Since the last report, the well has been drilled from 2663 mRT.

The Transocean Legend semi-submersible rig is drilling the Kronos-1 well, and ConocoPhillips is the operator.

Kronos-1 is located on a high block in the south-western part of the greater Poseidon trend, 15 kilometres from the Poseidon-1 well and is the third well on the greater Poseidon trend.

The well is designed to evaluate and test the Plover Formation reservoirs. Key objectives of Kronos-1 are to collect reservoir properties data, reservoir fluid compositional data and then define production rates for possible future production wells. The well has a planned total depth of 5322mRT.

The Montara Formation reservoirs intersected in the downdip Poseidon-2 well are interpreted to not be present at the Kronos-1 location.

As with the recent, Poseidon-1 and Poseidon-2 wells, Kronos-1 is planned to be plugged and abandoned following final well evaluation and production testing. During the current exploration and evaluation phase of the Poseidon field, exploration wells are designed to assess the resource potential in the most efficient manner, and are not suitable for production.

Equity interests of the participants in WA-398-P are: Karoon Gas (Browse Basin) Pty Ltd 40% and ConocoPhillips (Browse Basin) Pty Ltd 60%.

A concept study identified a conceptual open cut and underground mine development of 43 years mine life, with an average annual production of between 15 and 20 Mt of thermal coal, centred on EPC 1049.

South Galilee Project is a Joint Venture between Bandanna Energy and AMCI (Alpha) Pty Ltd (AMCI) whereby AMCI is acquiring the right to earn up to 50% interest by expending up to $25 mil. To date AMCI has spent $6.2 million and the proposed PFS budget will be fully funded by AMCI as part of their farmin arrangements.

The South Galilee Project is adjacent to Waratah Coal’s/Resource House’s “China First” Project and south of Hancock Prospecting’s Kevins Corner and Alpha projects. 

Bandanna provides the only access via an ASX listing to the South Galilee Project, in this newly emerging, world class, thermal coal province to have completed a concept study and moved through to PFS status.

Approximately 7,000 m of additional drilling is programmed during the PFS which will concentrate on upgrading the current 982 Mt of JORC compliant resource in the proposed open cut plan.

The company expects that drilling should deliver a substantial increase in the confidence level of the resource which currently stands at 922 Mt of JORC compliant Inferred and 60 Mt of JORC compliant Indicated.

MB Mining will undertake open cut and underground studies of a number of mining scenarios and to provide details on equipment, capital and operating costs as part of a detailed mining method analysis. Aurecon Hatch has been appointed as contractor to work through site infrastructure requirements and complete the overall PFS.

Bandanna recently snared Waratah’s former exploration manager, David Campbell, as its new manager of exploration and increasing sector attention towards the Galilee Basin development.

Resource House is expected to undertake an IPO and Hancock will commence a significant bulk sampling program, implying significant momentum for Galilee Basin coal.

A total of 19 diamond holes (1,667m) were drilled at the Alameda South deposit, all of which intercepted their intended targets.
 
The thickness and grade of the intercepts continues to provide a high level of confidence in the historical drilling information upon which Berkeley has based its exploration targets. The Alameda exploration target is 25.5 - 29 million tonnes @ 450 - 500 ppm U3O8.

The Alameda deposits have been extensively explored by ENUSA but are not classed as Mineral Resources. The Alameda South deposit is located 12km west of the ENUSA Quercus Plant and is accessible via sealed highway and a sealed secondary road.

Best drill intersections based on down-hole gamma logging were: Hole ASD_001 3.2m @ 5,904ppm eU308 and Hole ASX_002 47.5m @ 2,120ppm eU308.

It is anticipated that a Mineral Resource Estimate will be completed for the Alameda area by the end of the 1st Quarter.

The ACLIRES clinical research group has signed on to progress Biotron's hepatitis C drug through clinical trials, given its experience in running clinical trials for both Hepatitis C and the HIV virus.

ACLIRES will bring its access to large numbers of eligible patient populations, necessary to complete a clinical trial.

Biotron’s drug, BIT 225 works by targeting the p7 protein, a viral protein essential to virus production and replication.

The next stage of development is to determine how the drug works in combination with current approved treatments for HCV, Interferon and Ribavairin.

Professor Rob Murphy, currently the Director of the Centre for Global Health at the prestigious Northwestern University in Chicago, USA will lead the clinical trial.

Results so far received for this drilling include: 10BTDD001: 3.3m @ 0.4% Cu, 19.1% Zn, 0.9% Pb, 0.5g/t Au & 124g/t Ag from 393m, 10BTDD003: 2.9m @ 1.6% Cu, 33.5% Zn, 0.9% Pb, 0.8g/t Au & 145g/t Ag from 352.6m.

The mineralisation now extends north to the proposed Bentley decline position. This is expected to have a significant impact on development plans and improve cash flows for the proposed Bentley mine as it will significantly shorten the timeline to first ore production.

The mineralisation defined over this northern extension interval remains open down-dip and along strike to the north. A possible new massive sulphide lens (Comet) has been identified in 10BTDD007, with the mineralised interval occurring within the stratigraphically upper part of the post-mineralisation dolerite sill that separates each of the massive sulphide ore lenses.

In addition, a series of geophysical/geochemical targets immediately north of Bentley are currently being drilled with the aim of adding new resources to the project that could influence medium term mine development plans.

The down plunge copper-rich Bentley Extension below 4000mRL will soon be tested by a drilling programme planned to commence in the June quarter. The aim is to scope out the scale of the Bentley Extension and tenor of mineralisation at depth, for longer term planning purposes.

