I would like to kick off this interview with a big thanks’ to Dave for taken the time out of your schedule to take time to talk to ABM from Share Talk.
I had the pleasure to chat with Dave in-depth on his last visit to London about the company’s structure, future plans and a story holder, investors deserve to hear.
Q: First question Dave, are you still on the road, what are you up to? privateers’, investors don’t pick up on is how many miles, days you guys spend away from home.
A: Alex, I have been home for one week, but off again tomorrow bright and early to Kalgoorlie to meet up with the team to better see how they have been progressing the gold in my absence. We will also meet up with potential mining contractors and the Paddington senior management to make sure all is getting ready for next year.
Q: Why the name change from Ferrex PLC AIM: FRX who will be renamed to Keras Resources PLC AIM: KRS with effect from Monday 14 December 2015?
A: We felt with our strategic shift to lowest quartile development anywhere and in any commodity and a shift away from iron, our old name did not reflect the future of the company. As such, with the announcement of the gold transaction, we believed it time to make a fresh start.
Q: Can you introduce the background of new non-directors?
A: Our newest non-exec is Peter Hepburn-Brown. Peter is a hugely experienced mining engineer/manager that specializes in narrow vein underground mines and is one of the main driving forces behind the company we acquired. I worked with Peter in a gold mine that we developed where he was Mine Manager and I was his 2 IC technically so we go back a long way and work well together. Peter will be quite hands on and is driving the re-establishment of the Prince of Wales mine that is in our tribute. It was being actively mined before a flooding incident in the 90s due to a cyclone so all we have to do is de-water and re-equip and we are back into stope areas immediately. The main driver here is the high grade, historically they mine 10 to 12 g/t and it still has a resource/target of 650,000t at 10 g/t so a longer term option for us at really good grades and hence margins.
Your personal background has been well documented with your involvement in mining precious, base and industrial minerals throughout your career. Involved in developing projects in Africa, including Zimbabwe Platinum Mines Limited (“Zimplats”) and Afplats where you worked on the feasibility studies and development of the projects as well as being involved in the sale of both companies.
Q: Can you comment on how much these companies sold for and with over a decade working on these project, why did you form Ferrex PLC
A: Zimplats sold for approx. USD400m and Afplats $600m. Once Afplats was sold, we were looking around for the next thing to do and iron ore was really taking off so we looked around for near infrastructure iron deposits and then manganese as it seemed a similar steel focused mineral. Unfortunately, we had a few delays in various permits which delayed us and meant we missed out on the peak of the cycle, hence a navel gaze where any commodity, anywhere as long as it is low cost is our strategy rather than a single commodity or geographic area.
Q: TheDirectors own over 25% of company shares in issue and have paid when funds have been required. I would say that is a massive boost for any shareholder or invest. Do you think in the current market this is being reconised?
A: Directors are fully leveraged into the company and have supported it at every raise. I am not sure if people really appreciate the effort Directors have put in with our non-execs having not been paid for 2 years and all senior management on 75% salaries plus contributing cold hard cash to the business. Having said that, we are doing it for a reason, as we believe it will be worth our while.
Q: Gold Production Australia will be delivered in H1 2016 following the successful acquisition of Chaffers Miningreading news updates. How much net profit does the company envisage per Quarter from this project?How conservative is 20k -30k tons ounces per annum?
A: We are finalizing budgets as we speak and will put out more detail on this, however EBITDA should be in the vicinity of our current market cap, hence the support of Directors! Add Togo to this and the picture gets a lot more exciting!
Q: Do you have a date for Drill and with the area/plot being so large, is there scope or plans to drill other area’s?
A: We have spent the last week selecting our 5 priority targets out of the 12 known deposits. We have started re-modelling them and re-running the numbers. We have two deposits that we will drill in the very near term, they are at surface, no waste, 1.5g/t laterite deposits and will form the first areas we mine. We will then move onto two pit cutbacks, one that Barrick studied previously and during this time get the underground setup. Again, more detail will provide on this early next year.
Q: Are you in the market for other Gold opportunities? Would a JV be out of the Question?
A: We certainly are, we see Australian Gold as a very good place to be at the moment and lots of other opportunities in this space.
Q: Iron Ore: Do you believe in the current climate there is still value to be had mid-term?
A: Being realistic, I see this commodity as having a long tough road ahead, hence why we are looking at other options to leverage in-region requirements for value added products
Q: The big question on most PI minds is The Nayega Manganese Project in Togo – the Mining License, which is under application. The Feasibility Study has been completed but won’t be released until the license is issued. How big a game changer is the Togo project to the company and shareholders?
A: I think Togo is probably more important from perception rather than reality as the gold opportunity we are building could potentially eclipse Togo in earnings. Having said that, Togo will be an important building block in the development of the companies’ cash flows and will be developed once the license is issued and we have bedded down the gold
Q: Where do you see Keras Resources in 6 – 12 – 24 months down the line.
A: In 6 months’ time, Keras will be cash flow positive. In 12 months’ time, we will be at steady state in the gold, hopefully have added some more to the gold portfolio and be developing Togo. In 24 months’ time we should have significant cash flows and be using these to value add to shareholders be it through new projects or dividends.
LSE Share Talk will be following Keras Resources PLC progress over the coming year and if you wish to follow the twitter account @kerasplc or look at the company website www.ferrexplc.com . This is a company short – midterm business plan looking very interesting and one people should put on their watch list.
Share Price on day of publication 0.045p
One again thanks Dave for the interview and we look forward to updating Share Talk subscribers on Keras Resources future updates
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