Mining 2012 opens with a distinct whiff of optimism

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THE CONFERENCE CALLER: The Mining 2012 conference in Brisbane was opened with a note of optimism by Patersons Securities research analyst Matthew Trivett.

Addressing the first day audience, Trivett said there were many indicators pointing to positivity and of action on the buy side of the market, especially in the small resource stocks area.

 

“That’s giving us a little bit of optimism,” Trivett said.

“As we are looking forward into 2013 we hope that optimism is carried over and is reflected in a lot of share prices for a lot of these explorers and developers that are still doing a lot of good work on the ground and developing a lot of great projects.”

Trivett gave much of the credit for the recent market resurgence to the discovery of the Nova nickel deposit by Sirius Resources (ASX: SIR).

The Nova discovery, he said, had given real credibility to explorers, who up to then had struggled to gain the attention of the market.

“Before Nova was discovered there was a real occurrence of people out there who would have some fantastic drill results but nothing would happen – the market wouldn’t listen,” he said.

“So it needed something special to come along and change investors’ perspectives.”

Trivett then shifted his focus to take a macro view of what current global goings on were developing as possible market influences

He mentioned the obvious choices of the European Union and the United States, singling out the ‘fiscal cliff’ of the latter’s looming Presidential poll, which may have a lot to do with how the country deals with its debt.

“How these governments respond and the fiscal policies they put in place is going to have a major ramification on actual growth,” Trivett said.

“The IMF has just reduced its growth outlook across the board and I think there is a real chance that growth can be trimmed again.

“Not just in the major, advanced economies in the US and the EU but also India and Indonesia and smaller, more relevant trading partners for Australia.

“We are dependent on these small trading partners, not just China…in our resources sector in general.”

Trivett’s optimism was cautiously supported by LimeStreet Capital managing director Stephen Bartrop.

Bartrop opened his presentation describing the world economy as being bad enough to prompt some policy action.

 

“In the US the recovery continues so there is some increase in confidence there, albeit off a low base,” he said.

“QE3 was the catalyst for some consumer optimism and we have seen that reflected in the markets.”

Bartrop pointed to recovery in China, which he said was occurring with a lower growth trajectory than what we have recently become accustomed to seeing.

This is mainly due to a haemorrhaging of China’s global trade, a wound inflicted by the fact its biggest export market destination, the European Union is currently in a terrible mess.

Recovery in the EU and Europe, he said, is a long way off with no real end in sight.

There is a feeling of increased stabilisation, but nothing is going to be resolved quickly there.

Most analysts have factored in India as a key to unlocking these global woes.

Bartrop didn’t appear to be as convinced saying, “India is getting interesting, but the GDP level is not of a size where it is going to become the ‘next China’.”

“There is no great exciting event on the horizon that is suddenly going to change the world economy.

“It looks like being a long, slow grind out the problems we are in.”

China still appears to be the favourite to bring some form of stability to the global table.

The Chinese Communist Party (CCP) is the world’s largest political party with 80 million members.

It is the most powerful political organisation and it certainly monopolises political and economic power in the world’s largest country.

At the Country’s 18th National Congress on the 18 November, the five year turnover of the Chinese guard will result in the replacement many of the incumbents.

It is also the congress where the ten year leadership change comes into play with current Vice President Xi Jinping tipped to get the nod for the top job.

“China craves stability…if the Chinese economy slumped then the credibility of the Chinese Communist Party would then be called into question,” Bartrop said.

“So there is a huge impetus in China to move that economy along.

“Our expectations are there will be some spending stimulus. They are certainly cautious about inflation and property bubbles

“It will be slow but with potentially positive recovery reforms as well.

“Any stimulus will be positive for commodities.”

MRRT puts government folly on display

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The MRRT stuff-up has highlighted the ongoing government ignorance of the mining sector.

As former Prime Minister John Howard once described us, we’re pretty much ‘relaxed and comfortable.’

For the most part this reference seems fairly innocuous, but politically there is a problem.

In terms of the left side of politics the ‘relaxed and comfortable’ notion instead takes on a more sinister aspect – one of complacency and even outright jealousy.