Studies have recently been completed by Jabiru that indicate a positive economic case for pre-treatment of copper-rich stringer sulphide ore and subsequent flotation.

A study of vein orientations within the Stringer Zone at Bentley indicates that there is unlikely to be a significant sampling bias due to the relative orientation of diamond drill holes and sulphide veins within the Stringer Zone.

On this basis, it is possible to lower the cut-off grade for the Stringer Sulphide Resource and increase the level of confidence in the continuity of mineralisation, whilst maintaining an acceptable average grade for the resource. This has led to an upgrade of the Bentley resource.

The company said work on a next stage resource estimate for the Bentley deposit has also commenced, with completion expected in the June quarter. This will be presented as part of a combined Jaguar Project Resource and Reserve Statement.

It will incorporate all drilling completed above 3950mRL. A further resource revision is planned for later in 2010 as the Bentley Extension drilling programme advances.

Two diamond drilling programmes are currently in progress in the immediate vicinity of the Jaguar mine, with the aim of targeting additional resources to extend the Jaguar mine life beyond current reserves.

Pulse Health has been described as a potential takeover target, Medical Australia an under-the-radar emerging medical device company, CogState, a profitable company operating in a growth market of brain function and Stirling Products - a global pharmaceutical and healthcare story.

The event, which is free will be held at the Sydney Harbour Marriott Hotel, Sydney on Wednesday March 24, 2010. Australia has exciting and innovative companies operating in this sector.  

Many listed ASX healthcare and biotechnology companies out-performed the ASX All Ordinaries Index in 2009.

It is an opportunity for investors, stakeholders, industry participants to support this vital Australian sector.

After the presentations are complete the directors will also be available to meet and greet and take questions during a free Canapé and Wine Reception - to register, click here.

Bionomics Limited (ASX: BNO) is a productive drug discovery and development engine room focused on new treatments for cancer and serious disorders of the central nervous system.

Pulse Health Limited's (ASX:PHG) focus is in the private health sector as an integrated health services provider with operations encompassing private hospitals, day surgeries and community home care.

Circadian Technologies Limited (ASX: CIR) is a biotechnology company developing innovative, biologics-based therapies for the treatment of cancer and other serious human illnesses.

Medical Australia Limited (ASX:MLA) formerly BMDi Tuta, is a medical technology company focussed on the manufacture and marketing of a broad range of medical devices used by healthcare professionals globally.

CogState Limited (ASX: CGS) is a global provider of cognitive testing products and services. CogState is currently one of the fastest growing technology companies in Australia having achieved 981% revenue growth across three years.

Stirling Products Limited (ASX: STI) is an emerging global pharmaceutical group, focussed on manufacturing, product development ñ pharmaceutical, botanical and OTC products, platform technology ñ drug delivery through inhalation and sales across the pharmaceutical, and over-the-counter markets.

Investors interested in the following companies will also find the event highly beneficial:

Acrux (ASX: ACR) is an Australian drug delivery business developing and commercialising a range of patient-preferred pharmaceutical products for global markets, using innovative, patented technology to administer drugs through the skin.

Avexa (ASX: AVX)is an Australian drug-discovery company based in Melbourne, Victoria. Avexa's business is the discovery and development of anti-infective pharmaceutical medicines for the treatment of serious human infectious diseases. Avexa's principal research programs focus on the discovery of innovative medicines for the treatment of the diseases caused by Human Immunodeficiency Virus (HIV) and Vancomycin- and methicillin-resistant bacteria.

Avita Medical (ASX: AVH) is a medical device company formed through the merger of Clinical Cell Culture Ltd and Visiomed Group Ltd in February 2008. The company is active in the regenerative medicine and respiratory markets.

Benitec (ASX: BLT) is company dedicated to the development of treatments for serious human diseases including infectious diseases, neurological disorders, cancer and autoimmune diseases, through leadership in RNAi technologies and strategic partnerships with leading biopharmaceutical companies and research organisations globally.

Biota Holdings (ASX: BTA) is a leading anti-infective drug development company, based in Melbourne, Australia and Oxford, UK. Biota's initial success was the discovery of zanamivir, the first-in-class neuraminidase inhibitor for the treatment and prevention of influenza. Zanamivir is licensed to GlaxoSmithKline and marketed as Relenzaô.

Blackmores (ASX: BKL) is a distributor of branded vitamin and herbal supplements to the Australasian market. Products are distributed primarily through retail pharmacies, supermarkets, and to a lesser extent health food shops and professional outlets.

Bone Medical (ASX: BNE) is focussed on breakthrough treatments for bone and joint degeneration and disease, especially osteoporosis and arthritis.

CathrX (ASX: CXD) a specialist Australian medical device company focusing on the development and commercialisation of a range of innovative cardiac catheters for use in the diagnosis and treatment of electrical problems of the heart known as cardiac arrhythmias.

Cellestis (ASX: CST) has operations in the United States, Europe and Australia. Cellestis develops and markets QuantiFERON technology products for medical diagnosis and scientific research. The QuantiFERON technology is a patented whole blood method for detecting cell mediated immune (CMI) responses of T cell lymphocytes using whole blood samples.

Clinuvel Pharmaceuticals (ASX: CUV) is Australiaís photoprotective company. Clinuvel's focus is to gain market approval for afamelanotide, a drug to manage the symptoms of patients with severe UV and light related skin disorders.

