THE FUND RAISER: The junior explorers continue to attract plenty of financial backing.

Placement of Shares

Xstate Resources (ASX: XST) has placed 20 million fully paid ordinary shares at 5 cents each to raise $1 million in working capital.

The funds have been earmarked to fund the company’s exploration activities and for working capital requirements.

“These funds will enable Xstate to purchase additional 2D seismic data and expand the scope of our joint venture leasing and prospect capture within the Sacramento Basin in California,” Xstate Resources managing director Paul Cartwright said.

$1.2M raising

Apollo Minerals (ASX: AON) has completed a $1.2 million capital raise to fund the next phase of exploration at the Titan base-precious metals project.

The project is located in the emerging iron ore copper gold (IOCG) region in South Australia’s Gawler Craton copper-gold belt, close to the Prominent Hill and Olympic Dam deposits.

The focus of Apollo’s exploration programs at the project will be the Bundi prospect, which it has identified as a high priority IOCG target with the potential to host a large scale deposit.

The capital raise was via the placement of approx. 81.6 million ordinary Apollo shares at a price of 1.5 cents per share together with one free attaching option for every two shares subscribed, with an exercise price of 3 cents per share and an expiry date of 28 February 2017.

The placement was strongly supported by existing Apollo shareholders and also new investors.

Kingsrose raises $8 Million

Kingsrose Mining (ASX: KRM) has raised $8 million via a share placement to fund ongoing development of its second mine, Talang Santo.

The proceeds will allow Kingsrose to continue mine development at Talang Santo while it awaits final approval from the Indonesian Mines Department to transition to full production.

The proceeds of the raising will be applied primarily to the ongoing mine development at Talang Santo.

“We are delighted to have received such strong support from our existing institutional shareholders,” Kingsrose managing director Scott Huffadine said.

“We undertook the placement because we wanted to ensure that the company is funded through to full production at Talang Santo.

“It also means we can continue our development work at the mine while we wait for the final approval.

“This will ensure we can ramp-up to full production as quickly as possible once the approval is granted.”

Mutiny to raise $4.15 million

Mutiny Gold (ASX: MYG) has received commitments for approx. 92.6 million at an issue price of 27 cents per share, to raise $2.5 million.

The commitment include a placement to Ausdrill (ASX: ASL), which will take a strategic shareholding in the company and be appointed as Mutiny’s preferred contractor.

The funds from the Placement will allow the company to begin drilling gold targets at its Deflector gold-copper project at Gullewa, in Western Australia’s Mid-West Region.

Mutiny also proposes a 1:10 pro rata non-renounceable entitlement offer to raise up to an additional $1.65 million.

These additional funds will be used to commence Mutiny’s 2014 drill program, which is focused on near mine extensions highlighted by Sub-Audio Magnetics (“SAM”) surveys undertaken last year.

THE WELL SPUDDER: FAR Ltd (ASX: FAR) has received approval from the Ministry of Energy and Petroleum in Kenya for the first farm-in deal on the company’s onshore and offshore Kenya exploration permit, Block L6, located in the Lamu basin.

The farm-in deal has been struck with international petroleum logistics, marketing, trading, exploration and production company, Milio International.

Milio is based in Dubai and is looking to expand its commercial foot-print in East Africa.

 

Source: Company announcement

 

“We are pleased that the Cabinet Secretary for the Ministry of Energy and Petroleum has approved our recently announced farm out agreement for Block L6, Kenya,” FAR ltd managing director Cathy Norman said in the company’s announcement to the Australian Securities Exchange.

“We believe this deal, which FAR has secured funding for an onshore exploration well following a seismic survey, will evaluate the significant potential of the onshore part of Block L6 and unlock the potential of the wider Lamu basin in which FAR has a large acreage position.”

Under the terms of the deal FAR will be fully-funded through the drilling and testing of an onshore exploration well in Block L6, which is anticipated to spud in the first half of 2015.

FAR will also be fully-funded through the acquisition, processing and interpretation of a regional onshore 1,000 kilometre 2D seismic survey, which the company expects will confirm a number of prospects in onshore L6 as drill targets.

This seismic program is expected to commence in April 2014.

FAR retains a 24 per cent interest in the onshore part of Block L6 while preserving its 60 per cent interest in the offshore part of Block L6, which the company has estimated to contain, “substantial prospective resources”.

FAR indicated it is currently in discussions with parties to farm-in to drill an offshore well in Block L6.

