The International Resource Journal: Tanami Gold NL

Tanami Gold NL
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admin on 13 November, 2009 04:01:00
 
“Ours is a story of persistence and commitment,” Graeme Sloan, CEO and
Managing Director at Tanami Gold NL, of Perth, Western Australia starts.
“In particular from Denis Waddell, the company’s founding chairman. Without
his passion and belief in the Tanami region I have no doubt Tanami would not be
here today. A great deal of credit has to go to him.”
Waddell, currently Tanami Gold’s Non-Executive Chairman, created the company
back in 1994; with the single focus of exploring the highly prospective
Tanami-Arunta region in the north of Australia. This region extends over 500
kilometres from Western Australia [WA] in the west to the Northern Territory
[NT] in the east. In 2008, the same year that Sloan joined Tanami Gold, the
company had ceased open pit mining and commenced development of the company’s
main asset, the underground Coyote Gold mine.
IRJ caught up with Sloan to hear about current developments at Coyote and to
discuss the Company’s plans going forward.
”The Tanami-Arunta region of WA and NT is one of the last remaining provinces
in Australia capable of hosting multi-million ounce deposits. It hosts the
plus-10 million ounce Callie mine and several other 0.5 to 1.0-million-ounce
deposits,” Sloan says.
The Coyote Gold mine
The Coyote gold mine is located 30 kilometres west of the Western
Australia–Northern Territory border and is recognised as being one of
Australia’s most remote mining operations. This remoteness contributes to the
Tanami-Arunta region being one of the country’s least explored geological
provinces capable of producing multi-million ounce deposits. The mine is a
3.5-hour flight from Perth and currently comprises of an established 150 strong
workforce, airstrip, roads, water, power and a 250,000 tonne per annum treatment
plant. The company has spent over A$100 million dollars developing the
operation.
“That remoteness opens the door for opportunity,” Sloan explains.
Within the same year that construction of the Coyote Gold mine began, Tanami
Gold commenced open pit mining at Coyote Pit’s One and Two and, later, at Bald
Hill located approximately 30 kilometres to the north. In mid-2008, surface
mining ceased and the focus shifted to the development of the Coyote
underground. A subsequent re-optimisation of the Coyote and Bald Hill open pits
lead to mining operations recommencing in January 2009 [the Coyote Pits], 
then, six months later, transferred to Bald Hill. With ore being sourced from
open pits and underground, the company is currently producing at an annualised
rate of 50,000 ounces.
“At this stage, production is relatively small but by no means do I believe
this is where it will stay. What got me so interested in Tanami and one of the
key reasons for joining the company was the prospectivity of the Tanami
region,” Sloan says.
“I am a strong believer that the Tanami region will provide the company the
opportunity to have a number of mining operations running at the same time, in
addition to Coyote and Bald Hill with others in the pipeline that will see
overall gold production increase significantly.  If you look at our tenement
package and the numerous high-quality targets already identified through earlier
exploration drilling.  The drilling completed was mostly shallow RAB but
returned a number of impressive first pass results including four metres at 49
g/t Au fro 56 metres, six metres at 11 g/t from 33 metres, 10 metres at 7.8 g/t
from 101 metres and many more spread over 30 individual target areas. Many have
similar geology and geological features to Newmont’s Callie gold mine, so with
this in mind and given what we have seen underground at Coyote, we brought
forward an underground exploration program to help realise some of this
potential. To date, we have completed around 25 per cent of a 9,000 metres
diamond drill program aimed at testing a number of high grade advanced and new
targets.  Initial results have been extremely encouraging. and in many
instances, we are seeing very  high grades,  in some cases several thousand
grams  to the tonne. It’s early days, but certainly we see there is great
potential to add significant high value ounces to our inventory,” Sloan
explains.
The Coyote operation is a true greenfield site with no previous mining in the
area. To date it is still just over 200 metres below the surface, making this
site extremely shallow compared to other Australian mining operations. The mine
was originally seen as a high grade but narrow deposit; however, work to date
has shown it has been anything but. The company is mining three to five metres
wide with some sections ballooning out to 10-12 meters wide. On average, the
mining width is around three to five metres at an average grade of seven to 10
grams.
“The September 2009 quarter was  the first time the company has been in a
position of what we see as normal development-production ratio [40:60]  and we
produced just under 13,000 ounces at a cash cost of A$660 per ounce for the
September Quarter for the Quarter. On current forecasts, we should see another
12,000 ounces quarter,” Sloan says.
“For the company to have achieved what it has to date has taken a huge effort,
with credit going to our hard working Coyote and Perth teams.”
Shareholder support
Tanami Gold is in the enviable position of enjoying excellent financial backing,
an attribute that Sloan couples with their highly experienced expert teams.
“We have seen something like a 600 per cent increase in share price over the
past 12 months which is testament to the hard work of the Tanami team and the
strong support of our shareholders.  The Company has very little debt, no
hedging and a market cap of around A$250 million. Our register is predominately
retail with the top three shareholders owning approximately 35 per cent. The
stock is extremely liquid and it is not unusual to see 10-50 million shares
traded on a daily basis. Our aim over time is to attack a greater level of
institutional investment, which I believe will further strengthen the
company,” he says.
This support has been a large driver in Tanami Gold’s continued growth and
success throughout the recent tough financial times.
“The economic downturn has affected everyone, including Tanami, but given the
support from our shareholders and the hard work of our team, we came out of it
really quite well,” he says.
“There were certainly some positives [to the economic downturn]; it opened up
the employment gates and we were able to add high quality people very quickly to
attend the many tasks associated with a developing mine.”
The support from Tanami Gold shareholders and the expert team now in place are
both factors which will prove critical to Tanami Gold’s strategy, going
forward.
“Operations, explorations and corporate activity”
“The first part of our strategy is to optimize the operation: get it running
smoothly then look to increase and maintain sustainable production. We are a
long way down this path as we speak,” Sloan says.
“The second part of the strategy is about near mine and regional exploration.
As explained earlier, we have commenced near mine exploration with the
underground drill program and, very shortly, we will look to kick start our
regional exploration. Any additional ounces from our exploration programs will
be high value ounces, given every piece of surface infrastructure including the
250,000 tpa treatment plant is in place and paid for. Should any of this need to
be expanded, it will take very little expenditure to ramp up treatment rates by
20-40 per cent.”
This leads on to Tanami Gold’s third step: corporate activity.
“We will continue to look at corporate opportunities within Australia and
other parts other the world, as long as they are the right fit and meet a number
of very strict criteria, the most important being adding shareholder value,”
Sloan continues.
“The company is very well placed, operations are meeting their targets,
exploration has only just commenced, but early signs are extremely encouraging
and we are continuing with our corporate assessments.”
With their sights set firmly on this emerging gold region, their strong
shareholder support and expert teams on the case, the Tanami Gold story of
persistence and commitment certainly looks set to pay off.