TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH VENTURE MINERALS
(ASX:VMS) MANAGING DIRECTOR, HAMISH HALLIDAY
Clive Tompkins: Hello, Clive Tompkins reporting for the Finance News Network. Joining me for an update from Venture Minerals is Managing Director, Hamish Halliday.Hamish, good to see you in person. Tin prices have had an epic run lately, do you expect it to continue and for how long?
Hamish Halliday: Well Clive there are a number of factors that are driving the tin price, and we certainly do expect to see tin strengthening going forward. The various market commentators out there for tin have expectations between $30,000 and $40,000 a tonne over the next two to three years; so certainly we expect the strength to continue based on those factors.
Clive Tompkins: And what’s driving the tin price?
Hamish Halliday: It’s both a demand and supply side story, there’s an underlying paradigm shift on the demand side where we seeing tin effectively going from an old world metal to a new world metal as it’s being used a lot more in solder now, that’s nearly 60 per cent of the demand now is to the solder market which is obviously all the electronics, so that’s the underlying strength in demand in the medium term to long term. And on the supply side, the Indonesians have certainly had some major reductions in supply over the last half decade and it looks to be continuing so the two dynamics are pretty much driving the price forward.
Clive Tompkins: Hamish any time a commodity moves up as dramatically as tin has, people start looking around for a substitute. What’s the risk in that?
Hamish Halliday: Really you’re looking for a metal which has a really low melting temperature, which is inert which is non-toxic, and your next cab off the rank if you like is silver which is about $750,000 a tonne, so not an obvious competitor for tin. And then the final dynamic - sort of - in the whole play really is about whether the market can sustain those high prices and the products that it’s used for. Tin in solder is particularly inelastic on demand. Vis-a-vis it’s a very small component of the end cost product and a good example is your Blackberry which has got about six cents worth of tin in it. So we certainly see that those two dynamics are very positive for tin going forward.
Clive Tompkins: Everyone talks about WA and Queensland as mining hubs. What can you tell us about Tasmania has a mining district?
Hamish Halliday: Well I think Tasmania is probably one of the most prolific regions in Australia for mineral endowment in all sorts of commodities. If you just look at tin and tungsten, which are the two commodities in our project, there is nearly $10 billion worth of those products being mined out of north-west Tassie in the last 100 years. The industry is over 120 years old and if you’ve got a new discovery in Tasmania, typically it’s a multi-decade discovery, most of the mines down there are 50 to a 100 years old. So it is a prolific region, and I think there are fantastic opportunities going forward for new discoveries in Tasmania.
Clive Tompkins: The Mt Lindsay project has delivered Venture a number of successes on the drilling front. What’s the immediate next step for the project?
Hamish Halliday: Obviously we’ve spent a lot of time and a lot of effort on our drill campaigns in recent times. In Tasmania, we’ve had up to six drill rigs down on site for the last three months. All that work comes into play with a new resource upgrade that we’ll have out very very shortly and that will be followed by a pre-feasibility statement which will effectively update on the scoping study that we did earlier this year; so those two events will be forthcoming in the next few weeks.
Clive Tompkins: And what are the key milestones for the next six to 12 months?
Hamish Halliday: The next six to 12 months will be busy as usual for Venture. We’ve recently raised $20 million so we’ll be utilising that cash balance to move straight into a bankable feasibility study and that is scheduled to commence by December and we’ve got a 12 month schedule on that which sees us completing that in the fourth quarter of 2011. So that will be the major focus over the next 12 months. However, we have also budgeted for an extensive exploration program and we’ll be spending between $4 and $5 million on pure exploration during that period.
Clive Tompkins: Can you tell us how the project ranks in terms of size and grade?
Hamish Halliday: We certainly have come up the ranks quickly. If you look at where we were a couple of years ago we were around 40,000 tonnes a metal mark. We’re over 100,000 tonnes of metal now, and tin and tungsten, so we’re one of the largest undeveloped tin projects in the world. And we certainly will be a major player when we are in production. Over 1 per cent of world production would be coming from our project for tin and nearly 3 per cent of world tungsten production. So it is a big project on the world scale and with the new resource upgrade we hope to be up in the top three of the biggest undeveloped tin projects in the world. On the grade side I think it is important to note that the average grade for tin and tungsten mines worldwide is about 0.4 of 1 per cent. Our grade that we’re looking at on our studies at the moment will be around 0.7-0.8 so that’s nearly double the grade of other operations around the world.
Clive Tompkins: Hamish, with all projects there are always risks. What are the risks facing the Mt Lindsay project?
Hamish Halliday: I think over the next 12 months one of the major risks that you’ve always got to assess in these projects is getting your timing right. And the market; the market is always a factor. We’ve been very fortunate in recent times to raise the finance to complete the BFS (bankable feasibility studies) so that is one risk that we have mitigated and as we go forward obviously the next stage for us that we’re focusing on is financing the development of the project and in that process we’ll look to develop good, strong relationships with off-take partners. So those are the two major challenges we see in the next 12 months.
Clive Tompkins: Last question, there’s already been some Chinese interest in tin projects, do you expect this to increase?
Hamish Halliday: I think we’ve seen obviously a huge amount of interest in north-west Tasmania by the Chinese in general across multiple commodities, in particular Yunnan’s partial purchase of the Metal X’s assets at Renison Bell and Bischoff is a clear indication the Chinese are interested in acquiring ten assets outside of China. We don’t expect that to change, we expect them to probably increase their interest in gaining access to any opportunities outside of China and Tasmania is an obvious jurisdiction that they would look to expand into.
Clive Tompkins: Hamish Halliday thank for the update.
Hamish Halliday: Thanks Clive.
