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Edenville Energy, Beacon Hill Resources, Medusa Mining, Frontier Mining, and others feature in Fox-Davies Newsflash



Mining News

Angel Mining (LON:ANGM) announced that it has received the permit, from the Bureau of Minerals & Petroleum, that enables the Company to mine the high grade pillars at the Nalunaq gold mine in Southern Greenland. The pillars are estimated to contain 30,000t of recoverable ore at an expected average grade of 18 g/t. This high grade resource is expected to underpin the level of gold production for the next year or more. Two mining teams are being trained in the necessary mining method and rigorous health and safety procedures required to mine the pillars and production from this ore is expected to have commenced by mid-September. Afterwards, the Company expects to be producing consistently above 1,500oz per month from a single gold pour, i.e. at commercial levels of production given the Company's target of 2,000oz per month. The permit has been granted later than the Company had expected and the purchase of essential consumables was delayed as a result. Consequently, the mine had to process low grade material in the intervening period. Production for July was 29.3kg (942oz) and to date in August it has been 17.6kg (565oz). The next gold pour is planned for 27 August. Work is also progressing well with the development in the Mountain Block, where the Company is accessing ore with sample grades consistently above 50g/t. A new ore pass is being constructed to replace a 5km haul route to bring the ore to the process plant. The work on the pillars and the ore pass is being led by the Nigel Handley who was recently appointed as Deputy General Manager and Head of Mining. Golder Associates have advised on the mining method and they will help the team monitor progress as the centre portions of pillars are extracted. The pillars are typically 35m long and 5m wide. The ends of the pillars will be reinforced with roof bolts in resin and the central portion, being about 25m by 5m, will be blasted into the stope voids on either side. The material will then be recovered from the stope using high pressure water and a mechanical slusher, if needed.

Comment: This is positive news for Angel. The higher grades should enable them to get to their target of 2,000oz per month.

Exco Resources Ltd (ASX:EXS) announced that after considering the Soul Pattinson offer note that  in the context of the challenges its subsidiary CopperChem faces with a limited mine life at the Great Australia project. In principle, your Independent Directors have no problem with Soul Pattinson taking control of Exco if, and only if, minority shareholders receive a fair price for their shares.  In approximately four weeks you will receive a Target's Statement from your directors which will provide you with all of the information you need to consider the Soul Pattinson offer. Until you receive the Target's Statement you should TAKE NO ACTION IN RELATION TO YOUR EXCO SHARES.  As Soul Pattinson has now lodged its Bidder's Statement, it is entitled to purchase more shares in Exco on market at the offer price. Accordingly, your Independent Directors think it appropriate to provide you with a more detailed response now than they might otherwise have provided in advance of issuing the Target's Statement because there is a risk that control of Exco might pass to Soul Pattinson before you have had a chance to consider relevant issues.  Furthermore, we have received strong messages of support from a number of our key shareholders since the offer was announced and you can rest assured that your Independent Directors intend to do everything possible to ensure that this inadequate and unfair offer fails. To assist us in dealing with the offer, we have appointed Macquarie Capital as our financial adviser and Ashurst as our legal adviser.

Colt Resources (CVE:GTP) announced that it has received final analytical results corresponding to twenty-one recently completed drillholes from the ongoing drilling and trenching campaign on its Boa Fé gold project, located within the Company's 100% owned (47Km2) Boa Fé Experimental Mining License (EML) in southern Portugal. The Boa Fé EML is completely surrounded by the Company's 100% owned (732Km2) Montemor exploration concession. These results will greatly assist the mine development team and increase our understanding of these deposits and as we move towards preparing a Preliminary Economic Analysis.  The bulk of our current deposit development drilling activities are now focussed on our Banhos deposit, also within the Boa Fe EML.  We expect to accelerate productivity and news flow in the next few weeks with the imminent arrival of three additional and more powerful rigs to the site.

