THE BOURSE WHISPERER: Iron ore-focused exploration play Winmar Resources is set to raise $3 million having signed a Memorandum of Understanding with Santosh S Lad, a representative of Indian mining and steel producer VS Lad & Sons.

In accordance with the MOU, Winmar has agreed to place 10 million 10 million shares in the capital of the company with Shantosh S Lad at 30 cents per share.

The funds raised will be used to expand upon a 12,000m RC drilling extension and infill program that is currently underway, to maximise future resource upgrades and to fund the acquisition of a majority interest in the Mt Stuart and Ethel Creek tenements.

The current Inferred Resource Estimate for Winmar is 143 million tonnes at 52.6% iron (55.6% calcium iron).

An update of the Resource Estimate is due to be completed in the 3rd Quarter of 2011, together with an Order of Magnitude Study.

The additional funds will also allow further analysis of the potential for successful beneficiation of the DID material, involving a more comprehensive range of tests across the full strike length of the deposit.

Santosh S Lad is a major stakeholder in VS Lad & Sons, an iron ore mining concern with more than 55 years of commercial history in mining.

The VSL Group also owns VS Steels Ltd, which manufactures pig iron from its plant located at Hiriyur In Karnataka State, India.

Santosh S Lad is a member of the Congress Party which is the major political party in India and is serving his second term as a member of the legislative assembly in Karnataka.

The MOU is subject to Foreign Investment Review Board approval in Australia and other conditions, including:

– the company securing a 75% earn-in right to Mt Stuart (EL 47/2012, 47/2027 and 47/2043) and Ethel Creek (EL 46/918) tenements, presently owned by Cazaly Iron Pty Ltd, a wholly owned subsidiary of Cazaly Resources Limited;

– Clearance from the Reserve Bank of India under the Foreign Exchange Management Act in India;

– All other regulatory approvals that may be required in Australia or India;

– Board approvals of Winmar and the investing entity; and

– The parties entering into a term sheet granting Santosh S Lad (or his associated nominee) the first right of refusal to enter into an exclusive agreement with the company in relation to the future mining rights in respect of the company’s projects (should a mining lease be granted) on the basis that Santosh Lad (or his associated nominee) will fund all capital and operating costs associated with developing and operating any such mining operation and paying the company a royalty of not less than $2.25 per tonne of product sold.

Santosh S Lad (or his nominee) will also be granted 10 million options under the MOU to subscribe for one fully paid ordinary share, exercisable at $0.30, expiring 31 December 2014. The grant of the options will be subject to shareholder approval.

Santosh S Lad (or his nominee) will be restricted from disposing of all securities issued to him (or his nominee) under the MOU for a period of 12 months after issuance.

On completion of the placement, Santosh S Lad or his nominee will be joining the board of Winmar Resources.

THE DRILL SERGEANT: Western Australian-based resources and investment company Cape Lambert Resources has announced a 245 per cent increase to the Mineral Resources at its 100 per cent owned Marampa iron ore project located in Sierra Leone.

The total Indicated and Inferred Mineral Resource now stands at 680 million tonnes at 28.2% iron.

“This is an important milestone for Cape Lambert and the Marampa project as we have now defined a resource inventory capable of supporting a production profile of 10 million tonnes per annum of hematite concentrate for more than 20 years, thereby enabling Cape Lambert to move forward with its plan to sell down its interest and raise money for the project to be further developed,” Cape Lambert executive chairman Tony Sage said in the company’s ASX announcement.

“Cape Lambert has ceased resource drilling at Marampa and is now focused on the commencement of drilling at its 90 per cent owned Kukuna (Sierra Leone) and Sandenia (Guinea) iron ore projects.”

According to the Cape Lambert announcement the updated Mineral Resource represents an increase in tonnage of 245% at similar grades to Marampa’s maiden Mineral Resource, which the company announced in November 2010.

Indicated Mineral Resources now comprise 38% of the total resource due to infill drilling and a consequential increase in geological confidence.

Cape Lambert indicated the updated Mineral Resource for Marampa provides it with a mineral inventory it says can support a production profile of 10 million tonnes per annum of hematite concentrate for more than 20 years.

Total near surface oxide Mineral Resources have increased to 42 million tonnes at 31.7% iron with the highest grade resources located at Matukia (34.8% iron), Rotret (36.8% iron) and Mafuri (31.5% iron).

In the western portion of Mafuri, oxide iron mineralisation varies from 10 metres to 30 metres in thickness with a sub-horizontal to shallow dip to the southwest.

Cape Lambert said this provides a large expanse of near-surface mineralisation with a very low waste to ore stripping ratio.

The company is confident the shallow soft, higher grade oxide hematite Mineral Resources at the Mafuri, Rotret and Matukia deposits represents potential start-up ore with lower mining and processing costs early in mine life.

The rise of China as an economic powerhouse has been a fairly substantial contributing factor to Australia’s recent economic prosperity.

This was made very clear in a speech given by Ouyang Cheng, who is currently Second Secretary for economic and commercial affairs of the Chinese Embassy in Australia.

Speaking at the Australian Resources China Investment Congress in Adelaide Cheng told his audience of the importance the symbiotic relationship our two countries currently share is to the well-being of both economies.

“China attached great importance to its economic and trade relations with Australia,” Cheng said in his address.

“With joint efforts, the trade and investment between our two countries were increased at a fast pace in the past years.”

Cheng provided statistics from Chinese Custom’s data that showed bilateral trade exceeded US$88 billion last year comparing it to the US$10 billion in 2002.

