Hellyer Gold and beyond
Gary Peters speaks to Brian Stockbridge, Non-Exec Chairman at NQ Minerals, about his varied career and transition into the mining sector, as well as the company’s plans for the Hellyer Gold project.
Can you tell me about your background and career to date?
My background is mainly corporate finance and fundraising for companies – more in the finance area than mining or geology. I also qualified as an accountant and trained at the Takeover Panel, which regulates mergers and acquisitions in the UK.
After that, I moved into stockbroking and spent a couple of years in industry as a director of a public company. I left there in 2014 to set up my own group of companies that help small businesses raise money to float on the stock market.
I've been an investor, advisor, regulator and a director – it helps me to fully understand what small companies are going through.
What led you to move into the mining sector?
It’s an interesting area – there aren't many companies that can be worth nothing one minute and millions the moment they drill a hole.
I first came across the sector when I was a nominated advisor. AIM is a stock market that lists quite a few mining and resource companies. I had exposure by default and that developed an interest.
Mining companies can find it hard to generate finance, so what I try to focus on is helping them raise that finance and increase shareholder value.
Coming into the industry as an outsider, how did you view it?
It was a bit different [to other sectors]. I like to bring a fresh way of looking at things. If you can avoid getting too bogged down in the technical detail – which of course is nevertheless important – the critical thing is understanding the commercial drivers and how to present and structure an opportunity to maximise value and reduce risk for shareholders.
If you've invested anywhere between the first and the last person, chances are it's never enough money – mining companies always need more cash, so you end up being diluted and squeezed out. That's why we look at various structured debt investments in listed mining companies, so you can provide the finance that might be difficult to come by otherwise. What I like to do is apply the corporate finance skills into the resource sector.
What takes up most of your time at NQ?
At the moment, we are raising money to bring the Hellyer Gold mine project, Tasmania, back into production early next year, so that's a lot of intensive work. More broadly, we continue to acquire and develop mining assets to give value to shareholders. My focus is low-risk, low-capital intensive opportunities that provide near-term cash flow.
It's always a long-term process working with any company. We started off with assets in Queensland, Australia, and we've now moved to acquire the Hellyer mine, which provides the prospect of quite large, near-term cash flow. In that regard, it's been successful.
Your aim is to bring the Hellyer Gold project into production in 2018 – how is that progressing?
It's going well. Hellyer is a previously mined site that is now on care and maintenance. We are raising more money to get the project into cash flow production. The site has the capacity to process around 1.6 million tonnes per annum.
It also has the full supporting infrastructure in place, including a direct rail to the deep-water port, which is about 60km north of the mine. There is about 11.24 million tonnes of tailings containing gold, silver, lead and zinc.
We will use a hydraulic dredging process, because the tailings are all in a large dam. The team will be processing the proven base and precious metals on site.
There will be saleable metal concentrates produced – lead, zinc, and we have some precious metals, of gold and silver. The tailings are sufficient to keep feeding that for about ten years.
In theory, the value of the whole project could increase, rather than decrease. What we've done with NQ Minerals is have three main strands. First is the commercial, near-term cash flow with Hellyer, of about AU$1.2bn of revenue over that ten-year period. We also have the development side of things, with drilling areas to test in Queensland, and physical stockpiles we can move and generate cash from.
There's also the exploration side, looking at what could be potentially be a gold deposit in Queensland. In the Hellyer area, there will be other projects that we can do something with. We have created a platform to build on. This is definitely the most exciting mining project I have been involved with.
Are there any challenges with Hellyer?
Well, it is a constant challenge to ensure success on any project. As I mentioned earlier, we have raised some significant funding and we will need to ensure that the project gets into production and generates cash flow in 2018.
Sometimes – and I'm not saying it will be in this case – projects take longer than you think. What we need to do is keep everything on track. While it's not particularly complicated, there are a lot of clever minds at work.
Do you have a specific production start date for Hellyer?
We are looking at around seven to nine months from when the funding comes in. If we get it by the end of this year, we're looking at July/September 2018. It might be sooner, but I wouldn't want to over promise and under deliver. This isn't 'cross our fingers' and hope for the best. It's a proven product that's there.
You mentioned smaller scale projects – why is that the way forward?
I like to focus on smaller companies – there are larger funding organisations to provide finance for well-established, large companies in production. However, I think it's important to support the smaller ones, as they can get quite big, quite quickly.
Small can be anything from start-up to companies listed on AIM – it's a broad range.
Where will NQ be in the next three or four years?
I hope we will have enough liquidity for people to trade in and out. I think within that time period we will be generating significant cash flow from the Hellyer project, and I would hope we have some other interesting things in the mix. We do want to go large-scale.
Does the sector need to get better at attracting people from outside?
Obviously different people have their own skills, but there's always a need in any industry to have varied experiences and outlooks – it brings something different to the table.