Mundo Minerals Limited (ASX code MUN)
Open Briefing Mundo Minerals. CEO on Corporate
Production Plans
Record of interview:
corporatefile.com.au
Mundo Minerals Limited (ASX code MUN)
recently announced an objective of achieving 200,000 ounces per annum
production from its first three assets.
Can you explain the methodology underpinning this assessment and why you
undertook the assessment at this time
CEO John Langford
Mundo Minerals recently announced that
Mike Schmulian was retiring as Managing Director South
America at the end of June. We have
been pleased to appoint Jean Marc Lopez, our General Manager Exploration, as South American Country
Manager. Jean Marc is an
exceptionally capable guy and, together with our Chief Operating Officer Andrew
Law, they make up a formidable operations team to manage the development of our
assets moving forward.
As
part of ensuring that, as a management team, we
hit the ground running, we recently undertook a detailed review of all our
current assets based on the information we have gathered to date to assess
whether our stated objectives remain achievable.
In
reviewing all the data we’ve also made a determination, as objectively as
we could, as to what we believe the potential resource base and production
capability could be on each asset.
This will obviously change as more work is carried out but we are getting
a solid understanding particularly of the Engenho
Gold Project in Brazil and the prospectivity of the
surrounding tenements, and the Torrecillas Gold
Project in Peru.
We
have a reasonable historical dataset for the Jaqueira
Gold Project (Brazil), but we have not assumed any resource targets or
production yet from the Tocantins Gold Project in Brazil as the work done to
date frankly remains at too early a stage to make a reasonable assessment, even
though we have some extremely encouraging exploration targets.
The
end result of the review was that we are firmly committed to developing these
assets and our team, led by Jean Marc and Andrew, all understand where we are
heading and what our project objectives are.
It
is important to qualify that this is a company production objective. These areas do not contain JORC
resources at this stage and we have always stated that we would be pragmatic
about our assets and continue to review them periodically.
corporatefile.com.au
How
have you been able to make this assessment given that limited exploration has
been undertaken over the last six months while your focus has been on ensuring
a stable production base
CEO John Langford
We
have conducted limited exploration at Tocantins during the last six months,
although the team has been active there during this period conducting low cost
target assessment work. At this
stage it is still too early to talk about a resource or production expectations
from our work at Tocantins, although some of the results are shaping up to be
quite exciting targets.
Project
assessment at Torrecillas has continued at full pace
over the past six months. The
development work we have done has given us a considerable amount of geological
information about the mineralisation on the vein
structures. Through some early
trial mining we have also have developed a solid understanding of the potential
ore characteristics and likely grades we could encounter from full-scale
mining.
During
the trial mining, we have achieved grades of more than 22g/t gold but we have
assumed a conservative mine grade of 15g/t after taking into account dilution
when we move to more bulk mining.
While the gold production we are generating at Torrecillas is low level as you would expect for
what is essentially an exploration exercise, the revenues received have in fact
paid for all development work and corporate costs in Peru.
With
respect to Engenho, we are obviously getting more data
from ongoing development of the orebody with respect
to tonnage, ounces per vertical metre, grade, etc.,
that allows us to make periodic assessments of the ongoing potential of this
resource. We are currently about
505 ounces below our production targets for the 2009 calendar year; however
this is not an underperformance of the orebody but
merely a scheduling exercise. The
mining team took a decision to mine some additional lower grade ore while they finalised development access to the higher grade ore.
The
reconnaissance work we’ve been undertaking on our Engenho
tenement has given us some great target anomalies and we have enough available
data for us to make a reasonable appraisal of the tenement’s
potential. We have just started
diamond drilling at the Crista anomaly in the last
week or so and we have already received some very encouraging initial assay
results from the first two holes.
However,
we won’t be releasing data on a hole-by-hole basis moving forward as this
exercise is really designed to develop an understanding of the potential of the
entire resource.
We
have not undertaken any drilling at Jaqueira, but we
have an excellent historical dataset from previous mining of the targeted veins
plus we have been able to go underground and do some sampling ourselves. Our current assessment of Jaqueira has been made only on available information and we
expect to commence drilling in the next three months with funding allocated
from the approximately A$800,000 we will receive in
the next few weeks from sales tax refunds in Brazil.
