CLICK HERE to watch the full interview.
Interview with Michael Hodgson, CEO of Serabi Gold (LSE:SRB, TSX:SBI)
Apologies for the quality of the internet connection, Mike was dialling in from the country-side.
Off the back of yesterday’s press release, Mike spoke to us to give us a bit more colour on the details about :
- The Public Hearing
- The result of the first months test on the new ore sorter. Link here to a video of the ore sorter working: https://www.brrmedia.co.uk/broadcasts-embed/5e3a8fe1397af40afa52b27e/event/?previewEventId=5e3a8fe1397af40afa52b27e&popup=true
1:30 – Public Hearing: A Positive Outcome
3:43 – Ore Sorter: How Does it Work?
9:56 – Focus for 2020: Exploration, Drilling and Building Value
Company page: https://www.serabigold.com/
Matthew Gordon: Hello, Mike, how are you, Sir?
Matthew, very well, thank you.
Gordon: Good. Well, look, we saw the press release this morning, thought we’d
try and catch you, and it sounds like we caught you at a good time, you’re off
to Brazil tomorrow. So, why don’t we talk about the public hearing first of all
which you told us about last time we spoke, but it seems to have gone well?
Hodgson: Yes, yeah,
I mean, you don’t get a definitive answer in the actual public hearing itself
but you obviously… it could go very wrong on the day, so I mean if you have a
positive public hearing in terms of like, everyone sits down and listens and
all the stakeholders have the conversations and are all heard over 6-hours and
there’s no… you know, it’s all done in a cordial manner, which is exactly what
happened, you can’t have anything more.
So what we
actually have there. It’s chaired by the State Environment Agency, called SEMAS,
and they chaired it and all the various stakeholders had their say and we had
pretty much overwhelming support, which was great. So they will now go away and
digest all of those comments, people’s concerns, people’s wishes, people’s
wants, and they will then make a recommendation to a governing body which is
called KOHIMA. They’re the guys that actually, ultimately, either ratify it and
take it to the board. So they’ll listen to all of the, as I say, all the
comments and concerns and they’ll come back, hopefully, with an LP for us, we
hope within the next sort of six to eight weeks. That’ll be a great result,
we’ll be delighted to get it done so quickly.
slipped a bit compared to what we hoped, but you’ll remember we had to live
through all of those tailings dam problems of 2019 with Brumadinho and how that affected everybody in the mining industry in
Brazil. We’ll obviously get the EIA resubmitted and the public hearing still
early in 2020 and seemingly gone through in such a positive climate in a way.
Yeah, I think we did a really… we’re very pleased. Very pleased.
Gordon: Well I guess you had the benefit of obviously Palito, existing
business, running without any issues and you obviously had the support of the
local community from that, so that all helps. And I think people mustn’t
underestimate the importance of this, and we’ve certainly spoken to a few
companies in the last couple of weeks who are suffering from not being able to
get through the process, as it were.
talk about the ore sorter, because I’ve watched the video which kind of
explains it all to me and we’ll put the link up above here now so people can go
to that. Can you tell us the impact? You’ve been running it for the best part
of a month and it seems to be delivering quite well. I’m looking at some
numbers here, so you fed in 1,266 tonnes and you’ve identified 1,076 tonnes of
waste, so that’s significant.
numbers aren’t really terribly indicative. I put them in there because
obviously we switched it on just over a month ago and we’ve been putting
through some pretty miniscule tonnages, and we’re just playing around with it
really, trying to find the sweet spot. And we’re using different types of ore.
Some of the ore is actually sort of more massive sulphide ore. So really, I put
those numbers in there to show people, hey, you know, it was a pile of rubbish,
basically, sub-economic, very uneconomic material.
