Iberian Resources Remains Reticent About Its Undoubted Successes...

Iberian Resources Remains Reticent About Its Undoubted Successes in Armenia and Portugal.

By Jack Hammer

These days following the collapse of the Soviet Union and Israel’s inclusion in Eurovision, definitions of what constitutes Europe have been stretched right around the edges of the Asian part of Turkey. Iberian Resources is yet another company pushing these limits with the laboured marketing tagline: “Emerging European Gold Producer”. But allowing that Armenia is in Europe, Iberian has 1.75m ounces of gold equivalent in projects at either end of the continent – none in Spain incidentally - but two in Armenia and two in Portugal.

From the far shores of Australia, deep in the heart of Perth, Armenia may well look like Europe. Whether or not that’s how the directors see the world is hard to ascertain however, as for some reason, in spite of repeated attempts to get in touch, they seem to want to keep their own counsel. Admittedly the time distance between Australia and the UK is something of a hindrance to effective communication, but there are times - early in the morning in the UK, for example - when the waking hours of Perth and London do coincide. Iberian’s directors have been leaving the office early, lately, though, and unfortunately not in the mood to return calls or reply to emails. Maybe that’s because they’ve been busy preparing for a site visit to Armenia for senior investors that’s recently taken place. Or maybe it’s because they have no interest in keeping any existing or potential UK investors informed. Either way it has to be something of a rarity: a company run by reticent Australian miners.

This reticence is a shame, as Iberian has what look like some potentially interesting assets. Certainly Jesse James, analyst with Boston-based fund Geologic Resource Partners, is happy with the way things are going so far. Geologic Resource has a sizeable investment in Iberian, and merits an invitation to Armenia to have a look for itself. The rest of us mortals take what snippets of gossip we can get and wish the silent ones well.

The key asset is the Lichkvaz gold project in Armenia. There the company has 8.86 metres tonnes grading 3.78 g/t gold, 0.31 % copper, and 23.9 g/t silver, giving approximately 1.4million ounces of gold equivalent. Reporting in equivalents is no longer allowed under the AIM guidelines, thanks to Westhouse analyst Robyn Storer’s intervention with the stock exchange, but it’s still perfectly acceptable in Australia. In any case Lichkvaz isn’t a new operation so although bold statements from Iberia that it should be able to produce at a total cash operating cost of US$200 per ounce of gold equivalent may be open to interpretation depending on relative metals prices, the project has a track record of successful production to fall back on.

Indeed there’s 25kms of underground development on Lichkvaz and the nearby Terterasar mines that’s also been given an equivalent value - US$25million in today’s money, apparently. Australian broker Patersons estimates that initial production, due to commence in the fourth quarter of the current year, will amount to 70,000 ounces in concentrate. The broker forecasts net profits of A$7.9million for the year to June 2007. On top of that there’s not been any exploration around Lichkvaz for twenty years, and it’s open in all directions so there could be considerable upside in Patersons’ A69 cents per share valuation on the project. The shares are currently trading at A68 cents.

Meanwhile in Portugal a pre-feasibility study on Iberian’s 610,000 ounce Montemor project is underway. Montemor consists of several different targets, but following a second major drill programme in March, it looks as though low strip open-cut operations will be viable on all of them. Patersons only assigns a A$7.8million valuation to the Portuguese assets, or A8 cents per share, and reckons that Lichkvaz remains the focus for Iberian for the time being. Perhaps the management at Iberian might see their way to getting in touch to let us know if the Patersons assessment is correct. It is certainly not like Matt Wood to be backward at coming forward.

Companies featured in this Story
Iberian Resources Ltd (ASX-IBR)