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Jun 2017 - Intermin Res Ltd

Intermin Resources Limited (IRC) – Profiting from its Small Mining Projects

  • Intermin Resources Ltd (IRC) intends to self-fund its exploration through the development of a number of small mining projects (SMPs) in the Kalgoorlie to Menzies region of WA’s Eastern Goldfields, that are expected to be treated in various arrangements with nearby operating plants.
  • IRC’s first SMP is Teal, which has achieved production and profitability in less than one year, with initial profit payments starting in May 2017. IRC applied an innovative approach to removing the ~35m pre-strip above the supergene ore zone blanket, involving a 75/25% profit share investment with a contractor. Ore is trucked to the Paddington plant in batches with the first revenue payment (~50% of 80% of the grade) made after 2 weeks and the revenue less costs settlement balance a further 6 weeks later.
  • Average grades of the Teal batches appear to range from ~2.5g/t to possibly ~4.5g/t, with the first 5 batches totalling ~51kt @ ~3.0g/t (~5koz). Potentially higher grades may be achievable from the thicker, broader southern “half” as grade control had intercepts up to 375g/t, and the original resource model was top-cut at 20g/t. IRC has estimated that it expects to produce ~15 to 16koz @ an AIC of ~A$1030 to A$1090/oz from Teal Stage 1.
  • The next SMP is currently expected to be Goongarrie Lady, through one of 3 nearby plants (eg Davyhurst, Paddington). Apart from the infill of the current resource, there are a number of regional prospects that appear to have potential promise. However, like Menzies (see ERA’s September 2016 report on IRC) they come under the EGS JV, although EGS has stated that Menzies may form part of its 2nd Menzies-Ida production hub, and made the part 2 payment of the placement for 6.25m IRC shares at 12c for $750k on 1 June 2017.
  • Intermin has a number of mostly brownfields exploration possibilities that could follow on from Goongarrie Lady such as the Jacques-Peyes extension, although a number of the newer areas could have greater upside potential such as Baden Powell, Olympia, the many prospects within the Blister Dam tenement package, or Anthill on the Zuleika Shear.
  • IRC has a number of JVs and royalty streams that could provide additional cashflow or additional scenarios, such as the Janet Ivy 50c/t production royalty, with Paddington having recommenced mining there (based on the fresh low, medium & high grade site stockpiles near the pit). The royalty applies to any form of treatment, ie by plant or heap-leach.

Other Key Points: :

  • IRC intends to increase exploration amongst its various projects and prospects using its generated cashflow.
  • Exploitation of one of the newer prospects appears to be more likely than the Stage 2 treatment of Teal’s deeper arsenic refractory sulphide as it would require a different treatment partner than Paddington, and has yet to be arranged. • Evolution has started exploring the Binduli JV with IRC, while EGS was expected to start exploring in the Menzies area in 2H 2017, given its proposed 2nd hub timetable.
  • Infrastructure appears to be very good for IRC's Projects, with established dirt haul & main roads, treatment plants and proximity to either Kalgoorlie or Menzies.
  • Written by: Keith Goode
  • Thursday, 22 June 2017