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Proactive Weekly Mining Highlights: Sirius Minerals, Barrick, Randgold, Acacia, Orsu Metals, Connemara Mining

Last updated: 11:00 30 Sep 2018 BST, First published: 09:00 29 Sep 2018 BST

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Sirius Minerals PLC (LON:SXX) results revealed the UK mine developer is burning through over £800,000 a day as it develops the giant Woodsmith potash mine in North Yorkshire with the cash spent on the project in the six months to June 30 totalling £148mln.

It left the company with £323mln in cash and equivalents at the period-end. Recently Sirius tied up royalty funding of a further £190mln (US$250mln), which provides it with breathing space to find the second, debt-funded round of investment.

Sirius is now seeking £2.6-£2.7bn (US$3.4-US$3.6bn) from lenders, which has been revised up £300-£460mln.

“A number of financing alternatives to fund the increased capital requirement are under active consideration,” the company said.

The big sector news, however, came from Canada’s Barrick Gold Corp (NYSE:ABX) which confirmed it will buy Randgold Resources Ltd (LON:RRS) in an all-share deal to create the world's largest gold miner valued at US$18.3bn.

Under the terms of the deal, Randgold shareholders will receive 6.1280 new Barrick Gold shares for each of their shares. The merged company will be called New Barrick Group with Barrick Gold holding a 66.5% stake and Randgold owning the rest of the shares.

Randgold shares on the London Stock Exchange will be cancelled and New Barrick Group will list in Toronto and New York, operating under the branding of the Barrick Group.

Subsequently, Acacia Mining PLC (LON:ACA) said it would be seeking further clarity from majority shareholder Barrick Gold Corp (NYSE:ABX) regarding the Canada miner’s plan to merge with Randgold Resources PLC (LON:RR).

Barrick has a 63.9% equity interest in Tanzania-focused Acacia, following a restructuring eight years ago which saw the Canadian spin off its African assets as African Barrick Gold, now called Acacia, in a bid to de-risk the portfolio.

China National Gold’s US$420mln investment in the development of the Klyuchevskoye gold deposit in Russia has an interesting read-across for Orsu Metals Corp (CVE:OSU), which has the neighbouring Sergeevskoe gold project.

Orsu is currently drilling at Sergeevskoe and all the signs are that it could be sitting on a resource amounting to up to 2.5mln ounces.

If so, the project could become of real interest to China National Gold, and to its Indian partner SUN, which is putting up an additional US$65mln for the development of Klyuchevskoye.

Current thinking is that the Chinese will look to establish a 300,000 ounce per year operation at Klyuchevskoye, and that although there is ore to support that sort of operation at the moment, at some point China National Gold and SUN are likely to want more.

Connemara Mining Company PLC (LON:CON) ended the six months to June 2018 with €366,000 in the bank, after turning in a loss of €160,000. Considering the amount of activity that the company undertook during the period, the relatively low losses speak of a company that is husbanding its resources well.

Among the highlights were the establishment of a high-grade maiden resource estimate at the Stonepark zinc joint venture, as well as active exploration and significant progress across four projects.

The cash in the bank will now see Connemara through its budgeted activities and joint venture commitments until 2019. Chief executive Patrick Cullen said that the company expects “a steady flow of drilling and other assay results over the coming months”.

Work continues across several projects. “We are working on an updated exploration model at the Mine River gold project,” said Cullen.

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