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Pan Asia Corporation's receives ASX speeding ticket after 82% share spike

Thu, 09 Feb 2012 01:18:00 +0000

Pan Asia Corporation (ASX: PZC) has received a price and volume speeding ticket form the ASX after the company's shares hit an intra-day high of $0.195 yesterday, up 82% from the closing price on Monday 30 January.

Pan Asia responded to the ASX saying that it was not aware of any material information that has not been released to the market, which may explain the sudden investor interest.

Look a little further though, it appears investors are starting to re-rate the stock, and there are definitely some supporting reasons to do so.

Towards the end of 2011 Pan Asia received a major 115% JORC Resource boost to 114.6 million tonnes at the Transcoal Minergy Coal Project in Indonesia - which importantly has 62% of the resource in the higher confidence categories of Measured and Indicated.

The size of the upgrade was better than expected at the time, and supporting the company's belief that the project has potential to be an initial open pit mine and bring project cash flows forward while generating a preferred entry for future underground mining.

A$0.92 price target

Throwing some weight behind the company, in November 2011 a research firm placed a speculative buy on Pan Asia based on the JORC Resource upgrade - while placing a A$0.92 price target on the stock.

Continental Coal executes US$65mln coal hedged debt agreement with ABSA Capital

Wed, 08 Feb 2012 07:39:00 +0000

Continental Coal (LON:COOL,ASX:CCC) has secured US$65 million (A$60.2 mln) in total debt funding with ABSA Capital and a subsidiary of Barclays Bank to fund the Penumbra coal mine development in South Africa.

As part of the debt funding with ABSA Capital, Continental has implemented a coal and foreign exchange hedging programme to mitigate its exposure to a sustained fall in US$ coal prices or an appreciation of the ZAR:US$.

Importantly, the coal hedging represents only 12 per cent of the JORC reserves at the Penumbra coal mine and provides upside to any rise in thermal coal prices, as well as providing operating flexibility, the firm said.

Continental has hedged about 664,550 tonnes of coal over the life of the loan facility at an average price of ZAR1,057 (A$129.32) per tonne.

The hedging has been achieved at a 23 per cent premium to the current spot price of around ZAR860 per tonne and at a 54 per cent and 53 per cent premium to the average three and five year prices of ZAR685 per tonne and ZAR692 per tonne respectively.

Continental is in the process of satisfying the remaining conditions precedent to the first draw down of the US$35 million, seven year project loan facility to fund the Penumbra mine, scheduled to be completed later this quarter.

Drawdown of the funding will begin upon Continental funding, up-front, the balance of the project’s development costs not met from the US$35 million tranche from its existing cashflow and once it has satisfied the few remaining conditions precedent.

Chief executive of Continental Coal Don Turvey said finalising the loan agreements under "the current volatile capital markets" was a "key milestone" in the growth of the company and a further sign of support for its coal mining strategy in South Africa.

“To have already satisfied a number of the key conditions precedent and have agreed the draw down schedule of the US$35 million project loan facility is also a major step forward in the development of the Penumbra coal mine.

“In addition the establishment of the coal hedging program for the Penumbra coal mine, at average coal prices of ZAR1,057 per tonne, provides us with extremely robust margins to the forecast total FOB costs of approximately ZAR490 per tonne that were reported in the recent SRK Competent Persons Report on the Penumbra Coal Mine.”

The Penumbra coal mine development is on schedule and on budget. It is forecast to produce annual run of mine production of 750,000 tonnes.

Continental is forecasting production of 500,000 tonnes per annum of a primary export thermal coal product. Crucially for Continental, Penumbra is forecast to double export thermal coal sales and group earnings in 2012.

The company has a current run of mine production of 2 million tonnes per annum of thermal coal with sales to the international export and domestic markets.

Continental’s goal is to achieve 7 million tonnes per annum of run of mine coal production in 2013.

Continental Coal executes US$65m coal hedged debt agreement with ABSA Capital

Wed, 08 Feb 2012 03:36:00 +0000

Continental Coal’s (ASX: CCC) South African subsidiary has secured US$65 million (A$60.2 million) in aggregate debt funding with ABSA Capital and a subsidiary of Barclays Bank to fund the Penumbra Coal Mine development.

As part of the debt funding with ABSA Capital, Continental has implemented a coal and foreign exchange hedging program to mitigate its exposure to a sustained fall in US$ coal prices or an appreciation of the ZAR:US$.

Importantly, the coal hedging represents only 12% of the JORC Reserves at the Penumbra Coal Mine and provides upside to any rise in thermal coal prices, as well as providing operating flexibility.

Continental has hedged about 664,550 tonnes of coal over the life of the term loan facility at an average price of ZAR1,057 (A$129.32) per tonne.

The hedging has been achieved at a 23% premium to the current spot price of around ZAR860 per tonne and at a 54% and 53% premium to the average three and five year prices of ZAR685 per tonne and ZAR692 per tonne respectively.

Continental is in the process of satisfying the remaining conditions precedent to the first draw down of the US$35 million, seven year project loan facility to fund the Penumbra Coal Mine development, scheduled to be completed later this quarter.

Drawdown of the funding will begin upon Continental funding up-front the balance of the project’s development costs not met from the US$35 million tranche from its existing cashflow and once it has satisfied the few remaining conditions precedent.

Continental Coal chief executive Don Turvey said, “The finalisation of the loan financing agreements with ABSA Capital, a division of ABSA Bank Limited, one of South Africa’s largest financial service providers, under the current volatile capital markets is a key milestone in the growth of our company and a further sign of support for our coal mining strategy in South Africa.

“To have already satisfied a number of the key conditions precedent and have agreed the draw down schedule of the US$35 million project loan facility is also a major step forward in the development of the Penumbra Coal Mine.

“In addition the establishment of the coal hedging program for the Penumbra Coal Mine, at average coal prices of ZAR1,057 per tonne, provides us with extremely robust margins to the forecast total FOB costs of approximately ZAR490 per tonne that were reported in the recent SRK Competent Persons Report on the Penumbra Coal Mine.”

Penumbra Development

Continental is accelerating development of the Penumbra Coal Mine in South Africa.

The first decline development blasts have been successfully completed with the development of the twin declines continuing at a rate of about 2.2 metres of advance every second day in each decline.

The Penumbra Coal Mine, which is on schedule and on budget, is forecast to produce annual run of mine production of 750,000 tonnes.

Coal produced from Penumbra will be beneficiated through the existing Delta Processing Operations which comprise a 1.8 million tonne per annum coal processing plant and the 1.2 million tonne per annum Anthra Rail Siding.

Continental is forecasting production of 500,000 tonnes per annum of a primary export thermal coal product.

Importantly for Continental, Penumbra is forecast to double export thermal coal sales and group earnings in 2012.

The company has a current run of mine production of 2 million tonnes per annum of thermal coal with sales to the international export and domestic markets.

Continental’s goal is to achieve 7 million tonnes per annum of run of mine coal production in 2013.

Strategic Natural Resources updates on Elitheni development

Mon, 06 Feb 2012 12:06:00 +0000

Strategic Natural Resources (LON:SNRP) gave an update today about the funding of its Elitheni coal mine.

The firm noted the "statement made by the CEO of the Industrial Development Corporation of South Africa (IDC) at the weekend", which "confirmed that the IDC would be funding the development of SNR's 74 per cent owned subsidiary, Elitheni Coal (Pty) Ltd".

Today, in a statement to the stock exchange, Strategic Natural Resources said: "SNR confirms that, whilst it is in discussions with the IDC, these discussions remain on-going and form part of SNR's wider discussions with other parties in relation to finalising its funding needs."

It added that further announcements would be made at an appropriate time.

In December last year, the company announced a deal for selling coal from the mine.

The agreement was signed between Elitheni Coal (Pty) Ltd and government agency - IDC.

Elitheni will supply 70,000 tonnes of coal each year to a bio-ethanol plant that will built in South Africa’s Eastern Cape. The plant will produce its own power fuelled by Elitheni's coal, SNR said. The shipments are expected to start in 2013.

A government backed finance institution, named the Industrial Development Corporation, is fully funding the bio-ethanol project, the firm had said.

The supply agreement has an initial term of 20 years and during this time Elitheni would provide a total of 1.4 million tonnes of coal to the plant.

The coal will be sold at a fixed price, although it will be increased with inflation linked to South Africa's producer price index, the company said.

