Rey Resources to sell coal project for $21 million

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THE BOURSE WHISPERER: Rey Resources (ASX: REY) has entered into an agreement with Crystal Yield Investments Limited, to sell the Duchess Paradise coal project in Western Australia.

The deal will be done via a staged acquisition by Crystal of all of the issued shares in Blackfin Pty Ltd, a wholly owned subsidiary of Rey.

Rey currently holds a 100 per cent interest in the Duchess Paradise project assets through Blackfin and its othe subsidiary company, Rey Derby Pty Ltd.

The Duchess Paradise assets consists four exploration licences over the Duchess Paradise resource E04/1519, E04/1770, E04/1753, E04/1386; mining licence application M04/453; miscellaneous licence application L04/58; a sublease with the Shire of Derby/West Kimberley at the Port of Derby; and facilities and equipment located at the Port of Derby.

“A period of challenging conditions in international coal markets has led us to emphasise a strategy of developing our oil and gas prospects, particularly the acquisition in March this year of a further 15 per cent interest in two key Exploration Permits in the Canning Basin, bringing our total interest in the two leases to 25 per cent,” Rey Resources managing director Kevin Wilson said in the company’s announcement to the Australian securities Exchange.

“While we also intend to continue the development of our coal exploration assets in the Canning Basin, during this period of sustained lower thermal coal prices, we believe the best interest of shareholders is served by this transaction.”

Rey indicated that on completion of the transaction, it will continue to hold interests in a number of coal exploration licences as well as petroleum exploration permits, all in the Canning Basin, Western Australia.

The company said it would continue to focus on exploring for and developing energy resources in north-western Western Australia, including its petroleum interests and remaining coal exploration assets.

Rey anticipates to record a book loss of $480,000 on the transaction (assuming the full payment of the three consideration payments totalling $21 million) and anticipated exploration expenditure will be reduced by approximately $2 million over the next 12 month as a result of the Transaction.

Crystal is a private investment company incorporated and based in Hong Kong.

Traka Resources signs Farm-in and JV with Western Areas

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THE BOURSE WHISPERER: Traka Resources (ASX: TKL) has entered into a Farm-in and Joint Venture Agreement with Western Areas (ASX: WSA).

The agreements cover five exploration licences located in the Jameson area of Western Australia, which forms part of Traka’s Musgrave project.

 

The Musgrave project showing Traka’s interests including the Western Areas Agreement tenements. Source: Company announcement

 

According to Traka, Western Areas has identified the Musgraves as a prospective underexplored base metals region.

“The Agreement will result in an immediate acceleration of exploration activity particularly focused on the discovery of higher grade, intrusive-related nickel and copper deposits,” Traka Resources said in its ASX announcement.

“A number of prospective targets and areas have already been identified and work will initially focus in these locations.

“The area covered by the Agreement includes key ground around the known mineralised trend, which hosts the Nebo-Babel and Succoth deposits held by BHP Billiton (ASX: BHP).

“The agreement introduces a partner into Traka’s Musgrave project with both the resources and expertise to pursue and exploit the higher grade style of poly-metallic mineralisation being sought.

“Western Areas has a remarkable track record of discovery and mine development in the Forrestania area of Western Australia and Traka will obviously benefit from this experience.”

Traka’s agreement with Western Areas relates to exploration licences EL69/2032, 2230, 2253, 2618 and 2747.

Western Areas may earn in to Traka’s interests in these tenements via an initial $200,000 payment to Traka as partial reimbursement of Traka’s incurred exploration expenditure.

Stage 1:

Western Areas may earn the right to 30 per cent equity by expending $1.3 million within 18 months of the date of the agreement, with a committed expenditure of $1 million. Western Areas may withdraw after expending the committed expenditure without retaining any residual interest.

Stage 2:

In the event that Western Areas earns a 30 per cent equity, it can elect to earn an additional 21 per cent equity by further expending $2.5 million within an additional 18 month period. If Western Areas elects to cease expenditure during this stage, a joint venture will be formed with Traka having 70 per cent equity and Western Areas having 30 per cent equity.

Stage 3:

If Western Areas earns 51 per cent equity by having expended a total of $3.8 million, it can elect to increase its equity to 70 per cent by the expenditure of a further $5 million within an additional 3 year period and agreeing to free-carry Traka through to completion of a Bankable Feasibility Study.

