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Mining news summary: EMED Mining, Chaarat Gold, Archipelago Resources, Medusa, Bullabulling, Afferro

Published: 19:33 14 Jul 2012 AEST

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EMED Mining (LON:EMED, TSE:EMD) was among the most followed stocks this week after announcing a "significant" step forward on Monday - as it struck a deal regarding the €10 million purchase of certain land near the Rio Tinto copper mine.

The land is required to restart operations at the Spanish mine and will allow the deposit of tailings from the proposed operations.

The sale and purchase agreement is with Rumbo 5-Cero S.L, which owns the land. Rumbo is part of an Andalucían investment group.

In addition, Rumbo and the company also plan to enter a 50:50 joint venture to test and possibly exploit some tailings dumps. EMED will be the operator.

Partly to fund the acquisition of the land, EMED also announced that major shareholder Yanggu Xiangguang Copper (XGC) would subscribe for around 32 million shares at 10 pence a  share to raise US$5 million.

Managing director of EMED, Harry Anagnostaras-Adams, said: "The agreement with Rumbo is a major step forward for the planned restart of the mine. It not only facilitates ownership of over 95 per cent of the project lands, but also establishes a long term commercial alliance with an important Andalucían business group."

"The concurrent support from our shareholders is greatly appreciated and we are pleased to welcome an even closer relationship with major Chinese copper smelter group XGC who now also intends to appoint a representative to our board of directors."

Gold miners Chaarat (LON:CGH), Archipeago Resources (LON:AR.) and Medusa Mining (LON:MML) also reported positive news this week.

Chaarat said the development of the Tulkubash project is back on track as Kyrgyzstan looks set to adopt a clearer and more supportive mining law soon.

The company now expects gold production at Tulkubash, part of the wider Chaarat project in the country, to start in the second half of 2013.

The group had told investors in April it had put the project on hold as it entered talks with the government after authorities put the fiscal regime governing mining companies under review.

In the light of the latest developments, the group has now decided to lift the suspension of capital investment activities at Tulkubash.

Chaarat said the Kyrgyz President is set to ratify new legislation governing mining companies which has been approved by the Kyrgyz parliament and which, it believes, will give the country one of the more supportive legal regimes for the mining industry relative to other countries.  

In view of these favourable changes to the mining regime, the clarity they will bring and the removal of consequent uncertainty which has been brought to the phased development of the wider Chaarat project, the board has decided that it is no longer necessary to continue the direct negotiations with the government to develop an Investment Agreement. 

Chief executive Dekel Golan said: "We are pleased to report the Kyrgyz government has put in place steps to adopt a clearer and investor friendly mining legislative code. Our progress to production can now continue without the need for further negotiation on stabilisation with the Kyrgyz government."

Archipelago reported what it described as encouraging drill results from two satellite pits close to its Toka Tindung mine in Indonesia, while Medusa said drilling at the Co-O mine in the Philippines has continued to deliver high grade intersections.

A total of 28 holes were drilled on the Blambangan deposit at Archipelago’s Toka Tindung. The best intersections included 24 metres at 5.6 grams of the precious metal per tonne, 34 metres at 3.27 grams and 9 metres at over 10 grams.

The depths at which these gold bearing intersections were found varied from near surface down to 126 metres.

At Pajajaran 24 holes were drilled and the best three returned 8 metres at 8.8 grams per tonne, 15.1 metres at 4.1 grams and 16 at 3.3 grams. The mineralisation this time was deeper lying at between 93 metres and 181 metres.

Medusa reported the last set of results for this financial year that will be incorporated into the annual resource estimate.

Surface drilling continues to provide resource infill and extension information for mine planning while underground drilling continues to confirm vein continuity.

Managing director Peter Hepburn-Brown said: “For the first time we are achieving significant vein intersections to the west of the Tinago Fault which truncates the known veins at the western end of the mine.

“Whilst assays are awaited, in EXP 167 the veins are identical to the veins in the mine area. Continued success in extending the vein system westwards may have a significant positive impact on the future mine plans,” he added.

Staying with gold miners, Bullabulling Gold (LON:BGL, ASX:BAB) this week unveiled a 10 per cent increase in the mineral resource at its satellite Gibraltar project.

Gibraltar lies five kilometres from the firm's flagship Bullabulling project and management believes there is potential to expand resources here at depth and in untested areas.

The JORC compliant estimate for the wholly owned Gibraltar project in Australia now stands at 4.8 million tonnes at a grade of 1.15 g/t for 177,500 ounces of contained gold.

"The company intends to evaluate the mining of Gibraltar as a satellite mine to Bullabulling as part of the prefeasibility study currently underway," it told investors in a statement this week.

Although the deposit is generally deeper than Bullabulling the higher average grade may mean it will make an attractive source of mill feed in the early years of mining, it added.

Production at peer Anglo Asian Mining’s (LON:AAZ) flagship Gedabek gold/silver/copper mine in western Azerbaijan is ramping up nicely, and the company reiterated its 2012 production target of 57,000 ounces of gold and 26,000 ounces of silver.

Gold production from heap leach processing totalled 11,716 ounces in the second quarter to end-June 2012, compared to 9,925 ounces in the first quarter.

Total production for the first half reached 21,641 ounces of gold.  

The company told investors that due to an unseasonably harsh winter, the half-year production figures fell marginally below internal estimates, however the third and fourth quarters 2012 are expected to be stronger in terms of production levels due to revised processing targets.  

In light of this the board still maintains its gold production target of 54,000 ounces for the full year, it said.

Elsewhere in the sector, Afferro Mining (LON:AFF, CVE:AFF) said talks are ongoing with a number of potential strategic partners over its Nkout iron ore project in Cameroon.

The meetings were based around its recent preliminary economic assessment and infrastructure options and while it said there was no guarantee a partnership will come out of the talks, it expects to make “further progress” with the negotiations in the coming months.

Afferro said it had signed a number of confidentiality agreements with third parties. The discussions centre on attracting a long-term partner for a minority joint venture interest at the project level, or possibly a stake at both project and corporate levels, it said. 

Meanwhile, Tertiary Minerals (LON:TYM) this week said it expects the completion of a scoping study on the Lassedalen project by the end of August.

It says the report is now at an advanced stage. 

Additionally sufficient metallurgical testing has now been completed to support a preliminary flow sheet design. And results are said to be positive for the production of higher value, acid grade, fluorspar with good recoveries.

"I am pleased the study is on schedule and look forward to the result,” said operations director Richard Clemmey.

"This is the first economic and technical evaluation of the Lassedalen project and will form the basis for a decision on more advance feasibility studies and drilling.” 

The project currently hosts a 4 million tonne JORC resource grading 25 per cent fluorspar. And an upcoming drill programme, scheduled for the autumn, aims to expand this resource.

Lassedalen is one of two fluorspar projects being developed in Scandanavia by Tertiary. Storuman is the other. There, Tertiary is looking to establish a 100,000 tonne per year ‘acid grade’ fluorspar mining operation.

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