Majestic Interview: December16, 2010
Translated From German
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Majestic Gold Corp.:. Large production expansion ahead! - Interview with Rod Husband
China is currently on everyone's lips. Almost all commodities, the country acts as the leading buyers. But China also has large raw material reserves and even now foreign companies and investors excellent opportunities to participate in this raw material deposits. One such company that has dared to step in time to China and has since built up a very respectable production, Majestic is gold. We spoke with Rod Husband, president and CEO of Majestic Gold about what investors can expect from China and his company in the coming months.
Commodity levels: Rod, your main focus is currently on the expansion of production capacity at its Chinese Gold Song Jiagou project. Could you first some basic information about this project please give!
Rod Husband: We came to China in 2004 and came in search of a good gold project in Song Jiagou. At this time, the project has already been operated as an underground mine. We signed a contract with the former operator, with the aim of Song Jiagou to make a much larger open pit mine. In 2005, we began drilling the first to own an accurate picture of the actually existing resource base. In April 2010 we launched our latest up to date resource estimate. Accordingly, we have demonstrated so far about 3 million ounces of gold in the Inferred and Indicated categories.
One million ounces were able to be classified in the indicated category. We are currently working on a scoping study which will be completed in December. This will give us a hand, important information regarding a sound and efficient mining operations and the other a detailed mine plan. At the same time we could together with the contractor of the mine, so the person who organized for us the entire production operation and manages to conclude a deal with our local partners and receive a 94% stake in Song Jiagou. In return, the contractor is now one of the major shareholder of Majestic Gold. Right now we still produce with a daily processing rate of 1,400 tonnes. We are also working but at a magnification of our processing facility by an additional daily capacity of 6,000 tons, which is already completed about half of it.
Commodity levels, why are you working on one side by a pre-feasibility support, on the other hand, already? Is a feasibility study is not normally the precursor for a promotion?
Rod Husband: That's right. For us the case is slightly different dar. We know that enough gold is there and know where it is right. The mine was already operating, the project before we ever took. Until now found the entire promotion instead which is more or less within a band of Chinese standards. The Contractor owns and operates several processing plants for many years mining projects. So we know that we can promote economic gold. We also want to convert the whole project but in Canadian standards. This includes a 43-101-compliant resource estimate, a scoping study, a pre-feasibility and so on. We need this "Western" standards of mine to get a possible maximum output and also ensure you to.
Previously, this was the problem that the Chinese had. They did everything by the processing plant run and stayed on so little things like the Vergradung or the recovery rate. Very simple reason, because their processing costs were so low that it did not play a decisive role. They reached even at a gold grade of only 0.25 grams per ton of rock to their break-even and therefore also completed an all in the mill. But if you are on profitability, then they should seek to promote the high grade rocks first, and process. And so we create our "Western" studies to increase the efficiency of the mine. At the same time we also know that more than enough resources in the soil are available to increase our processing plant and infrastructure using cash flow and borrowing in China to improve massively.
Commodity levels: Could you name a few current production figures?
Rod Husband: In the first nine months of 2010, we processed approximately 300,000 tons of rock and it produces about 5000 oz gold. This resulted in a revenue of nearly $ 5.5 million. The total costs made in that period from about 50% of the income, all income included in the expansion of production capacity and continue to flow. For the full year we expect revenue of more than 7 million CAD and a production yield from 6,500 ounces of gold. With the help of the pre-feasibility, we should be able to obtain the necessary capital to complete the expanded processing plant. This should lead from mid-2011 to a gradual increase in production from the current 1,400 to 7,400 metric tons per day then. This will then allow us to support about 100,000 ounces of gold per year.
Commodity levels: What other resources you need to complete your processing plant or in any form should this be financed?
Rod Husband: We still need about $ 40 million. We think that we will receive the completed shortly Scoping Study Already a loan to start the new year. We prefer, where possible using local loans, that is from Chinese banks, but also lead talks with potential investors in Hong Kong, and Europe. We will be in a position to processing plants by April or May 2011 to complete fully. The feasibility study will therefore be completed in the coming weeks. We can then in January and February discussions with institutions and get the required balance yet.
Commodity levels: Until recently, held only 54% of Majestic Gold Song Jiagou. Now it is 94%. How was it exactly that?
Rod Husband, our former partner in the project wanted to get out because they were specialized in underground mines very much and we wanted to establish an open pit mine. The contractor that handles the rock for us by Song Jiagou brought us together with a group of Chinese investors, our former partners paid. This group wanted Majestic Gold not only the remaining 40%, but the mill and the land rights that the contractor had not performed. In return, the members of this group of large shareholders Majestic Gold.This led to the Majestic Gold now has a 94% share of the total project holds.
Commodity levels: Which of the Contractor receives grants for the Development of resources?
Rod Husband: It depends on the degrees from among other things, the individual has the rock. On average there are about 11 CAD per ton of rock. In addition, he still receives bonus payments for reaching certain production targets.
Commodity levels: What other steps sind'nun for the next 12 months planned, exactly?
Rod Husband: We will complete our feasibility study. We will be able to procure for the completion of the mill expansion, required residual capital. And after that it's really just a matter as expeditiously as possible ramp up production to full capacity of 7,400 tonnes per day. In addition, our project offers further upside potential of course. Some additional drill results will be published shortly, and we were able to define some additional drill targets to expand our current resource. The bulk of the capital is still needed - if possible by Chinese investors in the form of loans - are. We also investigate current listing several options.We do among them the TSX Main Board can listen. And we are in talks about a listing on the Hong Kong Stock Exchange.
Commodity-level: Why should investors at the current time at Majestic Gold be invested?
Rod Husband: Majestic Gold offers an excellent opportunity for a significant gold resource to participate.Our market capitalization is currently at $ 100 million. This means that we are currently only about 30 to 35 CAD per ounce of gold are valued. Normal at this stage are about 100 to 120 CAD per ounce. We offer a project that is regarded as one of the fastest growing and most gold projects. We will be able to generate in a very short time a significant cash flow. Moreover, we are far from finished with our drilling. The resource potential of Song Jiagou is still very high. And gold should continue to perform as strongly as before, then we will be able to pay back the cost of expanding production within a year. We are in the moment before the stage from the Explorer toward a mid-tier gold producer.