Author stories http://www.proactiveinvestors.co.uk Proactiveinvestors Author stories RSS feed en Tue, 17 Oct 2017 04:57:43 +0100 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) In the news: Base Resources & KEFI Minerals http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28770/in-the-news-base-resources-kefi-minerals-28770.html In the news: Base Resources & KEFI Minerals

 

FROM THE BROKING DESK

Base Resources (LON:BSE) *† has published an updated Resources and Reserves Statement for its 100%-owned Kwale Project in Kenya. This reflects depletion from mining that occurred over FY17 as well as the previously-announced resource update for Kwale South Dune: the effect of depletion was in line with our projections, while the resource update is pending the extension of the company’s mining licence. Currently all the South Dune area is covered by the prospecting licence SPL 173, while only a portion is covered by the mining licence SML 23. In the coming months Base will be performing economic analysis on the updated South Dune Resource, which will then form the basis of the application to the Kenyan Ministry of Mines for an extension of SML 23.

We reiterate our Buy rating and target price of A$0.49. It should be noted that the coming update to reserves may provide a 5-10% uplift to our target price from an extended mine life. To view our most recent report on the company, please see Base Resources — FY17 Financial Report, 29 August 2017.

COMPANIES

KEFI MINERALS†

LON:KEFI | 4.1p | US$18m | Buy | TP : 9.0p

Quarterly Update — More Details on Intended Project Funding

KEFI Minerals has announced a quarterly update that provides more detail on its proposed funding package for the development of its Tulu Kapi Gold Project in Ethiopia.

Oryx Management is continuing to work towards closing the funding package this year and has submitted a draft financing agreement to the Ethiopian authorities for approval. Oryx expects to raise US$140m towards the project’s financing requirement and the government has agreed to fund offsite infrastructure to a maximum of US$20m, for a total of US$160m.

COMMENT: With respect to the residual capital requirement, the company is considering offering third parties a stake in the project. It stated that it is in discussions with a number of potential project-level investors and that it will now bring these discussions to a head.

The company stated that Oryx has increased the amount of funding that it intends to secure from US$135m to US$140m and that this is part of the arrangements to allow a 25% increase in the processing plant throughput (from 1.5-1.7Mtpa to 1.9-2.1Mtpa) to be considered. The additional cost of this increase is to be offset by the move from a fixed price lump sum project construction to an open book, cost-based arrangement with incentivisation based on target costs and schedule.

We reiterate our Buy rating and target price of 9.0p. Our target price is based on a risked SoTP NAV for the company and assumes a gold price of US$1,250/oz and a 0.75x P/NAV8 multiple for the Tulu Kapi Project. It also includes allowances for the underground potential at Tulu Kapi, other exploration assets and G&A costs. While the upside to the share price implied by our target price is already substantial, it is worth noting that the current price implies a 0.37x P/NAV to our unrisked NAV8 of 11.9p. With the Ethiopian state of emergency having ended and the financing package in the process of being secured, we believe that there is a near-term re-rating opportunity. To view our most recent report on the company, please click here.

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Mon, 09 Oct 2017 11:22:00 +0100 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28770/in-the-news-base-resources-kefi-minerals-28770.html
In the news: Amani Gold http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28707/in-the-news-amani-gold-28707.html COMPANIES

AMANI GOLD††

ASX:ANL | A$0.025 | US$31m | Speculative Buy

Annual Results for FY17

Amani Gold has released its 2017 Annual Report. This outlined a number of near-term goals under the leadership of its new Chairman, Yu Qiumin, including the possibility of early production.

COMMENT: With the A$25m financing deal largely finalised (A$10m is subject to a shareholder vote in November 2017), the company is now well positioned to focus on a number of value-generative activities, including the preparation of pre-feasibility and feasibility studies on Kebigada, defining a resource at Douze Match in 2018, and adding ounces from prospective satellite deposits.

