CORAZON MINING

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We’re Talking Nickel – Are You Listening

The story of Perth-Based Canadian-focused nickel exploration play Corazon Mining Limited may not be widely known but it is one the company’s shareholders are eager to see through to the end.

Corazon Mining listed on the ASX in 2005 as Graynic Metals, an exploration company with a focus on base and precious metals, predominantly in Western Australia.

For a brief moment the company changed its name to Xanadu Resources and ventured off in search of nickel laterites in Guatemala.

Another change of name, this time to Corazon Mining, resulted in a subsequent change of focus to nickel sulphides in Canada.

“The board came to the decision that nickel laterites were probably not a right fit for a junior company,” Corazon Mining managing director Brett Smith told The Inside Story.

“Nickel laterites require an enormous amount of capital to develop, so we pulled out of the Guatemalan opportunity as the Canadian opportunity arose.

“This new project is unique in that we have inherited part of an old mining area, in which we see there is still a lot of potential.”

Corazon’s key focus is the Lynn Lake project located in the Canadian province of Manitoba.

The Lynn Lake project is located in the Lynn Lake nickel camp, Canada’s third largest nickel mining region.

 “The current board is very value focused and we are all of the opinion that this project and nickel sulphide is the right option for us at this stage,” Smith continued.

“It is something we are familiar with and this project is something we believe we can add value to quite easily and its real potential has yet to be realised.

“It is a brownfields nickel sulphide play and our strategy is to define the remnant resources around the old mine we have inherited and to discover new deposits.”

Corazon has an option to acquire 100% equity in the Lynn Lake nickel sulphide project by spending CAD$3 million on exploration over 3 years, followed by a CAD$2 million vendor payment.

“Besides the regional prospectivity of the project, the main aspect that attracted us to the project was the EL Mine,” Smith said.

“The EL Mine is a mafic/ultra-mafic plug containing massive sulphide, nickel, copper, cobalt that historically has only been mined down to around 200 metres in an area where surrounding mines have been mined to a depth of around one kilometre.”

Corazon holds the largest land holding within the Lynn Lake region, which incorporates the historic EL Mine and an exploration land holding covering several drill-defined base and precious metal prospects, including six drill-defined VMS deposits, as well as numerous untested geophysical targets.

“We think we are a unique play in that we are a nickel junior with a sub $10 million market cap and nickel sulphide resources,” Smith said.

“Generally, if you are thinking nickel and nickel sulphides you have to go to mid-tier production companies or grassroots explorers. There’s no-one in between those two levels.

“We want to show there is an exciting path towards production by demonstrating the upside of the project and get some momentum – a base level of resource from which we can fly.”

That momentum began to take shape in October when Corazon released a maiden (inferred) resource for the EL Mine of 1.8 million tonnes at 1.0% nickel equivalent (0.6% nickel equivalent cut-off).

The resource included 14,000t nickel, 9,000t copper and 400t cobalt and was regarded by the company at the time to be a significant step towards determining the development potential of the project.

“We have defined a resource for the top 600 metres that is an interim resource,” Smith explained.

“We have been very conservative and have only included holes we have drilled, holes we can sample and holes on which we have survey information.

“We have discarded a lot of historical information; however we feel we can add a lot of value with a minimum of drilling in that resource above 600 metres.

“We don’t believe the resource we announced late last year truly reflects the exploration potential so we also put out an exploration target (3.5Mt to 4.6Mt at between 0.8% – 1.45% nickel, 0.4% – 0.7% copper and 0.01% – 0.03% cobalt) down to around one kilometre deep.”

Historic mining at Lynn Lake ran for 23 years with a run-of-mine grade of 1% nickel, 0.5% copper.

Although the EL Mine was the highest grade mine in the district (+2.5% nickel), these grades appear low when compared to the Kambalda styled narrow high-grade nickel sulphide deposits Australians are more familiar with.  However, the Lynn Lake project hosts a very different style of deposit; one that is a large tonnage, low grade, low cost style of mining.

“We believe there is good potential for about 50,000 tonnes of nickel, with copper and cobalt credits, grading around 1% to 1.5% nickel,” Smith said.

Ironically this great potential is hindering Corazon’s share movement with the current shareholder base reluctant to sell. Around 50% is held by the top 20 shareholders.

“What we have been doing lately is getting out there and letting new, prospective investors know about the company, get more interest in the stock and be active in the field,” Smith said.

“Eventually if we’re out there drilling holes and people are buying and selling the stock then our liquidity should improve.”

Corazon is about to embark on an intensive exploration program it hopes will advance both the project and its share price.

