second large buyer, page-2

Ian Gandel has been buying and a lot of money always follows him

"Between them, Alkane and Consolidated controlled more than 1500 square kilometres of tenements in the Pilbara region of Western Australia, with both land holdings known to be rich in iron ore “paleochannels”, or ancient river beds in which iron ore has been deposited. In Alkane’s case its tenements where originally explored for diamonds, unsuccessfully. But, in the process millions of tonnes of pisolite ,or channel iron, was discovered – but for which no-one imagined there to be a market, until China went boom about five years ago. The immediate aim of the new BC Iron is to prove up between 200-and-600 million tonnes of pisolite, and then look at a transport option with two nearby rail systems, those of BHP Billiton and Fortescue Metals.

BC Iron, however, is only part of the Alkane revival. Chief executive, Ian Chalmers, told Minesite that the two projects keeping him awake at night were Wyoming, where a development decision gets ever closer, and the McPhillamy’s discovery which has the potential to become a world-class gold and zinc project. “We’re still very much committed to getting Wyoming to a decision to go,” Chalmers said. “We need to do a little more drilling, and the rig is due there next week. When we get the next set of results we should be in position to make a development commitment in the next two-to-three months.” Chalmers said tidying up loose ends, and testing a new area within Wyoming were necessary to lift the project to a stage where it could support an operation producing between 60,000 and 70,000 ounces of gold a year. “Wyoming is by far our most advanced project, and I think it’s important that we get that into production before we get too far ahead with our other projects.”

Having a bird in the hand is important for Alkane which has been looking for several years to find a mine to replace its former flagship, the Peak Hill mine. But the challenge for Chalmers is to keep his eye on the Wyoming ball just as McPhillamy’s emerges as a potential company-maker. Precisely what Alkane, and its partner in the project, Newmont Mining, have at McPhillamy’s will only be answered by more drilling, but it does look like a major mineralised system has been discovered in a region of NSW rich in world-class mines. Drilling so far has revealed thick intersections of mineralisation in two distinct zones, one rich in gold, the other in zinc. Best result is a 123 metre thick slice assaying 1.96 g/t gold starting at the surface. A series of wide zinc intersections assaying more than 1 % zinc have also been obtained.

“This looks to be a very interesting structure,” Chalmers said of McPhillamy’s. “It’s not like anything we’ve seen before. There appear to be three distinct mineralised zones, western, eastern, and a discrete zinc zone. We can’t see any connection between the zones, and it is worth noting that there is no zinc in the gold zones and only a small amount of gold in the zinc zone.” The significance of the separate zones is that any future processing would be simplified because one zone would not contaminate the other. “We’ve got a long way to go, but the early results are very encouraging,” Chalmers said. “There’s little doubt that any future mining would be open cut because it’s such a big, broad system with very little surface cover.”

The fourth duck in Alkane’s row is the Dubbo zirconia project, a potential development which has proved to be frustrating in the extreme. A series of near-miss starts with partners has kept Dubbo on the back-foot, but never to the point of being abandoned. “It’s still extremely important for us,” Chalmers said. The latest plan involves construction of a demonstration plant, partly-funded with a A$3.3 million development grant from the Australian Government. “We’re on our own this time, planning to run the demonstration plant for a minimum of six months, but most likely 12 months.” Chalmers said the aim was to produce “substantial volumes of product” which could be sent to prospective customers. “In 2002 we produced kilograms of material, and everyone said this is nice, but then asked when could we sent 50 or 100kg samples, and that’s what this demo plant is all about.”