AGM 2012 Chairman's Address
Adelaide, Oct 26, 2012 AEST (ABN Newswire) - Chairman's Address 2012 AGM
Ladies and gentlemen,
Thank you for joining us here today at our 2012 Annual General Meeting.
For those of you I haven't met yet, my name is Greg English and I am pleased to welcome you as Chairman of Archer. By all measures, the 2011/12 financial year was a successful and progressive period for Archer Exploration and its shareholders. During this time:
- - The Company's share price increased by 59.3% which is a good result when compared to the All Ordinaries Index which lost 11.3% and the Small Ordinaries which lost 20.7%.
- - The Company's cash on hand has increased from $2.6m to $11.8m.
- - Successful drill programs were completed at our Campoona and Sugarloaf graphite projects on South Australia's Eyre Peninsula.
Over the past few years, the Archer Board has focussed on developing a strong pipeline of graphite, copper, gold and other projects in South Australia. We are now starting to see the benefits of this strategy. We continue to remain focussed on those projects that we believe will generate the greatest return to shareholders rather than focussing on a particular "in favour" commodity.
At Archer, we see the diversity of our portfolio as a major strength. This strategy enables us to seize opportunities as they arise. Our core focus has been, and will continue to be, on our 100% owned Campoona Graphite project located near Cleve on the Eyre Peninsula. The Company is expecting to release a maiden mineral resource defined in accordance with the JORC Code and detailed metallurgical study results for this highly promising project before the end of the current calendar year.
This will be a significant milestone for the Company.
Graphite
A number of listed companies have entered into the graphite space. Many have had an initial rapid share price increase, quickly followed by retracting prices as the market takes a harder and more technical look at the various graphite projects.
While the initial graphite discovery phase is relatively straightforward, the key challenges facing junior graphite explorers are:
- - Product - the ability to produce a consistent supply of specified product over Life Of Mine.
- - Off-take partner(s) - it is not so much about how much but having an end user for your product.
- - A project that can attract sufficient funding to minimize shareholder dilution but more so to be realistic relative to the size of the company.
- - Project economics need to be robust enough to withstand product price declines if they occur, over the Life Of Mine.
There are many graphite stories out there but the reality is that few will achieve producer status.
Campoona graphite
The discovery of shallow, high grade graphite in multiple intersections at our Campoona Shaft prospect, which lies within the broader Campoona Project, has been a significant development for Archer. While we have only explored a tiny proportion of the Company's ground at Campoona and the nearby Sugarloaf prospect, graphite mineralisation has already been defined over a large area.
Campoona has high grade, near surface graphite mineralisation. The main objective of our drilling campaigns at Campoona has been to confirm the presence of a high grade mineral resource defined in accordance with the JORC Code which Archer expects to announce to the market before the end of the current calendar year.
We are confident that we will be able to deliver products that will meet the requirements of a long-term off-take partner. This confidence is evident in the fact that Archer has commenced environmental studies, at considerable cost, which are a precursor to an application for a mining lease.
Earlier this year, the Company appointed Dr David Lock as full-time manager of metallurgy and to establish and run Archer's processing facility at Lonsdale, Adelaide. This facility is set up to prepare bulk samples to be sent to commercial laboratories along with defining the optimum recovery process.
We are confident that the initial JORC resource will show that the Company has a project capable of sustaining a mining operation with a long life.
The key advantages of Campoona are:
- - Complete oxidation to 50-60m and strong oxidation to a depth of 100m.
- - Simple deposit which should be amenable to open cut mining where drilling and blasting requirements are expected to be minimal.
- - South Australia is a favourable mining jurisdiction and the Campoona project is located close to existing water, power, road, rail and port infrastructure.
- - The work being done at Lonsdale suggests the material to the base of complete oxidation is amenable to simple mineral processing techniques.
Our metallurgical test work in progress has concentrated on defining the optimum process flow sheet and by default the design parameters for commercial production of Campoona graphite concentrates. The results have not been optimised and we are confident that the Company has the ability to produce quality graphite products.
Once Archer has defined the optimum process flow sheet, the plan is to move quickly to pilot scale testing followed by marketing and off-take negotiations as a priority.
The attractiveness of Campoona is that it will not require huge capital expenditure and it has the added benefit of favourable logistics due to its location near existing infrastructure. Therefore it is our view that the project is well within the capabilities of an entity the size of Archer.
Copper and Gold
During the year, the Company sold its West Roxby Project to BHP Billiton for $8 million in cash. The West Roxby Project was for many years a key asset of the Company. However, West Roxby's geophysical targets would have required expensive deep drilling. Archer believes that BHP Billiton is better able to fund the drilling at West Roxby and is one of only a handful of global companies with the technical and financial capacity to take any exploration success through to development.
The all-cash disposal of the West Roxby tenements was a significant result for the Company and was achieved within a market environment where junior explorers generally have been forced to undertake highly dilutive capital raisings at low share prices, to maintain liquidity.
Whilst graphite remains Archer's principal priority, the balance sheet strength generated from the West Roxby sale has provided Archer with the cash to fund aggressive exploration at some very promising copper and gold prospects in the Burra and North Cowell regions of South Australia.
Multiple copper targets include: Robertstown, World's End, North Cowell and Spring Creek.
Archer's gold targets include: Napoleon's Hat over the extensive historic Wonna workings near Burra, Watervale near Burra and Bartel on Eyre Peninsula.
Conclusion
I would like to conclude by acknowledging on behalf of the Board, the hard work and contribution of all the Archer staff during the 2011 / 2012 financial year. I wish to also thank my fellow directors for their valuable direction, advice and support to me and the management team during the past year.
With $11.8m cash at bank at the end of the September quarter, only 83m shares on issue, a strong pipeline of projects and a track record of being able to create wealth for its shareholders, the outlook for Archer remains extremely positive in both the short and long-term. I firmly believe that the achievements of the Company and the opportunity presented to investors are of a calibre that many junior explorers in this current environment would envy.
The foundations for a positive share price re-rating for Archer have been laid and the Board and management look forward to the continued development of our flagship projects and an expanded general exploration program over the 2012-2013 financial year. I will now handover to Gerard Anderson, Archer's Managing Director to present his report on the Company's operations.
Contact
Archer Exploration Limited
T: +61-8-8272-3288
WWW: www.archerexploration.com.au
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