Golden Rim study determines viability of Netiana Lodes

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THE BOURSE WHISPERER: Golden Rim Resources (ASX: GMR) has received the final results of a Scoping Study on the Netiana Lodes at the company’s Balogo project, in Burkina Faso.

The Scoping Study was undertaken by Coffey Mining to assess the viability of an open cut mining and processing operation to mine the project’s Inferred Resource of 850,000 tonnes at 6.8 grams per tonne gold.

Golden Rim said the Coffey Mining study had provided a concept mining and processing strategy that, over two years, could recover 133,000 ounces of gold.

“The final Scoping Study results from Coffey Mining are positive,” Golden Rim Resources managing director Craig Mackay said in the company’s announcement to the Australian Securities Exchange.

“They suggest that should Golden Rim proceed to develop a mine on the Netiana Lodes there is the potential for the company to have $40 million to $50 million in the bank after only two years of operation.”

The conceptual operation consists of a contractor mined open pit delivering 440,000 tonnes of ore to a modularised processing plant at an average grade of 9.3g/t gold.

Several processing options were considered with a small 30 tonnes per hour modularised plant emerging as the preferred option.

A smaller 20tph plant was deemed to be an alternate, lower capital, higher operating cost solution.

A recent metallurgical testing program determined overall processing recovery (non-optimised) of 95.4 per cent.

At the Scoping Study level of accuracy (±40 per cent) the capital cost for a new modularised 30tph plant is estimated at $39 million.

“The company is confident that the mine life of an operation can be extended with the discovery of satellite resources along strike from the Netiana Lodes,” Mackay said.

“A program of auger drilling is currently underway to identify satellite targets for reverse circulation drilling”

The Study estimated total CAPEX for the project at $46 million with the operating cost (OPEX) of $600 per ounce delivering a total cost for the project of approximately $950 per ounce.

Golden Rim indicated that although the Netiana Lodes is a short term project, its development appears robust in the form of a starter pit, with an estimated NPV of $46 million (after tax and royalties) and an IRR of greater than 100 per cent giving a CAPEX payback of less than 6 months at the 30tph processing option.

At the 30tph processing option and a gold price of $1,550 per ounce the Study suggested the mine would generate gross revenue of $104 million/year.

 “Golden Rim will now conduct a detailed review of the results of the Coffey Mining Scoping Study and will seek proposals, including costings, from contractors to conduct a Definitive Feasibility Study on the Netiana Lodes,” Mackay said.

“It is also seeking proposals for the completion of the environmental impact study that will be conducted concurrently with the DFS.

“The path forward for a development on the Netiana Lodes will be determined once this process has been completed.”

Latrobe Magnesium lifts magnesium plant value to $120M

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THE BOURSE WHISPERER: Latrobe Magnesium (ASX: LMG) has completed further work on costings and processes of the company’s Latrobe Valley magnesium plant, located in the Latrobe Valley, Victoria.

The completed work has resulted in a rise of the net present value (NPV) of the plant from $83 million to $120 million.

Latrobe said the recent work was part of the company’s adjustment study, in which it has refined costings from a prefeasibility study it had conducted in 2011.

Additional test work over the past year has optimised Latrobe’s hydromet process resulting in greatly reduced capital costs.

“With significant design changes to the retort furnaces increasing reliance on robots and automation, the capital and labour costs of the thermal reduction process have also been reduced,” Latrobe Magnesium said in its ASX announcement.

“The result of these savings substantially improves the value of the project from $83 million to $120 million for the 40,000 tonnes per annum magnesium plant.

“LMG is endeavouring to further increase the value of the project with more detailed work on improving iron removal and the creation of an additional product.”

Latrobe Magnesium indicated it is now finalising a 500 kilogram bulk fly ash sample for shipment and testing in a commercial operation in China.

The company expects this work to take up to five months.

From this bulk sample 4kg of cementitious material will also be produced for the completion of both mortar and concrete tests covering strength, setting times and durability of this material.

