Attention ASX Company Announcements Platform
Lodgement of Open Briefing
ASX ANNOUNCEMENT: 22 March 2012
MD on Exploration Programme and Outlook
Open Briefing with MD Geoff Laing Exco Resources Limited Level 2, 8 Colin Street West Perth, WA 6005
Exco Resources Limited (ASX: EXS) is an Australian gold and
copper exploration and mining company focused on developing
its portfolio of projects in Northwest Queensland and South
Australia.
Market Capitalisation: $64 million
In this Open Briefing®, Managing Director, Geoff Laing discusses
o Update on Hazel Creek and Cloncurry Projects o Progress at Vertigo o Outlook and acquisition strategyOpen Briefing interview:
openbriefing.com
Exco Resources Limited (ASX: EXS) has intersected copper and gold at several prospects within its wholly owned Hazel Creek Project (EXS: 100%). How successful has your recent drilling programme been in identifying resources at the Turpentine and Eight Mile Creek prospects and defining targets for this year's drilling programme?
MD Geoff Laing
As we reported in February, the results from our extensive
drilling, geophysical and geochemical survey programme
through the latter part of last year have confirmed a
significant amount of mineralisation at Hazel Creek.
At Turpentine we've had results including 10 metres at 1.27%
copper at 138 metres depth and 8 metres at 1.73% copper at 90
metres depth. At Eight Mile Creek we've had reasonably thick
intersections with 56 metres at 0.64% copper and drilling
continues to show considerable mineralisation.
Our drilling and exploration activities last year positioned
us to put together a substantial programme for this year.
We'll be working aggressively on this as soon as it's dry
enough to get drill rigs into the area.
Open Briefing® | Exco Resources Limited | 22 March 2012 1
openbriefing.com
On current indications, what is the potential of Hazel Creek to support a stand-alone project?
MD Geoff Laing
It's still too early to make projections on major resources, but at Eight Mile Creek the structures and geology have made it one of our Tier 1 exploration sites. We'll be focused on looking for a major resource there, in addition to the small resource we have at Turpentine.
openbriefing.com
At the Cloncurry Project (EXS 100%), over the second half of
calendar 2011, Exco identified three
new Priority 1 iron-oxide-copper-gold (IOCG) targets:
Salebury South, Elder Creek and Canteen. What features have
made these targets so prospective and what is your drilling
plan for them?
MD Geoff Laing
As with Hazel Creek, we've identified these as Tier 1
prospects after extensive geophysical and geochemical
assessments in the most prospective regions.
Figure 1: Location Map of Hazel Creek
Open Briefing® | Exco Resources Limited | 22 March 2012 2
We're excited about the Canteen area as it sits between two
radiogenic granite systems. From the sub-audio magnetic (SAM)
survey details we see it as an area with great prospectivity.
We'll do gravity work on Canteen in the near future and then
re-start drilling. Previous drilling found mineralisation,
for example 12 metres at 1.34% copper, which is very
encouraging.
At Elder Creek, there's an interesting magnetic anomaly we're
focused on, and at Salebury, where we've been focused on
smaller, Tier 2 type prospects, we believe there might be
potential for a major structure.
openbriefing.com
The total resource at your Cloncurry Project is around 7.65
million tonnes, with a grading of
1.69% copper and 0.52 g/t gold. How do you expect results
from your latest drilling programme to affect this resource
estimate?
MD Geoff Laing
We expect to update the resource estimates at both Kangaroo Rat and Turpentine. While we are looking for growth in our existing resources, at this stage it's unlikely that growth will be significant. Our focus is on delineating new resources, for example the potential resource in the Salebury area.
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In the December 2011 quarter, the White Dam Gold Project (EXS 75%, Polymetals Mining (ASX: PLY) 25%) in South Australia produced 8,421 oz, down from 15,938 oz in the September quarter, with the Hannaford Pit reaching the end of its productive life. Lower production volume saw total cash operating costs increase to A$756/oz from A$413/oz. With mining from the Hannaford Pit concluded in mid January, will there be any residual costs associated with the mine?
MD Geoff Laing
Hannaford was a very successful mining operation and was
highly lucrative for us and our joint
venture partner Polymetals. The residual costs reflect
rehabilitation work and will be fairly modest given Hannaford
was a relatively small pit.
Figure 2: White Dam Gold Project Location Map
Open Briefing® | Exco Resources Limited | 22 March 2012 3
Rehabilitation of the waste rock dumps has been ongoing while we've been mining, and there's very little rehabilitation required of the pit itself. We're closing up at Hannaford and transferring across to the nearby Vertigo deposit. So mining continues at site and processing continues to run.
openbriefing.com
Can you update us on the progress in developing Vertigo, where you have a 50% joint venture partnership with Polymetals. How much production will Vertigo add to the existing White Dam operations?
