Bass Metals Ltd: March 2010 Quarterly Report of Activities & Cashflow

(firmenpresse) - Bass Metals Ltd: March 2010 Quarterly Report of Activities & Cashflow

•Strong closing cash position of $17.6 million.
•Operating revenue for the quarter estimated to be $3.3 million.
•Optimisation of the Hellyer Mine Project DFS results in improved project EBIT of $54 million (up 13%) and lower benchmark C1 production cost of US$0.17/lb zinc (48% lower), after credits.
•Hellyer Mine Project approvals completed and work commenced; mill refurbishment progressing well and the Fossey decline has progressed 38 metres from the portal.
•Specialist metallurgical consulting group retained to undertake major gold recovery study based on Hellyer Tailings and hard-rock gold resources.
•Exciting new outcropping Fossey style VMS mineralisation discovered south of Fossey over 100 metre strike extent, within a large 600 metre long soil anomaly not previously drill-tested.
•Diamond drilling testing of new target zones continuing, with second rig arriving at site in late March. Currently drilling at Nth Hellyer and Mt Charter West.

I am pleased to attach the March 2010 Quarterly operating and cash flow report for Bass Metals Ltd (ASX:BSM). Every quarterly period appears to mark at least one new milestone achieved or met by Bass Metals, and the March 2010 quarter is no exception.

In this period Bass received all the statutory and internal approvals for the development of its second and larger scale mine, the Hellyer Mine Project, and commenced development activities. During the quarter the Company immersed itself in the activities associated with the launch of the Hellyer Mine Project with the consequence of significantly advancing its transformation towards becoming a mid-tier diversified mining business.

However, whilst the day to day activities of the Company are centred around the management and governance of our producing assets and development projects, it is important that we also stay very focussed on the broader objective of the business, which as stated in Bass’ Business Plan is; “to develop profitable mining operations from mineral discoveries or acquisitions to achieve the prime objective of increasing shareholder’s wealth”. This objective is predicated on the application of our sustainability policies; including Safety, Environment and Governance; which underpins the business processes that support the interests of all other stakeholder groups.

Whilst it is a great achievement to be expanding the business through the development of a new mine, the Board is aware of the “prime objective” and the necessity to again widen the scope of activities beyond the HMP in pursuit of that goal. Therefore, the priority to increase the scale of production and mine life to improve the stability of underlying profits and cash flow is again the Company’s core focus. At present Bass is developing an Ore Reserve at Fossey with a 2.5 year production life, with plans to extend that to 5 years based on existing neighbouring resources at Hellyer and Que River. This is clearly a major boost to the scale of production (c.400,000tpa of ore processed) to the levels of several well known Australian mid-tier producers, but Bass needs to build in “life” and potentially further expand scale to achieve increased profits and higher valuations to meet the Prime Objective.

This quarterly report clearly demonstrates the near-term increase of production growth but also the refocus towards building up its longer term assets. There are significant opportunities within the Company’s existing resource assets to increase production life and scale. The 10 million tonne Hellyer Tailings resource represents an opportunity for a long-term re-treatment project running in tandem with the “hard-rock” processing operation. A prefeasibility study examining the key aspects to develop an integrated, long-term project is well advanced. Bass also has a significant gold inventory contained both within its hard rock resources and the Hellyer tailings; the latter alone contains approximately 800,000oz of gold. In recent years Bass has undertaken several rounds of testwork and studies examining the potential to recover this gold; but always as a lower priority to other, more imminent production opportunities. However, this quarter BatteryLimits, a metallurgical consulting group with specialist expertise in refractory gold, has been appointed to generate a recovery solution for this gold. There is likely in excess of $10 million worth of testwork and studies largely from the 1980-90’s; with new technologies, a larger resource base and a higher gold price it is exciting to consider what may now be possible.

Those are growth opportunities based on existing assets. This quarterly report also highlights further exciting developments toward the discovery of major new ore bodies. The new targeting process has clearly been successful in identifying prospective targets which the Company is systematically testing. This quarter a particularly exciting aspect is the discovery of outcropping Fossey style mineralisation 500 metres south of the Fossey deposit. The extent of the outcrop and the scale of the associated soil anomaly and its occurrence at the Hellyer ore position again demonstrates the increasing momentum building towards another major new find. There are currently two rigs at work on new targets; Mt Charter West and Nth Hellyer.

Turning from the higher level strategic issues related to the Prime Objective – of shareholder wealth, back to the current financial position of the business; the Company is currently in a strong cash position with $17.6 million. The cash contribution from the Que River Mine was lower than forecast at $1.8 million due to lower ore sales and mine production, which was partially offset by higher grades and metal prices and maintaining the project’s positive cash flow track record. The Que River Mine operation is in its last few months under the existing ore sales arrangement with MMG Rosebery operations. A substantial increase in ore production is planned for the next quarter as the PQ Nth pit is largely completed and waste mining requirements reduce.

The main cash outflows during the period comprised the HMP development ($0.5 million) and exploration ($1.3 million). The expenditure rate for the HMP is planned to increase in the next two quarters and, to ensure that Bass has sufficient funding to continue its exploration and other growth strategies it is seeking a $12 million debt facility from RMB Resources Limited. A financing mandate was signed in January 2010 covering separate debt and hedging facilities and Bass and RMB Resources have been working on completing the Conditions Precedent, such as technical due diligence, to gain access to that facility sometime in June 2010. Bass expects a final commitment from RMB Resources by late April and is not aware of any reasons why that will not be forthcoming.

In summary, the quarter was another significant transformation period for the Company as it establishes its new production profile and incrementally builds up its exploration results to “home-in” on its next discovery. Management has re-set its development focus to address the weak link in its business case – namely mine-life. Financially, the Company is in a sound position and finalisation of the RMB Resources debt facility will demonstrate its capacity to complete the HMP development. Shareholder value in the past few months has been disappointing given all of the above and the Company is stepping up its efforts to get the Bass story across to investors. This appears to have been resonating well in Europe, particularly over the March quarter, with our estimates indicating that approximately 11% of Bass’ shares are now held there, mainly by German and Swiss investors.

On behalf of the Board and employees I look forward to personally presenting the Company’s achievements and plans as well as reporting further news on our ongoing production and exploration activities.


Yours sincerely


Mike Rosenstreich
Managing Director


Competent Person
The information within this report that relates to exploration results is based on information compiled by Mr Kim Denwer and Mr Mike Rosenstreich who are both full time employees of the Company. Mr Rosenstreich is a Member of The Australasian Institute of Mining and Metallurgy and Mr Denwer is a Member of the Australian Institute of Geoscientists. They both, individually have sufficient experience relevant to the styles of mineralisation and types of deposits under consideration and to the activities currently being undertaken to qualify as a Competent Person(s) as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and they consent to the inclusion of this information in the form and context in which it appears in this report.

Technical Detail
This Report aims to provide a high level summary of various technical aspects of the Company’s projects. For more details on the underlying technical parameters the reader is referred to the ASX Reports on the Bass Metals’ website, www.bassmetals.com.au .

To view the full press release including the “March 2010 Quarterly Activities Report”, please follow the link: http://www.bassmetals.com.au/aurora/assets/user_content/File/asx%20releases/ASX_16%20April%202010%20March%202010%20Quarterly%20Report.pdf

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Datum: 19.04.2010 - 16:59 Uhr
Sprache: Deutsch
News-ID 19275
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