Austin Exploration turns cash flow positive

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THE ROADHOUSE BOWSER: Austin Exploration (ASX: AKK) has announced the company is now cash flow positive on a monthly basis.

This company said the achievement marks the success of Austin’s development strategy of simultaneously advancing multiple projects.

Oil production and monthly cash flow has increased as the Red Bud well in Texas was put into production.

In Texas the company’s Curington well is now in flow backtesting and is expected to begin generating monthly cash flow shortly while the Seaducer well is also currently being drilled.

Austin has met all required cash calls for these three wells and as a result, will be receiving the maximum possible cash flow as each well goes into production.

Whilst the production performance from the company’s assets in Texas is encouraging, it highlighted other factors contributing to the positive cash flow.

Production from the Kentucky wells is at its highest level ever. Oil production has increased in Colorado and the sale of heavy gases in Colorado is now occurring and strong production continues from Austin’s Mississippi wells.

“This accomplishment is a reflection of the focus, dedication, and capabilities of the entire Austin team – from the executive management team through all operations,” Austin Exploration CEO and managing director Dr. Mark Hart said in the company’s announcement to the Australian Securities Exchange.

“Austin is now very well placed to significantly ramp up production for its diverse portfolio of oil and gas assets in Texas, Colorado, Mississippi, and Kentucky.

“We have significant untapped potential in our portfolio.

“By covering all operating and administrative expenses on a monthly basis, excess cash flow will now be used to drill further wells and further increase production and cash flow.”

Fund Raising across the Boards

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THE FUND RAISER: Always good to see funds raised and then put to good use out in the field.

Finance to Fund Mankarga 5 Feasibility Study

West African Resources (ASX: WAF) has signed a Committed Term Sheet with the Metals & Energy Capital Division of Macquarie Bank Limited to provide a two-year US$5 million convertible loan facility to fully fund the completion of the Feasibility Study for the company’s Mankarga 5 heap leach gold project in Burkina Faso.

“It is very pleasing to have the support of Macquarie in developing the Mankarga 5 heap leach starter project,” West African Resources managing director Richard Hyde said.

“It strongly endorses both the quality of the Mankarga 5 project, and the company achieving its aim of being a plus-50,000 ounce per annum of gold producer by the end of 2015.”


$0.46 million R&D tax refund

Australia Minerals and Mining Group (ASX: AKA) has received a research and development (R&D) tax refund of $462,172 under the federal government’s R&D Tax Incentive Scheme.

The company’s claim relates to the costs of its R&D activities conducted during the 2013/2014 financial year, particularly in relation to the development and test work of its 100 per cent-owned high purity alumina (HPA) project.


$3.6 million Placement

Red River Resources (ASX: RVR) completed a capital raising with commitments received for a placement of Fully Paid Ordinary Shares to raise $3.6 million before costs.

The placement is for 20 million shares at 18 cents each to institutional investors and professional and sophisticated investors.

“The company is pleased to welcome a number of institutional investors onto the company’s register,” Red River Resources managing director Donald Garner said.

“We are very pleased with the support we have received for this capital raising.

“We will now progress the restart studies, commence exploration activities at Thalanga as well as to continue evaluation work on our current project pipeline.”

Proceeds of the placement will be used for working capital as well as directed to ongoing project development activities at the company’s Thalanga asset, including the Thalanga restart study, a mining option/evaluation study on the current project pipeline and the company will also restart exploration activities on its Southern Region assets.

Orbis Gold: The SEMAFO offer wasn’t good enough

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THE CONFERENCE CALLER: ROADHOUSE EXCLUSIVE While at Mining 2014, The Roadhouse was able to ambush Orbis Gold managing director Peter Spiers after he gave his presentation.

Spiers didn’t offer much lip service to the SEMAFO offer during his talk and wasn’t what you would describe as being overly keen on discussing it afterwards, except to say that Orbis had rejected the offer simply because it believes it to greatly undervalue the company.

