Transcription of Finance News Network Interview with Commissioners Gold Limited (ASX:CGU) Executive Chairman Chris Battye and Exploration Manager, Jason Needham Lelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me today from Commissioners Gold Limited
(ASX:CGU) is Executive Chairman Chris Battye and Exploration Manager Jason Needham. Chris, Jason, welcome.
Chris Battye: Thank you.
Jason Needham: Thanks for having me.
Lelde Smits: Chris, as your name suggests Commissioners Gold is focussed on gold exploration but you’ve recently changed your focus from New South Wales to Peru, could you explain why?
Chris Battye: The problem for Commissioners, as for a lot of juniors, is that there is no appetite in the market for greenfields exploration and advancing projects within New South Wales or indeed in Australia. But, there is appetite for South America.
Lelde Smits: What is your strategy for your New South Wales tenements?
Chris Battye: Oddly enough we saw the move into Peru as a way to advance our New South Wales tenements and projects. We could find in Peru, projects that had early cash flow, scalability and a mostest entry cost. And, we’ve managed to secure the Mollehuca plant and the Santa Rosa Tailings Project which will provide a cash flow to Commissioners to progress the New South Wales assets.
Lelde Smits: Looking closer at South America: When did you launch in Peru?
Chris Battye: We looked at Peru at the beginning of the year. We formed an alliance an entered into a JV [Joint Venture] which was announced to the market with Lima-based Australia Gold Corporation who has a team of eight on the ground in Peru. And, we identified a number of projects that met the objectives of the JV agreement.
Lelde Smits: And Chris, what are your deadlines for moving into production?
Chris Battye: We have to be into trial production by the 30
th November [2012], under the new mining regime in Peru. And, we’ll ramp up to full production early in the new year.
Lelde Smits: You’ve just inked a deal to buy a stake in the Mollehuca-Santa Rosa Project: On what terms and from whom was the project acquired?
Chris Battye: We’re acquiring a 25 per cent stake in the operation of the Mollehuca plant and the Santa Rosa Tailings. That was acquired through our joint venture partner, Australia Gold Corporation, it is in south Peru.
Lelde Smits: Finally Chris, what kind of return is Commissioners Gold expecting from the investment and where do you plan to re-deploy the funds?
Chris Battye: The initial investment will be repaid within six months. In a normal operating year, there will be $700,000 available, post Peruvian tax, to Commissioners Gold to redeploy into New South Wales and progress our assets here.
Lelde Smits: Chris Battye, thanks for the update.
Chris Battye: Thank you for the opportunity.
Lelde Smits: Now Jason, as Exploration Manager, what appeals to you about operating in Peru?
Jason Needham: The geology of Peru is very interesting and it has exceptional prospectively for mineral resources. The government and the culture are very supportive of mining and internationally, by international standards, there is a very low operating cost in Peru. And, also, I’ve got to admit, there’s some sort of interest for working in an exotic location as well.
Lelde Smits: Could you run us through Peru’s new mining reforms?
Jason Needham: The Peruvian government have recently revised their mining law and formed a process for formalising otherwise illegal mining operations within the country. Illegal mining is a very big problem in Peru. It takes away royalties from the government and results in quite a lot of environmental damage. Now this formalisation process allows small time miners to acquire proper permits while they are in production.
Lelde Smits: How does Commissioners Gold plan to take advantage of these new mining reforms?
Jason Needham: The formalisation process open up very prospective ground to investment and project acquisition opportunities, which otherwise would not be available to international companies. Commissioners also will leverage the formalisation process by some of our projects which we can start into production, which will acquire their permits while we are in production.
Lelde Smits: At what stage is development now and what are your immediate plans ahead of production?
Jason Needham: We’re currently in planning to initiate trial production in November of this year. All of our efforts are basically targeted towards getting the plant up to full operational capacity. The Santa Rosa Tailings that we’ll be processing in the first couple of years of plant life have a significant recoverable amount of gold contained. And, our focus is on optimising the plant for that recovery. And, we’re looking at somewhere in the vicinity of 96 per cent recovery of gold.
Lelde Smits: How many ounces are you expecting to produce in your first year of production?
Jason Needham: The first year of production from the Santa Rosa Tailings Field, we’re looking at about 970,000 ounces of gold in the first 12 months. Our operating cost on a per ounce basis are around $400 initially, and, once we move off diesel generated power for the plant we’ll be looking at $380 per ounce.
Lelde Smits: Finally Jason as Commissioners Gold moves to maiden production this year, what are the major milestones you would like to reach next year?
Jason Needham: Our major milestones for Peru is to have two projects in production by this time next year. We’ll also have a number of exploration projects in active exploration in Peru. And, we also hope to do some drilling and resource upgrading of our flagship project here in New South Wales at Cowarra Creek.
Lelde Smits: Jason, thank you for the update.
Jason Needham: Thank you for having me.
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