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Mining News    

Anglo Pacific Group (LON:APF) announced that it has agreed with Red Rock Resources to acquire 50% of a 1.5% gross revenue iron-ore royalty in the Mount Ida project in Western Australia from the miner for $14 million. The payment will be made in three installments: $6 million once the transaction is closed in return for a 0.3% royalty, $4 million once the feasibility study is completed in return for an additional 0.225% royalty, and $4 million once production starts in return for an additional 0.225%, bringing the total royalty to 0.75%. The Mount Ida magnetite iron-ore project is being developed by Australia's Jupiter Mines Ltd. and has an inferred resource base of 530 million metric tons. 

Baobab Resources plc (LON:BAO) announced that its Tete joint venture partner, IFC, has supported the 2012 exploration programme through a pro rata contribution of approximately US$1,900,000. 

Coal of Africa Limited (LON:CZA) advised that it has entered into definitive agreements with Rothe Investment Proprietary Limited to acquire a 26% shareholding in Keynote Trading & Investment 108 Proprietary Limited. Keynote is expected to hold the Chapudi Coal Project upon completion of its acquisition from Rio Tinto Minerals Development Limited and Kwezi Mining Proprietary Limited. 

Ferrex plc (LON:FRX) announced an update on its Malelane Iron Ore Project located in the Mpumalanga Province of South Africa. Further drill intercepts recorded down dip of historical workings include 17.29m @ 59% iron and 6m @ 62% Fe.

Oracle Coalfields Plc (LON:ORCP) announced the results of the technical feasibility study on Block VI of the Thar Coalfield. Within the Licence Area there are Mineral Resources in the mining area of 529 millions of wet tonnes with gross calorific value of 3,182k calories per wet kilogramme, with ash content at 5.89 per cent and Sulphur at 0.91 per cent, Probable Coal Reserves total 113Mwt with gross CV 2,831kcal/wkg, Ash 11.50 per cent and Sulphur 0.79 per cent with a strip ratio of 8.54bcm waste. Total capital expenditure for open cast mine development is estimated at US$610m for 5Mwt per annum of lignite production. Total cash cost of production is US$42.21 per wet tonne. Product quality is suitable for power generation. 

Randgold Resources (UNDER REVIEW) (LON:RRS) announced it Q4 results. Profit was up by 259% to US$433.4 million for 2011. Profit for the fourth quarter of US$136.2 million was up 323% on the corresponding quarter in 2010. Production for the year rose by 58% to 696 023 ounces. Group cash operating costs for the year of US$641 per ounce were in line with those of the previous year. The company is forecasting production of 825 000 to 865 000 ounces in 2012 at total cash costs per ounce, of under US$650/oz. Total capital expenditure for 2012 will remain high at approximately US$660 million, which will be invested in the anticipated start-up of construction at Kibali, the programmes to unlock more capacity at Loulo and Tongon and in exploration across the group. Cash in hand increased by 33% to US$487.6 million year on year. The board has proposed a US$0.40 annual dividend, up 100% on 2010.

Richland Resources Limited (LON:RLD) announced a JORC compliant resource upgrade for its tanzanite mining operation in Tanzania. Indicated Resource of 30.6 million carats and Inferred Resource of 74.4 million carats for a total Resource of 105 million carats were delineated. The Life-of-Mine is extended to approximately 30 years based on a ramped-up production of 2.7million carats 

Stellar Diamonds plc (LON:STEL) provided initial bulk sampling diamond grade results from the Lion-5 kimberlite dyke at its Kono diamond licence in eastern Sierra Leone. 346 dry tonnes of kimberlite were sampled yielding 244 carats for in-situ grade of 70cpht. Diamonds of 4.45ct, 3.22ct, 3.07ct, 3.0ct & 2.57ct, with 62% of stones were observed as gem quality.

Sunrise Resources Plc (LON:SRES) announced results from analysis of drill core from its Derryginagh barite project in south-west Ireland. Best results include: 3.6m of 89% barite from 200m, and 3.2m of 61% barite from 220m. Mineralisation remains open at depth and along strike. 

Vane Minerals plc (LON:VML) announced increased revenues from its Mexican operations, brought on by higher than expected grades of gold and silver being produced and improved recovery from its joint venture mine at La Colorada. Total revenue was US$2,692,093 generated in Q4. 7,802 tonnes of ore in total were processed during Q4 (Q3: 8,022 tonnes) with average grades 8.06 /T Au (Q3: 5.17g/T Au) and 127g/T Ag (Q3: 105g/T Ag). The average recovery rate was 78.2% Au (Q3: 75.9%) and 70.9% Ag (Q3: 69.9%). 1,352 oz. Au and 19,410 oz. Ag were produced in Q4 at a direct production cost of $585 equivalent per oz. Au; or $10.8 equivalent per oz. Ag (Q3: 628 oz. Au and 18,724 oz. Ag produced at a direct production cost of $640 equivalent per oz. Au; or $14.6 equivalent per oz. Ag).

Oilfield Services News 

Rig Count News. The Baker Hughes Rig Count is the key barometer for the oilfield services industry and in particular the drilling contractors. Last week’s data (week ending (03/02/12) remained positive for the industry as a whole. The U.S. Rig Count stood at 1997, down 11 on the previous week and up 258 year over year with the number of land rigs at 1938. The number of oil rigs stood at 1,245. Gas rigs stood at 745, down 32 as US gas prices remain low with the directional/horizontal rig count at 1,391. The Canadian rig count gained further momentum, up 28 on the previous week.

The fundamental outlook for global oilfield services companies remains favourable, reflecting continuing rising global hydrocarbon energy demand despite macro-economic concerns, increasing oil/gas industry capital expenditure - 10-15% pa over the next 4 years- and expectations of relatively high oil prices greater than $85/bbl, albeit with volatility. US gases prices have recently fallen sharply but we expect a rebound as producers cut production.  The oil rig count is likely to be on a continued rising trend with strongest rises in the Gulf of Mexico and West Africa. These positive factors are supported by encouraging company trading updates, healthy order books, good cash flow generation and solid financial positions. Valuations are generally not over demanding. Our key Buy recommendations in the UK are Kentz, Hunting, Petrofac, and Wood Group.