This work is expected to take up to six months to complete.

When its fly ash and property agreements have been finalised, which are anticipated to be completed in the next quarter, Latrobe said it will then endeavour to commence a bankable feasibility study.

Continental Coal settles one deal and sets up another

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THE BOURSE WHISPERER: Continental Coal (ASX: CCC) has completed settlement on the sale of its shareholding in Vanadium and Magnetite Exploration and Development Co (SA) (Pty) Limited.

Continental said the total sale proceeds of approx. US$10 million from the sale of the company’s shareholding in VanMag will be put towards purchasing all the outstanding minority interests in Mashala Resources not already held by its principal and 74 per cent-owned subsidiary in South Africa (Continental Coal Limited (CCL)).
 
Once it has completed acquiring the outstanding interests in Mashala, which the company said it anticipates occurring over the coming days, CCL will hold a 100 per cent interest in the operating Ferreira coal mine and Penumbra coal mine.

Both these mining operations produce a high quality thermal coal that is exported through the Richards Bay Coal Terminal and sold under existing off take agreement into predominantly the Asian markets.

In addition, CCL will hold a 100 per cent interest in the De Wittekrans coal project that is forecast to become the company’s fourth coal mine.

CCL is currently in advanced negotiations in respect to a potential long-term off-take agreement, strategic partnership and standalone funding agreement for the development of De Wittekrans.

“To be able to conclude the sale of one of the company’s non-core assets and use the proceeds towards the finalisation of acquiring the outstanding minority interests in Mashala, is a major positive for the company and its thermal coal business in South Africa.” Continental Coal chief executive officer Don Turvey said in the company’s announcement to the Australian Securities Exchange.

“We have over the past 3 years invested heavily in establishing a South African thermal coal production, development and export business, that includes the Vlakvarkfontein and Ferreira coal mines and now following the commencement of mining activities at the Penumbra coal mine, we anticipate increased returns for our shareholders in the coming years.”

Australia takes over as biggest LNG supplier to Japan

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THE BOURSE WHISPERER: Australia has become the largest supplier to the world’s biggest Liquefied Natural Gas (LNG) buyer – Japan – for the first time.

According to the latest EnergyQuarterly Report – by energy economics group EnergyQuest – Australia exported 15.9 million tonnes (Mt) of LNG to Japan in 2012, overtaking Qatar, which exported 15.7Mt, and Malaysia with 14.6Mt.

The milestone was recorded in the 2012 calendar year and coincided with Australia achieving both record LNG export volumes and LNG export revenue during the same period.

One of the reasons identified for the country’s rise to the top position was the start-up of the Pluto LNG project in 2012.

“Australia has captured the biggest share of a growing market for LNG,” EnergyQuest chief executive Dr Graeme Bethune said.

“Japanese LNG imports were a record 87.3 million tonnes in 2012, 11 per cent higher than the previous year, and 18.2 per cent of that LNG came from Australia.

“One of the major reasons for the increase in Japanese LNG demand is the shut-down of nuclear reactors in that country following the devastating earthquake in March 2011.

“Japan’s imports from Australia are set to keep increasing as the Gorgon, QCLNG, APLNG, Wheatstone, Prelude and Ichthys LNG projects come into production over the next five years.

“The INPEX Ichthys project – offshore of north-west Australia – alone is expected to supply around 10 per cent of Japan’s LNG needs when it comes into production in 2017.”

According to Dr Bethune Australian LNG exports reached a record 21.8Mt in 2012, up 11 per cent from 2011, and the value of exports reached $13.8 billion – an increase of 25 per cent on the previous year.

This now makes LNG one of Australia’s major export commodities.

Bethune said exports were likely to increase further in 2013 with a full year of production from Pluto, and then each year thereafter to at least 2017 as new projects come into production.