The proposed work programs include 5,000 metres of drill core and down-hole EM geophysics, 420 line kilometres of aerial VTEM and magnetic geophysics, 40 line kilometres of ground IP geophysics, project coverage with detailed ground gravity geophysics and preliminary mining studies on the EL Nickel sulphide deposit.

The EL Deposit will be a major focus for this upcoming raft of exploration activity as it undergoes resource up-grade drilling at shallow depths, drilling and down-hole EM surveys of extensions to the mineralisation as well as mining/engineering studies of the resource.

The program will also test other nickel sulphide and zinc-copper-sliver VMS targets within the project.

“This area hasn’t really been extensively explored since the 1970s and we believe there is plenty of upside with good modern exploration techniques,” Smith said.

“It is a metal-rich project and we are proposing a very active exploration program for the next 6 months.

“Our main aim with our exploration strategy is to increase this resource. We are hopeful that, with this round of drilling, we can underpin some certainty in our exploration target for the EL Mine.

“What we would also like to achieve is the discovery of another nickel sulphide deposit.”

Corazon considers the place this is most likely to occur is directly beneath the EL Plug.

Indications that have boosted these hopes include improving grades and faults that have been mapped

“We think these faults are very good places to explore,” Smith continued.

“Want we will be doing is drilling one or two deep holes down to about 1.2 kilometres then perform downhole electro-magnetic surveys which will accurately locate massive sulphide targets for follow-up resource drilling.

“The previous exploration carried out at Lynn Lake was old-school. Nothing like we are capable of doing now with the processing and modelling of information.

“These days we can put exploration data into 3D packages and identify anomalies and drill targets that were missed back then.

“There’s a different level of investigation we can perform now, compared to what was done before.”

A recent successful fund raising means Corazon will be financially well placed to do what it has said it wants to do.

“We’re going to be hitting areas where we know there is mineralisation or a geophysical target that looks just as good as the area where we know there is mineralisation,” Smith said confidently.

“A coincident EM with a magnetic anomaly could be another EL Plug with sulphides or it could be a VMS. Either way we would be very happy.”

Corazon Mining Limited (CZN)
…The Short Story

HEAD OFFICE
Level 1
350 Hay Street,
Subiaco  WA  6008

Ph: +61 8 6364 0518   
Fax: +61 8 6210 1872

Email: admin@corazon.com.au
Web: www.corazon.com.au

DIRECTORS and MANAGEMENT
Clive Jones, Brett Smith, Jonathon Downes, Adrian Byass, Rob Orr, Andy Thompson

MAJOR SHAREHOLDERS
Board 10%
Dr AR Brown 6.5%
Merrill Lynch (Aust)  3.9%
Bullseye Geoservices 3.4%
UBS Wealth Management (Aust)  3.3%

SHARES ON ISSUE
78.52 million

MARKET CAPITALISATION
$9.42 million (at press)

TRIANGLE ENERGY (GLOBAL) LIMITED

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 Junior gas Producer Works the Angles

A change of name and project-focus saw Perth-based Triangle Energy transform from a company with promising exploration interests to become a gas and condensate producer generating cashflow.

At an AGM in November 2009 shareholders of Maverick Energy Limited voted in favour of acquiring Triangle Energy Limited and changing the company name to Triangle Energy (Global) Limited.

Triangle Energy had already secured the 100% ownership of Triangle Pase Inc (TPI) in June 2009.

TPI, in turn holds 100% interest of the Pase Production Sharing Contract (PSC), located in Aceh province, North Sumatra, Indonesia.

The Pase Field covers an area of some 922 square kilometres that was originally acquired by ExxonMobil, which had carried out limited exploration on the acreage specifically targeting gas supply for the Arun LNG plant.

“It was a field that had been closed because it wasn’t seen as a viable opportunity for a major oil and gas company,” Triangle Energy Executive Chairman John Towner told The Inside Story.

“We came along and viewed it differently. We saw it as being extremely viable and we took up the opportunity.”

The Pase Field was discovered in 1983 with production commencing in 1998. In 2003 ExxonMobil estimated the field to contain 498 billion cubic feet (Bcf) of gas.

At the time Triangle Energy acquired the field cumulative production had totalled 183 Bcf.

Since the acquisition of TPI in June 2009 Triangle Energy has achieved the successful re-establishment of gas production at three wells: the Pase-A5 well in July 2009, the Pase A-6 well in October 2009 and the Pase A-1 well in April 2010.

“This is a big field with the potential to get much bigger,” Towner said.

“When we took it over it was pretty run-down and there wasn’t much happening.

“We have totally refurbished it to the point where it is now, once again, an operating gas field.”

The combined flow rate from the three re-established wells increased from 0 million cubic feet (MMcf) per day at the beginning of 2010 to 6.5MMcf per day at June 30.