Cochlear (ASX: COH) http://www.cochlear.com/au Cochlear is a manufacturer and marketer of cochlear implants which are used to stimulate impaired hearing. The COH implantable device is the standard for enabling profoundly hearing impaired patients to hear.

CSL (ASX: CSL) is a global, specialty biopharmaceutical company that researches, develops, manufactures and markets products to treat and prevent serious human medical conditions. The bulk of its sales are derived from pharmaceutical and bioplasma divisions.

Genera Biosystems (ASX: GBI) is an Australian company that develops and commercialises multiplexed molecular diagnostic tests, based upon its proprietary AmpaSandTM bead-based technology. Genera's products compete in the global market for molecular diagnostic tests - currently valued at around US$2.6 billion.

Halcygen Pharmaceuticals (ASX: HGN) operates as a licensee and developer of pharmaceutical formulations. HalcyGen, through its recent acquisition in September 2009, Mayne Pharma International, develops and registers pharmaceutical formulations known as SuperGenerics: SUBA-Itraconazole and Minocycline.

HealthLinx (ASX: HTX) is an emerging biomarker and diagnostic company with an integrated platform in biomarker and bioactive peptide discovery platforms. HealthLinx develops novel, non-invasive, serum-based, diagnostic products. The Ovarian Cancer Program has completed a phase II biomarker trial with the outcome being the development of the first generation ovarian cancer diagnostic, OvPlex™.

Hexima (ASX: HXL) is an agribusiness company developing gene technologies to help farmers enhance the productivity of arable land by improving yields and reducing the use of chemicals. Heximas core technologies aim to strengthen commercial crops by enhancing their resistance to insect pests and fungal disease.

Impedimed (ASX: IPD) is a global company with offices in Australia, the USA, and the UK. The company develops bioimpedance devices with a focus on medical applications for use in a variety of healthcare segments that are non-invasive, compact and portable, highly accurate, fast, simple to operate, and considerably cheaper than most existing alternatives.

KarmelSonix (ASX:KSX) is a global leader in developing acoustic respiratory monitoring devices, the Companyís ground breaking products are based on acoustic signal acquisition technology and advanced analysis capabilities.

Living Cell Technologies (ASX: LCT) is a global pioneer in the development of a revolutionary new treatment for diabetes. DIABECELLÆ is LCTís treatment designed to normalise the lives of people with insulin dependent diabetes.

Mesoblast (ASX: MSB) is an Australian biotechnology company committed to the development of novel treatments for orthopaedic conditions, including the commercialisation of unique adult stem cells to regenerate and repair bone and cartilage.

Nanosonics (ASX: NAN) a technology driven company that is commercialising innovative and unique customer focused disinfection solutions. Nanosonics is currently focused on developing a range of infection control solutions for the healthcare industry. Nanosonicsí launch into the global market is lead by the Trophon EPR.

Novogen's (ASX: NRT) business is developing the Novogen isoflavonoid technology platform to treat degenerative diseases, such as cancer, Heart disease (stroke, hypertension, coronary artery disease) Osteoporosis, Chronic inflamatory diseases (rheumatoid arthritis, osteoarthritis, chronic back pain) and Inflammatory Bowel Disease (ulcerative colitis, Crohn's Disease).

Optiscan Imaging (ASX: OPI) has developed and patented miniaturised confocal microscopes, and is now a global leader in the development and application of microscopic imaging technologies for medical markets.

Patrys (ASX: PAB) is focused on the development of natural human antibody-based therapies for the treatment of cancer. The company is also exploring opportunities to deploy its technologies in additional indications, either internally or through third parties, including cardiovascular, autoimmune and central nervous system disorders.

Pharmaxis (ASX: PXS) is a specialist pharmaceutical company that researches, develops and commercialises new therapies for undertreated respiratory diseases.

Phosphagenics (ASX: POH) is a Melbourne-based, globally driven biotechnology company focused on the discovery of new and cost effective ways to enhance the bioavailability, activity, safety and delivery of proven pharmaceutical and personal care products (including nutraceuticals and cosmeceuticals).

Phylogica (ASX: PYC) is a biopharmaceutical company engaged in the discovery and development of novel biopharmaceuticals directed at proteins and their interactions.

Prana Biotechnology (ASX: PBT) is a world leader in addressing the role of biological metals in human disease. The mission of the company is to develop disease modifying therapeutics for the treatment of common neurological disorders, with a focus upon Alzheimer's, Parkinson's and Huntington's diseases.

PrimaBiomed (ASX: is one of the world's leaders when it comes to cancer treatment. The focus is on developing anti-cancer therapeutics based on the emerging technology of immunotherapy. Scientific research, product development and clinical trials are the essentials of the company's fight against cancer.

Progen Pharmaceuticals (ASX: PGL) aims to maintain and develop a world-class position in the design and development of therapeutics that disrupt the protein-carbohydrate interactions involved in cancer.

pSivida Corp. (ASX: PVA) is a leading provider of miniaturized, sustained-release drug delivery products and is continuing the evolution of these systems. The lead development product, Iluvien Æ, delivers fluocinolone acetonide (FA) for the treatment of diabetic macular edema (DME), one of the leading causes of blindness in the developed world.

QRxPharma (ASX: QRX) a clinical-stage specialty pharmaceutical company with a core focus on the development and commercialisation of pain therapy products. The Companyís lead products comprise a patented combination of existing drugs, with a well defined path to regulatory approval and sales. QRxPharmaís lead drug compound, Q8003IR, began Phase III clinical trials in 2007.

Sirtex Medical's (ASX: SRX) primary objective is to research, develop, and commercialise effective treatments for liver cancer using novel small particle technology.