Other highlights of the report include:

Australian natural gas production passed 2,000 Petajoules (PJ) for the first time in 2012 reaching a record 2,141PJ.

Global LNG trade fell slightly in 2012. Lower demand in Europe was largely offset by higher Asian demand. The global LNG market is expected to remain tight until 2015 when new Australian projects are in production.

Domestic gas production was a record 1,101 PJ reflecting the introduction of the carbon tax.
There was only modest growth in national proved and probable gas reserves (2PJ) in 2012, with a reserve replacement ratio (RRR) of 1.2. Over the past three years the RRR is 7.1.

2012 east coast gas consumption increased by 15.3PJ to 722PJ, with an 8.5PJ increase in gas-fired power generation. Gas consumption in WA increased by 3.4PJ to 347PJ.

Domestic gas prices continue to strengthen. Most indicators are now in the $4-6/GJ range rather than $2-4/GJ. Origin Energy and Santos are setting new benchmarks for east coast gas prices.

Australian oil production plummeted in 2012 to the lowest level since 1970. Reserves of oil and liquids (2P) fell. INPEX has Australia’s largest reserves of oil and liquids. Cooper Basin oil production was the highest since 1991.

Woodside has replaced BHP Billiton as Australia’s largest petroleum producer.

Navarre Minerals earns 51 per cent interest in Sebastian gold project

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THE BOURSE WHISPERER: Navarre Minerals (ASX: NML) has announced it has earned a 51 per cent participating interest in the Sebastian gold project, in line with the company’s farm-in agreement with Castlemaine Goldfields.

The Sebastian project comprises two exploration licences (EL4536 and EL4974) located between the regional city of Bendigo and Navarre’s 100 per cent-owned Tandarra prospect.

 

Location map of the Bendigo North group of gold projects. Source: Company announcement

 

Navarre said it has met the initial expenditure requirement of the farm-in agreement having spent $100,000 on the Sebastian project through a series of work programs.

These have included a six line Controlled Source Audio-Frequency Magneto Tellurics (CSAMT) geophysical survey across a nine kilometre corridor and follow-up testing of five geophysical targets through a 15 hole, 1,100 metre air-core drilling program.

“Navarre has notified Castlemaine, now a wholly-owned subsidiary of LionGold Corp, of its election to continue solely funding exploration work at Sebastian,” Navarre Minerals said in its ASX announcement.

“Under the farm-in arrangements with Castlemaine, Navarre is entitled to increase its interest in the project to 75 per cent by spending a further $300,000 over the next four years.”

Navarre indicated it had also reached its minimum expenditure requirement of $100,000 on Castlemaine’s Raydarra gold project within the first twelve months after commencement of another farm-in agreement for that particular project.

Under the terms of that agreement Navarre can earn a 51 per cent interest in the Raydarra project by spending $300,000 over a two year period.

It then has an option to earn an additional 24 per cent interest by spending a further $600,000 over three subsequent years.

“Navarre’s farm-in arrangements with Castlemaine in respect of the Sebastian and Raydarra gold projects fit Navarre’s strategy of increasing its land position along the prospective regional Whitelaw Fault, which is believed to be a major control on gold accumulations in the Bendigo Goldfield,” Navarre said.

Green Rock Energy and AWE form renewable JV

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THE BOURSE WHISPERER: Green Rock Energy (ASX: GRK) has announced the signing of a Memorandum of Understanding between its subsidiary company Mid West Geothermal Power (MWGP) and AWE Australia, a subsidiary of ASX-listed oil and gas exploration company AWE (ASX: AWE).

The MoU covers the intention of forming a joint venture to demonstrate the development potential of geothermal power generation in hot sedimentary aquifers in the north Perth Basin in the Mid West of Western Australia.

 

Source: Company announcement

 

“We are very excited to be working with AWE which brings to the project its long experience and excellent reputation in the Perth Basin,” Green Rock Energy executive chairman Richard Beresford said in the company’s announcement to the Australian Securities Exchange.