 

Giro Gold Project background — Amani is focused on advancing its 55%-owned Giro Gold Project in the DRC. After putting out a maiden resource in July 2017, the company has concentrated on upgrading and expanding the resource, as well as the metallurgical drilling needed to complete pre-feasibility and feasibility studies. Near-term work is to include drilling and metallurgical testing at Kebigada in preparation for the studies, further drilling at Douze Match in order to define a resource in 2018, and follow-up exploration on soil samples at Kolongoba. Drilling at Kebigada will include infill drilling to upgrade resources from the Indicated to Measured category, while recent diamond drilling has shown that there are areas of mineralisation below the depth of previous RC drilling. The most promising depth extension showed 88m at an Au grade of 2.13 g/t from 221m. At Douze Match, in the north of the licence area, initial drilling returned some spectacular high-grade results, although follow-up drilling has so far not matched these results. A programme of vertical holes at Douze Match targeting the flat-lying structures is being planned. Further exploration at Kolongoba is part of a plan to explore high-grade soil anomalies that have the potential to add satellite resources.

Amani’s current market cap is A$39m/US$31m — The company has 1,566m shares outstanding, with 47m options exercisable at prices ranging from A$0.03 to A$0.10/share expiring from November 2019 to December 2020. Cash as of 30 June 2017 was A$1.1m, with the A$25m Luck Winner Investment Limited (LW) transaction closing subsequently. The terms of the binding subscription agreement with LW included 300m shares for A$10m at a price of A$0.05/share, and a commitment to provide a further A$10m subject to an Amani shareholder vote in November 2017 and other conditions precedent. As part of the deal, LW is to receive 250m options exercisable at A$0.07/share with a two-year term from the date of issue. Management expects these financings to help cover the costs of pre-feasibility and feasibility studies on the Giro Gold Project. While Amani is seeking to grow the size of the deposit to the multi-million ounce scale, there is a contingency payment that becomes payable should Amani define 3Moz in the Measured and Indicated categories at a cut-off grade of 2.5 g/t. At such a scale and cut-off grade, however, having to cover the US$5.35m payment would be a welcome development.

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Fri, 29 Sep 2017 12:33:00 +0100 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28707/in-the-news-amani-gold-28707.html
In the news: Metal Tiger http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28724/in-the-news-metal-tiger-28724.html COMPANIES

Metal Tiger*†

LON:MTR | 1.8p | US$22m

Potential Major Strike Extension at the T3 Deposit at its 30%-owned Botswana Cu/Ag JV

Metal Tiger has updated the market on the results of work at the T3 Deposit at its 30%-owned Botswana Copper/Silver JV. Highlights included the intersection of visible copper mineralisation that has extended known mineralisation by 300m to the west and north-east of the planned pit to 1.5km along-strike. Drilling was also reported to have intersected vein-hosted copper mineralisation down-dip from the planned pit. Assays are awaited and drilling is ongoing, with seven rigs now operating on-site.

The announcement also stated that the throughput of the project being considered in the PFS — planned for completion by the end of 2017 — is to be increased by 25% from 2.0Mtpa to 2.5Mtpa. Confidence in an increased mining inventory and an improved copper price have led to the consideration of a larger project, which will be designed to allow for an expansion to 4.0Mtpa should further additions to resources justify it. Other study work, including metallurgical test-work, water bore testing, environmental approvals and stakeholder engagement, are also underway.

COMMENT: Metal Tiger and JV partner MOD Resources are continuing to make good progress advancing the T3 deposit, on which a robust scoping study was completed in December 2016. Since the completion of that study, resources were updated in August, showing a 17% increase in contained copper. The reported intersection of visible copper mineralisation is a reminder that exploration at T3 remains at a relatively early stage and continues to deliver results that bode well for the discovery of additional mineralisation along-strike and below the planned pit.

T3 is already an attractive project. The scoping study indicated the potential for the project to produce 22,000tpa of copper, with associated silver, at a C1 cash cost of US$1.29/lb and capex of US$135m, equivalent to a very competitive capital intensity rate of US$6,200/t. At a copper price of US$3.00/lb, the pre-tax NPV10 was US$297m and the IRR 42%. The larger scale and potential additions to the mining inventory bode well for the PFS results.

With regard to its Thai assets, the company expects that during 1Q18 the authorities will make their decision regarding the designation of the area hosting two brownfield silver/lead/zinc mines, Boh Yai and Song Toh, as Mineral Deposit Areas (MDAs). This would allow the company to progress the work towards the re-development of the two mines, which previously operated from the late 1970s until 2002. The company’s ownership structure gives it a 78% interest in the project, on which a final draft of a Competent Person’s Report produced by SRK in June 2017 estimated the NPV10 at US$46m and the IRR at 31%. The company plans to undertake an IPO of its Thai assets once the decision on the land designation has been made.

