Atlantic Gold wins Touquoy gold project appeal case

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THE BOURSE WHISPERER: Atlantic Gold (ASX: ATV) has won an appeal case brought by a former landowner against a vesting order issued by the Nova Scotia Minister of Natural Resources in June 2012 dismissed in the Supreme Court of Nova Scotia.

The appeal was in relation to the one remaining 3.5 hectare private property Atlantic required to move ahead with its plans to develop the Touquoy gold project.

The appeal Judge heard submissions from the Appellant, Atlantic Gold and the Attorney General of Nova Scotia as co-Respondents, and the Mining Association of Nova Scotia as Intervener.

Another Intervener, the Nova Scotia Federation of Agriculture, was not represented by legal counsel but filed with the Court a two-page letter outlining its position in favour of the Appellant.

In dismissing the appeal the Judge determined the Minister had fully met his duty to be fair to all interested parties noting the legislative scheme designates the Minister as the final decision maker.

The Judge said it was not for his Court to interfere with that legislative authority without a clearly justifiable reason, adding no such justification existed in the case before him.

“This outcome vindicates the Minister’s careful and considered decision as empowered to his office under the Mineral Resources Act,” Atlantic Gold said in its ASX announcement.

“The dismissal of this appeal brings to a close the program of acquiring all 63 of the required private properties and clears the way to move the project forward.

“In particular, it removes the pre-condition for grant of Industrial Approval and the leasing of the seven requisite parcels of Crown land covering approximately 278 hectares.”

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.


Board Changes

Flinders Mines (ASX: FMS) has advised of the resignation, by mutual agreement, of its managing director Gary Sutherland.

Flinders said the Board of Directors intends to appoint a new managing director shortly.

In the interim current non-executive chairman Robert Kennedy will act as executive chairman of the company.

The company said it was committed to the progress of its Pilbara iron ore project and advised that negotiations with interested parties have reached an advanced stage.

“The Board believes that owing to the advanced stage of negotiations with strategic parties, an appointment to the role of managing director of a person having the requisite background to crystallise proposals is of the utmost importance to adding shareholder value,” Kennedy said in the company’s ASX announcement.

“We expect to be able to announce the details of the new appointment shortly and believe this will precipitate some exciting developments for the company.”

Board Changes

Quest Minerals (ASX: QNL) has appointed Paul Piercy as nonexecutive chairman and Jerome G (Gino) Vitale as managing director. Both appointments are effective immediately.

Dennis Gee will continue as a non-executive director, while former chairman Alan Winduss and Robert Molkenthin, who joined the board in December 2012 to fill a casual vacancy, have resigned.

Board Changes

Coal of Africa (ASX: CZA) announced chief executive officer John Wallington will not be renewing his contract with the company by mutual agreement with his executive role ending on 31 May 2013.

Wallington’s three-year contract with CoAL commenced on 31 May 2010.

In addition to his role as the chairman of CoAL, David Brown will become the interim CEO for a maximum period of six months whilst the appointment of a permanent successor will be progressed.

Commenting today David Brown said:

Professor Alfred Nevhutanda, currently the executive director Corporate Affairs, has also by mutual agreement tendered his resignation with effect from 30 April 2013.

Professor Nevhutanda joined the Board in February 2009.

New General Manager of Exploration

Ivanhoe Australia (ASX: IVA) has appointed exploration geologist, Mark McGeough, to the position of general manager – Exploration.

McGeough has over 30 years of experience as a geologist with exploration experience in gold, copper-gold, uranium, lead-zinc, mineral sands and platinum group metals in Queensland, the Northern Territory and South Australia.

He commences his role at Ivanhoe Australia on 1 May, 2013.

Since 2008, McGeough has been the general manager – Exploration for Toro Energy.

Prior to that, as manager of the Government of South Australia’s Geological Survey, he contributed to the success of the South Australian Government’s PACE program (Plan for Accelerating Exploration).

“We are particularly pleased to have secured the appointment of an experienced and capable exploration geologist such as Mark,” Ivanhoe Australia CEO Bob Vassie said in the company’s ASX announcement.