Spiers pointed to the work the company had already completed at the Natougou gold project, which he said had only just scratched the surface of what the project had to offer.

Whether he expects SEMAFO to come back with a superior offer – he said that was entirely up them – if they are prepared to up the ante that would of course be looked at.

From his demeanour, The Roadhouse would suggest that offer would need to be very, very attractive.

If there are other suitors in the wings, Spiers kept his cards very close to his chest, saying a number of third parties were hovering, but again, whether they are prepared to speak in numbers Orbis may consider to be near the mark – only time will tell.

Website: www.orbisgold.com

Friday Flashback

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THE WEEKLY WRAP: Everybody hit the pub early last week as the bourse closed in positive territory once again ending the market’s best week since February.

The scene was set for a jolly Friday with good news from both Europe in the form of the release of better-than-expected euro-area manufacturing and consumer confidence data and some hearty corporate earnings reports in the US.

The news wasn’t all good for the resources sector however with the big miners leading a downward charge with BHP Billiton (ASX: BHP) down 10 cents to $33.74, Rio Tinto (ASX: RIO) down 18 cents at $60.05 and Fortescue Metals Group (ASX: FMG) six cents lower at $3.47.

It would appear the continued depressing outlook for the iron ore price is still troubling all ends of town.

The Aussie market had a fun start to the week, following positive leads from the United States with buyers more keen on big bank stocks than they were on big mining stocks.

Fairfax’s Trading Room put this down to, “investors prepare for the US Federal Reserve to announce an end to quantitative easing stimulus measures when the Federal Open Market Committee meets mid-week.”

Among the juniors Gold Road Resources (ASX: GOR) found another cluster of Yamarna gold targets, Rox Resources (ASX: RXL) extended the strike of its Teena zinc prospect, and Goldphyre Resources (ASX: GPH) moved into the Fraser Range next door to Sirius (ASX: SIR).

Doray Minerals (ASX: DRM) pulled a Deborah Harry and kept everybody ‘Hangin’ on the telephone’ by requesting an extension to its trading halt in regards to the hush-hush “potential corporate combination”, possibly with Mutiny Gold (ASX: MYG), but without confirming anything.

All that changed on Tuesday as the merger was announced, which will result in Mutiny becoming a wholly-owned subsidiary of Doray.

Mutiny non-executive chairman Allan Brown will join the Doray Board as a non-executive director, while Peter Alexander is to remain as non-executive chairman.

The two companies believe the merger will create a mid-tier gold company with a complementary portfolio of high-grade Western Australian production, development and exploration assets.

The combined group will have a Mineral Resource base in excess of one million ounces of gold at a grade of 7.7 grams per tonne gold plus 27,000 tonnes of copper at a grade of 0.9 per cent copper.

Elsewhere the gloves were off in the Orbis Gold (ASX: OBS) – SEMAFO stoush with the takeover target announcing it has decided to ditch the Subscription and Co‐Operation Deed, under which Greenstone Resources proposed to subscribe for US$20 million of Orbis Gold shares at a price of 42 cents per share – upping the ante to complete the raising at 60 cents per share.

Life hasn’t been this exciting in the junior resources sector in ages!

At the Mining 2014 Conference in Brisbane Dory managing director Allan Kelly exclusively told The Roadhouse he believed the merger deal with Mutiny, “combines two great projects in one producing asset in Andy Well and a development asset at Deflector.”

While at Mining 2014, The Roadhouse was able to ambush Orbis Gold managing director Peter Spiers after he gave his presentation.

Spiers didn’t offer much lip service to the SEMAFO offer during his talk and wasn’t what you would describe as being overly keen on discussing it, except to say that Orbis had rejected the offer simply because it believe it to great undervalue the company.

 

Doray – Mutiny merger makes sense: Allan Kelly tells The Roadhouse

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THE CONFERENCE CALLER: The Resources Roadhouse caught up the busiest man in the Australian resources sector, Doray Minerals (ASX: DRM) managing director Allan Kelly at the Mining 2014 Conference in Brisbane.

