However, as a polymetallic miner many may not realise just what a spectacular SILVER play BSM is.
I have been building a position for a long time and this accelerated after talking to MR (CEO of BSM) for over an hour via phone recently just before BSM commissioned their Hellyer Plant.
I'd like to highlight the silver resources and potential of BSM - the rest (Zn, Pb, Au, Cu) you can then research yourself if you like the SILVER on offer.
RESOURCES - 47m oz SILVER
(1) Fossey - is currently being mined and holds 3.5m oz SILVER. This has recently increased as the halo ore is now being mined around the high grade ore.
(2) Hellyer remnants - Left over mineralisation from the old Hellyer underground mine totals 2.1m oz SILVER and will be mined after Fossey. The mine needs to be dewatered, which will be done from the Fossey decline. In addition to this there is the potential to increase resources materially with a target of 3-5mt of stringer ore going to be drilled soon below the historic Hellyer mine.
(3) Que River (a) 960k oz SILVER from the known Zn-Pb zone (b) 772k oz SILVER from the Cu zone. Again, Que will be mined after Fossey and there is scope to extend this open pit resource with more drilling.
(4) Mt Charter - 6.9m oz SILVER. MR indicated that this resource could be DOUBLED overnight by drilling but it was a waste of energy/ money to do it presently with all the other more proximate ore to be focused on and, in his words, the market would not appreciate the significance.
(5) Fossey East - +1m oz SILVER has just been discovered and its maiden resource announced. It is likely to increase in size/ grade and is <100m from the Fossey decline, which means low capex.
(6) Hellyer tailings - 32m oz SILVER... that's right - 32m oz SILVER just sitting in a tailings dam. Already mined and sitting there. MR and BSM are currently undertaking a DFS to determine what the best option is to extract this SILVER from sulphide ore. Three options exist - CIL, Pressure Oxidation or Albion. All extract differing %'s and have differing capex an opex.
(7) Total SILVER resources: 47m oz SILVER
PRODUCTION + 1m oz pa ramping up to 3-4m oz pa
(1) Fossey is currently being mined at a +1m oz pa rate (2 years production)
(2) Fossey East is likely to be the next ore body mined with 650kt ore for +1m oz SILVER this will be processed in less than one year through the Hellyer 1.5mtpa processing plant.
(3) The DFS will be completed within 12mth and then with another 12mth construction required the Hellyer Tailings will be producing an additional 1.3-2.7m oz pa SILVER depending upon which process method BSM chooses - there is 10 years of ore to process at 1mtpa throughput.
(4) Hellyer Remnant, Que River, Mt Charter, Hellyer stockwork, new discoveries will all then be processed through the Mill as required.
SOME INTERESTING POINTS
(1) BSM has hedged a relatively small +1m oz of silver. The remainder is fully exposed to spot prices
(2) MR commented that the CIL and Pressure Oxidation processes for the Hellyer Tailings has been tested to a BFS standard in the 1990's (when SILVER was priced a lot lower) and thus technical risks are negligible.
(3) MR commented that he didn't think the market really understood that the Tailings will be processing Ag-Au in 24 mths and it was only a matter of what process would be used (POG, POS dependent of course).
(4) A bet each way: If the world economy kicks off SILVER is a great industrial metal play: If we go the other way SILVER will be a great store-of-wealth play. You can't lose!
CREAM
BSM is a polymetallic miner. SILVER is only one part of the game - although with 47m oz resources it is a good part!!
If you haven't already, do yourself a favour and read the AGM Presentation from November 2010.
IMO BSM is one of the most undervalued, lowest risk PRODUCERS of SILVER (and other stuff) around.
Cheers John
BSM Price at posting:
39.6¢ Sentiment: Buy Disclosure: Held
(20min delay)