Traka explained the effect of this earning provision being Western Areas would carry the company for a minimum of $5 million expenditure even if it completes a BFS prior to completing that expenditure.

If completion of the BFS requires Western Areas to incur costs in excess of $5 million Traka would be carried for such additional expenditure.

Mutiny Gold in iron ore development discussions

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THE BOURSE WHISPERER: Mutiny Gold (ASX: MYG) has informed the market it is currently in advanced discussions with a local producer to commercialise the iron ore assets contained in its Gullewa project area, located within the Murchison Region of Western Australia.

Mutiny said the iron ore could potentially generate early cash flow within the next six to eight months.

The company indicated it is also in detailed negotiations with a large mining contractor to form a potential partnership to develop its Rocksteady asset with the partner supplying mining equipment and start-up funding.

Mutiny has previously announced its Gullewa tenements contain iron mineralisation within numerous banded iron formation (“BIF”) units.

These BIF units are interpreted to have a total length of approximately 150 kilometres and are considered to be underexplored having been previously drilled for iron ore mineralisation at only two locations being the Rocksteady and Brandy Hill prospects.

At both of these prospects iron mineralisation was intersected.

Mutiny said it had always looked at the development of the iron assets and their proximity to key infrastructure as a possibility since it acquired the Gullewa tenements in June 2010.

The project is located approximately 50km from a railway, and 200km from the Port of Geraldton.

“The company has always highlighted the mineral endowment contained within the Gullewa tenements and the variety of development opportunities they contain and maintained a strongly announced company objective of being a multi-mine operator,” Mutiny gold managing director John Greeve said in the company’s announcement to the Australian Securities Exchange.

“A Rocksteady development has always been one of our key, early stage development options at Gullewa and right now a ‘window of opportunity’ has opened up for Mutiny and we intend taking advantage of it, with the very real potential for Mutiny to be earning cash from this development by early to mid-2014.

“Rocksteady is located on an already granted Mining Lease and there is sufficient evidence to suggest that there is significant upside for adding substantial quantities of DSO quality hematite.

“In this regard we have also entered into discussions to quickly begin a significant new drilling program there.”
 
Mutiny considers the proposed development as a win/win situation as it will:

Allow the company to be cash flow positive;

Allow the company to develop a valuable asset; and

Allow it to continue to build the Deflector gold-copper project into a company making asset.

Rex Minerals increases Hillside Resource 50 per cent

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THE BOURSE WHISPERER:  Rex Minerals (ASX: RMX) has completed the sixth Mineral Resource upgrade in three years at the company’s Hillside copper project on the Yorke Peninsula, South Australia.

The company said the latest upgrade has reconfirmed Hillside as Australia’s largest open pit copper project.

Rex said the first 12 years of production at Hillside are now covered with Ore Reserves providing further confidence in the detailed mine plan and further support for the completion of project finance negotiations.

The recent upgrade has resulted in a 50 per cent increase in the Ore Reserve to 180 million tonnes at 0.52 per cent copper, 0.13 grams per tonne gold and 14.4 per cent iron (180 million tonnes at 0.8 per cent copper equivalent (CuEq)).

Rex has also completed a Mineral Resource update with a maiden Measured Mineral Resource of 2Mt of contained copper, approximately 64 per cent of which has been classified as Measured and Indicated Resources, and 72 per cent of this has been converted to Proven and Probable Ore Reserves.

“Rex started Resource drilling at Hillside in 2010 and in just 3 years, has delivered one of the best long-life open pit copper discoveries in Australia since Ernest Henry,” Rex Minerals managing director Mark Parry said in the company’s announcement to the Australian Securities Exchange.

“A Resource of this scale and a Reserve of this quality so close to existing infrastructure provides significant financial flexibility as we look to finalise project funding in the months ahead.

“We are continuing discussions with copper concentrate, iron ore buyers and potential joint venture partners which can provide significant financial support to Hillside.

“With relatively low capital intensity, low operating costs, and the simplicity of open pit mining in a first world location, we are confident Hillside has all the right attributes for successful financing and development.”

Core Exploration confirms NT copper field

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THE BOURSE WHISPERER: Core Exploration (ASX: CXO) has claimed to have confirmed a large copper mineral field on the company’s new and wholly-owned exploration licence application, EL 29689.