Oracle Coalfields feasibility study underlines Thar's technical and economic viability

Mon, 06 Feb 2012 07:34:00 +0000

Oracle Coalfields said the results of the feasibility study on its Thar Coalfield in Pakistan’s Sindh Province underlined its “technical and economic viability”.

Prophecy Coal provides update on Chandgana power plant project status

Fri, 03 Feb 2012 16:43:00 +0000

Prophecy Coal Corp. (TSE:PCY) (OTCQX:PRPCF) provided Tuesday an update on its proposed 600 megawatt (MW) Chandgana power plant project in Mongolia, relating to the engineering, procurement, and construction (EPC) contract, the power purchase agreement and project financing.

Earlier this month, the company released the results of a feasibility study on the Chandgana Mine-Mouth power plant project, which is to be built next to the company's Chandgana Tal coal deposit from where coal will be supplied.

Construction of the power plant project, which is estimated to have 30 years of commercial operation, is planned to start in April 2013, with the first 150 MW unit being commissioned in October 2015. The remainder of the units are to be rolled out in April 2016, October 2016, and April 2017.

The study projected an after tax internal rate of return (IRR) of 21.9 percent from the project, and a net present value of US $364.7 million, assuming a discount rate of 12 percent, and a debt interest rate of 10 percent.

The company said Tuesday that in the past three months, four Chinese EPC companies have reviewed the project data, and conducted site visits in Mongolia, while several other international companies have also expressed a written interest in bidding for the contract.

Prophecy expects to have key EPC proposals by March 31, 2012, with the company expecting to have picked a firm by the second quarter. The EPC firm is also expected to bring in a lender for debt financing, the company said.

With regards to the power purchase agreement, the company has been in close talks with the Mongolian Ministry of Natural Resources and Energy for the signing of the deal since Prophecy obtained the power plant construction license last November.

This month, a working commission on the power purchase agreement was constituted, and endorsed by the Minister, with both the company and the commission working together towards a deal. The aim is to have the power purchase agreement and the EPC contract selection finished at the same time.

Separately, Prophecy has met with Chinese government-sponsored policy banks involved in Mongolian projects for project financing, as well as private equity firms focused on international energy production projects.

The company also expects interest in the project from institutional investors. Prophecy said that once a power purchase agreement is signed, it anticipates being able to secure the necessary equity funding this year to move the project towards construction in the second quarter of 2013.

Under the feasibility study for the power plant, it was projected that coal will be supplied by the Chandgana Tal deposit, which contains 140 million tonnes of measured coal, at a steady rate of 2.7 million tonne per year, with the delivered coal price set at $15.50/t with a 2 percent semi-annual price increase.

The electricity tariff is targeted at US $0.06/kWh, with a 2 percent semi-annual increase.

Capital cost is projected to be US $744 million for the 600MW project, or US $1,240 per kW. This includes the power plant, overhead transmission lines, and administrative costs, the company said, but excludes mine development costs.

The company's coal resource is next to a two-lane highway and 150 kilometres from the existing power grid. Once power and the mine are brought online, there is good potential to introduce additional plant units at lower capital costs, it added.

Prophecy Coal is a Canadian company that has over 1.4 billion tonnes of surface minable thermal coal resources on two coal properties in Mongolia. Its Ulaan Ovoo coal mine is in production and its Chandgana mine mouth power plant has been permitted.

Pan Asia Corporation takes the ASX by storm, shares up 67% for the week

Fri, 03 Feb 2012 05:16:00 +0000

Pan Asia Corporation (ASX: PZC) has been on an upwards share trajectory this week, hitting an intra-day high of A$0.175 yesterday, marking a 67% increase on last Friday’s close of $0.105.

Shares were up 6.9% to $0.155 today as the broader Australian market wiped off some of yesterday’s gains, shedding 8.4 points, or 0.2%.

While the Australian market has spent most of the week in the red, Pan Asia continued to buck the trend, rising 9.52% to $0.115 on Tuesday January 31.

The company rallied further on Wednesday February 1 with shares jumping 21.74% to $0.14.

While there has been no news released this week besides the company’s quarterly reports, investors appear to be finally realising the potential Pan Asia possesses.

A recent US$1 million commitment in funding from Kopex for drilling through to final Feasibility Study at Pan Asia’s flagship Transcoal Minergy (TCM) Coal Project in South Kalimantan, Indonesia, vindicates the quality and potential of the TCM project to "feed" hungry Asian energy markets.

Pan Asia chief executive officer Alan Hopkins said recently, “The terrific progress on the TCM project is building a good platform for 2012 and the coming six months hold much potential.”

TCM has a JORC Resource of 114.6 million tonnes, with an overall exploration target of 200 million tonnes over the next 24 months.

Pan Asia expects to deliver a final Feasibility Study in the first half of 2012.

Xceed Resources: Cash backed and developing coal production and cash flows from Moabsvelden

Fri, 03 Feb 2012 00:39:00 +0000

Xceed Resources (ASX: XCD) is an Australia based junior mining company with South African coal assets that plans to commission its first open pit coal project at Moabsvelden in mid 2013.

Production is planned at a rate of 3 million tonnes per year to produce 1 million tonnes of domestic thermal coal, and 680,000 tonnes of export quality coal. Two additional coal projects are also under development within the same coal region.

The company is currently valued at very close to cash backing of $9.5 million, and the market assigns minimal value to its significant as well as advanced coal assets.

Share Price: $0.13
Issued Shares: 90.5m
Market Cap: $11.7m
Cash: $9.5m
Debt: Nil

On a fully diluted basis and after accounting for performance shares the number of issued shares becomes 140.5 million, and the adjusted market capitalisation would be $16.1 million.

Analysis

Catalysts such as receipt of mining permits, off-take agreement and funding could kick this valuation higher.

On an EV/tonne coal resource, Xceed is valued well below its coal sector peers.

Xceed could carry a similar valuation in 2012 as Moabsvelden develops into an operating mine and the portfolio produces a build up of resources for production, or acquires more low cost projects.

Background

The thermal coal market provides a very attractive entry point for a lightly capitalised company, and South African thermal coal assets can be acquired at very reasonable valuations. Long term demand for thermal coal in local and global markets is forecast to be robust.

South Africa is ranked amongst the top five countries as a coal producer and consumer of coal, and relies heavily on thermal coal for production of electricity. The country is also taking advantage of its proximity to Asian markets and is becoming an important player in the fastest growing seaborne thermal coal market in the world.

The country has good infrastructure, an established mining culture and has evolved its mining legislation to allow junior mining companies to form partnerships with local business entities.

The global consumption of thermal coal is projected to reach 7 billion tonnes by 2030, and is driven by the rapid industrialisation of countries such as China, India, and Brazil.

Thermal coal currently provides the feedstock to produce 39% of global electricity supply, and is expected to play a very significant role over the next twenty years. This is an extremely diverse global market that is not prone to extreme fluctuations in demand that typically affect markets for other commodities.

Management and Shareholding

The company maintains a three man board that is made of professionals who have all been involved with the development, construction and management of mines.

Patrick O’Conner serves as Non-executive Chairman, is Deputy Chairman of Perilya Ltd and until last month was Chairman of the West Australian Water Corp. He was previously Managing Director of Macraes Mining and CEO of Oceana Gold Ltd., and has had considerable experience in mining operations.

Ian Culbert serves as Managing Director, and was the former Managing Director of Tritton Resources Limited and Lafayette Mining Limited. He has 20 years experience in the resources industry and has managed the funding, planning, construction and operation of mines and exploration projects in Australia, Asia and Africa.

Stephen Belben is Finance Director, and was the national partner in charge of Ernst & Young’s Mineral & Energy Industry Group. He has 25 years of experience in the resources industry, and has served in senior executive positions and directorships for public companies with operating mines in Africa and Asia.

The top 20 shareholders hold 42.8 million shares, or 47.3% of the issued shares of the Company. The Directors and vendors of the 74% interest in the Moabsvelden Coal Project retain a significant equity interest.

The consideration for the acquisition of this interest included the issuance of 25 million ordinary shares. An additional 25 million Class A performance shares will now also convert into 25 million ordinary shares as a JORC compliant reserve has been delineated on the Moabsvelden Project prior to 5 April 2012.

A further 25 million Class B performance shares will convert to 25 million ordinary shares upon a New Order Mining Right being granted in relation to the Moabsvelden Project by 5 April 2014. If the milestone is not achieved by that date all Class B performance shares convert into 1 ordinary share.

Funding

Xceed Resources completed a 1:10 consolidation of its share capital, changed its name from Xceed Capital, and raised cash of $9 million from the issue of 45 million shares at $0.20 each. The Company re-listed on the ASX in mid April of 2011, after the funding was completed and management team was restructured.