Its ultimate manifestation is the attitude of the Labor-Greens coalition with respect to our resources industry, which has been very much under attack since prior to the last federal election.

Meddling politicians seemingly are doing their best to interfere with and hamstring the one sector of our economy that’s actually worked well – the mining industry.

 

At a time when as a nation we should be doing everything in our power to encourage and maintain investment and confidence in the resources sector, our politicians instead seem hell bent on doing everything they can to drive both existing and potential investors away.

Whether it’s ad-hoc regulations on coal seam gas; the mining tax; the carbon tax; or greater red and green tape on resource projects; Australia’s federal politicians and bureaucrats seemingly don’t have enough hours in their day to conjure up ways of hampering the one industry that’s managed to keep us out of recession.

The mining industry is the key factor that differentiates us from the economic basket-cases of Europe and elsewhere.

Whilst our politicians point to clever economic management and sizeable stimulus spending in keeping Australia from falling into the economic abyss, the truth is if spending alone were to keep the financial wolves from the door then the United States and Western Europe would not be in the financial strife that they are now.

They’ve spent vastly more than we have for little benefit.

Throwing money at the problem clearly has not helped – in fact it’s made things worse.

After all, most overseas governments have spent a much greater sum in terms of stimulus measures, representing a much larger proportion of their respective GDPs.

The key differentiating factor between us and the economic stragglers has been the fact that we are fortunate enough to have a strong, vibrant and efficient mining industry – situated just a short shipping-distance from the world’s modern-day economic powerhouse – China.

One of the best examples of the Government’s cluelessness and ignorance with respect to the mining sector relates to the Mineral Resources Rent Tax (MRRT), which officially came into effect during July.

Reports have surfaced that Treasurer Wayne Swan was warned four months ago that the MRRT wouldn’t raise any revenue for the first quarter and possibly throughout the rest of the financial year, threatening Labor’s planned budget surplus.

We’ve of course been warning of the likelihood of sizeable revenue shortfalls for at least 12 months, as have other independent groups.

The MRRT is the derivative of the original Resources Super Profits Tax (RSPT), which would have levied a 40 per cent tax across all extractive industry, including base and precious metals, coal, uranium and mineral sands.

The MRRT would impose a 30 per cent levy on coal and iron-ore companies that report profits of more than $75 million.

This tax had initially been aimed at companies earning profits of about $50 million, but was later revised.

In terms of the MRRT, new investments will be given an immediate write-off, rather than a depreciation over a number of years, allowing mining projects to access deductions immediately.

A project is also not liable for MRRT payments until it has made enough profit to pay off its upfront investment.

The tax also provides recognition of past investments through a credit that recognises the market value of that investment, recorded over a period of up to 25 years, while also providing a full credit for state royalties paid by miners.

In other words, it benefits big miners and so far they haven’t paid a cent.

Rather than embracing the resource sector, the mining industry is instead viewed as a necessary evil to envious Canberra-based politicians.

The Greens’ persistent comments about the mining sector are both naïve and dangerous, particularly as they relate to Australia’s coal industry.

The Greens’ attacks on the level of foreign investment in our mining industry are also dangerous – were it not for foreign investment dating back as far as the 1850s in this country, we would not have a mining industry to speak of.

Investment dollars from all over the world – initially from Britain, then continental Europe, North America, Japan, and now the emerging economic juggernauts – China and India – have over the past 150 years helped establish the resources industry that our politicians now take for granted.

The greens have also targeted the issue of company earnings and dividends that flow out of the country, but they conveniently ignore the much greater sum that’s reinvested within our country – the many hundreds of billions of dollars of taxation and royalties that have been captured by State and Federal governments over recent years that have been used to fund spending programs.

And that’s not counting the salaries and benefits paid to employees, as well as the sums invested in exploration and development.

The Pilbara iron-ore operations in Western Australia and the eastern states coal industries of NSW and Queensland, supply the bulk of the export revenues that have helped keep us out of recession.

These were established by companies with long-term vision, more than four decades ago.

Such massive investment decisions aren’t made lightly.

They reflect a level of confidence in the future financial and political stability of our country.

But our politicians are conveniently ignoring this. In a thinly-veiled, politically-motivated cash-grab, they are pursuing political expediency and threatening the long-term health and investment prospects our stand-out industry, the mining sector.