The company’s current market cap is approximately £15.3m. At the end of June it had £4.0m in cash and a portfolio of equity investments with a value of £6.4m, for an EV of £4.9m, or US$6.4m. We expect that the publication of the PFS on the T3 Project and the decision of the Thai authorities (expected early next year) could have a significant impact on the value of the company.

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Tue, 03 Oct 2017 10:34:00 +0100 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28724/in-the-news-metal-tiger-28724.html
In the news: Base Resources http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28734/in-the-news-base-resources-28734.html COMPANIES

Base Resources*†

ASX:BSE LON:BSE | A$0.295 | US$172m | Buy | TP : A$0.49

36% Increase in M&I Resource Tonnage at Kwale South Dune

Base Resources has released an updated Mineral Resource Statement for the Kwale South Dune that incorporates the extensional and infill drilling previously outlined in announcements between March and May 2017. Total Resource tonnage increased 29%, with an overall increase in Contained Heavy Minerals of 13% from the addition of a large volume of material at a grade below the previous average. As the mining licence has yet to be extended to include all of the South Dune area, management has not yet updated the Reserve. In the coming months Base will perform an economic analysis to form the basis of its application to the Kenyan Ministry of Mines either to amend the existing mining licence or receive a new one.

COMMENT: The Resource update shows a significant increase in tonnage and HM contained, albeit at a lower grade. Based on our estimates, the upcoming Reserve update will extend the life of mine and provide a material economic benefit. We believe that 1.0-1.5 years of additional mine life may be added, providing an additional 5-10% of value above our current target price.

We are maintaining our Buy recommendation and A$0.49 target price, but note the additional value that the pending Reserve is likely to provide. For details on the company’s latest financial results, please see Base Resources — FY17 Financial Report, 29 August 2017.

The South Dune Measured category grew due to tonnage additions and resource upgrades — The drilling campaign in 2017 included both extension and infill drilling on South Dune. As a result, the Measured Resource tonnage increased 89%, while Indicated and Inferred Resource tonnage decreased due to upgrading by 20% and 96%, respectively. Overall grades declined from 3.5% to 3.0%, which we believe to be attributable to the new material added. The net addition to the total resource implies that the new material added has a grade of 1.6%.

We believe that the coming Reserve increase is likely to extend the life-of-mine — Grades have fallen across all Resource categories, with Measured & Indicated decreasing 0.5%. However, the increase in tonnage (+36% for M&I) has more than offset the decreased grade and resulted in a higher HM contained (+19% for M&I). This has resulted in additional material that will extend the life-of-mine if converted to Reserves. Assuming that M&I tonnage and HM contained get converted to Proven and Probable Reserves on a similar ratio as in the Resource Statement of 30 June 2016, we believe the life-of-mine may be extended by 1.0-1.5 years. We estimate that the economic impact will be positive.

Mafisini deposit has the potential to extend the mine life — Mafisini is interpreted to be a continuation of mineralisation at the South Dune, separated by a narrow, alluvial lowland. Mineralised intervals occur over a contiguous 1,240m of strike and up to 480m in width. Notable results for Mafisini include the previously reported Line 13 cross-section showing 10.5m at 4.4% HM and 12m at 4.2% HM, both from surface, compared with a grade of 3.8% HM on the South Dune reserve. Other drill hole grades appear to be broadly in line with the South Dune.

NE Sector shows longer-term potential, but has been suspended pending the resolution of access issues — Only four drill holes with mineralised intercepts were reported for the NE Sector, so the story is still developing. The company intersected a surface zone where 2 of 3 drill holes were low-grade and narrow, as well as a deeper mineralised zone sitting ~20m below surface with higher grades. Base has yet to complete most of the proposed drilling; this has been put on hold due to community issues. The company believes these arose as a result of political posturing associated with the 2017 general election in Kenya. Base intends to re-engage with the community after the election to obtain informed consent and access the target drill sites.

