RNC Minerals Graeme Sloan Video & my transcript Excellent interview of RNC Minerals Graeme Sloan, Managing Director of Australian operations by Mike Coyle of Insidexploration, published August 23rd 2019.
Video: https://www.youtube.com/watch?v=AVIG-Fh3bvs
My transcript: https://ceo.ca/@pierreg01599501?9331fb4ca1f1
Mike Coyle: Hi I’m Mike Coyle of Insidexploration. I’m here with Graeme Sloan again, he's in Toronto this time and I had the opportunity to sit down and catch up with him. So, Graeme nice to see you in Toronto.
Graeme Sloan: Wonderful to see you again Mike.
Mike Coyle: Welcome to Canada.
Graeme Sloan: Thanks.
Mike Coyle: Luckily you didn’t show up here in the midst of our Winter.
Graeme Sloan: Let’s start a little bit warmer. Probably a little bit too humid for me at the moment.
Mike Coyle: I can appreciate that. It's a little drier in Australia. So, since the last time we talked you were talking a lot about the nickel exposure and the optionality at Beta Hunt. Now you have even that much more optionality with your mill so this has got to be really exciting for you. So, where are you at down there?
Graeme Sloan: It's a great period first really. So much has happened since we last spoke and obviously at that time, we only had Beta Hunt and we were sort of just new into sort of changing the whole stoping in the mining and all of that sort of thing. Since that time so much has happened. We've now consistently started to ramp up. We're producing 40,000 to 45,000 tonnes of ore a month and that makes a huge difference for us. Right so, the consistencies there, we've been able to go back and have a look at some of these nickel areas that are also there. It's still new, it's still early for us but it's really exciting for us at the moment with Beta Hunt.
Mike Coyle: So, you've been driving that ore drive on 16 level. Everybody's all curious about what's going with the Fathers Day Vein? But you can't mine that fast enough for retail. So, where are you at right now?
Graeme Sloan: Well it's interesting and I can understand why the interest is there. It certainly makes it for all of us. But at the same time, we need to be disciplined in how we approach this and at the moment we are driving on the 16. We're close to finishing at the end of the drive where it needs to be and where it needs to stop and at that point in time, we’ll then start to look at a sequence stoping. But it needs to fit in with our overall mine plan. If you get out of sequence in this you run the risk of sterilizing some of this material and the last thing we want to do, is sterilize the material. So, it needs to be part of a very disciplined mine plan which we have got or very close to having now especially with this drill program that's just completed and the resource upgrade. So, all of that work has to be put into this mine plan and it goes into a big mix and at the end you work out what the best sequences to mine. Unfortunately, or fortunately whichever way you look at it, the 16 level and the 15 or 14 well where A Zone where the Fathers Day Vein load is fits into that sequence. So, if you try to get ahead of that and try to cherry-pick this you will lose some of this material. This way we get it all Mike.
Mike Coyle: As you guys have quoted it, you leave something locked in a pillar and you could have another Fathers Day Vein locked in there and you wouldn't even know it.
Graeme Sloan: Exactly, they're so small that it's very difficult to find them and it's the proverbial needle in the haystack and if you don't take the whole haystack, we all miss the needles and that's what we've got to do. We've got to make sure that we get all of this. So, that's the approach we've taken.
Mike Coyle: So, what's the verdict on the Western Flanks? It's much wider it's much chunkier. What are you seeing at depth? Are you optimistic that your grade is going to continue to go up at depth and where are you at for mining the Western Flanks?
Graeme Sloan: We need to probably dispel this myth about the grade definitely going to be better at depth.
Mike Coyle: Wow!
Graeme Sloan: There's a chance it could but there's a chance it could stay the same. So, we just need to just recognize the fact that these things can occur but, at the same time it's a bit like the specimens. They could be there or they could not be there. So, we have to be a bit careful about that. But, on the Western Flanks Mike, now this this is an ore body. Now I can tell you and you do your research and you'll see that for a six months drill program, to end up with a resource in the measured and indicated character category of nine hundred and forty-four thousand ounces. At a discovery cost of seven dollars thirty an ounce is just phenomenal. It's a wonderful achievement and it sets Beta Hunt up and what it does now is it gives us the ability to put this mine plan around and convert that into reserve and be very disciplined in the way we approach and take our production on. So, we can say with confidence what we're going to produce and where we're going to produce it at what time and what grade and that has just so much. There are so many benefits that flows through the whole operation.
Mike Coyle: So, you've got five thousand meters of drilling that you're doing or just completing. The assays are coming back. What kind of a timeline are you kind of expecting for the assays to come around?