The EL covers 310 square kilometres within Core’s Albarta project, north east of Alice Springs in the Northern Territory.

The identification of the mineral field has come via Core’s analysis of mapping, prospecting and soil sampling by previous explorers on the exploration licence.

A number of prospects have emerged within the area of the ELA with the most prominent being Copper King, Copper Queen, Skippy Tail and MR2.
 
Rock chips assays of up to 14.3 per cent copper and 72.3 grams per tonne gold have been sampled historically.

Core indicated it now plans to utilise geophysical surveys for the first time over the area in the coming September quarter, to pinpoint high-priority drill targets.

“Previous explorers undertook a large amount of copper-gold focused exploration in the region in the 1990’s and early 2000’s utilising mapping, rock chip sampling and soil surveys to identify target areas for subsequent shallow RAB drilling,” Core said in its ASX announcement.
 
“Significant geochemical anomalism (both copper and gold) is associated with two main structural trends having significant strike extent, the NW-SE trending Florence Creek Shear Zone (FCSZ), and the E-W trending Copper Queen and Mogul trends.”

Core believes the structurally controlled setting for the Copper King and Copper Queen prospects, where 600m of visible malachite along a structure has been identified, is an ideal fit for its IOCG model of the Aileron Province.

“Whilst first pass historic RAB drilling identified thin intervals of copper mineralisation, there is little evidence that geophysics was utilised in drill targeting,” the company said.

Core believes that any broader mineralisation within structures at depth could be identified through geophysics as demonstrated by recent copper exploration successes in the region (e.g. Kidman Resources (ASX: KDR) – Home of Bullion).

The company indicated it intends to undertake detailed geophysics over known areas of mineralisation to identify potentially larger mineral bodies at depth.

Any substantial geophysical anomalies identified would constitute priority drill targets.

The company is expecting to commence field exploration on this tenement once it is granted during the next quarter.

Doray Minerals into commissioning phase at Andy Well

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THE BOURSE WHISPERER: Doray Minerals (ASX: DRM) has commenced commissioning of the gold processing plant at the company’s 100 per cent-owned Andy Well gold project, in the northern Murchison region of Western Australia.

Doray said it expects commissioning of the gold processing plant to take approximately four weeks to complete, meaning that gold production is currently scheduled to commence in August.

“Our original development schedule, as outlined in the BFS for Andy Well, had construction and development starting in September 2012 with first gold production forecast for July 2013,” Doray Minerals managing director Allan Kelly said in the company’s announcement to the Australian Securities Exchange.

“Due to permitting delays, we didn’t actually start work on site until mid-November last year.

“Using the same timeline, first gold production wasn’t therefore expected until September of this year.

“Instead, despite starting over two months late, and pending a successful completion of commissioning, we should be pouring our first gold within a few weeks of that original schedule, which is a great credit to everyone involved in the project up to this point.”

Doray also advised that underground development of the high-grade Wilber Lode gold deposit is continuing on schedule with first ore from the horizontal development drives expected during July.

The first stoping ore is scheduled for September-October, once sufficient capital development has been completed.

Elvis has left the building

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THE BOURSE WHISPERER: The regular game of musical chairs continues within the boardrooms across the resources industry.

Director appointment and resignation

Conto Resources (ASX: CNO) announced that Jonathan King, who joined the Board as an alternate director to Robert Jewson in December 2012, will be taking a full Board position as a non-executive director.

Jewson has chosen to step down from the Board to concentrate on other work commitments.

Board changes

Rubianna Resources (ASX: RRE) has made changes to its Board of directors.

Gordon Dunbar, who has been a director since September 2011, has decided to retire as a non-executive director of the company.

Company secretary, Graeme Smith has been appointed in the interim to replace Dunbar.

Smith has over 25 years’ experience in finance and company administration having held CFO and company secretary positions with Top 10 Australian and overseas mining companies.

He is currently the company secretary and/or CFO for six listed public companies.

“Gordon has made a significant contribution in the two years he has been a director and we have benefitted from his input and knowledge,” Rubianna Resources chairman Terry Smith said.

“Having worked with Graeme Smith since the company was founded I welcome his appointment and look forward to continue working with him.”