Target price — We are maintaining our Buy rating and target price of A$0.49. However, we estimate that the coming update to reserves may provide a 5-10% uplift from an extended mine life. Furthermore, we note that Mafisini offers additional resource potential.

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Wed, 04 Oct 2017 10:14:00 +0100 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28734/in-the-news-base-resources-28734.html
In the news: KEFI Minerals http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28695/in-the-news-kefi-minerals-28695.html FROM THE BROKING DESK

KEFI Minerals†  (LON:KEFI) has published its interim 1H17 financial results. The company has signed a mandate letter and heads of terms for the US$135m financing of its Tulu Kapi Gold Project in Ethiopia, which KEFI is aiming to commence construction of this year. An updated DFS for the project was published in May 2017 that confirmed the project’s attractions, including production of 980,000oz of gold over a ten-year mine life, AISC of US$777/oz and estimated initial capital costs of US$161m.

KEFI remains committed to reducing capex and finalising its financing plan. After announcing a further reduction in planned capex in August 2017, including reducing contingency provisions, we estimate that the total project funding requirement is US$152m, with an additional US$33m required for 30 months of interest charges before project cashflows start covering debt payments. To fund the US$185m, the company plans to receive US$135m from the Oryx financing and US$20m from the Ethiopian Government to cover offsite infrastructure, with the balance of US$30m to come from other sources. The company had previously stated that US$6m had been committed by Lycopodium and Lanstead, although the Sharing Agreement with Lanstead is now expected to provide less cash than expected. As of 30 June 2017, we estimate that a further £3.3m in payments to KEFI had been planned for; however, at the current share price of 4.39p, we estimate that only £1.9m will be received. This shortfall led to a write-down in the period’s financials. The cash balance at 30 June 2017 was £1.6m.

We reiterate our Buy rating and target price of 9.0p. Our target price is based on a risked SoTP NAV for the company and assumes a gold price of US$1,250/oz and a 0.75x P/NAV8 multiple for the Tulu Kapi Project. It also includes allowances for the underground potential at Tulu Kapi, other exploration assets and G&A costs. While the upside to the share price implied by our target price is already substantial, it is worth noting that the current price implies a 0.37x P/NAV to our unrisked NAV8 of 11.9p. With the Ethiopian state of emergency having ended and the financing package in the process of being secured, we believe that there is a near-term re-rating opportunity. It should be noted though that it remains to be seen whether peace will hold in Ethiopia, and there are still details of the financing to finish; the opportunity lies in the uncertainty of these two factors being reduced. To view our most recent report on the company, please click here.

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Thu, 28 Sep 2017 11:39:00 +0100 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28695/in-the-news-kefi-minerals-28695.html
In the news: Wave Swell Energy, Metminco & Metal Tiger http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28611/in-the-news-wave-swell-energy-metminco-metal-tiger-28611.html FROM THE BROKING DESK

We have been appointed to raise A$12m by Wave Swell Energy Limited***. This private Australian company is — as the name suggests — focused on wave energy. This lesser-known area of renewable energy could be the ‘third leg of the stool’, along with wind and solar power, as it relies on neither of these two for its generation. The technology used by Wave Swell Energy (WSE) converts renewable energy from ocean waves via a 1MW modular oscillating wave column unit into electricity for connection into national electricity grids. Full details on this and the company can be found here.

WSE has a Memorandum of Understanding with Hydro Tasmania to install a full-scale test unit at King Island (Bass Strait, Tasmania, Australia). This unit will complement the existing renewable energy generation units at King Island (which are solar- and wind-driven), and is designed to demonstrate the full-scale commercial viability of WSE’s UniWave™ energy converter unit. To support this, WSE has appointed RFC Ambrian to arrange a private placement of up to 2,500,000 new ordinary shares at A$4.80/share to raise a minimum of A$12m. Following the placement, WSE is anticipated to have 7.5m shares on issue and a value of A$36m.

The global wave resource represents twice the world’s current energy usage. Hawaii is a standout early-stage target market for WSE — the lowest of the low-hanging fruit. It currently draws most of its electricity from diesel generation; WSE can provide clean electricity in Hawaii at a significantly reduced cost. The company thinks that the potential Hawaiian market for wave energy is 1,800MW, or some US$2bn pa in revenue. Other diesel-reliant islands could represent a further US$10bn pa. The total global potential for wave energy is 425,000MW (12% of current global capacity), or US$120bn pa.

