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Gulf Keystone Petroleum, Nighthawk Energy, Stratex International, Providence Resources plus others feature in today's Fox-Davies Capital newsflash



Mining News    

Two major developments beneficial to mining are on the horizon for Honduras including a new mining law and a mining cooperation agreement with Chile. The Committees of the National Congress of Honduras have completed their report on a proposed new Mining Law and have submitted a draft of the legislation to Congress for their approval. Recently Chile and Honduras signed a mining cooperative agreement in which Chile will provide technical assistance for the development of the Honduran mining sector. The agreement allows the two nations to jointly develop mining projects, share tools and information pertaining to geology, steel manufacturing, mining process development, and improve environmental regulation, mining development, and control and socialization of artisanal mining. Aldo Santos, chief of Directorate of Mining Development (DEFOMIN), said he is confident that the new law will be enacted ea rly this year.

Rumours abound of a 110p a share cash bid for Kenmare Resources (KMR LN) from Rio Tinto.

Aquarius Platinum Limited (LON:AQP) announced its financial results for the six months ended 31 December 2011. Group attributable production decreased by 14% to 215,453 PGM ounces (H1 2011: 250,972), revenue decreased 25% to $252 million (H1 2011: $336  million) and the mine operating net cash flow decreased by 53% to $25 million (H1 2011: $54 million). Mine EBITDA decreased by 69% to $29 million (H1 2011: $93 million). Weighted average on-mine unit cash costs in South Africa rose by 38% in Rand terms, largely due to lower production

Aura Energy Limited (ASX:AEE) announced that it has raised AU$3,419M through a non-renounceable entitlement issue where shareholders were offered 1 Share for every 6 Share held, offering 22,798,345 Ordinary Shares at 15 cents together with one free attaching option exercisable at 20 cents.

Mindoro Resources Ltd (CVE:MIO) announced a drill-defined Exploration Target on its Pan de Azucar Project, Philippines, of 8 million to 12.7 million dry metric tonnes in a grade range of 35% to 40% sulphur, 0.4% to 0.6% copper and 0.5 g/t to 0.7 g/t gold. The sulphide also contains significant silver and zinc values. Preliminary metallurgical testing at Minercon in the Philippines (a non accredited laboratory) indicates potential for pyrite thermal-oxidation sulphuric acid production of up to 1.3 tonnes of acid per tonne of ore feed; subsequent acid-leach/SX-EW copper recoveries of 93% to 97% and gold leach recovery after copper removal of up to 95%. 

Stratex International (LON:STI) reported results from the final phase of the 2011 drilling programme at its Öksüt high-sulphidation gold project in Central Turkey. Best results include: 268 m at 2.34 g/t Au including 185.5 m at 3.19 g/t Au and 59.2 m at 5.39 g/t Au; 173.8 m at 0.70 g/t Au; and 229.1 metres grading 1.02 g/t Au. JV partner Centerra now has a 50% interest in the Project having spent US$3 million and has elected to earn an additional 20% interest in the project by funding an additional $3 million of exploration expenditures. An updated gold resource is to be announced shortly. 

Oil and Gas News

Tower Resources PLC (LON:TRP) Placing helps fiscal resources but focus remains at the drill bit. Today announced that Northland Capital Partners Limited has raised £5.41 million before expenses through a conditional placing of 180,333,334 new ordinary shares of 0.1p each in the Company at a price of 3p per Placing Share. Approximately £5 million is being raised from new institutional investors, with the balance being subscribed for by Directors of the Company. In addition, the Company has said that it is to issue 15,789,472 new ordinary shares to YA Global Master SPV Ltd, pursuant to its Standby Equity Distribution Agreement, details of which were announced on 6 January 2012. In view of the Placing, the Company is presently reviewing its standby equity distribution agreement arrangements, and proposes to make a further announcement in due course. It’s worth highlighting that this Placing is conditional on Admission. The Placing is also conditional upon a placing agreement made between the Company and Northland becoming unconditional and not being terminated prior to Admission in accordance with its terms. It is intended that the proceeds of the Placing and the issue of the SEDA Shares will be applied to redeeming the principal and accrued interest of the loan provided by YA Global Master SPV Ltd to commence the Mvule-1 well, to complete the drilling of the well, and to general working capital requirements over the balance of 2012. As previously announced, the Mvule-1 well, which is the third and final commitment well on Tower's EA5 license in Uganda in which Tower holds a 100% working interest, is testing an estimated recoverable resource potential of 80 million barrels. This Mvule-1 well is set to spud today or tomorrow. 