I don’t know of any industry where greater levels of taxation have contributed to growth and prosperity.

Inevitably, the impacts of greater economic imposts on our minerals industry will be felt – but not immediately.

Whilst mineral deposits are of course not transportable, investment dollars most certainly are.

Ultimately, the junior and mid-cap players that account for the bulk of ‘greenfields’ exploration in this country will increasingly shift their investment focus offshore.

It’s already happening in a major way, with more than 50 per cent of funds raised by ASX junior exploration companies being sent offshore.

What this means is that the next generation of Pilbaras, Olympic Dams, Bowen Basins, Cadia-Rideways and De Grussas won’t be found here in Australia – instead they’ll be unearthed in places like Africa, Asia and South America.

Fewer new mining operations will be brought on stream in this country as a result.

When politicians refer to the supposed damage being done to future generations by inaction on the climate change front, they blindly ignore the damage they themselves are doing to future generations through the systematic degradation of our best performing industry, the mining sector.

In this vein I thought I’d conclude by sharing with you the following comments by Anthony Peters, who writes for the International Financing Review in Europe.

“Meanwhile, there were bright pictures on the telly this morning of a beaming Julia Gillard who has seen her Mining Tax passed by Australia’s lower house by just two votes.

“I believe that she, like so many politicians, hasn’t fathomed tah we are in a globalised economy and although Australia might be sitting on a pile of raw materials which cannot be moved like banks or other service industry head offices from one tax or regulatory jurisdiction to another, the big investment dollars could leave the Lucky Country and head for Africa or South America.

“Commodity extraction is a particularly long cycle business and any effects which a change in the taxation of miners might have will only become evident once Ms Gillard is sipping frosties by the pool while drawing the generous pension of a former Prime Minister.

“I am drawn to comparing this move with the taxation of pension funds’ dividend income here in the united Kingdom which already looked bad when it was introduced by the invisible Scotsman but which has proven to be an absolute disaster for pension savings and one which will blight a generation.”

 

Gavin Wendt is the founder of MineLife, publisher of the MineLife Weekly Resource Report

 

Pioneer to acquire gold rights in the Acra project from Xstrata

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THE BOURE WHISPERER: Pioneer Resources (ASX: PIO) has reached an agreement with Xstrata Nickel Australasia Operations (XNAO) to acquire 100 per cent of the gold interests in, what was formerly, the Acra Joint Venture project.

The tenements concerned coaver 103 square kilometres and are located east of Kalgoorlie in Western Australia, close to projects held in Pioneer’s current project portfolio, which includes the Juglah Dome project and the recently acquired Golden ridge project.

 

Pioneer tenements showing Acra transaction tenements. Source: Company announcement

 

Once the agreement has been finalised Pioneer will hold a 100 per cent interest in the gold mineralisation at Acra.

XNAO will hold 100 per cent of the nickel sulphide mineralisation, while its JV partner Heron Resources (ASX: HRR) will retain its 100 per cent interest in the nickel laterite mineralisation.

The deal will entail Pioneer assigning its 20 per cent interest in nickel sulphide mineralisation to XNAO, which in return will assign Pioneer its 80 per cent interest in all commodities, excluding nickel and provide Pioneer with registerable transfers for its 80 per cent interest in the Acra tenements.

Under the terms of the agreement both Pioneer and XNAO have agrred to exchange reciprocal royalties equal to 0.5 per cent of the net smelter return (NSR) for gold and nickel (excluding laterite).

Stanmore Coal upgrades The Range Resource

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THE BOURSE WHISPERER: Stanmore Coal (ASX: SMR) has completed a further review of the company’s The Range project, in the Surat Basin, Queensland.

 

Project location. Source: Company announcement

 

The review followed the company receiving final laboratory and geological modelling results from a 2012 drilling program and has resulted in the certification of an initial 18 million tonne JORC-compliant Measured Resource.

The review also resulted in a 10 per cent increase in Total JORC Resource (Measured, Indicated + Inferred).

The company said the Measured Resource has given it an increased level of knowledge and certainty for the first three years of production.