Starpharma (ASX: SPL) is a world leader in the development of nanotechnology products for pharmaceutical, life-science and other applications. Starpharmaís lead product is VivaGelÆ, a gel-based formulation of a nano-pharmaceutical under development as a vaginal microbicide to prevent the transmission of sexually transmitted infections, including HIV and genital herpes.

Sunshine Heart, Inc (ASX: SHC) is a global medical device company, committed to the commercialisation of C-Pulse, an implantable, non-blood contacting, heart assist therapy for the treatment of people with moderate heart failure.

Tissue Therapies (ASX: TIS) provides wound healing, tissue repair and cell culture technology through a novel growth factor platform technology, VitroGroÆ.

Tyrian Diagnostics (ASX: TDX) develops and commercialises rapid point-of-need diagnostics for clinical and non-clinical applications. Tyrianís objective is to generate recurring revenues from a portfolio of rapid point-of-need diagnostic products.

Universal Biosensors, Inc (ASX: UBI) is a specialist medical diagnostics company focused on the development, manufacture and commercialisation of a range of in vitro diagnostic tests for point-of-care use.

Viralytics (ASX: VLA) a leading anti-cancer biotechnology company. Viralytics has acquired, by licence, an anti-cancer virotherapy technology using the naturally occurring Coxsackievirus and Echovirus. With the acquisition; Viralyticsís focus is now a leading anti-cancer biotech with a worldwide outlook.

Virax Holdings (ASX: VHL) is is a biopharmaceutical company engaged in the discovery and development of immunotherapeutic products for the treatment of chronic infectious such as Hepatitis B, autoimmune disorders, HIV/AIDS and cancers.

Vita Life Sciences (ASX: VSC) is a pharmaceutical and healthcare company, with principal activities involved in formulating, packaging, sales and distribution of vitamins and supplements and investment.

From the drill programme, Stanmore is aiming to establish a JORC Inferred Resource and confirming coal quality and potential coking properties of the various seams across the project area.

The target at Mackenzie River project is a large open pit deposit of coking coal.  The project is located on the railway line to Gladstone.

The target size of the deposit will substantially exceed the previous exploration target of 40‐50Mt, the company said in the Company’s IPO prospectus dated 30 October 2009.

Drilling has also recommenced at The Range project in the Surat Basin, following significant weather delays since the previous round of drilling ceased prior to Christmas.

The company expects to produce a JORC compliant Inferred Resource estimate in April, subject to the timing of the completion of the current drill program.

Stanmore Coal holds 100% interests in its seven coal project areas, covering over 1,080 km2 in total. A detailed third party geological review is underway on all of Stanmore Coal’s other projects in advance of planned exploration programmes this year.

Between them these projects have the potential to host significant deposits of coking, PCI and thermal coal and are typically well located for export infrastructure.

MINERAL discoveries tend to put a rocket under the share prices of junior resource companies. Rags-to-riches stories capture many hearts, but often mixed profits for investors buying after the discovery hype.

The transition from explorer to producer is a long one, and so elation following early success with the drill bit needs to be balanced with the realities of planning and funding a profitable mining operation. Magma Metals (ASX: MMW) is a classic case in point.

Soon after the company listed in 2006, a platinum discovery at its Thunder Bay North project in Canada sent its share price soaring from under 15c to more than $1 in a week.

Unfortunately investors buying into this 566 per cent surge would have been hard-pressed capturing a profit, as most of the gains were surrendered within a few months. There haven't been more fireworks during the past three years and the hype has passed.

So with subsequent exploration work yielding positive results, a period of share price growth could be looming. The company has established a maiden resource estimate for the project equating to 690,000 ounces of platinum, 90 per cent of which is amenable to open pit mining.

The shallow nature of the resource should lower mining costs, while nearby infrastructure reduces the financial burden of development. The project is accessible by road, just 45km from the main town of Thunder Bay, and isn't too far from grid power.

The project area also spreads just 20km-60km southeast of an existing polly-metallic mine and processing facility, which is operating below capacity.

An infrastructure sharing agreement may assist project economics, but we are comfortable with Magma's ability to go it alone.

The company has a strong institutional presence on its share register, the largest of which is mining heavyweight Anglo American (12 per cent). Anglo's interest is a testament to Thunder Bay's resource potential, which Magma suggests could be substantially increased by further drilling. In light of this exploration upside, and scoping study results due mid-year, we rate the stock a speculative buy.

Wise-owl.com is regarded as one of Australia’s leading independent research houses. If you would like to receive a complimentary sample of their Small to Mid Cap Equities report, please click here

The listing is expected to take place in the middle of the 2010 calendar year.

The main aim of the listing is to provide Resource Generation with greater flexibility when raising finance to develop its Boikarabelo mine.

The listing is also expected to encourage South African investors to invest in the company.

Paul Jury, managing director of Resource Generation, said: ‘This is another important step forward in our plan to develop a large-scale coal mining operation. The listing will increase awareness of Resource Generation in the South African business community and is expected to open up additional sources of finance.’

Resource Generation’s Boikarabelo tenements, in the Waterberg region of South Africa, have probable saleable reserves of 603 million tonnes of coal, plus an indicated resource of 570 million tonnes, plus an inferred resource of 1.7 billion tonnes. These figures are expected to increase following further drilling.

The company lodged a mining rights application in February 2010. The South African Department of Mines and Energy normally takes approximately 12 months to award mining rights and the company now intends to progress funding alternatives so it is ready to start construction when the rights are received. Production is currently scheduled to start in January 2013.