Paragon Diamonds (LON:PRG) announced that it has signed a Memorandum of Understanding ("MOU") for project financing for its Motete Dyke operation in Lesotho. The MOU signed with Lesotho partner Matekane Group of Companies ("MGC") provides up to US$10M of project financing, which is sufficient to bring the Motete Dyke project into full production. Repayment of the loan and interest will be from free cash flows once Paragon's initial costs have been recovered. The on-going interest rate will be 2% above USD LIBOR for term of loan. A financing fee of US$1M accrued and will be repaid out of cash flow on the back of the continuing positive results from the on-going bulk sampling programme and the anticipated publication of the initial scoping study on the Motete Dyke project, the Company has secured project financing to take the dyke into full production. This will enable the group to finance the project without any dilution to shareholders and enable the rapid development of the Lesotho projects.

Drake Resources (ASX:DRK) announced it has intersected broad zones of gold mineralisation at its 100 per cent owned Tasiast South Project in Mauritania, West Africa. A key target of the reverse circulation (RC) drilling programme was a 10 square kilometre mineralised zone defined by air-core drilling; now called the Ghassariat Prospect. The Ghassariat Prospect is located along strike from the 20 million ounce Tasiast Gold Mine and processing facility on the Aouéouat Greenstone Belt. Three thick zones of sulphide alteration and low grade mineralisation were identified. Five of the 13 RC holes drilled in the prospect intersected these zones; two of the zones remain open and are a minimum of 50 metres in width. Best intersections were 71m grading 0.3g/t including 5m at 1.2g/t and 38m grading 0.4g/t including 1m at 6.1g/t.

Edenville Energy (LON:EDL) has released the results from drillhole MK12-029 at the Mkomolo deposit on the Rukwa Coalfield project in south western Tanzania. The results confirm the thickening of the coal measures to the northern part of the basin, albeit interbedded with sandstone and shale with a total coal thickness of 19.04m over the entire 70m intersected. Grades and yields are higher than the April 2012 resource figures, but are still relatively low with high sulphur of between 2.49% to 5.46%.

Frontier Mining (LON:FML) has signed an agreement through its wholly owned subsidiary KazCopper with Sberbank to provide an additional loan and credit facility of US$6m to the existing loan facility of US$29M. The new facility is in two components, a $5 million increase in the investment loan and a $1 million increase in the working capital credit facility. All other conditions of the existing loan arrangement remain the same. The loan will be used for the Benkala project's Phase II expansion from 7kt to 10kt pa, working capital requirements and the on-going drilling programs at Benkala and South Benkala. Benkala produced its first copper earlier in the month, with the phase II expansion currently in construction.

Medusa Mining (LON:MML) has released a reserve update for the Co-O Mine. The Probable Reserve, as at 30 June 2012, now stands at 568,000 ounces contained in 1,820,000 tonnes at 9.7 g/t gold. Conversion of resources during the year has increased the Probable Reserve contained ounces by 10% when compared to that announced on 21 June 2011 of 502,000 ounces at 10.1 g/t gold in 1,500,000 tonnes. Although the mine only has a small reserve, due to the nature of the orebody and the cost of upgrading the resource to reserves ahead of production, the company only increases the reserves to replace those mined during the previous financial year.

Bushveld Minerals (LON:BMN) has released the Final Audited Results for Bushveld Resources and Greenhills Resources for the year ending 29 February 2012. Bushveld Resources Limited and Greenhills Resources Limited were acquired by the Bushveld Minerals as part of the Admission to AIM on 26 March 2012.  BRL and GRL hold the Mokopane iron ore and the tin projects respectively and neither company earned any revenue during the period. Any expenditure was largely attributable to exploration work and professional costs and BRL and GRL both recorded a net loss for the period, of £8,922 and £633,405 respectively. Since the end of the period Bushveld Minerals raised £5.46m gross and was successfully admitted to AIM on 26 March 2012.  Drilling at Mokopane iron ore and tin projects is progressing and a revised JORC resource for Mokopane iron ore project anticipated for 4Q'12 with the iron ore scoping study due to be completed in 1Q'13.