Stanmore is now modelling the impact of the resource upgrade on JORC Reserves and the project economics to feed into a Bankable Feasibility Study.

This increase is separate to the 60 to 70 million tonnes additional Exploration Target in the area west of the planned pit at The Range.

Commenting on the increase,

“This increased result in The Range is another positive step on the path towards production at our first class thermal coal deposit at The Range,” Stanmore Coal managing director Nick Jorss said in the company’s announcement to the Australian Securities Exchange.

“Certification of the first Measured Resource means that we now have a very high level of knowledge and certainty over the first years of production.”

The Range project is located south east of the Wandoan township, within the Surat Basin.

The project contains an initial JORC Marketable Reserve of 94 million tonnes from a JORC Total
Resource of 287 million tonnes (18Mt Measured, 187Mt Indicated plus 82Mt Inferred) of export quality thermal coal.

Stanmore Coal said it anticipates first coal from the project in 2016 subject to statutory approvals being attained and completion of third party infrastructure.

Survey records negative sentiment toward High Frequency and Algorithmic Trading

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The rise in algorithmic and high frequency trading (HFT) on the Australian Securities Exchange (ASX) and global stock exchanges has raised considerable alarm among investors, analysts and other market participants.

In an effort to ascertain perceptions in the market relating to algorithmic trading and HFT and the impact both have on investor sentiment, activities and decisions, Australasian investor relations firm, Professional Public Relations (PPR) conducted a comprehensive survey using the analytical capabilities of Orient Capital, a global leader in share ownership analysis, market intelligence, investor communication, proxy solicitation and shareholder management technology.

The survey, conducted between September 5 and October 7 this year, included 1754 respondents, of which 73.5 per cent were retail investors, 12.7 per cent were private client advisor/brokers and 5.8 per cent were fund managers.

The remainder included analysts, institutional representatives and listed company representatives.

Almost half of all respondents were focused primarily on ASX-listed small cap/micro-cap companies, while 25.5 per cent were focused on ASX 300 companies, 20 per cent on ASX 200 companies and 5.5 per cent on ASX 100 companies.

There is a general lack of understanding for the market on High Frequency and Algorithm trading.

Many respondents weren’t sure of the difference between High Frequency Trading and algorithmic trading and assumed they are the same thing.

Despite this, they still believe they have a negative effect on the market.

While nearly all respondents (97.6 per cent) had heard of algorithmic trading and HFT, a smaller proportion (70.3 per cent) believe they adequately understand them.

“The increased use of algorithmic trading and HFT has caused much concern among investors, analysts and generally anyone who believes the ASX should be a fair and transparent market,” PPR National director of investor relations David Tasker said

“This concern is demonstrated by the large number of participants who completed the survey and the extremely negative views towards algorithmic trading and HFT.

“Regulatory bodies such as ASIC need to act urgently to curb the current impact of algorithmic trading and HFT on the ASX and its ability to act as a fair and transparent market.”

Negative market sentiment

A key finding is the generally high level of negative market sentiment towards algorithmic trading and HFT, with nearly all respondents (96.6 per cent) believing both are having an adverse impact on the ASX.

Of the respondents, 83.6 per cent believe algorithm trading and HFT are having a major negative impact while 13 per cent believe they have a minor negative impact.

A fair and transparent market?

A significant majority of respondents associated algorithmic trading and HFT with a lack of market transparency, openness and fairness.

Of the respondents, 89.3 per cent believed algorithm trading and HFT were impacting the ability of the ASX to conduct a fair and transparent market, while decreased fairness and market transparency were regarded by a significant majority (90.3 per cent) as the biggest impact of algorithmic and HFT trading on the ASX.

Only 4.1 per cent of respondents believed increased liquidity was the biggest impact of algorithmic trading or HFT on the ASX while 2.9 per cent believed decreased liquidity was the biggest impact and 0.6 per cent linked it to increased fairness and transparency of the market.

A large proportion of respondents were reluctant to trade on the ASX as a result of the presence of algorithmic trading or HFT with 78.1 per cent either agreeing or strongly agreeing that it made them reluctant, with 85 per cent of retail investors agreeing or strongly agreeing.

The effects of algorithmic trading and HFT are generally seen as consistent in both a bull and bear market.