“FAR has now completed three farm-out deals within the last 12 months and as a consequence is fully-funded through three high-impact exploration wells in the near future,” Norman said.

“Next month FAR expects to start drilling the first of two company making offshore wells in Senegal which are together targeting over 1.5 billion barrels of un-risked prospective resources.

“FAR’s farm in partners in Senegal are ConocoPhillips and Cairn Energy PLC.”

Email: info@far.com.au

Website: www.far.com.au

WHAT THE BROKERS SAY: Interesting news and views from across the Resource Analyst universe.

Website: www.psl.com.au

Cradle Resources (ASX: CXX)

The recently released independent scoping study on Cradle Resources’ (ASX: CXX) Panda Hill niobium project (50 per cent owned with right to acquire balance) demonstrated a robust project at current prices.

There were several highlights which included lower capital/sustaining costs and higher grades (when compared to our estimates).

In addition, the study briefly examined a staged case whereby upfront capital costs were estimated to be c30 per cent lower compared to the base case.

On balance the base case was slightly lower than our estimates on a Net Present Value (NPV) basis due to higher operating costs and lower recoveries which have scope for improvement.

Robust Niobium Project:

Overall, the scoping study demonstrated a robust Ferroniobium project.

Encouragingly, upfront capital costs were c19 per cent lower (US$185 million) than Cradle’s initial estimates and sustaining capital was lower.

Whilst upfront capital was significantly lower this was offset by higher operating costs which were up c26 per cent from our previous estimates.

Recoveries were also slightly lower at 62 per cent LOM (PSL est. 65 per cent).

Based on the study we estimate a project NPV (at12 per cent) at US$332 million and IRR of 56 per cent.

At decision to mine our project NPV (at 12 per cent) increases to US$466 million.

PFS to Further Optimise:

Cradle plans to commence a Pre-feasibility Study (PFS) in Q2/2014 which is anticipated to be completed in Q4/2014.

The study will examine further project optimisations. The key areas highlighted for improvement include:

1) recoveries and reagent use;

2) reduced contract mining rates; and

3) power costs.

These have the potential to further reduce operating costs.

Staged Case Considered with 30 per cent Lower Capital Costs:

As part of the scoping study, a staged approach was briefly examined. Under this scenario the study estimated that capital costs would be c30 per cent lower at US$125 million.

The plant would initially process one million tonnes per annum (Mtpa) then be expanded to 2.3Mtpa after the first three years.

This lower capital option will be further examined in the PFS. The advantage is the reduced dilution with equity and/or lower debt requirements, as this expansion is funded through operating cashflows.

Further Funding:

At the end of the December Quarter, Cradle had $754,000 in cash. We anticipate that Cradle will need to raise additional capital to drive the project towards a decision to mine.

Catalysts:

1) Q3/2014: Metallurgical test work results;

2) Q3/2014: Updated resource estimate (category);

3) Q3/2014: Baseline studies for ESIA;

4) Q4/2014: PFS; and

5) Q4/2014: Commence DFS

Website: www.breakawayresearch.com

Emmerson Resources (ASX: ERM)

Emmerson is successfully applying a modern exploration strategy to its dominant tenement position in a world class mineral field.

The company has established a large JORC Resource at four deposits, with significant further exploration potential.

Emmerson also owns a fully permitted 300,000 tonnes per annum C.I.P. processing plant, providing a fast-track pathway to gold production.

With an Enterprise Value of just $9.4 million, Emmerson appears significantly undervalued.

Emmerson Resources (ASX: ERM) has a large, 100 per cent-owned tenement package covering the majority of the world class ‘Tennant Creek Mineral Field’, located in the Northern Territory.

The company has already identified significant copper-gold resources at four deposits, totalling 6.79 million tonnes at 3.6 grams per tonne gold equivalent (AuEq ) for approx. 900,000 ounces AuEq.

This JORC Resource is likely to be revised upwards in the near term with approx. one million tonnes of ‘ore grade mineralisation’ identified for near term assessment.

Of particular interest is the high-grade Chariot gold deposit (170,000 tonnes at 17.4g/t gold for 99,000 ounces gold) which is likely to be the first deposit mined and processed through the 100 per cent-owned 300,000 tonnes per annum Warrego C.I.P. processing plant, which is currently under ‘care and maintenance’.