By September the combined gas production was exceeding 10MMcf per day.

The gas from Pase is predominantly sold through the Arun LNG plant at a premium price tied to a basket of crude oil markers.  A small amount of Triangle’s gas (in 2010, less than 10% of gas sold), is sold to the domestic Indonesian market.

The Pase PSC is an arrangement between TPI and the Government of Indonesia that was originally signed between the government and Mobil Pase in February 1981 for a 30 year term.

This means the current PSC is due to expire in February next year, however Triangle Energy announced in March 2010 it had received verbal confirmation from the government’s PSC administrator, BPMIGAS of an extension of 377 days to the contract period extending the expiry date to February 2012.

TPI has applied for a 20 year renewal of the PSC, which is currently progressing through government channels including technical and commercial reviews by MIGAS and the Ministry of Energy and Mineral Resources, as well as approval from the Aceh government.

“Everything in that regard is going well so far and everyone is happy for us to be operating the project.”

The growth Triangle Energy has experienced this year has also resulted in the appointment of new personnel.

Rob Lemmey was appointed to the board as a company director in January following his appointment as country manager – Indonesia for TPI in December 2009.

Lemmey brings over thirty- five years experience and in-depth knowledge of business development of the Indonesian Oil and Gas industry.

Joseph Oravetz is a highly experienced Geophysical Engineering and joined Triangle Energy in June 2010 as exploration manager. He has worked globally for ExxonMobil, Chevron, and Premier Oil.

Triangle Energy is very conscious of its position within and responsibility to the community surrounding the Pase Field.

The company has been proactive in refurbishing two new schools and establishing a medical centre, where it is employing local people.

“We are employing more than 50 local people and are looking to employ as many local people as we can,” Towner explained.

“What people have to understand is that, unlike Australia that has many strings to its bow, these people don’t have that. They don’t share in the wealth that we and the rest of the world do.”

“We hold the view that as this is their country and their commodity they should be entitled to their share in it.”

“In return we get our share and everybody is happy.”

It is this attitude that is most likely to see Triangle Energy emerge as a preferred employment alternative for the local community.

Not only that but should another, similar project opportunity arise Triangle Energy would hope to be one of the first companies approached for its development.

“We have made for ourselves a pretty good start in the area that we can develop,” Towner said.

“We can become quite a large small company, but if we accomplish that in one region and everybody is pleased with what we do then we also develop the potential for that culture of accomplishment to spread.”

Giving back to the local community is an important cultural aspect of Triangle Energy, which was recently complemented by the company giving something back to its shareholders.

This was in the form of the payment of a maiden dividend to company shareholders in September of 0.2316 cents per share.

“We had a reasonably large amount of money in the bank,” Towner explained.

“We could have kept it but we decided to go to the shareholders and say, ‘this is our policy, that a portion of our net profit goes back to our shareholders’.”

“My view is simple. That is if you pay your shareholders a dividend they know what your policy is.”

…The Short Story

HEAD OFFICE
Unit 7, 589 Stirling Highway
Cottesloe WA 6011

Ph: +61 8 9286 8300
Fax: +61 8 9385 5184

Email: admin@triangleenergy.com.au
Web: www.triangleenergy.com.au

DIRECTORS
John Towner, Steven Hamer, Lewis Johnson, Adam Sierakowski, Rob Lemmey

MAJOR SHAREHOLDERS
Jarrad Street Corporate Pty Ltd     24.50%
Mr Kenneth John Bull             12.22%
Ucan Nominees Pty Ltd         9.39%
PT Prestige Global Petroluem     6.32%

BC Iron

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Everybody Needs Good Neighbours

When considering developing an iron ore project in the Pilbara region of Western Australia the first thing you should do is make sure you can move it.

When BC Iron managing director Mike Young joined the company the one factor that stood out most for him was how close it was to the railway infrastructure of Fortescue Metals Group.

“I saw a map of the Pilbara showing Port Hedland, Newman and all the iron ore deposits in north Western Australia,” Young told The Inside Story.

“When I first saw that map back in 2006, just on four years ago, the first thing I noticed was the proximity of the FMG infrastructure.

“That was the very first thing to attract my attention. Not the geology, not anything else.”

Since then it has been full speed ahead for BC Iron with the company having commenced mining in October putting it on track for its first shipment of iron ore through Port Hedland in December.

The major focus for the company has always been, from its first drill hole on April 10 2007 and first assays received in May that year, on getting its Nullagine iron ore project into production.

“It’s one thing that you that you go out and drill a lot of holes to get a lot of tonnes but if you haven’t got an avenue to port then why spend time and money defining a resource you’ll never move?” Young said.

