A shinier new JaguarKate Haycock, 5 May 2010 Jabiru Metals'...

A shinier new Jaguar
Kate Haycock, 5 May 2010

Jabiru Metals' Jaguar plant in Western Australia ... may be expanded.
JABIRU Resources Bentley deposit has potential to be a bigger and better project than its mainstay Jaguar copper-zinc mine, seems to be the concensus on the company's new earnings driver.

The small zinc and copper miner has plugged along quietly in the Australian resources scene from its Western Australian polymetallic operation, but just last week announced it planned to go ahead with the development of the Bentley deposit to extend mining out past Jaguars current two year scheduled life.

Last financial year Jaguar produced just over 9000t of copper in concentrate and 61,000t of zinc in concentrate.

Jabirus decision to develop Bentley comes as the strengthening zinc and copper prices bolster its bottom line, even as grades at the Jaguar deposit fall as mining goes deeper. In the last quarter, the company reported production falls of around 8% for copper in concentrate and more than 20% for zinc in concentrate, although in the last half yearly reporting period its revenues rose by some 86% to $A57 million. (Notwithstanding the company booked a loss on its hedge book due to mark-to-market devaluations.)

Jabiru is initially hoping Bentley, only 6.5km from the Jaguar concentrator, will produce around 16,000t of copper, 120,000t of zinc, 3.8 million ounces of silver and 15,000 ounces of gold over a four-year mine life, but with scope for a longer-term operation.

Bolstering these hopes, the Bentley deposit is open to the north of the resource area, and earlier this week Jabiru announced drilling had hit further massive sulphides below the deposit, with more drilling planned to test this zone. At the same time, Jabiru is already starting its site works and moving towards first ore production in the September quarter.

Analysts at Hartleys said the development of Bentley would give Jabiru access to higher returns thanks to the coarse grain of the mineralisation, giving the project excellent metallurgy.

The concentrate grades are actually better [at Bentley] than that of the Jaguar orebody, with the zinc in concentrate grade of 52% comparing favourably to Jaguars 48%, Hartleys noted. Likewise for the copper concentrate, both gold and silver credits are substantially better. This is particularly pertinent for gold, with a gold in copper concentrate grade of 7.5gpt gold (Jaguar 0.2 0.5gpt). The company only gets paid for gold once the concentrate grade exceeds 1gpt gold. Consequently, the additional revenue from the gold at Bentley may add between $A2 million and $7 million per annum.

The broker also said further discoveries could see Jabiru expanding its operation.

With further expansion of the Bentley resource base, and possibly Jaguars, we would not be surprised if the company examines increasing the throughput of the plant beyond the current 365ktpa.

An expanded resource is due out in July and Jabiru and Hartleys both expect this could help boost project longevity.

The company has said it would finance the $A32 million development costs for Bentley through its existing cash reserves of around $A30 million along with a proposed working capital facility, or debt of some kind.