Cash held at the end of the September quarter amounted to $10.04 million. Exploration expenses for the December quarter were projected at $1.2 million, and administration expenses were $350,000, for a total of $1.55 million.

Moabsvelden Coal Project

The company retains a 74% interest in the advanced stage Moabsvelden coal project which is located within South Africa’s key coal region of Witbank.

Xceed acquired the Moabsvelden thermal coal project because it is relatively easy to develop, and is within the Witbank/Ermelo/Highveld coalfield complex that supplies 80% of South Africa’s coal.

The coalfield has excellent road and rail infrastructure, and is surrounded by many thermal power stations that generate electricity, and is also 80 kilometres from the main Johannesburg industrial belt.

The project is surrounded by metallurgical and thermal coal mines at Leeuwpan, Stuart Coal, Vanggatfontein, and Rietkuil, where each project outputs an average of 3 million tonnes of coal per year. New mines are under construction at Vlakvarkfontein, Kangala and Brakfontein.

The market value of Xceed’s share in the project was valued by Venmyn and applied to the previously defined 55 million tonnes of Indicated thermal coal resources.

Venmyn who are leading specialists in the valuation of South African mining projects valued Moabsvelden at $18 million or $0.20 per share.

This valuation preceded the recent round of drilling that upgraded the in situ Indicated Resource to a JORC compliant Measured Resource and paves the road to funding, development, and production in 2013.

Since that assessment was completed the company undertook a drilling and development program that increased the size of the coal resource to a JORC compliant 66.14 million gross in situ tonnes, with 96% of that tonnage now classified as Measured Resources. No further exploration drilling will be required on the property.

Gemecs completed the independent resource estimate based on 39 diamond drill holes that were completed by Xceed in 2010 and 2011, and was further supported by an airborne magnetic survey that identified geological structures across the property. The survey also confirmed that the southwest corner of the property was barren of coal and was an ideal site for a wash plant and other facilities.

The resource is contained in two separate coal seams with the shallowest seam known as the 4 seam, and carries an average combined thickness of 1.46 metres, hosting an in situ Measured Resource of 3.08 million tonnes.

The deeper resource is known as the 2 seam, and carries an average combined thickness of 16.86 metres, hosting an in situ Measured Resource of 60.67 million tonnes, and an additional Inferred Resource carrying a thickness of 15.53 metres for 2.39 million tonnes.

The strip ratio for the shallower coal has been estimated at 1.5-1.6:1 for the first 5-6 years and at 2:1 for deeper coal, and will result in lower extraction costs.

Early washability tests confirmed that 100 tonnes of coal processed through a wash plant will produce 60.71 tonnes of 26.0Mj quality coal that provides 30.24 tonnes of export quality thermal coal and 30.47 tonnes of domestic quality coal suitable for local electricity production. More recent laboratory trials have refined this to produce a combined yield of 65.96 tonnes, and will add approximately 1 million tonnes of coal production over the life of the mine at no extra production cost.

The company has established a production target of 3 million tonnes per year that produces 1 million tonnes of 20MJ/kg thermal coal that can be produced at an operating cost of US$16 tonne, and sold to local power plants operated by Eskom at US$25 tonne.

Local thermal coal prices are extremely low and are under pressure from producers who are selling into export markets to obtain better pricing.

Xceed expects to produce 680,000 tonnes of high quality 26.5MJ/kg export coal at an operating cost of US$47 per tonne. This coal can be sold at US$77 per tonne at the mine gate to third parties with contracts at the nearby Richards Bay coal export facility.

The company is planning to develop Moabsvelden to produce 1.68 million tonnes of coal for sale into local and export markets on an annual basis. The project has potential to generate an annualized EBITDA of A$28 million, and provide an after tax profit of $18 million, based on current market pricing for thermal coal.

Xceed recently delivered a 43.8 million tonne initial Reserve for Moabsvelden which will support an increased mine life. Following the establishment of Measured Resources, as well as the recent completion of a mining work program by mining consultants Belton Mining Group, Xceed has released Proved and Probable reserves of 30.7 million tonnes and 13.1 million tonnes respectively.

Moabsvelden is expected to have a mine life of fifteen years (with potential to add to this), and will be a low cost open pit operation utilising modular and simple process plant.

Xceed is confident that it will be able to extend the mine life by potentially going underground. The company will undertake further studies to investigate potential underground mining in areas on the project site where easement and environmental considerations constrain open cast mining.

Targeted markets for coal production include Eskom power plants at Kendal and Kreil, local industrial power producers, steel mills for metallurgical coal, cement manufacturers, general industry, manufacturers, and export of higher quality thermal to Indian power companies.

Competitive advantages include closeness to markets, acceptable calorific values, excellent volatiles, low ash and acceptable sulphur. The project is located within 50 kilometres of South Africa’s major coal fired power stations and is adjacent to lucrative inland markets based around Johannesburg.

The project is located between several existing mining operations, and is not within a sensitive water catchment area, so directors do not anticipate any major obstacles to the granting of approvals to mine the resource.

The company has retained independent mining consultants who have lodged an application for a Mining Right, and are preparing a Social and Labour Plan, collecting data for an Environmental Impact Assessment and preparing an Environmental Management Plan along with an application for an Integrated Water Usage Licence.

A detailed Feasibility Study is expected to be completed in March of this year so that funding arrangements can be completed, and plant construction commenced in the March quarter of 2013, with commissioning of the plant scheduled for the September quarter of 2013.

Capital costs for mine development fall into the A$25 – A$35 million range for a 3 million tonne per annum 2 stage wash plant, along with all supporting infrastructure. Xceed may develop Moabsvelden via a 60/40 equity raise and secured debt funding package.

Various other options for funding Moabsvelden include 100% development funding by off-take partners, forming a BOOT or partnership with several funding partners who develop the project in return for a share of the financial returns, or possibly establish a lower cost mining operation that will sell Run of Mine coal to a local operator.

Roodeport Coal Project

Xceed has acquired a 70% interest in Roodeport on a Run of Mine per tonne basis. The project is adjacent to the Universal Coal (ASX: UNV) Roodekop thermal coal project hosting 84 million tonnes, and Exxaro Resources’ (JSE: EXX) New Clyesdale colliery located in the centre of Witbank coal field.

Roodeport covers 1,120 hectares and contains historic drilling that has identified near surface coal seams over half the property, and includes 5.6 metres on the #4 seam at a depth of 12.0 metres, and 6.65 metres on the #2 seam at a depth of 25 metres.

Drilling will commence shortly now that regulatory approval has been received.

Bankfontein and Vogelfontein coal projects

Bankfontein and Vogelfontein are two closely located properties in the Ermelo coal field, which is an eastern extension of Witbank and contains higher quality underground coal.

The two properties cover a total of 2,000 hectares and are surrounded by several operating and historical mines that are 35 kilometres from the main Richards Bay coal line hub.

Xceed has signed binding agreements to acquire a 70% interest in Bankfontein on a Run of Mine per tonne basis. The 22 historic drill holes on the property confirm the presence of all five of the Ermelo coal seams and of high quality coal in various holes. Like Roodepoort, all substantive conditions for the acquisition of Bankfontein have now been satisfied and Xceed will commence resource definition drilling of this project in the current quarter.

Some of this coal has start up potential for access via an open pit and includes 0.6 metres of the D seam from a depth of 10.9 metres, containing a raw coal CV of 28.78 and ash of 12.6%. The CL seam was intersected over 0.76 metres at a depth of 29.3 metres, containing a washed coal CV of 30.83, ash of 12.1% and a yield of 92.6%.

Xceed can acquire a 74% interest in Vogelfontein on a Run of Mine per tonne basis, subject to due diligence and regulatory approval. This is a large property that is connected by rail to the Richards Bay terminal and is located in the world class Highveld-Ermelo coalfield that is adjacent to Xstrata’s Spitzkop colliery.

Historic drilling confirms the presence of high value coal seams on the property.

Analysis

Based on recent coal sector M&A transactions and current valuations of South African listed coal explorers, Xceed’s current valuation looks light and that even an exit strategy for Xceed would value it between $0.20 - $0.25 per share.

Catalysts such as receipt of mining permits, off-take agreement and funding in planned timeframe could kick this valuation significantly higher.

On an EV/tonne coal resource, Xceed is valued well below its coal sector peers.

Xceed could carry a similar valuation in 2012 as Moabsvelden develops into an operating mine and the portfolio produces a build up of resources for production, or acquires more low cost projects.