“His experience in the field and also in senior leadership positions will greatly enhance our exploration efforts.

“We firmly believe that exploration is critical to the growth of our company and are excited to have Mark to lead the team forwards from here.”

Sentosa Mining signs on for Mongolian copper gold project

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THE BOURSE WHISPERER: Sentosa Mining (ASX: SEO) has signed up to purchase a 100 per cent interest in the Darvii Naruu copper gold project in Gobi-Altai province, western Mongolia.

The purchase comes via the acquisition of privately owned Australian and Mongolian companies.

The Darvii Naruu project comprises seven semi-contiguous licenses covering a total area of just over 62,735 hectares.

The project is located within the South Gobi Arc, which hosts Rio Tinto’s (ASX: RIO) Oyu Tolgoi copper-gold deposit.

Under the terms of the agreement Sentosa will spend $150,000 on a Work Program, which will involve flying an aeromagnetic and radiometric survey.

Sentosa explained it will then analyse the results of the survey, after which it then has the right to decide whether to proceed with the acquistion.

Should that be the outcome Sentosa will issue 5.5 million fully paid ordinary shares and a 0.5 per cent Net Smelter Return Royalty as consideration for a 100 per cent interest in all of the tenements.

“The investment into Mongolia represents a unique platform to gain access to a recognised mining jurisdiction hosting numerous world class mineral deposits,” Sentosa Mining executive chairman Nigel Gellard said in the company’s announcement to the Australian Securities Exchange.

“Western Mongolia is vastly underexplored by modern exploration methods and the agreement presents Sentosa with an outstanding opportunity to potentially make a discovery of a large-scale mineral deposit.

“With its substantial mineral endowment, and close proximity to China, Mongolia is a leading frontier for exploration and mining.”

 

Geological map and tenement holding of the Darvii Naruu project

 

Sentosa said historic exploration has defined multiple prospects at Darvii, including the main prospect Mushroom Reef, which the company considers to have characteristics comparable with the surface alteration footprint of a porphyry copper gold deposit

These include:
 
A spatially extensive iron-oxide iron-leach cap overlying Devonian mafic volcanics;

Close proximity to later stage felsic plutonism;

Polyphase structural deformation of strata;

Numerous occurrences of malachite in fractures with low to high-grade gold and/or copper in outcropping quartz veins;

Moderate anomalism of silver, arsenic, antimony, zinc and molybdenum in soil and stream sediments; and

Maximum rock chip values of 5.8 per cent copper and 34.4 grams per tonne gold have been collected at Mushroom Reef.

Anomaly 13 is located eight kilometres south of the Mushroom Reef prospect, where encouraging rock chip samples have also been collected with maximum assay values of 21 per cent copper, 2.1g/t gold, 0.37g/t platinum, 0.37g/t palladium and 0.63 per cent nickel.

Encounter Resources strikes Antofagasta earn-in deal

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THE BOURSE WHISPERER: Encounter Resources (ASX: ENR) has entered into an earn-in agreement in relation to two tenements at the company’s Yeneena project located in the Paterson Province of Western Australia.

The agreement is with Antofagasta Minerals Perth, a wholly-owned subsidiary of London Stock Exchange-listed Antofagasta PLC, one of the world’s largest copper producers and explorers.

The deal covers tenements E45/2658 and E45/2805, which cover an area of 433 square kilometres of the Yeneena project and will result in Encounter joining forces with the financial and technical resources of Antofagasta to advance the company’s BM1-BM7 copper discoveries.

 

Yeneena Project leasing, key structures and target areas. Source: Company announcement

 

“We are delighted to welcome Antofagasta, a subsidiary of one of the world’s largest copper producers and explorers, onto our share register and into an earn-in agreement over two tenements within the Yeneena project,” Encounter Resources managing director Will Robinson said in the company’s announcement to the Australian Securities Exchange.

“The transaction is a significant endorsement of the large scale copper potential at Yeneena.

“Antofagasta brings considerable financial, technical and operating resources to progress the exciting copper discoveries made by Encounter at BM1 and BM7.

“This relationship will ensure a fully funded exploration programme and if successful, provides a path towards production with a major copper producer.”

