Rio funds Tasman’s Olympic Dam exploration

THE BOURSE WHISPERER: Exploration minnow Tasman Resources has signed a conditional agreement with Rio Tinto Exploration, a wholly owned subsidiary of global mining giant Rio Tinto.

The agreement will see the latter’s subsidiary fund an accelerated exploration program on Tasman’s 100 per cent-owned Exploration Licence.

The EL contains the Vulcan prospect, located 30 kilometres from BHP Billiton’s
Olympic Dam copper-gold-uranium mine in South Australia.

Tasman will receive an immediate cash injection of A$10 million to be spent on its Vulcan iron-oxide copper gold uranium (IOCGU) prospect.

Under the terms of the agreement, Tasman will undertake a A$5 million exploration program across the Project over the first 12 months, with the objective of further proving up the potential of the Vulcan prospect.

Tasman has granted RTX the right, but not the obligation, to earn up to an 80% interest in the project through a two stage farm-in arrangement.

Should all the agreement stars line up accordingly RTX should end up paying up to $75 million in exploration costs and in addition pay Tasman up to $17 million in cash.

The agreement is subject to a number of conditions that Tasman said it hopes will be satisfied shortly.

The deal comes on the back of Tasman recently entering into a Native Title Mining Agreement for Exploration with native title claimants for the area, which covers most of the EL the Vulcan project is located within.

“Since first identifying the Vulcan prospect, we have maintained an unshakeable belief about the similarity of this prospect’s mineral styles relative to Olympic Dam and the potential for it to host a deposit of significant value,” Tasman Resources executive chairman Greg Solomon said in the company’s announcement to the Australian Securities Exchange.

“Tasman, not surprisingly, received overtures about possible joint ventures or sale options over this project.

“We have resisted these until we could secure an agreement which brings to the table a company with the technological expertise and financial capability to inject sufficiently rapid, high level momentum designed to identify Vulcan’s potential in a manner rewarding to our shareholders.

“Rio Tinto delivers that partnership certainty.”
RTX will pay Tasman an initial upfront cash payment of $10 million after certain conditions have been met, including the execution of a formal agreement and obtaining Aboriginal Heritage clearance for exploration over the southern portion of the Vulcan prospect area.

Tasman must undertake a drilling program of not less than 12,000 metres within the first 12 months of the agreement.

RTX can then elect to earn an initial 55% interest in the project by paying Tasman a further $7 million cash payment, after which, within three years, RTX must either fund the delineation of a JORC compliant Inferred Mineral Resource and complete a concept study, or spend a further $25 million on exploration costs, whichever comes first.

Tasman can then either retain a 45% interest and thereafter contribute or, if not, RTX, at its election, may increase its interest in the project to 80%.

RTX can do this by either completing a pre-feasibility study within a further five years, or by funding an additional $50 million on exploration costs, again whichever arrives earlier.

If RTX earns its 80% interest, Tasman then has the right to either maintain its 20% stake and contribute to future project development funding, or offer to sell its holding to RTX, which it will be obliged to purchase, at fair market value.

Rex eyes Hillside expansion

THE BOURSE WHISPERER: Rex Minerals will focus the pre‐feasibility study for its 100 per cent-owned Hillside copper project on expanding and optimising the mine plan to produce the equivalent of 100,000 tonnes of copper per annum.

This is almost double the production rate the company originally outlined in stage one of a recent concept study.

The change is focus stems from recent exploration success at Hillside, which has swayed the company to consider project returns would be enhanced by moving straight to a 100ktpa copper equivalent production rate rather than the previously announced two‐stage development outlined in the concept study.

Rex is also leaving its options pen in regard to potential further expansion, which is dependent on the results of exploration work to be carried out over the next six months on its regional large‐scale targets close to Hillside.

Rex has also commenced preliminary financing discussions in a bid to ensure an alignment of sponsor, developer, and financier interests when the pre‐feasibility study moves to a bankable study next year.

“The move from a staged development to an immediate 15 million tonnes per annum operation is an improvement to the project,” Rex Minerals managing director Steven Olsen said in the company’s announcement to the Australian Securities Exchange.

