CEO and Managing Director: Bruce McFadzean
Mawson West is a TSX listed, Australian Based copper producer, developer and explorer with a focus on the Democratic Republic of Congo (DRC). MWE owns 90% of the Dikulushi Mining Convention and has one operation at Dikulushi and one mine in development at Kapulo Project.
WSA: Good day from Wall Street. This is Juan Costello with the Wall Street Analyst. Joining us today is Bruce McFadzean. The CEO and Managing Director for Mawson West Limited. The company trades on the Toronto Stock Exchange and their ticker symbol is MWC. Thanks for joining us today there, Bruce.
Bruce McFadzean: Thank you, Juan. It’s good to be here.
WSA: Great. Just a correction on the ticker symbol it’s MWE. And starting off can you give us a history and overview of Mawson West for some of our listeners that are new to your story?
Bruce McFadzean: Yeah, sure. Mawson West started in about 2005 when it acquired through a joint venture, some assets that at the time belonged to Anvil Mining in the Congo, in the Democratic Republic of Congo in Africa. From that point in 2009, they were able to pick up the whole package from Anvil Mining. Anvil Mining took about a 30% position in the company and Mawson West then went down the process of delisting in Australia and re-listing on the TSX, raising some capital and commencing two projects, one of which is operating right now, which is the Dikulushi mine and the other one which is the Kapulo mine is under construction right now.
WSA: Certainly and in terms of Dikulushi, can you talk about the Q2 production?
Bruce McFadzean: Yeah, I certainly can. Dikulushi is probably one of the higher grade copper, silver ore bodies that I’ve ever known of and it’s had a great pedigree from the time that Anvil was mining it. Our second quarter was very similar to our first quarter where we produced almost 5200 tons of copper in concentrate and we also produced just under half a million ounces of silver at the same time.
WSA: Excellent and what are some of the trends that you’re seeing right now in the sector as far as copper and how are you positioned in the company to capitalize on them?
Bruce McFadzean: Yeah, look, Juan, we feel that the copper market is the market to be in at the moment and obviously we’ve seen some rather large shifts in the precious metals area with both gold and silver taking a fairly heavy hit in the last few months, but we see that copper, albeit it’s off a little bit, it’s still sitting at $7000 a ton, which is traditionally a very good cost of copper and I don’t think a lot of the analysts are seeing it sitting around that mark for next year or two, so, look, we see copper as a place where we want to be. We’re a copper company. We see that we have a real opportunity with Dikulushi continuing and Kapulo coming online that we can work ourselves towards that 40,000 ton of copper per year with about probably 1.5 million ounce of silver as well.
WSA: Good and can you talk a little bit about how you’re positioning the company to capitalize on some of those trends including (your position) at the Kapulo mine?
Bruce McFadzean: Yeah, sure, we just announced this week that we are extending the Dikulushi to it’s underground. There are three phases of the underground as we see it. At this point, we have completed the first phase of the study, which takes us through until next year and the reason why this is so important at Dikulushi is because the Dikulushi mine is such a large cash-generating asset for us. It will certainly produce well over a $100 million for the company in net revenue this year, so it’s an extraordinary, significant producer of cash for the company. The next phase of growth for Mawson West at Dikulushi is the second stage of underground mining, which we are presently finalizing and have studied for that and we will announce that as that study is completed either at the end of this quarter or beginning at next quarter and at the same time, Juan, we are more than halfway through the construction of a second copper processing plant and mine in the northern part of our tenements where we will be producing another 20,000 to 25,000 tons of copper per year from this project from about the second quarter of next year. So we’re pretty busy doing a fair bit, we’re doing a lot of technical work and of course a lot of construction and development work is going on at the same time, but we’re trying to ensure that the company hits all it’s targets. Our mantra is do what you say you’re going to do and so that’s been our focus we’ve had three quarters in a row now where we’ve hit our targets and we intend to keep going through for the rest of the year at that rate.
WSA: Excellent and, so what else would you say makes the company unique from some of the other players in the sector?
Bruce McFadzean: Well, I think the unique part about it is that we have minimal debt. We’re generating — our EBITDA is probably about less than one times our current market cap, so we’re extremely cheap as well at the moment, I mean, as a lot of mining companies are wide out at this point, but we’re probably one of the more cheap companies out there at the moment. We see that changing as we continue to hit our milestones and you know we’re in not a very plush market. Juan, as we’re all aware of, but we’re just of the view that if you keep your head down and keep focusing on delivering all of your targets that you’ve communicated to the market that ultimately you get recognized for that.
