Document date: Wed 30 Apr 2003 Published: Wed 30 Apr 2003 11:02:55
Document No: 152609 Document part: A
Market Flag: Y
Classification: Third Quarter Activities Report
MACMIN SILVER LTD 2003-04-30 ASX-SIGNAL-G
HOMEX - Brisbane
SUMMARY & COMMENTS
Macmin Silver Ltd (Macmin) is a silver focused company whose primary
project is the Texas Silver Project, SE Queensland, Australia. Macmin
has exposure to gold by way of a 65% equity in New Guinea Gold
Corporation (NGG) and a 1% NSR royalty on production by NGG. Macmin`s
business strategy is to enhance shareholder value by way of:
i. Continuing to expand silver resources/reserves at its Texas Silver
ii. Develop a silver mine at this project when the silver price shows
sustained strength above US$5 per oz of silver.
iii. Gold production in 2004 from NGG`s Papua New Guinea projects.
iv. Obtain maximum benefit from likely major increases in silver and
gold prices. Macmin is presently completely unhedged and the
Directors` preference is to remain unhedged.
The Texas Silver Project has in-ground resources of 44.5 Moz of
silver equivalent, with a district potential, based on drill hole,
geochemical and geophysical results, estimated to be in excess of 100
Moz of silver.
Highlights from the quarter include:
* The updated and enhanced Feasibility Study has shown that the
increased ore reserves for the Twin Hills Silver Project at Texas (as
announced in late 2002) now support an extended mine life of four
years. As resources are converted to reserves by additional drilling
and/or total district resources are increased, Directors would expect
this mine life to be further extended.
* Directors believe shareholder value will be maximised if
development is deferred until silver prices show sustained and upward
strength in the US$5-6 per oz price range.
* Drilling recommenced at the Texas Project during the quarter. A 2m
intersection grading 285 g/t Ag was encountered during drilling on
the Silver Spur Mining Lease. Aggressive exploration will be
undertaken during the year on the Texas Project to upgrade and extend
the asset base. Percussion drilling has commenced at Mt Gunyan and
other prospects and diamond drilling will commence during the second
* A major IP anomaly was located extending northward from the Silver
Spur Mining Lease and just west of the known Twin Hills silver
mineralisation. This anomaly is at least 800m in length, is open
ended to the north and is thought to indicate a buried zone of
sulphide mineralisation, such as the alteration zone surrounding the
Twin Hills silver mineralisation. This is an exciting new exploration
target in the Texas district.
* Macmin subsidiary, TasGold Ltd, completed an IPO raising $2.35M and
listed on ASX on 9 April 2003.
* Macmin subsidiary, New Guinea Gold Corporation, announced plans for
three gold mines over the next 4 years in Papua New Guinea.
* Dr Garry G Lowder, Executive Chairman of Malachite Resources NL,
joined the Board of Macmin effective 4 April 2003 as an independent,
2. TEXAS SILVER MINES PTY LTD
The Texas Project EPM`s 8854, 11455, and 12858; ML 5932 and ML 50161
are located 100km west of Stanthorpe. Texas Silver Mines Pty Ltd is a
wholly owned subsidiary of Macmin Silver Ltd.
2.1 Twin Hills Mine Development - Current Status
The Twin Hills Mine Development has been enhanced in light of the
successful upgrading of reserves by the 2002 Drilling Programme (ASX
announcement 26 September 2002).
Macmin`s Mining Engineering Consultant, Tennent Isokangas of
Brisbane, in conjunction with Macmin`s external mining consultant,
have produced a new optimised pit plan after updating the earlier
Surpac Block Model (report to ASX 7th August 2000). The optimised pit
contains 13 Moz of silver equivalent in a redesigned expanded pit
model. By comparison, the previously reported figure for the Phase I
Pit alone totalled 6.8 Moz of silver equivalent.
The updated Feasibility Study, also completed in conjunction with
Macmin`s external mining consultant, indicated that the mining
operation in the open pit will extend to about 4 years, in comparison
to the Phase I Pit operation of 21 months. The treatment rate will be
700,000 tpa of crushed and agglomerated ore, with lower grade ore
below 50 g/t silver carted to a dump leach operation. Partly because
of the lower cut-off grade of 50 g/t silver, the grade of the heap
leach ore is now 118 g/t silver equivalent and the grade of the dump
leach is 44 g/t silver equivalent. The likely cashflows from the
initial optimised pit are very sensitive to silver price and will not
be finally determined until the decision to mine is announced.