“With the positive drilling results of recent months it makes sense to focus on a larger immediate scale.

“Of particular importance to us is that the initial test work indicates that Hillside will produce high quality copper-gold and iron‐ore concentrates.

“This should give Rex a number of strong financing options that do not rely on equity markets.

“The key to project development is to involve potential financiers early to ensure they have followed the project from the PFS to BFS, which is what we will now do.”

Rex’s concept study was based on resource scoping and work it had received up until April 2011 and provided broad capital and operating costs estimates based on a two‐stage development.

Stage One is scheduled at 7.5Mtpa to 9Mtpa, with Stage Two ramping up to 15Mtpa to 18Mtpa.

Since April, and in particular the last three months, the company has received a number of high-grade and shallow copper results, which it said has given it confidence to now focus its pre‐feasibility study on a 15Mtpa processing plant from the commencement of operations.

This change delivers the company the opportunity to increase production and subsequent revenues in the first six years compared to the two staged approach of the concept study.

At 15Mtpa Hillside would produce over 100,000 tonnes copper equivalent (copper of 70,000t, gold of 50,000 ounces and iron ore of 1.3Mt) for a minimum of 10 years.

Catalyst cashed up for drilling

THE BOURSE WHISPERER: Catalyst Metals has raised $439,650 to fund its next phase of drilling at the Four Eagles gold project near Bendigo in Victoria.

Catalyst has completed a share placement of 1.3 million ordinary fully paid shares at a subscription price of 35 cents per share to raise the funds.

An aircore and diamond drilling program that Catalyst has had going since January has discovered three new zones with high-grade gold mineralisation, which the company said has confirmed the prospectivity of the regional Whitelaw and Tandarra Faults north of Bendigo.

A large mineralised footprint with gold and arsenic values has now been delineated over an area five kilometres long by two kilometres wide.

The Four Eagles tenements cover about 25kms of this favourable trend. So far Catalyst has only partially tested about 5km of strike length.

The company is scheduled to commence the next phase of its exploration program before the end of October.

This will consist of 6,000 metres of aircore drilling to test the strike extent of high-grade gold zones the company discovered this year at Harrier, which included:

3 metres at 5.5 grams per tonne gold and 3 metres at15.3 grams per tonne gold.

Catalyst said the objective of the latest drilling program is to delineate continuity of high-grade gold mineralisation that it considers could lead to resource drilling.

Subject to availability of a suitable reverse circulation drill rig, angled drill testing of the western Goshawk Zone may also be undertaken.

Under the terms of a Heads of Agreement the company has with Providence Gold & Minerals, Catalyst can earn an interest in the Four Eagles project by exploration expenditure on the tenements and cash and share payments.

“Catalyst has already achieved the Phase 1 expenditure commitment of $450,000 before 20 January 2012, but this drilling program will provide further confidence to the company to proceed to earn a 50 per cent equity interest in the project by spending a further $1.65 million in the subsequent two years and making payments of $100,000 and issuing a further 750,000 Catalyst shares,’ the company said in its ASX announcement.

Centaurus increases Jambreiro Resource

THE BOURSE WHISPERER: Iron ore-focused company Centaurus Metals has increased the JORC compliant resource estimate for its flagship Jambreiro iron ore project in the State of Minas Gerais, Brazil by 65 per cent.

The company’s new estimate stands at 116.5 million tonnes grading 26.8 per cent iron.

The updated JORC Resource estimate (combined Measured, Indicated and Inferred) comprises 67 million tonnes of friable mineralisation and 49.5 million tonnes of compact mineralisation.
 
Centaurus said the new resource provides a platform for the current Pre-Feasibility Study (PFS) on the Jambreiro project.

The PFS is on schedule for completion in November based on an initial two million tonnes per annum operation producing a plus-65 per cent iron final product for sale into the domestic steel industry in south-eastern Brazil.

Beneficiation test work Centaurus has carried out on resource grade mineralisation has so far demonstrated both the friable and compact mineralisation types can be beneficiated to a high quality hematite product to suit the various customers and markets.

