In a market where companies and institutional investors appear to be pushing for special purpose or single commodity focus, Metals X has been bucking the trend with its portfolio of base and precious metal assets.

It is no better emphasised than in recent times with an across-the-board malaise of gold companies where large impairments have been taken, in some cases bigger than the market caps of the entities themselves.

Further, big gearing has exacerbated this and as banks and financiers have wound in their risk profiles, hugely dilutive capital raisings have destroyed shareholder interests.

There has been none of this at Metals X. The company is conservatively run, has no corporate debt and has lots of cash (more than $80 million) in the bank.



Despite the carnage, Metals X shines like a beacon, booking a profit for the year of $8.7 million.

Further, it hasn't been to the market for four years (since August 2009) and according to chief executive Peter Cook, has no intention or need to do so.

The core business of Metals X is its base metals interests and in particular its Tasmanian tin operations.

Metals X is the dominant player in the tin industry in Australia. Cook is genuinely excited about tin.

His spiel is thus: "Tin is an essential metal today, it is critical to everyday life. Tin is in every electrical product we own, as the key conductor [solder] to make electrical contacts and joins to wires and circuit boards.

"There is no replacement, perhaps silver is a better conductor and gold is even better but they are way more expensive and less abundant," he said.

"In recent years the resurgence has been partially driven by lead replacement of tin in the solders the electronics industry.

"Tin is the new green metal and this current phase has been one of environmentally driven demand.

"Lead-free is the buzz term as the conscience and responsibility of the western world moves to replace lead as a known toxin from entering our waterways and landfills through electronic and computer dumping. Tin is benign to humans with no known material impacts on human health or the environment."

For some time now, analysts have universally been calling the tin price higher. There is dwindling sources of supply, limited discoveries and some of the more mature mines are in the wind-down phase and this market will get caught short. Many believe a supply crisis is looming and higher prices are just a matter of time.

Metals X's 50%-owned Renison mine is operated in joint venture with, among others, the world's largest and most vertically integrated tin producer, Yunnan Tin.

After investing heavily in exploration, mine development and plant in recent years, the future of the operation is possibly the brightest in its whole 100-plus years history.

The total mineral resource inventory has expanded to 11.6 million tonnes at 1.76% tin equivalent to about 16 years of annual plant feed. Production is growing and profits are rising. Metals X believes the Renison mine is well positioned to benefit strongly from any future uptick in the tin price.

Metals X is also the 100% owner of the Wingellina nickel-cobalt project in the Musgrave Ranges of central Australia.

The company acquired the project in 2005 and did substantial work, culminating in a feasibility study in 2008.

With a backdrop of a cluster of failed nickel laterite projects in Australia, Metals X has continually contended that this one is different.



"Wingellina is a limonite not a laterite and to compare the two is like comparing chalk and cheese," Metals X director Warren Hallam said.

"A limonite is very high iron, 50% Fe2O3 in the case of Wingellina and very low in magnesium oxide, less than 2% MgO in the case of Wingellina. This makes it not only hugely different chemically from the failed laterites of Australia's eastern goldfields but the very ore type that the HPAL [high pressure acid leach] method of processing was made for."

Coincidentally, the wave of limonite projects using the HPAL process seems to endorse this view, with the newly built Ambitovy project in Madagascar the latest, along with Coral Bay in the Philippines, which appear to have had a relatively seamless technical start-up processes and look to work very well.

However, they are high capital cost projects, which Hallam says "is the price you need to pay for a long-life low cost supply of nickel"



Metals X has been actively trying to find partners to help them get the project away. The depressed nickel price has curtailed the urgency but Cook emphasises: "This is a world-class project, one of the largest undeveloped nickel deposits in the world today. We own it outright.

"It is not a matter of if it will be developed but when. The biggest issue we face is the imbalance in the timing of the rewards that will come with the investment timeframes of our shareholders and investors."

Metals X's gold division contains the Central Murchison gold project at Cue in Western Australia, which has rapidly transformed over the past 12 months into a significant gold asset with a resource base of 5 million ounces and an initial reserve of 1.17Moz.

On the back of the large resource increase, a definitive feasibility study was completed in January 2013 that considered a 100,000 ounce per annum production scenario with estimated cash costs of $A980 an ounce.

However, Metals X previously advised it had no plans to rush into a new gold development and believed that consolidation and more efficient use of plant capacity in the region was logical and in everyone's best interest.

This, in hindsight, may be a wise and considered view - with the recent rout in the gold price, the market values and prospects of its peers in the region have been heavily diluted and consolidation appears to be well and truly a key factor in the survival game.

"We're in no rush here but with gold resources now valued at about one-fifth of the average discovery cost and mine infrastructure valued at similar ratios to replacement costs, it's a buyers' market," Cook said.

No surprise there, since it was Cook, backed by his chairman Peter (Talkie) Newton, who in a similar market environment in 1996 bought the Hill 50 mine from Western Mining and made their shareholders a small fortune.

The gold division also holds the Rover project near Tennant Creek in the Northern Territory. The main project there is the Rover 1 prospect where a virgin iron oxide-copper-gold discovery has been drilled out and which contains approximately 1.2Moz of gold equivalent in a polymetallic copper-gold deposit, with credits also of cobalt and bismuth.

Metals X is also planning a high-grade underground mine and processing operation, with an exploration decline being approved and authorised by the NT regulators in April 2013.

*A version of this report, first published in the October/November 2013 edition of RESOURCESTOCKS magazine, was commissioned by Metals X