Polo Resources says drill results at Komahun show potential for significant gold mineralisation

Thu, 02 Feb 2012 11:14:00 +0000

Polo Resources (LON:POL) said the latest “exceptional” drill results showed the potential for its wholly owned Komahun project in Sierra Leone to host a significant commercial gold mineralisation.

The results from the fourth quarter drilling programme, which were released today, included the deepest intersection yet at Komahun project, showing that the deposit is open at depth.

Some of the best intersections included 19.6 metres grading 7.08 grammes per tonne (g/t) gold and a slightly narrower interval of 14 metres at 4.7 g/t gold.

The results from infill drilling, which included intersections of 7.65 metres at 1.94 g/t gold and 17.45 metres grading 2.56 g/t gold, confirmed and enhanced the strong mineralisation observed close to surface, said Polo.

“The high gold grades recovered demonstrate the project's potential to host large-scale gold mineralisation at commercial values, in both the Main Zone and in the recent discoveries, the Eastern Extension, Western Extension and Sendekor Structures,” said chairman of Polo Neil Herbert.

“These results provide Nimini with a good platform from which to move forward with the preparations for the next phase of drilling.”

Shares in Polo Resources rose two percent to trade at 3.1 pence this morning, valuing the company at £72.5 million.

Pan Asia Corporation shares continue to outperform, up 21.74%

Wed, 01 Feb 2012 04:26:00 +0000

Pan Asia Corporation (ASX: PZC) posted gains of 21.74% to A$0.14 today, making it one of the biggest movers for the day.

For the second day Pan Asia went against the broader market which shed 17.6 points, or 0.4%, at 1.49pm (AEDT).

The company has been gaining momentum at its flagship Transcoal Minergy (TCM) Coal Project in South Kalimantan, Indonesia, with a US$1 million funding commitment for drilling from international coal heavyweight Kopex.

Pan Asia received a better than expected 115% Resource upgrade to 114.6 million tonnes at the project in mid-October last year. Importantly, 62% of the resource is in the higher confidence Measured and Indicated categories.

The TCM project hosts high quality export thermal coal with an average calorific value of 6,566kcal/kg, 6.41% total moisture, 13.52% ash and 1.52% sulphur.

Kopex has previously recommended the TCM project be advanced to final feasibility stage, following a positive independent study, which signals its view of the project's viability.

Xceed Resources delivers maiden thermal coal Reserve for Moabsvelden

Tue, 31 Jan 2012 01:06:00 +0000

Xceed Resources (ASX: XCD) has delivered a 43.8 million tonne initial Reserve for the 74% owned Moabsvelden thermal coal project in South Africa’s key coal region of Witbank.

Following the establishment of Measured Resources, as well as the recent completion of a mining work program by mining consultants Belton Mining Group, Xceed has released Proved and Probable reserves of 30.7 million tonnes and 13.1 million tonnes respectively.

Managing director Ian Culbert told Proactive Investors Xceed is confident that it will be able to extend the mine life by potentially going underground.

“Our expectation at this stage is that a mine life in the order of 14 to 15 years currently exists, with excellent potential to increase this further,” he said.

“With total Proven and Probable open cast reserves of 43.8 million tonnes, the Moabsvelden coal project is well positioned to become a substantial, long life mine.”

Xceed continues to unlock the potential of Moabsvelden, and in October last year upgraded the Resource by 20% to 66.3 million tonnes and, importantly, 96% of this Resource is in the high confidence Measured category.

Extensive washability testwork has confirmed the resource contains a significant fraction of export grade thermal coal as well as domestic grade coal, with each accounting for about half of the total product.

The results of the washability testwork indicate that the combined average theoretical coal product yield to produce a primary product of 26 megajoules per kilogram (MJ/kg) and a 20MJ/kg secondary product is 63%.

The initial JORC coal Reserves for Moabsvelden have been prepared as part of a Definitive Feasibility Study currently being finalised, and also as part of Xceed’s application to the Department of Mineral Resources for a mining licence for the project.

The Reserves of 43.8 million tonnes are inclusive of, and not additional to, the Resource of 66.3 million tonnes.

Next Steps at Moabsvelden

Xceed is planning to undertake further studies to investigate potential underground mining in areas on the project site where easement and environmental considerations constrain open cast mining.

The company is aiming to begin offsite fabrication this year ahead of commissioning the mine and first feedstock in 2013.

Growing Portfolio

The maiden Reserves at Moabsvelden come hot on the heels of news Xceed has received South African Government approval for the acquisition of a 70% interest in each of the Roodepoort and Bankfontein thermal coal projects, located within a region that produces the majority of South Africa’s coal.

Increasing the potential of the projects is that the Roodepoort project straddles Universal Coal’s (ASX: UNV) 82.8 million tonne Roodekop project, while the Bankfontein project is located in the Ermelo coal field nearby Xstrata’s Spitzkop and Tselentis collieries.

Importantly, as Xceed advances towards thermal coal production from Moabsvelden in late 2013, these two new project acquisitions provide the company with more than a single project, it provides Xceed with a pipeline of potential coal targets.

With the increase in exploration activity the market can expect more news over the coming months from Xceed.

Xceed Resources expands portfolio with highly prospective South African thermal coal projects

Mon, 30 Jan 2012 03:56:00 +0000

Xceed Resources (ASX: XCD) has received South African Government approval for the acquisition of a 70% interest in each of the Roodepoort and Bankfontein thermal coal projects, located within a region that produces the majority of South Africa’s coal.

Increasing the potential of the projects is that the Roodepoort project straddles Universal Coal’s (ASX: UNV) 82.8 million tonne Roodekop project.

Xceed Resources managing director Ian Culbert told Proactive Investors today that Universal is drilling on the boundary to the Roodepoort project with coal known to extend into the licence, as has been proven with drilling by Xceed.

“I know that we’re looking at something not dissimilar to Roodekop in terms of a mixture of export quality coal and domestic coal and it will be an open cut operation,” he said.

Drilling undertaken by Xceed on these projects as part of the company’s due diligence confirms potential for export grade resources to be developed.

Significantly, both the Roodepoort and Bankfontein thermal coal projects can be developed as open cut operations, improving the economics of the projects.

“The acquisition of these strategically located projects greatly increases our presence on the Witbank/Ermelo coal fields and provides us with a good pipeline of new exploration targets which will be advanced to follow on the development of the company’s Moabsvelden Thermal Coal Project,” Culbert said.

“Our recent drilling on Roodepoort and Bankfontein confirm the presence of near surface, high grade coal which will now become the focus of further drilling campaigns aimed at Resource definition.”

Roodepoort

The Roodepoort project is situated in the middle of the Witbank coal field and is nearby the Matla and Kriel coal fired power stations.

Xceed drilled a total of four diamond holes on the project during the quarter as part of its due diligence investigation.

These holes correlated well with the historical holes they were intended to twin and suggest at this stage that open cast resources with a combination of export grade as well as domestic grade coal may potentially be developed through further drilling and testwork.

The area tested by the due diligence drilling is in the eastern half of the project area, adjacent to the Roodekop project, suggesting that there is a continuation of the same coal formations from the one project to the next.

Geological consultant Gemecs have recommended that Xceed undertake a drilling program of 35 shallow holes with an average depth of 35 metres to define possible Resources.

Bankfontein

The Bankfontein project is located in the Ermelo coal field nearby Xstrata’s Spitzkop and Tselentis collieries.

This is an area where players like Coal of Africa and Continental Coal (ASX: CCC) are currently focused.

“The type of coal there is quite different, it is very high grade, it tends to be narrower and deeper,” Culbert said.

Xceed drilled a total of four diamond holes on the property during the quarter. Correlation with historical drilling was generally poor, however this was not unexpected as historical drilling was carried out by several different parties over a lengthy period.

Drilling undertaken by Xceed, however, indicated that there is potential to firstly develop some open cast resources and secondly seam thicknesses may support underground mining off the pit high wall.

This is significantly more economic than having just an underground operation as it is prohibitively expensive to develop underground shafts.

Culbert said it is more economic to begin with an open pit operation, where you are extracting coal as you develop the operation, and then drive in horizontally off the exposed surface face into an underground operation.

“This is the target we we’re looking for and our drilling indicates that we have the potential to do that,” he said.

Acquisition Terms

During the December 2011 quarter Xceed executed definitive agreements with Hampfuna Mining & Exploration to acquire the right to purchase a 70% equity interest in each of the Roodepoort and Bankfontein coal projects.

