Mining news summary: Petropavlovsk, African Barrick Gold, Goldplat, Metals Exploration, Triple Plate Junction, London Mining
Shares in midcap gold producers Petropavlovsk (LON:POG) and African Barrick Gold (LON:ABG) rose sharply at the end of the week. Both companies had positive news to report to investors with Petropavlovsk revealing record breaking results and ABG increasing the resources estimates for one of its deposits fourfold.
Petropavlovsk produced 630,100 ounces of gold in the year to December 31 - smashing the firm's full year production target for the year by over 30,000 ounces - and representing a 24 per cent increase on 2010.
And following improvements at its flagship Pioneer mine, the company produced, 359,100 ounces of the precious metal from the mine - a whopping 56 per cent improvement on last year.
The total gold sold in 2011 was 51 per cent higher than in 2010, the firm said, as it released a trading statement for the year ended December 31 and for the fourth quarter to the same date.
Meanwhile, fellow FTSE 250 constituent African Barrick Gold now has greater confidence in the Nyanzaga project in Tanzania following a fourfold increase in the resource estimate for the Tusker deposit.
Tusker is now estimated to hold a resource of over four million ounces (Moz) of gold including 3.48 Moz grading 1.47 grammes per tonne (g/t) in the indicated category and an inferred resource of 0.6 Moz at 2.05 g/t.
“This confirmation of the potential scale of the Nyanzaga project represents an extremely important step in the development of ABG as one of the leading gold companies in Africa and underpins our confidence in the future growth potential of the company,” said ABG chief executive Greg Hawkins.
Other news from gold miners included the second gold pour at Goldplat’s (LON:GDP) Kilimapesa mine in Kenya and an upbeat quarterly report from Metals Exploration (LON:MTL).
Goldplat has poured its second gold from the Kilimapesa mine in Kenya after successful commissioning of the elution plant.
The second smelt produced an 11.4 kg (366 ounces) gold doré bar of approximately 75-77% purity with the balance comprising about 20% silver. The bar was sold to Rand Refinery Limited in South Africa.
Goldplat added it will continue to smelt and produce gold from existing stockpiles at Kilimapesa on a weekly basis.
Once the stockpile has been used up smelting and gold production from the mine will occur on a monthly basis.
Fellow gold company Metals Exploration (LON:MTL) called the last three months of 2011 a “rewarding” quarter, which saw the mining firm make significant progress at its flagship Runruno gold-molybdenum mine in the Philippines.
The company has now started earthworks at the Runruno site with the programme of early site works expected to take five months to expedite construction.
Full construction is expected to take 15 months following the completion of early site works, which include the development of the processing plant pad and construction infrastructure.
Meanwhile, Leighton Contractors, which is responsible for the design and construction of the Runruno processing plant, has started detailed design and engineering works.
Peer Triple Plate Junction (LON:TPJ) has received the full results from the latest drilling at the Crater Mountain gold project in Papua New Guinea, but it stands by its decision not to fund more exploration there.
While the date received from partner Gold Anomaly (ASX:GOA) is encouraging in terms of potential for the discovery of a large low-grade gold deposit, the results do not change Triple Plate’s view that they are not sufficient to justify contributing the amounts of money needed to fund the future drilling programme.
The statement came a day after Triple announced it would reduce its stake in Crater Mountain from 20 per cent to a 10 per cent free carried interest, held together with Celtic Minerals. The reduced stake will be carried through to the completion of a bankable feasibility study.
Sticking with gold miners, Ariana Resources (LON:AAU) said the feasibility study for the Kiziltepe part of its flagship Red Rabbit project in Turkey is now nearly complete as it updated investors on progress.
The wide ranging statement also revealed the firm had agreed a US$2 million loan with Yorkville Advisors for current funding requirements for the project.
And it added that the company had begun acquiring land near the Arzu South pit - one of the last hurdles for the permitting of the project.
The remaining work for the feasibility study is currently focused on the design of the open pits to minimise the strip ratio and the review of engineering designs.
ECR Minerals hailed gold group West Wits’ plan to use the A$9 million sale of four South African leases to fund the Derewo River project.
ECR holds a 4% direct stake in West Wits and an indirect stake through its 26% holding in Paniai Gold, which owns performance shares and options.
Paniai’s performance shares relate to the Derewo River gold project in Papua Province, Indonesia which is 50% owned by West Wits.
They convert if the project, which covers approximately 129,000 hectares in Indonesia, achieves production of 20,000oz gold by 28 July 2013. Full conversion of the performance shares and options would give Paniai an 18% stake in West Wits.
Another gold miner, GGG Resources (LON:GGG, ASX:GGB), along with its joint venture partners, are to acquire a significant potential target - the Geko gold project - in Western Australia.
The company, Auzex Resources (ASX:AZX) and newly incorporated Bullabulling Gold Ltd have executed an option to buy 100 per cent of the project, which lies 17km north of the Bullabulling site.
The option fee is $200,000 and the purchase price is $3 million consisting of more than $0.5 mln in cash and the remainder in cash or a Bullabulling Gold Ltd scrip
The purchase price is also made up of a royalty production of $10 per ounce for all gold sold from the tenement.
Elsewhere in the sector, African Eagle Resources (LON:AFE) has added two non-executive directors to its board as it transforms from an explorer to mine developer.
Don Newport and Dr Christopher R. Pointon are joining the company as it develops its flagship Dutwa Nickel project in Tanzania, it announced this week.
Newport, currently a non-exec director at Wolf Minerals (LON:WLFE), is a London mine finance industry expert with more than 35 years experience in the banking sector.
Dr Pointon has wide international experience in the resources industry and is a non-exec director and deputy chairman of Ruukki Group (LON:RKKI).
In other news, London Mining (LON:LOND) has confirmed the details of its US$90 million institutional share placing.
In a statement, after Tuesday's trading on the LSE, the company revealed that it will issue 22.6 million shares at a price of 255p a share. This will raise a total of US$91 million.
The new funds will allow London Mining to increase the rate of iron ore production at the firm's flagship Marampa mine in Sierra Leone.
"(The) equity raise allows us to focus on near term delivery of production at Marampa, Phase 1 growth plans to 5Mtpa by 2014 and completion of our BFS for a further expansion to 9Mtpa," said chief executive Graeme Hossie.
Red Rock Resources (LON:RRR) this week confirmed that it will receive shares in Uranium Energy Corp (NYSE:UEC) worth around £902,000.
The statement came after UEC announced a deal to acquire Toronto listed junior Cue Resources (CVE:CUE) in an all paper deal valued at nearly £6 million ($8.9 million).
AIM quoted Red Rock owns 18.9 billion Cue shares, 15.71 per cent of the company. As a result of the deal it will subsequently hold 368,551 UEC shares. At UEC’s current price of US$3.82 they will be worth US$1.4 million, or £902,000.