So, it’s a large, highly receptive target market. This market is critically underserved, and a clean renewable energy source that can compete with traditional energy sources on price is an exceptional value proposition. Moreover, WSE’s highly innovative product has well protected IP.

WSE’s technology is efficient and commercially competitive — it’s a game-changer. It’s likely to prove very attractive to industry, and has a strong, sustainable advantage in a nascent sector. This is a high-margin business with low overheads; WSE’s EBIT is at the top end of industry margins, giving it a significant competitive advantage. Finally, the management team is highly experienced, and is well respected domestically and internationally.

COMPANIES

Metminco*†

ASX:MNC | A¢4.8 | US$4m | Speculative Buy

Update on Interim Results and Underground Development Approval at Miraflores

Metminco recently published its interim results to June 2017. It also announced that it had received approval from the regional environmental agency allowing it to construct 2km of underground development at its 100%-owned Miraflores Gold Project in Colombia. This will allow access to the orebody and infill drilling ahead of a decision to construct the project.

The key timeline items remain in line with those announced at the beginning of August, namely:

• 3Q17 — Completion of Miraflores feasibility study

• October 2017 — Completion of baseline monitoring for the Environmental Licence (EIA)

• End-2017 — Submission of EIA application

The announcement also presented a mining schedule that showed life-of-mine production from the project of 416,000oz of gold over a ten-year life, with steady-state, nameplate production of 45,000oz pa.

COMMENT: Although the main development permit is not expected to be received until early 2018 and requires the completion of the feasibility study and the EIA, the granting of a permit to undertake underground development will allow the company to establish an operating presence at the site and appears to indicate growing support for the project.

The nominal annual production rate of 45,000oz referred to in the announcement is slightly lower than the 50,000oz pa targeted by the company; this is due to throughput and average head grade being around 6% lower than previously suggested.

We note that the current market cap of A$5m is slightly lower than its net cash, and also that A$6m of deferred cash payments for the acquisition of Miraflores are expected to fall due next year. Nonetheless, the upside represented by the potential value of the project does not appear to be reflected in the company’s current market price. In the mining study of September 2016, at a gold price of US$1,300/oz, Miraflores had an NPV8% of US$73m and the IRR was 26%.

We await the announcement of the results of the feasibility study — particularly operating and capital costs — with interest, along with progress towards securing the permits necessary for the main project development. Pending the results of the feasibility study, we continue to recommend Metminco as a Speculative Buy.

 

Miraflores is 100% owned, subject to up to A$13m of deferred acquisition payments — Metminco acquired Miraflores from RMB in May 2016. A total of A$6m of deferred cash payments remain outstanding over the coming three years: A$1m in June 2018, A$3m in 2019 and A$2m in 2020. The last two of these payments would be triggered earlier by a production decision, meaning that — if the project progresses as expected — the company could be obligated to pay the full A$6m around the middle of next year. A royalty of up to A$7m is also payable from project cashflow.

Miraflores scoping study of September 2016 delivered an NPV8% of US$73m and an IRR of 26% at US$1,300/oz — In September 2016 SRK completed an updated scoping study for an underground-only mining operation, with a mining schedule containing 451,000oz at a grade of 3.5 g/t. The operation was planned with steady-state production of 50,000oz pa and a nine-year mine life for total recovered gold production of 414,000oz. Underground mining using longhole stoping with backfill was planned in conjunction with a gravity concentration, flotation and cyanidation processing route. Initial capex was US$81m, while cash costs and AISC were US$555/oz and US$648/oz, respectively. At a gold price of US$1,300/oz, the NPV8% was US$73m and the IRR was 26%.

Feasibility study to be completed within the next few weeks — The company commenced a feasibility study work programme in November 2016, and this remains on track to be completed around the end of September 2017. The updated mining plan announced with the 2017 interim results showed a mining inventory of 4.3Mt grading 3.29 g/t for 457,000oz of gold, slightly higher than the previous scoping study. At planned steady-state throughput of 467,000tpa and with recoveries of 91%, the rate of production is planned to be 44,952oz pa, some 10% lower than suggested in the previous scoping study. The project is planned to recover a total of 416,000oz of gold over a planned ten-year mine life.