Nyota Minerals (LON:NYO) has released an update for the Tulu Kapi Project in Ethiopia. The company is still waiting on 25% of the assay results from its infill drill programme and expects to release the update to its current resource in September, with the aim of converting a further 260Koz of Inferred Resources to an Indicated status. This will form the basis of the Ore Reserve figure on completion of our discussions with the Ministry of Mines on the terms of the Mining Licence, including the associated legal and fiscal framework. The target for both parties for the issue of the Mining Licence remains the end of September 2012.

BHP Billiton (LON:BLT) is selling its Yeelirrie Uranium Deposit to Cameco Corporation of Canada for US$430. The project has a historic resource of 139Mlbs at an average grade of 0.13% U3O8 under Australian JORC standards, although this may have to be revised down due to a lack of drilling density. The sale is still subject to approval from the Australian Foreign Investment Review Board and the Government of Western Australia.

Bumi PLC (LON:BUMI) has been informed by its 29.2% associate PT Bumi Resources Tbk that the repayment of US$231M by PT Recapital Asset Management did not take place on the 27th August as expected and that discussions are ongoing between Bumi Resources and Recapital regarding a new repayment schedule.

Toledo Mining Corporation (LON:TMC) has released a 2Q'12 operations report for the Berong Nickel Mine in the Philippines. Production of run-of-mine ore in 2Q was 179,178 wmt at an average grade of 1.63% Ni. Direct ore shipping operations, which resumed with two shipments in March this year, continued throughout the second quarter of 2012, resulting in a further six completed shipments to China by 30 June 2012 with a further shipment taking place post period. A further shipment, the 10th so far this year is currently being loaded which is expected to bring the forecast revenue to BNC to ~US$20M on sales of 522,346 wmt of ore, containing approximately 5,800 tonnes of contained nickel. As at 30 June 2012, total coastal stockpiles of all ore grades, including ore for which loading was under way at the end of June, amounted to 230,363 wmt with an average grade of 1.48% Ni.

Ortac Resources (LON:OTC) has released an update on the PFS and drilling results from its Šturec Project, from Eastern Slovakia. The project has a current JORC Resource of 1.36Moz of Au Eq. A Environmental and process plant and infrastructure consultant has been appointed and the PFS is expected to be complete in 1Q'13. Drilling continues in the wider portfolio of projects in Eastern Slovakia with the best results at Zlatá Baňa of 12.5m and 6.35m at a grade of 2.40 and 1.98g/t Au equivalent. The company has appointed Snowden to produce an updated Mineral Resource estimate at Zlatá Baňa.

Beacon Hill Resources (LON:BHR) announced its half yearly result for the period ended 30 June 2012. At the Minas Moatize Mine, the completion of a Definitive Feasibility Study ('DFS') - demonstrated highly compelling economics for Phase III Minas Moatize mine expansion - pre-tax NPV of US$662M. A maiden JORC compliant Mineable Reserve of 42.65Mt was declared. The commencement of the Phase II Expansion in August 2012 that involves the upgrade of the existing plant, which will enable a threefold increase in plant feed capacity to 1.8Mtpa ROM coal and support the production of coking coal at a higher and more consistent yield. At the Arthur River Magnesite deposit the completion of a Preliminary Scoping Study - financial modelling demonstrates a NPV of A$42M based on a 292,000 dry tonne per annum ('dtpa') ROM operation producing on average 100,000dtpa of calcined magnesia with an average grade of 95% MgO. The company reported revenue of £253,503 (2011: £292,039) and a loss of £5.651M (2011: £1.895 M) for the period.