Graeme Sloan: This goes back to this discipline across the board and maybe if I just throw in a little bit about Higginsville at this time. You know that we've just acquired this plant and we've acquired a lot of historic resources from that. What we need to do as a company to make sure that this is cash flow positive and keeping consistent and we have all of the production data come out and we can give forward and forward-looking numbers to the whole shareholder base, as well as all the institutions and so.
We need to convert those resources into a reserve and the only way to do that is a little bit more drilling. So, since we've had such success at Beta Hunt on the drilling to actually do further around that area now doesn't make a lot of economic sense at this time. It's not to say that we won't drill because we will because this Western Flanks resource has hallmarks extending further down and down plunge and interestingly Mike we're also seeing this go up. So, we're now developed a lot of those areas on the way up that. So, it makes access into this stoping just so much easier, so much cheaper, so much simpler and so much quicker. So, there's a number of benefits that came out of this drilling and that's certainly one of them. Getting back to the answer this question about the 5,000 meters. The best value to spend that money for shareholders now is to convert some of the other resources that we have got at Higginsville into reserve category, so we can start to get Higginsville at the same level now as Beta Hunt.
Mike Coyle: For clarification, you're still doing the 5,000 meters of exploration at Beta Hunt but they're going to do additional drilling on the Higginsville property?
Graeme Sloan: We have done part of the 5,000 meters drilling and some of the other meters that will go over to Higginsville. So, we’ll still do some drilling at Beta Hunt because that's important to do. But it's less important at this stage than to drill it at Higginsville.
Mike Coyle: Oh yeah you have a resource. You're developing a mine plan and some of the retail market hasn't exactly caught on to that and they for the life of me can't understand why because you have what you need now. You want to explore the land package. So, let's talk a little bit about that land package. You've got Baloo, you're stripping it. Things are moving along there. August is your first month of production I believe.
Graeme Sloan: Actually, July was first month of production, just starting. July was our first month mainly Beta Hunt and just a smidgen of some of the open pit or the old stockpiles from the open pit at Higginsville. In August is basically the first time Baloo ore will come into the mix as well for us so.
Mike Coyle: These being surface operations, they're far more profitable given the grams per tonne that you have right?
Graeme Sloan: Oh yeah, number of things. One, easy to access, they’re less time to access, less costs to get to and we have gone from trucking material which Higginsville was before over a hundred kilometers all around a hundred kilometers to fourteen kilometers. So, that has a big bearing on the cost as well. More so, we have Baloo and Baloo is new. It sits on a salt lake and typically the salt lakes have been mined up and down this whole trend. We exposed the top of the ore which was only three meters below the surface. So, we removed the sediments of the salt lake and the first material, the solid ground that you hit, was the ore. So, that's very, very unusual to see. Usually there's an overburden that you have to go through. Sometimes 10, 20, 30 meters thick. We went three meters and then to the top. So, that was a plus. Makes it a bit easier for us but that ore will start to go into the Higginsville plant this this month and for the coming months to the end of the year for stage one and then stage two, which the permitting is going. Now could come in early part of next year. Or, we believe there are other opportunities to supplement the mill without we get going to stage two. We can come back and do stage two later.
Mike Coyle: So, I'm glad you talked about that because I heard on the conference call the allusion to that there's other areas of interest and you just mentioned it now. So, can you kind of talk about some of those other areas of interest that you're seeing?
Graeme Sloan: Absolutely Mike, the whole of Higginsville area contains around 1.9 million ounces of measured, indicated, inferred and that's a historic resource. So, it's not JORC compliant nor is it 43-101 compliant at this stage. A few more holes and a bit more work from the geologists and we can start to upgrade to that level. All it does is tell you that there's a lot of potential around that area. We've gone back and we've reviewed a lot of the holes and I've actually employed specialist resource geologists just purely to look at this and the work today has been really, really pleasing. We're starting to see a number of these what were smaller pits start to come together and who knows where that can end up Mike. So, our pipeline of projects from Baloo is starting to grow daily and I think with a little bit of work we can convert those into mineable tonnes. So, at the moment we're a good healthy line of production centers at Higginsville which I think will grow over time.
Mike Coyle: Let's talk about that mill. That's the keystone of this operation. Now Beta Hunt is the cornerstone but this is the key that's going to bring it all together. So, what benefits are you seeing already? Obviously, there's plenty, but give us your take.