Permitting and associated approvals key to timeline — The company plans to submit the EIA for approval by the regional environmental authority by the end of this year. The process includes approval of the feasibility study and the Terms of Reference, and the submission of the completed environmental baseline studies, the approved development plan and the Social and Environmental Management Plan (particularly focused on the relocation of up to 70 homes and a number of illegal miners). It also incorporates the process of consultation and assessment of the impact of the project that forms the project’s Social Licence. The project’s design includes underground mining and dry stacked tailings, limiting its surface footprint, a factor that is hoped to help speed the EIA approval process.

Net cash at end of June of A$5.5m — The company had cash outflows from operations and expenditures on exploration of A$2.8m in the first six months of 2017. It received A$6.6m from the sale of its remaining 49% interest in the Los Calatos Project in Peru and a further A$1.7m from an equity issue and A$0.75m from the issuance of convertible notes, which are due to expire in May 2018. As a result, the company finished the period with A$6.3m in cash, or A$5.5m of net cash. The company had 102m shares outstanding and a further 25.3m partly-paid shares, which were issued to Lansted in January, and which we estimate would generate around A$1.1m if fully paid at today’s prices.

 

Metal Tiger*†

LON:MTR  | 1.9p | US$19m

IPO of Thai JV Postponed until 1Q18

Metal Tiger has announced that the planned IPO of its Thai-based JV, which includes interests in the potentially near-production stage Boh Yai and Song Toh silver/lead/zinc mines, has been delayed until 1Q18. The company has taken this decision as it is seeking clarification on certain aspects of the new Thai Minerals Act that came into effect in late August 2017.

A key requirement of the new act is that mining will only be allowed in areas that have been designated as being mineral-abundant with high economic value; these are known as Mineral Deposit Areas (MDA). Exploration, however, will be allowed to continue in areas outside the MDAs. Also, mining in preserved areas, or mining of preserved minerals, will be prohibited.

A draft of the areas being proposed to be designated as MDAs is expected to be submitted for approval in November 2017, with approvals expected in December. Metal Tiger expects that by 1Q18 the designation of the MDAs will have been made.

As part of the new act, the company is also working towards holding a public hearing for stakeholders (including villagers within 3km of the project, NGOs and government officials) before the end of the year, with the result to be reported to the Provincial Governor and the Director of the Department of Primary Industries and Mines for consideration.

COMMENT: The company is confident that the areas of interest to the Thai JV will be designated as MDAs, as not only is the project area a brownfield site at which operations were conducted from 1978 until 2002, but also given the economic potential.

We await further news of the results of the public hearing and designation of areas to be included in the MDAs with interest, and note that the company has stated that the value of 80% of the Thai project has a post-tax NPV10 of US$37m.

We expect that market attention will now focus on the results of the pre-feasibility study on the T3 Project in its 30%-owned Botswana copper JV, which is due to be completed by the end of the year.

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Mon, 18 Sep 2017 11:07:00 +0100 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28611/in-the-news-wave-swell-energy-metminco-metal-tiger-28611.html
In the news: Metal Tiger http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28518/in-the-news-metal-tiger-28518.html COMPANIES

Metal Tiger*†

LON:MTR | 2.2p | US$22m

Exploration Budget of A$10m for 30%-owned Botswana Copper/Silver Project JV

Metal Tiger has announced that the exploration budget for its 30%-owned Botswana Copper/Silver JV has been set at A$10m for the year to October 2018, the company’s share of which is A$3.0m/£1.85m.

COMMENT: This represents nearly double last year’s exploration budget for the JV and should provide a significant acceleration in the pace of exploration at the project. Work at the JV is currently focused on completing a pre-feasibility study on the T3 deposit by the end of this year, with a feasibility study currently planned to be completed by mid-2018.

The new budget will enable the company to test targets already established and to undertake geochemical and geophysical surveys over the JV licence area, at which soil and electro-magnetic anomalies cover a combined strike length of 150km.