Appointment of managing director

Republic Gold (ASX: RAU) announced the appointment of Mark Gillie as managing director and chief executive officer.

Ray Shorrocks will remain as chairman of the company.

The appointment coincides with the company’s proposed acquisition of African Stellar Mozambique Limitada, which holds the rights to three gold mining tenements in Manica Province, Mozambique.
 
“Mark is an Australian who has spent over 20 years working throughout Africa, in the exploration and mining industry, which makes him an ideal candidate to deliver on the company’s new Africa-focused strategy,” Shorrocks said.

“His wealth of experience on the continent includes a solid understanding of operational management, technical planning, production, geological modelling and mineral exploration.

“He is also conversant with corporate and mining law in numerous jurisdictions and is committed to sound corporate governance and investor transparency.”

Appointment of technical director

Erongo Energy (ASX: ERN) has appointed Marke Calderwood as a technical director.

The company has entered into an agreement to acquire Ninghan Exploration.

Ninghan has made applications for properties prospective for gold and base metals (copper, lead, silver and zinc) in Western Australia (Lyons project).

Ninghan’s projects were identified Mark Calderwood, who is the former CEO and managing director of West African gold producer Perseus Mining (ASX: PRU).

Chief executive officer appointment /resignation

Paradigm Metals (ASX: PDM) announced the appointment of Anthony Reilly as chief executive officer of the company.

Reilly has over 20 years’ experience in financial markets, financial risk management and corporate finance.

He has also served as executive director of an ASX-listed resource company.

Paradigm said he brings industry experience to the company as it continues to aggressively seek new project opportunities.

Paradigm Metals also advised that Greg Curnow has resigned from the position of CEO.

Director Resignation and Appointment

Mr Michael S. Perry & Mr Hanrui Zhong

Admiralty Resources (ASX: ADY) advised that Michael S. Perry has resigned as acting chairman and independent, non-executive director of the company.

Mr Hanrui Zhong has been appointed director of Admiralty.

Perry has been an independent non-executive director of the company since 14 October 2009.

Mr Hanrui Zhong, acting general manager since 21 May 2013, has been appointed director of the company effective on and from 21 June 2013.

Mr Zhong is currently a director of Taishan Resource company in Mexico and a director and shareholder of Sino Investment & Holding Pty Ltd, a substantial holder of Admiralty since March 2010.

Mr Zexing Ling, non-executive director of the company since 21 May 2013, is now the acting chairman.

WA Government grants latest round of EIS funding

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THE BOURSE WHISPERER: The Western Australia Government has announced the latest round of co-funded Exploration Drilling subsidies.

This years’ round of funding will result in the handout of almost $7.2million for exploration drilling to be carried out over more than 60 mineral and petroleum projects in underexplored areas.
 
The subsidies are part of the WA Government’s Exploration Incentive Scheme (EIS), which was established four years ago to support resources exploration.
 
WA Mines and Petroleum Minister, Bill Marmion said the projects would involve drilling for a wide spectrum of commodities across 2013-14.
 
“The co-funded drilling program provides incentives to drill in underexplored areas to ensure the continued economic prosperity of the State’s resources industry, particularly in the current financial environment,” he said.
 
“The scheme has already reaped significant rewards with its contribution to the discovery of the Nova deposit with a co-funding grant to Sirius Resources, as well as providing co-funding to commercially promising and scientifically interesting projects, such as deep drilling which led to the re-opening of the Mt Magnet gold mine.”
 

Marmion listed other positive exploration drilling outcomes that had come out of the program in recent times, including the Speewah vanadium deposit; the Yeneena copper discovery; the Theseus and Yalgoo uranium discoveries and drilling that was instrumental in the discovery of the East Tropicana and Handpump gold deposits.

Recipients of Funding.

The program provides co-funding of up to 50 per cent of direct drilling costs with caps of $150,000 for a multi-hole project, $200,000 or $400,000 for a single deep hole (depending on the target commodity), and $30,000 for prospecting projects.

 Regional Development Minister, Brendon Grylls also had to get in on the act by saying the program stimulated increased private sector resource exploration and partnerships.
 
“Investment through the EIS contributes to new mineral and energy discoveries – which underpins economic and community development in regional WA,” Grylls said.
 
