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Baobab Resources, Chaarat Gold, EMED Mining, Goldplat and others feature in Fox-Davies Newsflash.

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Mining News 

Baobab Resources Plc (LON:BAO) announced the results of the resource estimation at the Tenge prospect within the Tete iron / vanadium / titanium project. The Tenge Prospect now contains 159Mt of Inferred Resource at a head grade of 38.4% Fe and an average concentrate grade of 60.4% Fe, 0.8% V2O5 and 12.5% TiO2 at a mass recovery of 47.6%. The Tete global resource base is now 482Mt over 300Mt of which is defined at Tenge/Ruoni.

Chaarat Gold Holdings Limited (LON:CGH) announced a resource update at its Chaarat Gold Project. The updated estimate gold resource is 5.59 million ounces, an increase of 27% from the 4.406 million ounces announced on 7 February 2011. The Tulkubash section of the resource increased by 56% to 501,000 ounces from 321,000 ounces and the sulphide (refractory) section of the resource increased by 25% to 5.09 million ounces.

EMED Mining (LON:EMED) announces that it has mandated Goldman Sachs International to provide and/or arrange up to US$175 million of finance to the Company. This financing is intended to be in the form of a copper pre-sale agreement 

Goldplat plc (LON:GDP) announced its interim results for the six months ended 31 December 2011. The company reported a 74% increase in profit before tax to GBP2.37 million (2010: GBP1.36 million) and a 40% increase in operating profit to GBP2 million (2010: GBP1.44 million). The net cash position of the company is GBP4.6 million as at 31 December 2011. Gold recovery operations in South Africa and Ghana production were up 10.74% to 15,404 ounces of gold (2011: 13,910 ounces).

Kalahari Minerals plc (LON:KAH) announced that following the recommended cash offer for the Company by Taurus Mineral Limited and the China-Africa Development Fund, pursuant to AIM Rule 41 it has applied to the London Stock Exchange for the cancellation of admission to trading of its ordinary shares.

Mariana Resources Ltd (LON:MARL) provided an update on progress at its Los Amigos Joint Venture in Southern Argentina and precious metals and Iron Oxide Copper Gold ('IOCG') exploration projects in Northern Chile. Scout diamond drilling at Los Amigos Joint Venture intersected shallow gold mineralisation at the Bajo target with 10.2m @ 1.2 g/t Au & 7 g/t Ag from 9.2m. Mariana has also elected to dilute to 23.5% of Tierra Noble SA (Cliffs 76.5%) with IOCG exploration on-going.

Sumatra Copper & Gold plc (ASX:SUM) announce that it has accepted a committed offer from Macquarie Bank Limited for a convertible debt finance facility for $5 million to progress its Tembang project in Indonesia and for working capital purposes. Sumatra is currently completing the Definitive Feasibility Study (‘DFS’) for Stage 1 of Tembang, which remains on-track to commence production in 2013. 

Touchstone Gold Limited (LON:TGL) announced that it has entered into an option agreement with a private company to acquire a 90% interest in four mining concessions, over a total area of 57 km2, that together comprise the Santa Rosa Project located in the south of the Bolivar Department, Colombia. The area hosts multiple gold bearing vein type systems in a gold province that is home to a number of gold mining and exploration companies. The material terms of the Agreement include an initial payment of US$59,000 to the current concession holders, a non-related private company, upon signing the option agreement; an additional payment of US$50,000 upon the mining concessions being registered to Touchstone Colombia on the National Mining Registry of Colombia; four annual payments of US$327,750 that will commence one year after the mining concessions have been registered; and US$1,000,000 in exploration expenditures on the property before earning the 90% interest. 

Wolf Minerals Limited (LON:WLFE) announced that it has received credit approval from UniCredit Bank AG, ING Bank N.V. and Caterpillar Finance SARL for £55 million in senior debt finance facilities to fund the development of its Hemerdon Tungsten and Tin project in Devon, in Southwest England. The funding will support the planned construction of the project, based on the Definitive Feasibility Study completed in May 2011. The study estimated a post-tax, ungeared net present value of £74 million.

 

Oil and Gas News

TomCo Energy (LON:TOM) – Provides an update on the environmental and operational information for development of Holliday Block and the various permit applications: Key highlights include – received Hatch Engineering Report which details the engineering requirements for the development of the Holliday Block, SRK Consulting engaged in February this year to  report on TomCo's resource - results are expected in H2 of this year, completion of early stage geological, infrastructure and water-use studies. The company also announced that Epic Engineering has completed its “number of studies to prepare the way for production at the Holliday Block”. The company has competed number of significant number of studies necessary for the development and production of the Holliday Block. Expect some positive movements today.

