Magnum to acquire Brazilian project

THE BOURSE WHISPERER: Perth-based Magnum Mining and Exploration has entered into an option and exclusivity agreement to acquire an iron ore project in Minais Gerais, Brazil.

OCRA Trustees (Seychelles) Limited as trustee of Global Trust has granted Magnum an irrevocable exclusive option to acquire all of the fully paid issued shares in Irongates (Aust) (IAPL).

IAPL holds 100 per cent of the issued capital in Gates Minerals (GMPL) as well as 99% of Irongates Brasil Recursos Minerais (IBRML), a company registered in Sao Paulo.

GMPL also holds the remaining one per cent in IBRML.

IBRML holds contractual rights to acquire Emicon Mineracao Terraplenagem Ltda’s (Emicon) Brazilian iron ore project, the focus of Magnum’s acquisition.

The Brazilian iron ore project is located in the south western portion of the renowned “Iron Quadrangle” in Serra Azul in the state of Minas Gerais, Brazil.

“The Iron Quadrangle is an important iron mining region and one of the most important metallogenic provinces in the world and has been mined for iron ore since the nineteenth century,” Magnum Mining said in its announcement to the ASX.

The Brazilian iron ore project consists of an in-situ exploration project and a sinter feed project containing alluvial tailings.

Magnum said that it considers the alluvial nature of the sinter feed fines of the Sinter Feed Project present an early production opportunity for the company.

The Brazilian iron ore and Sinter Feed projects are both located in close proximity to Brazil’s MRS railway network, providing excellent infrastructure logistics to major ports located off the coast of Rio de Janeiro and São Paulo.

Magnum has already commenced comprehensive due diligence investigations in respect of the Brazilian iron ore and Sinter Feed projects.

Magnum has until January 2012 to exercise the option, subject to it being satisfied with its due diligence investigations on the two projects.

In consideration for the grant of the option, Magnum has paid OCRA an option fee of US$200,000.

Carnegie Wave rolls onto Reunion Island

THE BOURSE WHISPERER: Wave energy developer Carnegie Wave Energy has delivered its next generation commercial scale CETO unit (CETO 4) to its deployment location on Reunion Island with the help of French marine defence contractor DCNS.

The unit will now be subjected to pre-deployment testing similar to the CETO 3 pre-deployment testing undertaken by Carnegie at its Fremantle test facility in Western Australia earlier this year.

Once pre-deployment testing is completed, offshore installation of the unit is currently scheduled to take place during the Southern Hemisphere summer, subject to completion of some final installation aids.

The CETO 4 unit will be deployed and tested offshore at the Reunion Island project site.

Successful testing and operation of CETO 4 is planned to be followed by a grid-connected two mega-watt CETO project at the same site with subsequent further expansion to 15MW.

Activities to date have been two-thirds funded by French Government grants and the grid connected project will receive a marine energy feed-in tariff.

The work being carried out by Carnegie associated with Reunion Island and CETO 4 follow on from the company’s signing of a CETO technology licence and Joint Venture agreement with Electricité de France (EDF EN) in 2009 and a Memorandum of Understanding with EDF EN and DCNS in 2010.

The MoU outlined the intention of the parties to work together to test a single CETO unit ahead of a two mega-watt CETO project which would be expanded to a 15MW project at the same site at Reunion Island.

DCNS performs engineering, procurement, and construction management (EPC) activities for the project.

The CETO 4 unit involves some design modifications from the recently tested and independently verified CETO 3 unit deployed off Western Australia.

“The CETO 4 project represents the first joint project activities of Carnegie, EDF EN and DCNS,” Carnegie Wave Energy managing director and CEO Michael Ottaviano said in the company’s announcement to the Australian Securities Exchange.

“As well as testing the CETO system in a different wave climate, we’ve taken the opportunity to test some new design ideas.

“We’re grateful to the support of the French Government and the local Reunion region.”

Carnegie said the recent activities are consistent with the Carnegie and EDF EN technology licence and joint venture agreement, which established the framework for the company and EDF EN to work together to jointly deliver projects in the Northern Hemisphere and on Reunion Island.

All commercial stages beyond the initial CETO 4 unit deployment will result in Carnegie being paid a fee for licensing the CETO technology to the projects.

Anglo American farms-in to Earaheedy JV

THE BOURSE WHISPERER: The Earaheedy Joint Venture between Cazaly Resources and Vector Resources has signed a farm-in agreement with global diversified mining house Anglo American.

