The acquisition of a new project led to a new focus and subsequent name change for this South America-focused base metals play.

Recently rebranded Cobre Montana (ASX: CXB) (formerly Midwinter Resources) has become the latest Australian exploration play to hang its shingle in South America.

The company made its move in May 2013, striking a farm-in agreement with Southern Hemisphere Resources (ASX: SUH) over the Mantos Grandes project in the province of Limari in Chile.

“We are shifting our focus to South America by choice, and we can certainly see the benefits in doing so,” Cobre Montana managing director Adrian Griffin told The Resources Roadhouse.

“The Chilean Government earns a lot of money from the copper mining industry, which enables it to subsidise small operators, creating unparalleled opportunities for companies producing less than 12,000 tonnes of copper per year.

“Those opportunities include waiver of royalties and the use of government toll treating facilities.”

The Mantos Grande project comprises a number of mineralised occurrences dominated by skarn hosted copper/gold deposits, of which the Mantos Grandes deposit is the most prominent.

Other mineralised occurrences have been identified within the project area including: La Demonia (mine development circa 1935) El Durazno (skarn) Agua del Minera (skarn) Verde (porphyry copper) Pórfido Diorítico (porphyry copper).

“These deposits have not been extensively drilled, even though they have been mined in a haphazard fashion by prospectors chasing the high-grade skarns,” Griffin explained.

“We intend conducting is a systematic drilling program through the deposits, with work commencing in the field by the end of November.”

Griffin described the Mantos Grandes project as one that has flown well-under the radar for a long time.

The project does have a long mining history stretching back to 1935 then sporadically from the 1940s through to 1976, and then continuous through to 2001.

“The last mining campaign undertaken focused solely on the Mantos Grande deposit – and that deposit is one of seven within the project area,” Griffin said.

“Of the seven there are five that are skarn deposits and two are porphyry copper deposits.”

 

The project hasn’t so much flown under the radar it has, for one reason or another, just not received the attention Cobre considers it has deserved in recent times.

Its ownership pedigree includes major company Rio Tinto, which acquired it as part of a deal with North Ltd.

North was a true believer in the project, which it joint ventured with the then owner in about 1999.

After making the owner an offer he could barely refuse, North ceased production to evaluate the larger potential offered by exploration within the project area.

North soon became victim of a hostile takeover from Rio, which had its eyes on the North’s iron ore assets as the main prize.

Rio ran its ruler over Mantos Grandes only to declare it to be too small for its consideration.

The next company to hold the project was Sundance Resources, which was introduced to it by Eduardo Valezuela, who is now chairman of Cobre Montana following a recent Board restructure.

Although the acquisition of the project buoyed its share price, Sundance was ultimately distracted by another iron ore project, which today remains its principal focus.

“It got bowled over by an iron ore deal with Rio, then by another iron ore deal with Sundance,” Griffin said.

“Eduardo found it all too hard to believe so he bought the project from Sundance and put it together in a package to form Southern Hemisphere and floated on the TSX.”

There was still one last hurdle for Mantos Grande, as Southern Hemisphere focused initially on manganese and farming out much of the grassroots base metal acreage it had.

“This one, geographically, didn’t fit into any of the packages they let go,” Griffin explained.

“We were looking for a project in Chile and Eduardo walked through my door one day and said, ‘I think I have what you are looking for’.”

Although considered too small by Rio, the Mantos Grande project is an exciting prospect for a junior company such as Cobre Montana.

 

The prospective nature of the project is spelt out by the term ‘Mantos’, which in Chilean is a mining term for tabular ore lenses that shoot out from the sides of porphyry copper stratigraphy.

Griffin suggested Mantos Grandes roughly translates to mean, “A very bloody big one of those style of deposits!”

As exciting as Mantos Grandes may be, the announcement of a further acquisition has firmly entrenched Cobre Montana as a Chile-focused explorer/developer.

The company has optioned the acquisition of 65 per cent equity in the 2370 hectare Piedrecillas copper-silver project, located 180 kilometres southwest of Santiago.

Piedrecillas displays similar geological style to Mantos Grande and other manto-style deposits found elsewhere in the region.

Manto-style mineralisation has been proven to host significant copper deposits, such as the 200 million tonnes at 1.35 per cent copper El Soldado deposit operated by Anglo American.

Manto deposits are often higher in grade than, what are usually larger, porphyry deposits, due to high occurrences of bornite mineralisation.

There is a history of small-scale mining having taken place in the Piedrecillas area, albeit intermittently from 1940 to 1950.

