Reproduced with kind permission - ©2007 Aspermont Limited • Courtesy of RESOURCE STOCKS magazine

Newly listed junior Hemisphere Resources may be a newcomer to the exploration game but it has plans to grow beyond a primary focus on Western Australia’s Kalgoorlie-Boulder region.

  Consider its name for starters, which conjures up images of a global company, but in reality Hemisphere Resources is a small operation working from modest Perth headquarters.

The “think big” naming exercise was a practical one for managing director and Hemisphere co-founder Danny Costick, who said it was designed to accommodate the company’s plans to diversify into other minerals down the track. For now though, the $6 million market cap player has its eyes set firmly on Kalgoorlie-Boulder, for which Costick has always had a soft spot.

Like many of his peers who have built their careers in the renowned gold district, the Kalgoorlie-educated mining engineer has been spellbound by the area’s minerals endowment and the potential for new mines to feed off the network of existing infrastructure. Costick’s love of the gold fields stretches back to his days as a student at the Western Australian School of Mines, during which time he developed an interest in base metals, specifically nickel, gold and  uranium – a good fit for a region that produces several million ounces of gold per annum and around 10% of the world’s nickel supply.

The dream of forming a minerals exploration company, however, has been a more recent goal, first entertained a decade ago and re-visited in 2002 when Costick became the driving force behind the company’s inception. He invested a lot of his time and local knowledge evaluating existing projects that could underpin an initial public offering and spearheaded their acquisitions. 

By the time Hemisphere’s prospectus was issued in January, the company had under its belt a twin pack of highly prospective assets – the Mulgarrie nickel and Glandore gold projects – touted as potential producers by the end of this decade. Mulgarrie (Hemisphere 70%; Falcon Minerals 30%) is 75km northeast of Kalgoorlie-Boulder within a region bound by the high-grade Silver Swan (owned by LionOre), Carr Boyd (Consolidated Nickel)and Scotia (Breakaway Resources) mines. On reviewing past exploration efforts that identified several drilling targets, Costick jumped at the acquisition last year because of its geology,  surrounding anomalies and “very good” nickel prospectivity. His instincts were triggered by a historical fixed-line geophysical survey over the Mulgarrie tenements identifying a host of potential anomalous drill targets.

The company has since engaged Southern Geoscience to review the findings and expects firm drill targets to be provided by mid-year, with a view to commencing a diamond drilling program before 2008. Equally promising is the 100%-owned Glandore project, 40km east of Kalgoorlie- Boulder, which was historically locked up by major companies. More recent exploration identified gold intersections near surface and at depth, as well as a mix of advanced drill targets such as 10m @ 10.27g/t from58m, 6m @13.6g/t  from 18m, and less advanced drill targets such as 5m @35g/t from 24m and 9m @4.2g.t from 13m. All have significant prospectivity.

With its IPO closing early – it was “well oversubscribed”, according to Costick on the strength of Mulgarrie and Glandore – Hemisphere successfully attracted  over 500 investors and raised $4 million within three weeks. Its official ASX listing took place two weeks ahead of schedule, giving Costick and his  fellow directors every reason to smile.“We currently have $3.7 million in the bank which is sufficient to meet our two year exploration commitment [of  $2million] and we have the funds to evaluate new opportunities as they come onto our radar,” he said. “We have huge enthusiasm and are very excited about the prospectivity of our tenements. We have a strong board, the capacity to explore and develop the right advanced projects, and we  are in the right region. If you are going to explore with a view to production Kalgoorlie-Boulder is a very good place to start.” Not even February’s  Shanghai stock market correction could erase the company’s optimism. Instead, Costick takes the pragmatic route in recalling the event which rocked the share prices of a  number of Australian mining companies, Hemisphere included. “On our first day of trading, we opened at 27c and closed at 28c,” he said. “Three days later the correction occurred, we dropped back to 20c and our price has hovered around that since. Costick said building the company and ultimately, shareholder wealth is now the priority.“What we look for in a project is something that has real capacity to  generate cash flow,” he said. “The shortest path to generating early cash would probably be Glandore because we will have the capacity to produce quite readily on the back of successful exploration.“Likewise, with the value of nickel mines being much greater than that of gold mines, any exploration wins at Mulgarrie would really put us “If we prove Mulgarrie to be a successful operation in a good nickel price environment, the impact  of that may take us well away from our current market cap and bring us to the attention of institutional investors.“We have been reviewing the  geophysical data for Mulgarrie to ensure we get the drill targets in the right place. Our targets will not be deep by world standards but they will still be  quite expensive and so we will be taking the time to ensure we place the holes in the optimal position.”

Drilling will be initially targeted at the coherent, moderate-level anomaly detected over three consecutive lines in Loop 7 of a previous geophysical survey, with Costick adding that the Southern Geoscience review may lead to drilling of the target identified on Loop 2.Additional geophysical surveying has been proposed to evaluate those parts of the tenement not yet adequately tested and may result in more drill programs. Meanwhile, Glandore continues to travel full speed  ahead. In April, Hemisphere announced that available plans and sections were examined for the purpose of establishing a drilling program,  which will test the numerous significant gold mineralised target areas outlined in its prospectus.Preparations have been made to test three target areas and environmental approval was obtained earlier this year, setting the scene for a drilling program to commence “very soon”. As if the pace of  activity was not enough to keep Costick and Co busy, the directors have recently set their sights on uranium exploration, having identified and  secured exploration licence applications for six tenements over 600 square kilometres around Sandstone in WA’s Murchison district. The tenements are located around known uranium occurrences such as Yeelirrie (incidentally the world’s largest unmined calcrete uranium deposit), Windimurra,  Wondinong, Lake Mason and Anketell.Uranium exploration in the Sandstone area dates back to the 1970s when the likes of Western Mining  Corporation, RioTinto and BHP conducted reconnaissance mapping, stream sediment sampling programs, airborne magnetics and radiometry in  search of the metal.“In our prospectus, we outlined that our prime focus is nickel and gold, however we will also actively review and assess  otherprojects as they arise,” Costick said.“There are known uranium resources in Australia and we have acquired low cost entry level tenement  applications with very good prospectivity near to known uranium occurrences, so it is very exciting. “Although we are still awaiting  application approval, we are very aware that if we find something promising on those tenements, it could open up a whole new chapter for  Hemisphere in a completely different league.” 

©2007 Aspermont Limited • Courtesy of RESOURCESTOCKS magazine