The International Resource Journal: Discovery Metals Ltd

Discovery Metals Ltd
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admin on 25 March, 2010 12:40:00
 
In May 2003, Discovery Nickel was formed. Prompted by new opportunities to
explore some of the former Falconbridge exploration prospects following the
company’s incorporation into Xstrata, Discovery Nickel began with the
Falconbridge Dikoloti nickel prospects in eastern Botswana. With experienced and
discerning management at the helm, Discovery Nickel picked up seven copper
tenements in the explored but undeveloped Kalahari copper belt in north-west
Botswana. This was a fortuitous move for the company, and initial testing
revealed lucrative existence and grade expectations for the Boseto project area.
Focus switched from the initial nickel interests to focus on these new findings,
and in 2006 this company changed its name to reflect this shift, becoming
Discovery Metals Limited (DML).
Today DML’s principle focus remains to be the Boseto copper project, with
board philosophy centred on optimisation of value can by developing this
project, then replicating the development across the now 14 prospecting licenses
the company holds in north-west Botswana.
About Boseto
Boseto, 100 per cent owned by DML, would be Botswana’s largest copper mine
if intended developments are successful. The pre-feasibility study, completed in
mid-2008, indicates that doing this is economically attractive. The bankable
feasibility study (BFS) is well underway.
“The company continues to use industry recognised consulting experts to
conduct the technical work for the BFS and engage peer and independent reviews
to ensure the project design and execution is well planned to eliminate as many
risks as possible,” Paul Fulton, CFO at DML tells IRJ. “The
economics for the project were updated twice in 2009, confirming the project
viability and reporting progress on the conduct of the BFS.”
Fulton says that the Boseto copper project will satisfy a small portion of the
world’s increasing demand for the commodity. “Boseto’s annual
production will be between 22,000 and 27,000 tonnes per year, with the annual
increase in world copper demand likely to be approximately 1 million tonnes per
annum,” he explains.
“The Boseto operation will deliver copper net cash costs in the range of
US$0.90 per pound to US$1.20 per pound, dependent on the final supply of power
to the operation, which will initially be from on site diesel/HFO generators and
is likely to be switched to Botswana grid power, when the grid power is
available.”
In terms of cost positioning, Boseto is extremely well-placed. Fulton points out
that Botswana is a fantastic host country that is unlikely to change its tax
regime, its weather conditions are unlikely to disrupt or damage machinery,
affect timescales or cause hassle, and Ngamiland is an attractive location for
both expatriate and Botswana employees. In addition, Boseto’s in-bound and
out-bound logistics are not likely to be affected by weather or theft from the
trucks. It’s economically enticing, safe, well established, beneficial to
many and ultimately well-managed by DML’s experienced team. However in
order to come to Boseto, the company began with another very special project.
Back to Dikoloti
The Dikoloti Nickel Project, made up of four prospecting licences covering an
area of 612 square-kilometres, neighbours the three nickel deposits of BCL
Limited in the Selebi-Phikwe region of north eastern Botswana. Discovery Metals
has earned an 85 per cent interest from Xstrata, which is currently diluting its
interest in this project. Dikoloti stands with an Inferred Resource of 4.1Mt at
0.7 per cent nickel (Ni), 0.5 per cent copper (Cu) and 1.5 grams per tonne
PGE’s at a cut-off of 0.5 per cent nickel (Ni) for 28,700 tonnes of
contained nickel (reported by JORC code 2004).
“Discovery Metals announced on October 8 of 2009 that it has entered into
a Joint Exploration Agreement with The Japan Oil, Gas and Metals National
Corporation (JOGMEC) to fund an AUD$3 million exploration programme for
Dikoloti,” Fulton says.
Here is a brief overview:
- Discovery Metals remaining operator of the joint venture during the farm-in
exploration period and for any future projects or operating phases;
- The joint venture being controlled by a joint operating committee, which
represents both JOGMEC and Discovery Metals;
- Numerous highly prospective exploration targets have been identified adjacent
to the existing Inferred Resource;
- JOGMEC has the right to earn a joint venture interest of up to 60 per cent
- Should the exploration programme prove successful, it would be expected that
JOGMEC would assign its interest to another Japanese entity for the development
and operating phases.
- Despite awarding greater focus to Boseto today, DML has endeavoured to
continue working on Dikoloti and this agreement marks swift and smart moves to
safeguard development of this other project.
The world needs more copper
“The world is short of copper and there is only one way for the copper
price to trend,” Fulton says. “The goal of DML is ‘creating
shareholder wealth through the discovery and development of economic deposits of
base and precious metals.’”
DML is currently focused on completing the bankable feasibility study and
putting together all necessary internal and external approvals to construct the
Boseto Copper Project and deliver it in to production.
“We will in parallel, explore and prove up other similar projects across
the existing exploration leases in north-west Botswana,” Fulton says.
“Other opportunities will be evaluated as they arise.”
DML exemplifies the potential for creating shareholder wealth of a flexible
company. The original asset with which the company began is still valued, under
development and being dealt with to best commercially realise its potential, and
Boseto presents a new era, adding copper to this growing company. Relentlessly
committed to generating shareholder wealth, DML has already proven it can adapt
to meet the opportunities as they arise. Whatever comes along next, it will
likely be just as exciting.
www.discoverymetals.com.au