THE BOURSE WHISPERER: Chesser Resources has reported a maiden JORC-Code Mineral Resource estimate for the company’s Kestanelik epithermal gold project, located in Turkey.

The Resource estimate comprises an Inferred Resource of 5.9 million tonnes at 2.4 grams per tonne gold for 462,000 ounces of gold at 0.5 grams per tonne gold cutoff.

“We are particularly encouraged by the grade and tenor of this maiden resource as it is based on drilling we have carried out on only 3.5 kilometres of the more than 22 kilometres of veins that we have identified at Kestanelik and also on only eight of the more than 88 veins that we have identified on the property,” Chesser Resources managing director Dr Rick Valenta said in the company’s announcement to the Australian Securities Exchange.

“So more than 90 per cent of the veins remain untested and outside this maiden resource.

“Most of the resource is very shallow and should be mineable by open cut methods.”

Valenta said the company’s scout work had identified the next 5.5km of veins it will drill.

This is where Chesser has previously recorded some encouraging drilling results, including 6m at 46.4 g/t gold.

“There are numerous other strong indications that these veins are similar and warrant systematic drilling,” Valenta continued.

“Drilling is continuing and we would expect to be in a position to announce an increased resource, based on the current and planned follow-up program, in 2013.”

 

Mineralised zones modelled as part of the resource estimate. Source: Company announcement

 

The resource is based on mineralised zones which have been defined for the K1, K2, K3, KS, Karakovan (with three subzones) and Karatepe (KT) structures, all of which have been recognised at surface as well as in geophysical surveys and drilling.

Resources from individual high-grade zones from the project, also at a cutoff of 0.5 g/t gold, include:

–    K3 zone – 1,931,000 tonnes at 2.5g/t gold (158,000oz gold);

–    K2 zone – 1,055,000 tonnes at 3.2g/t gold (108,000oz gold);

–    KS zone – 1,132,000 tonnes at 2.5g/t gold (90,000oz gold);

–    K1 zone – 553,000 tonnes at 2.0g/t gold (36,000oz gold); and

–    Karakovan zone – 1,258,000 tonnes at 1.73g/t gold (70,000oz gold).

THE BOURSE WHISPERER: Every now and then The Roadhouse obtains research notes from different broking establishments. Here’s a few that hit our inbox this week.

 

Blackham Resources

Recently acquired the Matilda gold project located in the Wiluna region of W.A. The projects assets include previously operating mines, some infrastructure and a JORC resource of 12.5 million tonnes at 1.9 grams per tonne gold for 757,000oz of gold, made up from four nearby deposits.

Blackham has a near term exploration target of plus 1Moz gold with significant exploration potential at depth and along strike of the existing deposits.

A recent 4,000m RC drill campaign confirmed the prospectivity of the targets by intersecting wide zones of ‘ore grade’ mineralisation. Further opportunity exists to identify additional deposits hosted along 40km of strike over the Wiluna Mine Sequence and 10km strike along the Coles Find Mine Sequence.

The Wiluna plant, owned and operated by Apex Minerals, is located in close proximity to the Matilda project and has both oxide and sulphide treatment circuits. Potential exists to toll treat oxide ore through the plant providing Apex with additional revenue and operational efficiencies (as the plant is underutilised) while Blackham has the opportunity for early cash flow to fund additional exploration and development costs.

Blackham is also evaluating the potential of coal export and a Coal to Liquids facility to process lignite from the 1.4 billion tonnes Scaddan and Zanthus deposits located near the port of Esperance. The project is well serviced by infrastructure and may warrant a standalone mining operation for the export market should an appropriate lignite market be identified.

Recommendation: Speculative Buy

 

Tiger Resources

Tiger Resources is a copper producer with high-quality assets in the Katanga copper belt of the Democratic Republic of Congo.

It can add significant value in the near term by increasing copper production to plus 50,000 tonne per annum and by potentially buying out its 40 per cent JV partner. Katanga Province is currently a focus of corporate activity, so M&A potential is considerable.

Key Points:

–    Copper producer: Kipoi project (DRC) output is 35ktpa of copper in concentrate  with offtake by Trafigura at the mine gate.

–    Low operating cost: Stage 1 opex target $0.42 per pound copper with open pit mining of oxide and concentration by Heavy Media Separation (HMS).

–    Plans to expand production: DFS expected late 2012 for 50ktpa copper cathode (up to 100ktpa) by solvent extraction and electrowinning (SX-EW).