T3 is an attractive project. The scoping study of December 2016 indicated the potential for the project to produce 22,000tpa of copper, with associated silver, at a C1 cash cost of US$1.29/lb and capex of US$135m, equivalent to a very competitive capital intensity rate of US$6,200/t. As pointed out in the latest announcement, the current copper price of US$3.08/lb represents an increase of 50% over the past year, further focusing attention on copper development opportunities.

A$10m exploration budget for Botswana Copper JV, which covers 8,000km2 area of the Kalahari Copper Belt — Expenditures include the funding of a 70-hole drill programme at the T3 deposit (announced in August) and a further 160 diamond drill holes and 40 RC holes on the 50km-long T3 Dome, with additional exploration at the 60km-long T20 Dome to the south-west. Exploration over the coming year is planned to include the following.

T3 Dome

• Funding the current T3 drilling programme, including up to 70 diamond drill holes:

o Drilling at the project re-commenced on 9 August following the approval of the Environmental Management Plan (EMP), which is valid until December 2018.

o To test for extensions at T3 to the east and west of the planned pit.

o To test the extent of Zone 3 mineralised contact 300m below the current T3 resource.

o To test for high-grade, vein-hosted copper mineralisation that could potentially support underground mining beneath the planned open pit.

o To undertake hydrological and sterilisation holes required for project studies.

o To test geophysical anomalies to the north and north-east of the T3 resource.

o Currently seeking approvals for the drilling of 14 electro-magnetic (EM) and copper soil anomalies along the dome.

o The majority of this programme is planned to be completed by the end of the year.

T20 Dome

• Airborne EM geophysical survey over a large area of the T20 Dome.

Metal Tiger owns a 30% interest in the Botswana Copper/Silver Project JV — Metal Tiger holds 30% and MOD Resources (MOD: ASX) 70% in the JV that owns exploration rights over an area of over 8,000km2, covering 150km of the western end of the Kalahari Cooper Belt in western Botswana. Metal Tiger also owns 95.5m MOD shares (5.0%) and 1.5m MOD warrants at a price of A$0.060/share (the current share price is A$0.068). Metal Tiger also has a portfolio of other minerals interests, including exploration and development assets in Thailand and exploration licences in Spain, as well as a portfolio of mining equity investments.

Robust scoping study into 22,000tpa copper operation at T3 completed in December 2016 — The pace of progress at the T3 Project has been impressive: after discovery in March 2016, a maiden resource statement was published in September 2016 and a scoping study completed in December 2016. The positive scoping study was based on the maiden resource of 350,000t copper and 14Moz of silver. It considered the development of an open-pit copper mine producing 22,000tpa of copper and 665,000oz of silver in concentrate over a mine life of over nine years. Average life-of-mine C1 cash costs were estimated to be US$1.29/lb after silver credits. Capital costs were estimated at US$135m, equivalent to US$6,200/tpa of annual capacity. At a copper price of US$3.00/lb (compared with the current price of US$3.07/lb), the pre-tax NPV10 was US$297m and the IRR 42%.

Resources increased by 17% to 409,000t of copper in August 2017 — A resource update was announced in late August 2017. Updated total resources comprised 36Mt, grading 1.1% Cu and 13 g/t Ag, increasing copper content by 17% to 409,000t and silver to 14.8Moz. Some 28% of the copper was contained within Measured resources, and a further 33% in Indicated resources.

Pre-feasibility study planned to be completed by the end of the year — The company plans to complete a pre-feasibility study by the end of the year and a feasibility study in 3Q18.

The company is well funded — Cash at the end of 2016 was £1.4m and the company raised a further £4.85m in April 2017 at 3p/share.

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Fri, 01 Sep 2017 11:54:00 +0100 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28518/in-the-news-metal-tiger-28518.html
In the news: Peak Resources http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28539/in-the-news-peak-resources-28539.html FROM THE BROKING DESK

Peak Resources (ASX:PEK) †† has announced a significant milestone. The company has lodged an application for a Special Mining Licence (SML) for its Ngualla Rare Earths Project in Tanzania. This follows the award of an Environmental Impact Assessment Certificate in March and the release of a definitive feasibility study in April. An SML is superior to a standard Mining Licence in that it is granted for 31 years (ie, the life of the project defined in the DFS) and is over a greater land position (more than 18km2 in this case), as opposed to ten years and 10km2.

