shoestring. In both cases grades were only just slightly lower than forecast.
The Newmister deposit had a inferred JORC mineral resource at at Jan 2013 of 116,766 grading 3.51 g/t at 13,045 ounces. Most of the high grades came from the deeper drill intersections.
The whole reason for taking the pit to a 65m depth was to access further high grade gold mineralisation below Newminster with the aim to prove up to commence underground operations. Drilling results were outstanding.
Nuheara (NUH)- Barra's tech investment
As a vendor of part of the Quinns tenement package, Barra held approximately 10% of the issued capital of Wild Acre upon listing. From last reports its shareholding in NUH was 2,092,500.
However as per last quarterly it received $91k from proceeds of equity investment sales. Looking at the timing, and the SP around those times, it doesn't look to represent sale of their entire holding, but perhaps half of it, In which case they sold at a high price relative to current levels.
Mt Thirsty and Cobalt, and Creasy
The Mt Thirsty Project is a 50/50 joint venture between Barra and the manager of the project, Conico. The project is located 20km north-northwest of Norseman, Western Australia.
I have made it clear I am not a fan of Conico, any my down ramping of them is noted. They are being supported, and put simply, the resource is too valuable in this current Cobalt climate.
The Mt Thirsty Cobalt-Nickel Oxide deposit differs significantly from typical WA nickel laterite occurrences in that it is completely oxidized and contains high cobalt values. The mineralogy of the deposit allows leaching recoveries of approximately 95% cobalt and 80% nickel.
Due to the intense oxidation of the deposit, mining will be extremely low cost as there will be no need for blasting prior to excavation.
The majority of the deposit is shallow and flat lying, occurring only 10-15m below surface. Another advantage to the deposit is the location of the high grade resource zones. They are situated closest to the surface allowing the deposit to be high-graded during the first 3-4 years of production, dramatically reducing capital payback.
Metallurgical testing and pre-feasibility work highlighted the potential world class nature of this outstanding project.
The Mt Thirsty Project has the potential to emerge as one of the world’s top ten cobalt suppliers with capacity to deliver 3,000t of cobalt, 9,000t of nickel and 13,000t of manganese per annum during the first 3 years of production.
Based on mining 12.5 million tonnes from the Indicated Mineral Resource, two 900,000 tonnes per annum conceptual flowsheets were investigate. One utilising a paste thickener (Thickener) and the other using an ion exchange resin-in-pulp (RIP).
Early studies indicate both flowsheet options have similar capital requirements of approximately $65-70 million (including 30% contingencies on plant and equipment and $20 million for site infrastructure). Unit operating costs were estimated at $5.50/pound of cobalt for the RIP option and $5.55/pound of cobalt for the Thickener option.
Once upon a time when Metal prices were higher for Cobalt, Nickel and Manganese....the metal content was worth $6bn.
The Mt Thirsty Joint venture commissioned a new website to show-case the Mt Thirsty Cobalt Project to potential partners and investors. The new website can be viewed at
www.mthirstycobalt.com.
In order to increase confidence in the Mt Thirsty Co-Ni Oxide Deposit resource
further infill drilling is planned to convert some or all of the Inferred Resource to the Indicated Resource category, allowing an upgraded mineral resource estimate to be reported in accordance with JORC 2012.
New Applications
Two new licences (refer Figure 2) have been applied for adjacent to the existing Joint Venture tenements. One of these covers a short extension of the interpreted footwall contact north of E63/373; the footwall contact is considered prospective for Ni sulphides.
Both applications have potential for lithium-bearing pegmatites that have been mapped by the GSWA in the Mt Thirsty area. No lithium minerals were logged in deep pegmatite intersections in previous Mt Thirsty Joint Venture nickel sulphide drilling within E63/373. However, these pegmatite intersections are over 1.2km further to the east of the outcropping lithium bearing pegmatites recorded by the GSWA.
Platx/Creasy
To the North of the resource a Company called Platx owns the tenement in which they have also conducted extensive drilling and
if combined with Mt Thirsty's current estimate it would add further 30%+ to the resource estimates which currently sit at 40,000 tons Cobalt, 177000 tons Nickel. Platx is a Mark Creasy associated company who is a very successful businessman/miner in Western Australia... Refer Sirius Resources amongst others.
The black indicates the CNJ/BAR owned tenement while the pink rectangle indicates Platx's extensive drill work to the north of the Tenement.
