Each one in plain English, with the numbers worked through for a shareholder.
4 Sept 2008well test result▲ Good
Starfield reported that batch tests of the iron-removal and acid-recovery step of its in-house metal-extraction process produced hematite with 67-71% iron, which the company says is pure enough for steelmaking and could be a possible extra revenue stream. It has swapped the magnesium chloride solution assumed in the March scoping study for an iron chloride one. Hatch Engineering is contracted for pilot plant design, a continuous test circuit in Montreal is due by the end of September, and pilot plant testing is targeted for mid-2009.
Starfield released the first 2008 assays, from 10 West Zone holes (3,662 m), which management said showed strong continuity and no surprises; for example FL08-384 had 16.10 m at 1.44% copper and 0.84% nickel. The current resource is stated as 44.2 million tonnes, 15.3 million of it indicated, with a goal of adding about 15 million more indicated tonnes over two years. Assay turnaround is about 10 weeks and expected to stay that slow through 2008.
Starfield released the remaining assay results from 15 holes of its 2007 program, saying most holes confirmed the continuity, thickness and grade of the known massive sulphide in the eastern West Zone (for example hole FL07-378 had 11.60 m with 1.03% copper and 0.76% nickel). It also said 26 holes (10,632 m) have been drilled in 2008 so far, but a laboratory backlog has delayed 2008 assays, so the early-August results it had flagged have not yet been released.
Starfield reported its first quarter to May 31, 2008: exploration spending of about $7.4 million (vs $2.1 million a year earlier), administrative costs of $0.6 million, and cash of $24.5 million, which includes the $20.0 million May placement. It also said over 6,000 metres have been drilled since April and that it plans drilling on two new targets, the North Zone (about 2,000 m from mid-July) and the Y Lake trend (a further 2,000 m afterwards). First 2008 drill results are expected in early August, which is slightly earlier than the 'late July' given before, and the 2008 program is now described as a 20,000-metre program.
Starfield closed a $20 million private placement: 15,000,000 flow-through shares at $1.00 and 5,555,556 common shares at $0.90, led by GMP Securities. Proceeds go to exploration at Ferguson Lake and working capital, and the company now has 321,807,149 shares outstanding, so existing holders were diluted.
What it means for a shareholder
5.6m new shares at $0.900 to raise about $5.0m. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
Starfield filed the full scoping study report on SEDAR (summarised in the March 20 release) and said Phase 1 of the 2008 PGE drilling is underway, with first assay results expected in late July. No new figures beyond what was already announced.
A preliminary assessment (scoping study) by Scott Wilson RPA on the 100%-owned Ferguson Lake project showed a pre-tax IRR of 27% at March 17, 2008 prices (US$14.25 nickel, US$3.75 copper), with capital costs of CDN$1.35 billion. At the base case prices (US$8 nickel, US$2 copper), the pre-tax IRR is 13.4% and NPV is $321 million; the study is preliminary and includes inferred resources, and management says it plans to skip a prefeasibility study and go to a full feasibility study expected by early 2010.
Check assays on 40 samples confirmed the earlier platinum and palladium results, and three intervals returned small amounts of rhodium (0.009-0.021 g/t), resolving the pending rhodium question from February. The company set out a 2008 plan of about 15,000 metres of drilling in Phase 1 (April-September) and 5,000 metres in Phase 2 late in the year, plus a surface exploration program on its 207 surrounding claims for kimberlite and gold potential.
Starfield released complete assay results from the 19-hole 2007 PGE program, with many intervals of high platinum and palladium grades, though two holes (FL07-369 and FL07-372) had no significant mineralization. The company plans 40-50 new holes (20,000-30,000 metres) with three rigs from April to September 2008, 75% in the low-sulphide PGE zone, which it says should permit an updated resource estimate; rhodium assays are still pending.
First results from five holes of the 2007 PGE program at Ferguson Lake showed significant platinum and palladium intervals (e.g. hole FL07-363 had 1.35 m at 39.25 g/t platinum). Full results from the 19-hole program are expected early 2008, and the scoping study is now expected in spring 2008 because it will be amended to reflect the PGE potential.
Starfield started its fall 2007 platinum-group-element (PGE) drilling at its Ferguson Lake property in Nunavut, aiming for 12,000-15,000 metres (about 45 holes) with a $4.5 million budget funded from cash on hand. The target is a low-sulphide, high-grade PGE zone below the known 43 million-tonne massive sulphide resource; 65 holes so far are too widely spaced to calculate a resource.
