Article from MinesiteNews Story
Link:
https://minesite.com/archives/news_archive/2003/july-2003/crew030703.htm
Date : July 3, 2003
Canadian Listed Crew Development Group Now Based Close To London And Accelerating Towards Significant Cash Flow.
The decision by Canadian listed Crew Development Group to move its head office from Oslo to Weybridge, on the outskirts of London, owes much to the fact that this is a more central base for managing projects in Greenland, Ghana and the Philippines and a fair bit to the possibility that it may list on AIM. A lot has happened at the company since Hans Christian Qvist and Jan Vestrum took over the reins as chairman and chief executive respectively. Until that time the company was freewheeling with a stake of over 50 per cent in the South African mining company Metorex which it consolidated into its own accounts. Now it is pushing on with its advanced gold project Nalunaq in Greenland, an olivine project in the same country and sulpur and nickel projects in the Philippines as well as a gold joint venture in Ghana.
Nunaluq is being fast tracked into production by the simple expedient of eliminating the recovery process. The project is 40 kms from the deep water port of Nanortalik in the south of the country so the plan is to ship ore direct to the Nugget Pond mill in Newfoundland which is owned by Richmont Mines. The result is that the capital costs are reduced to US$9.7 million and US$8 million of this is being financed by a credit facility from Standard Bank with Crew contributing the balance. A contract has just been signed for construction of the mine and around 60,000 tonnes of ore is stockpiled to await shipment later this year.
Last year the measured and indicated resource at Nunaluq was estimated at 483,900 tonnes grading g/t gold to give just under 400,000 ounces with another 281,300 tonnes grading 20.5 g/t in the inferred category. Drilling since then will have increased this resource significantly as these resources only represent 350 metres of strike length and 200 metres in vertical section out of a total of 2,000 metres of strike and 1,000 metres of height on the mountainside. By 2004 the mine should be producing at a rate of 470 tonnes a day which would put the company on target for annual production of over 100,000 ounces of gold at a cash cost of US196/ounce. The payback period on this basis will be well under a year.
Only a couple of months ago Crew also decided to go ahead with the Seqi olivine deposit, also in southern Greenland on which it had held an option since 1999. This decision was stimulated by the fact that the olivine market is dominated by North Cape Minerals which is controlled by Sibelco Group. Crew sees an opportunity to offer an alternative source of supply to European steel companies who use it primarily as a flux. In recent years it has replaced dolomite due to its lower energy consumption and reduced environmental impact. Again the olivine , which is 94-98% pure magnesium iron silicate, can be shipped direct to customers as it sits right beside the Fiskefjord which is free of ice for most of the year.
Jan Vestrum is hoping to negotiate an offtake agreement with a leading German consumer which would pay for the feasibility study as well as the capital cost for bringing the mine into production. Seqi is a largely homogeneous deposit which can be mined by open pit methods and the resource is estimated at 46 million tones, though it could be much bigger. Even at the smaller end an annual production rate of 2 million tonnes would give it an excellent mine life.
A similar strategy is planned for the Pamplona sulphur project on the island of Negros in the Philippines with a joint venture partner being introduced to lift the financial burden of development from Crew. Initially Pamplona was going to provide sulphur for Crew’s Mindoro nickel project in the Philippines, but when problems were encountered over a Mineral Production Agreement at Mindoro a reassessment of Pamplona as a stand-alone project took place. The 40 million tonne deposit, which grades 30 per cent sulphur, is now to be bulk sampled and plant testing will take place to see whether it meets requirements of a local fertilizer manufacturer, Philphos. These operations will be paid for by Philphos and if everything comes up to scratch production could start next year at a rate of up to 4 million tones a year.
As can be seen the new management policies at Crew have put it very much on the front foot and by 2005 it should be generating significant cash flow from gold, olivine and sulphur. Jan Vestrum is confident that the company will cover its costs next year, but is conscious of the need to deliver rather than make forecasts. For this reason he is not expecting to move onto AIM for a couple of years to see how the proposed new rules about secondary listings pan out. In the meantime he has cut the holding in Metorex down to 9 per cent in order to finance Crew’s own projects, though Crew remains a 20 per cent partner in the recently acquired Eastern Transvaal Consolidated which owns three gold mines in South Africa. These will be operated by Metorex which has a 54 per cent interest and the plan is to cut the operating costs of the annual production of 100,000 ounces of gold down to well below the present US$242/oz.
Jan Vestrum is also considering what to do about the Hwini-Butre gold project in Ghana which is operated by its jv partner St Jude Resources. The project lies on the eastern contact with the Ashanti gold belt, encouraging drilling results have been received, and according to last year’s independent geological report by Watts, Griffis and McOuat the indicated resource amounts to 4.25 million tones grading 4.1 g/t gold with a further inferred resource of 1.72 million tonnes grading 3.0 g/t to give a total of fractionally under 1 million ounces. Vestrum is not too happy with progress by St Jude and wants to renegotiate the shareholdings to give Crew more control. This is a company in a hurry as Vestrum also wants to progress other projects closer to home such as the Ringvassoy gold project in northern Norway and the Nanortalik exploration concession surrounding Nalunaq.