A 1,200m RC drill program is scheduled to commence at the end of the wet season, targeting relatively shallow mineralisation (100m-200m) at Chariot East and Chariot West.

Historic ‘ore grade’ intersections in this area make it low risk-high reward program with potential to add meaningful ounces within an expanded open cut mine plan at Chariot.

Emmerson is a well-run company operating in a world renowned mineral province.

The company appears to have ‘cracked the code’ for discovery of blind deposits, and has increased its JORC Resource estimate by 70 per cent (gold) and 140 per cent (copper) in just the last quarter.

The Scoping Study currently underway is likely to provide impetus to begin feasibility work, targeting production in late 2015/early 2016.

Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.

GAVIN WENDT: Despite the hit that the uranium business initially took with respect to sentiment in the wake of the Fukushima earthquake back in 2011, the conundrum remains the same: the world has few alternatives in terms of substantial, reliable base-load power generation.

Realistically, in a world with burgeoning populations in emerging countries and an escalating need for energy, there will be even greater demands placed on all three forms of traditional energy – coal, gas and nuclear.

 

The Fukushima nuclear disaster made the world take a second look at the safety of nuclear energy and many countries halted construction and plans to build nuclear reactors.

Japan shut down all but two of its 50 nuclear reactors in the wake of Fukushima.

As a result, uranium prices have been in free-fall ever since. However, there are a number of strong catalysts for future uranium producers.

For starters, there are very real supply challenges being faced by the nuclear industry, driven by two very important considerations.

During 2013, the world’s 435 current nuclear power generators are expected to require 20 per cent more uranium than was currently being produced from the world’s mines.

Power generators will need more than 66,000 tons of uranium, but current global mine production is just 55,000 tons.

Over the past 20 years, the effective supply gap has been alleviated by uranium from decommissioned Soviet-era nuclear weapons.

During 1993, the United States signed an agreement with Russia called ‘Megatons to Megawatts’.

The agreement was a 20-year program where Russia down-blended the equivalent of 20,000 nuclear warheads to produce more than 14,000 metric tons of low-enriched uranium.

This uranium supplied the United States with nearly half of its nuclear generated energy over the past two decades, which is almost 10 per cent of the country’s total electric needs.

The final shipment from this program arrived in Baltimore on December 10, 2013, marking the end of the agreement.

To make up for the end of this supply of uranium coming to the US, USEC signed a 10-year agreement with Russia’s Techsnabexport (TENEX) to provide USEC with Russian enriched uranium.

However, this agreement will only supply half of the uranium previously supplied under the Megatons to Megawatts program and won’t reach that level until 2015.

This new agreement won’t come from down-blending nuclear warheads, but rather from Russia’s commercial enrichment activities.

During 2013, US nuclear plants required 19,622 metric tons of uranium.

Taking into account the end of Megatons to Megawatts and the new agreement between USEC and TENEX, there will have to be 4,000-5,000 metric tons of uranium coming from new sources during 2014 and beyond.

The Fukushima nuclear disaster in Japan has merely delayed the onset of the upcoming supply crunch, but it is entirely real and power station owners and governments will be increasingly nervous.

An additional supply challenge relates to the lack of investment in the uranium sector, which bears a direct correlation with two important factors: firstly, low uranium prices provide a disincentive to commission new uranium supplies; and secondly, depressed conditions in equity and lending markets over recent years make it extremely difficult (if not impossible) to source funding for new uranium developments.

Significantly too, even the major players in the uranium business that have the balance sheet strength to finance their own developments (without having to rely heavily on outside funding sources) are leaving new sources of supply undeveloped in most instances.

Quite simply, where is the incentive to bring new supply on stream when prices are already painfully low?

This illustrates the fundamental discrepancy within the uranium industry relating to where prices realistically should be (i.e. reflective of the looming supply shortfall) in order to stimulate profitable new levels of production, and where they currently are (i.e. trading at depressed levels and acting as a major deterrent to new project investment).

Nowhere is this more pronounced than at the smaller end of the uranium business.

At current prices there is an enormous amount of strain placed on uranium producers, to the point where the majority of existing operations would be barely breaking even around the $35 per pound mark, so prices below this level aren’t sustainable.

This is clearly evident in the fact that Paladin Energy (ASX: PDN) has announced it is suspending production at its Kayelekera mine in Malawi, placing it on care-and-maintenance to preserve the orebody until a sustained recovery in uranium prices.

