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Diversified niches

Two old wisdoms tell us, that on the one hand it is easier to stand on four legs than on two and on the other hand that you have much better chances to survive by filling niches. What has worked for millions of years in the animality cannot be bad, the management team of Icon Resources thought and so it decided to link both wisdoms with the mining business. We spoke with Icon Resources’ Managing Director John Bishop about this business strategy and about the opportunities that Icon Resources has at current market conditions.



John, Icon Resources has approximately 15 projects in eastern Australia, covering several commodities including gold, base metal and iron ore projects. Why did you decide to diversify your portfolio of projects?

When we established the company we had two main criteria. The first was to acquire projects which were generally un-explored but with potential to be a world-class mine. One example is our Burketown iron oxide copper-gold-uranium (IOCGU) project which has a similar geophysical signature to BHP Billiton‘s Olympic Dam Mine.

The other criterion was to acquire underexplored historic mining areas. A good example is our Peel Fault Gold Project in NE NSW. This project contains several historic gold fields along a major structure with many similar features to the Californian Mother Lode which has yielded more than 100Moz, yet there has been very little exploration.

Lastly, rather than concentrate on a particular commodity, we react quickly to opportunities. Examples here include our prime project, Mt Carbine tungsten and the most recent, Collingwood tin.



Your most advanced project is the Mt. Carbine Tungsten Project in North Queensland. What makes this former mine so interesting to Icon?

Icon’s chairman, Dr Andrew White, was associated with Mt. Carbine when it closed in the mid 1980s, along with almost all of the western world’s tungsten mines due to Chinese over-production and so we were familiar with the project. Mt Carbine still contained significant resources when it closed, it was about to start a new underground mine and, importantly, there had been no exploration of the extensive old workings adjacent to the mine. So there is plenty of known resource at Mt. Carbine with a large upside potential. At the time of the acquisition we were very pleased to get a project with a known resource, which gave Icon Resources an additional and quantifiable valuation, although this has largely been ignored in the current economic climate.

Our strategy at Mt. Carbine is to start with the tailings since this will enable us to get into production quickly and at a lower cost. So we will save time and money and will get a quick cash-flow by starting with the tailings. We own 100% of Mt. Carbine and this project will help Icon make the significant step from explorer to producer.



You recently signed a memorandum of understanding with Polymetals Group Pty Ltd. for the development and operation of the Mt. Carbine tailings project. What benefit does Icon Resources get from this memorandum of understanding?

The strategy is that Polymetals Group will take over the mining and the operation and also the funding for the plant. This would be paid back from the first income and after that we would divide the income on a 50:50 basis.

The ideal timing would be a two year production from the tailings and during this time we would develop a full mine plan for the production of the main hard rock mineralization.



At the beginning of 2009 you acquired the Collingwood Tin Project from Metals X Limited, which lies about 180km north of Mt. Carbine. What assets does this project bring to Icon Resources?



The main reason we acquired the Collingwood Tin Project was for its plant which we want to relocate to Mt. Carbine and use it as the basis of the process for the Mt. Carbine tailings. However there are other assets at Collingwood: initial testing suggests that the tailings could be profitably extracted and there is also a significant underground resource remaining. There is also a new exploration license surrounding the mining leases.



What advantages and synergies does this acquisition bring for Icon Resources?

The advantage of this acquisition is the long-term underground mineral potential at Collingwood and the near-term ability to use the plant at the Mt. Carbine minesite. Icon Resources aims to become a major tin-tungsten-producer, there are many similarities between the two commodities, in their occurrence and in the production process.

The other point is that we can pay for the Collingwood acquisition in Icon Resources shares. This allows us to bring the Collingwood plant to Mt. Carbine very quickly and go into production with a relatively short amount of cash/costs.



What would a production scenario for both projects look like?

The main strategy is to start with the tailings, what can be realized in a quicker, cheaper and more effective way than mining underground. As I mentioned we made some very positive testing at Collingwood and that gives us the possibility to start production there. When the Mt. Carbine Mine was closed in the 80s they were working on an underground mine beneath the open cut, however we believe we can be more profitable and extract a larger tonnage from an expanded open cut mine.

So the strategy is to start with the Mt. Carbine tailings using the Collingwood plant with the possibility to delay this strategy by 6 months to one year if we decide to mill the Collingwood tailings first.

If we decide to start at Mt. Carbine we will go into production within the next 12 months and will operate the tailings for between 18 and 36 months depending on the production rate. During this period we will prove up the primary ore for an expanded open cut operation with a minelife of 10+ years.

What are the next steps and milestones before production start?

There is only one piece of permitting outstanding and that is for a change of activity for the mining at Mt. Carbine. We need this permit for being able to work on the tailings. This is a standard permitting step and we do not expect any problems. We will also apply to re-new a water licence from the nearby river. Again, we expect to get this, but have alternative strategies if we don’t. Down the track, we will further funding for the expansion of the open cut hard rock production which would plan to start after we have milled the tailings at Mt. Carbine.



What is the current status of your exploration work at your other projects and which of these are the most promising?

One of our other projects where we have already done a lot of work is the Peel Fault Gold Project. In times of growing gold prices we are working hard on developing our gold targets, but currently we are more focussed on Mt. Carbine. The Peel Gold Project will need more money to get drilled and therefore we are seeking a joint venture partner for the further development of this project.

Another promising project is our gold/copper project Fitzroy which has JORC defined resource of 1.75Mt @1.7% Cu + 2% Zn where we are planning some in-hole geophysics to increase the size of the resource. Surface geophysical surveys are also planned for Burketown IOCGU Project to confirm the mineralization and define drill targets.


Do you have plans for getting more interest from European shareholders in the future?

Yes we do. We have the ambition to grow Icon Resources to become a major tin and tungsten miner.

Tungsten is a not very well known material, but it is mined and manufactured in Europe. So there is a good understanding of tungsten in Europe and we are confident that we can find interested investors within Europe. Also, there is a much larger pool of potential investors in Europe than Australia. Therefore I think it makes sense to increase Icon Resource’s profile in Europe.



Why should European investors invest in Icon Resources?

Like most listed exploration companies, we are very undervalued at the moment with a market capitalization of less than 4 million AUD. Our share price does not reflect the very significant advancements Icon has made within the last couple of months. Becoming a cash-positive producer should have a significant effect on Icon Resources’ market capitalization. With our plan to mill the present tailings at Mt. Carbine and/or Collingwood we plan to make this step within the next 12 months. Both tailings projects are well advanced and both projects contain significant hard-rock resources and exploration potential. We have a minimum of capital costs, because we will get most of the requirements from the existing Collingwood plant. So in my opinion it is an excellent time for investing in Icon Resources.

ASX: III
Berlin: A0JMAE
ISIN: AU000000III2