Under the terms of the agreement Antofagasta may earn a 51 per cent interest in the tenements by spending US$20 million over a five year period.

Encounter will maintain its 100 per cent interest in the majority of its ground holding at the Yeneena project (approx. 1,000sqkm) which includes the BM2 and T4 copper discoveries as well as a number of other untested targets it considers to be highly-prospective.

Encounter will continue to manage all exploration at Yeneena throughout the earn-in period including the tenements subject to the Antofagasta earn-in agreement.

Antofagasta will complete a private placement of 9.24 million shares at 21 cents per share that will inject $1.94 million (US$2 million) into Encounter.

Existing Encounter shareholders will have the opportunity to subscribe for additional shares at the same price as the Antofagasta placement through a Share Purchase Plan to eligible shareholders, which will be announced soon.

Encounter has commenced a 5,000 metre RC drill program at Yeneena and expects first assay results in May.

Troy Resources snaps up $40M funding loan

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THE BOURSE WHISPERER: Dual-listed Troy Resources (ASX: TRY, TSX: TRY) has signed a Mandate Letter and Term Sheet with Investec Bank (Australia) for the provision of $40 million in loan facilities.

The Facilities consist of the following:

–    A $20 Million Revolving Corporate Facility (RCF); and

–    A $20 Million Revolving Acquisition Loan Facility (ALF).

Troy explained the RCF will have a term of three years and will provide funding for general corporate and working capital purposes.

The ALF will have a term of 18 months and will be used to assist with costs associated with the takeover of Azimuth Resources (ASX: AZH) and ongoing work associated with completing the prefeasibility study of Azimuth’s West Omai deposit.

Drawdown under the Facilities is subject to certain conditions precedent, with the RCF to be available following completion of documentation and the ALF following completion of the Company’s takeover offer for Azimuth.

As part consideration for the provision of the Facilities, subject to receipt of the approval from the Toronto Stock Exchange, Troy has agreed to grant just under 1.4 million call options over Troy ordinary shares to Investec to the value of $5 million with an exercise price of $3.67 and a three year term.

It is not the first time Investec has provided funding for Troy having stumped up $35 million in loan funding to assist with construction of the company’s Casposo project in 2010.

 

Project locations. Source: Company announcement

 

This loan was repaid ahead of schedule in October 2012, which was no doubt taken into consideration by Investec when signing the papers on this latest deal.

“We are very pleased to have agreed these facilities with Investec who have been supportive of the company through the provision of the $35 million facility to construct Casposo and of the company’s acquisition growth strategy,” Troy Resources managing director Paul Benson said in the company’s announcement to the Australian Securities Exchange.

“These new facilities will not only give Troy tremendous flexibility over the next few years, they provide a degree of comfort and certainty, which is invaluable in these volatile markets.

“In particular, the ALF is expected to allow us to accelerate activities at West Omai.

“It also puts us in a strong position to acquire second hand plant suitable for the mine’s development which is part of Troy’s successful strategy for minimising mine development capital.”

Straits Resources continues sale of non-core assets

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THE BOURSE WHISPERER: Straits Resources (ASX SRQ) has agreed to the sale of additional non-core assets in the form of the Pressure Oxidation Plant and a number of South Australian exploration leases.

The Pressure Oxidation Plant is located at the Hillgrove Antimony mine, which the company recently sold off to Bracken Resources.

Straits explained the plant was specifically excluded from the sale of the Hillgrove assets and Bracken had approached the company after the completion of that sale to purchase the Pressure Oxidation Plant for $3.2 million.

The sale of the plant was completed on the 19 April.

Straits has also bagged an offer from OZ Minerals (ASX: OZL) to purchase the Stuart Shelf exploration project in South Australia for a total consideration of $2.2 million.

The project comprises seven exploration licenses located within close proximity of OZ Minerals 100 per cent-owned Carrapateena Licenses.

The purchase is subject to due diligence and finalisation of a Sale and Purchase Agreement with a number of conditions precedent attached.

Straits indicated it anticipated the due diligence will be completed by the end of April.