We passed it
through the ore sorter and we just pulled out 200t at, like, 7g/t and the rest
of it is a big pile of waste, and that just shows what this thing can do. And
the video shows it, that it’s going in, you know, it’s crushed material which
is 80% waste rock and if you look at underground face, underground, if you just
eyeball that you can see, well hello, 80% of that face there is waste and 20%
of it is a band of ore. That’s exactly what the ore sorter does. When that
thing’s all been crushed it can actually eliminate all that waste and just
scavenge out that sort of high-grade band of the sulphides where the Gold sits,
and that’s what it does.
So I think
we can see straight away it’s a very… it’s great at just scavenging out the ore
out of the waste. And we won’t put our best material through it because it’s
not an exact science, there are always going to be losses. Like, you will get
ore going into the waste system and you will get waste going into the ore
system, but I think the best way of describing it is, it is a waste remover.
That’s what it is, it’s a waste remover and it’s an ore scavenger.
So we are
only really using it at the moment and will be only using it until we’ve got
this absolutely nailed, we’ll only be using it on our lower grade ore
development, which is where we’re just driving along the [inaudible 00:06:06]
in its most diluted materials, that’s the material with all the waste rock in,
and it’s great for just recovering the ore out of that material and not having
to pass all that stuff through the process pond which up until now had been
completely constipating our process plans with this material.
So if we get
rid of that, first of all we save ourselves, just by getting rid of that
material and going for 500 tonnes a day at 7g/t, 400t per day at, say, 9g/t,
you’re going to save yourself about USD$1M a year at cost which means the
payback on this machine is about 18 months. But, more importantly, what it will
do is it will liberate 100t a day of free space, which we can then use again to
add more high grade or make our little process plant produce, instead of 40,000
ounces, which it can do today, the same plant with the same size and
through-put can do 50,000 ounces. That’s the beauty.
Gordon: That’s truly remarkable. But it doesn’t actually identify Gold per se,
does it? Explain to people what it’s actually doing? They can watch it in the
video but I thought it was interesting to…
Mike Hodgson: Very, very important, the distinction. When you look at that video you see that yellow shiny stuff, people I know would be very excited if that was a band of Gold. It’s not. That is a band of sulphides, mostly charcoal pyrites which is a copper sulphide and pyrites which is an iron sulphide. And all of our Gold is very fine-grained contained within those sulphides. So, our ore sorter has two metals that actually split differentiating between ore and waste. What you’re always after with any type of ore sorting, whether it be diamonds or, as we’re doing, Gold, or whatever, you need contra between your ore and your waste, dark contrast. So it won’t work terribly well on a disseminated ore body? On an ore body like ours, which is very sharp, it will. So, what it’s actually doing, you crush it down to about a quarter of an inch, half an inch, so you can see there, an inch to half an inch, and you pass it through either a colour sorter or an x-ray sorter. So, let’s take the colour sorter first. In our case as you’re dealing with video, pink-based and the rest is ore. So you can just simply say, right then, I want to collect anything that’s not pink and it will just literally identify any stone that’s not pink and throw it off on to different belts as you saw in the video and the pink, the granite, will just fall off the edge as waste. Alternatively, you can sort on atomic density which is where you use the x-ray sorter, so it’s a piece of equipment not dissimilar to what we have at airports, you pass through it, and it’s actually penetrating every stone on 1mm centres, so it’s hugely detailed. And there’s a 3D sample so every stone gets analysed for a percentage or its atomic density and, of course, the granite rocks are much less dense than the sulphides and the ore rocks so, again, there’s a big contrast in density between what is the ore and what is the granite. So, again, we can sort on x-ray as well. And, if we really want, we can’t do it at the same time but we can – we haven’t tried that yet – but what we can do, we can sort once on, say, density, save the pile, and then you can pass the pile again and sort on colour. So, the permutations are endless and we’re just at the beginning of this journey really. But we’ve just simply by sorting on x-ray. It seems to be brilliantly separating the waste and putting some more add to the waste. The closing shot of the video you see that little pile and the big pile. We pulled that little pile. That’s now a big pile and before it was just lost in that big pile.
