Jubilee Mines Plans To Bring Wa Nickel Deposit Into Production
The Age
Monday September 6, 1999
Entry to the sulphide nickel business comes at a lower cost than the new game in laterites. That has been demonstrated by Jubilee Gold Mines' plan to bring its high-grade but small Cosmos nickel deposit near Leinster in WA into production in the June quarter next year.
The sulphide project got a move on recently with a consortium of banks lining up to provide debt financing for the $37.7million development.
The sulphide resource at Cosmos stands at 420,000 tonnes, grading an impressive 7.5 per cent nickel - a grade good enough to allow the ore to be trucked to WMC for treatment.
But Jubilee has decided to go it alone and build its own concentrator facility, happy in the thought that over the three-year mine life at Cosmos, and at current nickel prices, pre-tax profits of about $130million or $1.20 a share will be generated.
That estimated profit flow is net of the repayment of all capital, operating and interest costs, including shipping, smelting and refining costs.
That might well be the case but what the sharemarket now wants from Jubilee is an extension in the life of the Cosmos project.
That could come from the discovery of another high-grade massive sulphide orebody along the 25kilometres of potential nickel-hosting rocks within the group's leases.
Failing that, there is the potential for a life-extension from the treatment of lower-grade disseminated mineralisation or using the plant to process gold ore from the group's Kathleen Valley property.
The ifs and buts surrounding the longer-term future is why the share market has long kept Jubilee at 48cents a share, giving it a market capitalisation of $52million.
Mind you, continued strength in the nickel price could change that in a hurry, particularly as first production from the ``cash-cow" at Cosmos draws closer.
Signs the rerating is under way came on Friday with the stock advancing four cents to 52 cents. Coolgardie venture
The Coolgardie exploration joint venture of the unlisted Mining Project Investors, Pittston of the US and the listed Herald Resources has raised hopes there might be life in the old gold field yet. Work by the joint venture at the Empress North prospect about four kilometres south of Coolgardie has indicated the presence of a high-grade zone at a depth of about 120 metres.
The mineralisation is associated with steeply dipping quartz sulphide veining and remains to be fully tested along strike, raising the expectation that the partners are on to something potentially significant.
Best results from different holes included six metres from 228 metres grading 12.6 grams of gold a tonne, three metres from 200 metres grading 11 grams a tonne and 13-metre intersection from 138 metres that came in at 175 grams a tonne.
It is a measure of the quality of the work program at Empress North that the 175 gram-per-tonne hit from the reverse-circulation program was immediately tested by an adjacent diamond core hole.
The average assay of that hole was 5.7 grams per tonne (including one metre of 15.1 grams per tonne). The ``twin" hole really only served to confirm the gold field's history of producing pockets of exceptionally high gold grades.
Overall, the results have been encouraging enough for the partners to plan a follow-up drilling program. MPI and Pittston are funding the program and need to spend $6million by May 2002 to earn a 60per cent interest.
The free-carried Herald Resources closed on Friday at 30 cents, down two cents on the day.
Downlands tie-in
Apart from producing its share of rugby players, Downlands College in Toowoomba also counts among its old boys one Dr Howard Brady, the deputy chairman of Mosaic Oil.
Dr Brady must have enjoyed his time there as when it came to name the group's new gas project near Surat in central Queensland, he settled on Downlands.
The taps on Downlands have just been turned on, with 3.5 million cubic feet of gas a day flowing in to the Roma-to-Brisbane pipeline via a 7.5 kilometre spur line to Wallumbilla.
Although Downlands flowed gas at more than nine million cubic feet a day during testing in 1997, it is being held back at the 3.5 million cubic feet rate during what will be a four-month test of the reservoir capabilities.
The test period will also give Mosaic and its partners (Santos, Petroz and Interstate Energy) to firm up long-term supply contracts.
The Downlands tie-in also makes additional exploration in the area a more meaningful exercise. There is a cluster of prospects being worked up.
© 1999 The Age