The farm-in agreement will cover part of Joint Venture’s Earaheedy iron project located in the Wiluna region of Western Australia.

“The dimensional extents and quality of the Earaheedy project will be further refined and enhanced as a consequence of this timely involvement by world leading miner, Anglo American,” Vector resources chairman Damien O’Reilly said in an announcement to the Australian Securities Exchange.

O’Reilly’s sentiments were supported by Cazaly managing director Clive Jones, who said the agreement with Anglo American recognised the substantial potential of the Earaheedy project and the need to have a major international mining house as part of its development.

“Earaheedy is a potentially major iron ore province and it needs the resources and expertise of a major player to develop it,” Jones said in the ASX announcement.

“Anglo American has the resources to invest in the development of this project and we, and our JV partner, are very happy to have their support.”

The Earaheedy project covers an area in excess of 1,700 square kilometres and includes a substantial strike extent of the iron ore prospective Frere Formation.

A recent drilling program carried out on a number of targets at the Earaheedy project returned encouraging results from the Cecil Rhodes prospect.

Results from the prospect included:

–    34 metres at 54.4 per cent iron, including 22 metres at 58.1 per cent iron; and

–    22m at 57.8% iron and 26m at 55.1% iron, all with low levels of contaminants.

The farm-in agreement relates to a specific area of approximately 890sqkm and allows for Anglo American to complete an initial “proof of concept” program.

This will consist of a minimum of 7,500 metres of reverse circulation (RC) or diamond drilling to be completed as due diligence within 18 months.

Once this has been completed, Anglo American may earn an initial 51 per cent interest in the project by payment of an initial one million dollars in cash to the Joint Venture and the additional spending of $20 million within four years.

After this, Anglo American can qualify to earn a total 75% interest in the project by completing a Bankable Feasibility Study and a further payment of $5 million.

Delivery of a positive BFS would then require Anglo American to make a success payment of $45 million, after which the Joint Venture may then elect to contribute to project expenditure or dilute to a royalty of 1.25% Fee On Board.

The Eeraheedy JV retains sole rights to the southern portion of the Earaheedy project area, which it considers to be prospective for manganese mineralisation.

Toro finalises tenements deal

THE BOURSE WHISPERER: In February uranium trend-setter Toro Energy announced it was acquiring a project called Millipede from MPI Nickel, a subsidiary of Norilsk Nickel Australia.

The company has now announced that it has executed a raft of comprehensive legal documentation with MPI which has set out the commercial and legal framework for the purchase of certain mining tenements adjacent to the Centipede deposit at Toro’s Wiluna uranium project in Western Australia.

The Millipede project consists of three additional tenements that are situated immediately adjacent to Centipede.

Centipede is one of Toro Energy’s key uranium deposits, on which the company is currently undertaking development approval at Wiluna.

Toro has purchased the mining tenements and associated database for Millipede from MPI.

In turn, MPI has retained the rights to all non-uranium minerals, other than those produced as a by-product of uranium mining of co-mingled ores.
One of the tenements is currently the subject of a Joint Venture operating between MPI and Barrack Mines, which is a wholly owned subsidiary of Grange Resources.

Barrack’s holding in the Joint Venture is 10 per cent equity.

Toro has concluded the acquisition of this 10% interest in M53/336 on the same terms on a pro-rata basis.

Toro Energy is currently working on a JORC Resource update for the Wiluna project.

The company said that it expects Millipede will now constitute a portion of the revised consolidated resource.

The revised Resource is scheduled to be released at the end of September.

New Age completes $4M capital raising

THE BOURSE WHISPERER: New Age Exploration has completed a private placement of ordinary shares raising $4 million.

The placement was taken up by an institutional investor and a sophisticated investor and will be carried out through the issue of just over 33.3 million ordinary shares at an issue price of 12 cents per share.

New Age said it would be using the funds to advance its Colombian coking and thermal coal projects.

This will include the acceleration of early production of coking coal from the Subachoque project that will pay for costs of the placement and for working capital purposes.

The two parties to take up the placement were Resource Capital Funds, a group of mining-focused private equity funds and Chee Siew Yaw, a sophisticated investor, who is a successful Singaporean businessman and investor.

“We are pleased to have been able to secure this funding in the current volatile markets,” New Age Exploration managing director Gary Fietz said in the company’s announcement to the Australian Securities Exchange.

