Transcription of Finance News Network Interview with Horseshoe Metals Limited (ASX:HOR) CEO and Managing Director, Neil MarstonClive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me from Horseshoe Metals Limited
(ASX:HOR) is CEO and Managing Director, Neil Marston. Neil welcome back. Horseshoe Metals has two copper/gold exploration projects in WA, can you start by introducing them?
Neil Marston: Good morning Clive. Yes, our two projects are the Horseshoe Lights project and the Kumarina projects, both of them are copper projects predominantly. Horseshoe Lights is located 75 kilometres west of Sandfire Resources
(ASX:SFR) new copper mine at DeGrussa. It includes the old Horseshoe Lights copper mine which was in production back in the 1990’s. And at Kumarina, that’s like over 100 kilometres north of DeGrussa, it’s got some old copper workings on it. There was a bit of production back in the Sixties and it’s a reasonably large area, which has had very little exploration on it.
Clive Tompkins: Thanks Neil, now to the Horseshoe Lights project in more detail. What does it contain, what has the past production been at the site and what is its potential?
Neil Marston: The Horseshoe Lights project is very interesting Clive. It’s a VMS (Volcanogenic Massive Sulphide) style ore body that was previously mined there. It’s located in the same geological setting, which is the Narracoota Volcanics, as Sandfire’s DeGrussa deposit, which as I said earlier, is only 75 kilometres to the west. And when it was operating back in the Nineties, they produced about 313,000 ounces of gold and about 55,000 tonnes of copper were produced.
It actually started as a goldmine and then as they mined down deeper into the ore body, they started to intersect more copper, hit a very rich copper zone there. They were actually able to produce direct shipping ore at Horseshoe Lights. They produced about 110,000 tonnes of that, which is very similar to what Sandfire has just pulled out of their pit over at DeGrussa.
As for the potential, we have done some drilling back in 2010 and 2011 with some interesting results. We produced a JORC Resource Estimate at that time which had a contained inventory of copper of about 91,000 tonnes of copper and about 36,000 ounces of gold. Since then we’ve conducted drilling last year and the results of that drilling will flow through to a new JORC Mineral Resource Estimate, which is due out in March.
Clive Tompkins: Now last year there was a lot of drilling at the site. What were some of the highlights?
Neil Marston: Clive, we drilled about 10,000 metres of drilling last year, most of that was reverse circulation but some diamond holes as well. And we were basically doing drilling to test in areas where the previous resource block model - there were gaps in that block model. And also to test for some shallow zones of mineralisation we thought existed, under a waste dump at the north end of the pit. But we were very happy with those results; we had some very good intersections at very shallow depths.
The best intervals were basically around 23 metres at 4.2 per cent copper, which was about 30 metres below ground level. And very close to the existing pit wall at the northern end of the pit, we had 18 metres at 4.4 per cent copper. So those are reasonable grades by any estimate and the fact is they’re quite shallow, so they’ve really achieved what we wanted to achieve with the drilling last year.
Clive Tompkins: Good. And what are your plans for the project this year?
Neil Marston: Clive our plan for this year basically, is to get the JORC Resource Estimate completed and out to the market as quickly as we can. And from that we’ll then undertake what we call a preliminary economic assessment, which will basically look at the mining scenarios of doing a cut back at the mine and then the economics associated with that. And we’ll also obviously be looking at exploration activities as well. One of the things we have noticed with Horseshoe is we don’t think that the market understands the potential of the mine.
And so, we’re actually going to be looking at areas which are going to be deeper, down dip, down plunge of the main zone where some really high grade mineralisation has been intercepted with previous drilling. But also within the prospective horizon, there’re numerous target areas we’ve generated from our geophysical exploration activities. So we’re basically just completing a study on the geophysics and geological mapping we’ve done, which will help guide our drilling going forward.
Clive Tompkins: Neil, now to Kumarina. What stage is the project?