Most respondents (37.9 per cent) disagreed with the statement that algorithmic trading and HFT would not have a material impact in a bull market.

Measures to limit the impact of algorithmic trading and HFT

Respondents were varied on the preferred methods of controlling the impact of algorithmic trading and HFT on the ASX.

Banning algorithm trading and HFT was cited by the majority (57 per cent) of respondents as the preferred method.

Of the respondents, this was cited by 61.7 per cent of retail investors, 52.9 per cent of private client advisors/brokers and 30 per cent of analysts.

Placing a minimum order limit was the next most-cited response, with 16.7 per cent of respondents believing it to be the most preferred method.

This was cited by 24.4 per cent of listed company representatives, 17.2 per cent of retail investors and 6 per cent of analysts.

Meanwhile, 12.9 per cent of respondents thought the best way would be to introduce tougher regulation of HFT systems.

This was cited by 26.8 per cent of company representatives, 28 per cent of analysts and 10.1 per cent of retail investors.

ASX’s facilitation of algorithmic trading and HFT

The vast majority (76.7 per cent) of respondents were of the view the ASX should not be allowed to facilitate algorithmic trading and HFT compared to a minority (12.6 per cent) of respondents who believed the ASX should be able to facilitate algorithmic trading and HFT.

The remaining 10.7 per cent of respondents had no opinion on the matter.

Regulatory powers

On the subject of ASIC’s regulatory power in relation to algorithmic trading and HFT, a majority (66.5 per cent) believe ASIC had inadequate regulatory and supervisory powers and tools.

A minority (14.6 per cent) of respondents believe ASIC has adequate regulatory and supervisory powers while 19.2 per cent had no opinion on the matter.

David Tasker

National Director, Investor Relations – Professional Public Relations

david.tasker@ppr.com.au

 

 

 

Solid gold trumps paper money

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CONFERENCE CORRESPONDENCE: Global stocks down another 90 per cent in the next few years as the world’s financial system continues to its eventual demise is just one of a series of dire predictions from Swiss-based Matterhorn Asset Management founder Egon von Greyerz.

Speaking at the 2012 Gold Investment Symposium at Sydney’s Luna Park, von Greyerz said the vote-losing austerity measures launched in Europe, particularly in Greece and Spain, have failed and will continue to do so, leading to accelerating deficits and the printing of more increasingly worthless paper money that will culminate in a hyper-inflation depression world-wide.

 

“How long will that take – who knows. The end of the Roman Empire took 500 years,” he said.

While claiming not to be a “gold bug,” von Greyerz sees a crucial component of any current investment should be directly held physical gold, not controlled by any second party in the banking system.

Underlining his dire global economic scenario von Greyerz points to a 97 per cent decline in all the major currencies against gold in the last 100 years.

Back in 1913, $US1,000 would buy 500 ounces of gold; in 2012, the same amount would buy about 0.6 ounces.

In recent years it has been debt that has been driving GDP, with $US1 creating 4.6 per cent of GDP between 1917-1952., that $1 now creating 0.06 per cent of GDP.

“The law of diminishing returns,” von Greyerz told conference delegates.

“It’s not just a European problem, as the US would have you believe.

“US debt per person is now higher than in any of the major European countries.”

Von Greyerz’ solution is a tad radical.

“A fire – let the whole system burn down to give the world a fresh start.

“Let the banking system disappear and start again.

“This will never happen, but it should, rather than rely on bits of paper that aren’t worth anything.”

For the near future von Greyerz sees global interest rates and taxes surging, along with unemployment, falling asset (property, stocks, bonds) prices in real terms, the collapse of pensions and social services, social unrest and eventually famine and war.

Von Greyerz said that in 2002, he and his company were recommending clients hold 50 per cent of their investments in gold.

“Today, it’s more like 80 per cent,” he said.

He likes gold and silver stocks at the present, but only in the short term, as they are being consumed by higher costs, rising as fast as the gold price.

His complete lack of faith in the banking system is such that he recommends the need to hold physical gold and to a lesser degree silver, in secure private situations, such as Matterhorn’s 2 vaults in Switzerland, one of them the biggest in the world.

And his other investment advice – farm land, presumably to offset the famine.

