EXCO Resources NL (EXS) – Using White Dam to Attain Early Cashflow

• EXCO is an exploration company that has recently acquired a 40% interest in the Drew Joint Venture (with Polymetals, and is farming in to increase its interest to 60%). The Drew Joint Venture contains the prospective White Dam gold mine and surrounding properties (in South Australia), enabling EXS to attain early cashflow.
• White Dam has a non-JORC resource of about 5mt at 1g/t (or 160,000oz), so EXCO are infilling to generate an accepted reserve and resource by about February 2004. After which a trial 30,000t to 50,000t heap-leach is expected to be commissioned as part of a scale up to full 1mtpa to 2mtpa production.
• EXCO expects to use the early cashflow from the Drew Joint Venture to advance its expected copper operation at Mt Margaret, since the acquisition of White Dam provides EXS with two relatively advanced projects (Drew and Mt Margaret) that are both on the cusp of making the transition from exploration into production.
• Mt Margaret lies immediately east of Ernest Henry in the Mt Isa district of Queensland. The recent discovery of higher grade near surface mineralisation (such as 29m @ 3.64%Cu & 1.28g/tAu, and 65m @ 2.55%Cu & 0.56g/tAu [including 9m @ 4.28%Cu and 25m @ 3.78%Cu]) has resulted in a review of the pre-feasibility study with a decision on the next stage of advancement expected in March 2004.
• Should a small 0.5mtpa operation be established at Mt Margaret, then EXS’ other nearby regional prospects such as at Hazel Creek and Boomara could come into the viability equation, especially with Turpentine Creek’s (in Hazel Creek) 16m @ 2.94%Cu & 0.59g/t Au from 24m including 8m @ 4.28%Cu.
• EXCO has established a select drill-ready portfolio of potentially promising Middle Proterozoic primarily copper – gold exploration projects, although the range does extend to include the other base metals such as nickel-PGM and leadzinc- silver. The projects are mainly in the form of a series of joint ventures in which EXS is largely the minor contributor with a major company providing the bulk of the exploration finance.