Kelly had just finished his presentation to the conference, during which he outlined the company’s rational behind the proposed merger with fellow Western Australia-focused gold play Mutiny Gold (ASX: MYG).

“The deal combines two great projects in one producing asset in Andy Well and a development asset at Deflector, which looks a lot like Andy Well, apart from the copper,” exclusively told The Roadhouse.

“The combined assets have a resources base of over one million ounces of gold at a grade of around eight grams per tonne.

“They are the two stand out [gold] projects in Western Australia.”

Kelly said the deal also de-risks the single mine element of the current Doray model.

“If you have peaks and troughs in your production profile and you only have one asset, it is difficult to manage,” he explained.

“Companies like Evolution, who have multiple mines, are able to smooth out the bumps.

“If Mutiny were to develop Deflector by themselves, they would be in the same position as us.”

Kelly didn’t appear to be too worried by the market’s usual irrational frenetic response to such news, which has seen the company’s share price take a belting since coming out of its self-imposed trading halt leading up to the announcement of the deal.

“All our institutional shareholders like the deal and have said that it makes sense,” he said.

“It is a logical combination for us – the same sort of style of deposit – in WA.

“It reduces our risk and doubles our production profile quite cheaply, and we are getting it at a pretty good price in a market that is pretty depressed.

“We have a bit of work to do, we have to finalise the funding and there is probably a bit of tweaking to do to the BFS, but we want to get Deflector into production as soon as possible.

“We’re targeting early 2016. Mutiny has been saying November 2015, which we think may be a bit optimistic, but there is no reason for us to sit around.”

Queensland Miner and Explorer of the Year Awards

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THE CONFERENCE CALLER: The Queensland Explorer and Miner of the year awards were presented during the opening session of the Mining 2014 Conference in Brisbane.

A packed auditorium watched on as Minister for Natural Resources and Mining Andrew Cripps handed out the framed certificates.

The Explorer of the year nominees were Hammer Metals, Minotaur Exploration Ltd and Senex Energy.

The Miner of the year nominees were Evolution Mining, CopperChem and QCoal.

Winner of the Explorer award was Minotaur Exploration (ASX: MEP), which recently, along with its Eloise copper Joint Venture partners, committed to a $6 million accelerated exploration program through to June 2015.

The program is to include new ground geophysics and deep drilling at the Artemis copper-gold-zinc prospect 50 kilometres southeast of Cloncurry in Queensland.

Twenty kilometres west of the Eloise copper mine the company’s first drill hole encountered a zone of massive sulphides, returning 22 metres at three per cent copper, 3.8 grams per tonne gold, 112g/t silver and 6.6 per cent zinc from 157m.

Accepting the award Minotaur Exploration executive director Tony Belperio said it was a pleasure to accept the award, particularly on behalf of the company’s technical team.

 

Minotaur Exploration executive director Tony Belperio receives the award from Minister Andrew Cripps

 

“They worked very, very hard,” he said.

“It was a fantastic discover – planned methodically, executed and there it was.

“We have only put three holes into the body, but the drill rigs are back this week and we look forward to a very exciting three to six months when we have some new information coming out of this deposit.”

The Miner of the Year award was picked up by QCoal. The company’s Byerwen coal project in the Bowen Basin is the most recent coal operation the independent company has developed.

The company has been developing coal projects in Queensland for over 25 years.

Byerwen is forecast to produce up to 10 million tonnes of premium hard coking coal per year, and will employ a construction workforce of up to 350 and 500 during operation.

It has an expected mine life of 50 years.

The company was not expecting the win, exemplified by the company’s Leith McLaughlin who was standing at the rear of the auditorium and had to fight his way to the stage.

 

QCoal’s Leith McLaughlin receives the Miner of the Year award

 

“This is a bit of a surprise,” he said.

“We look very much forward to getting on with the job of opening the Byerwen coal project in the coming months.”