“The fact that we were able to raise this funding at a premium to our current share price illustrates the quality of our Colombian coal projects and our development strategy.

“We are especially pleased to have the support of each of RCF and Mr Yaw and look forward to their long term support as key investors in our company.

“The funds raised will be used to advance our exploration and development programs on our Colombian projects, in particular to accelerate bringing the Subachoque project into early production.”

The placement will be undertaken in two tranches.

Tranche one involves the issue of 12 million ordinary shares under the company’s existing placement capacity with the balance of 21.3 million outstanding shares being issued subject to shareholder approval at the company’s upcoming Annual General Meeting, expected by early November.

Binding agreements for the participants have now been signed and New Age expects to receive 100% of the funds by the end of September.

Legacy secures cornerstone investor

THE BOURSE WHISPERER: Legacy Iron Ore and National Mineral Development Corporation have proposed a formal Share Subscription Agreement which will result in NMDC subscribing for a placement in Legacy.

The proposal follows an announcement by the company in May of the signing of a non-binding Memorandum of Understanding between the two companies.

A subsequent independent valuation was conducted by NMDC on Legacy’s assets.

The Legacy Board has now agreed to a proposal from NMDC that involves the latter subscribing for approximately $18.89 million in equity for 50 per cent of the former.

The proposal is subject to Legacy shareholders’ approval at a meeting that has been pencilled in for November as well as Foreign Investment Review Board approval.

“We are delighted to have secured India’s National Mineral Development Corporation Limited as a cornerstone investor in Legacy,” Legacy Iron Ore chief executive officer Sharon Heng said in the company’s announcement to the Australian Securities Exchange.

“It is NMDC’s first investment outside of India, and after conducting extensive due diligence on Legacy, NMDC have concluded that we are the ideal entry point for them into the Australian iron ore and resource sector.

“NMDC is not only providing Legacy with funding through the placement, but their presence on the register will create additional opportunities for Legacy, such as the acquisition and divestment of various projects.

“Since announcing the Memorandum of Understanding in May this year, and indicating that Legacy was actively seeking new projects, we have been inundated with offers to joint venture and fund numerous advanced resource opportunities, including several in gold, iron ore and coal, with JORC resources.”

Legacy has earned a 60% interest in the Mount Bevan Joint Venture with Hawthorn Resources, by spending $3.5m.

The company has spent $1.49m towards earning its 60% interest and is currently undertaking stage two drilling, spending an additional $0.71m.

Upon completion of stage 2, Legacy will have spent approximately $2.2m, with the remaining $1.3m likely to be spent before the end of 2011, at which time Legacy will successfully acquire a 60% interest in Mount Bevan.

“With NMDC on the register, and significant financial backing, upon completion of the placement, Legacy will be in a position to actively acquire such projects, to further increase shareholder value,” Heng said.

Legacy said NMDC’s proposal provides the company with a number of significant benefits, including:

–    A substantial cash injection, which will ensure that Legacy’s ongoing funding obligations under its various joint venture agreements will be met, and which will assist in progressing the development of its assets, regardless of market and financial conditions;

–    Access to new acquisition opportunities, via a strategic relationship with NMDC;

–    Access to the technical, financial and industry experience of NMDC in the iron ore sector;

–    Opportunity for Legacy to be NMDC’s preferred vehicle in Australia, as part of its global expansion; and

–    Access to project finance.

Blackham to acquire gold mines

THE BOURSE WHISPERER: Blackham Resources has executed a heads of agreement to acquire 100 per cent of the Wiluna South and Williamson gold mines.

The deal will also see the company pick up the Regents, Carol Prior, Galaxy gold deposits in the Wiluna gold belt of Western Australia.

The 500 square kilometre landholding surrounds the operating Wiluna gold mine owned by Apex Minerals.

No systematic regional exploration has taken place on the project since Great Central Mines sold the Wiluna Mine and surrounding package to Normandy in 2002.

Most of the exploration carried out on the project since 1996 has focused on the neighbouring mine.
Blackham’s initial focus will be to explore for new gold resources in and around the Wiluna South mine.

Wiluna South is a large gold system consisting six historical open, pits which have been mined to less than 80 metres.

The mining from the pits has confirmed the system extends over a strike of 3.5 kilometres.

