Adds broker comment

VANE Minerals (LON:VML) has renegotiated the terms of two outstanding convertible loan notes to limit possible dilution to other shareholders.

VANE will now repay a £500,000 note held by City Natural Resources High Yield Trust this month rather than September, while repayment of a £1 million note held by Geiger Counter Ltd has been extended until 2017.

Both City Natural Resources and Geiger Counter are funds managed by New City Investment Managers.

Geiger Counter’s loan note will now be convertible into 80 million ordinary at 1.25p, a 34 per cent premium to yesterday’s close. Shareholders have to approve the new loan note, which will pay interest at 8 per cent.

David Newton, VANE’s chief executive, said he was delighted with the new agreement.

“The maximum dilution to existing shareholders would equate to only 15.3% of the enlarged share capital of the Company and the agreement allows the company to continue to devote its current cash resources to the development of its highly promising copper and uranium exploration assets."

VANE announced last year it had found a copper-molybdenum porphyry system on its acreage in New Mexico, an area that has produced huge amounts of the metals in the past. 

The company also has gold and silver mining operations in Mexico that are providing the cash to fund its copper exploration.

It had cash balances of £2.30 million at the end of December.

Broker Northland described the renegotiations of the convertible as impressive.

“The new loan note will enable the company to continue to utilise the revenue generated from its Mexican gold operations to explore its prospective copper porphyry and uranium projects in the US,” it said.

Shares rose 9 per cent to 1.02 pence.

VANE Minerals (LON:VML) has renegotiated the terms of two outstanding convertible loan notes to limit possible dilution to other shareholders.

VANE will now repay a £500,000 note held by City Natural Resources High Yield Trust this month rather than September, while repayment of a £1 million note held by Geiger Counter Ltd has been extended until 2017.

Both City Natural Resources and Geiger Counter are funds managed by New City Investment Managers.

Geiger Counter’s loan note will now be convertible into 80 million VANE ordinary at 1.25p, a 34 per cent premium to yesterday’s close. Shareholders have to approve the new loan note, which will pay interest at 8 per cent.

David Newton, VANE’s chief executive, said he was delighted with the new agreement.

“The maximum dilution to existing shareholders would equate to only 15.3% of the enlarged share capital of the Company and the agreement allows the company to continue to devote its current cash resources to the development of its highly promising copper and uranium exploration assets."

VANE announced last year it had found a copper-molybdenum porphyry system on its acreage in New Mexico, an area that has produced huge amounts of the metals in the past. 

The company also has gold and silver mining operations in Mexico that are providing the cash to fund its copper exploration.

VANE had cash balances of £2.30 million at the end of December.

adds broker comment

Vane Minerals (LON:VML) said the increased revenue from its Mexican operations experienced in the fourth quarter 2011 has continued throughout the first quarter of 2012.

It generated revenue of US$2.61 million in the quarter, broadly in line with the US$2.69 million reported for the fourth quarter.

Chief executive David Newton said: "Q1 production continues to meet forecasts and our in-house evaluation work during the period indicates security of production moving forward.

“Our Mexican operations continue to fund our copper and uranium exploration programs on which we will provide updates as appropriate."

Vane produced 1,180 ounces of gold and 26,164oz of silver in the first quarter at a direct production cost of US$582 per gold ounce or US$10.7 per silver ounce.

This compares to a fourth quarter performance of 1,352oz gold and 19,410oz silver produced at US$585 per gold ounce or US$10.8 per silver ounce.

In addition to the normal production from the La Colorada mine, the company is processing higher grade ore that it removed from the Diablito mine ahead of its planned closure later this year.

The first revenue from this additional production is expected to be recognised in the second quarter of the current year.

Broker Northland added the additional 1.6kt of high grade ore (17.9g/t gold and 1.8g/t silver) from the Diabilto Mine will be processed at a rate of 80t per month, resulting in c.100oz gold extra per quarter.

At today’s gold price of about $1,580/oz, it estimates this extra production would be worth around $158,000 per quarter until September 2014 (about $1m additional revenue in total). 

A further 1,600t of lower grade ore (2g/t gold and 200 g/t silver) from Diabilto is to be stockpiled.

Vane already funds all its copper porphyry and uranium exploration from the operations in Mexico and this additional cash is likely to be utilised on these exploration projects, Northland said.

- adds broker comment

VANE Minerals’ (LON:VML) revenues rose sharply in 2011 as the performance of its Mexican gold and silver operations improved “significantly”.

Turnover increased by 44 per cent to £3.68 million (£2.56 million), with net losses for the year reducing to £1.6 million from £2.37 million.

In Mexico, lower than expected production from the Diablito mine was offset by higher than expected grades and recovery rates from its Ruiz joint venture. The Diablito mine is to be closed this year.

Total production in Mexico was 2,706oz of gold and 73,384oz silver at a at a direct production cost of $743.45 per equivalent oz gold or $16.23 per equivalent oz of silver.