Heritage Oil (LON:HOIL) Heritage Oil continues drilling Miran West-3 in Iraqi Kurdistan. The Company has completed wireline log evaluation and well testing of the Lower Cretaceous reservoir in the Miran West-3 well. No measureable flow of hydrocarbons to surface was observed from testing in the Lower Cretaceous formation, and this was due to the lack of extensive connected fracture network at this location. The results from detailed wireline log interpretation, observations whilst drilling and gas recovered at surface confirm that the Lower Cretaceous reservoir formation is gas bearing. Detailed work is being undertaken on the recently processed 3D seismic and offset well data to establish the areas of effective reservoir for this formation. Below the Lower Cretaceous reservoir the well encountered a high pressure interval as well as a loss of circulat ion which resulted in the need to sidetrack the well. This interval has now been successfully drilled and being logged. The well, currently at depth 2,910m is a follow up well to the discovery Miran West-2 well and drilling will continue to the Jurassic target below 3,000m. A number of tests are planned and drilling is expected to be completed within the next couple of months. A second rig to drill the Miran East-1 well is on location and expected to commence drilling shortly. Though the Miran West-3 drilling is taking longer than planned due to geological uncertanties, the tests and interpretation thus far would help the Company further de-risk the Carbonate structure by providing further data on the area thus giving the Company a better understanding of the reserves distribution in the field and firm up numbers. 

Oilex (LON:OEX) – Provides an update on the Cambay-76H horizontal well, in the Cambay Field, India: The company reported that operations to retrieve the stuck milling assembly and coiled tubing have been successfully concluded on the 76H horizontal well. The well will be prepared for production tubing and production testing after the completion of milling of the seven remaining fracture stimulation stages. Cambay field is spread across 161km2 and contains untapped tight oil and gas reservoirs across the block. Oilex is the operator of the block with 50% interest. Consortium has identified six potential Eocene reservoirs in the block, named X, Y, Z, 180-200, 200-300 and 300-400. The Netherland Sewell and Associates (“NSA”) estimates gross 2C resources of 83mm bbl of condensate and 495bcf of gas respectively and unrisked prospective resources of 140mm bbl conden sate and 935bcf gas. We view today’s update as a step further towards the monetization of the block resources.  

Premier Oil (LON:PMO) – Announces successful testing of Lama formation within the Anoa field on Natuna Sea Block A: The WL-5 development well on the Premier operated Natuna Sea Block A (28.6% WI)  was drilled to a total depth of 11,012 feet and it encountered 300 feet of fractured Lama Sandstones. Previously, the Lama formation had been tested over the interval 10,658 feet MD to 10,770 feet MD at which natural gas flowed at 17 mmscfd through a 48/64 inch choke. The latest results will now be integrated with seismic data to determine the recoverable resources of the deeper reservoir. On the back of this news, the market will be looking for the updated resources numbers over the next few months. Will be following updates closely.

JKX Oil & Gas (LON:JKX) Exploration well success in Ukraine. The Company successfully completed and tested exploration well Z-04 in the Zaplavskoye exploration licence in Poltava, Ukraine. Well Z-04 was drilled to a total depth of 2,937m and penetrated over 20m of Visean sandstones. Drilling and completion of the well took 31 days.  On completion of a 36-hour multi-choke test, well Z-04 flowed at a rate of 20.8 MMcfd of gas and 1,040 bpd of condensate with a flowing wellhead pressure of 2,684 psi. The well has been tied back to the main Novo-Nikolaevskoye complex processing facility with a 9km flow line and placed on production. Well Z-04 is located to the northwest of the Novo-Nikolaevskoye group of fields within the recently acquired 41.9 sqkm extension of the existing Zaplavskoye exploration licence. The Zaplavskoye exploration licence now comprises a total area of 197.5 sqkm. This is the Company’ s first success in Zaplavskoye and should have a positive impact on the share price. We will be watching this one over the next few sessions to determine the potential of this well. 

 

Oilfield Services News  

Petrofac (LON:PFC): Petrofac’s 2011 results were as expected with revenues up 33% and net profit up 25% with EPS at $1.571. At 31/12/2011 the net cash balance stood at $1.5Bn and the group’s backlog at $10.8Bn

The outlook statement read positively for both business areas with management stating the following: “Overall, our existing portfolio of projects, the strong pipeline of new bidding opportunities … , our strong financial position, our differentiated and competitive offering and our proven track record in project execution give us increasing confidence in achieving our medium-term target of more than doubling our recurring 2010 Group earnings by 2015. 2012 should see us make further progress towards that goal, with net profit expected to grow by at least 15%.”

We remain positive on the stock given the strong competitive position, and healthy order book despite the geopolitical uncertainties in some if its markets. 

Rig Count News. The Baker Hughes Rig Count is the key barometer for the oilfield services industry and in particular the drilling contractors. Last week’s data (week ending (02/03/12) remained positive for the industry as a whole. The U.S. Rig Count stood at 1989, up 8 on the previous week and up 282 year over year with the number of land rigs at 1929. The number of oil rigs stood at 1,293, up 28 on the previous week on the back of rising oil prices. Gas rigs stood at 691, down 19 as US gas prices remain low with the directional/horizontal rig count at 1,385. The Canadian rig count softened, down 20 on the previous week.

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