–    Strong forecast EBITDA: CY2013e is US$106m (P/E 1.9) based on current operation; CY2014e is $196m (P/E 1.4) after SX-EW expansion.

–    Potential to add value by acquiring remaining 40 per cent project share held by JV partner, Gécamines (DRC miner).

–    A likely takeover target: Katanga copper belt is a focus of M&A activity by majors (e.g. Minmetals/Anvil – C$1.3bn; Jinchuan/Metorex – US$1.4bn).

Our 12-month target for the stock is $0.85, based on current 35ktpa copper HMS production and a plus $150 million expansion to 50ktpa copper by SX-EW. This could increase to $1.18 if Tiger acquires the 40 per cent of Kipoi held by Gécamines.

The DRC is a challenging place to work but in our view, operational risks are outweighed by the quality of the Kipoi asset, the potential for plus 50ktpa copper production, and the possibility of corporate action.
An approximate 1 per cent sell-down by shareholder Fidelity from Nov 11 to Apr 12 affected the share price, which has now started to recover.

 Recommendation: Buy

 

 

Altona Mining
 
AOH has successfully made the transition from developer to producer at the Outokumpu project and will produce 8,000 tonnes per annum copper, 8.4k ounces per annum gold and 1.6ktpa zinc (approx. 10ktpa copper equivalent) in concentrate for approximately 9yrs at the Kylylahti underground mine via conventional flotation at the 550ktpa Luikonlahti plant.

Cash costs will average US$1.38 per pound (FSBe) which will result in operating cashflow of approx. $50m p.a. to be re-invested back into exploration at both Finland and Queensland. We also highlight the potential upside at Outokumpu with the plant fully permitted and capable of being increased to 750ktpa (to deliver approx. 15ktpa copper equivalent) for capex of $8m.

Roseby to be a large scale operation: The recently released DFS has outlined economics based on a large tonnage (7Mtpa), low grade (0.6 per cent copper) operation with ore sourced predominantly from the Little Eva open pit.

Cash costs of US$1.73/lb (previous FSBe US$1.40/lb) and capex of $320m (previous FSBe $250m) are both higher than what we had previously modelled however the project remains robust based upon our long term copper price forecast of US$2.75/lb, delivering annual average EBITDA of approx. $120m (FSBe).

We reiterate our BUY recommendation and have reduced our price target to $0.60/sh (from $0.80/sh) following a refinement to our modelling.

Recommendation: Buy

THE BOURSE WHISPERER: Tiger Resources has pumped 203 tonnes of copper in concentrate through the Heavy Media Separation (HMS) plant at the company’s Kipoi copper project in the Democratic Republic of Congo.

This level of production is 200 per cent above the HMS plant’s nameplate capacity of 35,000 tonnes per annum of copper in concentrate.

 

Kipoi HMS plant. Source: Company announcement

The numbers are the result of Tiger achieving two consecutive months of production in excess of nameplate capacity with the plant producing 3,506 and 3,066 tonnes of copper in concentrate for March and April 2012 respectively.

“We now have our focus clearly on growth through exploration success, acquiring quality assets, completing the Definitive Feasibility Study for the solvent-extraction and electro-winning (SXEW) plant, and the continued delivery of production expectations underpinning our business plan,” Tiger Resources managing director Brad Marwood said in the company’s announcement to the Australian Securities Exchange.

The Kipoi project is located 75 kilometres from the city of Lubumbashi and covers an area of 55 square kilometres in the Katanga Province of the DRC.

According to Tiger Resources the project contains a 12km sequence of mineralised Roan sediments that hosts at least five known deposits: Kipoi Central, Kipoi North, Kileba, Judeira and Kaminafitwe.

The company has reported JORC-compliant resources at three of the deposits: Kipoi Central, Kipoi North and Kileba.

The principal deposit is Kipoi Central, which contains a zone of high grade copper mineralisation within a much larger, lower grade global resource.

The company has adopted a staged development approach at the Kipoi project.

Tiger said it would be exploiting the high-grade zone of mineralisation at Kipoi Central during its Stage 1 development phase.

During the three-year operation of Stage 1, Tiger anticipates processing 900,000tpa of 7 per cent copper through the HMS plant with a recovery rate of 55 per cent to produce the equivalent of approximately 35,000tpa of payable copper.

