Firstly the sense I got from the exploration team was that they were very excited about both the Hellyer tenement now that the Fossey ore body had developed into a larger system that included Fossey East and McKay and also their Lake Margaret target.
On the Hellyer tenement the exploration manager was, without over-cooking it, champing at the bit to drill out McKay and see what they'd found. The drill hole at McKay that intersected high grade BMS was the highest grade ore on the tenement to-date.
Whilst I'm no geologist it would seem logical that the highest grade ore discovery on the tenement in it's history is probably not a small anomaly, but we'll have to wait on this.
From an intellectual perspective I think their heads were spinning with the implications of the Fossey discovery and the geological re-interpretation of the ground.
Historically, VMS ore bodies lie flat and horizontal as they are precipitated out from black smokers and settle on the sea floor. Fossey/ Fossey East and McKay seem to have formed down into the vent of a black smoker (my novice interpretation of what I was told).
As I said before they have lots of targets to follow up on within the Hellyer tenement. Note that the exploration budget allocated in the rights issue is very sizable ($3.7-6.3m depending upon whether we raise $8-10.7m).
IMO the budget is large because they have some definite targets. The ones that I know about are:
(1) McKay - discovery (2) Switchback - discovery of clasts (?? ore body '100's' of metres away ??) (3) D Zone - virgin ground below the horizon zone between Hellyer (16mt) and Que River (3.3mt) (4) South of Que River - Matrix identified high priority with little historical drilling to date (for whatever reason)
In addition, due to budget constraints, only one hole has been drilled at Lake Margaret. The exploration manager did his Phd at Mt. Lyell (just across the southern valley) and believes that the geology is the same... Their first hole found what they expected but, as stated, started too far away from the contact zone... having a chat in the pub about it, I think they are VERY keen to get back there.
In terms of the gold project; The tenement is quite large and around the Western part it is very flat and there are truck loads of possible Mill sites to choose from that shouldn't present any construction issues. EVG are utilising a slurry pipeline for part of their ore/ tailings movements and I would imagine that BSM would look to do the same.
The Barge is actually in good condition, despite the photo. It is kept commercially certified by the Maritime Authorities and the pumping and dredging equipment all looked in good order.
There was a range of shore based infrastructure including tanks and storage facilities.
As 1trader stated, there is a lot of sunk capex invested here and in conjunction with the Hellyer installed infrastructure I would be very surprised if the final capex did not drop considerably from the figures reported in the scoping study.
In terms of any environmental issues or legacy concerns I don't think that there will be problems. The tailings dam has ALWAYS discharged Zn into the run off stream at levels higher that mandated under Aberfoyle and Intec. Since BSM has taken over the tenement they have been able to drop the Zn discharge % significantly.
The importance of this is that BSM are considered a credible operator with high environmental standards. This should make the permitting process with the Tasmanian Government quicker and smoother.
Another important note is that sulphide ore is acidic. The Albion process neutralizes this acid as part of the process and thus improves environmental outcomes as part of normal operations. I would think that the Tasmanian Government would welcome this type of activity that gives them:
(1) An improved environmental outcome (2) State royalties (3) Employment
Hope this helps mate.
Cheers John
BSM Price at posting:
20.3¢ Sentiment: Buy Disclosure: Held
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