SATURDAY'S WEEKLY NEWS ROUND-UP

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Weekly mining summary including Archipelago Resources, Petra Diamonds, Landore Resources and Chaarat Gold

January 19 2013, 8:30am
Weekly mining summary including Archipelago Resources, Petra Diamonds, Landore Resources and Chaarat Gold

It was a mixed bag of mining news this week, with Indonesia -focused Archipelago Resources (LON:AR.) ending it by announcing "exceptional" drill results from the Jipang prospect at the operating Toka Tindung mine in Indonesia.

Highlights ranged from 2 to 18 metres in width with high gold grades of 3.94 grams per tonne (g/t) to 17.88g/t.

“The significant drill intercepts encountered at Jipang, combined with similar results reported throughout 2012, further demonstrate the prospectivity of Toka Tindung,” chief executive Marcus Engelbrecht told investors.

There was a note for anyone interested in diamond investment this week, as investment bank Nomura said the long-term fundamentals of the diamond market remained intact.

It acknowledges that rough diamond prices have been in reverse gear following an “overshoot” in 2011. However, it reckons they have now stabilised.

“We expect demand to outstrip supply from 2015,” it said.

“With secular Asian middle class expansion driving demand growth, we see many characteristics supportive of a long-term bull market.”

Petra Diamonds [LON:PDL] (price target 160 pence) and Harry Winston [TSE:HW] (target C$19) are  Nomura’s favoured plays in the sector.

Investors should ‘avoid’ Gem Diamonds [LON:GEM], it said.

Among the large-caps Rio Tinto [LON:RIO] and Russia’s ALROSA [MCX:ALNU] offer the potential for high margin cash generation.

There was positive news from Regency Mines (LON:RGM)  this week as its shares rose after the first stage of hot commissioning began at Direct Nickel's (DNi) pilot plant in Australia, representing a significant milestone.

DNi is Regency's joint venture partner in the Mambare nickel project in Papua New Guinea.

DNi is currently demonstrating a potentially revolutionary process for treating laterite nickel ores called the Direct Nickel Process.

Elsewhere in the sector, Landore Resources’ (LON:LND) Junior Lake project in Ontario is on track for production in 2015-16 after it announced a significant increase in indicated nickel resources.

Alison Turner, an analyst at broker Panmure Gordon, said that the upgrade had increased the total resource at Junior Lake to 55,100 tonnes of contained metal - representing a 25% increase in contained metal at B4-7 and a 22% increase in the grade.

Panmure added that the new 1.5-2.0Mt exploration target implies a potential 19,000-25,000 tonnes contained metal upside on top of the new 55,100 resource base, while the potential to extend B4-7 even further west could add a further 20,000 tonnes as well as adding considerable platinum group metals (PGM) potential.

Marble took centre stage on Thursday, when Fox Marble (LON:FOX) revealed it had acquired the rights to extract marble from a quarry in the west of Kosovo, close to its red marble quarry at Cervenilla.

The deal has been struck with Drini Company, a Kosovan business that has been using the Drini quarry for aggregates extraction.

Under the terms of the agreement, Fox Marble has the rights for 20 years to extract marble from the 2.5 hectare site, which it says is of good quality, with sufficient quantities for commercial exploitation.

This week, broker RFC Ambrian restated its buy advice and price target on Mandalay Resources (TSE:MND) after a record end to the year.

It also said the numbers point to the precious metals miner being “significantly profitable” for the year just gone.

The Canada-listed business produced a total of 10,927 ounces (oz) of gold, 785 tonnes antimony and 895,222 oz silver representing a total of 33,537 oz of gold equivalent in the quarter.

Costerfield in Australia produced 5,907 oz of gold and 785 tonnes of antimony, on "considerably higher volumes" than the fourth quarter of 2011 as a change in mining method boosted amounts mined.

In other news, Chaarat Gold (LON:CGH) updated investors on tax changes in the Kyrgyz Republic which have ‘simplified and clarified’ the operational environment for mining in the country.

The changes, along with the recently simplified process for land allocation and licensing, demonstrate that the Kyrgyz Republic is becoming one of the best mining addresses in the frontier markets, according to chief executive Dekel Golan.

Under the new mining tax code, which came into effect at the start of January, income tax will no longer be payable for gold mining companies.

Instead, there will be a revenue based tax, calculated monthly, which will be tied to global gold prices.

 


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