Q&A With URA Holdings (URAH):
Q1. You have just announced your results for 2022. What would you say were the main achievements during the year?
Obviously, it was vital to get the Company reconstructed and relisted and in the process we acquired two good exploration licences in Zambia but the key event was the acquisition of the Gravelotte emerald mine which without wanting to exaggerate represents a massive and game changing opportunity for the Company.
Q2. Well, from what I’ve read it would be difficult to exaggerate the importance of Gravelotte to the Company. Can you just sum up what it is that makes it so important ?
It was once the biggest emerald mine in the world and it is no exaggeration to say that it has the potential to become that again. When it was introduced to us by our Chairman, Ed Nealon, we found it difficult to believe how big an opportunity it was but, when we looked at it carefully, it quickly became clear that it was a chance not to be missed. What is more, because of the vendor’s circumstances, we got it for an absolute bargain price.
Q3. We will come back to that question certainly but before we do can you just go through what you have actually got in terms of resource, timing etc.
Well, when we were first offered Gravelotte, there was no formal resource estimation, never mind a JORC compliant resource. The Vendor estimated that there could be at least 9 million carats of unmined emeralds there and it was well worth buying even with that level of resource. We believe from our understanding of the geology that the resource could be significantly bigger and subsequently we have focused our energy on resource confirmation work. We also engaged ACA Howe who are globally recognised experts in coloured gemstones as independent consultants. The majority of 2022 was therefore spent on establishing a JORC resource and in November 2022 we published the results of the independent JORC Mineral Resource of 29 million carats established by ACA Howe. In addition to the JORC mineral Resource ACA Howe also estimated a JORC Exploration Target of between 168million and 344million carats! Needless to say, we were extremely pleased by the size of the JORC resource which much exceeded our expectations.
Q4. That is a big uplift. Just how valuable is that potentially – and how recoverable is it?
Extremely valuable – that volume alone would make it a major mine but in fact there is actual great deal more behind that 29 million carat figure. As to how easy it is to recover, in fact in mining terms it is really quite straightforward – the entire resource so far known is open pittable so mining is quite easy and, in terms of sorting and grading, that is made much easier than it was thanks to modern technology developments such as that of the optical sorter which is in fact the main piece of equipment we need to purchase.
Q5. So what is the actual value of this 29 million resource.
We have looked at recent emerald prices – which have really been on an uptrend overall in recent years. The main operator in this field is Gemfields also listed in London, who carry out quarterly auctions of emeralds and they recently achieved $9 per carat for their lowest (commercial quality) emeralds and we of course don’t expect all our emeralds to be of the lowest quality so the $9 per carat figure is quite conservative. But even on that basis the resource has a value in the ground of over $270m – which happens to be 130 times our market capitalisation!
Q6. What is the importance of the JORC resource?
The JORC resource is an independent assessment of the minerals (in our case emeralds) contained in the ground, done in compliance with the JORC code which is an international standard. Therefore, the maiden JORC resource of 29Million carats is not our internal assessment but done by independent experts and gives investors confidence in grade and size of the resource and therefore also the potential of the project.
Q7. Normally new mining projects take several years and many millions of expenditure to prove up and bring into production. Your view is that this is not the case with Gravelotte, I believe …
No, it is certainly not – this is not a new greenfield project – it is a former large scale operating mine and most of the infrastructure is sitting there waiting to be restarted. Of course, it was not just ready to be switched on – we had to do a lot of clearing up and refurbishing but we have now actually done that. And, what is more, it comes with an established competent mine manager who we have got to know well in recent and he is certainly capable of managing the operation on the ground.
We do need to purchase some new mining and optical sorting equipment and we have researched and identified and priced what we need. We can get the initial stage operation up and running for a capex outlay of less than for £1 million. It will take some months to get the kit delivered and installed but overall, it should be in operation in roughly 12 months from ordering the kit.
Q8. Your ACA Howe report came out last November. What progress have you made since then?
The large JORC resource that we published in November 2022 gives us the ability and confidence to fast-track the Gravelotte mine back into production. Therefore, since publishing the JORC resource we have focused our attention on the nuts-and-bolts items that are required to restart mining and processing operations, including:
- Building haulage roads between the plant and open pit
- Large upgrade in water storage capacity
- Upgrading the main electrical infrastructure required for the processing plant
- Completion of site security upgrades and installation of electrical fences
- Refurbishing of on-site management accommodation
We have also conducted extensive processing testwork including at Tomra Systems in Germany where they tested and designed a custom-made optical sorting machine for us with a 98% recovery rate. The optical sorting machine is our biggest capex item for the restart of the mining operations and also has the longest lead time and we are therefore keen to place the purchase order as soon as possible.
Q9. And how far will you take it?
We are planning to start small and scale up over time and from profit/revenue. Once we have a small profitable operation we will increase it on a progressive basis and then do further detailed proving up of resource – with a view to turning back again into a major force in the market.
Q10. Can you do that on your own?
We have a strong experienced team with success in mining and in fact in gems and we have in the past developed those with partners or in due course sold on. We certainly intend to take it to a materially profitable level and then we will see.
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