Tiger is currently undertaking a feasibility study to evaluate the economic viability of constructing a SXEW plant (Stage 2), targeted to come on-stream by April 2014.

It is envisaged that ore from Kipoi Central, Kipoi North and Kileba South and the other deposits within the Kipoi project and within the nearby Lupoto project would be processed during the Stage 2 phase.

 

THE BOURSE WHISPERER: Carbon forestry project developer Carbon Conscious has welcomed the seasonal rainfall, which has allowed it to commence planting for the 2012 season.

During the 2012 season, 10,000 hectares of mallee eucalypt trees will be planted in the wheatbelt region of New South Wales.

 

Planting seedlings. Source: Company

 

The company released profit guidance to the market in January of $3.5 million Net Profit After Tax, which it said it is on track to achieve.

“Under our 2012 contract arrangements, the company will receive revenue in line with our earnings guidance for this financial year,” Carbon Conscious chief executive officer Peter Balsarini said in the company’s announcement to the Australian Securities Exchange.

“Carbon Conscious has received a client payment of approximately $5 million for planting commencement and will receive a further $5 million on completion of planting.

“Rainfall in key planting areas has expedited site preparation and more than 10 million seedlings provided by seven local nurseries are scheduled for delivery over the next eight to 10 weeks.”

In addition to the revenue received at the time of planting, Balsarini said once Carbon Conscious completes this season’s planting it will have secured a 15 year revenue stream.

“At the completion of the 2012 planting program, Carbon Conscious will have approximately 19,000 hectares of plantings under management across Australia and New Zealand,” Balsarini continued.

“Ongoing contract revenue associated with existing projects will exceed $43 million over the next 15 years.”

Carbon Conscious said it has received a number of new client enquiries from organisations looking to meet carbon liabilities arising from the Clean Energy Act 2011.

There has also been much interest from New Zealand companies with liabilities under the New Zealand Emissions Trading Scheme (ETS).

“We are seeing growing interest from a range of sources seeking our internationally compliant carbon credits,” Balsarini said.

“As more countries develop carbon pricing mechanisms, such as South Korea’s new cap-and-trade emissions trading scheme, there is increasing appetite for global carbon offset investments.

“We believe our low-risk, large-scale projects using proven technology will meet these investments and we are investigating additional project sites.

“Our initial expansion into the New South Wales wheatbelt will see approximately 1,000 hectares of mallee eucalypt plantings in 2012 with more land being identified for the 2013 planting season.”

THE BOURSE WHISPERER: Phoenix Gold has reached agreement with a private vendor to purchase a 100 per cent interest in the Kintore gold project in Western Australia.

The Kintore project adjoins the company’s Castle Hill project situated within its extensive land holding on the Zuleika and Kunanalling shear zones northwest of Kalgoorlie.

The Kintore project and comprises three mining leases and four prospecting licences.

 

Kintore gold project tenements (green) and Phoenix projects. Source: Company announcement

 

Phoenix said the acquisition is in line with its strategy to re-consolidate landholdings on what it described as two of the most well-endowed shear zones in the WA goldfields.

“The continued consolidation of this region is fundamental to our strategy of developing a significant mid-tier gold developer and producer in the medium term,” Phoenix Gold managing director Jon Price said in the company’s announcement to the Australian Securities Exchange.

“We look forward to completing the technical work at Kintore to deliver a maiden Resource to add to our growing Resource base.

“Kintore becomes part of the large Castle Hill gold system that is now emerging as a significant and very large new gold camp in the WA Goldfields.”

The vendor has agreed to sell the Kintore project to Phoenix for $800,000 in cash and shares comprising:

–    An upfront cash payment of $25,000;

–    A cash payment of $375,000 on completion of a formal sale agreement;

–    1.6 million fully-paid ordinary Phoenix Gold shares (at a deemed price of $0.25); and

–    A $30 per ounce production royalty on ore produced from the Kintore tenements.

Phoenix said it expects to execute and complete a Formal Sale Agreement in the September Quarter of 2012 subject to any shareholder, government and regulatory approvals that may be required.

The Kintore project has been comprehensively drilled over the last five years but a JORC Resource has yet to be estimated.

Phoenix has undertaken a detailed assessment and is in the process of completing all the required logging, down hole survey, re assaying and data validation to enable a maiden Resource estimate to be generated.

The company indicated this is anticipated to be delivered in the September Quarter of this year.