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UK mining wrap; Ascent Resources, Triple Plate Junction and Medusa Mining in focus


Overnight from the UK, one of the main stories by Proactive Investors was dedicated to today’s top riser in the oil and gas sector Ascent Resources (LON:AST), which was boosted by excellent results from a gas well in Slovenia.

Shares in the company soared by more than 70 percent in morning trade as it said gas flows from the second well, PG-10, on its Petisovci project in Slovenia were more than twice the rate expected.

Preliminary testing of the shallowest of two stages of the PG-10 well flowed at a stabilised rate of 8.5 MMscfd (240,000 m3; 1,420 boepd).

As the frac stimulation moved further away from the original well the rock quality got “better and better”, Ascent added.

Today’s result followed flows from the fracture stimulation of a first well, Pg-11A, in Petisovci that showed stabilised gas flow rate of 2.1 MMscfd.

Options to allow the production and associated cash flow generation of both the wells by mid 2012 are now being evaluated, the oil and gas explorer added.

Managing director Jeremy Eng said, "This result from Pg-10 is excellent and exceeds our expectations.  It follows the commercial, although less prolific, result from the Pg-11A stimulation, and gives us confidence that redevelopment of the Petisovci field can and will now proceed.”

Precious metals focused miners also generated plenty of interest today with Proactive dedicating two feature stories to gold mining stocks, Triple Plate Junction (LON:TPJ) and Medusa Mining (LON:MML).

Philippines-focused Medusa Mining has reiterated its upbeat forecasts for the next few years at a meeting with broker Seymour Pierce.

Chairman Geoff Davis and chief executive Peter Hepburn-Brown confirmed a forecast of 90-100,000 ounces gold production this year to June, rising to 120,000 ounces in 2012/13 and 200,000 ounces the year after, Seymour Pierce said.

Costs were also forecast to remain below US$220 an ounce, while Medusa’s team reaffirmed their commitment to a 10 US cents a share dividend, according to the broker.

Medusa is currently producing gold at the Co-O mine in the Philippines and developing a second deposit in the country at Bananghilig.

Cash and equivalents now stand at US$81 million and the company is starting to build up its reserves to put towards the development of Bananghilig.

This is slated to become the company's second 200,000 ounce a year operation with very early estimates of capex at around US$200 million and operating costs around US$500 per ounce.

Another article took an in depth look at Triple Plate Junction, whose joint venture partner Gold Anomaly yesterday announced a maiden resource of 790,000 gold ounces at a prospect at the Crater Mountain project in Papua New Guinea ahead of schedule by six months.

The news marks a “major milestone” for both the project and the company, according to independent broker Optiva Securities.

However, in a research note published today the broker added that “there is much more to TPJ than just Crater Mountain, as four core projects are being pursued in Papua New Guinea, all of which hold the potential of discovering a world class gold deposit”.

Optiva pointed out that a number of gold deposit discoveries of over 10 million ounces have been made in Papua New Guinea, the most notable being the colossal Wafi-Golpu porphyry discovery, which has 27 million ounces of gold and nine million tonnes of copper.

“The Wafi‐Golpu discovery lies tantalisingly close to TPJ’s projects at Wamum and Morobe, with both licences bordering the Wafi‐Golpu tenement,” said the broker.

“Such elephant hunting country has attracted a number of mining majors to the region, three of which are project partners to TPJ, namely Newmont, Newcrest and Barrick.”

Two other feature stories focused on staff rostering specialist Allocate Software (LON:ALL) and carbon emissions and clean energy-focused group Camco International (LON:CAO).

Broker Brewin Dolphin recently included Allocate Software in a group of healthcare IT firms that it says have a once in a lifetime opportunity because of the current environment.

Allocate is already a major supplier to the National Health Service in the UK, where it is has seen strong growth over the past four years.

Sales have risen from £8.3 million in 2007 to £30.1 million in the year to end May, with healthcare accounting for nearly 80% of that total last year. The remainder of sales are to established customers such as the British Army, Nato and Australia’s armed forces.

Profits have also picked up smartly, with the operating total before amortisation charges last year rising from £3.75 million to £5.77 million.

Brewin Dolphin expects underlying profits to rise to £5.9 million in the current year and to £6.6 million in the year after.

The story on Camco noted that the company is currently involved in several environmentally-friendly projects around the world. Recently, it has benefited from an improving regulatory environment for low carbon and clean energy projects.

Camco comprises three business divisions. The largest division focuses on carbon reduction project development, while the group also has a business that invests in clean energy projects as well as another operation that provides advice to other companies, and governments, about energy and carbon matters.

The carbon division works with power generators and large industrial companies to help reduce greenhouse gas emissions, particularly with regard to meeting regulatory requirements as set out by the United Nations’ Kyoto Protocol.

Camco develops these carbon projects “at risk”, which means working with the project owners and sharing the profits in much the same way as a property developer.

It then earns its payback from revenues generated by the projects or by banking valuable carbon credits; the creation and commercialisation of carbon credits is an important part of this business.

Earlier this year, Camco announced it was “seeing tangible benefit from the high rate of registration of emission reduction projects” by the Clean Development Mechanism (CDM) Executive Board.


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