Climax Aims HighPublished by MAC on 2006-03-29
Climax aims high
29th March 2006
CLIMAX Mining has its eyes on being the latest Australian mining success story in Asia as it closes in on financing and development of its Dinkidi gold-copper project in the Philippines. Michael Quinn reports from Singapore
On the sidelines of the Asia Mining Congress in Singapore today, Climax chief executive Rob Thomson indicated to MiningNews.net that possible full debt financing of the project was very close to being finalised, with final capital costs one of the issues currently being clarified.
While capital costs estimated around 12 months ago totalled $US80 million ($A114 million), Thomson pointed out that an increase shouldn't necessarily be anticipated given the calculation was made after rising costs of recent times in the sector had peaked.
The capital costs and a possible increased production profile are being looked at by Ausenco and Leightons.
Thomson also indicated that while some hedging would inevitably be required with debt financing, certain banks were cognisant of not "ripping the heart out of the project" with onerous commitments.
Climax, which has recently been trading around 36c, was valued by its broker Austock back in December at $A1.12 using an 8% discount and the-then metal prices of $US503 per ounce gold and $US1.99 per pound of copper (plus an exchange rate of 0.748).
Climax's base case is for a 2 million tonne per annum mining (opencut followed by underground) and processing operation yielding around 200,000oz (gold equivalent) at cash costs of around $190-200/oz.
Thomson said the company was keen to get into cash flow ahead of future expansions planned on the back of a resource of a gold equivalent resource of 5.79 million ounces.
Thomson also pointed out that the company had major exploration targets around Dinkidi that hadn't been touched since the 1990s when the-then Climax ran out of cash and market favour.
Aside from the depth potential of Dinkidi, Climax has some 17 targets in the near vicinity of the planned development, "and while I'm not a geo, I'm told there's a better than 70% chance of finding another commercial deposit", Thomson said.