For a more immediate view of the gold price, global Swiss-based gold, silver and platinum refiner PAMP sees gold ranging between $US1,540 per ounce to  $US1,900 per ounce, averaging $US1,720 per ounce; silver at $US26.37 per ounce to $US42 per ounce, averaging $US33 per ounce; and platinum at $US1,385 per ounce to $US1,790 per ounce, averaging $US1,550 per ounce.

By Mark Mentiplay

Bullion beats shares as gold companies underperform

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THE CONFERENCE CALLER: Investors who bought physical gold bullion in 2006 instead of buying shares in gold companies at the same time did the right thing according to Evolution Mining (ASX: EVN) executive chairman Jake Klein.

Speaking on Day Two of the 2012 Gold Investment Symposium at Sydney’s Luna Park, Klein said that although that is how the statistics stand he believes it shouldn’t be the case.

 

Source: Jake Klein presentation

Over the past five years, shares of gold mining companies have massively under-performed, a problem Klein said that the industry needs to address.

The rhetorical question he asked was, why it was gold shares have performed so badly – especially when they offer better leverage to the gold price.

“In a rising gold price environment, gold shares should out-performed gold bullion,” Klein said.

One mechanism Klein suggested is weighing gold stocks down is the combination of resource nationalism and political risk, which he said has fundamentally been mispriced by the market.

“People have gone off and invested in companies, which have gone off to these new frontiers,” He said.

“The rules have changed to the point where the ownership of the assets has been put in jeopardy and investors [in some cases] have lost 70 to 80 per cent of their money in one blind-siding sweep.”

An emerging trend in the mining world is the desire of governments of the perceived-to-be ‘hot’ mining destinations to want to change the rules.

The current state of world economies has incubated an environment, from which the obvious result will be, and has been, a rising gold price.

It is in an environment such as this, one where government debt may be spiralling out of control, which also gives rise to resource nationalism, resulting in increased tax takes from these governments.

 

“As you venture into more and more difficult jurisdictions, it is going to be more difficult to bring those profits home to your shareholders,” Klein said.

As hard as Australia has tried over recent times to portray itself in probably the worst possible light it could to global investors in the last couple of years, the country has most likely reached the point where there can’t be too much more bad news to release to the international community.

However, the damage has been done, so much so many of these countries, which are now proposing their own versions of a super profits taxes, quote Australia.

“I do think we are at the end of that and that Australia has been over-sold in terms of [being a bad] mining destination, because at the end of the day, this is a good place to mine in,” Klein said.

“We are a vast highly-mineralised, lowly-populated, resource-friendly country and we need to get out there selling that to international investors.”

Klein made reference to a statistic involving the top five gold companies and the predictions they have made in regard to production over the past five years.

He related having heard that if the growth profiles presented by the top gold companies over this time had come to fruition those five companies would be producing  60 per cent more gold than what they are today.

The implications of such a statement bring rise to the question of whether companies are over-optimistic about their chances or whether they should be a bit more realistic about what they are able to achieve.

The importance of such discrepancies should not be lost on shareholders and capital providers; although past history tells us they are still willing to give these companies to develop their respective projects.

“It is an industry that has, remarkably, been able to raise money,” Klein said.

“We keep putting our hand out and investors have kept giving it to us.

“I think investors want to see, and appropriately, want to see, a new-found discipline from the mining industry.”

All this should evolve, according to Klein, as political risk in Australia begins to be much more accurately priced.

“Australia will be re-rated much more favourably,” Klein said.

“I would suggest that every gold fund in the world is underweight in exposure to the Australian gold industry.

“I think capital discipline will be a key focus – capital will be less-freely available and we will have to spend it more wisely and we will be held more accountable for that allocation of capital.”

His considerations probably hold some validity given the bad news emanating from Australia has passed, without – at this stage – too much detriment to the industry.

Companies operating in Australia never have to state their refusal to participate in corrupt practices, which suggests they never have to deal with such systems in the first place.

Neither do we see the desire, or need, for our government to order the shooting of striking union-led mine workers for refusing to return to work, however much some operators may wish to see this procedure introduced.

