Mundo Minerals Limited (ASX: MUN)
Title: Open
Briefing�. Mundo Minerals. Engenho Commissioning & Growth Prospects
Record
of interview:
corporatefile.com.au
Mundo
Minerals Limited (ASX code � MUN) is currently commissioning its Engenho Gold
Project (MUN 100%) in Brazil.
Can you give an update on the commissioning progress and timetable, expected
first gold production and the scheduled ramp-up?
CEO
John Langford
The
team in Brazil
has made great progress with developing the mine and treatment plant under
budget and in a commendable timeframe. The quality of the work and general
housekeeping around the mine site is excellent and the quality of the team
developing the mine and operating the treatment facility is first class. All of
our key personnel have significant experience in the areas they are responsible
for. The treatment facility has now been handed over from the construction team
to the operating team and ore is currently being processed.
Commissioning
has largely been a progressive strategy as major items were completed. For
instance, the crusher was commissioned and has been operating now for a few
months and the mill was commissioned and handed over in mid- April. We are
anticipating that we will have our first gold pour, hopefully in late May.
Mining commenced in November 2007, enabling us to develop a stockpile of ore
prior to commissioning. This is now feeding the mill and ongoing mined ore is
replenishing the stockpile.
As with
any mining project, initial ore tends to be development ore which logically is
used for plant commissioning. We do not anticipate any issues with completing
commissioning and the process is expected to be very quick. As an ongoing
planning process, we are managing the mine modelling and we currently are
looking at a couple of mining methods to maximise efficiencies. For instance,
in one area where we have identified new ore zones we believe that this will be
amenable to long-hole stoping, thereby increasing available tonnes. We will
most likely trial this in the near future once we have developed appropriate
access.
Overall,
we are really comfortable with progress and, yes, it is an exciting time for
the Company as well as great to commence a sustainable period of cash flow.
corporatefile.com.au
What
confirmation of the resource model are you getting from mine development so
far?
CEO
John Langford
It is
still relatively early stages into the mining and, at this stage, we are only
mining ore from the open pit wall. The decline continues to make excellent
progress and we expect to access ore from the main Engenho ore body around
November. From what we are seeing in the development to date, the mine is
demonstrating good reconciliation to the ore resource model. As with all mines
there are variances but, where we are finding that ore is not reconciling to
the model, we are more than compensating for this with new structures that are
being found, and at this stage the new structures are delivering good grade.
The
interesting factor associated with mining is that, until the ore body is
developed, there is always a degree of uncertainty in any resource model. This
degree of uncertainty diminishes as more development exposes exactly what the
structures are doing. Our team is diligent and we have excellent housekeeping
procedures in place that are designed to enable the geological and mining team
to work to maximise the potential of the mine. We are quite excited by the new
ore sources that are being uncovered.
corporatefile.com.au
Mundo
is making good progress in advancing several other exploration projects.
How
important is Engenho to prove your credentials as an operator? To what extent
would this de-risk the Company?
CEO
John Langford
When we
established Mundo, our strategy was always to build sustainability and
accretion in shareholders� value by developing a pipeline of projects at
various stages in order to deliver ongoing growth in our production base. This
means that, in addition to production assets, we need strong exploration assets
as well as assets that are close to production. We are fortunate to have an
excellent portfolio of assets in all three categories and, at this point, our
view is that all of our projects have the potential to develop into production
assets. Notwithstanding this, we must ensure that we have the capabilities to
manage our growth and our assets. It is essential that we prove our credentials
as an operator so investors have confidence in our ability to deliver
sustainable growth.
To
enhance this approach we identified early on that, as far as possible, we
needed to minimise learning curves in the countries we were operating in. We
did not wish to send a group of expats to South America
to learn how to operate. All of our senior people in South America have more
than 20 years experience operating in South America
in the areas of expertise they are responsible. Significantly, this team has
recruited the second tier management team with a similar experience profile.
As is
well known, our Board has an enormous depth of experience in both the corporate
and technical areas of the resources sector. In fact, we were punching well
above our weight when we established the Board, however we were confident that
we would justify this depth of experience with the assets and people we were
putting in place. Just prior to Easter, the directors visited Brazil and held technical briefings and site
visits at Engenho and Tocantins. It is a
credit to the local team that the feedback from the directors was that they had
not had more thorough and competent briefings from any other team that they had
been associated with.
Coming
from those guys, that is a huge compliment to Mike Schmulian and the team in South America.