Gulf Keystone Petroleum Ltd (LON:GKP) Porfolio actions - dressing up for a sale? GKP has appointed Strand Hanson Limited and Perella Weinberg Partners UK LLP as Joint Corporate Advisers with immediate effect. Working together, the companies will be jointly responsible for coordination of and advice on the sale of the Company's 20 per cent working interest in the Akri-Bijeel block in the Kurdistan Region of Iraq, which is part of the Company's Forward Strategy announced on 14 September 2011. Both firms are specialists in finding acquisition targets, Takeovers, Floatation’s, and Valuation analysis. It’s also worth noting that PWP recently established a new office in Beijing, its seventh globally, following the opening of the Firms Abu Dhabi office. The opening clearly further enhances the Firm’s global presence, and overa ll augment the Firm’s strategic advisory business and asset management opportunities across Asia. From a corporate perspective, could this proposed sale be the start of something bigger?

Nighthawk (LON:HAWK)  Finally problems identified – New start, or has the damage been done? Nighthawk has announced that it will commence a comprehensive work-over program focused on 15 wells on the Jolly Ranch Project; two work-over rigs are expected on location in March and will extend through most of 2Q12 and cost ~$750m. The work will focus on replacement of pumps, casing and other faulty equipment, re-perforation of potential behind pipe reserves and potentially productive zones, acidisation and other stimulation techniques and P&A-ing of old unproductive wells.  New logging will be undertaken at a number of wells to gather additional data on the Cherokee shale formation and other potentially productive zones. Subsequent to the work-over program, Nighthawk plans and has budgeted to drill 5 new wells to add production and further establish the range and exte nt of the Cherokee shale on the Company's acreage. Nighthawk expects at least one well to test the possibility of Niobrara shales in the northerly acreage and also to drill a horizontal step out from an existing vertical well. Subject to the availability of drilling rigs, the first of the new wells is currently anticipated to spud early in the second half of 2012. The current gross cost estimate for the drilling program is $6.8mm. While it is good news to hear that the issues have been identified and the Company has the resources to fund their reparation, now it is all about delivery.

Providence Resources (LON:PVR) Appraisal well a technical success – but is it commercial? Preliminary Results from the drilling of the 48/24-10z well indicate that the well’s secondary objective had good hydrocarbon shows and a number of potential secondary units, some in communication with the nearby 48/24-3 well. Further study and a drill stem test of the primary basal sands target will be conducted to in order to ascertain flow rates and productivity of the reservoirs. While the news does not provide an uplift to the company’s valuation (YET), it takes the asset one step closer to the point at which commerciality can be declared, or not. Irrespective it is good news for the basin and its operators.    

Oilfield Services News  

TGS Nopec (PINK:TGSNF) 2011 results. TGS reported net revenues of $180.9 million in Q4 2011, compared to $177.6 million in Q4 2010, a 2% increase. TGS' backlog amounted to $210.9 million at the end of Q4, representing the highest backlog figure in the history of the group. 

Comments on the outlook were positive with management citing the healthy 2012 outlook for industry E&P and seismic capital spending.  Specifically the group commented that its pipeline of investment opportunities is strong for 2012 with the all-time high backlog… ‘We enter 2012 in strong financial condition with an aggressive investment plan to capitalize on a healthy market outlook.’

Technip (EPA:TEC) Technip announced yesterday that  was awarded a 5-year frame agreement contract from Petrobras  for the supply of around 1,400km of flexible pipes. The contract is effective immediately with supply starting in 2013 and orders are guaranteed for at least 50% of the total value, which is currently estimated to be worth around $2.1Bn. 

The scope of the contract includes the manufacture of over 150 types and diameters of risers, flowlines and associated equipment and accessories. Deliveries under this frame agreement will be spread over the contract period and order intake recognition will progress as specific work orders are confirmed. Flexible pipes for the contract will be produced both at Technip's existing manufacturing site in Vitoria, and also at its new manufacturing facility under construction in Açu, Brazil. 



Quick facts: Archer Daniels Midland

Price: 44.45 USD

Market: NYSE
Market Cap: $24.7 billion


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