Xceed will settle the deal through a combination of project development expenditure and vendor payments to be made when certain milestones – namely, Resource definition, mining rights and the start of mining – are achieved.

The company has now satisfied the two substantive conditions of Ministerial approval of the transaction and completion of due diligence and will go ahead with the acquisitions.

Forward Plan

Xceed’s priority will be Roodepoort where it will begin a drilling campaign in the next couple of weeks.

The company then plans to move onto Bankfontein with the aim of defining a JORC Resource for both projects in the next four to six months.

Cash-backed Coal Developer

Xceed has received a buy recommendation from a U.K. broker and a target price of A$0.22, more than double the last traded price of $0.10.

The company is working towards bringing its flagship Moabsvelden thermal coal project into production by late 2013 producing 3 million tonnes per annum run of mine coal for sale to the domestic, industrial and export markets in South Africa.

Importantly, as it advances towards this goal, these two new project acquisitions provide Xceed with more than a single project, it provides the company with a pipeline of potential coal targets.

With the increase in exploration activity the market cannot expect more news over the coming months from Xceed.

Xceed Resources: A cash backed coal developer worth double says Old Park Lane

Mon, 30 Jan 2012 03:43:00 +0000

Xceed Resources (ASX: XCD) has received a buy recommendation from the UK based Old Park Lane Capital, with a target price of $0.22. This target is more than double the last traded price of $0.10.

The following is an extract from the report.

Summary:

Xceed Resources Ltd is an emerging coal explorer and developer with a portfolio of projects located in South Africa. Xceed is listed on the Australian Securities Exchange under the ticker ASX: XCD.

Xceed plans to bring its flagship Moabsvelden thermal coal project into production by late 2013 producing 3Mtpa ROM coal for sale to the domestic, industrial and export markets in South Africa. The company’s South African projects are fully BEE compliant.

· Low cost transition to producer. A modest capital expenditure plan and industry competitive operating costs should see Xceed rise to the ranks of producer with a robust coal operation. Moabsvelden is a long life (66Mt JORC resource, 95% Measured), low-strip ratio, open pit operation which our modelling demonstrates to be highly profitable.

· Not dependent on Richard’s Bay port allocation. As well as producing local power station coal, Xceed has identified strong demand in the industrial market and from 3rd party exporters at competitive mine-gate coal pricing vs. export sales on a FOB basis, negating the need to secure allocation at RBCT, which is a major obstacle for many operators.

Moabsvelden is located much closer to the industrial market customers than the majority of other operating coal mines.

· Cashed up and ready to go. With A$9.5m cash in the bank and no debt, Xceed is in a strong financial position, being fully funded through to the start of construction at Moabsvelden in late 2012. No further resource drilling is required.

· Deeply discounted coal play. Our analysis indicates that Xceed is trading at a significant discount on an EV/t basis compared to its peers in the Southern African coal sector. In part this reflects development and funding risk, but also that XCD is at present, a single project developer. We expect the company to re-rate as key hurdles are achieved.

· Take-over target. With Moabsvelden racing towards production and XCD’s strong cash position we view the company as an attractive take-over target. Our analysis of XCD and recent coal sector M&A transactions, suggests that a current takeout value for XCD should be in excess of A$0.20/sh.

If XCD is successful in obtaining permits, off-take and funding we expect the stock to command multiples as a compelling target within a consolidation of the South African coal space.

· Compelling valuation. Our NAV for Xceed Resources is A$49m or A$0.35 per share fully diluted, indicating that the company is trading at a significant discount with a current P/NAV of 0.32. We set our target price at A$0.22/sh after adjusting our NAV for financing and development risk. We view this target price as conservative.

· Key Catalysts. Moabsvelden feasibility (March 2012), key permits, off-take and financing (in next 12 months) We initiate coverage on Xceed Resources Ltd with a BUY recommendation and a price target of A$0.22/sh. Our valuation suggests material upside if Xceed is successful in developing Moabsvelden on-time and according to current plans.

Valuation summary:

Net asset value - A$0.35 per share

Our net asset valuation (NAV) for Xceed Resources is A$49m or A$0.35 per share, fully diluted. This is based on a discounted cash flow valuation of the company’s primary project, Moabsvelden, using a 12% discount rate.

Our base case model is more conservative than management estimates and in particular we have used higher capex inputs and assume a 6-month delay to the start-up of first production at Moabsvelden. Our valuation implies that Xceed is currently trading at a P/NAV discount of 0.32, presenting a compelling opportunity for capital growth against the current share price.

Target price – A$0.22 per share

We set our target price at A$0.22/sh. We derive our target price from our base case NAV of A$0.35 and then make a series of adjustments for the required equity financing to produce an adjusted postfinancing NAV (A$0.29), which after adjustment for development risk, drives our target price.

We assume that Xceed will need to raise A$19m in equity based on a 60:40 debt to equity split applied to our total funding assumption of ZAR 330m including working capital and rehab costs. Our capital cost assumption is conservatively 25% higher than management estimates.

We assume the new equity is raised at A$0.20 per share at a premium to the current share price and factor in the dilution as a result of the issue of 95m shares. We assume the equity raise in mid-2013, and believe that by this point, Xceed’s share price should have benefited from any de-risking as a result of the company meeting development hurdles, and thus we deem a raise at 20¢ achievable.

Finally we apply an NAV multiple of 0.75 to reflect development, funding, timeline and other risks to derive our final price target of A$0.22. Our target price implies a 97% return to the current share price.

Ncondezi Coal CEO discusses reserves, PFS, cash and infrastructure

Fri, 27 Jan 2012 15:41:00 +0000

Graham Mascall, CEO of Ncondezi Coal (LON:NCCL), tells Proactive Investors that having proved up 1.8bln tons of coal at its project in Mozambique, it is now working towards its pre-feasibility study. Graham also discusses local infrastructure and says that the $30mln cash the company has will last until at least until the end of this year, most likely to the early part of 2013.

Continental Coal beats its own export record, ships 30% more thermal coal in December quarter

Fri, 27 Jan 2012 07:56:00 +0000

Continental Coal (LON:COOL, ASX:CCC) subsidiary Mashala Resources has exceeded previous record exports of high quality export thermal coal through the Richards Bay Coal Terminal by more than 30% for the December 2011 quarter.

The company previously announced export sales from the Ferreira Coal Mine during the December quarter were forecast to exceed the previous quarter’s export sales of 130,995 tonnes and previous record export sales of 136,400 tonnes achieved in the June 2011 quarter.

Preliminary results for the December quarter also show unaudited revenue and earnings before interest, taxes, depreciation and amortisation have exceeded the September quarter unaudited results by over 35% and 70% respectively.

New Broad Based BEE Partner

Continental and the Sishen Iron Ore Company Community Development Trust (SIOC-cdt) are finalising the few remaining conditions precedent for Subscription and Shareholder Agreements under which SIOC-cdt has become the company’s new partner in South Africa.

SIOC-cdt is a Broad Based Black Economic Empowerment Company that holds a 3% interest in Sishen Iron Ore Company, the operator of the Sishen, Sishen South and Thabazimbi iron ore mines, Africa’s largest iron ore mining operations.

Importantly, the deal attracts an initial A$16.8 million (ZAR140 million) investment which will be used to further fund the growth and development of Continental’s thermal coal mining business in South Africa.

SIOC-cdt, which has become a 26% partner in the company's South African subsidiary, will invest a further A$9.1 million (ZAR75 million), which will satisfy the A$26.2 million (ZAR215 million) loan advances made by Continental Coal on behalf of its previous partner.

Following completion of the conditions precedent, which is expected to occur within the next two weeks, settlement will take place and the funding will be advanced to Continental.

ABSA Capital Debt Funding

Meanwhile, Continental has received committed finance from ABSA Capital for aggregate debt facilities of around US$65 million.

ABSA Capital is a division of Absa Bank, one of South Africa’s largest financial service providers and a subsidiary of Barclays Bank.

The facilities, which comprise US$35 million to fund the development costs of the Penumbra Coal Mine, have received all necessary credit approvals and all associated due diligence has been completed.

Drawdown of the funding will begin upon Continental funding up-front the balance of the project’s development costs not met from the US$35 million tranche from its existing cashflow and once it has satisfied the few remaining conditions precedent. First drawdown is scheduled for later in the current March quarter.

Laying the Foundations for Strong Growth

Continental has laid the foundations and has funding in place for substantial growth and a forecast increase in earnings.