The company also expects the beneficiated product from Jambreiro to have very low phosphorus grades and low alumina grades.
 
Centaurus’ intends to design the plant at Jambreiro to tailor the iron and silica grades for individual customer requirements.

A six-tonne sample of friable mineralisation is currently being tested in the planned process flowsheet.

Centaurus said the results from these tests will assist in confirming the product specifications for the domestic steel industry.

A total of 72.1 million tonnes grading 27.6% iron of the overall Jambreiro resource base is now classified in the Measured and Indicated categories.
This represents 62% of the total Resource providing the company a solid base for its upcoming Jambreiro JORC Ore Reserve estimate.
This Measured and Indicated Resource represents 25Mt to 28Mt of high grade (+65% iron) product at a mass recovery of 35% to 40%.

“We are very pleased to be able to deliver such a significant increase in the overall resource base for the Jambreiro project, including a major uplift in the quantity of friable mineralisation, following successful drilling programs this year – in particular at the South East Extension Zone and satellite prospects,” Centaurus Metals managing director Darren Gordon said in the company’s announcement to the Australian Securities Exchange.
 
“When combined with the strong increase in the overall level of Measured and Indicated Resources, we are confident that the revised resource base will form the foundation of a long-life mining operation at Jambreiro.

“We look forward to completing the Pre-Feasibility study on the project, which we expect will confirm our expectation of a financially robust project that will become the cornerstone of our domestic iron ore business in Brazil.”

Magma exercises Beaver option

THE BOURSE WHISPERER: Perth-based Magma Metals has exercised its option to purchase the Beaver Lake claim, located within its Thunder Bay North platinum-palladium-copper-nickel project in Ontario, Canada.

The Beaver Lake claim covers an underground mineral resource as well as a newly defined eastern extension to the underground mineralisation the company had announced in August.

It is also part of the area which is currently being subjected to a step-out drilling program.

The claim had been subject to a five-year option agreement which was due to expire the day of Magma’s announcement.

Magma has exercised that option and as a consequence has now acquired 100 per cent ownership of the claim for a consideration of one million Canadian dollars in cash and 200,000 shares in the company issued to the vendors.

Magma now holds 100% of the area encompassing the entire Current Lake Intrusive Complex.

This is subject to a 3% net smelter return royalty, one third of which can be acquired at any time for C$1 million.

“Exercising the Beaver Lake option secures 100 per cent ownership of the underground resource and its potential extensions for about 800 metres to the east and is an important step in the development of this project,” Magma Metals managing director Dr Keith Watkins said in the company’s announcement to the Australian Securities Exchange.

Magma has previously established Mineral Resources at the Thunder Bay North project, from drilling it carried out completed prior to May 2010.

The Resources are made up of:

Open Pit Indicated Resource:

–    8.46 million tonnes at 2.13 grams per tonne platinum equivalents (1.04 grams per tonne platinum, 0.98 grams per tonne palladium, 0.25 per cent copper and 0.18% nickel) containing 580,000 ounces platinum equivalent metal.

Underground Indicated Resource:

–    1.03 million tonnes at 3.48 grams per tonne platinum equivalents (1.63 grams per tonne platinum, 1.51 grams per tonne palladium, 0.39 per cent copper and 0.24 per cent nickel) containing 115,000 ounces platinum equivalent metal; and

Underground Inferred Resource:

–    0.21 million tonnes at 3.00 grams per tonne platinum equivalents (1.40 grams per tonne platinum, 1.29 grams per tonne palladium, 0.34 per cent copper and 0.23 per cent nickel) containing 20,000 ounces platinum equivalent metal.

Magma Metals said its strategy from now on will be to work on enhancing the project’s economics by:

–    Growing the resource base through step-out drilling;

–    Including the underground resources in a proposed mine plan; and

–    Simplifying the mineral processing flow sheet.

NSL begins plant construction

THE BOURSE WHISPERER: Bulk commodity developer, NSL Consolidated has commenced construction on its US$2.3 million Kurnool iron ore beneficiation project in India.

The company’s schedule should result in it initiating first stage commissioning of the plant by year’s end and deliver maiden revenues in the first half of.

