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Mining news summary: BHP Billiton, Xstrata, ENRC, Anglesey Mining, Caledonia, KEFI Minerals, Strategic Minerals

Published: 22:08 20 Aug 2011 AEST

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This week, mining majors BHP Billiton (LON:BLT), Anglo American (LON:AAL) and Xstrata (LON:XTA) approved a massive expansion project at a major thermal coal mine they are developing in joint venture.

The three FTSE 100 mining giants announced that each of them has approved its US$437 million share of the US$1.3 billion expansion at the Cerrejon mine in Colombia, which should up its production to 40 million tonnes per annum (mtpa).

Fellow FTSE 100 mining company Eurasian Natural Resources (LON:ENRC) revealed strong first half earnings thanks to a recovery in its traditional markets, the continued strength of the Chinese economy and significantly higher commodity prices.

It assured its corporate governance review is “well under way”.

Underlying earnings before interest, tax depreciation and amortisation (EBITDA) jumped 33 per cent to US$1.92 billion versus last time, on revenue ahead up 32% to just over US$4 billion.

Capital expenditure over the period totalled US$700 million, with the total for the full year projected at US$2.2 billion.

Moving to small caps, Anglesey Mining (LON:AYM) said its 33 per cent associate Labrador Iron Mines (TSE:LIM) has revealed that mined grades are exceeding expectations at the recently commissioned James mine.

LIM began iron ore production earlier this year from its operations in the Schefferville area in western Labrador and north-eastern Quebec.

The phased development project will ultimately see LIM bring 20 direct shipping iron ore deposits online in the area. It began transporting the produced direct shipping ore last month.

Churchill Mining (LON:CHL) announced that an appeal in relation to the revocation of two of four licenses covering its East Kutai coal project has been dismissed by the Administrative High Court in Jakarta. The company now plans to file a notice of appeal to the Supreme Court of Indonesia.

The dismissal of the appeal is in relation to the PT Investama Resources and PT Investmine Nusa Persada licenses.

Elsewhere in the sector, Caledonia Mining Corporation (LON:CMCL, TSE:CAL, OTCBB:CALVF) is seeking urgent clarification from Zimbabwean government ministers after being informed that its indigenisation proposal for its key Blanket gold mine does not meet legal requirements.

Indigenisation plans are being demanded of foreign and local companies as a result of a new Zimbabwean law that aims to force them to sell a majority stake in their businesses to black Zimbabweans. The law came into effect last year.

Fellow gold miner GoldStone Resources (LON:GRL) announced that the final soil sampling from the Manso Amenfi project in Ghana exceeded expectations, returning multiple robust gold anomalies and giving the company new targets to work with.

Of the total 2,070 soil samples taken from the project area, 378 showed anomalous gold concentration. Grades ranged from 20 parts per billion (ppb) to 2.4 grammes per tonne (g/t) with the anomalies stretching over five kilometres in strike length.

“The outcome of this soil survey has exceeded our expectations and outlined several highly prospective targets for follow-up work,” said exploration director of GoldStone Hendrik Schloemann.

Another gold mining company Pan African Resources (LON:PAF) has decided to spin out the Manica gold project as a separate entity which will be listed on an appropriate international stock exchange.

The company said it has been exploring optimal ways to bring the Manica gold project ‘to account’.

It subsequently decided that the best option would be to separate the exciting exploration project from its South African mining operations and create a new Mozambique focussed explorer. The process to spin out Manica has already got underway, Pan African said.

Staying with gold miners, Stratex International (LON:STI) has increased its resource estimate for its Altintepe gold project in Turkey by nearly 20,000 ounces, with “excellent” gold grades confirmed at two key zones. It is now looking to begin production there by 2013.

In an update on the Altintepe project, Stratex reveals its new in-house resource estimate for asset increases the total contained gold to 593,131oz from 574,013 oz, based on infill drilling of the Kayatepe and Extension Ridge zones.

Fellow junior gold miner Orosur Mining (LON:OMI, CVE:OMI) posted a very handsome set of full year results this week, with profits and cash flow jumping as it benefited from a strong operational performance and higher gold prices. The gold mining company says it is now very well placed to continue advancing its existing assets.

Profits after tax for the full year to May came in at US$ 15.9 million versus US$ 1.4 million, and after an exploration write-off before tax of US$ 6.9 million.

Revenue jumped 32 per cent to US$ 78.7 million, with the realised gold price up significantly to US$ 1,347 from US$ 1,065 in 2010.

Gold and copper firm KEFI Minerals (LON:KEFI) has continued its business strategy and sold its Artvin project in northeastern Turkey, it emerged this week.

The project, which consists of 15 exploration licences covering 254 sq km, was sold to a Turkish mining company via the sale of KEFI's subsidiary - Kackar Madencilik San. Tic. Ltd.

KEFI will receive an initial US$100,000 and a 1 percent net smelter royalty on all future mineral production from the licences.

In other news, mineral development company Thor Mining (LON:THR, ASX:THR) said this week that non-executive director Norman Gardner has resigned from the firm with immediate effect.

Gardner is leaving to focus on the activities of Western Desert Resources Limited where he is the managing director, said Thor in a statement.

Strategic Minerals (LON:SML)
this week unveiled plans to buy private Australian firm Ebony Iron for an initial £10 million, which will be paid in shares.

The deal brings with it the potential of early production and cashflow, and is a good fit with the SML’s other asset, the Iron Glen magnetite project in Queensland.

Ebony owns three tenements in the Northern Territory close to known iron ore reserves, and negotiations are underway to acquire another two.

African Minerals (LON:AMI) confirmed that the Tonkolili iron ore mine in Sierra Leone will have a capacity of 15 million tonnes per annum (Mtpa) rather than 12 Mtpa.

However it also revealed that phase one of the project will now cost an additional US$284 million – including US$132 million to increase capacity - on top of the original cost of $1.1 billion.

AMI also revised its sales outlook for the mine’s ramp up period. It now expects to sell 1.2 million tonnes of direct shipping ore this year (cut from 2.5 million tonnes) while next year it expects to sell 12 million tonnes (up from 10 million tonnes).

Australian Strategic Materials signs US$600 million LoI

Rowena Smith, CEO and managing director of Australian Strategic Materials Ltd (ASX:ASM, OTC:ASMMF), joins Jonathan Jackson in the Proactive studio to discuss the company’ s Dubbo Project, in Central West New South Wales. This project aims to extract and process critical minerals and rare earth...

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