“We have done the opposite. We drilled enough to get a mine going and we haven’t in fill drilled our other deposits.

“The key thing we did was, back in 2006 when we listed, we called FMG and we have had a good relationship with them ever since.”

The Nullagine iron ore joint Venture (BC Iron 50% : FMG 50%) is targeting production of one million tonnes of iron ore by June 30 2011 and everything seems to be on track for that.

The company recently announced the commencement of mining infrastructure construction at the JV following the granting of all approvals for the project by the WA Department of Mines and Petroleum.

The approvals comprise the Project Management Plan, the Mining Proposal and the Clearing Permit allowing work to commence on construction of a new 55 kilometre haul road running from the mine site to FMG’s Christmas Creek ore processing facility.

“When you do a mining project there are three permits that you have to get,’ Young explained.

“One is called the Project Management Plan and that is to do with safety and the environment and the really high-level matters.

“It looks at aspects of how you are going to manage the project rather than say, where your operations are going to go.

“Then you get the Mining Proposal: that’s when you demonstrate how you are going to mine the project; you are going to build this type of road and this is where it is going to go.

“Then to do the actual mining you have to obtain a Clearing Permit – that’s the environmental branch.

“Sometimes it goes to the Environment Protection Authority, if it is a big project or is in a sensitive area. Ours didn’t go up to the EPA it stayed within the mines department as it a low impact project.”

The last aspect BC Iron had to negotiate was getting what is called a Section 18 with the local Nyiyaparli people on the southern part of its proposed haul road.

“That’s been done now. We have met with them and now have approval to put in a Section 18 to disturb the site so everything is done,” Young said.

“All the final hurdles have been cleared and now all that remains is a race against time to achieve the one million tonnes before June.”

Looking at the location of the Nullagine JV would make some people ask why BC Iron has elected to construct its own haul road instead of using the nearby public access highway.

Young explained the reason for this is the vehicles the company will be using to move its ore from the mine to the Christmas Creek OPF.

“It seems a bit of a waste that we are not going to the trouble of paving the public road but the vehicles we are using on this road are different to say the least,” he said.

“A normal road train that you would use to haul iron ore on a public road carries 75 tonnes of ore.

“These carry 360 tonnes. They are big machines. Four trailers: one of which has its own engine. They are called Power Trans.

“They’re not what you consider ‘street legal’ so we are building this special purpose haul road. The road design has been reviewed and improved to ensure sustained haulage for the life of the project.”

BC Iron expects to become cash positive by around April 2011, which means by June the project should deliver $30 – $40 million free cash, which will be split half and half between the JV partners.

“That’s when we will really start to ramp up production,” Young said.

“Within six months we should, hopefully, be fully operational with a fully completed haul road and with everything going well we should be at full production.”

BC Iron’s achievement at Nullagine has been one of the fastest discovery to mine stories to be told in the Pilbara.

The question being asked by everybody now is what’s next for the company?

“We’ve got a business development that has been constantly reviewing projects,” Young said.

“We’ve looked at projects within the Pilbara, within Australia and outside Australia. That is our order of priority.

“One thing we want to do is work to our strengths, which are our relationship with the state government, with the Aboriginal people and the credibility and, basically, the good name that we have with all the stakeholders.

“We want to leverage of that so what you do first is obviously look within the Pilbara.”

Young is also eager to point out the first mover advantage the company has with FMG having been the first junior in the region to enter discussions with its larger neighbour over three and a half, almost four, years ago regarding third party access.

“In the early days we were a political weapon in their fight for third party access as they demonstrating their willingness in allowing third party access to their railway,” Young said.

“As we moved towards feasibility and the test pit they came to realise that yes, we did have a real project and that we could enter into a real joint venture with them.

“It is the politics of infrastructure that is really critical and that is what we have really come to understand.

“Jumping onto somebody else’s infrastructure is just so much simpler and delivers results so much quicker.

“A lot people who weren’t so complimentary a year ago when we did the deal with FMG are now a bit more pragmatic having spent that time trying to obtain their own third party access deals.”

BC Iron – The Short Story

HEAD OFFICE
Level 1
15 Rheola Street
West Perth WA 6005

Ph: +61 8 6311 3400
Fax: +61 8 6311 3449

Email: info@bciron.com.au
Web: www.bciron.com.au

DIRECTORS
Tony Kiernan, Mike Young, Morgan Ball, Terry Ransted, Steven Chadwick, Glenn Baldwin

MAJOR SHAREHOLDERS
Consolidated Minerals 22.7%
Regent Pacific Group 16.2%

SHARES ON OFFER
83,911,000