Gordon: It’s amazing. We were talking to a lot of companies about bringing ore
sorters in to improve their productivity and throughput. As you say, the
savings are, or can be, immense. You had a great year last year in terms of the
share price. Obviously, shareholders, the share register must be quite pleased
with your performance. I know you’re excited obviously about the ore sorter
here but you’re obviously more excited about bringing Coringa into production.
You’re off to Brazil tomorrow you tell me, before we started the call. What are
you going to do?
Hodgson: Well, we’re
closing in on our sort of three-year, we’re doing, we’re updating our mine plans
and our resource estimations. So that’s basically what I’m going down there to
actually sort of oversee, have a good look at that. We’ve got some exciting
drilling going on at Sao Chico. I just to make sure we can as much of those
results into this resource estimate we’ve just done There will be an update coming
out too some very couple of intersections on the further step outs yet. That’s
not probably get the results on, quite, even the official results, but
certainly it’s looking very good. We’ve got some very nice-looking
introspection, visual at this moment in time so I’m going to be looking at all
year, well that’s obviously going on very well. We’re, as you know, we talked
about this last time, we have Greenstone the convertible loan note coming in at
the end of next month, and that will, of course, be the catalyst to us to start
work at Coringa, start on the decline and getting on the ground. And, again,
the exciting thing about that is getting underground, getting the bulk sample
done or getting that earth moving, see how that responds to ore sorting as
well. So, I’m completely sold on the whole thing. I mean I must admit when it
was all, when we all talked about it, it was about two years ago the scary
thing was it basically going to amount to USD$2M on something like this was you
know… Well, I don’t want it just to be an ethical success. We really hope it
works in earnest. I’m completely sold. I think it’s a paradigm shift in this
part of the world with all of its sulphite hosted Gold deposits. It’s going to
Gordon: I think that’s what the shareholders bought into last year when the
share price was moving rapidly up having been stagnant for so long. A couple of
million bucks and a payback of, as you said, less than a couple of years, 18
months to 24 months. Fantastic. But, also the ability to double your production
and get up towards that wonderful 100,000 ounce a year number it has got to be
in the crosshairs for you. I mean Coringa could get you up to 80,000 and with
your exploration at Sao Chico you’ve got to be aiming higher, haven’t you?
definitely, I think the ease of mining at Sao Chico ore body, that’s why we put
a lot of effort on exploration now. We obviously get a bigger bang for our buck
with our exploration work that we do there. If we do get a bit of a tiger by
the tail there and, at the same time, the space that we’re liberating by
cleaning up the Palito ore creates more space to put through more Sao Chico
ore, but we’re not dismissing the possibility of being able to sort the Sao
Chico ore as well. It might be a different way of doing it, but we are
beginning to get some pretty good results on that. So, it’s three deposits.
Coringa, Sao Chico and Palito as being sortable in the end. We’re going to
squeeze, I was always saying, my comment there, low-grades and tonnes cost,
we’re always going to try and get the grade up as much as possible and not just
chase scale but chase quality so we can actually get to, you know, 100,000
ounces with mining as high a grade as possible so we don’t actually have the
enormous through points that a lot of 100,000 ounce producers have to have to
get that level of production. That’s the name of the game.
Gordon: And that’s the focus for this year or, have you got more surprises on
Hodgson: I think if
we get a nice big resource increase at Sao Chico and we get successful or we get
on the ground at Coringa and we bring back a bulk sample and that works very
well with the ore sorter and Palito’s achieving its 45,000oz, I’d be very happy
with that outcome.
Gordon: Very good. Thanks very much. I appreciate you taking our call with
regard to this morning’s press release. We were keen to speak to you because it
was one of the stories, success stories, of last year, certainly in terms of
share price, which is the name of the game after all. So, we’re kind of keen to
see how you get on this year and see if you can repeat that success. Stay in
Mike Hodgson: I will Matthew.
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