The Only Way to Play the Perfect Storm
Keras Resources is an AIM-quoted resource development company with a diverse suite of assets in Australia and Africa. Given the iron ore sector downturn, Keras has stepped back from its African iron ore projects to focus on near-term gold production assets in Western Australia. Keras plans to commence gold production in Q2 2016, with a plan to build into a 30-40koz producer. This new strategy drives shareholder value by acquiring access to permitted projects with low capex and opex, and the potential for near-term cash flow.
Keras, previously known as Ferrex Plc, has secured three “Tribute”agreements in the Kalgoorlie region of Western Australia, one of the most prolific gold producing regions in the world. Tribute Mining involves the mining of resources owned by third parties, on existing mining leases, and sending the ore for toll treatment at a nearby process plant. The deals are typically structured as profit share or royalty agreements.
Near-term Cash Flow
The advantage of a tribute deal is that because mining takes place on existing leases, there is no onerous permitting process. Furthermore, mining is normally focused on orebodies forming remnant resources below existing open pits, or previously un-mined shallow deposits. The use of existing infrastructure and toll processing means that capital requirements to restart production are largely negligible, amounting to working capital only, allowing projects to be fast-tracked into production