Work is underway on the plant site works program, which is located on a 12 acre stockyard site at Kurnool in the south-eastern Indian state of Andhra Pradesh.

All site surveys have been completed and selection of an earthworks contractor has also been finalised, which is in process of mobilising to site.

The stockyard is located adjacent to NSL’s existing Kuja mine and five kilometres from the company’s Mangal mine, both of which are currently the subject of mine design and production schedule work as the ore sources for plant start-up.

The order process with suppliers for equipment continues as part of the beneficiation plant project.

At this stage in time, NSL claims to be the only foreign company granted the right to own and operate iron ore mines in India, which is the world’s third largest iron ore exporter in parallel with having a strong domestic steel market.

“The Kurnool plant has the potential to lift our ROM iron ore grades to between 58 per cent to 61 per cent iron from as low as 25 per cent to 27 per cent iron, and with good yield and recovery rates,” NSL Consolidated managing director Cedric Goode said in the company’s announcement to the Australian Securities Exchange.

“Our ability to value-add low grade ores from the area was highly supported by the Expert Appraisal Committee from the Ministry of Environment and Forests.

“Our trial mining has provided NSL with accurate cost estimates for all aspects of mining, crushing, screening and transport to port from Kurnool and our financial modelling suggests a return on capital within just three months of reaching full commissioning.

“The Kurnool plant will have the capacity for annual throughput of 196,000 tonnes of concentrate, which would deliver a steady net cash flow of US$800,000 per month once commissioning is completed and throughput stabilised.”

Final commissioning of the Kurnool plant will deliver maiden revenue for NSL as well as opening up additional revenue generating opportunities from beneficiation of third party ores from a number of iron ore deposits within the Cuddapah Basin area of Andhra Pradesh.

NSL is currently in discussions with project owners to gain access to these additional iron ore sources.

Development of an Indian iron ore production business is one of two bulk commodity growth strategies for NSL Consolidated – the other being exploration and development of its suite of thermal coal assets in Queensland.

Sundance accepts Hanlong offer

THE BOURSE WHISPERER: Sundance Resources has given the thumbs up to the proposal by Hanlong (Africa) Mining Investment Limited to acquire 100 per cent of the company for 57 cents cash per share via an Australian Scheme of Arrangement.

The deal values Sundance at $1.65 billion and represents a 65.3 per cent premium to Sundance’s Volume-Weighted Average Price (VWAP) in the one month leading up 15 July 2011, when Sundance received Hanlong’s initial proposal.

It also represents a 56.3% premium to Sundance’s three-month VWAP to the same time and a 32.6% premium to Sundance’s closing share price on 30 September 2011, the last day that Sundance traded prior to signing the Scheme Implementation Agreement.

In March, Hanlong became Sundance’s largest shareholder after acquiring all of the shares in the company previously owned by Ken Talbot’s estate.

The Mbalam iron ore project currently boasts hematite resources of 521.7 million tonnes grading 60.7 per cent iron and a further 2.3 billion tonnes of itabirite hematite resources at 38 per cent iron.

The project is forecast to produce 35 million tonnes per annum of Direct Shipping Ore-quality hematite for ten years in stage one, then continue production at 35Mtpa of itabirite hematite for at least an additional 15 years, generating an internal rate of return of 27% on an ungeared basis based on the DFS published in April 2011.

The development of the Mbalam project will include construction of a new deepwater port for the export of iron ore and heavy haulage railway connecting the mines to the port.

Sundance Resources chairman George Jones said he believed the offer was attractive to shareholders.

“After careful consideration, the Sundance Board has unanimously concluded that the offer represents an attractive price and provides shareholders with an opportunity to realise considerable value from their investment in Sundance,” Jones said in the company’s announcement to the Australian Securities Exchange.

“The offer values Sundance at A$1.65 billion compared with the company’s market capitalisation of approximately A$350 million in June 2010.

“This increase in shareholder value reflects the world-class attributes of the Mbalam iron ore project in the Republics of Cameroon and Congo and its potential to unlock a new iron ore province in West Africa.