The study asserts at the outset that from a top-down, macro approach, the bank is moderately bullish on commodities as a group for the rest of 2010, but that the prices of individual commodities are expected to vary considerably.  The bifurcation of economic growth and the emphasis on developing nations points in particular towards base metals, steel, iron ore and energy.

The bank suggests that moderate support for commodities will come over the next few quarters from both fundamental end-user commodity consumption and investor commodity demand. 

Economic growth is expected to top 6% in emerging countries and come in at slightly above 2% in developed economies as expansionary monetary and fiscal policies are working better in the former since they are not suffering from impaired balance sheets; this two-lane highway is expected to persist some way beyond 2010. 

Furthermore the emphasis on emerging economies is on the development of infrastructure, which particularly requires the commodities listed above. 

The bank suggests that we are looking for "binary inflation".  Large output gaps persist in the developed economies, which should keep inflation well contained in 2010 and 2011, while there are mounting inflation risks in the emerging economies.  A debate over the medium term inflation outlook is beginning "to flare", however, and SocGen is of the view that inflation is very likely to be the next hurdle to overcome.

The bank is looking for an upward trend in gold and silver over the next few quarters, driven by increasing inflationary fears and concerns that developed countries might be tempted to monetise some of their hefty sovereign debt. 

Investors are expected to continue to hedge against economic and financial risk, official sector sales will of course be governed by the destiny of the remainder of the gold that the IMF has for sale. 

The average gold price for the final quarter of this year is forecast at $1,325 while that of silver is pegged at $21.75. 

The gold average for 2011 is expected to be the highest for the medium term, with prices coming down gradually thereafter.  The industrial element in silver's character is expected to keep silver prices higher for slightly longer, with 2012 the peak year, although in the short term it is largely copying gold as an inflation hedge and also finding a niche with smaller investors. 

Meanwhile the platinum group metals, which have carried the banner for the precious sector since late 2008, are now expected to give up this leading role to gold and silver.  The bank suggests that while platinum has some further upside scope. 

Palladium's run may be coming to a close - although the rebound in automotive activity means that the downside is very limited.  Russian state stockpiles are, as usual, a topic for debate and although there was a spike in imports to Switzerland in January, an increasing proportion of metal appears to be going directly to consumers,  Platinum remains focused on potential supply problems in South Africa, as the recovery in the auto sector is less influential than it is for palladium. 

Europe is the only auto sector in which platinum is dominant over palladium, because of diesel's local market share, in which platinum has historically been the key metal.  The European automotive sector is lagging, and palladium is making inroads into platinum's share here as fuel technology now allows for substitution between the two (but to a limited extent).

Among the base metals, SocGen notes that LME lead inventory continues to rise but that current stock levels still provide limited demand coverage. 

Lead is expected to benefit from a significant boost from the rebound in the global auto sector (the bank is looking for a 40% increase in auto production against 2009).  Lead concentrate availability is expected to come under increasing pressure as a result of mine depletion at existing operations. 

Zinc's price upside is expected to be constrained by a sustained market surplus - refined production is forecast to increase by 8% year-on-year in 2010. 

Nickel prices surged in the first quarter of this year as stainless steel producers increased their production rates and LME stocks have begun to decline.  Stainless production is expected to rise by more than 14% this year, driven in particular by autos and domestic appliances. 

Aluminium is seeing significant smelter restarts, both in China and the west as a result of rising prices.  Chinese copper demand, meanwhile, is expected to underpin a near 7% increase in global demand and LME inventories have been declining since mid-February.

China of course remains a key element in the outlook.  The SocGen economists are expecting a revaluation of the yuan this year, and argue that such a revaluation is more likely to support commodities then impede Chinese exports - and that any knee-jerk drop in prices in response to such a revaluation would offer a buying opportunity.

www.mineweb.com

A partner in the Tropicana gold project, Independence Group NL (ASX: IGO), Wednesday unveiled the potential of Boston Shaker, only 500 metres from the established resources on the Tropicana-Havana deposits, as a major target for detailed exploration.

Tropicana is a huge series of prospects that stretch over several hundred kilometres from east of Leonora to well south east of Kalgoorlie and is managed by 70% partner AngloGold Ashanti.

Independence said mineralisation was similar to the Tropicana-Havana mineralisation and was open down dip and along strike.

Some of the better drill intersections, following an earlier encouraging intercept of 7 metres grading 2.1 grams/tonne followed by 14m @ 3.5 g/t gold, showed there were multiple intersections that suggested stacked lodes up to 17m thick.

Latest true width hits included - TFRC3293: 5m @ 3.9 g/t from 48m depth and 17m @ 3 g/t from 58m; TFRC3294: 12m @ 4.9 g/t from 93m and 16m @ 3.5 g/t from 119m; TFRC3290: 14m @ 3.5 g/t from 81m; TFRC064D: 12m @ 4.1 g/t from 138m.

Independence said Boston Shaker may represent the faulted offset of the Tropicana deposit.

Results are awaited for an additional seven holes while step-out drilling continues to determine the extent of the mineralisation.

Infill drilling is also planned with the aim of increasing the current 5.01 million ounce gold resource and 3.3 million oz ounce gold reserve on Tropicana and Havana.

Tropicana is a key addition for AngloGold Ashanti which established a strong gold mining base in Western Australia several years ago and is still mining one of Australia's best producers - Sunrise Dam in the north eastern goldfields.

