Integra
Mining Limited (ASX: IGR)
ASX
RELEASE
20 February 2008
Open
Briefing®. Integra Mining. Increase in Resource & Growth Plans
Record of interview:
corporatefile.com.au
Integra Mining Ltd (ASX code - IGR) is progressing its
Aldiss-Randalls Gold Project (100%), located east of Kalgoorlie, to development. Integra recently
announced an increase in JORC resources of 38% to 18 million tonnes grading
2.8g/t gold for a contained 1.6 million ounces of gold. What level of resource
is required to proceed to development? What is the significance to the Company
of this resources increase?
MD Chris Cairns
Subject to a scoping study currently underway, we believe
that we’ve identified sufficient resources to underpin our target of producing
120,000 ounces per year with a mine life of five years. This is an improvement
on the targets we set ourselves in 2007 of identifying sufficient resources for
100,000 ounces per year for five years. Our exploration success in 2007
culminated in the maiden resource of the Salt Creek deposit.
The significance of the increase in resources is that the
Company may be able to proceed with its development activities without having
to identify any additional resources, so any additional exploration success we
have this year will really represent ‘cream’ for the operation.
corporatefile.com.au
Where are your current resources for Aldiss-Randalls
located? What are the best deposits so far?
MD Chris Cairns
Integra’s gold resources are split between the Aldiss,
Randalls and recently acquired Mt Monger gold projects, with approximately
500,000 ounces in the Aldiss project, approximately 1 million ounces at
Randalls and about 100,000 ounces at the Mount Monger
project.
In terms of ranking the deposits, the Maxwells deposit at
Randalls has 2.4 million tonnes at about 5.2g/t and contains about 410,000
ounces of gold. This would have to rate as the best gold grade. The flipside
with Maxwells is that the gold mineralisation is hosted in parallel zones of
banded iron typically between two and five metres wide. This
mineralisation will have to be selectively mined to ensure that we
don’t dilute the grade too much.
On the other hand, the recently discovered Salt Creek
deposit has an initial resource of 2.8 million tonnes at 2.7g/t containing
approximately 250,000 ounces of gold. Salt Creek will provide the bulk tonnage
feed for our mills, while Maxwells will deliver less tonnes, but at a higher
grade. Therefore, the two major gold deposits are complementary from a production
perspective.
corporatefile.com.au
Integra recently completed a $31.5 million share placement.
What is your current funding position? How will you allocate the funds?
MD Chris Cairns
Our cash position as at 31 December 2007 was $28.6 million and
we won’t need to raise additional funding for the remainder of our 2008
work programmes. Our 2008 capital expenditure budget is split into development
and exploration. On project development we have allocated approximately $5
million on the disassembly and refurbishment of our New Celebration mill and
another $5 million for feasibility studies. The mill disassembly should be
completed by end June and the feasibility study by the end of the year.
We have allocated approximately $16 million to our exploration
programs and that is probably one of the most substantial programs for any
company in Australia.
In 2008, we’re targeting to increase total resources to between 2 million
ounces and 2.2 million ounces with approximately 1 million ounces of resources
in open pit optimisations.
If our exploration efforts are successful, an additional
discovery could be a major driver of value for our shareholders, and
we’re committed to aggressively pursuing some of the excellent
opportunities we have identified.
corporatefile.com.au
What are the drilling programs you have planned in the area,
including resource extensions and exploration for new resources? What are your
expectations?
MD Chris Cairns
We recently released an exploration update presenting the
results of reconnaissance air core drilling conducted in late 2007. These
results highlighted three new prospects – Salt Creek South, Mohegan and
Lucky Bay North in addition to the already significant Red Dale prospect. Red
Dale remains by far our most significant opportunity. In conjunction with
the new prospect areas, these opportunities are expected to
form the core focus of Integra’s 2008 regional exploration program.
corporatefile.com.au
Apart from your exploration programs and your objective of adding
to resources, what are the key milestones to get Aldiss-Randalls into
production?
MD Chris Cairns
We have been fairly opportunistic in buying the
infrastructure assets required to get into production including the New Celebration
processing mill and a 140 man camp and we now have all the infrastructure
required for development. We will soon be seeking quotes for the open pit
mining costs from contractors and we will use those mining costs to re-optimise
the pits and also use them in our scoping study, which we hope to complete near
the end of March. Assuming the scoping study returns a robustly positive
outcome, we’ll proceed into a feasibility study to be completed by the
end of the year. I think with the current gold price and the grade of resources
we’ve identified to date, it’s a bit
of a no-brainer that the scoping study will deliver positive
outcomes. We believe the progression into the feasibility study is relatively
assured.
corporatefile.com.au
The Salt Creek discovery within the
Aldiss-Randalls Project has confirmed good widths and high grades of gold
mineralisation. Can you describe the extent and orientation of the
mineralisation and the grades and the continuity? How important is the Salt
Creek discovery to the project?
MD Chris Cairns
In terms of orientation, it is cylindrical and shallowly
dipping to the south east. The grade continuity is fantastic between sections.
The exposed sections at the open pit floor are expected to be hundreds of
metres along strike and 30 to 50 metres wide. This should suit bulk, open pit
mining and should also result in minimal dilution.
