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Kimber Resources, Inc. (KBR)
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CEOCFO Current
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This is a printer friendly page! Kimber’s Carmen deposit looks promising at $300 gold.
Initial scoping study suggests robust economics Mining Robert Longe BIO: Mr. Longe, who has a 35 year career in the mineral
exploration and development business, has worked with multinational companies,
including Consolidated African Selection Trust and Rio Tinto / Rio Algom. Since 1980 he
has provided consulting and contracting services to the mineral industry in North and
South America, and in Africa and has served as an Officer and Director of junior public
companies. Kimber Resources, Inc. (KBR-TSX Venture) was formed in 1995, and remained private until July 2002 when it became public. Kimber’s principal asset is the Monterde gold-silver property in Chihuahua state, Mexico. The Monterde mineral property, which Kimber holds through an option to acquire 100% free of royalties, covers a low-sulphidation, epithermal, oxide, gold-silver deposit. Kimber’s objective is to develop this property to the point at which it can be taken to profitable production. The reason for focusing on this property is the emerging grade of the Carmen deposit. Because of its grade in gold and silver, Kimber believes there is an excellent chance that an orebody can be developed. Work will now be directed at confirming this grade. The 24 holes drilled into the Carmen deposit in the fall of 2002 were the basis for an estimate of Inferred resources published at that time. Since then Kimber has produced a revised resource estimate based on 45 holes which advanced a significant portion of the deposit to Measured and Indicated status. Further drilling is expected to advance more of the Inferred resources to Measured & Indicated status. Additional resources are expected in parts of the Carmen deposit which have not yet been drilled. Development drilling will continue on the Carmen deposit along with metallurgical and environmental studies. Other drilling will test targets on the mineralized structures to the west of the Carmen. CEOCFOinterviews: Mr. Longe, please give us a brief summary of Kimber Resources Inc. and the projects you are working on. Mr. Longe: “Kimber Resources went public in July of last year. The intent of going public and our focus is to develop a gold/silver property in Mexico, which we think will become a mine. We raised about 3.4 million dollars at that time and since then have raised another million. We are drilling, doing metallurgical studies and are starting environmental studies; all necessary steps in the development of a mineral property.” CEOCFOinterviews: Please tell us a little about the property, and what attracted you to it? Mr. Longe: “I have been in the metal exploration business all of my life, first as a geologist with major companies and then in consulting. I know how hard it is to find orebodies; they are very rare things. When this property came to our attention, we took it very seriously because of its main attribute: its grade. There are many gold/silver properties that look as though they should be minable at perhaps one-and-a-half grams of gold per ton. On a gold-equivalent basis, this property is closer to three grams per ton and it looks as though it should be profitable, and that is the basis for our enthusiasm.” CEOCFOinterviews: What is the process and where are you in the process? Mr. Longe: “The first and biggest task is to drill the deposits. When we went public we had 21 holes into the Carmen deposit. Imagine a mineralized structure about 500 meters long, which was mined underground by old timers in the thirties and forties. It had a series of tunnels, cross-cuts, and shafts within the mountain. In those tunnels, the grade was over 15 grams per ton, with a lot of silver. Outside that meter or two of high-grade, there are lesser and lesser grades as one gets further away from those tunnels. We are interested in anything over half a gram, particularly a large volume of rock that averages about three grams equivalent. Some of our drill holes have been 100 meters apart, some 50 meters, and some 25 meters. When most of our holes are about 25 meters apart we will have sufficient confidence in the numbers for an advanced resource estimate.” CEOCFOinterviews: What is happening today with the property? Mr. Longe: “We now have 69 holes on the Carmen deposit. We have had two resource estimates published; one at 6.9 million tons when we did the IPO, and another in March when we confirmed the same sort of size and grade based on 45 holes. We expect to complete another another resource estimate at the end of this year. We recently had an important study conducted by an independant consultant. This “Scoping Study”, is the first independant economic appraisal on the Carmen deposit to have been published. It gives a preliminary indication of what returns the Carmen deposit would deliver if it were mined. On the basis of our current assumptions, it looks as though the deposit should be profitable to mine, even if gold were to be no more than three hundred dollars an ounce. We have also been talking the local people. They are in favour of us developing a mine because they want the resulting jobs and infrastructure. Metallurgical studies are very important. and we have been doing those as well. We are involved in