No production records remain and there has been no more recent exploration of the tenure since this time.
 
Cobre Montana has identified three separate copper occurrences in the area, all of which, upon inspection, have shown mineralisation consisting of primary bornite and chalcopyrite, with secondary copper oxides.

Area 1
Demonstrates evidence of mineralisation consisting of malachite, azurite. Minor bornite is exposed at the base of diggings into a steep ridge.

Access is provided via a northeast-trending creek, which may represent a fault zone.

Shallow workings 300m up the creek line expose more small adits into the walls of the creek, with narrow vein mineralisation.

Area 2
Area 2 is located about 5km to the northeast of Area 1.

Mineralisation again appears to be structurally controlled within narrow, steep dipping shears in the host andesite.

Several small historic excavations mark the zone over a length of some 200m.

Area 3
In Area 3, copper oxides, including chalcocite, occur over at least a 200-m long zone with pervasive epidote-quartz-pyrite alteration.

The host rock is extensively altered, with the observed alteration and associated copper mineralisation occurring within a broad basin measuring some 2km across.

Griffin said the company was initially attracted to the Piedrecillas project by its extensive surface mineralisation, prospective geology, good location and evidence of past exploitation.

“Our plan is to develop a pipeline of copper/gold projects within Chile,” Griffin said.

“The historic Mantos Grandes gold/copper mine clearly has potential for early production, and other deposits, including deposits within the greater Mantos Grandes project area, will add longevity to the plan by building a strong resource base.

“The acquisition of Piedrecillas is the first step towards broadening our exploration base to achieve that outcome.

“Exploration around the areas of Past production at Mantos Grandes remains the priority target as it can potentially result in near-term production.

“It is envisaged that field work will commence in November, and will be run concurrently with reconnaissance exploration at Piedrecillas.”

Cobre Montana NL (ASX: CXB)
…The Short Story

HEAD OFFICE
Suite 3, 23 Belgravia Street
Belmont WA 6104

Ph: +61 8 6145 0288
Fax: +61 8 9475 0847

Email: info@cobremontana.com.au
Web: www.cobremontana.com.au
 
DIRECTORS
Eduardo Valenzuela, Adrian Griffin, Bryan Dixon

MAJOR SHAREHOLDERS
Wilgus Investments 4.93%
Citicorp Nominees 4.41%
Alan Jenks 4.4%

SHARES ON ISSUE
57.5 million

MARKET CAPITALISATION
$3.2 million (at 10/10/13)

The successful Senate run of the Single Issue Parties in the recent Federal election has caused a great deal of consternation amongst the major parties and the mainstream media.

Plymouth Minerals managing director Adrian Byass stood as a candidate for the No Carbon Tax Climate Sceptics Party and although he didn’t end up with his name on one of the big red leather seats, he did emerge with renewed faith in Australia’s democratic process.

 

“The party had a message that I believe in,” Byass told The Roadhouse.

“I believe that anthropogenic climate change is not the issue: climate change – this is the geologist in me speaking – has always happened and will always continue to happen.

“The best thing for us to do is to be pragmatic about how we are going to deal with the consequences of it, and store up enough fat for the winter, to use a colloquialism, so that if it does change detrimentally, we can deal with it.

“Rather than taking, what I believe to be, misguided approaches thinking that we are King Canute and omnipotent and that if we change our carbon use in Australia by a fraction of a percent it is somehow going to make a difference.”

The No Carbon Tax Climate Sceptics Party first hit electoral radar screens during the 2010 South Australian State election, where it managed to secure a healthy percentage of votes.

This was followed by, what Byass described to be as, a disconnect within the community that manifested in the lead up to the 2010 election, which saw Malcolm Turnbull deposed as Liberal Party leader for fraternising with the Labor Party in regards to an Emissions Trading Scheme and which led Prime Minister Gillard to feel she needed to declare a Labor Government would not introduce a price on carbon.

“There was that explicit statement by Julia Gillard about ‘no carbon tax under a government I lead’,” Byass said.

“That was the bit, I think, that drove the No Carbon Tax Party to take a similar stance to the one they had taken to the South Australian State election in 2010 on a national level.”

Byass explained his decision to stand as a candidate for the No Carbon Tax Climate Sceptics Party was not a conscious decision, rather it followed him receiving an unexpected email for the Party asking for like-minded folk to stand for its cause.

After talking it over with his wife and gaining her immediate support he soon found himself working through the many processes required to become a candidate of the Australian Senate.

He found himself having to prepare a biography, sit down and speak with people and tell them why he was running and what he hoped to achieve; it was getting serious.