The WA Government’s Royalties for Regions Program has funded this program from 2008-09 to 2013-14 to an amount of $100.6million, with Government support continuing to end of 2015-16 – reaching a total of $138.1million.
 
Information acquired by companies from the drilling is publically released on the Department of Mines and Petroleum’s website after a short confidentiality period.
 
This adds to the geological knowledge of the State, and reduces the risk for subsequent explorers.

Moly Mines gets shareholder nod for mine gate sale

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THE BOURSE WHISPERER: Dual-listed Moly Mines (ASX/TSX: MOL) has obtained shareholder approval to proceed with a mine gate sale agreement for iron ore produced at the company’s Spinifex Ridge iron ore mine.

The agreement is with Mineral Resources (ASX: MIN) and is to come into effect from 1 July 2013.

Under the Transaction, Moly Mines’ wholly-owned subsidiary Moly Metals Australia (MMA) will sell ore from the Spinifex Ridge iron ore mine to Mineral Resources at the mine gate.

Mineral Resources will pay MMA a purchase price calculated on the basis of an agreed minimum product tonnage.

“The actual minimum product tonnage will be determined on the basis of the tonnage available under the current mine plan as at 1 July 2013,” Moly Mines explained in its ASX announcement.

“Based on current estimates the purchase price will total approximately $38 million.

“This price is payable in two instalments, mostly by a substantial upfront payment and the remainder by a final payment once the economic life of the Spinifex Ridge iron ore mine has been exhausted.

“The upfront payment will be payable in cash or Mineral Resources shares at Mineral Resources’ election on 12 July 2013.

“Mineral Resources has informed the company that it intends to pay in cash.

“The final payment is subject to adjustments to reflect the quantity and quality of iron ore mined during the term of the mine gate sale agreement.”

After settlement of the transaction, Moly Mines anticipates its cash and liquid assets position to be at least $80 million.

The company said it will be actively seeking merger and acquisition opportunities – specifically for copper and gold.

“Current market volatility, combined with a strong balance sheet, puts our company in a strong position to acquire projects,” Moly Mines said.

“The focus will be on near-term production assets where the company’s surplus cash can be applied in the short term.”

Moly Mines indicated it would avoid projects in high-sovereign risk jurisdictions; however, it also pointed out its ultimate objective is to find an appropriate project, which means that criterion will not be rigidly applied.

Consolidated Tin Resource review increases Mt Garnet project

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THE BOURSE WHISPERER: Consolidated Tin Mines (ASX: CSD) has had a review conducted of the recently-announced Resource upgrade at the company’s Mt Garnet tin project, near Cairns in northern Queensland.

The review has delivered a further increase in the Resource Estimate.

The new, revised total JORC Resource estimate is:

–    13.12 million tonnes at 0.39 per cent tin (0.56 per cent tin equivalent (SnEq)) reported at a range of SnEq cut-offs.

The company said this represents a 24.1 per cent increase in Resource tonnage over the Resource Estimate announced earlier this month, which had confirmed a 44 per cent increase in Resource tonnage from an estimate released in September 2010.

“The revised total contained tin metal is 51,160,000 tonnes, compared to the previous figure of 46,500,000 tonnes,” Consolidated Tin Mines said in its ASX announcement.

“The revision of the Mt Garnet Resource Estimate has also resulted in an increase in the project’s iron and fluorine Resource Estimates.”

The updated iron and fluorine Resource Estimates are:

–    13.12 million tonnes at 22.87 per cent iron and 7.04 million tonnes at 5.8 per cent fluorine reported at a range of SnEq cut-offs.

“The revised Resource estimate further strengthens the Mt Garnet project’s resource inventory and its ability to support a major tin mining operation in northern Queensland,” the company said.

“It further builds on Consolidated Tin’s stated Resource goal of an initial 8 million tonnes to 10 million tonnes required to commence development of the project into a major low cost, open pit tin mining operation.”

Consolidated Tin Mines has previously indicated the Resource Estimate will be used to form the basis of a Pre-Feasibility Study (PFS), which the company currently has underway at the Mt Garnet project.

The PFS is based on a treatment rate of one million tonnes per annum through the existing Mt Garnet process plant.

Consolidated Tin Mines anticipates releasing further details on the PFS in the near future.