Larvotto Resources: An $8m purchase to make $154m a year? – that’ll do!
Larvotto Resources Managing Director Ron Heeks on 3AW, 2GB, 4BC & 6PR Bulls N' Bears Report
Listen to ASX-listed Larvotto Resources Managing Director Ron Heeks talk to Matt Birney on the Bulls N’ Bears Report about Larvotto’s crazy low outlay to make over $150m a year from a gold project it pinched from administrators for just $8m.
TO LISTEN TO THE LARVOTTO RESOURCES AUDIO INTERVIEW - CLICK BELOW
Last year Larvotto Resources pretty much stole the mothballed Hillgrove gold and antinomy mine and associated in-ground resources in NSW from the administrator of Red River Resources. It paid just $3m and lodged a $5m environmental bond to pick up the project that came replete with a mining plant, in ground gold resources and perhaps Australia’s largest antinomy resource. Since then Larvotto has scrubbed the project up considerably and recently lodged a pre-feasibility study on the project that contains a lovely set of numbers.
RADIO INTERVIEW - TRANSCRIPT
Matt Birney - Welcome to Bulls N' Bears brought to you today by gold and antimony developer Larvotto Resources.
Matt Birney - ASX code: LRV
Matt Birney - I'm Matt Birney and I'm joined now by the Managing Director of Larvotto Resources, Ron Heeks.
Matt Birney - Hi Ron.
Ron Heeks - Hi Matt.
Matt Birney - Okay so last year Larvotto Resources pretty much stole the mothballed Hillgrove gold and antinomy mine and associated in-ground resources in NSW from the administrator of Red River Resources. It paid just $3m and lodged a $5m environmental bond to pick up the entire project that came replete with a mining plant, in ground gold resources and perhaps Australia’s largest antinomy resource. Since then Larvotto has scrubbed the project up considerably and recently lodged a pre-feasibility study on the project that contains a lovely set of numbers.
Matt Birney - Okay Ron, Larvotto has just tabled a maiden ore reserve at this project, what is it and what's the broader resource?
Ron Heeks - We have a lot of gold and we have a lot of antimony so we have 600,000 ounces of gold equivalent and that's made up of the component of antimony and gold and that's at 6 grams per tonne.
Matt Birney - So you've just completed a PFS, let's get into that with some rapid fire questions and answers. Firstly what gold and antimony prices did you use in the study and what's the current market price?
Ron Heeks - In US dollars we use 2,000 ounces gold and 15,000 per tonne antimony. The current spot prices for those are $2,300 and $23,000 a tonne so consider more than what was in our evaluation.
Matt Birney - What's the initial mine life estimated?
Ron Heeks - 7 years.
Matt Birney - How many ounces of gold and how many tonnes of antimony will you produce a year?
Ron Heeks - Producing 41,000 ounces of gold and 5,400 tonnes of antimony, which is about equivalent weighting on a dollar value.
Matt Birney - What will it cost you in CapEx to get the existing mining plant ready to mine again?
Ron Heeks - Very low, $73 million because of what we've already got on site.
Matt Birney - And how long will it take you to pay that CapEx off?
Ron Heeks - 2 years using our base case modeling and one year at the current prices.
Matt Birney - And how much money will this thing make a year on average over that 7 years? Let's go with EBITDA.
Ron Heeks - $93 million a year but at current prices it's $154.
Matt Birney - And how much will it cost you to produce an ounce of gold in Aussie dollars and what's the current Aussie gold price?
Ron Heeks - Our all-in sustaining cost, which is made up of the component after we sell the antimony, is $820 an ounce on our base case. At current spot prices, it's basically free because of the antimony credits.
Matt Birney - And what's the net present value of the project in today's money?
Ron Heeks - Pre-tax NPV is $261 million in the base case and at spot prices it's $584 million.
Matt Birney - What's antimony used for and what's its price journey been?
Ron Heeks - The biggest driving price at the moment, it's used in solar panels and and as a critical metal within military uses, but solar panel usage is driving the price and it's doubled over the last 12 months.
Matt Birney - Ron Heeks from Larvotto Resources
Matt Birney - Thanks for joining me on Bulls N' Bears and remember we're only here to give you information, not advice, which you should of course seek independently.
Matt Birney - I'm Matt Birney and this is Bulls N' Bears.
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