VANE added that in the fourth quarter, Mexico’s contribution covered the entire costs of the company. 

The company plans to use cash generated in Mexico to fund a potentially company-changing drilling programme on its copper assets in New Mexico and Arizona.

The group discovered what it says is a clearly identified copper-molybdenum porphyry system ay McGhee Peak at the end of 2011 and will test that and other potential targets further in the current year.

VANE is also exploring for uranium in the US, where it is focused on state-owned not Federal land.

It said today pre-feasibility work continues at the Wate uranium project, while other lead projects going into 2012 include the Rose pipe where work will focus on establishing a NI 43-101 resource.

David Newton, chief executive, said: “The first drilling results from McGhee Peak were encouraging, whilst the qualities of our Mexican assets can now be demonstrated over a meaningful period. 

VANE is in a robust position both operationally and financially, with the downside risk mitigated by the cash flow generated in Mexico and the profile of our exploration assets strengthened."

VANE ended the year with a cash balance of £2.3 million.

The porphyry mineralisation discovery at McGhee Peak capped a good year for the company according to the broker Northland.

The positive results from the third of twenty four defined targets was an important step that highlights VANE's success with the exploration database that contains over 100 years of exploration data. 

VANE is now drilling at its fourth US copper target, Peg Leg.

Shares rose 2 per cent today to 1.02 pence.

Vane Minerals’ (LON:VML) revenues rose sharply in 2011 as the performance of its Mexican gold and silver operations improved “significantly”.

Turnover increased by 44 per cent to £3.68 million (£2.56 million), with net losses for the year reducing to £1.6 million from £2.37 million.

In Mexico, lower than expected production from the Diablito mine was offset by higher than expected grades and recovery rates from its Ruiz joint venture. The Diablito mine is to be closed this year.

Total production in Mexico was 2,706oz of gold and 73,384oz silver at a at a direct production cost of $743.45 per equivalent oz gold or $16.23 per equivalent oz of silver.

Vane added that in the fourth quarter, Mexico’s contribution covered the entire costs of the company. 

The company plans to use cash generated in Mexico to fund a potentially company-changing drilling programme on its copper assets in New Mexico and Arizona.

The group discovered what it says is a clearly identified copper-molybdenum porphyry system ay McGhee Peak at the end of 2011 and will test that and other potential targets further in the current year.

VANE is also exploring for uranium in the US, where it is focused on state-owned not Federal land.

It said today pre-feasibility work continues at the Wate uranium project, while other lead projects going into 2012 include the Rose pipe where work will focus on establishing a NI 43-101 resource.

David Newton, chief executive, said: “The first drilling results from McGhee Peak were encouraging, whilst the qualities of our Mexican assets can now be demonstrated over a meaningful period. 

VANE is in a robust position both operationally and financially, with the downside risk mitigated by the cash flow generated in Mexico and the profile of our exploration assets strengthened."

VANE ended the year with a cash balance of £2.3 million.

VANE Minerals (LON: VML) said a diamond drill rig will be used to follow up on the company’s initial drill programme at McGhee Peak in New Mexico.

The company has completed two rotary holes and partially drilled a third, which uncovered a copper-molybdenum porphyry system.

An attempt was made to re-drill the third hole, which was unsuccessful due to the poor ground conditions. 

A diamond drill rig, which is more suitable for the conditions, will be used for the follow-up drilling programme, during which this third hole will also be completed.  

Each hole will take three to four weeks to drill once the permits have been obtained. In the meantime, the rotary rig has been moved to VANE’s next target, Peg Leg, in Southern Arizona.

Chief executive David Newton said: "Although it is frustrating not to have completed the third hole at McGhee Peak to target depth, our analysis of the drilling to date has given us sufficient confidence to commit to diamond drilling there. 

“The rotary drilling has already discovered two mineralised targets within a clearly identified porphyry system relatively inexpensively.   

“This is a promising development for VANE and we will continue our exploration there. 

“There are a number of copper exploration targets within our license areas and we intend to remain active in attempting to identify further porphyry systems."

Revenues jumped to US2.69 million in the three months to December as it produced 1,352 ounces of gold at a cost of US$585 per ounce compared to 628 ounces at a cost of US$628 in the preceding three months.

VANE also produced 19,410 ounces of silver at a lower cost per ounce.

The cash generated was enough to cover all of the company's costs (both its operational costs and its exploration costs) for the fourth quarter, VANE added.

VANE is pushing ahead with the closure of the Diablito mine and work has started to remove 3,200 tonnes of high grade ore.

David Newton, chief executive, said: “These results are very encouraging and underpin the company's decision to switch its focus to ore produced at the La Colorada Mine”

“Whilst there can be no guarantee that these results will be replicated in the future, they demonstrate that if these production levels can be maintained then the company's Mexican operations will continue to make a significant cash contribution to the total running costs of the group," he added.

