Considering the current worldwide economic climate, the metal industry is doing well — and Exco Resources Ltd is one of the companies at the forefront.
Exco Resources has been operating in Australia since 1998. Since then the Company has expanded and developed a solid reputation, both amongst its peers and the wider investor community.
Current Managing Director Michael Anderson, a geologist with 17 years experience in the southern-African and Australian mining industries, joined the Company three and a half years ago. “I was very excited to join Exco,” he said. “We are primarily known for our focus on copper, but we’ve also picked up a small gold project as well.”
Location Map of CCP Tenements Highlighting the E1 Camp, Monakoff and Great Australia Deposits
Exco’s primary focus over the last three years has been on unlocking the value across the Company’s portfolio of Queensland projects. Exco holds a sizeable land package (~4,100km2) in the Mt Isa region of north-west Queensland, Australia; an area that is considered by many to be one of Australia’s most prospective base metal terrains. Exco has established a large resource base across its Cu-Au-U3O8 Queensland projects, and is currently in the process of completing a Definitive Feasibility Study (DFS) on its Cloncurry Copper Project (CCP), centred around the town of Cloncurry in north west Queensland.
“We are also commencing our White Dam Gold Project in South Australia,” Anderson added. “That project should be in full swing during the first quarter of 2010.”
The estimated cost of the Company’s Cloncurry Copper Project in north-west Queensland is approximately $200 million U.S. dollars. This estimate includes project development costs, capex, infrastructure, and financing, etc. “That’s for a three-million tonne per annum sulfide concentrator project,” Anderson explained, “producing 25,000 tonnes of copper and about 20,000 ounces of gold (in concentrate) per annum. “The by-product potential is significant.” These by-products include cobalt, magnetite and uranium. The Company expects that the DFS will be completed in mid 2010 and is aiming to be in production from the CCP in 2012.
North-West Queensland Tenement Map Detailing the Location of Exco’s Key Deposits & Prospects
According to Anderson, the actual returns on the project are looking quite robust. Copper is currently trading between $2.80 and $2.90/lb, and Exco’s return projections were based on the $2.50/lb mark. “I do believe that the outlook for copper is very strong,” he said. “Most analysts I talk to have selected [copper] as their preferred base metal, and [Exco] certainly agrees with that.”
Although it will take a sizeable amount of cash to fund these copper projects, Exco is confident that the Company’s White Dam Gold Project in South Australia will provide up to 40 million in equity over the next two or three years. The Company is also aware of the fact that any additional amounts of investment dollars from potential partners would be an asset. “We realize that we need to have a conversation with Ivanhoe Mines, which is our major shareholder,” said Anderson. “They hold 20 percent of the Company, and we are confident that they will support us as we move forward.” Exco also has other deals in the works, so the financing outlook is very positive.
The key is to maximize the benefits from their smaller gold project at White Dam as much as possible. Anderson expects the project to yield about 50,000 ounces of gold per annum over the next two and a half to three years (at a minimum). Every aspect of the gold project has already been set up and firmly established, from approvals to construction. Funding is in place, and first gold production is scheduled for March 2010. Gold is trading at historic highs, especially in Australia where the price of gold is currently A$1,150/oz. All financing debts would be paid off in a year, leaving the remaining cash-flow from the project to be incurred as useable income, which will assist the Company in expediting the preferred development strategy for its portfolio of Cu-Au-U3O8 projects in north-west Queensland.
For potential investors, Exco is a company with immense earning potential. It is also a company that is extremely organized and forthcoming regarding the financial particulars of each mining project — large or small. “When you are looking for a company to invest in,” Anderson explained, “you have to examine two things: the Company’s assets and the people involved. As far as these two categories are concerned, I think Exco has a lot of strength, history and pedigree.”
The directors of Exco know the main reason why other companies choose to invest, and that is to make a significant return on their investment. That is why they have worked hard on showcasing Exco’s reputation as a company that has a deep history of turning mining into money. “There comes a time when you have to transition from explorer to producer,” said Anderson. “We are on the brink of that transition and are well-positioned to take advantage of the base metal markets as they unfold.”
With a short-term funding project at hand and an enormous project expected to take shape in the near future, Exco is poised to corner the copper and gold market. The Company’s current resource base at its Queensland projects is 57Mt containing 495,000 tonnes of copper and 480,000 ounces of gold. But the resource base could change, for the better. The more time and money the Company spends drilling, the more resources they will find. “As a company, we will continue to grow,” said Anderson. “We have a pipeline of exploration projects coming up so we’re excited. Over the last two or three years,
I've seen us double our resource tonnages. I fully expect that to continue.”
For more information please visit:
http://www.excoresources.com.au
Head Office & Registered Address:
Level 2, 8 Colin St, West Perth, Western Australia 6005
Mailing Address:
PO Box 1726, West Perth, Western Australia 6872
Telephone: +61 8 9211 2000
Facsimile: +61 8 9211 2001
Email: info@excoresources.com.au