Transcription of Finance News Network Interview with KBL Mining Limited (ASX:KBL) CEO, Trangie Johnston
Anastasia Mangafas: Hello I’m Anastasia Mangafas for the Finance News Network. Joining me today from KBL Mining Limited (ASX:KBL) is Chief Executive Officer, Trangie Johnston. Trangie welcome to FNN.
Trangie Johnston: Thank you, good to be here.
Anastasia Mangafas: Can you start by introducing the Company?
Trangie Johnston: Yeah KBL is a copper producing company; we have an operating mine in central New South Wales. We also have advanced projects in the Kimberley region and we have a diversified portfolio of advanced assets. And we’ve been listed since August 2010.
Anastasia Mangafas: What was behind the name change from Kimberley Metals to KBL?
Trangie Johnston: With our operating mine in New South Wales, we thought it fit that we show to the public that we were diversified, not just in the Kimberley region. And that was the reason for that.
Anastasia Mangafas: You have a number of projects from Mineral Hill in New South Wales to the Northern Territory, Queensland and Western Australia. Tell us what’s taking place at Mineral Hill in central New South Wales?
Trangie Johnston: Yeah Mineral Hill has been producing since October last year in steady state production. We’re focusing on copper concentrates at the moment with gold and silver credits. At this stage, we have a number of deposits which we want to bring online in the next 12 months, which will expand the operation to include gold and silver doré. And also introduction of lead and zinc concentrates from those assets.
Anastasia Mangafas: So what is the next milestone?
Trangie Johnston: The next key milestone for us is the Pearse open cut gold silver project. That is a very high value shallow resource and we are very keen to bring that online early next year.
Anastasia Mangafas: Is there a potential for an upgrade?
Trangie Johnston: Mineral Hill is actually poorly explored by modern standards. It is a polymetallic – a large polymetallic epithermal system and at the moment, from modern standards, it’s poorly explored. So there’s a lot of opportunity there to expand the resource base. We actually have 5.2 million tonnes of resource currently on the books and we doubled that in the last 12 months. So we see a lot of upside in exploration potential.
Anastasia Mangafas: Thanks Trangie. So based on what you know, what is the mine life for Mineral Hill?
Trangie Johnston: Our resource base at Mineral Hill can support a 10 year mine life operation with the current resource base; we see a lot of opportunity there to expand that. And Mineral Hill is the only operating mine within around 125 kilometre radius in the Cobar Basin, and we see that as quite a strategic position.
Anastasia Mangafas: So what is the outlook for the cost of production?
Trangie Johnston: Currently we’re producing from underground and cost of production is in a comfortable position. The outlook for us is really about the growth phase of the Company. As we bring online the additional deposits early next year from both underground and open pit, Mineral Hill will operate as a negative cash cost operation.
Anastasia Mangafas: And what is the planned capital expenditure?
Trangie Johnston: The capital expenditure requirements are focused on the Pearse gold silver open cut and expanding the current mill to accommodate for lead and zinc products.
Anastasia Mangafas: Now looking at your zinc lead silver projects, starting with Sorby Hills in Western Australia. What is the size of the resource and the geology?
Trangie Johnston: The geology of Sorby Hills is positioned within the Bonaparte Basin on the eastern limb of a large zinc line that straddles the Western Australian/Northern Territory boundary - border. We have approximately 17 million tonnes of contained resource of around 30 million ounces of silver, 750,000 tonnes of lead and over 120,000 tonnes of zinc. The mineralisation is Mississippi style deposits and it’s quite an exciting region.
Anastasia Mangafas: What is taking place and what is the size of the project?
Trangie Johnston: The project’s in feasibility. At this stage the engineering and environmental test work is well advanced and the project is undergoing a public environmental review. We hope to gain formal approvals early next year.
Anastasia Mangafas: What is KBL’s stake and who is funding the project?
Trangie Johnston: KBL has 75 per cent of that project. Our joint venture partner is Yuguang Gold & Silver, who is China’s largest lead and silver company in China.
Anastasia Mangafas: Thanks Trangie. Based on what you know, what are the economics of the deposit?
Trangie Johnston: Sorby Hills will be a very low cost operation. We’re focused on the resources which are quite shallow to surface, less than 15 to 20 metres below cover. And we’re looking at operations where pits won’t be any deeper than 70 metres. So the position of the resources, the grade and the closeness of the infrastructure Kununnurra and also the port of Wyndham, puts it in a very good position.
Anastasia Mangafas: Now just across the border in the Northern Territory, you have a similar style deposit in the Manbarrum project. What does it contain and what is the plan?
Trangie Johnston: The plan with Manbarrum is it’s a similar geology to Sorby Hills - Mississippi style mineralisation on the eastern limb of the Bonaparte Basin. KBL combined with the Manbarrum project, put us in a very strategic position which covers most the mineralised horizon within that Basin. So at the moment there’s around 30 million tonnes of resources to find through a number of projects, and we see Sorby Hills becoming an essential processing facility for those resources.
Anastasia Mangafas: Now to your financials, you recently raised $8.3 in a private placement. Where are the funds going and who took up the issue?
Trangie Johnston: The funds were picked up by a sophisticated investor. They did a site visit to Mineral Hill and were very impressed with the operations, and the asset within the Company and the leadership of the team, and have got on board. Those funds were used to advance the Pearse project and also other requirements at Mineral Hill, capital requirements for the lead zinc system. And also a contingency to have comfortable cash positions in these current volatile markets.
Anastasia Mangafas: Finally Trangie, where do you see KBL Mining by year’s end?
Trangie Johnston: I see KBL as going to be in a comfortable position by year’s end. Our expansion projects have us on target to generate $100 million revenue leading into 2013, with the expansion of Mineral Hill.
Anastasia Mangafas: Trangie Johnston, thank you for the introduction.
Trangie Johnston: Thank you, good to be here.