The company has a current run of mine production of 2 million tonnes per annum of thermal coal with sales to the international export and domestic markets.

Continental also has a third coal mine currently under development that is forecast to double export thermal coal sales and group earnings in 2012.

A fourth mine Bankable Feasibility Study has been completed for the De Wittekrans Coal Project, confirming a technically and economically viable operation that is forecast again to again double export thermal coal sales and group earnings in 2013.

When in operation the project is expected to produce over 0.8 million tonnes of export sales, over 1.7 million tonnes of domestic sales, and annual earnings before interest, taxes, depreciation and amortisation in excess of US$50 million.

Continental’s goal is to achieve 7 million tonnes per annum of run of mine coal production in 2013.

Universal Coal: worth more than three times current value says broker

Fri, 27 Jan 2012 02:52:00 +0000

Universal Coal (ASX: UNV) has received a buy recommendation from DJ Carmichael, with a target price of $0.83 - which is more than three times the last traded price of $0.24.

The following is an extract from the report:

UNV is an ASX listed, South African focused coal exploration and development company holding interests in three thermal coal projects in the Witbank Coalfield and three coking coal projects in the Limpopo Coalfield, with ownership structures varying from 30% to 70.5% on a staged earn-in basis.

UNV has responded to media speculation surrounding its coking coal assets and advises that it is reviewing the appointment of advisors to assist the company with any formal approach it may receive on these assets.

Our recommendation and price target remain unchanged but the response does indicate the level of interest in the coking coal assets and signals a high level of M & A activity in the sector in the year ahead.

Key points

The Combined Berenice / Cygnus coking coal project resource was vastly increased in 2H2012 to 1.32Bt of which 402.4Mt (30%) is in the measured and indicated categories. Of this amount, and after taking into account geological losses, UNV estimate mineable resources of 479Mt, chiefly composed of a middling product and a smaller percentage of high grade coking coal.

As a result of the resource upgrade, UNV s interest in the project has risen
to 40% from 22%. A Scoping Study was initiated in 2H2012.

As yet UNV has not received a formal approach but the company has now indicated that a number of Indian and Chinese groups have expressed interest in the coking coal assets and UNV has held a number of discussion from interested parties involved in energy and the steel sector.

The size of the coking coal projects is an attraction for groups seeking long-term feed into steel operations. The project is ideally situated with respect to rail and road infrastructure which increases the level of interest further.

We believe the development is positive for UNV and could result in a formal offer which could potentially inject cash into UNV and potentially provide a strategic partner already embedded within the industry to provide off-take or the financial capacity to play a significant role in project development, possibly both.

We await further news and in the meantime, maintain our current buy recommendation and $0.83 valuation, reduced slightly for the reduction in cash since our previous note.

Atlantic Coal set for strong production increase this year

Tue, 24 Jan 2012 10:29:00 +0000

Atlantic Coal (LON:ATC) is expecting to increase production substantially this year once the latest excavator becomes operational at the Stockton Colliery, its opencast anthracite operation in Pennsylvania.

The statement was included in the group’s production report for 2011. Run-of-mine coal production rose to 208,730 tons from 203.060 tons in 2010, while it removed 3,257,776 bank cubic yards of overburden, compared with 2,837,863 bcy the previous year.

Atlantic produced 105,403 tons of clean coal in the year, up from 88,620 tons in 2010.

It sold 106,403 tons in the period at an average price of US$142.33 per ton, compared with sales of 97,349 tons at an average price of US$124.43 each the previous year.

As announced last year, the company ceased operating its DeMag H185 excavator in September after a long run of mechanical problems. It acquired a Komatsu PC2000 hydraulic excavator in October 2011.

Since becoming operational, this has already had a positive effect on production which the board anticipates will be further enhanced when the second Liebherr 9250 19-yard bucket hydraulic excavator becomes operational, scheduled to be in the first quarter this year.

Whilst the construction of the railroad diversion was completed in the third quarter 2011 on schedule, certain delays have occurred in the negotiations with operators regarding commissioning.

These delays are reflected in a higher ratio of coal to overburden than Atlantic's mine plan had originally forecast. However, Atlantic is confident that these discussions will progress positively and will update shareholders at the appropriate time.

Atlantic managing director Steve Best said "Whilst we had anticipated higher production figures from Stockton for 2011, we remain confident that, with the Komatsu already operational and a second Liebherr becoming operational in Q1 2012, we will see increased production for 2012 and indeed, both initial production and sales price figures for January 2012 look to be a large improvement on those achieved in January 2011.”

Churchill Mining: Three judges chosen for appeal at Supreme Court of Indonesia

Mon, 23 Jan 2012 14:35:00 +0000

Churchill Mining (LON:CHL) updated investors this afternoon on its appeal concerning the disputed licences that make up the East Kutai coal project.

In a statement, the company said that the head of the state administrative chamber of the Supreme Court of Indonesia had chosen three judges to hear the case.

The appeal was originally launched to try and overturn the decision by the Administrative Tribunal in Samarinda, East Kalimantan, concerning the revocation of the four mining licenses that comprise the East Kutai coal project, in which Churchill has a 75 percent stake.

The East Kutai project is a huge resource with a JORC compliant estimate of 2.7 billion tonnes of coal and a pre-tax net present value of US$1.8 billion.

Churchill acquired the licences in 2007 through an acquisition of a 75 per cent stake in Indonesian group Ridlatama after the previous owner Nusantra failed to extend the licences in 2006 and 2007.

As at 2.30 pm, Churchill shares were up 8.27 per cent, to trade at 18 pence each.

UK Coal hits 2011 production targets despite setback at Daw Mill

Mon, 23 Jan 2012 10:00:00 +0000

UK Coal (LON:UKC) managed to hit its production target in 2011 despite problems, which significantly reduced production from its largest mine in December.

The group saw its coal output decline from 2.3 million tonnes (Mt) in the fourth quarter of 2010 to 1.6 Mt in the final three months of 2011.

However, full year production was four percent ahead of 2010 at 7.5 Mt, meeting the company’s expectations, while operating profits for the year also were in line with forecasts.

The production shortfall was due to lower output at the Daw Mill mine in West Midlands, where UK Coal failed to mitigate a face gap. As a result, the mine’s contribution in December was negligible.

UK Coal said its key priority for 2012 is to recover production levels and improve development at Daw Mill.

The impact from the problems at Daw Mill was offset by the strong performance of the Thoresby and Kellingley mines with the latter topping expectations in the fourth quarter.

Investors welcomed the news as shares in UK Coal rose 1.75 pence (6 percent) to 31.25 pence, valuing the group at £93.55 million.

Broker Collins Stewart had a generally positive reaction to the report, saying the setbacks at Daw Mill show that the company has to do more work to eliminate the key risks to its coal operation.

“The turnaround at UK Coal appears to be headed in the right direction at last,” said analyst at Collins Stewart John Mcgloin.

“Although the group still faces significant challenges, seeing debt level fall and the combined operations hitting production targets, provides some long-lost hope for the group.”

Universal Coal responds to media speculation regarding strategic investors

Mon, 23 Jan 2012 04:46:00 +0000

Universal Coal (ASX: UNV, from Johannesburg, South Africa, the company has responded to media speculation.

The statement issued by Universal Coal is as follows:

Universal Coal plc advises the company is reviewing the appointment of advisors to assist with informal approaches regarding its coking coal projects in the north of South Africa.

The company expects increasing interest in these assets, and as a result, and following a number of informal approaches and discussions from groups within the steel sector, Universal may appoint specialist advisors to assist in securing a strategic investor for the coking and thermal coal assets.

Universal has not received a formal statement or offer from any party regarding these assets. The company continues to be in discussions with various equity investors and industrial groups in the steel and power generation sectors regarding its operations in South Africa as part of its ongoing investor relations and communications programs.

In December 2011, Universal advised shareholders that the company’s two early-stage coking coal exploration projects in South Africa’s Limpopo province were likely to be the catalyst for substantial and increasing investor interest during 2012.

The company said in December that the Berenice-Cygnus project, in particular, with a gross in situ resource of 1.3Bt declared from the first phase of drilling, was already attracting interest.

Berenice-Cygnus, situated in the emerging Soutpansberg Coalfield near the Mozambique and Zimbabwe borders, is located 30km from a railway siding linked to both Maputo and Richards Bay ports. A second phase of drilling is scheduled to begin in early 2012, and a scoping study commenced in late 2011 at the project.

