THE BOURSE WHISPERER: Recent flooding, which has impacted on road and rail transport in the Northern Territory has resulted in a costly mishap for OZ Minerals.

 A Genesee & Wyoming Australia train travelling north to Darwin derailed in bad weather near Edith River.

The freight train derailed at the Edith River Crossing after flood
waters washed away the tracks. Picture: Michael Franchi. Source:
Northern Territory News.

According to OZ Minerals a number of the wagons on the train were carrying copper concentrate from its Prominent Hill mine.

The total tonnage of copper concentrates being railed on the train was approximately 1,500 dry tonnes.

“The total value of the concentrates on the train was in the order of US$7-8 million and preliminary discussions on the loss have been initiated with various parties,” OZ Minerals said in an ASX announcement.

“This is not considered financially material for the company.”

The flooding has limited access to the area, which OZ Minerals said has made it difficult for it to determine exactly how much copper concentrate may have been lost due to the derailment.

Early assessments carried out by the company indicate that the amount in the wagons which derailed into the river might be in the order of 1,000 tonnes to 1,200 tonnes.

OZ Minerals said a more detailed assessment will be carried out as soon as there is safe access to the train.

“From an environmental perspective, in consultation with the relevant authorities, concentrate that is accessible will be cleaned up when the area can be safely accessed,” the company said.

“Given the large volume of water flowing through the system it is likely that any concentrate that has been impacted by the water would be highly diluted.

“The OZ Minerals Crisis Management Response was initiated on notification of the incident.”

The company reiterated its previously announced intention to commence containerised rail transport through Adelaide and Darwin early in the first quarter of 2012.

“It is expected that copper concentrates shipments planned for Q1 2012 will all be completed before the end of the quarter,” OZ Minerals said.

“There has been no impact to operations at Prominent Hill.”

THE BOURSE WHISPERER: KBL Mining has signed a Memorandum of Framework Cooperation, an apparently fancier term for an MOU, with Chinese concern, Guangdong Guangxin Mining Resource Group (GMR).

GMR is a subsidiary of Guangdong Guangxin Holding (GGH).

GGH is a Chinese government-owned enterprise, and according to KBL, is the largest foreign trade group in Guangdong Province, Southern China.

The MOU covers a package that provides for the subscription by GMR for a 15 per cent fully-diluted shareholding in KBL and for the acquisition by GMR of a 25 per cent interest in KBL’s Mineral Hill mine.

The deal also allows for a discounted life of mine offtake for copper concentrates.

The Mineral Hill Mine is located 65 kilometres north of Condobolin in central western New South Wales.

Mineral Hill Mine. Source: Company image

“For a number of months, our senior management has been working with GMR management on this package that will be mutually beneficial for GMR and KBL’s shareholders,” KBL Mining executive chairman Jim Wall said in the company’s announcement to the Australian Securities Exchange.

“We are delighted that this opportunity, with a company the size of GMR, not only provides us with capital to rapidly expand Mineral Hill, to start developing Sorby Hills in 2012 and to pursue other opportunities, but provides us with a long term, stable partner for KBL that will assist our expansion from a single-mine company to a medium-sized multi-mine corporation.

“This can now occur in a timeframe substantially sooner than KBL could achieve on its own.

“The proposed transaction also underlines the potential of Mineral Hill in a relationship which gives GMR the benefit of KBL’s operational and management expertise.”

Wall conceded that a considerable amount of work is required by both parties before the transaction is finalised, saying he is pleased both parties intend to proceed expeditiously.

Completion of the transaction is conditional upon receipt of all necessary Australian and Chinese government approvals, shareholder approvals (including the approval of GMR’s parent company, GGH) and negotiation of the necessary Joint Venture Agreement, Share Subscription Agreement and Concentrate Sales Agreement no later than 31 March 2012.

Once GMR has completed on site due diligence and the necessary transaction agreements are finalised, KBL will seek the approval of its shareholders to the transaction at a meeting anticipated to be held by late March 2012.