the steady process of firming up the deposit and dealing with all the other issues involved in bringing an orebody to feasibility.” CEOCFOinterviews: What comes next? Mr. Longe: “The next step is more drilling. We are going back in August to start another 20 or 30 holes. We will continue with metallurgical work and will carry on with the permitting. All of that applies to the Carmen deposit. “At present, we are just short of a million equivalent ounces consisting of five hundred and forty thousand ounces of gold and about thirty million ounces of silver. Next to this deposit are all sorts of mineralized structures that extend another two kilometers. We are spending about 20% of our drill funds on these other structures because we would like to find another Carmen-size deposit. Such a find would enlarge the number of ounces considerably and make Kimber a lot more attractive to companies that might want to take us over.” CEOCFOinterviews: You have an agreement on surface rights; will you tell us about that? Mr. Longe: “We have an agreement with the local people that gives us the right to use the surface for mining. As you might expect, we already have the mineral (ie subsurface) rights. We take our relationships with the local people very seriously. We want them to be on our side and we want them to benefit from the presence of a mine in their neighborhood." CEOCFOinterviews: What other possibilities are there for you? Mr. Longe: “There are three possible goals; one is being taken over by a larger company on a share transfer. Another possible outcome is a joint venture, and the final possibility is that we take the deposit to production ourselves. That would require starting on a smaller scale, minimizing dilution and getting cash flow as soon as possible. Our policy has been to keep open those three possibilities and keeping in mind that our obligation is to ensure the shareholders do well. We expect narrow down our choices during the next year or so according to the market, the prices of gold and silver, and our progress on the property.” CEOCFOinterviews: How are you funding these projects? Mr. Longe: “We have about a million-and-a-half dollars Canadian in the bank now. There are about six million warrants, which can be exercised at fifty-five cents prior to January 12 next year. If those are exercised, it will bring in just over four million dollars and the options could bring in more. We expect to have enough money to continue a long way towards feasibility.” CEOCFOinterviews: How do you gauge how long it takes to get a project completed? Mr. Longe: “Assuming we have all the funding we want, and have no concerns about dilution, then we could probably get to feasibility in about eighteen months. This would include the drilling, permitting, etc. In fact, the rate of progress is governed by keeping an eye on the bank balance and dilution. Our shareholders in this case have a piece of what looks like an asset of real value, which is why we are very sensitive to dilution. We will take whatever steps are necessary to make sure we maintain and enhance our shareholders value.” CEOCFOinterviews: Will you tell us about the management team? Mr. Longe: “We are very strong technically and legally and we have good financial advice. The person leading the work on the property is Alan Hitchborn, who used to be chief geologist at Bald Mountain in Nevada. This and the Monterde are similar kinds of deposit: epithermal gold. Alan gets the credit for recognizing the Carmen deposit’s similarities to the Bald Mountain mine, which has been a very profitable operation. Alan has had lots of experience converting geological resources into reserves, and that is what he is doing for Kimber at Monterde. Another of my technical colleagues is Byron Richards, a geological engineer whose job it is to make sure the data we collect is of sufficient quality to satisfy the scrutiny of the banks or other companies. Another colleague is Michael Hoole, who having been in-house counsel with large resource companies, has a lot of experience with corporate law. We have three external directors, all of whom are mining engineers. If we have been weak in some areas, it would be the promotion side, but we have come a long way in improving our corporate communications.” CEOCFOinterviews: In closing, why should potential investors be looking at Kimber? Mr. Longe: “I think the key fact is that we have an emerging resource, which does not depend on an increase in the price of gold or silver. There are risks remaining of course, but we have been looking for the fatal flaw in this deposit for two-and-a-half years now, and we have not found it. When one invests in a mining or exploration company, one should look at what it has and determine if mining would be profitable at the present prices. Often times one can buy shares in a mining exploration company with a promising property, but when you look into it, you realize that it would be profitable only if the price of gold or silver were to increase. It is a valid business strategy to buy shares as an option on a future price increase, but that is not the best reason for investing in Kimber. Based on our current understanding, Kimber’s Carmen deposit does not need price increases. At three hundred dollar gold and four-and-a-half dollar silver, these grades should be profitable. That, I think, is the main attribute of the Monterde deposit.” disclaimers |
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