NB: I'm not sure if this article has already been posted on the...

NB: I'm not sure if this article has already been posted on the Exco threads, but I don't recall having seen it. - Tweets (:
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[Source: www.businessreviewaustralia.com]
Link to Article: Please Click Here!

From Gold Prospector To Copper Producer
Written By: Chris Herden | Thu Nov 4, 2010

Keen investors and a stream of gold give Exco Resources an enviable range of options to proceed with its next development.


Rock samples, NW Queensland

Exco Resources Ltd, an ASX listed exploration and mining company founded in 1998, is soldiering forward on two key Australian based projects. The flourishing output of the first of these, the White Dam Gold Project, is a veritable indication that Exco has made the transition from prospecting junior to mid-tier producer.

In April this year, a rich lode started to pour from the South Australian mine - a 75 per cent joint operating venture with the Polymetals Group Pty Ltd (Polymetals). Already the White Dam mine is exceeding expectations with production levels nearly 30 per cent above target. Exco's share in White Dam's first five months of operation is more than 20,000 ounces.

"White Dam means we now make some money rather than just spending it," says Exco Resources Managing Director, Michael Anderson. "Our ambition is to build a sizeable mining company with multiple projects and if everything unfolds, as we are hoping in Cloncurry, we will have a dual project company within the next year or two."

BHP Billiton's divesture of Cloncurry mining leases during the late 1990s was the embryo of Exco Resources. Today, Exco holds approximately 4,000 sq kilometres of copper rich tenements in Cloncurry, Queensland. As it nears the final stages of its definitive feasibility studies (DFS), the junior player is in the enviable position of choosing from a range of stand-alone or joint venture ore-supply options.

"A lot of time and money has been put into the Cloncurry package over the last 12 years and we now have a sizeable resource base," Anderson says. "A lot of people have come into the area since and we feel we've had a 'first-mover' advantage on what is some of the best geology around."

Earlier this year, Exco reported a more than doubling of its resource estimate for the modest in size, but high-grade, Mt Colin deposit positioned halfway between Mt Isa and Cloncurry. A targeted exploration programme has commenced at Hazel Creek where previous drilling has identified numerous ore grade intersections.

"The Mt Isa Belt, that whole area north and south of Cloncurry, is highly prospective and the assets we have there are shaped to produce a pipeline of projects for us."

The company is looking at various scenarios and these include a collaborative ore processing arrangement with Xstrata at the nearby Ernest Henry Mine which has the milling infrastructure to concentrate ore into a product ready for smelting. But an agreement announced in August 2010 to raise $4.9 million via the issue of shares to the Singapore based Sin-Tang Development Pte Ltd (Sin Tang) may prove to be the key sweetener for a stand-alone endeavour.

"The deal with Sin-Tang demonstrates we have alternatives and we're mindful of creating the best value proposition for shareholders," Anderson says. "We still have time to see how the Xstrata situation plays out."

Exco is well funded to build its own ore processing facility but replicating infrastructure that already exists next door could erode the project's value and due to the proximity of Exco's critical mass of resources (Cloncurry has an established resource base of more than 55Mt), the highest value proposition is for these ores to be milled at Xstrata's Ernest Henry Mine. Ernest Henry is producing copper concentrate at only 35 per cent of typical capacity. Given Exco's flexibility regarding the commercial structure of a possible joint venture with Xstrata, a partnership could prove a viable venture for both parties and bring the CCP timetable forward.

"We will need Xstrata's cooperation and of course we are pursuing that."

The challenges of getting new projects online is ongoing Anderson says. Regulations and approval requirements get tougher and tougher each year, leading to protracted gestation periods which test the market's patience.

"Particularly when you're a junior company trying to get your first project up. We've done that with White Dam which is providing us with sustained cash flow."

Exco's most important partner is Ivanhoe Australia. Ivanhoe and another shareholder, WH Soul Pattinson, are very active in the Cloncurry region with a portfolio of projects taking shape.

"They've been a tremendous 'shot in the arm' for the region. Lots of our shareholders have been with us for a long time and are enjoying the recent re-rating we�ve had."

Exco has engaged numerous external consultants and contractors to carry out the raft of mining and engineering studies required. The company has more than 20 full-time employees. It is hardly surprising Anderson has seen little staff turnover in the four and a half years he has been with the organisation as the majority of Exco's people have a stake in the business through share options and bonus schemes.

"There is a lot of continuity from our key people and everyone understands the business which is great from a motivational perspective. Everyone is linked to the success of the company."

In terms of lean practices, a cost-effective approach to the use of hardware, resources and recycling practices is adopted. All this will come to the fore when Exco is a much larger organisation.

"We'll leave the new advances to the big multi-national companies with big deep pockets and research budgets."

The company is equally pragmatic in its view of new technologies - always looking to improve and optimise but often these exercises are variations on what has gone on before. Exco's methods are tried and tested and have been proven in the market many times before.

"For a company like ours, when you start talking technological advances it tends to put investors off because it suggests you're trying to do something new," Anderson says. "If we do build our own facility it will be a traditional crushing and milling flotation circuit to produce a copper gold concentrate for sale."

Although Exco intends to extend the mine life of White Dam, which is generating worthwhile cash flows, the primary focus is now the Cloncurry development and its A$200 million price tag. Leading global engineering and project delivery business, AMEC Minproc, are helping negotiate final approvals which will form the basis of Exco's mining lease applications.

"We have the basics in place but need to put some flesh on the bones," confides Anderson. "We still need to do a detailed design of the plant but until we know we are going to build we won't be racing off down that path."

Michael Anderson studied in London at the Royal School of Mines and began his geology career with Anglo American in South Africa. He pursued various business management and development roles in the metallurgical and engineering industry before venturing into the 'junior mining game'.

"A six man management team and tremendous support staff has been the heart and sole of Exco and now we've got a good group of assets, a good team of people. Our goal is to deliver a company with value for shareholders - a simple ethos we never lose sight of."


Ends.