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NQ Minerals offers substantial cashflow from silver stockpiles

NQ Minerals anticipates early cashflow from high margin silver stockpiles

The key to NQ Minerals PLC (ISDX:NQMI)  is silver. That’s the uncompromising message from Walter Doyle, the company’s chief executive, as he begins to set the wheels in motion for the next stage of growth.

There may be gold, there may be lead, zinc and copper, and there may be huge upside in the longer term from all of those on the company’s ground in Queensland.

But getting that future value unlocked and creating the environment in which a move to the main board of the London Stock Exchange looks feasible will involve the processing of the huge amounts of silver-lead stockpiles that the company has on its Ukalunda project.

It should be an easy, and very cost effective, win.

The stockpiles are left over from the old Sunbeam silver mine, which lies inside the Ukalunda license. This was operated in days of yore, in conjunction with a variety of juniors, by a once-famous mining name, Sons of Gwalior.

But Sons of Gwalior went bust before the last boom even really got going - for tantalum rather than silver-related reasons - and work on Sunbeam and the corresponding movement of ore from stockpiles to smelters ground to a halt.

And there’s the point. Because, as Doyle emphasises, the stockpiles at Ukalunda which are large enough to be seen from space are not waste rock. It’s not rock that was put aside as valueless after processing was complete. Rather, it’s ore that has yet to be processed. And as such, and because the mining costs have been sunk long, long ago, it’s likely to be very profitable for NQ.

“It’s not left-overs; it’s run of mine,” says Doyle. “It’s neatly stacked in rows and it’s super high grade that runs in kilos not ounces per ton.”

What’s more, there’s lots of it.

“It’s stacked up in neat rows ready to process,” says Doyle. “It’s visible from satellite it’s so large. It just needs to be packaged up and sent to a smelter.”

How much revenue it will all generate remains to be seen. That the margins will be high is clear. And given that local smelters have taken this ore before, in the Sons of Gwalior days, there aren’t likely to be any unpleasant surprises in regard to processing or penalties. And the recent strength in silver on the commodity markets bodes well too.

No forecasts are currently in the market, and the resource numbers are historic in nature so it’s hard to hang anything official on the stockpiles on Ukalunda, but it seems clear that we’re talking at the level of tens of millions of Australian dollars.

To be able to turn around that sort of revenue from a mining project in short order is a rare thing indeed, and is the reason why Doyle is confident he can move NQ from the ISDX Exchange to the main board in London in fairly short order.

It’s also why he’s confident that he’ll be able to unlock the funding to do more serious exploration work across the wider potential of Ukalunda, and also in due course to re-open the Sunbeam mine itself.

“There’s a substantial amount of copper that’s never been drilled,” says Doyle. “There’s a wall of it a couple of hundred metres long and ten metres high running at high grade.”

Pictures which Doyle carries on his phone show it to be an outcrop of significant scale indeed, and if the ground had not been tied up in the legal wreckage that was Sons of Gwalior would doubtless have been drilled out years ago.

Doyle would also like to move towards a JORC resource for the gold potential and do some further work on the zinc potential.

So plenty to be getting on with, and plenty that can be achieved if the initial cashflow from the silver stockpiles can be brought on stream. The prospect of that cash means that Doyle is less concerned about fundraising as he moves the company on to the main board, although he may issue some new equity just to give liquidity a boost.

And that strength in depth may just allow for further deals to take shape along the way. Watch this space.


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