Norseman Gold (LON:NGL) announced that Zhaojin Mining Industry Co., Ltd ("Zhaojin") has applied for relevant government approvals to use its wholly owned investment vehicle Gold Vein International Investment Co.("Gold Vein") to subscribe for 100,000,000 shares at the price of A$ 0.04 per share as part of the recently announced and approved by shareholders of Norseman 625 million share placement ("the transaction"). Following completion of the transaction Zhaojin will hold approximately 8.95% of Norseman's expanded issued capital. The proposed investment cannot proceed until after receipt of approval from:

1. the Foreign Investment Review Board of Australia; and

2. the relevant Chinese authorities.

As announced on 23 August 2012, the placement to Zhaojin has been allocated from the underwriting commitment which otherwise would have been taken up by Tulla Resources Group Pty Ltd. This will have the effect of reducing Tulla's holding post settlement to 27.73%. 

Kalimantan Gold (LON:KLG) announced its unaudited Interim Consolidated Financial Statements for the second quarter ended June 30, 2012. The Company incurred a comprehensive loss for the three and six months ended June 30, 2012, of $80,834 and $215,575 respectively (2011 - $674,849 and $1,000,168). Included in the six month loss were net exploration costs to the Company of $122,226 (2011 - $250,648). The exploration costs are net of those costs funded by a joint venture with a subsidiary of Freeport-McMoRan Exploration Corporation on the KSK Contract of Work and by Tigers Realm Metals Pty Ltd. on the Jelai project. The current loss is also net of $219,978 of management fees earned by the Company pursuant to these joint ventures. The Company began the current fiscal year with $791,511 in cash. The Company was provided with $374,976 to fund operations, used $21,259 to purchase equipment, recognized cash as unrestricted of $209,167, received $473,230 net proceeds from a private placement financing and recorded $4,931 of unrealized foreign exchange gain on cash balances, to end the quarter with $1,832,556 in cash. The Company's working capital at June 30, 2012 is $499,463. 

Sirius Minerals (LON:SXX)  has reported the completion of the first growing season complete for multi-year crop study conducted with Texas A&M University and USDA-ARS Scientists on the product performance (tonne for tonne) of Sulphate of Potash ("SOP") as a premium source of potassium and sulphur compared to the more common Muriate of Potash ("MOP"). The early results indicate that yields of SOP treated crops were higher than MOP treated crops, and SOP treated crops outperformed MOP treated crops for important quality benefits. Most previous studies have focused on the lower potassium content of SOP compared to MOP and as a result the company felt they did not properly account for the benefits of the added sulphur over the costs of the chloride in MOP. Although encouraging this is still a single study which has not yet been completed and the results of the second phase which aims to test whether the direct application of Polyhalite improves yields and so could potentially be a bulk source of organic potassium, sulphur, magnesium and calcium.

Strategic Minerals (LON:SML) has completed a test shipment by rail of its magnetite material from the Cobre stockpile in New Mexico to the port of Guaymas in Mexico. The test, which comprised an eight rail car shipment, was undertaken to verify key processes and procedures ahead of commencement of 72-car unit train commercial shipments for the export market. Some minor operational glitches and equipment problems were encountered, but these were quickly resolved. The Company's rail freight operations include its loading facility inside the mine gate, railroad switching during the 900+ kilometre journey to port, border crossing from the United States into Mexico and unloading and storage at the port.

Orogen Gold (LON:ORE) has completed 3,800m of drilling in 15 holes of the 7,500m drill programme at its Gindusa mine target. The programme is on schedule, with 3,800 metres of drilling completed. Drilling has covered a strike length of 250 metres targeting the potential down-plunge extension of high-grade gold shoots within the Gindusa lodes indicated from underground sampling and mapping.  A major 100 metre wide shear-zone has been intersected along the full strike length drilled to date. This shear-zone contains several narrow quartz-pyrite lodes that were previously exploited through shallow underground mining at Gindusa. The deepest hole drilled to date has confirmed that the shear-zone continues beyond 250 metres vertical depth - Gindusa was mined historically to just 80 metres depth. Drill core logging and assaying of core samples will be used to identify possible depth extensions to the Gindusa lodes and to evaluate their economic potential. Logging and sampling of core is progressing well and a batch of drill core samples has been dispatched to the ALS Chemex laboratory at Rosia Montana, Romania for assay testing. Analytical results will be reported as soon as they are received and appraised.