The recent argy-bargee concerning the rise of single-issue parties has neglected to take into consideration the candidates representing them have not just written their names on the ballot paper, but a running because they genuinely feel they have a point to make.

“I’m not an aspiring politician, in any way, shape or form,” Byass said.

“But I do think it is good to see that people are willing to stand up and do something.

“I don’t care if they’re from the Shooters Party, The Animal Rights Party, whatever; I basically want to see people make time in their lives to try and do something they believe in.

“I was willing to do that.”

Byass said he felt the fact that so many different people stood for all those different single issue parties has plenty to say about how politics is viewed in the country at present.

“It is a reflection of two things,” he said.

“The system was actually changed by the Labor and Liberal Parties several years ago, and they thought it was going to benefit them, but it backfired.

“Secondly…we have all hit the middle of the road [politically], because that is the policy of least resistance and as a result we do have this so-called fringe element emerging.

“It is a way for people, a very healthy way, to show there are issues other than lowering inflation and unemployment.

“That’s something I don’t want to see taken away.”

When asked if he considered the whole experience to be worthwhile Byass said he no regrets and was glad he had taken the opportunity.

He also had no reservations in recommending standing for public office for anybody who believed in what they were doing.

He did, however caution anybody against it should they not fully believe in what they were standing for.

“If you’re not doing it for the right reasons, then I think that sums up everything that Australians are cynical about regarding politicians,” he said.

“If you’re doing it because you view it as a career pathway and you will blow whichever way the winds says you should – I wouldn’t want anybody to do that.”

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

 

 Forte Consolidated (ASX: FRC)

 
Forte Consolidated has completed the acquisition of a 100 per cent interest in the prospective Johnnycake project located near the recently commissioned Mt Carlton gold/silver/copper mine in north-east Queensland.

In late 2012, Forte Consolidated entered into an agreement to purchase a 100 per cent interest in EPM 18986, named the ‘Johnnycake Project’, for total consideration of $50,000 from Adept Solutions Limited, now called Emerchants Limited (ASX: EML).

Emerchants only disposed of the tenement due to a change in business activities from the resources to the financial services sector.

The tenement is located at the northern end of the Bowen Basin, approx. 170km south of Townsville and is in close proximity to Evolution Mining’s Mt Carlton Mine, which hosts a JORC Resource of 25.2 million tonnes at 1.7 grams per tonne gold (for approx. 1.35 million ounces of contained gold), plus significant silver (approx. 30.6 million ounces) and copper resources (approx. 63,000 tonnes of contained copper).

Historic aeromagnetic and radiometric surveys have been sourced and reprocessed, and have refined the definition of important faults and dykes (which are conduits for fluids, potentially leading to the formation of mineral deposits).

A desk top review of the available ‘Johnnycake’ data has generated four distinct targets; namely Hill 345, West Rocky Creek, Mt Wickham South and CAZ.

A limited initial field program, comprising soil and rockchip/float samples, has been completed at each of the targets with some promising, albeit preliminary, results.

The company’s chairman, John Terpu, has extensive knowledge of the area having acquired the original Mt Carlton tenements with modest outlay in his role as managing director of Conquest Mining Limited (the company which discovered the nearby Mt Carlton project).

With this experience, Forte plans to apply known exploration methodology to the Johnnycake area.

Forte also holds the Kangaroo Hills project in north Queensland, which represents a secondary priority at this time.

Initial drilling included 4m at 100g/t silver and 3.4 per cent zinc at the Clarke prospect and deeper drilling is required to adequately test the target.

Forte Consolidated is currently advancing exploration at the Johnnycake project.

Four high-priority precious metal prospects have already been identified; however exploration is still at an early stage.

With an EV of just $2.1 million and $2.2 million cash to fund exploration, Forte is highly leveraged to exploration success.

 Sovereign Gold Co Ltd (SOC.ASX)

Overview: Sovereign Gold Company Ltd (“Sovereign Gold”, “the Company”) is an Australian gold explorer focused on New South Wales.

The company has made a discovery of national significance at its Mt Adrah project near Wagga, and remains free carried for exploration up to $21 million within the SUGEC JV, near Uralla.

It retains a 79.5 per cent interest in Precious Metal Resources (PMR.ASX).

Catalysts: After expanding its resource inventory by 200 per cent at a cost of $1 per ounce, Sovereign Gold has set an exploration target of 3.2 million ounces to 4.6 million ounces for the existing ‘Pipe-1’ deposit at Mt Adrah.

The company has identified neighbouring prospects which could support a mineralised camp exceeding 40 million ounces.