corporatefile.com.au
Can you give a
breakdown of production by asset, including mine life Why are you confident that all this
production will be economic
CEO John Langford
The
table below summarises where we see the production
profile building:
Exploration Target
|
Tonnage Range
|
Grade Range (g/t Au)
|
Ounces (000's)
|
Engenho
|
|
|
|
Engenho ? to
270m
|
1.6-1.9M tonnes
|
~4
|
205-244
|
Engenho ? 270m to 500m
|
0.9-1.1M tonnes
|
~4
|
116-142
|
Crista
|
0.7-0.8M tonnes
|
~6.5
|
146-167
|
Olhos/Mazoca
|
1.2-1.4M tonnes
|
~4
|
154-180
|
Total
? Engenho
|
|
|
621-733
|
|
|
|
|
Jaqueira
|
|
|
|
Jaqueira Tenement
|
0.75-0.95M tonnes
|
~8-10
|
217-274
|
Other Tenements
|
1.8-2.3M tonnes
|
~5
|
289-370
|
Total ? Jaqueira
|
|
|
506-644
|
|
|
|
|
Torrecillas
|
|
|
|
Torrecillas Vein
|
0.9-1.1k tonnes
|
~14-20
|
434-530
|
Ady/Oly Vein
|
0.7-0.9M tonnes
|
~14-20
|
337-434
|
5 de Novembre Vein
|
0.7-0.9k tonnes
|
~14-20
|
337-434
|
Torre Chico
|
0.7-0.9M tonnes
|
~14-20
|
337-434
|
Total
? Torrecillas
|
|
|
1,445-1,832
|
|
|
|
|
TOTAL
? Exploration Targets
|
|
|
2,572-3,209
|
Obviously
economics are affected by the gold price but all of our assets have one major
thing going for them and that is grade.
We are not endeavouring to develop bulk tonnage
1.2-1.5 g/t resources. Our expected
capital and operating costs are expected to be reasonable and for gold mines
and the operating parameters should be robust.
I
am not going to predict operating costs or capital budgets at this stage. We prefer to base these statements on properly
prepared feasibility studies which will evolve as we further develop the
assets. We do refer people to the
disclaimers in our stock exchange announcements as these are project
assessments based on our current work and reflecting the current status assessments
of our assets.
corporatefile.com.au
How
will you develop each project
CEO John Langford
Engenho is already in
production and we expect to get around 34,000 ounces next year. This will be enhanced by the
production we expect to generate from a likely open pit operation at Crista, which we are aiming to have in production by
mid-2010. The drilling we are doing
now is an important step to allow us to move forward with the assessment of Crista, including a feasibility study and logistics, but we
expect this to be a very achievable target.
We
have just announced some initial results from Crista
which have provided early confirmation of the potential of this area as
outlined from previous trench sampling.
The first two diamond drill holes both intersected ore grade mineralisation including zones of 7.35 metres
at 5.67g/t (including a high grade zone of 2.2m @ 12.7g/t) and 5.2m @ 15.02g/t. As I mentioned earlier we won’t be
reporting results on a hole-by-hole basis from here on, as this drilling is
designed to test the overall potential of this area and underpin an initial
JORC resource estimate.
Torrecillas will be
developed via declines on three separate veins allowing mining to operate
concurrently with the planned development.
The team on site is aware of the challenges to achieving our target and
we remain confident of getting the logistics and feasibility study under
control in the next twelve months.
Jaqueira will also be
an underground operation and we will be progressing
our mine development and logistics plan to ensure we meet our tonnage and grade
expectations.
corporatefile.com.au
What
has been the recent operating experience at Engenho
Gold Project What
are your current production and cost expectations including longer term plans
CEO John Langford
The
orebodies
are performing well from both a tonnage and grade perspective and we are able
to plan the mine management effectively.
The development is where we wish it to be; and for each month so far of
the 2009 calendar year our current budget period ? we have achieved excellent cost management in all areas of
our business and we expect that will continue.
corporatefile.com.au
Can
you give more detail on the trial stoping at Torrecillas How do you expect to develop the
mine to meet your commercial production objectives
CEO John Langford
The
trial stoping
is achieving excellent success.
Even though it represents small tonnage and is part of our project
assessment, we are achieving excellent continuity of mineralisation,
the mining is not incurring significant dilution and we are achieving grades of
more than 22g/t. The grade
for May looks as though it will be about 25g/t.
We
are still currently working through the logistics of full production at Torrecillas and we will, in the next few months, move to a
full feasibility study. Production
from Torrecillas is relatively simple with the ore
being non-refractory and treated through a standard CIP process. The treatment facility may well be
located on a tenement we have about 40km away from the mine, as this is closer
to water sources, power, etc, but logistically this is not a major issue for
us.
We
are hoping to have Torrecillas developed and in
production by mid to late-2011.
corporatefile.com.au
You
reduced exploration activities significantly around six months ago. With Engenho
now on track, how much discretionary expenditure can you devote to corporate
growth projects How quickly can you accelerate the
Company’s growth profile from now on?
CEO John Langford
This
calendar year, including the work we are doing at Torrecillas
but excluding development work on the Engenho mine
(which is not classified as exploration), we expect to spend about A$6.5 million in project exploration and assessment
activities.
With
respect to the pace we will develop these assets, I am going to be a little
boring and state that we will continue to be very disciplined and do the work
we need diligently and properly.
The actual timeframe will be largely dictated by how these assets
evolve, however we do believe our production profile is reasonable given the
work we need to do on each asset.
corporatefile.com.au
Thank you John.
For
further information on Mundo Minerals Ltd visit
http://www.mundominerals.com/ or contact John Langford on 08 9429 8889.