Transcription of Finance News Network Interview with Bathurst Resources Limited (ASX:BTU, NZ:BTU) CEO, Hamish BohannanLelde Smits: Hello I’m Lelde Smits for Australia’s Finance News Network and joining me today from dual-listed coking coal explorer and developer Bathurst Resources Limited (ASX:BTU, NZ:BTU) is CEO, Hamish Bohannan. Hamish welcome to FNN here in Hong Kong at Mines and Money.
Hamish Bohannan: Thank you Lelde, it’s great to be here.
Lelde Smits: Bathurst Resources is focused on coal development in New Zealand. What do you believe is most attractive about the area in which you operate?
Hamish Bohannan: Lelde I think what makes us so special is we’re very high quality coal and we’re sitting on existing infrastructure. So our development into production is very quick, very rapid and very low cost.
Lelde Smits: And what is the Company’s vision and strategy to advance your projects?
Hamish Bohannan: Our strategy has been to build up our ground position to give ourselves a full solid position on the ground, with a long term potential future. And then to get into production as rapidly as we can, so we are already in production and our next mine is just waiting on the final licensing, any day now.
Lelde Smits: Bathurst Resources recently inked a $13.4 million deal to buy thermal coal assets adjacent to your Takitimu mine. What is the significance of the acquisition?
Hamish Bohannan: It’s really about giving ourselves a big footprint in the southlands of New Zealand. Its coal that goes to the dairy industry, it’s not for thermal power generation. And the $13.4 million, most of that gets paid once we’re in production. It’s only a million upfront to secure the mine and the operations, and it really gives potentially that Takitimu mine, a 30 plus year mine life providing coal for our dairy industry.
Lelde Smits: And how do you expect the acquisition will compliment your existing operations?
Hamish Bohannan: We want to be a significant New Zealand coalminer. Our focus is coking coal, but the thermal domestic market plays a key role in our licence to operate. We want to be seen as a New Zealand producer based in New Zealand.
Lelde Smits: Now to your flagship Buller metallurgical coal project. What is the size of the resource and potential for exploration?
Hamish Bohannan: The resource there is sitting at about 94 million tonnes. We believe that there is a total resource available in the ground; our exploration target is closer to 160 million tonnes. We have three drill rigs working now in the area expanding our resource base and every six months, we hope to update with modest increases to that resource number.
Lelde Smits: And looking ahead, what are your production forecasts and operating costs for the Buller project?
Hamish Bohannan: Lelde, I think the key one for us is getting our conveyor belt in to take the coal off the plateau. That’s not going to be in until the end of 2014. So up to that time, we’ll be trucking off the plateau that will limit the production rate and it’s also slightly higher cost. So up until then, we’ll be limited to a bit less than a million tonnes per annum, and we’ll bill a full FOB (freight on board) cost of about $US115 per tonne.
Once the conveyor is in we can lift our production with the other mines to 2.3 million and subsequently 4.0 million tonnes per annum, and our costs drop to about $US85 per tonne. So just on that, you can see we are a high margin mine and we’re looking forward to coal prices going up. But even in the current coal prices, we have a healthy margin.
Lelde Smits: Bathurst Resources is currently involved in escarpment approvals and appeals. What are the latest developments in the court processes?
Hamish Bohannan: Well there are two appeals that are outstanding and both the hearings for those have completed. The first is a legal argument on whether we should be paying the carbon tax on our exports. Clearly as a coalmining company in New Zealand, we already pay carbon tax on the gases that are emitted as we mine and we also collect the carbon tax for our domestic sales. But we believe under New Zealand law, there isn’t an imposition to collect the carbon taxes for exports.
So that’s what’s been tested through the courts. It’s gone through the Environment Court; it’s gone through the High Court and just recently, it was heard in the Supreme Court. And the judges there will give a final binding decision, sometime in the very near future.
Lelde Smits: And how about the other case?
Hamish Bohannan: And the other case is the environmental case and that was recently heard in the Environment Court. That finished just before Christmas and we’re waiting now, likewise, a decision from the judge and the commissioners there on whether we can go forward, and that appeal is cancelled.
Lelde Smits: So Hamish, what environmental factors has Bathurst Resources considered which have changed the nature of your operations?
Hamish Bohannan: Lelde, I think the environmental issues are crucial in any mining operation today, in fact any operation. And absolutely where we are, there are some very special aspects associated with the plateau. I think everyone’s aware that we have some very special snails for example, some carnivorous snails which are only found in this part of the world. So we’ve put in very strict environmental controls. We also believe very much in giving a net positive conservation outcome.
So not only are we establishing best practise environmental practises on the ground, we’re also contributing to other environmental exercises. We’re working with the Department of Conservation to identify different areas that we can contribute funds to, to give a net conservation gain.
Lelde Smits: Now turning to funding. As you advance plans for a production ramp up, could you talk us through your funding model?
Hamish Bohannan: So we do have a modest cash flow coming into the Company. The capital that we’ve got to spend going forth to get into full production is very small. We’re talking about $NZD20 million to bring ourselves into sustainable production. So we’ve got money in the bank, we’ve got banking facilities, we are effectively fully funded.
Lelde Smits: And Hamish, when would you expect Bathurst Resources to become cash flow positive?
Hamish Bohannan: We’ll be modestly cash flow positive in the last quarter of this year and we’ll be substantially cash flow positive, in the first quarter of next year.
Lelde Smits: Finally Hamish. What are the main priorities for Bathurst Resources this year and how would you like to see the Company end 2013?
Hamish Bohannan: The main priorities now are locking home the escarpment mine and establishing ourselves as a serious coalminer in New Zealand.
Lelde Smits: Hamish Bohannan, thank you for joining us in Hong Kong and for the introduction to Bathurst Resources.
Hamish Bohannan: Lelde thank you, it’s our pleasure.
Ends
