Whats luck got to do with it?Kate Haycock, 2 June 2010 Jabiru...

Whats luck got to do with it?
Kate Haycock, 2 June 2010

Jabiru Metals' Jaguar plant.
JABIRU managing director Gary Comb admits there may have been a skerrick of luck behind the discovery of the Jaguar mine and the new Bentley deposit, but he mainly attributes the companys successes to hard work and, vitally, spending time and money on exploration.

Jaguar has been the little base metals mine that could.

Last year produced about 9000 tonnes of copper metal and 60,000t of zinc metal, and Jabiru has become a $A170 million company with no debt. Although it hasnt received a lot of love from the market in recent times its share price was at A30.5c this week, down from an April high of 43c Comb described Jabiru as a stayer thanks to hard work through the lean times, although he said others were quick to attribute the companys successes to luck.

Such lucky breaks for the company included its initial acquisition of the Teutonic Bore tenements from MIM a hell of an environmental mess, Comb said; its luck finding Jaguar missed by MIM by about 20m before the project was divested; and good fortune in buying the Cadjebut concentrator for $A1.4 million in the early days of the Jabiru development.

Comb described the plant buy as a serious punt for a company with $A1.5 million in the bank at that stage. It ended up saving the company around $A30 million in capital costs.

We were also fortunate with our financing, he said. We had a number of offers from various different banks, and all of the banks wanted hedged everything they possibly could and we were forced to hedge 50% of our reserves, both copper and zinc.

Comb said the company was on the verge of hedging at silly levels and then decided to pull back and try to find a more accommodating financier successfully tapping its largest shareholder, Consolidated Minerals, for help in securing debt.

While luck may have played a role in the companys development Comb said he also attributed the success of any company to backing [his own] judgement and making sensible decisions.

In an industry where the lack of exploration spending is regularly bemoaned, Comb also had some simple advice for other junior miners looking to replicate some of Jabirus good luck. Drill.

The Bentley deposit, like Jaguar, was originally drilled by MIM in 1992. An initial hole missed the deposit but intercepted some stringer mineralisation, and Comb said MIM was planning a second hole which would likely have intercepted the deposit, but the follow-up never happened.

The geo who was involved was quite adamant he was on to something... in retrospect that was the discovery hole, he said.

Jabiru also drilled several holes before making its own discovery hole, some 16 years after MIMs first drilling at the project.

That resource almost looks like it was designed to elude drilling, he said. Its an amazing evolution and it just shows how determined youve got to be to find these things. Patience is really the most important factor in finding them. You just have to keep at it.

Of course, around the same time as Jabiru was first starting work at the Bentley deposit, the bottom dropped out of the mining industry and the global economy.

Just to put this into context, the Lehman Brothers collapse happened on September 15, 2008, so looking at the way the market and the world was going, to continue with our drilling program was a pretty determined effort, Comb said. But we knew what we wanted to achieve and we just needed to keep on going and three months later we drilled the first discovery hole.

The company continued drilling through the financial crisis of 2009 and the project has now been revealed as a high grade deposit which should produce 16,000 tonnes of copper, 120,000t of zinc, 3.8oz of silver and 15,000oz of gold contained in concentrates over four years.

Development work at the $A32 million project has been approved and started three weeks ago.

What luck is all about in my experience with this company [is that] youve just got to keep at it and keep focused, and allow [geologists] to spend the time to pull it all together. As far as both discoveries are concerned, its all about the geology. We spent three years not drilling too many holes and pulling together all the previous data and understanding the geology, Comb said.

Dont be scared by the dollar signs you have to get out there and spend money. Its about deep drilling these days.

His final words of advice were perhaps the most pertinent.

Make sure youre still alive when metals prices pick up.