“AWE also has a strong desire to achieve a successful outcome from drilling the geothermal wells in 2013/14 leading to a new business opportunity in geothermal power generation in a fast growing market.

“We are confident that we now have in place all the ingredients critical for securing Commonwealth funding and then proving the very large geothermal potential1in the Mid West.

“AWE’s participation in drilling complements Pacific Hydro’s participation in power generation once commercial production of geothermal energy is demonstrated.”

MWGP is the 100 per cent-owner and operator of seven Geothermal Exploration Permits (GEP) in the north Perth Basin.

Since it was awarded the GEPs in 2009, MWGP has identified, what it considers to be, prospective geothermal resources.

According to Green Rock’s announcement the JV’s main focus will be to secure funding for the project from the Commonwealth’s Emerging Renewables Program (ERP).

Greenrock said the project could be a very strong contender for this funding as it considers it to have the advantages of a long history of exploration and drilling in the north Perth Basin and close proximity to power infrastructure and a growing energy market.

Ampella Mining upgrades Konkera Resource

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THE BOURSE WHISPERER: Ampella Mining (ASX: AMX) has upgraded the JORC Code-compliant Resource at the Konkera deposit, situated within the company’s 100 per cent-owned Batie West gold project in Burkina Faso.

The upgrade comes on the back of an infill drilling campaign completed during 2012 on the Konkera Resource for pre-feasibility studies (PFS) purposes and the basis for pit optimisations.

The new Mineral Resource for Konkera comprises an Indicated Resource of 34.2 million tonnes at 1.8 grams per tonne gold for 1.92 million ounces gold, and an Inferred Resource of 25.0 million tonnes at 1.7 grams per tonne gold for 1.33 million ounces gold.

The company’s global resource now stands at 59.2 million tonnes at 1.7g/t gold for approximately 3,253,000 ounces of gold (at the 0.5 g/t cut-off).

Ampella indicated this represents a 10 per cent increase in grade and an approximate increase of 180,000 ounces of gold (six per cent) when compared to its previously released resource estimate from November 2011.

 

Source: Company announcement

 

“Ampella was very pleased to see both the increase in grade and resource ounces which are expected to have a positive impact on the overall economics of the Konkera project,” Ampella Mining managing director and CEO Dr Paul Kitto said in the company’s announcement to the Australian Securities Exchange.

“The updated Resource estimate will now be incorporated into the ongoing pre-feasibility studies.

“Pit optimisations and mine planning schedules will be undertaken to ascertain new pit designs, total in-pit inventory and material movement schedules which will be incorporated into project financial models.

“Some additional infill drilling will be required at Konkera to convert the minor remaining Inferred Resources within the expected pit limits to Indicated Resources or higher categories prior to executing the definitive feasibility study and the release of a maiden reserve statement.”

The revised JORC-compliant Resource incorporated the five contiguous prospects of Konkera East, Konkera Main, Konkera North, The Gap and Kouglaga, which collectively cover a total strike length of 4.9 kilometres.

Independence group secures $170M funding from NAB

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THE BOURSE WHISPERER: Independence Group (ASX: IGO) has signed a new facility agreement with National Australia Bank (ASX: NAB) totalling $170 million.

The company explained the new facility agreement provides it with a number of facilities that will provide financial flexibility as development of the company’s Tropicana gold project in Western Australia moves closer to completion.

The first gold pour for Tropicana is expected in the December 2013 quarter.

Key features of the facility agreement include:

–    A $130 million revolving corporate loan facility available on an “as needs” basis with a term to 31 December 2015;

–    A $20 million asset finance facility which replaces an existing $15 million asset finance agreement with NAB; and

–    A $20 million contingent instrument facility terminating on 31 December 2015 which will free up liquidity in relation to current cash backed bonds.

“The facilities are offered on a secured basis usual for these types of facilities,” Independence Group said in its ASX announcement.