Graeme Sloan: It's just without it we made life so much difficult for all of Beta Hunt and obviously Higginsville would've made it. But the reality is this plant delivers immediate benefits and first and foremost is the cost of actually treating Beta Hunt ore. It's like 15 dollars a tonne cheaper to treat it through Higginsville plant then we were toll treating, that's a big cost saving to the company, great cost saving but then you talk about the synergies between the two, not just a plant but the things that you can buy in bulk rather than just looking at fuel for one and water and all of these things that have a big cost bearing onto the operations. The plant itself Mike, obviously it suits Beta Hunt and it suits Higginsville. But the key to it is sits dead smack in the middle of one of the most prolific gold centres in Western Australia. There's a trend that goes from way south and you won't know where this is but it's about 80-120 kilometers south of Higginsville - maybe 800 kilometers north of Higginsville. Same trend and it has the same big geological features going up through there. Now we sit in between Kambalda which has got a production record of 13 million ounces and Norseman which has six million ounces and we’re smack in the middle. That plant controls almost a hundred kilometers of territory. So, anyone who wants to treat material will have to come in to see the plant, to see us about treating their material or it gives us the ability to look at others.
Mike Coyle: So, I smell an expansion coming down the road maybe not in the immediate future obviously.
Graeme Sloan: It just shows shareholders what a great acquisition Higginsville is for them. That's what it does Mike. It meets all the Beta Hunt needs and it meets all the Higginsville needs but it also controls the region. I mean how good is that!? That doesn't mean we're going to make acquisitions. It just means that we have the ability to give us flexibility and it gives us, that we keep talking about, this optionality Mike.
Mike Coyle: So, speaking of optionality, let's get back on the nickel the ASIC figures on nickel looked pretty good. Are you guys mining nickel at Beta Hunt still? Is that still in the works? I know that plant just around the corner it's not operating correctly. Is there any plans for them to kick that back up with the rising price of nickel?
Graeme Sloan: That's the BHP concentrator and from what we believe that concentrator will kickstart sometime mid next year, that's great. At the moment we are treating some of our nickel that we're mining at Beta Hunt but it goes up to a place called Leinster which is quite a bit way further north than Kambalda. So, it is a long haul for us. We're still profitable doing that. It's going to be more profitable when we go into the concentrator. So, at this stage we are looking certain targets around that we're going to sort of focus on. It's a little bit early to start to say we're going to drill those targets but certainly we've identified some of them from the gold drilling that we did at Western Flanks. Some of those holes actually went through the gold ore body and further on another 20-30-50 meters further on into the nickel targets.
Mike Coyle: I’ve seen them in all my pictures, over them and you can see there's quite a bit of nickel then. When I was up in that stope it was pretty impressive to see it. Almost a meter-wide solid piece of nickel like that. So, I definitely see the value in it. People who haven't had my experience don't have that, all they see is the paper and the ASIC and speaking of ASIC it kind of leads me into my next question is gold ASIC seemed pretty high this month but that's a lot to do with development. Can you talk about that because I think people miss that? They see that number; they get scared and I really want to elaborate on where future ASIC is going to be versus what we just seen in the second quarter report.
Graeme Sloan: At this stage you it is to a level. We'll bring that down but it has to happen over a period of time and again, it comes back to the fact that we're currently still mining the resources. We haven't finished the new mine plan with the reserves. So, there's always this bit of delay between what we're doing now and where we want to be very shortly and we'll have the mine plan completed and then, were able to come back and we have to be more definitive around production numbers and cost numbers and it would be wrong of me like to give you those or even hint where they're going until that comes out because we have to finish the process.
Mike Coyle: When it's safe to say that we're going to see much improved AISC costs with the integration of HGO and further production?
Graeme Sloan: Yeah, we've got so many areas Mike we're working on the cost reduction program. The Higginsville acquisition gives us the ability to start to really look at synergies. Even now we're starting to see these people swap around from site to site. We're seeing services being performed across both sites. All of these have a way of lowering the cost for us and as I said earlier on, fuel is a massive one, the big cost. So, we bring all of those down now because we're twice the size. We can get better deals and better rates for it than what we're getting at Beta Hunt. So, both operations will sort of benefit from those Mike.
Mike Coyle: Terrific, well I'm really hoping I get the opportunity to go back down in Australia and maybe if I do, we'll get an opportunity to sit down and yet again talk a little bit about the project you've been extremely informative and shareholders have found great value in what you said. So, really appreciate the time today Graham.
Graeme Sloan: Thank you very much Mike. Really appreciate you taking the effort and look forward to you coming down to Australia again and showing you all of those. You can see it firsthand.