TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH UXA RESOURCES LIMITED (ASX:UXA) MANAGING DIRECTOR, DR RUSSELL PENNEY
Nicholas Hayes: Hello I’m Nicholas Hayes for the Finance News Network. Joining me today is uranium and base metals explorer UXA Resources managing director, Dr Russell Penney. Russell welcome to FNN. Can you tell us a little bit about UXA Resources?
Dr Russell Penney: Yes, thank-you Nick. UXA Resources was originally listed on the Australian Stock Exchange as Uranium Exploration Australia back in 2005. The Company at that stage was largely engaged in exploration for Olympic Dam type copper gold deposits in South Australia.
I joined the Company in late 2008 and we’ve since diversified our exploration effort so that we’re involved in uranium exploration in Northern Territory. And we’ve also got some other base metal projects which I’ll tell you about in a few minutes. And we’ve also acquired a cash flow business which is a contracting Borehole Wireline company that operates currently in Australia and the United States of America.
Nicholas Hayes: Can you give us a little insight into Board members of UXA Resources?
Dr Russell Penney: Yes certainly. Our Chairman, Neill Arthur has a long history in the minerals and metallurgical industries and he’s just retired as a director of AusIMM which is, of course, the big professional body for mining professionals in Australia. Steve Gemell is on the Board, he’s a consultant mining engineer, well-known all around Australia. Ian Mutton is a lawyer who is involved in many emerging companies. And David Hawley is a uranium geologist who’s got a long history and experience with uranium exploration in Australia.
Nicholas Hayes: Starting with your uranium projects, where are they and what do they contain?
Dr Russell Penney: Well, our most exciting project at the moment is an upcoming drilling program on our Nabarlek Project in Northern Territory. This is a joint venture with Reliance. Reliance is the largest public company in India; it has the largest market capitalisation and they’re a 49 per cent contributing joint venture partner. In fact, we have a Reliance geologist with us in the Territory at the moment, preparing for this drilling program.
We’re exploring on some tenements that were granted late last year, and they lie close to the old Nabarlek Mine, and close to a rediscovery of an old mineral prospect made by Cameco in joint venture with Uranium Equities late last year, where they’ve announced some very high-grade intersections. And that’s just a stone’s throw across the border from our tenement and we believe that structure may extend into our tenement. And so we’ve got a drilling program that’s going to be starting next month to follow that up.
Nicholas Hayes: Now to base metals. You’ve recently identified a 500 metre wide zone of high-grade lead zinc silver mineralisation at your Dome 5 Project, 50 kilometres northwest of Broken Hill.
Dr Russell Penney: This is an Option Agreement we have with Teck and their joint venture partners which include PlatSearch, where we have the right to farm into a discovery that was made back in 2007, which is a newly discovered MVT style of mineralisation - that’s zinc, lead and silver. Those types of deposits are amongst the most important zinc and lead deposits in the world. And we recently have done some drilling there, which is diamond drilling, the depth of mineralisation is down about 320 metres, it’s a flat lying zone.
I think there are many parallels that you can draw between this type of mineralisation and for example, Cadjebut in Western Australia which was mined – was discovered by BHP Minerals and mined in the 90s. The zone of mineralisation is based on widely spaced drill holes and we believe that between those drill holes, there is still a very good chance of discovering a deposit of lead zinc silver mineralisation. The best intersection we’ve had to date is 3 metres at 15.8 per cent lead and zinc with 67 ppm silver in that, so it’s got quite a high silver content. We’re very excited about that project.
Nicholas Hayes: Now your JV partner is a subsidiary of a major Canadian company Teck Resources. What is your stake and what is your required spend under that Agreement?
Dr Russell Penney: Yes, Teck is one of the world’s largest mining companies, in fact one of Canada’s premium base metal producers, and so we’re farming into their interest in the project. Our first earning point for this is when we’ve spent $2 million and we have until August next year to do that and our first stake will be 50 per cent.
Nicholas Hayes: And still on base metals, you have another joint venture in South Australia with Straits Resources?
Dr Russell Penney: Yes indeed. This is the ground that the Company was originally exploring back in 2005 that I mentioned earlier. We’ve now farmed that out to Straits Resources. Straits have a right to earn a 70 per cent interest in that ground by expending about $10 million on exploration over a seven year period. This is in the Olympic Dam Prominent Hill corridor in South Australia, very highly prospective for iron ore oxide copper gold deposits, and I know that Straits are very excited about this project. So, I am looking forward to seeing some of the results of their exploration activity on the tenements.
Nicholas Hayes: Thanks Russell. Can you now tell us about an important part of the UXA business, the borehole wireline logging company, GAA Wireline?
Dr Russell Penney: Well, GAA Wireline was a strategic investment made by the Company to provide us with a cash flow to, you know, help fund the working capital and exploration efforts as a company back in 2009. That Company has borehole wireline trucks servicing clients in Australia and in the United States.
It also owns outright, the technology of Prompt Fission Neutron Logging which is specific to the uranium industry. It overcomes the problem of disequilibrium that occurs in many sandstone hosted uranium deposits, because they’re young and there’s a lot of physics in that, that I won’t bore you with. But essentially we have quite a number of clients for PFN both here and in the United States, and importantly in Wyoming where we’re working at Cameco Smith Ranch Mine.
GAA had a very tough year last year because of the rains in Australia. Really an awful lot of drilling programmes of the clients’ closed down in Queensland and South Australia as well. But we’ve now been able to recover that situation and we’re back involved with coal, coal seam gas logging in Queensland, iron ore and uranium in South Australia. So we believe that in the next six months, the Company will have revenue of about $2.8 million and an EBIDA of about $500,000.
Nicholas Hayes: Do you have ambitions of becoming a producer or are you focused on discovery and sale of your projects?
Dr Russell Penney: Well at UXA the most important thing I think is that we are an exploration company. We still believe that the significant movement in our share price for our shareholders, will be from a discovery and we have split our risk if you like, between uranium and base metals. We have good projects in both of those areas, so a good chance of discovery.
Nicholas Hayes: Last question Russell. Where would you like to see UXA 12 months from now?
Dr Russell Penney: I would hope that in the next 12 months, we would be looking at an inferred resource on one of our projects.
Nicholas Hayes: Dr Russell Penney thanks for the introduction.
Dr Russell Penney: Thanks Nic.
ENDS
UXA Price at posting:
2.4¢ Sentiment: None Disclosure: Held