Independence has been a profitable performer for several years and floated in 2000, with Tropicana as one of its exploration assets. It's cash flow comes from the Long shaft nickel mine at Kambalda in Western Australia.

www.mineweb.com

Fat Prophets initially recommended buying MYR at $3.25 in February 2010 (FAT461). On the charts, Myer Holdings touched an all time low of $3.12 on February 5. Since then, a short-term uptrend has formed as evident from the series of higher lows and higher highs on the daily chart. The recent high of $3.54 on March 11 represents a gain of 29 cents or 8.9% since our original recommendation a month ago.

Myer Holdings is currently consolidating above the 50 day SMA, which is a bullish signal. Downside risk is limited to this moving average, whereas a break of the $3.54 high will result in another move higher. The initial target is the January 5 high of $3.70.

The timing of the float was indeed fuelled by the adrenaline rush of the government cash stimulus payments in early 2009 that pumped up most retailers’ tills throughout the year. TPG, the majority owner of the company at the time, saw the opportunity to exit its position ahead of schedule. In layman’s terms, they were feeding the ducks. The lure of Australia’s largest IPO of the year, and an iconic brand, was a big temptation for many.

But as Mr Brookes admitted, there was still a lot of work to do before the turnaround of the business would be complete. Not the least of these issues was the refurbishment of the company’s flagship store in Melbourne’s CBD. At approximately $220 million of sales before refurbishment began, the project will only be ready for the Christmas trading period in 2010. Mr Brookes knows that this key piece of kit in his sales bag will produce over $300 million of sales each year once it is fully rebuilt.
 
With hindsight, the hurried exit of the private equity owners, together with the incomplete turnaround project presented patient investors with a nice opportunity. The secret, of course, was to wait for the price to reflect the reality of the glass half full business (FAT448).

In addition to Melbourne, Myer will open new stores this year in Top Ryde in Sydney (July) and Robina in Queensland (October). Both stores will contribute around $30-40 million in sales in their second year when fully up to speed.

During the half year, Myer refurbished stores in Blacktown, Castle Hill and Northland. The track record of these projects is unquantified by the company other than to reassure investors that once completed, they trade well above previous levels.

The company’s hurdle rate of return for capital expenditure is to double its cost of capital in year two. On a total capital expenditure budget of $230 million over the 2010 and 2011 financial years that suggests the momentum in operating earnings is strongly driven by these new store openings and refurbishment projects. In that period, about $139 million of the total is allocated to store network expenditure.

Stores to be refurbished in the second half of this financial year include Canberra, Charlestown (NSW), Marion (SA) and Eastland (VIC). In the last 3½ years, Myer has refurbished 10 stores.

As we already knew from Myer’s sales release in February ( FAT461), the company’s sales experience had been a choppy one throughout the six month period. Total sales growth of 2% and comparable store sales growth of just 1.2% was a fairly subdued outcome considering the hype that had preceded the IPO. Members may recall the Australian Bureau of Statistics data that recorded annualised retail sales growth as high as 7.9% in June 2009 and comfortably above 5% prior to the float in November. The latest official ABS data now has retail sales at a more sedate growth rate of 3%.

The real culprit in the bubble of those retail figures was, of course, the effect of the government’s cash stimulus payments. Myer was clearly a beneficiary of that money, but now its effect is washing through, the prognosis is looking more sober.

In fact, Myer’s Prospectus contained a sales growth rate forecast for the 2010 financial year of 3% but has now downgraded this to between 1-2%. The company expects second half sales growth of 0-2%.

The good news is that the profit forecasts remain intact, mainly due to the extensive improvement in the cost of doing business. In the first half year result, Myer lowered this factor by 1.59% or about $19 million. Myer has a long list of projects that will make further contributions to reducing the cost of running the business.

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Initially the mine suffered teething troubles and delays, principally stemming from problems with the plant and equipment supplied by the EPC (Engineering, Procurement, Construction) contractors.  But now, following the rectification and completion of the contract scope of works, and a performance improvement programme, Kenmare believes these problems have been largely resolved; proof of the pudding lies in the production figures which demonstrate a successful ramp up during 2009.  The ramp-up will be complete by the middle of this year when the addition of an ilmenite scavenging circuit is expected to take ilmenite production to 100% capacity, zircon to 90% and rutile to 75% of design levels. Ilmenite typically contains 45-62% titanium dioxide (TiO2) while rutile contains 94-96%. Zircon is a zirconium mineral used principally in the ceramics industry.

Kenmare believes that medium to long term supply/demand outlook for titanium dioxide pigment and titanium dioxide feedstocks is favourable so the time is now ripe to begin Phase 2 which will expand capacity at the mine by 50%. It is looking to grow in the market at a time when demand for feedstocks for titanium dioxide pigment and titanium metal is likely to be growing rapidly but when the other major producers are either declining or running to stand still. 

The company is therefore in the market to raise almost £180m to fund the expansion through the issue of 1.5 billion shares, half in a firm placing and half in an open offer.  The shares are priced at 12 pence each, a discount of 42% on the closing price on 4th March, the date of the announcement.  The open offer, which has been fully underwritten, closes on 26th March.

Proactiveinvestors met with Managing Director Michael Carvill and Marketing Manager Eamonn Keenan while they were in the City to present their case.  Here is a summary of some of the key points they presented about the window of opportunity in the market, the current strengths of the project and the potential of the expansion.

The Window of Opportunity in the Titanium Dioxide Feedstock Market

Titanium metal is used in a wide variety of metallurgical uses such as aerospace, chemical plants, bicycle frames, chemical equipment, heat exchangers, golf clubs and artificial hips, as it is light, hard, chemically inert and it has a low coefficient of thermal expansion with a high strength to weight ratio. 