The remaining resource at Twin Hills (not yet included in Ore
Reserves), if successfully upgraded to reserve status, may allow the
operation to continue well beyond the initial 4 years.
The Board believes that shareholder value will be optimised if
development is deferred until the silver price moves above US$5 per
ounce and shows continuing strength in the US$5-6 per ounce price
range. The Directors continue to believe that the silver price will
increase substantially in the near future because of the
supply/demand shortfall, as explained in Macmin`s 2002 Annual Report.
Any such increase will have a major upward impact on the
profitability of the project. A second consideration which mitigates
against early development is that the cost of raising project capital
would be high at present silver prices. The preferred method of
raising capital, so that the company is not forced to enter into an
onerous hedging strategy, is to raise this capital by way of a
convertible note or bond. As the loan would be underpinned by Macmin
shares, it would be preferable for the Macmin share price to be
substantially higher before entering into such a raising. The
Directors are confident Macmin`s share price will rise substantially
with a significant rise in the silver price.
Exploration resumed on the Texas Project in late February with the
objective of increasing the current 44.5 Moz of silver equivalent
currently in resources. Shallow percussion drilling was undertaken at
several prospects and a geophysical survey was commenced on the
southern part of the Twin Hills area. Drilling commenced at the Mt
Gunyan prospect which already has an inferred resource of
approximately 14 Moz of silver equivalent.
* SILVER SPUR
Eighteen percussion holes (897m) were completed during the quarter in
the northern part of the Silver Spur Mining Lease where narrow
intervals of silver-gold mineralisation had previously been
encountered. The best intersection was 2m at 285 g/t Ag between
54-56m (bottom of hole) in drill hole SSP44. Further drilling will be
required to test the deeper extent of these near surface indications
* BACK CREEK NORTH
Thirteen percussion holes (600m) were drilled around a historic
copper working at Back Creek North. The best intersection was 6m at
0.35% Cu between 50-56m down hole in drill hole BNP033. Silver values
* TWIN HILLS NORTH
Seventeen percussion holes (1,000m) were drilled on the northern part
of the Mining Lease. Low silver values were encountered.
* MT GUNYAN
Drilling commenced at Mt Gunyan but no results are yet available (see
also ASX release of 19th March).
An IP (Induced Polarisation) Survey was conducted over the silver
soil geochemical anomaly at the southern end of the Twin Hills Mining
Lease. The aim of the survey was to detect zones of alteration
(silification) which would be drill tested for silver mineralisation.
The survey has located a chargeability anomaly at the north-east end
of the area which requires further geophysical coverage (to be
undertaken in May) to determine its extent, depth and significance.
Drill testing will be undertaken on completion of the survey.
Because of the location of this IP anomaly, effectively along
strike from the Silver Spur mining lease and adjacent to the Twin
Hills silver resource, it is considered highly favourable for the
location of additional silver mineralisation.
Former Macmin subsidiary, TasGold Ltd (TasGold) successfully
completed an IPO on 26th March 2003 with the raising of $2.35M.
TasGold listed on ASX on 9th April 2003. Macmin now holds only a
minor interest in TasGold.
NEW GUINEA GOLD CORPORATION
Macmin holds a 65% equity in New Guinea Gold Corporation and retains
a 1% NSR royalty on all income from NGG`s current PNG projects.
Releases made by NGG through the quarter, including the Joint
Venture Agreement with Paccom Ventures of Vancouver, can be viewed on
their website at www.newguineagold.ca.
During the quarter, the Macmin Silver Ltd Board approved changes in
responsibilities for Executive Directors including appointment of Bob
McNeil as Executive Chairman and Dr Garry G Lowder as an additional
independent and Non-Executive Director.
R D McNeil
This report is based on & accurately reflects information compiled by
a competent person as defined in Appendix 5A of the ASX Listing Rules
Please refer to announcements previously released
A copy of the full announcement is available in PDF format on
www.asx.com.au. Alternatively it is available for purchase from
ASX Customer Service on 1 300 300 279.