Neil Marston: Kumarina is very early stage exploration; we’ve only been drilling there for just over a year now. And it’s a project where there’s been almost no exploration prior to us actually going out there and doing some work. So we’ve drilled about 140 drill holes on the site to date and about 90 of those have been drilled at a project called - or a prospect called- the Rinaldi’s prospect. And at Rinaldi’s we’ve actually intersected copper mineralisation in a vertical fault zone, which is running about 700 metres strike length at the moment, but it’s open in both directions and down dip. We’ve got some work happening at the moment to complete a Maiden JORC Mineral Resource Estimate on that Rinaldi’s prospect. And that should be out in the next few days actually.
Clive Tompkins: And what’s planned for this year?
Neil Marston: Clive, late last year we completed a soil sampling program over the whole tenement area and that actually identified quite a few soil anomalies. And the interesting thing about those anomalies is a lot of them are coincidental with these north south faults, which we’ve identified in our exploration work, which we think are the controlling structures for mineralisation in the area. So we’ll be going back and having a look at those on the ground in more detail. We plan to do some aircore RAB (rotary air blast) type reconnaissance drilling on those project areas.
And also on an area which we call the Kumarina Deeps Prospect, which we identified as a large aeromagnetic anomaly in 2011, we’ve also got a coincidental soil anomaly over that as well. So we’re really quite interested in testing that. We’ve received some co-funding from the WA Government to go and put some deep holes into that. So we’ll be doing that drilling in the first half of this year as well.
Clive Tompkins: And Neil, what about the market’s response to your results so far?
Neil Marston: Clive, we’ve been a little bit surprised with the response to some of our results and I think it’s really about the market’s perception of what we’ve been doing at Horseshoe Lights, in particular. I think the market has looked at us saying, ‘Horseshoe Lights there hasn’t been much more to be found there and we’re just drilling in the same areas’. But really, the big story there is that we’ve only just scratched the surface. We’ve got lots of targets to test and 2013 will be the year we’ll actually go and do that.
So I think once the market understands what we’ve got, we’re close to Sandfire’s deposit. So the potential for the development of the site in the short to medium term is strong. And whether that’s development with plant on site there or some other options, time will tell. But really, we’re a very undervalued company; we’ve got a market cap of about $12 to $13 million at the moment. So I think the market needs to have a good look at what we’ve got.
Clive Tompkins: OK. And Neil, tell us about your cash position and whether you’re funded for the rest of the year.
Neil Marston: At 31 December, we had about $1.1 million in the bank. Last year we raised $4.1 million with a group called Investment Limited coming onto our register, they hold 19.8 per cent interest in our Company. And with Investment backing us, we don’t have any shortage of access to funds. So our view is that we’ll raise funds as we need them to fund our exploration going forward, but we’re not concerned about having to tap the market tomorrow to fund our ongoing exploration activities. So we’re very comfortable with the future funding for the business.
Clive Tompkins: Good Neil. And what are some of the development options that you’re considering for bringing projects into production?
Neil Marston: As I’ve said Clive, Horseshoe Lights is obviously the project which is closest to production; Kumarina is still very early days. At Horseshoe Lights we’ve already done some test work on retreating tailings and looking at the offsite side of the resource. We know that there’ll be potential to do a heap leach or vat leach operation there, which could lead into SX-EW processing production of copper cathode. The deeper mineralisation of Horseshoe is very much sulphides.
From the previous operations which had a flotation plant there, we know that the copper will float. So that’s obviously the preferred pathway for production which will produce a copper/gold concentrate, so you capture those gold credits. And of course, whether that’s done onsite or at a third party location, really is part of the assessment process which will go forward.
Clive Tompkins: Last question Neil. What are some of the key milestones investors can look out for?
Neil Marston: Well the immediate milestone for us is to get our Mineral Resource Estimates updated and out to the market. So as I said, Kumarina’s will be out in the next few days and then Horseshoe Lights in March, all things being equal. Then obviously from the Resource Estimates, we’ll then have some mining study work completed, so there may be some significant announcements come out on the back of that.
On the exploration side, we intend to get back on the ground early second quarter of this year and start drilling at both Horseshoe Lights and then at Kumarina. So once we get drilling, we’ll advance with a fairly hefty program of drilling on some of these new targets we’ve identified. So investors can expect a steady news flow from the results of that drilling.
Clive Tompkins: Neil Marston, good luck with the projects and thanks for the update.
Neil Marston: Thank you.
Ends