International Coal recommences coal drilling at South Blackall, JORC resource first half 2012

Fri, 20 Jan 2012 01:02:00 +0000

International Coal (ASX: ICX) has made a fast start to 2012 with three drill rigs turning at the South Blackall Project, which is strategically located in a highly prospective region of south western Queensland.

With that momentum, a maiden JORC Resource for South Blackall is planned in the first half of 2012.

Significant drilling has occurred over the last 2 days with coal seams and intersections occurring at levels consistent with 4 holes drilled in late 2011.

Downwire logging is being undertaken this week and will continue with all holes drilled.

The company has a 22 hole program to be completed in the short term.

International Coal has already confirmed a significant coal seam structure at the project. South Blackall has an exploration target of 8.8 billion tonnes of thermal coal.

South Blackall strategically located

South Blackall comprises an area of 769 square kilometres and consists of 250 sub-blocks, and is located 80 kilometres north-east of Quilpie in south-west Queensland and is part of the Eromanga and Galilee Sedimentary Basins.

Providing a major advantage for International Coal is the existing infrastructure, with the permit located close to road and rail that can provide direct access to the Port of Brisbane.

Mozambi Coal attracts U.S. based bulk mining company as substantial shareholder

Wed, 18 Jan 2012 04:58:00 +0000

Mozambi Coal (ASX: MOZ) has caught the eye of investor Richmond Natural Resources which has acquired a 5% shareholding in the company.

Richmond Natural Resources is a U.S.-based company investing in mining and mining related properties worldwide.

The company purchased 5.7 million shares between 15 November 2011 and 10 January 2012 for a total consideration of A$969,398.52, providing an average entry price of $0.17 per share.

Mozambi Coal managing director Shiv Madan said the support of Richmond Natural Resources gives increasing credibility to the potential of Mozambi Coal.

“The principals of RNR have a strong track record of developing large scale coal assets internationally, including associated infrastructure, and we expect to work alongside them as we progress our operations in Mozambique,” he said.

“RNR’s growing financial interest in the company promotes our view that Mozambique is on track to becoming a significant part of the international coal market, a view that is increasingly supported by key players in the industry.”

Richmond Natural Resources is led by chairman Gary Rogliano, a 20 year mining veteran who previously founded and managed INR Energy, a West Virginia-based producer and exporter of metallurgical and thermal coal that was sold in 2010 to Cliffs Natural Resources for US$757 million.

Rogliano said, "This investment in Mozambi Coal demonstrates our high expectations in Mozambique as an evolving coal producer and specifically in Mozambi Coal as a market leader and significant player in that vital geographic market.”

Mozambi is ramping up coal exploration in Mozambique with 2012 expected to be a busy year.

Exploration will cover the company’s Songo, Tete West and Muturara projects in the Zambeze Coal Basin, a region frequented by mining giants Rio Tinto (ASX: RIO) and Vale (NYSE: VALE).

Among the tasks to be completed are a revised model and the identification of additional targets for drilling for the Songo Project, the interpretation of assays from the Tete West drilling program and the start of first pass drilling at the Muturara Project.

Mozambi Coal has a significant exploration position within the country, with three projects covering more than 600 square kilometres and a combined target mineralisation of 4.96-6.19 billion tonnes of coking and thermal coal.

Aviva Corporation welcomes Marford Group as a substantial shareholder

Mon, 16 Jan 2012 05:04:00 +0000

Aviva Corporation (ASX: AVA) has added a new substantial shareholder to its register with Marford Group taking a 5.11% stake in the company.

Marford Group acquired 3.1 million Aviva shares for a total consideration of A$431,707.53 between 24 October 2011 and 11 January 2012, providing an average entry price of $0.14 per share and taking its total shareholding to 8.5 million.

Aviva rounded out 2011 with further high grade gold intercepts from follow up diamond drilling at its Bushiangala joint venture prospect, and reconnaissance drilling at two new prospects, Sigalagala and Makuchi, all in the Kakamega Gold Camp.

Highlight intersections from Bushiangala included 4.67 metres at 4.92 grams per tonne (g/t) gold from 77.95 metres, 6.34 metres at 5.02g/t gold from 38.32 metres, and 16 metres at 5.91g/t gold from 57.8 metres.

Work during early 2012 will focus on drilling prospects in the Kakamega Gold Camp with infill, down dip and extensional drilling at Bushiangala and Kimingini being prioritised.

The company remains on track to announce a maiden gold resource in the first half of 2012.

Rey Resources keeps its eye on the prize, a busy year ahead with a 2013 production target

Fri, 13 Jan 2012 03:54:00 +0000

Rey Resources (ASX: REY) is rapidly advancing towards production from its Duchess Paradise Thermal Coal Project in Western Australia’s Canning Basin.

Tellingly, the success Rey has experienced at Duchess Paradise has generated significant interest from a number of parties interested in becoming involved with the project.

In the past year, Rey has:

- Upgraded the 535 million tonne thermal coal Resource;
- Delivered a maiden JORC Reserve of 26.3 million tonnes of thermal coal;
- Completed a Definitive Feasibility Study on time and budget that delivered attractive economics for the project; and
- Extended the Duchess Paradise coal occurrences through drilling.

In December Rey also completed a A$4 million capital raising that will be used to progress permitting and approvals required for Duchess Paradise as well as maintaining its sufficient level of working capital.

The DFS for Duchess Paradise confirmed the project as being an economically robust thermal coal export project with a longer life than expected and strong cashflows estimated with earnings before interest, taxes, depreciation and amortisation of $504 million over the first five years of sales.

The study proposes a highwall mining operation producing 2-2.5 million tonnes of 5,500 kilocalories per kilogram of thermal coal per year to be exported via the company’s existing port infrastructure at Derby in Western Australia.

The figures are encouraging with a longer mine life of at least 10 years, an ungeared net present value (10% discount rate) of $176 million (after taxes and MRRT), an internal rate of return of 27%, and a payback of 3.4 years.

Worth noting is the potential to achieve this with the current Resource at Duchess Paradise representing just 25 kilometres of the plus 320 kilometres of coal sub-crop in the area.

In September, drilling confirmed the strike extent of a coal outcrop for 2 kilometres to the north, beyond the existing coal reserves, along with extensions to the P1 Seam resource for 2.5 kilometres to the east.

The presence of continuous shallow coal occurrences increases the proposed above ground slot mining from the current plan of 10 years to about 13-14 years.

India Coal Demand

Rey is well placed to take advantage of the projected widening gap between coal demand and supply in India.

By 2016, it is estimated that India will require over 1 billion tonnes of coal – a shortfall of 300 million tonnes it cannot produce.

Rey, with its potentially large Canning Basin coal production, could be a part of the long term solution for India.

Duchess Paradise also presents a capital advantage for Rey with its proximity to the existing Derby Port.

Fending off takeovers

Rey's Kevin Wilson has fended off a number of takeover offers for the company, indicating the promise, scale and value perceived by suitors at Rey's Canning Basin coal project. The current valuation would appear to offer considerable upside potential.

Plans for 2012

Significantly, the company is now looking to extend the mine life of Duchess Paradise beyond 10 years through further exploration of its land holding.

This year Rey will also advance corporate partnership discussions, which are well underway, as well as aim to reduce its funding requirement.

International Coal expands coal footprint in Queensland, completes due diligence

Fri, 13 Jan 2012 01:06:00 +0000

International Coal (ASX: ICX) has completed due diligence on the acquisition of 100% of Great White Nominees, giving International Coal access to projects that neighbour existing large scale operating mines.

Independent expert analysis indicates that the assets are prospective for coking and thermal coal.

International Coal has engaged an independent consultant to develop an exploration program for the coal exploration permit.

Following the exploration program, expected to be conducted over the coming months, International Coal will consider undertaking a drill program to assess the volume and quality of thermal coal deposits at the site.

Significantly, the coal exploration permit and one of the permit applications surround Anglo American's advanced open pit thermal coal mine in Callide.

Of the coal exploration permit applications, one is located in the well known coking coal district of Bundaberg, adjacent to International Coal’s existing Bundaberg project which contains two target exploration coal-bearing units.

Another of the applications is in an emerging region east of Mt Isa, where significant exploration and infrastructure planning is underway.

Terms of agreement

The consideration for the acquisition of Great White Nominees comprises:

- 2 million International Coal shares;
- $250,000 cash; and
- 3 million International Coal options valid for five years from January 12, 2012, with a strike price of $0.35.

Strategy

International Coal is focused on developing a number of prospective coking coal and thermal coal projects throughout Queensland.

This transaction provides further regional diversification of the company’s assets close to existing large scale operating mines.