Paladin blamed the continued depressed uranium price for the closure.

The silver lining in all of this is that the medium to longer-term fundamentals for uranium are strong.

New mines will be required and prices will inevitably have to rise in order to allow this to happen.

Looking ahead, uranium prices upwards of $70 per pound will be necessary in my view to justify and support investment and development of new projects.

 

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

THE FUND RAISER: The optimistic start to the New Year continues with junior explorers attracting plenty of financial backing.

Southern Hemisphere Mining raising $3.4 million

Southern Hemisphere Mining (ASX: SUH) is carrying out a capital raising up to $3.4 million to finance the next phase of exploration, evaluation and development of its copper-gold portfolio in central Chile, South America.

The company has already raised up to $1.2 million through a placement of shares to sophisticated and professional Investors at 4.5 cents per new share.

It also intends to undertake an underwritten non-renounceable 1 for 4 entitlement issue at the same price to raise approximately $2.2 million amounting to a total capital raising of $3.4 million before costs and expenses.
 
The funds will be used primarily to meet the company’s share of upcoming drilling expenses and prospect acquisition costs at the 50/50 Los Rulos Joint Venture with Lundin Mining, as well as for general working capital.
 
The Los Rulos JV has recently acquired three highly prospective IOCG-style copper-gold prospects in central Chile as part of a growing portfolio which is in the same region as Southern Hemisphere’s Llahuin project, where it has already established a substantial copper-gold resource.

Southern Hemisphere is currently free-carried on ongoing exploration activities at the Mantos Grandes project and the Llahuin project.

 “Given the current market for junior resource companies, we are pleased with the strong support shown in both the Placement and the underwriting of the Rights Issue,” Southern Hemisphere managing director Trevor Tennant said.

“I believe this reflects the quality of our projects and the strong pipeline of news flow which we expect this year.”
 

Segue Resources completes Institutional Placement

Segue Resources (ASX: SEG) has completed a placement to Australian institutional and sophisticated investors to raise a total of $900,000 by the issue of 150 million ordinary shares at 0.6 cents per share together with a 1 for 2 attaching option exercisable at 1.8 cents per share.

The Placement was made to institutional investors including specialist microcap resources investment manager, Acorn Capital Limited, which will own approximately 8.1 per cent of the issued capital of Segue.

The proceeds from the Placement will be used to fund exploration at the Plumridge nickel project in the Fraser Range Province of Western Australia.

 

Kibaran completes $1.125 million Placement

Kibaran Resources (ASX: KNL) has placed 9 million fully paid ordinary shares at 12.5 cents per share, with sophisticated investors to raise $1.125 million.

Investors will receive one free attaching option for every two shares subscribed exercisable at 20 cents each and expire eighteen months from the date of issue.

The funds raised will enable the company to complete a drilling program to upgrade the Epanko resource at Mahenge, from inferred to indicated and further advance metallurgical studies in order to determine optima grind size and concentrate.

The company will also use part of the funds to advance several potential opportunities focused on the consolidation of other graphite prospects in Tanzania it is currently reviewing.

Orinoco Gold raising $4 million

Orinoco Gold (ASX: OGX) announced a capital raising of up to $4 million to underpin the next key phase of exploration and development of the company’s Faina Goldfields project in central Brazil, including plans to advance its Cascavel gold project.

The company has received firm commitments for a placement of just under 11.48 million shares at 10 cents each to raise approximately $1.14 million before costs to underpin the retention payment of US$950,000 in relation to the Curral de Pedra project.

The funds raised will be used to secure the company’s 70 per cent interest in the Curral de Pedra project by paying the cash portion of the final retention payment, being US$950,000 (due April 2014), progress the next key phase of exploration, evaluation and project development activities at the company’s Brazilian exploration projects located in the Faina Goldfields, as well as to fund the costs of the issue and for general working capital purposes.

“Despite continuing difficult market conditions for junior resource companies, we have received strong interest and support from investors, enabling us to complete this placement in a timely fashion to address our immediate funding needs,” Orinoco Gold managing director Mark Papendieck said.

“At the same time, we are offering all shareholders the opportunity to participate in this capital raising on the same terms.

“This provides our existing investors with the ability to increase their holdings on attractive terms as the company moves ahead with plans to accelerate the next stage of development of the high-grade Cascavel project, including the commencement of an exploration decline and Scoping Study and completion of a maiden JORC-compliant Mineral Resource.”