In 2010, China exported US$27 billion to Australia and imported US$61 billion from Australia

Last year Australia became China’s 7th largest trade partner, while China has become Australia’s largest trade partner as well as our biggest service export destination.

“I am of the view that currently, China and Australia are at the best time to further promote bilateral economic cooperation,” Cheng continued.

He pointed to visits both countries had received from dignitaries including Australian Prime Minister Julia Gillard and Jia Qinglin Chairman of the National Committee of the Chinese People’s Political Consultative Conference.

Cheng said these visits highlighted the eagerness of both countries to propel China-Australian political and diplomatic reelations.

However, he also politely suggested a few ways we could probably make things a bit easier for his countrymen to do business here.

“We believe that it would be Australia’s benefit if Australia could channel more competition in its market, either from home or abroad,” he said.

Cheng indicated efficient competition would benefit both Australia’s economy and consumers making particular mention that it took nearly 10 years for Chinese apples to enter Australian market.

“Some Chinese enterprises have experienced difficulties during their investment and operation in Australia,” he said.

“Including long period of approval procedure, slow implementation or delay of the projects, localization of the enterprises, different enterprise culture and management patterns, etcetera.”

The recent problems being endured by the Oakajee Port and Rail consortium is probably a good case in point.

THE $6 billion port and rail project in Western Australia hit a major road block when Chinese metals major Sinosteel signalled it is to wind up its $2 billion Weld Range iron ore project.

Sinosteel Midwest Corp stopped all major work at the project. It then laid off 43 workers and closed its office in the mid-west WA town of Geraldton.

Sinosteel’s move was a reaction to cost blowouts and lengthy delays that were being experienced in building the critical infrastructure project.

The way Australia conducts its business, especially in regard to large infrastructure projects where government funding is crucial, is obviously more hamstrung than those of a similar nature in China.

This means Chinese investment does get somewhat impatient with the length of time necessary to clear such hurdles as environmental approval, land rights issues and community consultation.

“We could have strong confidence that our two countries would have more cooperation and enjoy a more prosperous future,” Cheng said.

“However, we shall also realize the challenges and difficulties ahead.

“If these challenges couldn’t be dealt with properly, it would be difficult for China and Australia to maintain a healthy and steady economic cooperation.”

Perhaps any potential Chinese investors could sit down with one of our home-grown philosophers in Collingwood Football Club coach Mick Malthouse.

His famous, “the ox is slow but the earth is patient”, quotation is probably more relevant now than ever.

 

THE BOURSE WHISPERER: Western Australia-focused gold producer Ramelius Resources produced just over 100,000 ounces of gold from its wholly owned Wattle Dam gold mine for the year to 30 June 2011.

The result flows on from a strong June quarter production of approximately 25,500 ounces of gold at the mine located 25 kilometres south west of Kambalda.

“This is an excellent outcome for the full year, and given the excellent margin on this high grade gold production, the company looks forward to continued success at Wattle Dam in the future,” Ramelius Resources chairman Robert Kennedy said in the company’s ASX announcement.

The June quarter production result brings total gold production for the Wattle Dam mine to over 200,000 ounces, including production from the former open pit of 51,000 ounces.

Ramelius is continuing to develop the next stage of production at Wattle Dam with the decline now 340 metres below surface, some 20m from the base of the new mining zone Block D.

The decline extension is expected to be completed by the end of August.

Development of ore drives on the 60m RL and 40m RL has begun and this ore will be treated in the September and December 2011 quarters.

New extensional exploration drilling below Block D will now begin in the first week of August 2011, after a delay by the contractor in making a rig available.

The company is also moving along at its Mt Magnet project, located north east of Perth, with the planned schedule for gold production to begin in January 2012.

The company said it is confident discussions with the Western Australian Department of Mines & Petroleum could result in its mining plan being accepted soon, clearing the way for mining to commence in late August 2011.

THE BOURSE WHISPERER: As the mining sector continues to recover from the Global Financial Crisis of 2009 the listing of Initial Public Offerings from Western Australia has been growing proportionally.

According to new figures released in the Deloitte Corporate Finance survey, Western Australia was responsible for 63 IPOs in the year ending 30 June 2011.

This almost doubles the 33 hopefuls that listed on the boards of the Australian Securities Exchange in the previous financial year.

Source: Deloiite

The value of funds raised through IPOs also increased sharply, up from $266 million to $604 million displaying renewed confidence in what before the crisis hit had been fertile ground for companies attracting new investment.

Although it led the field, WA was not alone in witnessing an increase in IPO listings.

The Deloitte Corporate Finance IPO survey revealed that Australia-wide FY11 produced 123 floats, almost double the number in the previous financial year.

Deloitte Corporate Finance partner, Andrew Annand, said Western Australia not only generated more IPOs than any other state in 2010 it also accounted for five of the 10 best-performing floats, led by the resources sector.

The value of funds raised from investors grew from $4 billion in FY10 to $7.6 billion in FY11, however, Annand said the strong-looking numbers belied a disappointing second half of the year for IPO activity.

“The value of funds raised reflected two big-value floats earlier in the year of QR National and Westfield Trust, which together raised almost $6.1 billion,” Annand said.

“The number of floats was boosted by activity in the resource sector, which produced 95 IPOs, or almost 80 per cent of all the floats for the year.

“The successful listing of Queensland Rail in particular raised expectations for the IPO market in the new year, however, overall the market has failed to live up to these expectations, with many businesses foregoing a listing, often in favour of a trade sale.

“The equity market simply couldn’t match the valuation expectations of vendors or those achieved through private sales.”