Beadell's Tucano Trumps Expectations

Issue 33, March 2013

Beadell Resources is focused on building its Tucano gold mine into “the best operated gold mine in Brazil from a cost point of view”, co-founder Greg Barrett tells Global Mining Observer. “We love Brazil,” he adds, noting its predictable tax regime.

Following commissioning in November, Tucano’s carbon-in-leach gold plant has exceeded all expectations, turning the company cash flow positive two weeks after its first gold pour and exceeding nameplate capacity of 3.5m tonnes per annum in its second month of production. “The mill performance has been better than expected,” Barrett says. “We couldn’t be happier.”

Tucano’s high throughput rates will accelerate capital payback, improving the economics of a project that already enjoys low costs of $400 per ounce. Based on its current resource, close to 5m gold ounces, Beadell faces at least 10 years of low cost, open-cut mining.

As ongoing drill results emphasise however, Tucano’s gold resource is far from fully defined. In January, Beadell hit 25m grading 5.8 grams per tonne on its Duckhead deposit, contributing to a resource upgrade last week. All of its open-pits remain open at depth.

Duckhead sits in Anglo American’s contingent Amapa iron ore claims, over which Beadell holds all gold rights. “We’re going over the production plans and they’ve started constructing roads for us to transport the ore,” Barrett explains. In exchange, Beadell funnels its iron ore byproduct through Anglo’s beneficiation plant, lowering costs for both parties.

Early this year, Anglo announced the sale of its Amapa mine however to privately-owned, London-based Zamin Ferrous. “We think they’re the logical buyer,” says Barrett. “They’re already operating in Brazil and are best placed to get the most value for that asset.”

Beadell’s shareholders can meanwhile look forward to figures showing Duckhead’s impact on Tucano’s output and costs, besides drill results from its Tropicana project, Western Australia, once the country’s summer cools off.

In Brazil, Barrett does not rule out further project acquisitions. “There are a lot of companies with decent resources that are struggling to get capital market and banking support,” he says. “It's not something we’re looking at aggressively, but we’re aware of some opportunities.”

“Companies with decent resources are struggling to get capital market support.”
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