Transcription of Finance News Network Interview with Chinalco Yunnan Copper Resources Limited (ASX:CYU) Managing Director, Jason Beckton
Anastasia Mangafas: Hello Anastasia Mangafas reporting for the Finance News Network. Joining me today from copper explorer Chinalco Yunnan Copper Resources (ASX:CYU) is Managing Director, Jason Beckton. Welcome to FNN Jason.
Jason Beckton: Thank you for having me.
Anastasia Mangafas: Can you start by introducing the Company?
Jason Beckton: CYU or Chinalco Yunnan Resources has been active in exploration, primarily copper exploration, in our jurisdictions listed on the ASX.
Anastasia Mangafas: And how long have you been listed?
Jason Beckton: We listed in late October 2007, so approximately four and a half years. And since then we’ve stayed on the Australian Stock Exchange through various capital raisings.
Anastasia Mangafas: What’s the connection with Chinese company Chinalco and Yunnan Copper, and how did they become involved?
Jason Beckton: Well initially it was Yunnan Copper in 2007 and subsequently they were taken over by the aluminium company Chinalco, who now hold 58 per cent of Yunnan. Who in turn as a group – those groupings of companies hold 21 per cent of us, of CYU the Australian junior, and that’s stayed at that position since 2007.
Anastasia Mangafas: So what is the goal of the Company?
Jason Beckton: The goal of the Company like all exploration companies is to make a discovery that’s economic, in good jurisdictions. We apply a very strong filter of only exploring in low political risk jurisdictions, but also in the best geology which we’ll talk about shortly.
Anastasia Mangafas: Thanks Jason, taking a closer look at your projects in north western Queensland. Can you start by introducing the Mary Kathleen joint venture project, and what is the size of the Elaine prospect?
Jason Beckton: We’ve had a critical breakthrough which we announced last week on this project, in that the geological model has shown to be that of a Mary Kathleen replacement deposit. Now what that means economically is potentially a new copper resource, which we previously released an exploration target on, of greater than 10 million tonnes of copper at greater than 0.5 per cent copper. Subsequent to that, the geological model has improved and now we’ve got a situation where we aim for a June resource estimate on Elaine. And it will have copper, cobalt, thorium, three rare earths as well as gold.
Anastasia Mangafas: And what stage is the project at?
Jason Beckton: We’re still drilling it, although the data cut-off for the resource estimate was pre-Easter, so of course these projects keep growing. But we want shareholders to every six months, to receive an inventory or a resource upgrade. So shareholders in CYU won’t just be getting drill results. In parallel, they’ll be getting resource upgrades every six months if the project continues to pass tests.
Anastasia Mangafas: And what has the latest drilling revealed?
Jason Beckton: The latest drilling has revealed a strong connection with the Mary Kathleen Shear itself which is a - without getting too technical, it’s a major feeder structure that no-one in Queensland has previously found a significant copper deposit on. Historically it’s always been known as a uranium host in the north six kilometres. So that’s a critical, what you would call a paradigm shift or a change, where we’ve opened up a whole new belt of rocks in Queensland.
Anastasia Mangafas: Jason you’ve recently announced a joint venture with Xstrata Copper for the Mt Frosty exploration permit for minerals. What is known about Mt Frosty?
Jason Beckton: Well in addition to our good friends Goldsearch (ASX:GSE) who have 30 per cent of of Elaine, we’re farming-in up to 75 per cent on the Mt Frosty tenement which basically gives us growth to the north. And also importantly, covers the now what we know to be fertile Mary Kathleen Shear. So we have the full extent, other than government tenure, in the Mary Kathleen pit itself of that six kilometre long zone, which has previously been untested for copper - which is a major oversight that we’re taking advantage of now.
Anastasia Mangafas: And what is the timeline for exploration?
Jason Beckton: Operations are underway now; we’re clearing the old existing tracks. So the timeline is access, native title clearance, potentially drilling within a month.
Anastasia Mangafas: Now to Chile where you have an interest in three copper porphyry projects with joint venture partner, Rio Tinto (ASX:RIO). First up Candelabro, what do you know about the deposit?
Jason Beckton: Candelabro was a Rio Tinto discovery and that’s the point that we’ll return to talking about Chile, is that these prospects if you
like, have already been discovered. So Rio Tinto has done the hard work, the initial greenfields work. So what we’re doing effectively is drilling these prospects including Candelabro, one at a time based on some good mapping by the Rio Tinto group and good geo-scientific information. So CYU shareholders are effectively de-risked in these projects.
Anastasia Mangafas: What is your stake as a farm-in partner with Rio, and what is your commitment?
Jason Beckton: Well potentially we can earn 40 or 60 per cent with normal dilutionary clauses after that, depending really on the size of the discovery in one of these properties. Obviously if we found something that is world scale, Rio Tinto may elect to start contributing after we earn 40 per cent by spending $8 million.
Anastasia Mangafas: Thanks Jason and now to Laos. Who are you working with and what’s taking place?
Jason Beckton: We’ve completed a related party transaction. It was approved by shareholders last year that allows, exposes CYU shareholders, to potential short term cash flow. We are looking at sedimentary hosted copper silver deposits, very similar to what you see in Southern Africa which have been mined by the French historically, but never drilled in a modern way. So it’s a conventional old working drill out, like you might do out the back of Kalgoorlie but in northern Laos which is very well supported by southern China or Yunnan Province, where our people are based. This operation is run by the Chinese and overseen by us. So manning wise it’s not onerous, it’s a straight forward old working drill out. And then we’ll try and get into production using facilities just across the border.
Anastasia Mangafas: Now to financials. What is Chinalco’s commitment for 2012 and are you funded?
Jason Beckton: We have approximately $6 million in the bank right now as per the quarterly out shortly, and we also have a budget of $6 million annualised. So at the moment we’re fine for a good solid 12 months of operations, that’s given that we don’t slowdown in any of the areas.
Anastasia Mangafas: Is it the Company’s intention to become a producer at some of these projects?
Jason Beckton: I think realistically the near term production i.e. within two years or three years, is Laos. Chile are long lead time, high risk, high reward projects and realistically you find a porphyry and it’s developed by us or the next owner, or the group of conglomerate that we might be part of. It’s generally developed five to 10 years after discovery. Queensland with permitting issues etc. normally within, you could expect within seven years. So therefore, short term development really is Laos, through small scale operations.
Anastasia Mangafas: Now to your share price. Where has it traded over the last 12 months, where is it now and what market cap does that give the Company?
Jason Beckton: The share price has been trading in a narrow band between 25 and 17 cents for the past 12 months. And the market cap as a result is about $30 million. So right now, we’re not at historic highs or lows but certainly shareholders are exposed to a lot of upside, particularly from Chile in the near term.
Anastasia Mangafas: Finally Jason, where would you like to see Chinalco by the end of the year?
Jason Beckton: By the end of 2012 our plan is to have Elaine in growing resource which is JORC inferred, moving towards metallurgical test work and an indicated resource with potential infill, although we’re not infilling yet until we find the edges of it. And Chile, to have at least one of the four properties stand up, which will require follow on drilling and additional rigs. Laos is straight forward; it’s another resource drill out on both Xinzhai and Juizhai. So that’s a realistic goal by the end of the year to have those two resources out, for the two areas and discovery underway in Chile, driving the Company.
Anastasia Mangafas: Jason Beckton, thanks for the introduction.
Jason Beckton: Thank you for your time Anastasia.
Ends
AKN Price at posting:
15.5¢ Sentiment: None Disclosure: Held
(20min delay)