“The sale of these two non-core assets at competitive prices is a good outcome for Straits and helps to further simplify the organisation as we focus on the company’s two core assets, the Tritton copper mine in New South Wales and the Mt Muro gold mine in Indonesia,” Straits Resources executive chairman Andre Labuschagne said in the company’s announcement to the Australian Securities Exchange.

“Our largest remaining non-core asset is the Temora copper/gold project in New South Wales.

“This is a high quality project targeting copper porphyry deposits in the proven and highly prospective Lachlan Fold belt in New South Wales.

“We are currently assessing the various options for maximising the inherent value in this project which we don’t believe is currently being recognised by the market.”

Cape Lambert finds new buyer for Leichhardt copper project

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THE BOURSE WHISPERER: Cape Lambert Resources (ASX: CFE) ran out of patience with its potential buyer for its wholly-owned subsidiary Cape Lambert Leichhardt, the holder of the Leichhardt copper project.

The company had previously announced it had entered into a conditional agreement for the sale of the Leichhardt project for a total consideration of $15million, payable in three tranches, the final tranche payable 36 months after completion.

As delays held off finalising the terms of that transaction, Cape Lambert was approached by another buyer for the project.

It has now subsequently entered into, a new binding agreement with a private Malaysian company for a total consideration of $14.75million and has received a $1million non-refundable deposit, with a further U$1million non-refundable deposit payable by 25 April 2013.

At completion of the Transaction, Cape Lambert will receive the final $12.75million plus costs incurred in operating the Leichhardt project from 1 May 2013 until completion.

The company will have $5.6million of environmental and cash bonds returned.

Completion of the transaction is to occur on 31 May 2013, subject to the buyer receiving a “no objection” letter for the acquisition pursuant to the Foreign Acquisition and Takeover Act 1975 (Cth), final due diligence enquiries and execution of a formal share sale agreement, which is expected in the coming weeks.

The Leichhardt copper project comprises a copper cathode process plant capable of producing 9,000 tonnes per annum of copper cathode and surrounding landholding.

Cape Lambert acquired the Leichhardt project in August 2010 for $7.75million.

The Leichhardt project has an existing cathode off take agreement with Glencore International AG and has been on care and maintenance since its acquisition by Cape Lambert.

Archer Exploration acquires strategic landholding

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THE BOURSE WHISPERER: Archer Exploration (ASX: AXE) has agreed to purchase the Sugarloaf Property, located approximately 35km north of the township of Cleve on South Australia’s Eyre Peninsula.

The Sugarloaf Property lies within the company’s Carappee Hill tenement that contains the bulk of the Sugarloaf graphite deposit, which has an identified Exploration Target of 40 to 70 million tonnes at 10 to 12 per cent carbon.

 

Location of Archer’s Campoona and Sugarloaf graphite deposits. Source: Company announcement

 

The Sugarloaf Property consists of 568 hectares (1,404.3 acres) of land with 503 hectares arable and used for winter cropping.

Archer indicated it intends to appoint farm managers who will continue to operate the land on that basis.

“Ownership of the Sugarloaf Property gives the company tremendous flexibility in its plans to develop graphite operations,” Archer Exploration managing director Gerard Anderson said in the company’s announcement to the Australian Securities Exchange.

“Ownership of the land means the company can greatly increase the exploration period (usually post-harvest and pre-seeding or January – April each year).

“Given the huge graphite target at Sugarloaf the land also affords the opportunity to consider processing of Campoona graphite at a central processing facility at Sugarloaf.”

Norton Goldfields makes takeover bid for Kalgoorlie Mining Company

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THE BOURSE WHISPERER: Kalgoorlie Goldfields neighbours Norton Gold Fields (ASX: NGF) and Kalgoorlie Mining Company (ASX:KMC), have signed a Bid Implementation Deed (BID) pursuant under which Norton will make a friendly off-market takeover offer to acquire all Kalgoorlie Mining company shares.

The offer is for of 0.054 Norton shares and 0.054 Norton options (exercisable at 27 cents on or before 30 April 2015) for each Kalgoorlie Mining Company share.

“This transaction just makes good sense,” Norton Goldfields chief executive officer Dr Dianmin Chen said.