Blackham said potential at Wiluna South has been highlighted by a previously reported intercept of 14 metres at 12.15 grams per tonne, approximately 300m down‐plunge of the previously mined pits.

A number of mineralised zones intersected by shallow RAB drilling within the Wiluna South system also demonstrate consistent plunge geometry and down‐dip potential, however these are yet to be tested at depth.

The Wiluna South database includes 6,660 holes with an average depth of drilling of 49m.

270 of these holes are deeper than 100m and only 53 holes are deeper than 200m, which the company considers presents a significant opportunity for the discovery of new deposits.

A number of shallow intercepts have also been struck outside the historical pit areas with no follow up drilling, which Blackham view to be additional open‐pit targets.

The Williamson Gold Mine is located approximately 10km east of the Wiluna South project and is situated on an extension of the Wiluna mine sequence under the shallow cover of Lake Way.

Blackham will prioritise drilling of the high grade targets below the Williamson pits and nearby Carroll Prior Deposit with a view to revising the resources and re‐optimising the open pits.

Blackham Managing Director, Bryan Dixon made the following statement,
“It is not often you get an opportunity like this in your own backyard,” Blackham Resources managing director Bryan Dixon said in the company’s announcement to the Australian Securities Exchange.

“This agreement allows Blackham to gain the largest landholding in one of Western Australia’s major Archean greenstone belts that has produced over four million ounces of gold.

“The systems we are targeting have only limited shallow drilling and mining that took place when gold prices were a fraction of today’s gold price.

“Only one of the targets has had systematic exploration on it in the last 15 years.”
A number of other highly prospective targets exist within the project including the Regent deposit.

Regent is located 10km from the Wiluna Mill under thick transported cover and was initially discovered by Wiluna Mines.

Subsequent owners conducted further drilling and estimated resources which are yet to be verified by Blackham.

The company’s exploration team is currently reviewing previous exploration results and evaluating the potential for extensions such as Regent North.

Invictus enhances Scartwater prospectivity

THE BOURSE WHISPERER: Perth-based gold exploration play Invictus Gold said follow-up work it has recently carried out on the Scartwater prospect at its 100 per cent owned Drummond Basin project in Queensland has enhanced its prospectivity.

Invictus identified the Scartwater prospect as interesting on the basis of elevated gold‐in‐soil responses and highgrade rock chip assays taken during field checking in the Mount Kroman area earlier this year.

Assays of up to 32 grams per tonne in modestly outcropping weathered quartz porphyry were identified during this fieldwork.

“These high‐grade rock chip assays are associated with disseminated pyrite in the intensely and widely altered porphyry,” Invictus said in its announcement to the ASX.

“Detailed field mapping has now defined the surface extent of this porphyry in more detail and has identified a second similar porphyry about 750 metres west of the first porphyry.”

The two bodies have been called the East Porphyry and the West Porphyry and are each about 500m long and up to 300m wide.

Invictus has prioritised the East and West porphyry targets for drilling.

The company is in the process of finalising Compensation Agreements with the pastoral lease holder while statutory Aboriginal Heritage Surveys have already been completed.

Drilling is scheduled to commence in early to mid‐October.

Infill systematic soil sampling undertaken on a 200m by 50m sample spacing grid, has refined the broad gold‐in‐soil anomaly Invictus had identified in its initial program into two discrete anomalies of up to 600m by 250m.

Elevated molybdenum‐in‐soil responses have also been recorded at the northern end of the West Porphyry.

Invictus said these geophysical and geochemical signatures are similar in nature to those found at many porphyry‐style deposits in Queensland.

These include the Mount Wright and Mount Leyshon Mines, located about 100km to the north, and at the large Anthony porphyry‐hosted molybdenum deposit about 100km to the south.

Straits restructures Tritton takeoff

THE BOURSE WHISPERER: Straits Resources has signed a non-binding Memorandum Of Understanding with J.P. Morgan outlining terms for a binding agreement to allow it to restructure an existing offtake agreement between the two parties from January 2012.

Straits said it had been working for some time to restructure its existing Tritton Copper Mine copper offtake agreement with J.P. Morgan Metals & Concentrates.

Under the agreement, in exchange for an upfront cash payment of approximately US$120 million, J.P. Morgan will agree to terminate the current offtake agreement.

J.P. Morgan will now enter into a new offtake agreement with Tritton Copper Mine for all copper concentrates it produces until the end of 2013.