The importance of the Salt Creek discovery to the project is
twofold. Prior to Salt Creek, we had a substantial resource of contained gold
at Randalls, but Salt Creek now provides a bulk mining operation and should
provide the base load mill feed to complement the higher grade ore at Randalls.
Importantly, Salt Creek is located in an area where previous
explorers had overlooked the potential for gold mineralisation. The knowledge
and understanding of the controls over the mineralisation in that area has us
well placed for additional discoveries. In exploration nothing is certain, but
I like our chances.
corporatefile.com.au
What’s the status of Integra’s New Celebration
Gold Plant that you will relocate to Aldiss-Randalls? How much capital
expenditure will be required for it to be refurbished? What is its capacity?
MD Chris Cairns
The plant is approximately 25 kilometres south of Kalgoorlie and 60
kilometres west of Salt Creek. Late last year we tested the mills, the conveyor
belts and the pumps and everything looks to be in good condition.
We acquired the New Celebration mill for $3 million around
18 months ago, which was relatively cheap compared with a replacement cost of
about $25 million. In our pre-feasibility study we have assumed capex of $50
million to refurbish and relocate the mill to near the Salt Creek deposit. Our
feasibility study, which we expect to complete at the end of the year, will
provide a more reliable number.
The New Celebration mill has substantial crushing and
grinding capacity at the front-end so we felt that it was suited to the medium
to hard ores. The ore at Salt Creek is expected to have a work index of around 18
and therefore the mill will probably have a production capacity of about 1.35
million tonnes per annum. That would translate to a production rate of about
120,000 ounces per annum.
corporatefile.com.au
Integra’s other main project is the Oodnadatta copper-gold
project, South Australia;
a JV with Barrick Gold. How important is the project to Integra? Can you
provide an update?
MD Chris Cairns
Since the December half last year, Barrick has been
conducting a drilling program targeting four gravity anomalies looking for
‘Olympic Dam’ style copper gold mineralisation. Each quarter they
update us about their activities as they’re required to do under the JV
agreement and we consider that they are progressing these programmes
professionally.
Barrick is currently spending $3 million to earn 80%, and
Integra can elect to contribute or dilute our 20% equity position. Should
Barrick hit something substantial, 20% of a major discovery would be
significant to Integra – although Integra’s current share valuation
is not dependent on success at this project.
corporatefile.com.au
Can you comment on the relevant experience of
Integra’s Directors and management team? Who are your major shareholders?
MD Chris Cairns
The composition of the Integra Board is a little different
to similar-sized mining companies in that we only have three Directors. The
Board is independent of the major shareholders and we are able to make
decisions fairly quickly. However, despite being small in number, our range of
experience is diverse. I am a geologist with experience in project development
and my background prior to Integra was with Sino Gold as geology manager. I
oversaw the drill-out and feasibility study on the Jinfeng project which is now
in production. Prior to that, I was with LionOre as a
supervising geologist at Thunderbox. My background in more recent years has
been in taking projects through the exploration, drill out and feasibility
stages. Our Chairman, Graeme Beissel, is an engineer and the former MD of
Macmahon Holdings and a former director of Concrete Constructions. He
brings a great depth of engineering and management
experience and is a great asset and contributor to the Board.
Peter Ironside is a Chartered Accountant with over 20 years
experience as a company secretary and accountant with resources companies and
he provides significant input from a commercial perspective. Our board has a
very workable balance of experience.
Our major shareholders are the Telluride Investment Trust,
Acorn Capital and Renaissance Capital. The first two became shareholders about
three years ago and although they have been well rewarded, we believe they will
continue to support our vision of longer term value creation for shareholders.
corporatefile.com.au
How will you grow the Company in the longer term? What is
the value proposition for investors?
MD Chris Cairns
In the short term, we are concentrating on project
development and exploration. Development of our large resource base at
Aldiss-Randalls will get us into production and generate cash flow to fund
ongoing exploration.
Exploration is extremely important for mining companies
because it can create significant value from relatively small investments. For
example, last year Integra spent $10 million on exploration, but our market
capitalization increased from $40 million to $170 million. That is the
magnitude of investment return we’re looking for from exploration.
In the longer term, we’ve initiated exploration
programs with the objective of identifying a major new discovery within a timeframe
of three years of plus 1 million ounces to extend the mine life of
Aldiss-Randalls beyond what we will have identified by the end of 2008.
The long term future for Integra shareholders is sound
because we will be developing Aldiss-Randalls from a strong financial base and
it should generate very significant cash flows, which we can use to fund
exploration to drive superior returns for shareholders.
corporatefile.com.au
Thank you Chris.
For further information on Integra please call Chris Cairns
on (08) 9423 5920 or email chris@integramining.com.au
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Comments regarding Exploration Results and Mineral resources
made in this interview are a summary of information extracted from several
Public Report(s) released by Integra Mining Limited in 2007 and 2008.
Information regarding Exploration Results and Mineral Resources in this
interview is considered by Chris Cairns, who is a who is a Competent
Person as defined in the JORC Code (2004), to be a fair and
reasonable summary of the information in those Public Report(s) and who agrees
to the form and context in which it appears in this summary report. Exploration
targets mentioned in the interview are targets based on known mineralization in
the area and opportunities for further discovery,
however, investors are advised that the targets are
conceptual in nature and it is uncertain that further exploration will result
in the determination of additional Mineral Resources.
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