Puntland Drilling Update - Dharoor Disappoints: News that Shabeel North has killed the prospectivity of the both wells in the Shabeel structure is disappointing, and this news serves to highlight the difference between making a discovery and it being commercial. Still, the core that has been taken, and the knowledge learnt from the drilling of the wells, will be integrated in to the existing data set, and sharpen the operating team's pencils in identifying the next candidates for the next stage of its drilling programme on the Nugaal block, where the region's most recent exploration programme (~early 90s) was undertaken. Despite the technical successes gained with this drilling campaign, we are not moving to derisk the area amending any of our risk factors associated with the region.

Range Resources (LON:RRL, ASX:RRS) - After Puntland, a Dreadlock Holiday is Just the Tonic: While the Puntland drilling update is disappointing, it contributes a relatively low percentage to the overall valuation, which is dominated by the producing US and Trinidadian assets, and to a lesser extent by the next phase of the Puntland exploration programme in the Nugaal block and the Georgian asset's near-term appraisal of the CBM potential. As highlighted earlier this year (March), Trinidad is the key focus, which in itself covers off most of the stages in the development cycle, from rejuvenating old wells, bringing new areas on production and untested prospectivity. While Shabeel has been disappointing, there is still further drilling to be done in this frontier region, which could yet result in significant increases in value. In order to reflect the non-commerciality of Shabeel and Shabeel North, we have marked the volumes associated with the Shabeel complex to zero, which has reduced our target price by 3p to 24p. However, given the fact RRL has only limited exposure to Puntland, and the majority of the value is derived from its Trinidadian assets, investors should take advantage of the inevitable weakness to gain exposure to the stock. While this news is disappointing, we are reiterating our BUY recommendation

Red Emperor (LON:RMP, ASX:RMP) - Go South!: News of Dharoor's wells' un-commerciality is disappointing, and has been reflected in our valuation (-17p), but there is a silver lining. Dharoor's results confirm once again the presence of a working hydrocarbon system, and their failure has been attributed to the absence of a trap, which is a local, not a regional issue. Nugaal (south of Dharoor), was explored ion the ~90s, and while in a different basin, its contemporaneous deposition allows for a positive read across from Dharoor. With adequate funding to meet its near-term needs, and potentially look elsewhere, the Company is well able to execute its plans and generate significant return for shareholders. To reflect today's news, we have downgraded our Target Price by 17p to 48p, but we are reiterating our BUY recommendation.

San Leon Energy (LON:SLE) - And the Hits Keep on Coming!: Within the span of one week, San Leon has successfully farmed-out its interest in the second Moroccan block - Foum Draa to Cairn Energy, re-confirming the high prospectivity of the Moroccan portfolio. Cairn will hold a 50% net operated interest, in the process paying its share of past costs ($0.8mm net to San Leon), and 100% of the costs up to $60mm towards the drilling of the commitment exploration well. Today's news underlines the quality of the pre-exploration work that the Foum Draa consortium has delivered. In this news:

Cairn will acquire a 50% operated equity interest in Foum Draa, pro rata from each of San Leon, Serica Energy plc and Longreach Oil and Gas.

In return, Cairn will pay its equity interest share of past costs, being $1.5mm ($0.8mm net to San Leon) and pay the first US$60mm towards the drilling of the commitment exploration well.

Post farm-in, Cairn will hold a 50% net operated interest, San Leon Energy will hold 14.17%, Serica will hold 8.33% and Longreach will hold 2.5%. ONYHM, the National Bureau of Petroleum and Mines will continue to hold 25%.