Further resource drilling at Pipe-1 and appraisal of neighbouring targets stand as major growth drivers.

Hurdles: The refractory nature of mineralisation at Mt Adrah may require significant project scale to overcome metallurgical and marketing risks.

Sovereign Gold’s exploration targets are conceptual in nature and there is no guarantee further mineral resources will be defined.

The company remains reliant on external capital to fund operations outside its SUGEC JV.

Investment View: As Sovereign Gold’s present market valuation merely reflects its free carried interest at Uralla and PMR shareholding, the potential significance of Mt Adrah has yet to be recognised.

Should the company successfully realise its current exploration target at ‘Pipe-1’, our base case valuation of 49 cents per share offers, a 145 per cent premium to recent trade.

Neighbouring prospects provide upside beyond our current appraisal.

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

THE CONFERENCE CALLER: Next Week, The Roadhouse will be attending the RIU Melbourne Resources Round-up.

Now in its fourth year the RIU Melbourne Round Up is a regular fixture on the resources conference circuit calendar as one of the must attends for junior and mid-cap resource companies to present to the stockbroking, institutional and investor world; with over 700 delegates in attendance last year.

 

Watch The Roadhouse speak with conference organiser Doug Bowie

 

The two day forum aims to connect Australian resources companies with Melbourne’s investment community at a time when there is a good deal of investment from Victorian being pumped into projects and companies in every state across Australia.

It can be no coincidence the RIU Melbourne Resources Round Up is held in the week leading up to the AFL Grand Final, an event which attracts many people from around the country to the city for the festivities leading up to the big game.

Amongst the incoming crowd are brokers and investors from all over the country, who regularly attend the conference to hear first-hand stories from chief executives and managing directors regarding some of the nation’s most exciting minerals developments and what can be expected over the coming 12 months.
 
RIU’s Melbourne Resources Round-up will again offer investors and brokers alike the chance to get amongst the throng of business activity in the Victorian capital whilst networking with key figures in the industry, making it an event which should not be missed.
 

For more information regarding the RIU Melbourne Resources Round-up, click here

THE FUND RAISER: There appears to be a rise in activity in the fund raising space for junior miners recently.

Renounceable Rights Issue to raise $1.5 million

Monax Mining (ASX: MOX) announced a pro-rata non-renounceable rights issue to raise approximately $1.5 million to further advance the company’s Waddikee graphite project and for working capital purposes.

The company said it intends to apply the funds raised by the Rights Issue towards:

–    Beneficiation and metallurgy studies of the Wilclo South deposit;

–    Additional graphite resource definition drilling at nearby Francis prospect;

–    Testing of the graphite product;

–    Marketing initiatives of the graphite product;

–    Seeking graphite off-take partners; and

–    General working capital.

The Rights Issue is being offered on the basis of one new Monax ordinary share for every three ordinary shares held at an issue price of three cents per share.

Monax indicated the Rights Issue price reflected a 15 per cent discount to the most recent 30-day closing volume weighted average price of the company’s shares at the time of the announcement.

$7.3 million Placement and Entitlement Offer

Chesser Resources (ASX: CHZ) has completed a placement to institutional and sophisticated investors, raising gross proceeds of approximately $2.46 million.

The company also announced eligible shareholders will be invited to participate in a fully underwritten, pro rata non-renounceable entitlement offer to raise approximately $4.84 million.

“We are delighted with the strong support demonstrated by our existing investors and new shareholders in both the placement and the underwriting of the entitlement offer,” Chesser Resources managing director Rick Valenta said.

“We look forward to applying these funds to continue our progress at the Kestanelik project over the next 18 months as we progress the project through prefeasibility, feasibility and environmental permitting.”

The Placement of 22.4 million ordinary shares was completed at an issue price of 11 cents per share, a 4.3 per cent discount to the closing price of the Company’s shares on the ASX on 11 September 2013.

The Entitlement Offer will be an offer of just under 44 million new fully-paid ordinary shares in the company on the basis of one new share for every four shares held by Eligible Shareholders.

The offer price will be the same as that offered under the Placement, being 11 cents per new share.

Chesser indicated it intends using the funds raised under the Entitlement Offer and Placement to:

–    Undertake the steps necessary to obtain the EIA approval for the Kestanelik gold project;

–    Complete a pre-feasibility study for the Kestanelik gold project, which is planned to include a 21,000m drilling program conducted primarily for the purpose of converting existing Inferred Mineral Resources to Indicated Mineral Resources; and

–    Providing working capital to the company generally.