“It brings together complementary assets and will deliver greater production, cost efficiency and exploration upside for both companies, and their respective shareholders.

“Norton’s vision is to be a leading, long-term gold producer in Western Australia and the proposed acquisition of Kalgoorlie Mining Company is consistent with our strategy to reduce operating costs and increase production, both from our existing assets and by exploring opportunities for consolidation.

Kalgoorlie Mining Company’s key asset is the Bullant gold project, which is located 28 kilometres west of Norton’s 3.3 million tonnes per annum Paddington operations.

Bullant contains a Total Mineral Resource of 431,200 ounces (3.57 million tonnes at 3.76 grams per tonne gold) and Reserve of 40,366 ounces.

 

Bullant gold project – Total Mineral Resource Statement. Source: Norton announcement

 

Kalgoorlie Mining Company has identified a number of areas with potential to grow the existing resource.

“Norton’s offer provides Kalgoorlie Mining Company shareholders with an attractive premium, while giving them the opportunity to participate in the upside that exists in the combined company,” Kalgoorlie Mining Company managing director James Croser said.

“Norton’s experienced management team has the development and mine operation capabilities to maximise the value of Kalgoorlie Mining Company’s assets and bring them quickly and cost effectively into production.

“The offer will significantly reduce the risks shareholders face through an investment in a single mine company, with limited access to capital.

“Each Kalgoorlie Mining company director considers the offer to be in the best interests of shareholders and unanimously recommend the offer in the absence of a superior proposal.”

CONDITIONS OF THE OFFER

A Bid Implementation Deed was signed on 17 April 2013 and obliges NGF to make an off-market takeover offer for the entire issued share capital of Kalgoorlie Mining Company, subject to a number of conditions which include (but are not limited to):

(a) Norton and its subsidiaries obtaining a ‘relevant interest’ (as defined in the Corporations Act
2001 (Cth)) in at least 90 per cent of all the Shares;

(b) The Option Offer being declared free from all conditions;

(c) Each of the Unlisted Options being cancelled;

(d) Receipt of Foreign Investment Review Board (FIRB) approval and all necessary Chinese regulatory approvals;

(e) No material adverse change in relation to the Kalgoorlie Mining Company group;

In addition, NGF is obliged to make the Option Offer, which would be subject to the following conditions:

(f) Norton and its subsidiaries obtaining a ‘relevant interest’ (as defined in the Corporations Act
2001 (Cth)) in at least 90 per cent of all the Listed Options; and

(g) The Offer for Shares becoming unconditional.

Quarter Time Wrap

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THE BOURSE WHISPERER: Once again The Roadhouse’s inbox has been inundated with quarterly reports this season. Here’s a random selection of what companies had to say.

SARACEN MINERAL HOLDINGS (ASX: SAR)

Record Quarter Gold Production

• Record Quarter Production – 36,430 ounces at cash cost of $991 per ounce;

• Mill grade plus 2 grams per tonne for the quarter – the first time since operations commenced;

• Year to date production of 98,909 ounces at cash costs $993 per ounce;
 
• On track for record production year of 125,000 to 135,000 ounces at cash costs of $975 to -1,075 per ounce;

• Grades from Deep South of 4g/t approximately 87 per cent higher than reserves;

• Expansion Projects on track. The Whirling Dervish cut back on schedule and process plant upgrade due for completion by December.

• Drilling at Red October outside of existing ore reserve returns 5 metres at 15.3g/t and 2.2 metres at 53.9g/t;

• Gold hedging of 188,300 ounces at average price of $1,698 per ounce; and

• Mark to Market value of hedges of $56 million at $1,300 per ounce spot.

“Our Carosue Dam Operations have recorded consecutive production records with 32,038 ounces in the December quarter being eclipsed by 36,430 ounces in this March quarter,” Saracen Mineral Holdings managing director Raleigh Finlayson was quoted as saying.

“The most pleasing aspect of our latest production record is that it was achieved with only 14 per cent of ounces being contributed from the Red October underground mine versus 27 per cent in the previous quarter as the mine focused on development work on the Central lode.

“This highlights the contribution being made from our open pit operations, particularly Deep South.

