BEADELL’s Tucano gold mine, Brazil. The company is ‘in-the-money’ on call options over 70,000 gold ounces at up to $1,700 per ounce and on a hedging book imposed by its lenders. Managing director Peter Bowler sold Agincourt Resources in 2007 for $415m.

BEADELL’s Tucano gold mine, Brazil. The company is ‘in-the-money’ on call options over 70,000 gold ounces at up to $1,700 per ounce and on a hedging book imposed by its lenders. Managing director Peter Bowler sold Agincourt Resources in 2007 for $415m.

Peter Bowler: Beadell Planning Hefty Dividend

Issue 64, November 2013

Beadell Resources has hit a new lode at its Duckhead deposit at its Tucano gold mine, Brazil, drilling grades of 15 grams per tonne over 24m from surface, alongside in-fill drilling on Duckhead’s main lode of 20m at 76 grams per tonne. “The more we’re drilling the more success we’re getting,” says Peter Bowler, Beadell’s founder and managing director.

Only discovered last year, Beadell has quickly converted Duckhead into positive cash flow. The deposit’s mined grades of over 10 grams per tonne have lifted output at Tucano, a string of open pits that remain open at depth, to 55,000 ounces in its last quarter.

Throughput rates are currently being lifted to 4.5m tonnes per annum, 30 per cent above nameplate capacity on commissioning last year, whilst installation of a gold elution circuit, which Bowler describes as “the last part of the jigsaw puzzle,” is due to hike output to 27,000 ounces per month.

Owing to a hedging book inserted by its lenders, Beadell is selling 60 per cent of its output at $1,600 per ounce, 25 per cent above the gold price. With 150,000 ounces remaining on its book, residual debt of $94m, cash of $35m and total costs around $600 per ounce, Beadell expects to be debt and hedge free within 12 months.

“We are in a good position to make acquisitions,” Bowler says, “but they’re not part of our thinking at the moment. Our shareholders, and they’re the ones that own the company, are quite firm that any acquisitions is not what they or us want.”

“It’s more about creating a better gold business: we want to be firmly the best gold mine in Brazil and we’re determined to reward shareholders next year with some dividends.” He says the payout is subject to the gold price, but is aiming for a “substantial yield.”

The strategy makes Beadell akin to a cash flow positive exploration stock. Open pit reserves sit at 2m ounces, but as Duckhead illustrates, the company’s surrounding land package of 250,000 hectares offers internal upside. Bowler has allocated a near-mine exploration budget of $10m to $15m per annum, which he says will “ebb and flow” with drill results.

“The more success we get with in-fill and peripheral drilling,” he says, “the more we’ll do. There is plenty of room for a repetition of Duckhead.” 

“We want to be firmly the best gold mine in Brazil and we’re determined to reward shareholders.”

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