Conditional Placement to raise $5 million

Middle Island Resources (ASX: MDI) is to conduct a conditional placement to raise $5 million at 10 cents per share.

The company also announced a share purchase plan, also at 10 cents per share to eligible shareholders, under which each eligible shareholder who held shares in MDI at the record date of 17 September 2013 will be entitled to acquire up to $15,000 of new shares in the company.

Both the Placement and SPP shares will rank equally in all respects with existing MDI ordinary shares.

Middle Island recently announced it had entered a heads of agreement to acquire the Samira Hill gold mine.

The company indicated the Placement will satisfy one of the conditions precedent to closing of that proposed acquisition.

Funds raised under both the Placement and the SPP will be used by the company for working capital purposes.

The cash component of the consideration for the proposed acquisition will be paid from the company’s existing cash reserves.

Raising up to $6.2 million

Anatolia Energy (ASX: AEK) is hoping to raise up to $6.2 million to fund the next phase of work at the company’s Temrezli uranium project in Central Anatolia, Turkey.

Anatolia has received firm commitments to raise up to $4.2 million through the placement of up to 52.5 million new fully paid ordinary shares at an issue price of 8 cents per share to institutional and/or sophisticated investors.

Anatolia has also executed a binding term sheet with one of its largest shareholders, Azarga Resources, pursuant to which the company may raise up to a further $2 million by way of two $1 million conditional put options over fully paid ordinary shares in the company at an issue price of 12 cents per share.

The company indicated it will use the proceeds from the Placement to conduct further in-fill and step out drilling, initiate an Environmental Impact Assessment and complete a Pre-Feasibility Study on the Temrezli deposit.

“The proceeds of the capital raising will enable the company to continue to advance the Temrezli uranium project at a rapid pace by committing to a substantial program of work and further demonstrating the enormous potential of this project, whilst maintaining a critical path to a production decision,” Anatolia Energy managing director Jim Graham said.

$2.2 million to progress Citronen zinc project

Ironbark Zinc (ASX: IBG) has raised $2.2 million to continue to progress the company’s Citronen zinc project in Greenland as well as exploration at its other Greenland and Australian base metal projects.

Ironbark Zinc said it has resolved to raise $2.2 million via a placement of approximately 36.7 million shares at 6 cents per share.

The placement will be undertaken in one tranche.

Ironbark released a positive Feasibility Study on the Citronen project in April, which the company said confirmed the project as a base metal mining project of global significance.

The company claims the project to be one of the world’s largest undeveloped zinc assets and is being evaluated to mine at a rate of 3.3 million tonnes per annum and produce zinc and lead concentrates for global supply with an estimated life of mine cash flow exceeding US$5.65 billion.

 “We see that the global zinc stockpiles have fallen by 20 per cent over the last six months and believe that the draw down will now accelerate following the closure of the Brunswick and Perseverance mines in Canada this year,” Ironbark Zinc managing director Jonathan Downes said.

“As the 100 per cent owner of one of the world’s largest zinc project held by a junior, Ironbark is uniquely positioned to take advantage of a stronger zinc market with its advanced and large scale Citronen zinc project.”

Shortfall Placement finalises $37.5 million raising

Galaxy Resources (ASX: GXY) has raised $20.3 million from proceeds of the shortfall component of a pro-rata non-renounceable entitlement offer.
 
Galaxy has now raised a total of $37.5 million since 1 July 2013, which includes some funds raised from listed options expiring 31 December 2014 already being exercised.

Galaxy explained that during the course of the entitlement offer it has been engaged in ongoing talks with certain large strategic investment institutions in respect of subscribing for a substantial equity position in the company.

As such the company intends to set aside a shortfall block worth $9.2 million for these ongoing discussions.

The proceeds from the raisings to date will be used for partial debt pay down to Chinese lenders, working capital for the Jiangsu lithium carbonate plant in China and the Sal de Vida lithium brine and potash project in Argentina and to pay costs associated with the raisings.

“With over $37.5 million raised, or over three times the minimum subscription level under the Entitlement Offer, we have been able to make significant improvements in the company’s financial position,” Galaxy Resources interim managing director Anthony Tse said.

Importantly, as well as the receipt of additional capital we have been successful in negotiating significant improvements in the structure of both the Chinese bank debt and convertible bonds.

This is an area we are continuing to work upon, and will make further progressive improvements, as we pursue debt reduction initiatives.

“Now that in excess of $35 million has been raised, we have the capacity to pursue additional debt reductions in line with the convertible bond restructuring plan previously agreed with the bond holders.”