“Hanlong’s offer means that the substantial financial support needed for this integrated port, rail and mine project will now be available, in the process realising substantial value for Sundance shareholders and immense benefits for the people of the Republics of Cameroon and Congo.”

Dempsey says not to Cacule Option Agreement

THE BOURSE WHISPERER: Dempsey Minerals has elected not to exercise the Cacule Option Agreement following exploration and field reconnaissance failed to provide it with any satisfactory encouragement.

A small drilling program undertaken at the site provided sub-economic results.

The company spent approximately $150,000 to undertake works to satisfy requisite due diligence assessment to the company’s satisfaction over the Cacule manganese project.

In the meantime, Dempsey is earning into the Dandaragan phosphate project and the Cooljarloo mineral sands project, which it seems to me more upbeat about.

The Dandaragan phosphate (and glauconite) project is located approximately 150 kilometres north of Perth centred on the town of Dandaragan.

The project lies within the Northern Perth Basin which is more renowned as a major mineral sands mining province.

“The Dandaragan project hosts numerous phosphate occurrences occurring within Cretaceous sediments of the Dandaragan Trough,” Dempsey explained in its ASX announcement.

“The origin and style of this mineralisation is unlike other major rock phosphate projects in Australia, such as Phosphate Hill (Incitec Pivot) and Wonarah (Minemakers).

“Phosphate mineralisation at Dandaragan occurs as nodules and precipitates within sandy sedimentary host rocks similar to that observed in the giant phosphate deposits of Florida, USA.”

Dempsey has planned a first-pass aircore exploratory drilling program of 12 drill holes for 980 metres at Dandaragan for late 2011.

The completion of this program is pending Aboriginal Heritage Clearance which the company anticipates to be finalised in late-October, with drilling proposed to commence in November pending drill rig availability.

The Cooljarloo heavy mineral sands (HMS) project comprises an exploration licence also situated in the Northern Perth Basin.

The Cooljarloo project abuts Tiwest’s Cooljarloo mine and Image Resources’ Cooljarloo heavy mineral sands discoveries.

“The Northern Perth Basin hosts a series of strandlines between the coastline and the Gingin escarpment,” Dempsey explained in its announcement.

“HMS mineralisation occurs in three different depositional environments in the Cooljarloo area; Strandline mineralisation close to the surface, so called “mid-level” mineralisation and basement (Mesozoic) mineralisation.

“These strandlines host large concentrations of heavy mineral sands principally containing ilmenite, rutile and zircon.

“Tiwest’s Cooljarloo HMS mine has been operating since 1989 and Tiwest has reported production of more than 700,000 tonnes of heavy mineral concentrate a year using a dredging operation and dry mining techniques.

“The Cooljarloo project is situated in a particularly active area of mining and recent exploration activity for HMS but has yet to be adequately explored.”

Focus releases FY11 results

THE BOURSE WHISPERER: Australian gold producer Focus Minerals has announced a record full-year Revenue and Net Cash from Operating Activities, which it said will position the company for strong growth.

In the 2001 financial year (FY11) Focus increased its annual revenue by 39 per cent to $102.8 million, compared to 2010 financial year (FY10) revenue of $73.7 million.

Net Cash from Operating Activities increased by 11% to $30.3 million (FY10: $27.8 million), and total gold production jumped by 17% to 72,830 ounces (FY10: 62,117oz).

During the recently completed financial year Focus increased gold sales by 16.2% to 72,721 ounces of gold (FY10: 62,294oz) at an average price of $1,391 per ounce (FY10: $1,197/oz).

Focus’ Net Profit After Tax for FY11, however, was down to $7.6 million compared to $10.9 million for the same period last year.

The company attributed the increase in the average cost of production and the decrease in NPAT to significantly increased levels of mine development expenditure, in particular at The Mount underground and Tindals Open Pit operations.

It also listed increased exploration expenditure and the impact of mill upgrades as mitigating factors.