New Standard Energy upgrades Eagle Ford to 2P value

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THE ROADHOUSE BOWSER: New Standard Energy Limited (ASX: NSE) released results from an independent reserves report on the company’s Eagle Ford acreage, which it claims has increased its Proved plus Probable (2P) reserves by 83 per cent, to 4.89 million barrels of oil equivalent (BOE), creating a 2P PV10 value of $72.3 million for its Atascosa project.

New Standard Energy said both the 1P and 2P reserves comprised 87 per cent oil and natural gas liquids (NGLs), which it claims has further reinforced the highly liquids prone nature of the Atascosa project.

The upgraded independent reserves report from Netherland, Sewell & Associates Inc (NSAI) also increases 1P and 3P reserves by 133 per cent and 33 per cent respectively.

The independent report calculated PV10 value for Eagle Ford reserves net to New Standard at:

$30.8 million for 1P; $72.3 million for 2P; and $148.5 million for 3P.

The company outlined reserves growth since January 2014 report at:

133 per cent increase in net 1P reserves to 3.58 million BOE;

83 per cent increase in net 2P reserves to 4.89 million BOE; and

33 per cent increase in net 3P reserves to 16.45 million BOE.

“New Standard’s business strategy in the United States is targeted on increasing reserves to increase the value of the company’s Atascosa project,” New Standard Energy managing director Phil Thick said in the company’s announcement to the Australian Securities Exchange.

“The increased reserves are a pleasing and robust measure of the progress we are making to execute that strategy.”

New Standard indicated the upgraded reserves report also places a Present Value discounted at 10 per cent (PV10) on the reserves.

Following this report, the company has now confirmed with Credit Suisse that the next draw under its enhanced debt facility is available as and when required, to support funding of the next two wells, the first of which spudded last week.

New Standard said it will continue to use this facility conservatively to manage risk.

The PV10 figures estimated by NSAI were US$27.1 million for 1P, US$63.6 million for 2P and US$130.6 million for 3P.

“The PV10 results from the reserves report highlight the increasing value of the Atascosa project, even during a period of low oil prices and despite the relatively short production history of the Peeler 5H and 6H wells,” Thick said.

“Even though we were conservative with our oil price assumptions the independent values are significant and clearly demonstrate there is still substantial upside as we drill our next wells.

“The large increase from the short production history of just two additional wells illustrates the enormous leverage associated with our Atascosa project and confirms it is primed for development to drive significant value.”

Website: www.newstandard.com.au

Empire JV granted Red Gully production licences

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THE ROADHOUSE BOWSER: Empire Oil & Gas (ASX: EGO), operator of the EP 389 Joint Venture (EGO 76.39%, ERM Power (ASX: EPW) 23.61%), announced the JV has been granted Petroleum Production Licences L 18 & L 19 by the Western Australia Department of Minerals and Petroleum.

The licences are over two exploration blocks, which cover approximately 18 square kilometres incorporating the Red Gully-1 and Gingin West-1 producing fields and the Red Gully Processing Facility.

The Red Gully-1 and Gingin West-1 wells have been producing gas and condensate on an Extended Production Test (EPT) through the Red Gully Processing Facility since first gas was produced in June 2013 and commissioning of the facility occurred in September 2013.

The Red Gully-1 B Sands were perforated in late June 2014 and have since been tested via production through the facility with average daily sales for the September 2014 Quarter of 7.7 terrajoules (TJ) and approximately 360 barrels of condensate per day.
 
“This marks a major milestone in the transformation of Empire from an exploration company to a significant onshore Perth Basin gas and condensate producer.” Empire Oil & Gas chief executive Ken Aitken said in the company’s announcement to the Australian Securities Exchange.

“The JV plans to use the Red Gully facility as a ‘production hub’ for future exploration discoveries in the production licences and greater EP
389 area.

“These licences give the JV further security of tenure over what is a prime petroleum production asset with extensive exploration potential and efficient access to a growing market via the existing infrastructure.”