Meanwhile titanium dioxide is the second most refractive naturally occurring material on earth after diamonds.  It reflects all colours in the spectrum, has a high opacity and a bright whiteness, and it is non-toxic and inert and so is of great importance in the production of titanium dioxide pigments for many applications including paints and coatings, paper, inks, plastics, foods, cosmetics and fibres.  It is also used to mask or enhance other colours.

Demand for pigment (which accounts for around 90% of TiO2 feedstock consumption) has been strongly correlated with world GDP growth, and has averaged a 3.1% compound annual growth rate (CAGR) since 1990. Analysis of trends by market however has shown that the intensity of consumption varies with the maturity of a market.  In the most under-developed, but also in the most developed markets, growth tends to be less than GDP, while in the newly industrialising countries pigment demand growth considerably exceeds that of GDP. In China for example pigment growth has averaged 15.6% CAGR since 1990 but the intensity of consumption, at around 0.6kg per capita, is still less than a fifth of the USA's 3.4kg, albeit considerably ahead of India's at around 0.1kg.  The potential for catch-up is therefore huge, particularly as there are no substitutes for many of the end uses. The largest global producer of TiO2 pigment, American chemical company DuPont, has predicted that demand for titanium dioxide pigment will grow by 5-10% for the next 5 years to restore the long term trend line growth rate of 3%. This growth will be driven by further industrialisation and urbanisation in Asia and other developing economies, and by catch-up after the recession in the developed economies.

Meanwhile the supply of TiO2 feedstocks is likely to be subject to a number of restrictions caused by capacity constraint, limited expansion potential, resource depletion, significant increases in power prices and unjustifiable further capex requirements.  The three major suppliers, (Rio, Iluka and Exxaro who together account for more than half world supply), are all facing challenges in maintaining or growing their current production levels.  World production is expected to decline from 2012. 

Independent industry analysts, TMZI, are predicting that the combination of demand growth and supply constraints will create a supply deficit from 2012 equivalent to 20% of world supply by 2015 in the absence of new project development.  On this basis Kenmare see the period from 2012 as a window of opportunity for higher prices in the market and thus favourable timing for the project expansion to come on stream.

Current Strengths of the Moma Project

Moma's geology, size and location are all significant natural advantages. It is one of the world's largest known mineral sands resources and at the present rate of production Kenmare could be busy for the next 150 years. The Namalope Deposit currently being mined measures roughly 7km by 4km and contains proven and probable reserves of 21M tonnes of ilmenite,1.5M tonnes of zircon and 0.5M tonnes of rutile, which is good for 25 years at the current rate. Other deposits at Moma contain further JORC resources of 160M tonnes of ilmenite, 11M tonnes of zircon and 3.6M tonnes of rutile. 

The sands are found at surface with no overburden and little vegetation. They are mined using two dredges to pump the ore from a large artificial, freshwater mining pond, some 800 by 300 metres and up to 15 metres deep.  The ore is pumped to a wet concentrator plant which floats behind the dredges and separates out the valuable heavy minerals, (5% by weight), from the tailings which are deposited at the rear of the dredge pond for ongoing rehabilitation; the pond and concentrator plant thus effectively takes a slow walk across the reserve over the life of mine.  Meanwhile the heavy minerals concentrate is pumped to the mineral separation plant where it is separated and processed into the finished products; ilmenite, zircon and rutile. These are transported 2.4km along a covered overland conveyor belt to a jetty where they are loaded onto Kenmare's trans-shipment vessel, the Bronagh J, which transports the products to a sheltered deep-water trans-shipment point 10km offshore where it self-discharges into the customer's vessels.

Costs at the mine can thus be kept low.  The deposit is at surface, dredge mining is the cheapest, most efficient and safest mining method for this type of project, there is ample freshwater, the infrastructure is fully integrated, the ore does not require any overland wheeled transportation, and the hydro-electric power supply arrangement, for the next 20 years is at a very competitive tariff.  Since the products are high volume but relatively low value the coastal location on a favourable shipping route next to a deep water terminal is of crucial importance to the economics of the project.

Meanwhile revenues are boosted by the high quality of the ilmenite produced, (which, at 52-59% has a high TiO2 content and can be sold without upgrading), and by the valuable rutile and zircon co-products. Rutile is a preferred TiO2 feedstock for titanium metal, pigment and welding electrode applications and is in strong demand given its limited supply. The zircon is used primarily in the ceramics industry and for refractory and foundry applications.

Kenmare also benefits from strong relations with local communities and with the NGOs. It employs 600+ people at the mine comprising 80% local employees, 16% Zimbabweans and 4% other ex-pats, and it supports local enterprise and projects in health, education and sports. The company won some prestigious awards in 2009 including the Nedbank Green Mining Socio-Economic Award and the Irish Chamber of Commerce President's Award for Corporate Social Responsibility.  The company has also established a strong working relationship with the Mozambican authorities and it benefits from favourable taxation treatment, with the mineral separation plant and export facilities being a designated Industrial Free Zone.


