Transcription of Finance News Network Interview with Blackthorn Resources Limited (ASX:BTR) CEO and Managing Director, Scott LoweLelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me today from Blackthorn Resources Limited
(ASX:BTR) is CEO and Managing Director, Scott Lowe. Scott, welcome back to FNN.
Scott Lowe: Thank you, it’s a pleasure to be here.
Lelde Smits: First up to your Mumbwa copper gold project in Zambia and the results that have really excited the market. What have you found?
Scott Lowe: Well for some time now we’ve been exploring on the Mumbwa copper exploration project in Zambia. This project was formerly a joint venture with BHP Billiton Limited
(ASX:BHP), but BHP Billiton exited in August last year and we’ve been the 100 per cent owner of the project since that time. Now there’s already a JORC compliant inferred resource at Mumbwa of 87 million tonnes, at just under one per cent copper. And the drilling that we’ve been doing in recent times has focussed on improving that resource, including some infill drilling and we’ve achieved some spectacular results. The best hole to date was 230 metres at an average of 4.5 per cent copper and that’s truly outstanding.
Lelde Smits: Excellent, so as far as copper projects go, how do these grades stack up?
Scott Lowe: Well these are very impressive results. One analyst here in Sydney recently did a comparison and found that there are only five or six projects anywhere in the world, since the year 2000, that have reported results of this grade over such a wide intercept.
Lelde Smits: And can you put the potential size of the project into perspective for us?
Scott Lowe: Well as I mentioned, we already have a JORC compliant inferred resource of almost 90 million tonnes, of just under one per cent copper. We think there’s great scope to improve that resource further. Our objective in the short term is to achieve an indicated JORC status and we’ve announced recently that we’re commencing a scoping study. And we intend to announce the results of both the JORC upgrade and the scoping study, and then launch into prefeasibility, in the next six months.
Lelde Smits: So Scott, what do you have planned for Mumbwa this year; Will there be more drilling to confirm the size and extent of the resource?
Scott Lowe: We’re about to finish a drilling campaign that’s aimed at improving the resource, then we’ll complete the scoping study and the JORC resource upgrade. Then there is potential later in the year to do additional drilling, not only on this resource which we call Kitumba, but elsewhere on the Mumbwa project, with the aim of testing other attractive targets.
Lelde Smits: Let’s now get to your Perkoa zinc mine in West Africa, a joint venture with Swiss commodities trader Glencore International. What role have they taken up in development?
Scott Lowe: We’ve had a joint venture with Glencore since December of 2010 and Glencore took over as manager of the project on behalf of the joint venture, early in 2011. Glencore are involved in a number of ways in this project. They are the project manager; they’re investing $80 million in the construction of the zinc mine. There’s also potential for Glencore to invest additional money for expanding the mine, and Glencore is also our customer. Glencore will purchase all of the concentrates from the mine.
Lelde Smits: When we last spoke Scott, you were aiming to be in production by mid-this-year, are you on track?
Scott Lowe: We’ve been informed by Glencore that everything’s going well and we do periodically visit the project as well. The aim at this stage, and we’re on track to begin commissioning in July of this year, now the commissioning process begins we’re starting up motors and beginning to activate the mill, and to process the plant. And then we’ll go into what’s called hot commissioning shortly thereafter, where the ore that’s already been produced – we have about 8,000 tonnes of ore on the surface of the mine, that will then be used to test the process plant.
So long story short, the commissioning will begin in July and then for the next few months, the commissioning will be completed, then ramping up to full production later in the year.
Lelde Smits: And what rate of production are you expecting at this stage?
Scott Lowe: Well in the base case – there are two cases, investment cases, for Perkoa. In the base case, it’s a zinc only mine and the rate of production will be 720,000 tonnes per annum of ore. And that produces 170,000 tonnes of concentrate and the concentrate has a 53 per cent metal content. So the base case produces about 90,000 tonnes of contained zinc metal per annum.
Lelde Smits: What are Blackthorn’s plans for ramping up development at Perkoa?
Scott Lowe: We’ve been working with Glencore for some months now on a further investment case, to consider investing more money to improve the Perkoa project. In the base case it’s a zinc only mine, but Glencore has put together an investment proposal that would involve increasing the capacity of the mine by 40 per cent. So that the throughput goes from 720,000 tonnes per annum to a million tonnes per annum, but importantly adding a new product that is producing not only zinc concentrates, but silver and lead concentrates as well.
Lelde Smits: To your financials now, as a company moving to production what’s your current cash position?
Scott Lowe: In our last quarterly report, we announced that we had just under $11 million available on December 31, 2011. Looking ahead, that money will see us comfortably able to do the things that we need to do at Mumbwa and to take the company forward.
Lelde Smits: When do you expect to receive an income stream from production at Perkoa?
Scott Lowe: When Perkoa goes into production, the first $5 million of earnings will be given to Blackthorn. And then following that - then loans, project loans, will need to be repaid to Glencore. And then we’ll share earnings after that.
Lelde Smits: Finally Scott, Blackthorn’s share price has recently spiked. What developments do shareholders have to look forward to this year?
Scott Lowe: It’s going to be a very busy and exciting coming six months for Blackthorn Resources. Our shareholders can look forward to more drilling results from Mumbwa, and then the outcome of the JORC resource upgrade. And then towards the middle of the year, the outcome of a scoping study which will begin to look at the economic potential at Mumbwa. Then beyond that, we will look at doing additional drilling to test other targets at Mumbwa.
Of course, at Perkoa- a very exciting time going into production in the second half of the year. So there’ll be news relating both to the commissioning and the production in the zinc mine, but also to the potential to expand the mine to add silver and lead, and boost the capacity.
So a very exciting time for us and yes, the share price has improved considerably. And that’s great news for our shareholders, but I’m always keen to emphasise that our market cap remains around $200 million. And we certainly see looking in the years ahead, great potential for us to grow the value of the company well beyond its present market cap.
Lelde Smits: Scott Lowe, thanks for your time and all the best.
Scott Lowe: Thank you Lelde, it was a pleasure.
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