Nice write up in Today's Australian by Barry Fitzgerald. Always...

Nice write up in Today's Australian by Barry Fitzgerald.

Always nice to get a bit extra exposure.

Carbine Resources

Twice in the last couple of years mining engineer Tony James has had to find a new job after the companies he led were taken over.

First there was the takeover of Mutiny Gold by Doray Minerals, and then zinc play Atherton Resources by private equity group Actus Minerals.

In both cases James had parlayed his 30 years-plus experience into uncovering overlooked and/or stalled projects inside ASX companies. He was on the money with Mutiny and Atherton.

He likes to do his own due diligence before settling on his next foray, and that he is a keen judge of where hidden value might lay is reflected in his last two ASX plays being snapped up a short time after his arrival.

It is for that reason that James can expect a good following on his latest foray, Carbine Resources (CRB). He has become managing director after finishing up with Atherton in November and then conducting due diligence on 25 projects.

He liked what he found with Carbine’s Mount Morgan gold-copper tailings retreatment project in central Queensland. Mount Morgan produced more than 8 million ounces of gold and 400,000 tonnes of copper between 1882 and 1980.

Apart from providing the cash that funded the oil discoveries in Iran on which the modern era BP owes its existence, the historic mining left behind more than 40 million tonnes of tailings of the nasty acidic type.

Early feasibility study work by Carbine has outlined the potential for a retreatment operation that could produce its gold as cheap as $US234 an ounce after byproduct credits for pyrite and copper.

The study envisaged an 8-year project recovering an average of 31,000 ounces of gold, 3200 tonnes of copper and 200,000 tonnes of pyrite (sulphuric acid manufacturers love the stuff) annually.

Because it will shipping out the pyrite, the project has a feel good aspect to it in that the acid drainage issue from historic mining will be at least partly mitigated, something the Queensland government, which assumed the liability back in 1993, is keen to see happen.

Carbine closed at 18.5c on Friday, giving it a market cap of about $30m. That’s kind of interesting given Patersons had a stab back in March that the initial project could generate $60 million of free cash in the first year of operations when higher grade material will be processed, and $33m annually over the remaining project life.

Patersons had a 37c price target on the stock, noting that others that failed in reprocessing Mount Morgan tailings erred by focusing only on the gold.

Carbine plans to employ a resin-in-leach process used elsewhere in the world to get the copper out, then float off a pyrite concentrate to get a clear run at getting the gold out. The byproducts help in getting to that super-lower cost of producing the gold.

Best to see what the definitive feasibility comes up with. But on James’ past form, it can be said now that Carbine is one to watch in months ahead.