These offtakes will be priced in line with the significantly lower prevailing market offtake terms for copper concentrate.

Tritton will have the option, within six months of signing of the agreement, to terminate the new agreement effective from July 2012.

Straits will pay US$9 million to J.P. Morgan should it exercise this option.

Straits said the agreement restructuring will present the Tritton Copper Mine as a ‘clean’ asset.

It will also provide a number of benefits for the Group, including positioning Straits as an independent copper producer by optimising the Group capital structure and allowing an improved exposure to a strong copper market.

The restructuring and working capital for the Group is being financed by Straits subsidiary Tritton Resources, which has signed a credit approved term sheet for a five year debt facility with Standard Chartered Bank for US$120 million.

Credit Suisse has also provided a separate credit approved term sheet for a US$50 million silver loan facility (pre-paid silver forward transaction) for Mt Muro.

“The market is aware that Straits and its Tritton Copper Mine suffer from the legacy of significantly ‘out of the money’ offtake terms entered into by the previous owners prior to the original Trittonc company’s Initial Public Offering in 2002,” Straits Resources chief executive officer Milan Jerkivic said in the company’s announcement to the Australian Securities Exchange.

“This has stopped the equity markets attributing the valuations of our copper producing peer group to Straits.

“With the support of J.P. Morgan, the opportunity now provided to restructure the offtake agreement to market terms will allow Straits to provide a cleaner and more transparent investment opportunity to the market.

“Following two years of hard work recapitalising the Tritton Copper Mine and our success in expanding the copper reserves and resources, a successful conclusion to this restructure will better allow us to highlight the potential of the Tritton mine and its undervaluation relative to its copper peer group.”

YTC completes Hera DFS

THE BOURSE WHISPERER: YTC Resources has completed a Definitive Feasibility Study of its Hera gold-base metal deposit.

The study covered Stage 1 of the development of the company’s Hera-Nymagee project located in the Cobar Basin, New South Wales.
The Hera-Nymagee project consists of the Hera gold-lead-zinc deposit and the Nymagee copper deposit.

Both of these are located only 4.5 kilometres apart within the company’s tenements in the Cobar Basin, which the company claims to have total prospective strike length of 25km.

YTC said the Hera DFS has confirmed the technical and financial viability of the development of the Hera deposit.

Key findings of the Hera DFS include:

–    High margin, low-cost gold production at A$395 per ounce (after base metal credits);

–    Ore Reserve of 423,471 gold equivalent ounces at average grade of 7 grams per tonne gold equivalent;

–    7.3 year mine life producing 391,000 ounces gold equivalent;

–    Gross revenue of $510 million, and a pre-tax operating profit of $94.8 million (based on A$1,450 per ounce gold price);

–    Gross revenue of $572 million, and a pre-tax operating profit of $152 million (based on A$1,750 per ounce gold price);

–    Gold recovery of 94 per cent; and

–    Pre-Production Capital Cost of $73.5 million.

“With operating costs after lead-zinc credits forecast to be less than A$400 per ounce, Hera will generate significant returns for YTC and establish a strong platform for growth, initially through the expansion of the project to incorporate the mining of high grade copper from the nearby Nymagee deposit,” YTC Resources chief executive officer Rimas Kairaitis said in the company’s announcement to the Australian Securities Exchange.

“YTC is very pleased with the results of the DFS, and looks forward to commencing the transition from explorer to developer at the Hera-Nymagee Project, whilst simultaneously continuing to aggressively explore our highly prospective tenement package in the Cobar Basin.

“The recent discoveries at Nymagee have clearly demonstrated the enormous potential for our ground to host world-class deposits.”

Stage 1 development will see the establishment of the Hera gold mine and construction of a processing facility at the Hera site.

The company has a feasibility study currently in progress on Stage 2 to evaluate the integration of the Nymagee deposit utilising Stage 1 infrastructure.

YTC has adopted a two-stage approach to developing the Hera-Nymagee project to fast track first gold revenue and to establish mining and process infrastructure with a view to self-funding the development and integration of the larger Nymagee deposit.

The company said the study confirms a financially and technically robust underground mine and processing plant at the Hera-Nymagee project producing gold and silver doré bars and a bulk-lead-zinc concentrate for sale.

Once established, YTC said the Hera mine will substantially provide the mining and process infrastructure to support the future integration of mineralisation from the Nymagee copper deposit.