Coppied a new interview with managing director Bruce McFadzean from www.dyor.de. More stuff about CAH also on this site.
Gold – the place to be
In current times of worldwide economic crises, many experts anticipate a coming gold hype. Mainly more and more printed dollar-notes could bring the gold price to a much higher level. Catalpa Resources wants to benefit from this possible scenario and plans to start a 100,000 ounce production from May 2010 on. We spoke with Managing Director Bruce McFadzean about his opinion of a coming gold hype and about Catalpa Resources’ chances to profit from it.
Bruce, in former times you worked about 15 years for two of the biggest world-wide commodity companies, Rio Tinto and BHP Billiton. Why did you decide just to go to Catalpa Resources? What makes Catalpa Resources so special?
I have worked with BHP from 1980 till 1985 and with Rio Tinto from 1985 till 1995. After this era I worked for a gold company, a nickel company and one iron ore company which I established. I joined Catalpa in June 2008 because I thought that gold was the place to go.
My decision to come to Catalpa Resources came from a technical point of view. In my whole career I aggregated much experience in many parts of the world with many different projects and commodities. I have a big technical background in mine evaluation and optimization. I saw that the ore body was well understood and well drilled – 64% of our reserve is in the highest confident category, which is very unusal. Metallurgically it is very simple. In total it is a big lowgrade resource which was very undervalued at that time.
Catalpa Resources is focussed on gold projects in Western Australia. Why gold and what is your opinion about the predicted coming gold hype?
I think that now is the time for gold. In my opinion the gold price could go to 1,500 to 1,600 AUD in the near future, which would be around 1,000 to 1,200 USD. No one can predict the gold price. I think the time is right for gold, for the next 3 or 4 years. It depends what effects the world-wide stimulating programs for the global economy will have and how much money will be printed for getting the economies back to the level before the beginning of the crisis. To print more money would help to get the gold price higher.
Catalpa Resources Limited has finalised a bankable feasibility study and also already completed the capital funding for the Edna May Gold Project. What makes this project so special?
When I was at Rio Tinto and at BHP Billiton I learned to tick 4 boxes:
1. Do you know your resource? Is it well drilled?
2. Is it metallurgically predictable and consistent?
3. Do you have a good revenue?
4. Do you have a good team of people?
The Edna May Gold Project ticks all these 4 boxes.
The bankable feasibility study is finished and the capital funding is almost complete now.
We are now completed at debt (67 million AUD) with the Macquarie Bank and we raised 31.4 million AUD in equity.
We will produce more than 100,000 ounces of gold per year for at least more than 10 years mine lifetime. We have hedged parts of our coming production at a price of 1,544 AUD per ounce which is more than the current market gold price which lies at about 1,220 AUD. That means that our hedge book is very much in the money. We will generate more than 70 million AUD per year in operating cash for more than 7 years.
The Edna May Gold Project has a lot lower risk than many other (gold) projects in Australia because of the amount of drilling etc..
We are the next project to really become a producing mine in Australia. That is what makes us so special. So we can come into production very quickly, the construction of the plant will be finished in about 11 months and we will produce the first ounce of gold in May 2010.
We already have a plant on site which we bought from a former Placer Dome mine named Big Bell and which will be re-constructed. The mill operated for about 18 years with material that was a lot harder than our material is. This mill has a capacity of 2.8 to 3.2 million tons per year. So it is a very big and proven mill which worked successfully since the late 80s at Placer Dome’s Big Bell Mine.
How does the mine site at Edna May look like? How about the infrastructure?
The project lies right between Perth and Kalgoorlie with 300km each way. The mine site has access to the highway, railroad (which is relatively unique), water and power lines. We have a lot of infrastructure that many mines in Australia do not have.
What are the next steps and milestones towards production?
We will start the construction of the plant in May 2009 to get finished until the planned production start in May 2010. At this moment we see no hurdles which could stop the production start at the planned start-up. 'We already have most of the requirements for the refurbishment of the plant. Most of the required parts which will be used for transportation etc. will come from mining contractors. These contractors will supply the mining equipment and we will supply the operators and all staff in the plant. This means a total of about 110 workers from which about 10 to 20 will come from contractors.
How do your production plans look like?
We will mill 2.8 million tons in year one and two and 3.2 million tons from year three onward. So we will use the full capacity of the plant, also in because of our big resource which lies at about 41 million tonnes and our big reserve which lies at about 21 million tonnes. We have a minelife of 7 years at open pit production with further underground potential at higher grades and we will produce more than 100.000 ounces per year from the open pit only.
If we start the underground mine from year 4 onward we will be able to produce more than 135,000 ounces of gold per year.
The open pit material contains 817,000 ounces of gold which we will mine completely within about 7.5 years. Together with the underground mining and other planned exploration we will have a minelife of more than 10 years.
We believe that Edna May will be the platform for Catalpa’s growth which will allow us to grow through acquisition and exploration with our ultimate goal to produce more than 500.000 ounces per year.
What potential does Edna May have furthermore?
We still have a very large exploration program at the project. Last week we were able to announce another 80.000 ounces reserve from Greenfinch, which still is open to the west and to the depth. We also have more potential at the open-pit area of Edna May and a lot of potential for the underground and regional growth.
Are you looking for more projects, maybe near the current one?
Yes, we are looking for other projects, but at the moment we are looking to get Edna May into production as quickly as possible. At the same time we are looking for growing by acquisition. We have already been approached by people from nearby the project, but it doesn’t have to be nearby. It has to have a solid orebody with simple metallurgically characteristics. We would like to build a gold production company, maybe later to include some kind of copper-gold projects.
Why should potential investors invest in Catalpa Resources right now?
We have a very well drilled orebody. We will have a fantastic cash-flow. And we have a fantastic team of experienced engineers and geologists. We are significantly undervalued. Most independent valuers have the opinion that we should be between 0.15 and 0.30 AUD. Once we are producing we suppose to see a much higher shareprice than independent valuations. We are full financed and we do not expect problems until production start in May 2010. We are in a very good and very low risk position.
ASX: CAH Berlin: A0Q86 ISIN: AU000000CAH4
CAH Price at posting:
82.5¢ Sentiment: Buy Disclosure: Not Held
