Transcription of Finance News Network Interview with Metallica Minerals Limited (ASX:MLM) CEO, Simon Siesarewich Clive Tompkins: Hello I’m Clive Tompkins for the Finance News Network. Joining me from Metallica Minerals Limited
(ASX:MLM) is CEO, Simon Siesarewich. Simon, welcome to FNN.
Simon Siesarewich: Thanks for having me.
Clive Tompkins: First up, can you start with an introduction to Metallica Minerals?
Simon Siesarewich: Metallica’s an ASX listed junior resource company. We’ve got a market cap of about $7 million or $8 million; we’ve been listed for about 11 years. And we’re very much focused on our direct shipping bauxite project called Urquhart Point, which is up near Weipa in northern Queensland.
Clive Tompkins: Now to your Cape York heavy mineral sand and bauxite project, where the Urquhart bauxite project seems to be the priority. What does it contain?
Simon Siesarewich: Urquhart bauxite’s got about 7.5/8 million tonnes in direct shipping bauxite. It’s located directly opposite Weipa, so it’s on deep water. We’re very much focused on bringing that into production. The benefit that project has is twofold. Firstly, it’s a low temperature bauxite, which is sought after in the world market and secondly, it’s on deep water. So the capital to bring that on is extremely low and we can bring that into production very very quickly, with minimal requirements on capital and also on approvals.
Clive Tompkins: What’s been taking place?
Simon Siesarewich: We’ve been busy, very very busy on approvals, which isn’t all that sexy unfortunately. But it’s a lot of the grunt work that we need to do, to make sure we have all our approvals in place that’ll make this happen. Critically, what we’ve done is de-risk the project by delivering a logistic solution. So 15 kilometres away from Urquhart Point is another small bauxite mine, called Hey Point. We’ve executed heads of agreement with Hey Point to do the logistic services, to get our bauxite from land and onto export ships, which will be able to go into the open market. That mine is now in production, i.e. Hey Point’s in production. And we expect to piggyback off the back of their infrastructure, which means again, it’s about low capital and bringing this into market as quickly as possible.
Clive Tompkins: When do you see bauxite production commencing?
Simon Siesarewich: We’re confident that we’ll be producing bauxite, by the first half of 2017. We think we’ll have the approvals in place over the wet season 2016/17. Obviously that’s not the best time up around Weipa to be producing a new mine, so we’ll wait for that wet season to stop and then go into production. The benefit that Urquhart bauxite has is it doesn’t require any infrastructure. So therefore, the construction timetable for this is a couple of months and then we’re into cash flow, which is an absolute benefit for any project anywhere, but particularly for this one.
Clive Tompkins: You have an exploration program planned for the coming months. What do you hope to find?
Simon Siesarewich: So knowing that program is twofold, firstly we will increase the resource category and the confidence in that resource category. So we’ll have one to two years worth of production measured, then an indicated tale and then inferred thereafter. We’ll also be getting bulk samples; we’ll be going out and testing the market and talking to buyers, and putting things in place. And when we do come into production in 2017, we have a ready market ready to go.
Clive Tompkins: Now to your other project the Esmeralda graphite project. Where is it located and what does it contain?
Simon Siesarewich: Esmeralda graphite project’s located in north Queensland, around Croydon. It’s a unique graphite project in that it’s hosted in granite. Most other graphite projects globally are metamorphic. Why this is unique is that usually hydrothermal projects like this have very high quality graphite. We put two holes into the project in late 2015 and got significant intercepts. We’ve since then done some metallurgical test work on those two holes and have got graphite purity of over 91 per cent, and with over a 90 per cent recovery. We’ve since gone and done some caustic bake work on that and got purities in the concentrate of over 97 per cent, which means a very high purity concentrate, which should be valuable in the market.
Clive Tompkins: What’s the priority for the next six months?
Simon Siesarewich: Priority there is to understand the market for where this could sit, because it is a unique style of mineralisation. Therefore, the graphite that comes from Esmeralda will have to find a niche, but it’s likely to have a high market value in that niche. So we’ll do some market studies and we also understand it’s a very large tenement portfolio there, so over 1,000 square kilometres. So we’ll go and find where the graphite’s concentrated and where it’s closest to surface.
Clive Tompkins: A more general question Simon. What has the price of graphite flake been doing over the last year?
Simon Siesarewich: Graphite flake I guess depends on the type of graphite; it’s an opaque market. But my reading of it is that graphite flake has probably gone up a little and that’s really on the back of the tech sector. But again, it comes back to the type of graphite you have and who you’re selling it to. So if you have an everyday run of the mill graphite, you’re probably getting less than what you would have a year ago, whereas that higher graphite going into the tech sector, is probably increasing in value.
Clive Tompkins: Now to financials and strategy. What’s your cash position and how much are you budgeting for exploration over the next six months?
Simon Siesarewich: So Metallica’s just recently completed a capital raise, where we raised $1.8 million; we’re well supported by existing shareholders. We’ve also just converted an option on the sale of a non-core limestone asset, which will deliver another $900,000 in cash. So when that’s completed, we’ll have $2.2 million to $2.3 million in cash, which means the company’s well funded well into next year. And to the grant of the mining lease at Urquhart Point, and that’s what we’re very much focused on. The exploration program that we’re doing in the coming quarter is nominal, it’s sort of $300,000 to $400,000, but there’ll be a lot of work being put into the marketing and pushing that project forward, into production.
Clive Tompkins: What is the company’s long-term strategy?
Simon Siesarewich: Metallica’s very much focused on becoming cash flow positive, it’s as simple as that. We will be focused on Urquhart bauxite to produce that cash flow. That will be a game changer for our company. And hopefully we will see a rerating off the back of that, once people understand that we are able to bring a project into market. From that it gives us a great platform to grow on. Both organically, there’s a large portfolio of bauxite and mineral sands projects within the joint venture, but also we’ll also be looking outside our normal home, which has been Queensland. We’ll look globally for other projects that add value to shareholders, and take advantage of where the cycle’s at right now.
Clive Tompkins: Last question Simon. Where would you like to see Metallica Minerals by year’s end?
Simon Siesarewich: By year’s end, we’d love to have the mining lease in our hot little hands and pushing towards production. And de-risk that project and bring cash flow in as soon as we can.
Clive Tompkins: Simon Siesarewich thanks for the update.
Simon Siesarewich: Thank you.
Ends