WSA: Excellent. So, talk about your position there in the Congo–how is the political climate in the area?
Bruce McFadzean: Look, we like being in the Congo. It’s interesting that the Congo has various reputation with various sets of investors, but we find that our investors are well aware of the Congo and they invest in the Congo simply because they are aware of it, they do understand it. I don’t think it is typically understood throughout the investment community worldwide. The regime, the Congolese regime we see has been fairly stable. There is minimal change that we have seen to laws in operating inside the country and we get a sense, not like we do in a lot of other countries. The DRC government is very aware of the importance of the resources sector to their growth and, you know, we’ve put a lot of effort back into our communities, because I think we have a moral obligation to work in the communities and make sure that we are not — we leave a lasting positive legacy within the country, but, look, we like the DRC. They have great ore bodies, they have great people and there is a willingness to work, which is not found generally in all countries in the world.
WSA: Good. And perhaps you can walk us through your background and experience, Bruce, and talk a little bit about the management team there.
Bruce McFadzean: Yeah, sure. My background is I’m a mining engineer. I joined the company late last year in October to do several things. Prior to that I took the Catalpa Company from being a $10 million company to being more than a billion dollar company through a series of mergers and transactions, which added a lot of value to our shareholders. Prior to that I was in Iron Ore developing a mine, which was also a very successful operation. My career has been some 35 years now. I have worked 10 years with Rio Tinto, five years with BHP before breaking out into the smaller sector and getting my hands dirty in both gold, nickel, iron ore and cobalt and diamonds as well, so it’s been a bit of fun. I think the exciting part for me joining the company late last year was I’ve been able to rebuild the team, the management team and the group that’s assembled right now is as good as a group I’ve ever worked with. We’ve got a new Chief Operating Officer who is Greg Entwistle who is in charge of all the operations in the construction. We’ve got a new CFO, Chief Financial Officer, Mark Di Silvio who is ex-Centamin, a very skilled guy also. We’ve got Caroline Keats who is Group Executive and Legal Secretary and Gary Brabham who has just joined as Group Executive, Geology and the last member is Glenn Zamudio who is a Group Executive, Commercial, so we’ve really worked hard in the last eight months to totally rebuild this whole team and I think that the record for achieving three quarters of production in a row, which either on or about guidance speaks for the skill set of that team.
WSA: Good. And what are some of the goals and milestones that you and the team are hoping to accomplish over the next year?
Bruce McFadzean: Look, we’ve got a fair bit on at the moment. The first part is we’ll now execute the — we’ll finish off the open pit mining this month, which will allow us to continue processing that all through to the end of the year. As soon as we finish the open pit mining we’ll commence the underground mining from the existing infrastructure, so we plan to have that underground mining and carry on for several years from this point with the completion of various studies and execution of various targets on the ground. The Kapulo mine, we intend to have in commercial production by quarter two 2014 and we’ll wrap that project up to its full capacity of some 25,000 tons of copper a year. So, look, we’ve got a pretty exciting 18 months ahead of us and we’ll be well bedded down, it will be a, what we consider one of the middle players in the bunch I guess from as far as copper producers. So we’ve got extraordinary ore bodies, we’ve got great people and we’re operating I think in quite an exciting jurisdiction as well.
WSA: Great and once again joining us today is Bruce McFadzean. The CEO and Managing Director for Mawson West Limited. The company trades under Toronto Stock Exchange, ticker symbol MWE, currently trading at 39 cents a share, market cap is north of 56 million. And before we conclude here Bruce, to recap some of your key points, why do you believe investors should consider the company as a good investment opportunity today?
Bruce McFadzean: Well, for the same reason I did I think, Juan. I’m a technical and an operational person and I think that we’ve got an extraordinary set of assets, which we can execute the operational side of the business and generate significant amount of cash and, therefore, we get that opportunity of providing that growth back to our shareholders. So, you know, the market is a little bit dented at the moment I think generally in the resources sector; however, we think we’re in the commodity with the right sets of assets and the right set of people to add some significant value to our shareholders in the near term.
WSA: Well, we certainly look forward to continuing to track your company’s growth and report on your upcoming progress and we’d like to thank you for taking the time to join us today, Bruce, and update our investor audience on Mawson West, MWE.
Bruce McFadzean: Thank you, Juan. It’s been a pleasure.