explorer to producer - ideal scenario., page-4

ramsay07

It is a good question that you pose and i hope too see it get a few more responses.
Here is my 2 bobs worth :

1. I dont believe that emmersons is a suitable j/v partner for 2 reasons a) just like us they are explorers and lack the skill sets we require of a mining j/v partner and b) as someone else pointed out, they dont have the financial muscle IMO.
Having said that they may well prove to be our best bet for processing Excalibur ore at Warrego, proximity is very do-able and it appears that the mill only requires about $2m and 3 months to be operational. As an aside to that i wouldnt be surprised if they could gain financial assistance for this purpose from NT Govt as i am sure they would be keen to see the Tennant Creek field brought back to life. As mentioned previously Warrego lacks a copper train but i am sure that any copper ore could be stockpiled and treated at a later date.

As an ideal scenario ;

Firstly we need positive and robust conclusions from the feasability studies. I personally see this as virtually granted considering the Grade and depth alongside record $A POG and falling operating costs.
Secondly invitations to tender would be sent out for a suitable j/v partner. I suppose there would be a number of candidates some such as Troy resources (TRY) have already been bandied around. I dont have any particular preference but for arguements sake Troy looks the goods, they have the requisite mining experience + a strong balance sheet ($60m cash/no debt) + as an added bonus they have a gold processing plant in storage should Warrego not come to the party (or perhaps TRY would prefer to run their own plant and reduce reliance on 3rd parties).

I expect that mining would be able to commence fairly quickly for a couple of reasons
a) Tenements have been mined in past and no native title encumberances exist.
b) Given current economic climate and NT Govt pro-mining stance surely a bit of fast tracking is in order after all NT govt will want revenue and jobs etc.

I would expect that the smaller shallow open pit candidates such as Nobles Nob and Rising Sun would be 1st to commence mining (feasability studies will determine best options) and would produce early cashflow. As i see it this approach has 3 major benefits
a) minimal capex and opex
b) the opportunity to optimise treatment of ore and iron out any unforeseen issues before going for the big stuff ie; Juno and M10
c) Early cashflow and profits will assist in funding drilling and further operations

Perhaps this would be a good time for a 10-1 consolidation ? Once production is well under way.

Once funding is available thru j/v or cashflow more exploration drilling can be done to further expand known resources all of which currently remain open along strike and at depth. I think we can obtain our 2m+ Oz target.

Once the shallow open pit targets have been exploited it would then be time to exploit Juno by open pit, that should keep them busy for years and then after that go after M10 via underground methods.

Now I'm getting a bit cheeky but this would perhaps be a good time to look at consolidating other Tennant Creek explorers such as emmersons and westgold via scrip or cash and extending our footprint and potential resource base.