Cerro announces initial inferred resource at Namiquipa

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THE BOURSE WHISPERER: Dual-listed company Cerro Resources (ASX: CJO TSX-V: CJO) has announced an initial inferred resource estimate for the company’s 100 per cent-owned Namiquipa silver project located in Chihuahua, Mexico.

 

Prospect location. Source: Company announcement

 

The inferred resource estimate has come in at 4.6 million tonnes at 154 grams per tonne silver equivalent, containing 22.5 million ounces silver equivalent, including 15 million ounces of silver; 41,000 tonnes of lead, and 76,000 tonnes of zinc.

Cerro indicated the silver equivalent grades were calculated using the 12 month average metal prices of US$31.50 per ounce silver, US$0.89 per pound zinc, and US$0.92 per pound lead. Metal recoveries were not considered in this calculation.

Cerro also said a recently completed IP survey had identified a potentially faulted offset of the Princesa- America mineral system to the north.

“This initial resource estimation confirms our belief in this quality project in a region of other significant discoveries and deposits,” Cerro Resources managing director Tony McDonald said in the company’s announcement to the Australian Securities Exchange.

“This and the potential northern extension provides a solid basis for expansion.”

The Namiquipa deposit is located adjacent to the village of El Terrero in Chihuahua, Mexico, west-northwest of Cuidad Chihuahua.

According to Cerro the deposit occurs as a low-sulphidation epithermal system transecting a suite of shallow dipping breccias and ignimbrites of andesitic and rhyolitic composition.

Extensive silicification has occurred around a major north trending shear zone that is host to the epithermal veins.

Sierra encouraged by reconnaissance drilling in the Philippines

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THE DRILL SERGEANT: Sierra Mining (ASX: SRM) has received the results of recently-conducted initial reconnaissance drilling at the company’s Mabilo project in Camarines Norte Province of the Philippines.

 

Regional geology of the Paracale Mineral District. Sierra’s Mabilo
and Nalesbitan projects are located to the south of the main areas of
historical production. Source: Company announcement

 

Sierra drilled a vertical hole, which it said was targeted on a magnetic high and aimed at testing for potential polymetallic magnetite skarn mineralisation similar to that exploited by artisanal miners elsewhere in the area.

According to Sierra the hole intersected magnetite skarn mineralisation between 36 metres to 86 metres depth with an overall average grade of:

–    50 metres at 3.90 per cent copper, 2.31 grams per tonne gold, 14.09 grams per tonne silver and 51.95 per cent iron.

“The 10 metre interval of ferruginous clays immediately above the 50 metre skarn zone graded 2.09 grams per tonne gold making the combined interval from 26 metres to 86 metres – 60 metres at 2.28 grams per tonne gold,” Sierra said in its ASX announcement.

“The copper, silver and iron assays for the ferruginous clay interval have not been received from the laboratory.

“The orientation of the mineralised body is unknown and the intersection therefore may not represent a true width.”

Sierra said two subsequent holes, collared approximately 400 to 500m from the first hole do not appear to have intercepted the magnetite skarn targets.

Drilling is ongoing to test other magnetic anomalies within the project.

Aguia granted Brazilian tenements

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THE BOURSE WHISPERER: Emerging fertiliser development company Aguia Resources (ASX: AGR) has received confirmation from the National Department of Mineral Production of Brazil that a further seven tenements have been granted close to the company’s phosphate discovery at Três Estradas (TE project) located in the state of Rio Grande do Sul, southern Brazil.

 

Location of Rio Grande Projects, SE Brazil. Source: Company announcement

 

Aguia announced the discovery of the TE project in November 2011, after which the company applied for an additional 13 target areas in close proximity to the project.

The company said these areas were targeted based on similar geological and magnetic signatures to the TE discovery.

“We are very pleased to have seven of these tenements granted and will begin reconnaissance field checking once the geological team has finished sampling and logging of the recently completed drilling program,” Aguia Resources managing director Simon Taylor said in the company’s announcement to the Australian Securities Exchange.

“Significantly the seven tenements granted are in the Brazilian border control zone.

“As such we look forward to further tenements in this zone being granted, in particular the southern extension to the phosphate carbonatite host rock discovery at TE where we announced an initial JORC resource in June this year.”