The
delivery of our first production assets within 18 months of listing and
substantially under budget is an outstanding result. The quality of the work
done has been excellent and we are, I believe rightly proud of our
achievements. We now have to deliver on an ongoing basis but we are absolutely
focused, and we have the right management team and asset base in place to do
this. As an ore body progressively de-risks as it is developed, I am confident
that we will continue to prove to be competent managers of our asset base and I
am sure the investment community will endorse this approach. Our key measure is
delivering sustainable accretion in shareholder wealth.
corporatefile.com.au
You�ve
recently released several encouraging announcements on exploration at, and
around, the Engenho Gold Mine. At the mine, you�ve stated that mine development
to date has identified a number of new ore sources, confirming the potential
for parallel ore bodies. Can you give more detail on why you believe there may
be new ore sources? What is the potential of these?
CEO
John Langford
When we
initially acquired Engenho, we saw it as a foundation asset which could deliver
a reasonable cash flow to develop other assets for the Company. We had no great
expectations of exploration potential from the Engenho tenements.
However,
at a relatively early stage in assessing the data acquired as part of the
project acquisition, our technical guys identified that there was excellent
potential for additional ore bodies parallel to the existing ore body.
In
addition, we identified an anomaly about 750 metres to the north of Engenho,
known as Mazoca, which showed strong correlation to the original anomaly that
developed into Engenho. This encouraged us to take exploration up the list of
priorities for Engenho. As mentioned earlier, we are finding additional ore
sources as we are developing the existing ore body and we remain confident
that, as we develop these parallel ore sources, we will continue to upgrade the
exploration potential at Engenho.
corporatefile.com.au
You�ve
also been encouraged by the results of a major soil sampling and mapping
program on the Engenho tenements, the identification of a large gold anomaly
and rock chip samples from old workings. Can you explain why you are so
encouraged by these results and what it means for the potential of the Engenho
tenements?
CEO
John Langford
With
respect to Mazoca, we took the decision to conduct a systematic mapping and
soil sampling exercise over the broader area surrounding Mazoca and down to
Engenho so that we could assess any trends that were developing before
commencing drilling. This exercise has been exceptionally successful and the
soil sampling has identified significant regional trends and substantially
enhanced the previous potential targets.
We
still need to conduct drilling but our Engenho tenement now contains a number
of high quality exploration targets with the potential to significantly enhance
our resource base. When we started this exercise, it was simply designed to
enhance an anomaly prior to drilling; the result is that we now believe we have
more of a geologically prospective region than a high quality anomaly. This is
a really exciting development for our Company and, importantly, we have
incorporated maximum flexibility in the design of our existing treatment
infrastructure to cope with additional ore sources.
corporatefile.com.au
What
approach will you now take to exploration at and around Engenho? What priority
will you allocate to those various opportunities now identified including
Mazoca and the parallel ore body potential?
CEO
John Langford
Again,
we will be disciplined in our approach to exploration. The regional sampling
exercise has vastly enhanced our expectations of the potential of the tenements
outside of the existing ore body. We will now properly assess that data and
plan a systematic drilling programme. Mazoca remains a high priority target and
will most likely be the first target tested, but we will take a couple of weeks
now to properly absorb all the information so that our exploration approach is
well structured and our exploration dollars are well spent.
corporatefile.com.au
You
have recently confirmed drilling programs for your new projects at the Nova
Prata Gold Project in Brazil
(Tocantins JV � 51%) and the Jaquiera Gold Project in Brazil (option to acquire 100%).
Why were you keen to secure these projects?
Can you
describe the geology within each project and what the drilling programs will
test?
CEO
John Langford
The
resource industry is a high risk industry and it�s important to ensure that the
pipeline of assets being assessed and, if appropriate, developed is a dynamic
group of assets. While we have great expectations from all of our existing
projects, we must not be complacent in growing our asset base. The opportunity
to secure both of these new projects was seen as strategic given that we have
assessed both as high level exploration targets with excellent potential to
develop into production assets. Time will tell if we are right, but the team is
excited by both.
The
strategic addition of Nova Prata was reasonably obvious. It is located within
the greenstone belt that we are already exploring at Tocantins
and was a logical addition to our existing portfolio in the region when it was
offered to the Tocantins Joint Venture. In addition, it has a very significant
geochemical anomaly over the primary tenements that we are interested in.
The
Nova Prata target is a little different to the other targets we have at Tocantins which tend to be mid-sized, high grade (6-9g/t)
targets. Nova Prata is assessed as having the potential to host large tonnage,
medium grade (2-3 g/t) resources. We have not yet tested this anomaly but the
geologists have a high regard for the asset and we hope it will further enhance
the already considerable potential of the greenstone belt at Tocantins.