MD Geoff Laing
The Vertigo pit has already been opened up and we've been
mining ore from it for the past month. There's capacity on
the existing heap to place the Vertigo ore, which has been a
cost saving for us because we haven't had to construct a new
heap. We've already loaded ore from Vertigo on the heap and
expect to irrigate it in the next couple of weeks, so gold
will be produced from Vertigo in that time frame.
Depending on the final recovery and how quickly the material
can be leached, Vertigo will incrementally add about 7,000oz
over the next four to six months. Because we're loading
material onto the existing heap, and continuing to circulate
solution through the existing heap, this helps our chances of
recovering residual ounces from the Hannaford material while
also extracting the Vertigo ounces. While there has been a
drop in production rates, we'll see an incremental pick up as
the Vertigo material is put under irrigation.
openbriefing.com
Exco recently returned $135 million to shareholders following the sale of the Cloncurry Copper Project (CCP) to Xstrata for $175 million and at the end of December, you had $58.6 million cash on hand. How will you utilise this cash and are you actively looking for acquisitions?
MD Geoff Laing
It was pleasing to give back a large amount of money to our
shareholders and also to retain cash of $58 million. For a
small mining company, it's a significant amount and allows us
to get on with our exploration activities. While we're
focussing on exploration and drilling this year, we're also
looking at acquisitions.
We have a two pronged acquisition strategy. We're looking to
replace the White Dam cash flow while also keeping an eye out
for opportunities that may arise, particularly in the current
market cycle where there are companies with established
resources that are struggling for cash. We're prepared to
make a strategic investment in the right company or project
with a significant resource. That would see us offset some of
the exploration risk that comes with being at an earlier
stage of exploration.
openbriefing.com
You were officially appointed MD in January 2012, after
filling the role of acting MD since August
2011. What are your short to medium term priorities for the
business? Will you be making any significant changes to
Exco's strategic focus?
MD Geoff Laing
I've been with Exco for four and a half years and have been
involved in the evolution of the
business to where it is. In the short to medium term, there
won't be a major change in strategic
Open Briefing® | Exco Resources Limited | 22 March 2012 4
direction as we'll remain focused on exploration and
unlocking value from the prospects we've retained post the
sale of the CCP to Xstrata.
However, rather than project development, which was an area
of focus in the recent past, we'll now be looking at
potential acquisitions. The strategy remains the same: to
continue being a self-funded business rather than going to
the market for exploration funds.
We're in a unique situation in the Cloncurry area because
there are many facilities there requiring ore. For example,
we were able to sell our CCP to Xstrata because Xstrata's
Ernest Henry project ran out of ore from its open pit and was
transitioning to underground mining. Ernest Henry still
requires additional ore feed, as do a number of other
operations in the region. Because of this, there is potential
demand for any resources we develop in the area in the short
to medium term. The sale of the CCP to Xstrata created a lot
of value, for our shareholders and potentially we'd look to
replicate that model if the appropriate opportunity arises.
openbriefing.com
Thank you Geoff.
For further information on Exco Resources Ltd visit www.excoresources.com.au
or call Geoff
Laing on (08) 9211 2000.
To read other Open Briefings, or to receive future Open
Briefings by email, please visit
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FORWARD LOOKING STATEMENTS & COMPETENT PERSONS STATEMENT: This report contains forward looking statements that are subject to risk factors associated with resources businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates.
All references to dollars, cents or $ in this report are to AUD currency, unless otherwise stated.
Information in this report relating to mineral resources and exploration results is based on data compiled by Exco's Chief Geologist Stephen Konecny and Exco's Resource Manager Ms Christine Shore, who are members of The Australasian Institute of Mining and Metallurgy. Both Mr Konecny and Ms Shore have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons under the 2004 Edition of the Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves.
Mr Konecny and Ms Shore consent to the inclusion of the data in the form and context in which it appears.
DISCLAIMER: Orient Capital Pty Ltd has taken all reasonable care in publishing the information contained in this Open Briefing®;
furthermore, the entirety of this Open Briefing® has been approved for release to the market by the participating company. It is
information given in a summary form and does not purport to be complete. The information contained is not intended to be used as the basis for making any investment decision and you are solely responsible for any use you choose to make of the information. We strongly advise that you seek independent professional advice before making any investment decisions. Orient Capital Pty Ltd is not responsible for any consequences of the use you make of the information, including any loss or damage you or a third party might suffer as a result of that use.
Open Briefing® | Exco Resources Limited | 22 March 2012 5
distributed by | This press release was issued by Exco Resources Limited and was initially posted at http://www.excoresources.com.au/DownloadAsset.ashx?aid=7b960a59-d4d9-46e7-97b9-c8ffbec30704 . It was distributed, unedited and unaltered, by noodls on 2012-03-22 04:15:07 AM. The issuer is solely responsible for the accuracy of the information contained therein. |