“We are pleased that the major capital works phase at Red October to establish the primary ventilation network and access the Central Lode is largely behind us, with our focus reverting back to ore production on multiple stoping horizons.

“We are ahead of our revised production guidance, which we increased to 125,000 to 135,000 ounces in December, on the back of a strong start to the calendar year which is set to continue.

“Saracen’s prudent capital management is reflected in the 188,000 ounces of hedging we have at an average price of $1698 per ounce which provides a measure of comfort given the erratic performance of bullion and gold equities of late.

“The mark to market value of our current hedging is $56 million (net after costs) assuming a spot gold price of $1,300 per ounce.

“This puts us in the enviable position of either delivering into our hedge to provide gold price protection over the next 3.5 years or a partial close-out or resetting the price to release cash to reduce debt.

“No decision has been made but we are continuing to closely monitor the spot price and our debt position.”

SANDFIRE RESOURCES (ASX: SFR)

DeGrussa Copper Mine Stage 2 of the open pit completed in April 2013.

• Ramp-up of underground mine on schedule to complete the transition to wholly underground operations;

• Plant ramp-up and optimisation continuing: on track for nameplate production rates from mid-CY2013. Strong performance so far in April with some 3,000 tonnes of copper-in-concentrate recovered for the month to date (15 days);

• Quarterly copper sales of 12,297 tonnes (Q2FY2013: 22,454 tonnes) and gold sales of 10,115 ounces (Q2FY2013: 13,184 ounces);

• Final high-grade DSO shipment completed in early January 2013, with further lower grade DSO shipments to be completed during the June 2013 Quarter; and

• First shipment undertaken from newly-completed port facility at Port Hedland.

Exploration

• Outstanding assay results received from drilling targeting Conductor 5 orebody:

26.1m at 7.2 per cent copper and 3.1g/t gold;

28.3m at 5.3 per cent copper and 2.7g/t gold; and
 
15.2m at 8.6 per cent copper and 2.3g/t gold.

• Ore Reserve and Mineral Resource upgrade underway including recently drilled extensions to Conductor 4 & 5.

• Exciting new near-mine and regional exploration targets being progressed.

Corporate

• First $50 million debt repayment completed, with funds deposited for next $45 million payment scheduled for June 201.

PEAK RESOURCES (ASX: PEK)

Revised Mineral Resource

A new and increased Mineral Resource was announced on 4th April 2013. At a 3.0 per cent lower grade cut the Mineral Resource for the Bastnaesite Zone weathered mineralisation targeted for initial development is:

21.6 million tonnes at 4.54 per cent rare earth oxides (REO), for 982,000 tonnes of contained REO.

Potential to support significantly increased production levels and an extended mine life, based on a simple sulphuric acid leach operation, compared to the 10,000 tonnes per annum REO estimated in the December 2012 Scoping Study.

An increased production rate and higher grades, combined with the enhanced beneficiation ability will significantly improve the strong economics and further reduce cash costs.

A revised Scoping Study and economic assessment to be completed during June Quarter to quantify cost reductions and revised project economics at a range of REO production levels: 5,000tpa, 10,000tpa and 20,000tpa.

Beneficiation

Advances in beneficiation achieved during the Quarter lead to lower capital costs through a smaller acid and leach plant.Operating costs will also be reduced through lower sulphuric acid consumption
SX Pilot Plant, ANSTO(Australian Nuclear Science and Technology Organisation).

Production of a rare earth chloride feed solution for the solvent extraction (SX) pilot plant from a 1.3 tonne bulk sample of Ngualla rare earth mineralisation was completed at ANSTO during the quarter.

An average of 83 per cent recovery of rare earths was achieved in the acid leach stage, independently verifying the simple sulphuric acid leach recovery process and the robustness of the process flow sheet at a larger scale.

The SX Pilot Plant is on track to produce four separated greater than 99 per cent purity REO products successively over the next few months.

Appointed financial advisors to assist in identifying and securing strategic partners to assist with funding the longer-term development of the Ngualla rare earth project and product off-take agreements.

The company had $2.25 million cash on hand at the end of the Quarter.