With
respect to the Jaquiera asset, our exploration manager conducted three site
visits to this region prior to us committing to the project. It is a well
defined historic gold production region where a Canadian company is currently
producing in excess of 100,000 ounces per year. There are several historic gold
workings on the tenements that are included in our Jaquiera asset. The
geologists have assessed the geological data as well as visited the tenements
and assessed the regional geology. The mineralisation is largely hosted in
conglomerates and one key target is hosted in dolerite, which is the same host
rock as the Kalgoorlie Golden Mile.
We have
assessed the potential of Jaquiera as hosting medium-sized gold resources at
medium-to-high average grades. Once again, this is a new project and we need to
undertake exploration in order to confirm this assessment. Planning is
currently being undertaken to enable drilling to start in the short term.
corporatefile.com.au
Diamond
drilling has been continuing at Tocantins Gold Project on the major anomalous
area within the Concei��o anomaly. Visible gold has now been encountered in
four of the diamond drill holes. How has this drilling enhanced the
interpretation of the mineralisation? What is the potential for this area to
develop into a commercial gold mining operation?
CEO
John Langford
Concei��o
is an exciting exploration asset for Mundo Minerals. We have previously
provided information regarding the emergence of strongly anomalous zones over
an extensive area that were initially developed through RAB drilling and
subsequently enhanced through diamond drilling. This target is located within
the greenstone belt at Tocantins and initial reconnaissance drilling identified
two anomalous zones with the largest having a strike in excess of 1.5km.
Diamond drilling was undertaken to follow up the RAB successes to identify the
structural characteristics of the anomaly.
The
visible gold has been replicated and is an additional feature of the broader
drilling programme. The main focus of the last period of drilling has been on
understanding the structural characteristics of the anomaly so we can ensure
that, when we move to resource drilling, it is strategic and effective
drilling. We now believe that we have a good understanding of how this
mineralisation is structurally emerging and it appears that they are pipe-like
structures which may well be amenable to extraction via open pit.
Of
course, we need to do more work to further develop this but the next phase of
drilling will be designed to develop a measurable resource according to JORC
standards. We look forward to the next stage of development of this exciting
asset, but rather than taking a hit and miss approach, we have just recently
temporarily suspended drilling while we undertake a complete data review. This
will ensure that our geologists can most effectively plan the next phase of
exploration at what we see as an exciting emerging production asset for the
Company.
corporatefile.com.au
Can you
outline recent results at other projects such as the Torrecillas Gold Project
(Peru �
Mundo 100%) and their significance?
CEO
John Langford
Torrecillas is an
advanced asset which is currently at the assessment stage. The asset relates to
high grade gold associated with narrow vein structures. With this style of
mineralization, drilling alone will not provide an appropriate level of comfort
to the resource base to enable us to make a decision to move to production.
The
most appropriate method of evaluation is to actually develop along the vein
structures and open up the mineralisation. We are currently developing an
exploration decline, as well as developing from existing underground workings.
This
will take us approximately 18 months and, frankly, we need to complete this
work before we can form any real project assessment view.
Progress
and results to date from this program have been very encouraging, however I do
not want to pre-empt the outcome. We are simply getting on with the job and, in
the meantime, we are continuing to get our minds around production logistics
for this project. For instance, we have booked a mechanical ore sorting test in
Germany
for May where a 400kg parcel of ore and waste from Torrecillas will be assessed
to see how it reacts to mechanical ore sorting. This may enable us to look at
bulk mining processes and beneficiate the grade on the surface rather than
focusing so much on the labour intensive mining processes associated with the
selective mining required to mine the narrow veins without dilution. This could
well advance our logistics for mining significantly. We did conduct a small
test late in 2007 which was encouraging but this forthcoming test will be more
definitive.
Torrecillas
is advancing well and we believe that this asset will be a strong contributor
to the Company in the future but we need to do the work systematically and
properly so we do not make ill-considered business decisions. Once again, this
is a focussed and discipline approach consistent with the culture we are
developing within Mundo Minerals and we look forward to the next period of
development of this asset.
corporatefile.com.au
Can you
sum up the recent highlights from across your project base for shareholders of
Mundo Minerals and the investor proposition looking forward?
CEO
John Langford
I have
covered in reasonable detail the specifics associated with all of our assets.
As I
said earlier, we set out to establish Mundo Minerals as an emerging gold
production company with a sustainable future. The best summary I can provide is
that we
have an excellent team, great assets that are all showing substantial potential
and an emerging and sustainable cash flow. For a company that has been
listed
around 18 months, we are proud of our achievements to date but also realistic
that we have a lot of work still to do and we know that we have to now deliver
consistent
results from operations and exploration.
To date
we have managed to deliver strong and sustainable growth for our shareholders
and we are confident we will continue to do so in a disciplined manner.
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.
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