VANE said 7,802 tonnes of ore was processed by SDA Mill during the three months to December (Q3: 8,022 tonnes) with average grades 8.06 g/t gold (Q3: 5.17g/t) and 127g/t silver (Q3: 105g/t).

The average recovery rate was 78.2% for gold (Q3: 75.9%) and 70.9% for silver (Q3: 69.9%).

The two drill holes were  a mile apart and had found two targets within a clearly identified porphyry system, containing copper, molybdenum and zinc, it added.

The drills encountered copper values in the range of 300-600 ppm, with zinc values greater than 200 ppm.

One hole showing visible molybdenite is being re-drilled after caving while there will be  further additional drilling to determine if economically viable higher grades are present.

David Newton, VANE’s chief executive, said: "These are encouraging results, showing a mineralised porphyry and confirming our geological theory that the porphyry systems that have been successfully discovered and mined at surface in this part of the US, also occur at depth.“

“Further drilling is required over the coming months to confirm whether this porphyry has economic potential. This successful drilling result at what is only our third project on this very favourable mineral trend gives us confidence of further exploration success in our remaining projects, " he added.

VANE added that the drill currently working at McGhee Peak will be moved to its next copper target once the re-drilling of hole MP-1 is completed as additional drill holes will require permitting. Permitting of the additional holes at McGhee Peak is underway.

VANE’s focus is the porphyry copper systems of the south-west US, and its targets on either side of the Arizona-New Mexico border. This is an area that is home to 60 per cent of all US production of the metal.

McGhee Peak is located on the Hillsboro-Chino-Tyrone-Bisbee porphyry mineral trend in southwest New Mexico.

Precious metals and uranium miner VANE Minerals (LON:VML) announced this morning that the remaining concentrates produced from its Mexican gold and silver operations during August and September have now been received by its smelter. Revenue amounting to just less than US$1 million, representing 85 per cent of the total value of these concentrates, has also been received.

The remaining 15 per cent of the value, amounting to approximately US$168,000 is expected to be received in December. In addition, a further 76 tonnes of concentrate from milling that occurred last month has been shipped to VANE’s smelter; these concentrates have a projected value of more than US$750,000.

“Management would like to reiterate their confidence in the on-going operations of the company,” said David Newton. “With an experienced board and opportunities for growth, we look to the future with increasing confidence.”

Last week, the firm said that it had processed more than 8,000 tonnes of ore from its Diablito and La Colorada mines in the country during the three months to the end of September, generating US$433,691 in revenue.

Revenue from VANE’s gold and silver operations support the rest of the firm’s activities, which included developing copper and uranium projects in North America. The firm is targeting porphyry copper targets in the south-west US as well as exploring high-grade breccia pipe targets in the US.

Vane Minerals (LON:VML) this morning unveiled an encouraging set of drilling results from its Rose uranium breccia pipe project in northern Arizona.

The company has completed three deep holes on the project, with two of them returning grades of above 1 per cent uranium, confirming previous historic data.

The highest grade intercept was three feet containing 16.45 per cent uranium, while the widest was 99 feet averaging 0.06 per cent of the radioactive mineral.

The plus one per cent eU3O8 intervals were found in holes 11-R-2 and 11-R-3 at the same depth (around 1435ft) and were around 60 feet apart horizontally. 

The drill-hole results, combined with data from previous drilling indicates that the pipe centre is easterly from all holes drilled to date, Vane said.

Chief executive David Newton said: "We are encouraged by these drilling results and the mineralisation that has been encountered. 

“Further drilling will continue at Rose with the aim of establishing an NI 43-101 compliant resource, which will add to our existing resource of 1.118m pounds at our Wate project."

Freeport-McMoRan is no small fry. It is the world’s largest producer of molybdenum, and is also a one of the world’s top copper producers. The company also produces significant amounts of gold. 

Vane Minerals, a comparatively minuscule London listed junior, has had an agreement in place with Freeport since its very early days, where it has access to Freeport’s exploration databank which includes 7000 files (each file contains between 1 and 10 projects) predominately in the United States, Canada, Mexico, South and Central America and Australia. 

Today, to a rather muted reaction, Vane Minerals confirmed that it had extended its agreement with Freeport to 30 June 2011.

“Under the terms of the Agreement, Freeport has the option, either at the time when a project's reserve announcement is made or when a property goes into a bankable feasibility, to acquire an equity interest of up to 25% in a project,” the company summarised.  “This is made through the payment of twice the exploration costs incurred by the Company on that particular project. The Agreement does not include any active exploration permits or mining rights but gives [Vane Minerals] access to a large, global information portfolio.”

In itself the news may not sound significant, but the database is a vast treasure of information for Vane Minerals, and though it is hard to put a value on the agreement, there is no shortage of mining juniors across the globe that would jump at the opportunity for a similar kind of deal with one of the world’s largest mining groups.