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Fox-Davies Capital Wednesday Energy and Mining News Wrap

29th Oct 2008, 9:23 am Fox-Davies Capital Wednesday Energy and Mining News Wrap
Van Dieman Mines (VDM)  has secured a further extension to its short term bridging loan from Galena Special Situations Master Fund Limited, as announced on 26 August 2008. The extension is for an additional A$2,000,000 and has been granted on the same terms as the initial Bridging Loan and the further extension of A$250,000 as announced on 15 October 2008. Due to current market conditions and the immediate cash requirements to meet the Company's current work programme the Company has decided not to pursue, at this time, the proposed equity fundraising, referred to in the circular sent to shareholders on 2 July 2008. Instead, the Company and Galena are in advanced discussions to re-finance the original loan facility by way of a new convertible loan note of up to GBP6,500,000. Further details regarding the proposed re-financing will be announced by the Company on entering into the relevant documentation.
 
Comment: Galena have been fully committed to this project for some time, and now look set to provide the total financing requirement. We will update our model further once details of the re-financing are announced. For now we reduce our target price to £0.07, based on our estimate of the share dilution and revised start-up estimate for the Endurance project of 1Q 2010.

 
African Eagle Resources  (AFE)  announces that its joint venture (JV) partner CGA Mining today issued an update on the feasibility study for the Mkushi project, Zambia. The feasibility study is on schedule for completion end October 2008. An updated NI 43-101 compliant resource report has been lodged. A Full Mining Licence has been granted. A memorandum of understanding was signed with Lunsemfwa Hydro Power Company Ltd to supply power to the project. Exploration results indicate further resource upside.
 
Comment: The award of the mining licence is good news, but the feasibility study is required to gauge the economics of this project.
 
Sylvania Resources  (SLV)  announces that it plans to construct two new chrome and platinum recovery plants at Samancor Chrome's Doornbosch and Tweefontein chrome mines. The new plants are forecast to increase production by 33 000 PGM oz. An estimated capital expenditure of R224 million is to be funded from existing cash resources. Construction is to start in third and fourth quarters of FY2009, with commissioning scheduled for January 2010.
 
Comment: Despite low prices, Sylvania are pressing ahead with expansion. Having the cash on the balance sheet obviously helps.
 
Karelian Diamond Resources  (KDR)  announces that it has discovered a significant north-east extension to its Seitaperä diamondiferous kimberlite pipe in Finland during the delineation drilling programme. Seitaperä is already the largest known kimberlite pipe in Finland, with a surface area of 6.9ha.

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