THE BOURSE WHISPERER: The wholly-owned subsidiary of Melbourne-based MEO Australia, South Madura Exploration Company, has executed binding transaction documents to acquire an additional 60 per cent participating interest in the South Madura PSC, situated onshore of Madura Island, Indonesia, in a deal that has been struck with AED South Madura BV.

In June this year, MEO acquired a 30 per cent participating interest in the PSC.

A consideration of US$0.3 million is payable upon completion of the transaction and receipt of requisite Governmental approvals.

South Madura PSC location map. Source: Company announcement

The South Madura PSC covers an area of 1,586 square kilometres and is scheduled to expire in October 2013.

The remaining ten per cent interest in the project is held by PT Eksindo South Madura.

MEO said it considers the PSC to be prospective for oil.

Subject to completion of the transaction, MEO said it intends applying to the regulator for a variation to the work program involving acquisition of seismic to advance one of several identified leads to a drillable prospect status.

“In the event that MEO completes the transaction, obtains regulatory approval for a work program variation, acquires seismic and matures one of the identified leads to drillable status, a partner will be sought to fund a potential 2013 drilling campaign,” MEO said in its ASX announcement.
 
“This acquisition is consistent with MEO’s strategy of expanding its portfolio by securing a high initial participating interest at a low entry cost in areas with proven hydrocarbon systems, where the company considers it can add technical value before farming down to larger industry participants who are seeking attractive, drill ready, growth opportunities.”

THE BOURSE WHISPERER: Archer Exploration has reached a Heads of Agreement with BHP Billiton Olympic Dam Corporation (ODC).

The agreement is in regard to the sale of an 80 per cent legal and beneficial interest in Archer’s five West Roxby tenements.

Magnetic image showing Archer’s West Roxby tenements in relation to major IOCG deposits. Source: Company announcement

“The Tenements host a number of undrilled exploration targets including potential IOCG targets at Island Lagoon and Evelyn Dam, a potential Athabasca unconformity uranium target at Apollo and several skarn targets,” Archer Exploration said in its ASX announcement.

Key terms outlined within the Heads of Agreement include:
 
–    ODC to acquire an 80 per cent legal and beneficial interest in the five tenements for $3 million;

–    ODC to spend $3 million on Exploration over a period of 3 years;

–    ODC will sole fund the project to a maximum of $50 million to a Decision to Mine;

–    Archer and ODC agree to establish a Joint Venture to carry on the project with ODC as manager; and

–    Archer has the right to sell its participating interest at any stage before and on the Decision to Mine.

THE BOURSE WHISPERER: Solar Systems, the wholly-owned subsidiary of ASX-listed Silex Systems has commenced on-site construction work for the first stage of what is to become Australia’s largest solar power station in Mildura, north west Victoria.

Silex said the project will be the first full-scale commercial deployment of a grid connected solar power station using the ‘Dense Array’ concentrating photovoltaic (CPV) technology of its subsidiary.

Construction works underway at the Mildura solar power station site. Source: Company announcement

The first stage of the project involving the construction of a demonstration facility of up to 2MW capacity is scheduled to be completed in late 2012.

The company said that, subject to satisfactory performance of the demonstration facility, grid interconnect and planning activities, a much larger 100MW solar power station will be constructed on the same site.

According to Silex 100MW is enough power to run 40,000 average homes.

Should all its plans fall into line, Silex said the construction of the 100MW plant would commence in 2013 with an expected completion date in 2016.

“The Mildura demonstration facility represents a key milestone in the commercialisation of Solar Systems’ unique ‘Dense Array’ CPV technology,” Silex Systems chief executive officer Michael Goldsworthy said in the company’s announcement to the Australian Securities Exchange.

“We are very excited about the commercial potential of this technology, which is expected to provide very low cost electricity from large utility-scale solar power station projects around the world.”
 
The Mildura solar power station project has received financial support of up to $120 million, subject to milestones being met, from the Victorian State Government with up to $45 million already confirmed.

The Australian Federal Government has also come to the party having also confirmed funding to the tune of $75 million.

The company said it expects several more large scale power station projects to proceed over the next few years in key off-shore markets, including the USA and the Middle East.

It claims to have received strong interest in the technology from these and other markets.