www.bassmetals.com.au
Bass Metals (ASX: BSM) is a growth focused and profitable Australian base and precious metal producer with a portfolio of high quality zinc, lead, copper and gold assets in the rich Mount Read Volcanic mineral belt in northwest Tasmania. Listing in 2005, Bass delivered its maiden profit in 2008 from its profitable base metals production hub at Que River in Tasmania, which has generated $25 million in cash flow over the last two years.
The Company also has an active and successful exploration programme and is currently following up on recent discoveries at Switchback and Fossey East which are high-grade and located in close proximity to existing mines and milling infrastructure. Bass has an experienced Board and operating team who have a strong track record of delivering profitable production underpinned by exploration success and are highly motivated to improve on that record.
The Company’s growth strategy centres on the development of a ‘pipeline’ of production, near-production and exploration assets in this prolific mineral belt, with strong leverage to a substantial new discovery through its extensive regional ground holding.
Bass Metals raises A$3.55m, begins $1.7m Hellyer gold processing feasibility study
Bass Metals (ASX:BSM) has commenced a $1.7 million definitive feasibility study (DFS) on further gold production, that could add 40,000-110,000 oz of gold in annual output from Hellyer.
In addition, the company has raised $3.55 million through a share placement to mainly European institutional investors at 25 cents per share to fund growth.
Bass's transformational Hellyer Mine Project in North West Tasmania is on track to commence production toward the end of 2010.
The company is targeting production of 110,000 ounces of gold equivalent (based on a 1:70 gold silver ratio) production per year, with a conservative base case position of 40,000 ounces of gold equivalent per annum.
The scoping study, which identified 3 operating scenarios, indicates a potential annual operating surplus range of between $25 to $55 million per year subject to the process route selected at current gold and silver price levels and the viability of these process routes.
The company’s confidence to commit to this significant study programme is based on production forecasts that are based largely on detailed testwork undertaken mainly in the 1990’s, much of it to feasibility study levels.
Also, the gold price is approximately 3-4 times higher than in the late 1990’s and over the past 10-15 years there have been important technical advances in gold recovery and engineering technologies.
In addition, Bass owns the 1.7 million ounces of contained gold equivalent in Mineral Resources, reported in accordance with the JORC Code 2004, that would initially underpin this production.
The most substantive resource is the Hellyer Tailings which is an “above ground” resource with a gold equivalent grade of 4.1 g/t.
The DFS is expected to take 12 to 18 months to complete to a level considered “bankable”.
It will comprise all the elements typical of this type of study including resource modelling, reserves, mining, metallurgical optimisation, piloting, process engineering, plant engineering, estimates of capital and operating costs, financial evaluation, environmental planning and ultimately implementation and operating plans.
Bass has already commenced the process of collecting approximately 2 tonnes of tailings material for the metallurgical testwork which is planned to commence in November, 2010.
As well, Bass has applied for Exploration Licences covering nearby potential limestone resources which will be evaluated as a source of important neutralising reagent, which is currently considered to be supplied from commercial sources within Tasmania and represents a significant operating cost in all three operating scenarios.
Mike Rosenstreich, managing director, said “our targets for gold may appear
aggressive but a possible production scenario of between; 40,000 to 110,000 ounces gold equivalent a year would provide a very profitable addition to our Hellyer revenues."
"The technical, resource and processing assumptions are well founded and with possible base metals credits not currently factored in, this is clearly a project that warrants significant funding and attention from Bass, now that we have the people to drive the project.”
“This project represents an important part of our strategy of pursuing organic and
transactional growth opportunities to add additional profit streams to the Hellyer operations,” Rosenstreich added.
The proceeds of the placement will supplement the company’s discretionary funds available to fast track exploration drilling at the Fossey East discovery and fund the Gold Recovery Feasibility Study and the Heavy Media Separation study.
This funding strengthens a recent $5 million silver based financing, to provide working capital support to the Hellyer Mine Project (HMP) development as well as funding these growth initiatives.
Rosenstreich added “shareholders expect us to chase these growth opportunities aggressively and given the constraints on discretionary expenditure of the secured project loan facility for the HMP, and the support from the institutional investors it was a great opportunity to top-up the liquidity of the company to be able to meet those expectations."
Bass has an active and successful exploration programme and is currently following up on recent discoveries at Switchback and Fossey East which are high-grade and located in close proximity to existing mine and milling infrastructure.
Article Highlight
With a feasibility study underway and increased funding, a positive DFS could add 50,000+ ounces of gold production worth $67m-$100m+ in revenues, yet Bass is valued by the market at only $53m.