Despite the recent changes in the Tanzanian Mining Law, the backdrop for Ngualla’s main products is continuing to improve. Neodymium and praseodymium (Nd/Pr) are key components in traction motors for electric vehicles, and have seen spectacular price gains this year; as the move towards mainstream acceptance of electric vehicles has gathered pace, prices have risen almost 110% YTD. China accounts for 90% of the world’s supply, but it is also the largest user, and on current growth projections it will be forced to be a net importer by 2023. The increase in prices led China’s National Rare Earth Office to issue a statement on 8 August to the country’s six largest rare earth groups asking them to help stabilise the market. This led to a month of flat prices, but prices have begun to rise again and they are now at a five-year high of US$78/kg.

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Wed, 06 Sep 2017 09:56:00 +0100 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28539/in-the-news-peak-resources-28539.html
In the news: Mineral Sands Pricing, Base Resources & Resolute Mining http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28571/in-the-news-mineral-sands-pricing-base-resources-resolute-mining-28571.html FROM THE BROKING DESK

Some excellent news for mineral sands producers has come out. Iluka Resources has announced a 12% increase (to US$1,230/t) in its reference price for zircon for the next six months. Iluka usually only reports price increases around its quarterly reports; this interim announcement was made owing to the significance of the increase. This reflects the continuing strength in the zircon price, for which we estimate that Base Resources*† received US$800/t in FY17 (to June), and for which we currently forecast US$990/t in FY18. Zircon represents approximately 20% of Base’s (LON:BSE) revenue mix.

Jim Taylor has a new initiation piece out: Resolute Mining — Determined to Deliver Profitable Growth, 11 September 2017. (Believe me, that was quite an achievement given that our office had a new bunch of computers installed and a software upgrade over the weekend.) Jim has started coverage with a Buy rating and a target price of A$1.63. Resolute is an ASX-listed middle-tier gold company that could be looking to list in London at some stage. It is set for production of 300,000oz this year from operations in Africa and Australia.

Resolute (ASX:RSG) is a mid-cost producer with ongoing programmes that are planned to raise capacity to 400,000oz pa in FY19. There’s also a potential development project that could increase this to 500,000oz in FY20. We believe that share price performance will be driven by the de-risking of these development programmes and the de-bottlenecking of the company’s Syama plant in Mali. Also, the definition of a new discovery and the plans for its integration into Syama offers significant upside.

We base our A$1.63 target price on the SotP NAV of the company. Our NPV8, at a gold price of US$1,350/oz, is US$1,036m (A$1.77/share), equivalent to a current P/NAV of 0.70x. At gold prices of US$1,250/oz and US$1,450/oz, our TPs would be A$1.25 and A$2.00 respectively.

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Tue, 12 Sep 2017 10:09:00 +0100 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28571/in-the-news-mineral-sands-pricing-base-resources-resolute-mining-28571.html
In the news: Resolute Mining http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28597/in-the-news-resolute-mining-28597.html FROM THE BROKING DESK

A reminder that Jim Taylor released an initiation piece earlier this week: Resolute Mining (ASX:RSG) — Determined to Deliver Profitable Growth, 11 September 2017. Jim started coverage with a Buy rating and a target price of A$1.63. Resolute is an ASX-listed middle-tier gold company that could be looking to list in London at some stage. It is set for production of 300,000oz this year from operations in Africa and Australia.

Resolute is a mid-cost producer with ongoing programmes that are planned to raise capacity to 400,000oz pa in FY19. There’s also a potential development project that could increase this to 500,000oz in FY20. We believe that share price performance will be driven by the de-risking of these development programmes and the de-bottlenecking of the company’s Syama plant in Mali, where the definition of a new discovery, and plans for its integration into the plant, also offers upside.

We base our A$1.63 target price on the SotP NAV of the company. Our NPV8, at a gold price of US$1,350/oz, is US$1,036m (A$1.77/share), equivalent to a current P/NAV of 0.70x. At gold prices of US$1,250/oz and US$1,450/oz, our TPs would be A$1.25 and A$2.00 respectively.

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Fri, 15 Sep 2017 09:53:00 +0100 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/28597/in-the-news-resolute-mining-28597.html