The company highlighted significant developments it had achieved in FY11 to include:
 
–    Commencement of ore production at Tindals Open Pit operations;

–    Commencing ore production at The Mount underground operation;

–    Achieving its first full year of ore processing at the Three Mile Hill plant;

–    An increased commitment to exploration spending to $23.9 million (FY10: $6.3 million);

–    The discovery of a new gold camp at Treasure Island gold project;

–    Record production from the Tindals Underground operation increasing 29 per cent to 61,248 ounces (FY 10: 47,516oz); and

–    Significant increase in scale of operations through the acquisition of Crescent Gold.

“FY11 was a transformational year for Focus Minerals,” Focus Minerals chief executive officer Campbell Baird said in the company’s announcement to the Australian Securities Exchange.

“We will now go about capitalising on our production capability after establishing a very solid platform for growth. The best is very much still ahead.”

The company said its successful commencement of new open pit and underground mining operations in the second half of FY11 will be followed by ramping up production at its Coolgardie operations.

The company’s acquisition of Crescent Gold will enable to increase total gold production during FY12, which will allow it to capitalise on high gold prices.

“At the start of FY11 we had just one operating mine,” Baird explained.

“By the end of FY11 we had three mines with production commencing at The Mount underground and the Tindals open pit operations.

“With the recent addition of Crescent’s Laverton gold project open pit operations, we now have four operating gold mines.”

Baird said with its developing presence in the Coolgardie area, and its new presence in the Laverton area, Focus has a combined JORC resource base of 4.3 million ounces of gold and will produce more than 200,000 ounces of the yellow metal in the 2012 calendar year.

“FY12 will be a year of growth as we get our new open pit and underground operations up to full production, maximise higher-grade throughput at the Three Mile Hill plant, optimise performance and grow production at the Laverton gold project and continue our accelerated exploration program to increase resource and reserve ounces,” he said.

Olympus inks Philippine JV

THE BOURSE WHISPERER: Internationally multi-listed company Olympus Pacific Minerals has entered a formal Joint Venture agreement for the Capcapo gold property located in Northern Philippines.

The company has entered the JV with Abra Mining & Industrial Corporation, Jabel Corporation, Kadabra Mining Corporation (a wholly-owned subsidiary of Olympus), and PhilEarth Mining Corporation.

The Capcapo gold property is located in Abra Province, Northern Luzon, Philippines, north of the Baguio-Mankayan gold district that, according to Olympus, has combined production, current reserves and resources in excess of 60 million ounces of gold.

“This acquisition is an integral part of our strategy to become a multi-mine producer and complements our development stage Malaysian property in diversifying our company over three countries in Southeast Asia,” Olympus Pacific Minerals chief executive officer John Seton said in the company’s announcement to the Australian Securities Exchange.

“Our due diligence drilling at Capcapo indicates we have a truly world class copper-gold discovery typical of the premium deposits found in the Philippines.

“I believe our success in negotiating this exciting ground is twofold; first, our successful track record commissioning two gold processing plants that generate us operating cash and second, our recent announcement that we are starting feasibility at Bau Central in the Bau goldfield, East Malaysia.

“We are excited about the major potential at Capcapo and our strategic partnership with Abra Mining & Industrial Corporation.”

Under the terms of the JV, Olympus, in consortium with a Philippine company, which is controlled by Philippines nationals and is currently in the process of incorporation, has an option to acquire a 60% interest in the Capcapo gold project.

The deal is subject to compliance with Philippine foreign ownership laws.

Olympus paid to Abra Mining US$300,000 upon signing the JV agreement.

The company is required to pay a further US$400,000 upon gaining unencumbered access to the property and may fully exercise its option over three stages of expenditure.

Jabel Corporation will also be paid a royalty based on a calculation that yields the highest payment.

This will be either 3% of the gross value of production from the Capcapo gold project or 6% of the annual profit of the JV corporation.

Olympus will be obligated to make a milestone payment to Abra Mining of US$2 million plus two million common shares of Olympus, or common shares having a value of US$5 million, whichever is of lesser value.

These payments will come due each time a specific level of mineral reserves is defined or daily production rates are achieved.

The JV also grants Olympus a right of first refusal over a mineral production sharing agreement held by Jabel Corporation over the Patok property, also located in Abra Province, Northern Philippines.