By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, US
on 5/20/2018 Galena Mining Limited (ASX: G1A) owns 100% of the Abra base metals deposit, located in the Gascoyne Region of Western Australia, one of the biggest undeveloped lead deposit in the World. Galena completed a very successful drilling campaign in Q4 2017, with high grade lead and silver mineralization intersected in every one of the 12 holes. We learned from Ed Turner, CEO of Galena Mining, that since they listed last September, they raised 15 million Australian dollars and came up with the new resource of approximately 11 million tons at 10% lead and 28 grams per tons silver. Plans for 2018 include finishing the pre-feasibility study and bankable feasibility study that should take about one year to complete. The financing options and off-take agreements will be considered during that stage. According to Mr. Turner, there's been a shortage of lead supply, so the prices are very good and the demand continues to be very strong. The company has good base metal targets to explore and they have just commenced drilling the Woodlands' copper prospect, which is about 50 km to the west of Abra.
Galena Mining Limited
Dr. Allen Alper:This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Ed Turner, CEO of Galena Mining Limited. Could you give our readers/investors an overview of Galena Mining, your focus and current activities, Ed?
Mr. Ed Turner:Sure, Galena is a new company. We only listed last September, specifically to try to advance the Abra lead, silver, copper, gold project, in Western Australia, into production. We raised 6 million Australian dollars at IPO and since then we've raised another 9 million dollars. In the last eight months, we've completed a quite large, infill drilling program, targeting the high grade lead-silver mineralization at Abra, which proved up a new resource of approximately 11 million tons at 10% lead and 28 grams per tons silver. That's within a larger resource of 36.6 million tons at 7.3% lead and 18 grams per ton silver. That's the foundation stone for our project going forward towards production. We've commenced the pre-feasibility study, which we're about halfway through.
Dr. Allen Alper:That sounds excellent. Could you elaborate on your plans for 2018?
Mr. Ed Turner:Certainly. We're aiming to complete the PFS in the third quarter of this year and we expect very positive results, based on our internal studies. Then we should advance directly afterwards into the bankable feasibility study, during which we can consider financing options, off-take agreements and things like that. The study should take approximately one year, or 9 months, to complete.
Dr. Allen Alper:That sounds excellent. What distinguishes your lead-silver project from others?
Mr. Ed Turner:It's unusual in that it's dominantly lead, with very little associated zinc. Often lead, as you probably know, is a secondary product associated with higher-grade zinc. That's not the case here. This will definitely be the highest grade lead deposit in Australia and one of the highest grade lead deposits in the world. Our preliminary metallurgical test work, which was just released last week, shows that we can get a very high-grade concentrate in the order of 75-80%. And we are getting very high recoveries in the order of 95-97%. So, by any standards, a very good, clean product. A very highly saleable product.
Dr. Allen Alper:That sounds great. Could you tell our readers/investors a bit about what's happening in the lead market?
Mr. Ed Turner:In the last few years there's been a shortage of supply and hence an increase in demand. The prices, after the start of the year, were on a constant 6-year upward trend. The prices right now are very good, and the demand, we've foreseen from our forecasts, continues to be strong. So we don't anticipate that changing very much in the next few years. It's mostly in the lead-acid battery market which is where 75% of the lead goes. An increasing, growing middle class, around the world, is helping to provide that demand for new lead-acid batteries. This is despite the increase in electric vehicle lithium batteries, which is not going to have a big impact on the lead-acid battery market in the short to medium term.
Dr. Allen Alper:That sounds very good. Could you tell our readers/investors a bit about your background, management, your team and the board of directors?
Mr. Ed Turner:I'm a geologist by profession. I have 30 years of experience working around the world, mostly in Australia, but I've also worked in several countries in Africa, Brazil, Romania, the Ukraine, and various other countries reviewing projects. It's mostly in exploration but also mining. On our board of directors, we have two other geologists, our Chairman Adrian Byass, who's an economic geologist, with more than 20 years’ experience. He's also the MB of another mining company Infinity Lithium. Jonathan Downes is another economic geologist and he's also the MB for Ironbark Zinc. Those two, have listed and developed five separate mining companies now and taken a few into production. So they have a lot of relevant experience. And then we have two directors with financial expertise, Oliver Cairns and Tim Morrison.
Dr. Allen Alper:Sounds like you have a very strong experienced Board.
Mr. Ed Turner:Absolutely.
Dr. Allen Alper:Tell our readers/investors a bit about your capital structure.
Mr. Ed Turner:We have 336.5 million shares on issue and 34.75 million options as well. At a share price of 17 cents, it's around that, might be a bit lower now, we have a market cap of 57 million Australian. We have about 11 million dollars in the bank. Our shareholders are dominated by the board and management, about 35% and then we have institutional investors about 18%, and the remainder retail investors; The top 20 own about 63% of the company.
Dr. Allen Alper:Excellent! Could you tell us anything more about the location of the deposit and the infrastructure, etc.?
Mr. Ed Turner:Sure, the ABRA deposit is located in the mid-west of Western Australia about 1000 km north of Perth. It's just over 100 km from the DeGrussa copper deposit, owned by Sandfire. We have good access to the Port of Geraldton via public roads which run right up to site. That's the most likely location, from which to export, because they're already exporting lead concentrate from there and have been for more than 20 years, so all the permits are in place for that. We can produce that high-grade concentrate onsite and then truck it though to Geraldton and export from there.
Dr. Allen Alper:Could you tell our readers/investors a little bit more about your pathway to production?
Mr. Ed Turner:We're looking to get into production in a few years from now. The PFS finishes later in the year, then we're looking at nine months or so for the BFS. It's in a granted mining lease, which helps us save a lot of time and it's 100% owned by Galena. So during 2019 we can potentially even commence an underground decline that will give us better access for underground infill drilling but also save some time getting into production. By year 2020 we can be constructing the mine, the underground development, and commence production of the lead and silver in late 2020.
Dr. Allen Alper:That sounds excellent, very fast track. What are the primary reasons our high-net-worth readers/investors should consider investing in Galena Mining LTD?
Mr. Ed Turner:Well, we're targeting a high grade, high margin deposit with a relatively low capex around 150 million Australian dollars. We can be in production soon, without spending too much money producing approximately one million tons per year from underground. That would create about 140, 150 thousand tons of concentrate per year. The margins on the higher grade, 10% lead, will be very high and will be reflected in the NPV, so basically high profit and a quick payback. We can be paying back the capital in approximately two years and after that there'll be continued high profit margins for quite a few years. We have the 11 million tons at 10%, which will give us a minimum of about 11 years mine life. Ultimately we'll end up mining, I think, for closer to 30 years. That makes it a very robust deposit and could survive any downturn in the industry because of the high margins.
Dr. Allen Alper:That sounds excellent. Is there anything else you'd like to add, Ed?
Mr. Ed Turner:We do have some exploration upside as well, the deposit is not closed off so we do expect to grow the ABRA deposit. Also from the regional exploration point of view, we do have some good other base metal targets within our land holdings and we've just commenced drilling the Woodlands' copper prospect, which is about 50 km to the west of ABRA. There have been some very good historic intersections of 60 meters at 0.3% copper. And we have associated electromagnetic targets, which we hope are related to massive copper sulfide mineralization. So we're going to be chipping away at those regional prospects at the same time as advancing the ABRA deposit.
Dr. Allen Alper:Sounds excellent! You have a huge project, very high grade, low capex, and you're just moving markedly along. You have opportunities to increase your resource and other resources. It sounds excellent.
Mr. Ed Turner:Yeah, we're very happy with the progress we've made.
(20min delay)
