Nexus Minerals (ASX:NXM) remains an "under the radar company", trading at close to cash backing while conducting joint venture exploration work with mid-tier producer Saracen Mineral Holdings (ASX:SAR).
The Pinnacles JV in the Eastern Goldfields of Western Australia recently yielded some high-grade and broad gold intersections.
To tell us more, we are joined exclusively by Andy Tudor, managing director, Nexus Minerals, in Proactive Q&A Sessions™.
PROACTIVE INVESTORS: Welcome Andy.
First of all to the Pinnacles JV with Saracen, can you outline the key recent assays and what impact they have on the project?
Andy Tudor: Standout intersections included 6 metres at 13.1g/t gold, 8 metres at 7.7g/t gold and 11 metres at 5.6g/t gold.
These are below the existing resource. With all seven holes intersecting high-grade and good width mineralisation below the existing 28,000 resource, this has confirmed that the high grade mineralisation previously identified at shallow levels continues to depth.
Also the mineralisation still remains open in all directions.
How much drilling is required before an updated resource estimate, and can you outline the exploration target?
Andy Tudor: The intention is to undertake staged focussed target specific drill programs in 2016, with further drilling being planned to test for the north, south and further depth extensions.
This would enable Nexus to be in a position by the end of the year to potentially undertake a resource update. To date we have not disclosed a specific exploration target, as we need to build our knowledge of the project geology and mineralisation first - then provide an update.
Considering the company's $5.8 million cash position, can Nexus speed-up its JV commitments to advance to decision to mine sooner?
Andy Tudor: That is certainly the case, and we are accelerating our earn in schedule already at a rate ahead of the minimum requirement.
What ore purchasing agreements does Nexus already have in place with Saracen, and how soon could cash flows be achieved?
Andy Tudor: The agreement Nexus has with Saracen ensures Saracen will buy any Ore produced from the Pinnacles JV by way of Ore Sale & Purchase Agreement.
SAR will process the Ore through their 2.4Mtpa Mill at Carosue Dam Mining Operations - 13 kilometres to the north of Pinnacles JV project.
Another critical element to the agreement is that Nexus has full access to SAR Infrastructure, Haul Roads, Camp facilities etc. which has already proved to be of huge assistance to our exploration campaigns.
Post any resource upgrade and a positive "decision to mine", it would be 12 months before any cash flow would commence. This is a very short timeframe - but it is achievable as minimal upfront project CAPEX will be required - with the use of the SAR mill and other infrastructure already in place.
How was the relationship formed between Nexus and Saracen, and could the companies work on additional JV's?
Andy Tudor: I have worked in the past with some of the senior management at SAR, and over the last 12 months have dealt with other members of their team. The two companies certainly have a good working relationship, and other JV opportunities are certainly being discussed.
Would Nexus consider any acquisitions, or additional farm-ins with other companies, in the near-term if they became available?
Andy Tudor: Absolutely. We are actively seeking other narrow vein high grade gold projects in the region, with a view to utilising a potential similar agreement with SAR, for the treatment of any ore material through the Carosue Dam mill facility.
Finally, why should an investor consider adding Nexus Minerals to their portfolio?
Andy Tudor: Nexus is a fantastic investment opportunity as we are currently "at cash backing". The market has yet to place a value on the Pinnacles JV, and in addition to this, the regional tenement package, with the stock having an E/V of $0.
We are actively marketing the stock and this, in conjunction with a steady news flow from planned drilling in every quarter of 2016, should see the stock move to a price that represents its true value.
The Australian dollar gold price continues to be at very levels, and this coupled with an advanced exploration / pre production gold story augers well for the stock price in the coming months and beyond.
PROACTIVE INVESTORS: Thank-you Andy.
MEET the company at Proactive's Spotlight CEO Sessions in Sydney and Melbourne in March 2016
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