In December 2011, International Coal expanded its footprint in the Eromanga Basin with applications for 11 Exploration Permits for Coal in the Eromanga Basin area and the surrounding region in SW Queensland.

These acquisitions show that International Coal is aggressively pursuing prospective EPCs and EPCAs in coal rich Queensland.

Analysis

As one of the best performing IPO's on the ASX in 2011, it has been a quantifiably strong start to the public lists for ICX. The latest addition to coal assets in Queensland surrounding Anglo American's advanced open pit mine at Callide, where independent analysis indicates EPC and EPCA’s are prospective for coking and thermal coal raises the valuation bar for ICX, yet again.

Resource Generation non executive buys more shares on market

Tue, 10 Jan 2012 01:13:00 +0000

Resource Generation (ASX: RES) non-executive director Geoffrey Rose has bought 50,000 shares on market for A$0.3835 per share, or a consideration of $19,175.

Rose now owns 68,000 shares in Resource Generation.

Resource Generation recently secured the water required for stage 2 of the company’s Boikarabelo mine, one of South Africa’s largest remaining coal deposits.

The Boikarabelo mine is located in the Waterberg region of South Africa, and has Probable Reserves of 744.8 million tonnes of coal on just 35% of Resource Generation’s tenements.

The agreement with the Lephalale Local Municipality in Limpopo Province, subject to a number of conditions, will see Lephale construct, operate and maintain a wastewater treatment plant at Marapong, about 50 kilometres from Boikarabelo.

Atlantic Coal to start due diligence on Pennsylvania anthracite property

Mon, 09 Jan 2012 07:35:00 +0000

Atlantic Coal (LON:ATC) is to start due diligence on the 410 acre Pott & Bannon anthracite mining property in Pennsylvania after owner Reading Anthracite (RAC) approved a lease option.

Atlantic will now pay US$250,000 to RAC with a further US250,000 to be held in escrow while it carries out due diligence on the property.

If it takes up its option, Atlantic will pay US$6 million in cash and shares for the property along with the grant of US$3 million in warrants to RAC.

The Pott & Bannon property is situated in New Castle Township, Schuylkill County and about 25 miles from Atlantic’s existing open cast operation at Stockton.

It is estimated to contain reserves of 12 million tons Run of Mine at 3.9 ratio with 4.1 million tons of clean coal.

Atlantic has appointed John T. Boyd & Company to carry out due diligence and confirm the resource information provided, adding it intends to submit the permit transfer application shortly.

Last week, when the deal was announced, Atlantic’s managing director Steve Best said that taking the lease option was part of its strategy to expand in Pennsylvania and to build Atlantic Coal into a major anthracite producer in the US.

Under the terms of the lease, RAC can buy all of the raw coal produced at the prospect until Atlantic makes a decision on whether to build a processing plant and up to 50% thereafter.

UPDATE - Atlantic Coal's anthracite deal could double production says broker

Tue, 03 Jan 2012 12:38:00 +0000

Atlantic Coal’s (LON:ATC) proposed deal to lease a 410 acre anthracite site in Pennsylvania will be a very good move for the miner, according to broker Fox-Davies.

It says assuming both that the lease option is ratified by the board of the site's owner Reading Anthracite Company (RAC) and that due diligence is completed successfully, Atlantic has the potential to double its current rate of anthracite production and at a favourable strip ratio.

Atlantic announced this morning it had signed an option on the permitted site, which is 25 miles from its existing open pit coal mine at Stockton and also contains the same Mammoth Seam.

Atlantic estimates the new site, known as the Pott & Bannon anthracite mining property in Schuylkill County, contains 12 million tons of Run of Mine coal at a 3.9 ratio with 4.1 million tons of clean coal.

Subject to due diligence, Atlantic will pay US$6 million in cash and shares to RAC and grant it US$3 million worth of warrants at 0.75 pence per share.

Atlantic said that as well as developing its strategy of increasing its current reserves and production profile in the Pennsylvania Anthracitic Belt, it will allow it to build a commercial relationship with RAC, a firm that has been operating in the Pennsylvania area for 135 years.

The site is also in close proximity to major east-coast transportation hubs, it added.

Steve Best, Atlantic Coal's managing director, said: "We are extremely pleased to have been able to secure an option on this major site. This agreement is in line with our growth strategy of expanding our regional footprint in this prime anthracite region, which has excellent infrastructure and established demand, and building Atlantic Coal into a major anthracite producer in the US.

Under the terms of the lease, RAC can buy all of the raw coal produced at the prospect until Atlantic builds a processing plant and up to 50% thereafter.

The $2.7 million cash component of the consideration will be sourced from Atlantic’s existing cash resources.

The lease will run for an initial period of 10 years and Atlantic will have the opportunity of extending the lease on the new site once it expires for two additional periods of 5 years each.

Atlantic added it will try to achieve a minimum rate of production of 400,000t of run of mine coal in the second year of the lease.

Its current operation at Stockton is an open pit colliery that sells mainly into the local central heating market and has reserves of 3.1 million tonnes of run-of-mine anthracitic coal, equating approximately to 1.5 million tonnes of washed anthracite after processing.

The firm’s current target is to produce 300,000t of run-of-mine coal in 2011 after it reported a 65 per cent increase in the production of run-of-mine coal to 121,000t the first half of the year.

Shares were up 6% at 0.472p. Fox-Davies is Atlantic’s house broker.

Atlantic Coal takes out option on new US anthracite property

Tue, 03 Jan 2012 07:33:00 +0000

US-focused coal miner Atlantic Coal (LON:ATC) has signed an option on a prospect in Pennsylvania that could double its anthracite reserves.

The lease option with Pennsylvania-based Reading Anthracite Company (RAC) is for a permitted 410 acre site 25 miles from Atlantic’s Stockton site and which also contains the Mammoth Seam that is being mined at Stockton.

Atlantic estimates the new site contains 12 million tons of Run of Mine coal with 4.1 million tons of clean coal.

Subject to due diligence, Atlantic will pay US$6 million in cash and shares to RAC and grant it US$3 million worth of warrants at 0.75 pence per share.

Atlantic said that as well as developing its strategy of increasing its current reserves and production profile in the Pennsylvania Anthracitic Belt, the deal also has the potential to build a commercial relationship with RAC, which has been operating in the area for 135 years.

The site is also in close proximity to major east-coast transportation hubs, it added.

Under the terms of the lease, RAC can buy all of the raw coal produced at the prospect until Atlantic builds a processing plant and up to 50% thereafter.

Aviva Corporation finishes up 2011 with more high grade gold discoveries at Bushiangala

Tue, 03 Jan 2012 06:07:00 +0000

Aviva Corporation (ASX: AVA) has ended 2011 on a high note with further high grade gold intercepts from follow up diamond drilling at its Bushiangala joint venture prospect, and reconnaissance drilling at two new prospects, Sigalagala and Makuchi, all in the Kakamega Gold Camp.

Highlight intersections include 4.67 metres at 4.92 grams per tonne (g/t) gold from 77.95 metres, 6.34 metres at 5.02g/t gold from 38.32 metres, and 16 metres at 5.91g/t gold from 57.8 metres.

These new intersections support the continuity of mineralisation at the Kakamega Gold Camp and build on the previous positive gold strikes of 7 metres at 8.29g/t of gold from 98 metres and 17 metres at 7.20g/t gold from 25 metres announced by Aviva in November.

Samples from two further diamond holes at Bushiangala are currently in the laboratory and results are expected in early 2012.

Three reverse circulation holes were drilled at the Makuchi prospect, all of which intersected very broad widths of anomalous gold mineralisation.

Two of the holes were abandoned before reaching target due to technical difficulties.

The host and style of mineralisation is interpreted to be similar to that encountered at Dhahabu where previous drilling returned 62 metres at 2.45g/t gold from 42 metres, 24 metres at 2.41g/t gold from 42.2 metres and 5 metres at 1.95g/t gold from 29 metres.

Meanwhile, results from the single reverse circulation hole drilled into the western end of the Sigalagala gold-in-soil anomaly returned a very broad anomalous interval which included a zone of 4 metres at 3.59g/t gold from 79 metres.

Drilling of prospects in the Kakamega Gold Camp, Base Metal Precinct and Lake Zone will begin again on 5 January 2012.

Work during early 2012 will focus on drilling prospects in the Kakamega Gold Camp with infill, down dip and extensional drilling at Bushiangala and Kimingini being prioritised.

The company remains on track to announce a maiden gold resource in the first half of 2012.