Circle Oil (LON:COP) - Steady as She Goes…: The successful completion of water injector well - Al Ola-3 is positive as it will support the oil production from the Al Ola-1 and Al Ola-2 wells. Formation pressure tests in the Kareem sands of Al Ola-3 indicate fluid communication in the southern extent of the AASE field which is positive for ultimate oil recovery. The rig will now move to drill infill production well Geyad-6, in the south central part of the Geyad field. The overall production the AASE, Geyad and Al Ola fields is averaging at 9,100 bopd which is in-line with the company expectations. In this news:

Al Ola-3 objective was to appraise both the Shagar and Rahmi sands for water injection in that location.

The well was successfully drilled to a total depth of 10,550ft MD into the Upper Rudeis. The well encountered 18 ft of net reservoir in the Kareem Shagar sand (between 10,164 - 10,182ft MD) and 20ft of net reservoir in the Rahmi sand (between 10,232 - 10,252ft MD).

The well will be dually completed as a Shagar and Rahmi water injector.

The NW Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest) and Sea Dragon Energy (10% interest).

Antrim Energy (LON:AEY) - Executes Oil sales contract for Causeway Field: The Company has entered into agreement with BP Oil International Limited for the sale of its share of oil produced from the field. Oil production is scheduled to commence in September, 2012. Start-up of production operations and development progress at Fionn Field would be the key share price drivers.

Petroceltic International (LON:PCI) - Interims Results - Solid But Not the Big News…Still:The key highlight of H1'12 is still the proposed merger with Melrose Resources, and that is despite excellent news in the shape of the declaration of commerciality for the Ain Tsila field, the lifting of Italian ban on offshore exploration and production. Merger with Melrose (to form "NewCo") should be welcomed by investors as it resolves the single largest issue for each management team regarding the operations. For Petroceltic, it shores-up the funding gap between its current portfolio and its long-term portfolio and combination creates a new company that has a better balance within its portfolio and better able to create a sustainable company. On the operations side, commerciality of Ain Tsila field (56.6% WI) which is estimated to contain gross resources of 2.1tcf of sales gas, 67mm bbl of condensate and 108mm bbl of LPG provides was another important milestone for the company. In this news:

Cash position of US$51.1m at 27 August 2012 with no debt.

Capital expenditure in the period amounted to US$10.6m which primarily related to the completion of the Ain Tsila appraisal campaign, Italian exploration costs and the on-going seismic programme in the Kurdistan Region of Iraq.

The loss for the period to 30 June 2012 was US$3.2m, down from US$4.1m in the comparable period in 2011.

Seismic acquisition underway in the Kurdistan Region of Iraq.

Award of two licences in the central Adriatic, offshore Italy.

Italian Legislative Decree 83/2012 approved by Italian Parliament 12 August, provides for the potential resumption of activities offshore Italy.

Preparations for drilling of high value Carpignano Sesia prospect (formerly Rovasenda) in Italy in early 2013.

Solo Oil (LON:SOLO) - Ausable EOR Project Update: The Ausable project continues to make steady progress with two of the four planned wells in production. The operator expects to put two more wells in production within next few months which will substantially uplift the production. The company also plans to increase volume of gas injection into the reservoir which will further increase oil and condensate production volumes and thus expects to achieve its production guidance of gross 500boepd by year end. In this news:

Two of the four wells at the Ausable Oil Field (Ausable #1 and Ausable #5) have now been put on line and and project that liquids production from the four well scheme will then rise to approximately 700 boepd (gross).

The recently completed facilities upgrade has successfully addressed all major issues arising from the installation of venturi pumps in total liquids potential of 275 boepd gross has been computed based on the current gas cycling rate of 236 mcfd.

The initial two wells production rate averaged 13 boepd although this is now being rapidly scaled up as gas cycling rates are increased.

Reef anticipate increasing the gas cycle rate about 20-fold to 5,000 mcfd progressively over the next 4 to 6 months

The wells and has incorporated the modifications needed for sustainable long-term gas cycling.


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