Transcription of Finance News Network Interview with Millennium Minerals Limited (ASX:MOY) CEO and Managing Director, Brian RearLelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me from gold producer Millennium Minerals Limited
(ASX:MOY) is its CEO and Managing Director, Brian Rear. Brian welcome to RIU’s Resources Round-up Conference here in Melbourne.
Brian Rear: Thank you.
Lelde Smits: Millennium Minerals poured its first gold bar at your wholly-owned Nullagine gold project in Western Australia’s Pilbara Region at the end of last year. How much has been produced since?
Brian Rear: We’ve produced around 70,000 ounces. So you know, from a dead start we produced our first bar the last day of September and that was having built the project, really on time and budget. And we think for the year, we’ll produce around 78,000 ounces for this year and we’ve met guidance. So you know for our first year, I think it’s been a great start.
Lelde Smits: What are your average cash costs and how much has Millennium earned on gold sales revenue since production commenced?
Brian Rear: We’ve cranked out about $99 million in gross revenue. That’s a combination of an advantage from our hedge book, which protects our price. We sold gold under our hedge at around $AUD16.50 and about half of our production goes into the hedge book, and then about half in the spot market. So our average price I think over 12 months is around $AUD15.80 an ounce, which is well above the spot price average. So that risk management strategy paid off for us.
Lelde Smits: If we can turn to your exploration strategy, Millennium has recently published drilling results. What are the Company’s next priorities?
Brian Rear: We have two prong strategy on exploration. One we call within the headframe - that means we’re exploring the existing deposits we have. The probability of a success with exploration declines the further away from known deposits. So all our deposits are still open on strike and depth. So our focus has been on that really all this year. Next year, we’re actually going to step out and mix that headframe type exploration with walk-up targets, on our ground that we haven’t looked at. They’re not so much greenfield, but they are new targets.
Lelde Smits: Millennium posted a maiden interim net profit of just over $34 million last month. What were the main drivers behind this result?
Brian Rear: There are two. One was the underlying performance of the operation and that generated about $12.5 million, counting net profit after tax. The other was taking account of the advantages and the financials plus of our hedge book structure, which was in the money by about $22 million. And under the accounting rules, we booked that to our P&L. So that’s the two drivers, our price protection portfolio and our underlying operating result.
Lelde Smits: The results affirmed your focus on cutting costs through reducing CAPEX and debt. What levels of CAPEX and debt are you targeting heading into next year?
Brian Rear: On the debt side, in the first two quarters of this year, we reduced debt by 20 per cent. We hope by the end of December, we will have reduced it to half. We will be down to around $25 million total debt. And we look at what we do with that then, at the time which means that going into 2014, which is our financial year, we can look to up our expenditure on exploration. And there’s a few things around the mine we’d like to do, a few million there. So I think CAPEX will be around $10 million. And then obviously what we want to do is get a balance between what we spend to sustain the business, and then we think about paying a dividend to shareholders. That’s the plan for next year.
Lelde Smits: Millennium also added to your cash pile through inking a deal to raise $6 million last month. Where do you plan to put the funds?
Brian Rear: The first $3 million of that $6 million will be going into debt reserve account. And that means that it supports our fairly high debt repayment plan for September and December. And that will bring us down to half of our debt. The other three will go into working capital essentially.
Lelde Smits: Finally Brian, with production and exploration steaming ahead, what do you anticipate will be Millennium Minerals next milestones?
Brian Rear: Putting the plan that we’ve always had in place and that is multiple ore sources available to mine, a centralised plant that’s foolproofed. And wrapping up our production profile, we’d like to get to 100,000 ounces a year and have a reserve base that supports a life of 10 years. And those are our big ticket items really.
Lelde Smits: Brian Rear, thank you for the update to Millennium Minerals.
Brian Rear: It’s been a pleasure, thank you.
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