TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH FINDERS RESOURCES LTD.
(ASX:FND) IS EXECUTIVE CHAIRMAN, DR. RUSSELL FOUNTAIN
Clive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me for an update from Finders Resources is Executive Chairman, Dr. Russell Fountain. Russell welcome to FNN. A lot’s happened since we last spoke; can you start with an update on the Wetar Island Project?
Dr. Russell Fountain: Yes, I think the really big news is that we’ve completed our feasibility study which has demonstrated a very robust project. We’ve developed a stage development plant with an initial expansion of the existing demonstration plant to 5,000 tonnes a year, and then a second stage expansion using the Whim Creek SX-EW Plan, which we have under option from Straits Resources - which will take us up to the full 23,000 tonnes a year copper option.This gives us a huge amount of flexibility in funding the project - the overall projects plus a $100 million and the demonstration plant; we can get up for around $12 million. So it’s a very, very cost effective expansion from where we are at the moment. We’ve now run the demonstration plant for nearly ten months. It showed us exactly how we need to operate the heaps and it’s proven that the leaching concept works.
Clive Tompkins: And what have you learnt from the demonstration plant?
Dr. Russell Fountain: Oh, the demonstration plant has actually been a fantastic exercise. We’ve learnt a huge lot about the logistic chain in operating out in the islands, also in the heap management. And it also showed us that our acid generation’s going to be higher than predicted from column testing and the whole reason we did it, was that you can’t really scale up from small scale diameter column testing to operational heaps. So we have had much higher acid generations, so it’s allowed us to build in full acid neutralisation capability in the main feasibility study. And so from a practical point of view, it’s been a wonderful exercise from our point of view.
Clive Tompkins: And Russell, what are the prospects of increasing production at Wetar from further discovery?
Dr. Russell Fountain: We think there’s very good prospects for discovering more tonnage – the nature of electrowinning copper is that you are set with the production rate, so we’d be looking to extend the mine life. We have the Meron Prospect a couple of kilometres away where we think there’s at least another million tonnes of resources. And we have four excellent prospect areas on the south side of the island with extremely good potential for discovering both more copper and also some gold mineralisation.
Clive Tompkins: And Russell, can you now tell us about your Ojolali gold and silver project in Sumatra?
Dr. Russell Fountain: Over the last six months we’ve had a low cost programme. We put all our resources into getting the demonstration plant at Wetar up and running, so we’ve just carried out a low cost programme of surface trenching. We’ve got a huge area of nearly 50 square kilometres there with gold mineralisation spread over at least 30 square kilometres of it. We’ve done a lot of surface trenching and we’re really, really encouraged by the results that we’ve got from that. We’ve got a lot a high grade intercepts of grades of up to a metre of over 50 grams of gold at the surface. We’ve got a four month drilling program up to a decision point lined up for Ojolali at the moment. Beyond that we would hope to go into feasibility study stage and have an initial start-up operation – maybe 50,000 ounces a year through feasibility study by early 2011. So we could then build that following on from the Wetar Construction. So we see Ojolali as the firm growth path for the company. So we’re not just a one project company.
Clive Tompkins: And given the remoteness of Wetar, how is Ojolali placed, is it close to infrastructure?Dr. Russell Fountain: Ojolali is brilliantly located. It’s probably eight hours drive from Jakarta. It’s two kilometres from the Trans-Sumatran Highway; a couple of kilometres from grid power and you can drive there in a Toyota Corolla. It’s very, very gentle topography and it’s very, very well situated for development – yes.
Clive Tompkins: Now the financials. Finders recorded a loss of 11.6 million last financial year. Was this within budget?
Dr. Russell Fountain: Yes, it was all largely within budget. We did write off $4.6 million on pre-production costs for the demonstration plant and probably another 1.3 million in financing costs – fairly interesting time financing the project through the GFC. But apart from that, was very much on track that we recovered $3.1 million of revenue in the financial year from the demonstration plant, and going forward with the rebound in the copper price - that should just about run the company on the demonstration plant output.
Clive Tompkins: And Russell you recently raised 20 million, how much does this leave you with after borrowings?
Dr. Russell Fountain: Okay we raised actually 20.6 million after issue expenses from the share placement and the purchase plan. 7.8 million of that was applied to repayment of debt, including the US$5 million debt which was repayable this month. The company’s remaining interest bearing debt is US1.5 million in convertible notes which are not repayable till 2012.After that we have - the end of September quarter, we had 11.2 million cash in the bank and that is being applied to long-lead items for expanding the stage 1 expansion to full scale production. Finishing the permitting and general working cash flow requirements for Wetar and also we’ve restarted exploration on Ojolali. And we’re also running fairly low key exploration programmes on our outlying targets at Wetar so that we can extend the mine life.
Clive Tompkins: And Russell last question. For anyone watching this broadcast, where do you expect Finders Resources to be this time next year?
Dr. Russell Fountain: Well by next year December we expect to be a fully fledged producer at 5,000 tonne a year with the stage 1 expansion of Wetar fully up and running. We expect to be a long way down the line in construction of the full 23,000 tonne a year expansion. And we very confidently hope to be in an advanced feasibility study stage for a goldmine development at Ojolali as well. So we see a very strong growth path for the company over the next twelve months.
Clive Tompkins: Dr. Russell Fountain thanks for the update.
Dr. Russell Fountain: Thank you very much.