Email: admin@empireoil.com.au

Website: www.empireoil.com.au

CSL to acquire Novartis influenza vaccine business

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THE ROADHOUSE PHARMACY: CSL Limited (ASX: CSL) has agreed to acquire Novartis’ global influenza vaccine business for US$275 million.

The business will be combined with CSL’s subsidiary, bioCSL.

The company claims combining bioCSL’s existing influenza vaccine operations with the Novartis business will create the number two global player in the US$4 billion global influenza vaccine industry, with manufacturing plants in the US, UK, Germany and Australia, a diversified product portfolio and strong pre-pandemic and pandemic franchises in its major centres of operation.

The combined business will have a strong growth profile and is expected to achieve sales approaching US$1 billion per annum over the next three to five years.

CSL explained the Novartis influenza vaccine business is one of the largest in the world, with net sales in the 12 months to 31 December 2013 of US$527 million.

The business has state-of-the-art manufacturing facilities and a diversified, late stage product pipeline.

“The Novartis influenza vaccine business provides bioCSL with a global leadership position in an attractive sector we understand intimately,” CSL managing director and chief executive officer Paul Perreault said in the company’s announcement to the Australian Securities Exchange.

“It will transform bioCSL by giving it first class facilities and global scale as well as product and geographic diversity.

“CSL has demonstrated its ability to make the most of specialist pharmaceutical acquisitions in areas we know well and this transaction has the potential to create a global platform for bioCSL that is comparable in many aspects to our global protein science business.”

Final settlement of the transaction is expected to occur in the second half of calendar year 2015, subject to regulatory approval.

Website: www.csl.com.au

Alchemia Phase III trial misses the mark

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THE ROADHOUSE PHARMACY: Alchemia Limited (ASX: ACL) announced its pivotal Phase III trial of HA-Irinotecan in the treatment of patients with metastatic colorectal cancer (mCRC) did not meet its primary endpoint of statistically significant improvement in progression-free survival (PFS).

The Phase III trial enrolled 415 patients across 76 clinical centers worldwide as a randomised, double-blinded, active controlled study of Alchemia’s proprietary HyACT technology formulated with the well-known chemotherapeutic drug, irinotecan.

HA-Irinotecan or irinotecan were administered as part of the conventional FOLFIRI chemotherapy regimen (combination of folinic acid, fluorouracil and irinotecan) in patients with mCRC who were candidates for second-or third-line chemotherapy.

The company explained the primary objective of this trial was to demonstrate superiority in progression-free survival (PFS) of its HA-Irinotecan over irinotecan.

The trial demonstrated a median PFS of 5.5 months for patients treated with HA-Irinotecan as part of the FOLFIRI chemotherapy regimen.

Patients treated with the FOLFIRI regimen containing standard irinotecan also achieved a median PFS of 5.5 months.

A planned interim analysis of overall survival was performed and the FOLFIRI and HA-Irinotecan arms demonstrated an equivalent overall survival of approximately 14 months.

The safety profile was equivalent between both arms of the study.

“We are extremely disappointed in the outcome of this trial and extend our appreciation to trial investigators, the clinical sites and the hundreds of patients who participated in this study,” Alchemia Limited chief executive officer Thomas Liquard said in the company’s announcement to the Australian Securities Exchange.

“We will undertake further analysis of this trial.

“We expect to report back to the scientific community and the market with further details on our data reviews and corporate strategy early in 2015.”

The company’s chief scientific officer, Dr Tracey Brown said Alchemia will be conducting an in-depth review of the data to identify the possible reasons for an unexpectedly high median PFS outcome in the irinotecan control group.

“We will also investigate the impact of other variables, including potential regional and country-specific differences, in outcomes of our Phase III study,” Dr Brown said.

“With these additional analyses in hand, we will be in a better position to formulate the next steps for the HA-Irinotecan development programs.”

Website: www.alchemia.com.au