“However the security provided is not overly restrictive and the company will continue to enjoy flexibility in its day-to-day operations.

“There is no requirement for gold or currency hedging associated with any of these facilities.”

Independence Group said the bank facilities would provide support to the company’s growth strategy.

They are intended to assist the company in times of to weather economic uncertainty and commodity price fluctuations while at the same time providing the flexibility to continue mine and regional exploration including resource and reserve drill outs, and fund Tropicana expansion and enhancement studies.

The company pointed to its current balance sheet, which it described as being, “strong…with very low debt”.

The $170 million facilities will enable the company to access in excess of $145 million in cash resources by way of the $130 million corporate facility, a net additional $5 million asset financing facility and release of cash backed bonds.

Aruma Resources to raise $2.5M to fund WA gold exploration

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THE BOURSE WHISPERER: Western Australia-focused gold explorer Aruma Resources (ASX: AAJ) has agreed to raise up to approximately $2.5 million by way of a placement of up to 50 million shares at a price of 5 cents per share.

The Placement is being made to professional and sophisticated investor clients of BBY Limited, which is acting as Lead Manager to the offer.

Aruma said it had already received very strong support for the Placement from existing shareholders as well as a number of new professional and sophisticated investors.

“The funds raised will be used for targeted gold exploration programs on the company’s existing projects, Glandore, Gindalbie and Jundee South, located in the Kalgoorlie goldfields in Western Australia as well as costs of the issue and general working capital,” Aruma Resources said in iits ASX announcement.

The Placement comprises:

Tranche 1: being approx. 19.67 million shares to raise around $983,000. Settlement of these shares is scheduled for 8 March 2013;

Tranche 2: for approx. 25.04 million shares to investors unrelated to the company to raise around $1,252,000 subject to shareholders approving the issue of those shares at a general meeting of the company to be held in April 2013; and

Tranche 2: for approx. 5.3 million shares to raise around $265,000 to entities associated with Aruma’s directors, subject to shareholder approval at the general meeting to be held in April 2013.

Shares issued under the Placement will rank equally with existing Aruma shares.

Blackham Resources achieves positive metallurgical results at Matilda

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THE BOURSE WHISPERER: Blackham Resources (ASX: BLK) has completed preliminary feasibility metallurgical testwork and Process Design Criteria (PDC) at the company’s Matilda gold project in Western Australia.

The completed work is the company’s second phase of metallurgical study.

The independent PDC report has concluded the overall plant recovery based on the Matilda mining scoping study feed profile was 92.8 per cent.

Blackham said this figure was much better than the 89.9 per cent average recovery it was expecting that had been assumed in a scoping study the company completed last year.

 

PDC project summary and testwork results. Source: Company announcement

 

Blackham conducted the pre-feasibility investigation to characterise the Matilda ore with the aim of determining head grade, comminution response plus testing the response to gravity separation and precious metal recovery by cyanide leaching.

A total of 616 meters of diamond drill core was submitted for laboratory testing.

Blackham said the work conducted in the Pre-Feasibility had supported its scoping testwork results by increasing the confidence through further work on flowsheet validation and variability testing including comminution (crushing and grinding) characteristics.

The outcome the company has taken from the program is that it suggests the resource could be economically treated using standard Gravity Concentration / Carbon in leach (CIL) cyanidation technology.

Blackham indicated it considers the PDC report to also be a pre-cursor and major information reference point for the consideration and evaluation of any second-hand equipment procurement, toll treatment or other plant purchase options it may currently have under consideration.

Additional metallurgical work will be done in conjunction with a 30,000m drilling program Blackham currently has underway at the Matilda project in preparation for future feasibility studies.

“We are very pleased with the results of the metallurgical testwork and the Process Design Criteria which will help us evaluate our processing options going forward,” Blackham Resources managing director Bryan Dixon said in the company’s announcement to the Australian Securities Exchange.

“This is another significant step in de-risking the Matilda gold project.”