The Proposed Expansion

The proposed expansion will increase the capacity of the mine by around 50% from its current capacity of 800,000 tonnes per annum of ilmenite to 1.2 Million tonnes, while zircon production should increase from 50,000 to 80,000tpa and rutile from 14,000 to 22,000 tpa. At this level production would represent respectively 10% and 7% of the world's ilmenite and zircon supplies.  The expansion will increase throughput by the addition of an extra dredge, wet concentrator plant and a Wet High Intensity Magnetic Separation circuit ahead of the mineral separation plant and through various upgrades of the existing equipment and infrastructure.  It will be modular in design to avoid disruption to existing operations.   The 18 month design and construction programme could begin in the second half of 2010, with production ramping up during 2012 to full production by 2013.  At this point the company should be generating very significantly more revenue, particularly if prices are higher, which should help to pay down the current debt of $353M more rapidly.

Analysis

So will Kenmare be successful in the proposed expansion?  There is no doubt that the company faced considerable difficulties in Phase 1 (see the Proactive Investors article from August 2009) which led to a higher debt burden, slower returns, significant extra dilution for shareholders and a loss of market confidence, which was compounded by the recession and falling ilmenite prices.  It resulted in the share price plummeting from a peak of 67p in mid-2007 to 7p by end-2008.  But the silver lining, according to Kenmare, is that valuable experience was gained, the company now has an intimate knowledge of the systems and equipment and construction contract management, and key new personnel were appointed in 2009, including a new Chief Operations Director, the highly experienced Jacob Deysel who previously worked for Richards Bay Minerals, the world's largest single producer of titanium dioxide, where he was responsible for the mine's five plants, geology, mine planning and maintenance. The fact that production figures are now on track following the performance improvement programme is certainly a positive indicator.

Nonetheless there are considerable risks to a project of this scope and size; the prospectus for the offer lists 37 different categories of risk.  Key among these must be the commodity price risk, particularly if there were to be a double dip recession, Kenmare's debt position, and the risks of capital cost escalation and/or delays, (although the cost estimate allows for a accuracy tolerance of +/-25% and +/-10% contingency). Dilution for existing shareholders is clearly another issue. Since the announcement about the offer the share price has headed south.

However the upside is considerable given the strengths of the project and proposed expansion.  The deposit is known to be large, long-life, high-quality and with valuable co-products.  Its coastal location with deep-sea loading facilities is of fundamental importance.  Unit mining costs, already relatively low should fall further as the expansion will optimise the use of existing infrastructure.  Revenues will increase in line with production and any increase in prices.

If Kenmare's interpretation of the market is correct the expansion will be well timed to enable the company to capture first mover advantage in the projected deficit in the TiO2 feedstock market.  The expansion could propel Kenmare to the position of third largest global producer TiO2 feedstocks at a time when consumption in China, India and other industrialising countries will be growing rapidly.

Lydian International’s Amulsar Gold Project certainly isn’t small; it already hosts an inferred resource of 1.4 million ounces, and with another 16,000 meters of drilling planned in 2010, this number is going to increase.  But the deposit is a relatively low grade, bulk tonnage type deposit.  Hence the delight in Lydian’s statement this morning that additional metallurgical test work at Amulsar has continued to show that the ore is amenable to low cost heap leaching, with tests showing that 90% recoveries are very achievable.

Three different column leach tests on 19mm ore composites returned gold extractions of 81.5%, 78.7% and 66.5% over a 14 day leach period and 89.1%, 88.6% and 76.5% over a 70 day leach period.  “With recovery trajectories indicating gold was still being extracted in all composites with two of them likely to exceed 90% extractions after a short period of further leaching,” Lydian noted. The head assay grades of the three composites were 1.17 g/t gold, 1.09 g/t gold and 1.52 g/t gold.

The recovery grades reported for the column leach tests were based on the back-calculated head assays to ensure that they are the most conservative values, Lydian added.

“We are pleased with these results which imply recoveries of around 90% and a low-cost gold leaching operation at Amulsar”, said Tim Coughlin, Lydian’s President and CEO. “Cheap processing is of course very important for bulk tonnage operations. Further column leach experimental work will be completed this year to test different parts of the expanding resource and to test recoveries from newly identified prospect areas such as Erato where we drilled 229m at 1g/t gold in the last hole of the 2009 drilling season. The next stage will be to simulate a run-of-mine leaching operation which does not require crushing and can amount to cost savings in the order of 20%.”.

Amulsar sits within the Tethyan fold belt, one of the principal geological features in the northern hemisphere. Extending from Central Europe and northern Africa across Turkey and the Middle East to the Himalayas and then on to the Far East and Indonesia, it marks the point where Africa, Arabia and India collided with the Eurasian plate on their drift northwards and closed up the Tethys Ocean that lay between them in Triassic times.

Stretching as it does across so many countries and cultures, many of which have been centres of political and geological upheaval over the centuries, the Tethyan belt is perhaps the least explored of all the earth’s major geological systems.

Lydian has already secured a 25-year Special Mining License and all the necessary permits to build a starter pit at Amulsar, and is planning to complete additional components required for a feasibility study this year. 

Production is expected to commence in 2013.

It has been a busy start to the year for the IP commercialisation group. In February Fusion announced the spin-out of Seren Photonics, an ultra-high efficient light-emitting diode (LED) company, which has been formed under Fusion’s exclusive IP agreement with the University of Sheffield.

In addition to its partnership with the University of Sheffield, Fusion also has a similar exclusive partnership with Cardiff University. These long-term exclusive agreements give Fusion access to a combined R&D (research and development) spend of over £185 million a year.

A week prior to the Seren Photonics spin-out, Fusion announced the launch of a new business under its Cardiff University partnership. The newly established Progenteq is developing a novel cartilage replacement technique, using technology developed by Professor Charlie Archer's research group at Cardiff University's School of Biosciences.