Toro finalises tenements deal

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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

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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

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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

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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

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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

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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

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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.

Saracen to raise $65.2 million

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THE BOURSE WHISPERER: Gold producer Saracen Mineral Holdings has completed a placement of 73.8 million new fully paid ordinary shares at a price of 68 cents per share to raise $50.2 million.

The company is also launching an underwritten Share Purchase Plan to raise a further $15 million.

The maximum amount the company intends raising will be $65.2 million before expenses.

Saracen will use the raised from the placement and SPP to pay for an increased and accelerated exploration budget that it will spend across its tenement holdings.

This will entail drilling and development work at Saracen‘s Porphyry and Whirling Dervish mines, and potential bolt-on acquisitions.

Exploration funding on the company’s Red October and Butcher Well prospects will receive a boost to the tune of $12 million for the current year, while its total exploration budget will be lifted towards $35 million.

The company said the new funding would enable it to accelerate its strategy of targeting an increase in group gold production from the current 120,000 ounces per annum towards 250,000 ounces per annum by 2015.

“Saracen has received very strong support for this capital raising,” Saracen Mineral Holdings executive chairman Guido Staltari said in the company’s announcement to the Australian Securities Exchange.

“Given the exciting growth options ahead of us, and the elevated gold price environment we find ourselves in, it makes good sense for us to lift our sights to much higher production levels, and a more aggressive exploration strategy.

“Our 250,000 ounces per annum production target is being backed by an aggressive push in the northern district, at the Red October and Bucher Well projects, with parallel drilling and development programs in the southern district, particularly at the Porphyry and Whirling Dervish projects.”

The company is confident increased production will result in a greater contribution of high-grade underground ore sources to the Carosue Dam processing plant.

The company suggested a production increase could come from the contribution of another plant, depending on drilling and feasibility study results.

This would be fed by ore sourced from the Red October mine, as well as underground mines at Porphyry and, subject to further drilling results, Whirling Dervish.

Cleveland completes $10M capital raising

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THE BOURSE WHISPERER: South America-focused Cleveland Mining Company has completed a $10.1 million placement to sophisticated, professional and institutional investors.

The placement will result in the issue of 29.7 million new ordinary shares at a price of 34 cents per share.

A large portion of the shares have been allocated to Chinese businessman Wang Zhe, who is principal of private Chinese steel mill group Aosen Steel, a steel group based in the Hebei province.

Zhe has acquired a cornerstone interest in the company of 12 million fully‐paid ordinary shares at the 43 cent issue price for $4.08 million.

The issue to Zhe is subject to Cleveland shareholder approval at a meeting expected to be held during late October.
 
The remaining 17.7 million fully‐paid ordinary shares are to be issued to selected sophisticated, professional and institutional investors to raise the additional $6.02 million before costs.

“The success of this raise is a vote of confidence in the company’s future and an acknowledgment of our performance up to now,” Cleveland Mining managing director David Mendelawitz said in the company’s announcement to the Australian Securities Exchange.

“Our strategy has focused on first developing company’s capabilities to operate in what it believes to be the best commodities and jurisdictions for profitable mining: that is, gold, copper and iron in Brazil and Chile.

“Cleveland now has a large, capable South American team, an excellent project portfolio and significant access to further opportunities.

“Gold production is fast approaching at the Premier mine and the Company enjoys the clear support of numerous financial heavyweights.”

Cleveland said it will use the funds raised from the placement to complete the development of its Premier gold mine in Brazil.

The monies should augment working capital, and enable fast‐tracked installation of a cyanide CIL plant at Premier, where Cleveland is preparing to install a gravity recovery circuit.

“While our approach is atypical compared to other juniors, we believe that this strategy has readied Cleveland for a very exciting period of development,” Mendelawitz said.

“We are always mindful of shareholder dilution associated with equity raises.

“In these unprecedented times of economic instability, we feel that any such shareholder dilution is counterbalanced by the security of a strengthened balance sheet and the strong support of a friendly, growth‐orientated Chinese steel group that wishes to support us to build a successful mining house in South America.”

Potash West extends landholding

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THE BOURSE WHISPERER: Potash West has extended its exploration tenure in the Dandaragan Trough in Western Australia.

The company has increased its landholding from an area of 2,107 square kilometres to 2,905 square kilometres.

Potash West listed on the boards of the Australian Securities Exchange in May after closing a heavily oversubscribed $6 million Initial Public Offering.

The main focus for Potash West is on developing potassium-rich glauconite deposits in the Perth Basin, from which the company hopes to define a substantial resource base and subsequently investigate how it can best recover potash from the mineral.

By acquiring the new exploration areas the company has increased its control over the glauconitic prospective Dandaragan Trough to an estimated 80 per cent of the available ground in the region.

Potash West has successfully completed regional mapping program over some of its granted tenements using high resolution satellite imagery.

This technique enabled the company to map laterite surfaces and low lying topography, both of which are known to have a deleterious influence on potash grades.

It also enabled Potash to map geomorphology and overburden, and other features which the company considers to reflect underlying geology.

After the detailed mapping exercise, the company undertook field trips to carry out preliminary ground investigations.

This led to the application for four Exploration Licences, E70/4124, E70/4137, E70/4138 and E70/4139, which have a combined area of 798sqkm.

“These exploration licenses will not only add significantly to our prospective landholding but, importantly, increases our contiguous footprint, which will aid future project development,” Potash West managing director Patrick McManus said in the company’s ASX announcement.

“The deposits are located close to the potash consuming region of the WA Wheat Belt, in a region with established infrastructure.”

Using target zones generated from the mapping, Potash has applied to undertake drilling at Dandaragan that will be aimed at providing more detail on the thickness and grade of the underlying glauconite bearing lithologies.

The company expects to begin this program of drilling in the final quarter of 2011.

Potash West has also commenced metallurgical test work aimed at extracting potassium from the glauconite-bearing greensands in its tenements and to produce commercial-grade potash.