Daily Mining Monitor
African Copper PLC (LON:ACU) announced its production figures for the third quarter of fiscal 2013 from its 100% owned operating mines in Botswana. During the third quarter the mine processed 215,383t, an increase of 28% over the prior year’s equivalent quarter. Copper recovery was 69.38% and 2,577t of copper concentrate were produced. As previously announced, the introduction of an increasing proportion of sulphide ore has brought flotation stability and improved recovery, evidenced by the December 2012 flotation recovery of 95.5%, and has also resulted in the reduction of costs due to curtailed usage of high cost flotation reagents. Improved plant efficiency continued through the quarter, principally from the Larox filter plant which increased filtration capacity and reduced moisture content. The main mining contract at Thakadu mine, which is due to expire on 31 March 2013, is currently under review and being renegotiated. Pursuant to this, certain mining equipment has been demobilised. In the interim, mining operations continue with both the existing main contractor and a second Thakadu mining contractor who has been on-site since mining commenced at Thakadu. As a short term measure, Management is also looking at equipment hire or short term contracts to augment mining volumes. As a result of the negotiations around the mining contract, the Company is expecting that less volume will be mined from Thakadu until additional equipment is delivered and the mining contract review finalised. The reduction in mining volumes is likely to result in lower mining costs. Any impact on ore delivery during a possible transition phase will be mitigated by the use of oxide ore stockpiles situated at Thakadu and Mowana Mines but the use of reagents to treat the oxide ore will increase treatment costs, reducing the benefit of the lower mining costs.
Angel Mining plc (LON:ANGM) announced that it has requested temporary suspension from trading on AIM from 24/01/2013 07:30 am, pending clarification of the Company's financial position.
Bushveld Minerals (LON:BMN) has found phosphate intersections in a zone above the P-Q Zone iron ore layer adding an additional commodity to the iron, titanium and vanadium products already being evaluated at the iron-ore project.
In this news:
• Drilling assay results reveal a zone of phosphate mineralisation between 8m and 61m thick in the hanging wall to the P-Q Zone.
• Grades in this zone range between 2% and 5% P2O5.
• Phosphate zone is geologically and identifiably distinct from the main P-Q iron ore layer
• Potential for extracting saleable phosphate would enhance economics of the project
• The zone would have previously stripped as waste material to access the P-Q magnetite layers.
• Maiden phosphate JORC resource anticipated in the second quarter of 2013
FD Comment: This is another positive for Bushveld. Although lower grade than commercial phosphate operations, the Phosphate layer would have had to be removed as waste anyway and so after some beneficiation it has the potential to further improve the potential economics of the prospect.
Diamond Corp PLC (LON:DCP) announced that development activities have commenced for the 47 level block cave at the Lace mine, following receipt of the first US$3M (£1.9M) tranche of loan funds from Laurelton Diamonds, Inc., a wholly-owned subsidiary of Tiffany & Co. The second US$3M tranche is scheduled to be paid on 10 April 2013. The combination of funding through the Tiffany loan, £4.2M of convertible bonds (issued in December 2012) and R220M (£15.6M) from the Industrial Development Corporation of South Africa (as announced on 21 September 2012) completes the R320M (£23M) Lace project financing package.
The Main Pipe at the Lace mine contains 33.1Mt of kimberlite indicated and inferred to a depth 855m containing approximately 13.4 carats in both resource categories at an average grade of 40.1 carats per hundred tonnes. The resource has an in-ground value in excess of $2B at $160 per carat. The deposit will be mined by block cave mining, with three caves planned over the 25 year life of mine on the 47, 67 and 85 levels (at depths of 470m, 670m and 850m respectively). The kimberlite is open at depth, and also contains a significant bulge between 250m and 360m depth with the potential to add additional tonnage and diamonds not currently included in the resource statement.
Drake Resources Ltd (ASX:DRK) announced it has a comprehensive review of available reports on its 12 exploration licences over the Espedalen nickel district in central Norway and defined a substantial work programme including a number of drill ready targets.
This project along with the significant Granmuren discovery in Sweden has greatly enhanced Drake’s nickel portfolio in Scandinavia. The Espedalen Project can be expected to see a similar growth profile through the next drilling programme. The Espedalen permits currently have substantial deposits of nickel-copper reported to the ASX on 31 August 2012 and also have the potential for substantial increases in those deposits.
Drake’s main target at Espedalen is high grade, Voisey’s Bay-type nickel-copper (Canada). The Espedalen geology and mineralisation is of similar type and age as found at Voisey’s Bay and forms part of this exceptional nickel-copper province stretching from Canada through to Scandinavia. The deposits at Espedalen may represent the second largest deposit (behind Voisey’s Bay) of this type in the province. In addition, the extensive, lower grade nickel-copper mineralisation already identified may constitute a target in its own right. The review has established that there are 10 additional prospects in which there are drill intercepts of greater than five metres per cent nickel using a 0.1 per cent nickel cut off. Four prospects at Stormyra, Dalen, Megrundtjern and Trona have significant on-going exploration potential and programmes and budgets are proposed.
Fox Marble (LON:FOX) has announced that the licensing authority in Kosovo, (“ICMM”) has restored the four Fox Marble licences it annulled as announced on 3rd December.
In this news:
• All four licenses restored
• The Company must maintain its responsibilities to the conditions of the licences within 60 days
• Fox Marble is confident it can achieve this for three of the four licences
• Requested an extension to the 12 month deadline for mining to commence at the fourth license in Suhogerll
• Work will resume at Peja as soon as the snow clears and weather conditions allow.
FD Comment: This is great news for the Company, who all along said that the annulment notices were issued unlawfully and erroneously. Although the Company will need to get an extension to the Suhogerll license, getting the license for Peja returned was key as it contains the higher value honey yellow onyx marble. In our valuation of the Company we gave no value to Suhogerll but valued the currently operating Cervenilla quarry at €19.2M NPV10 and Peja at €128M NPV10.
International Ferro Metals (LON:IFL) has released its Dec’Q production report.
In this news:
• Furnace electrode paste replacement successfully completed over the quarter, limiting impact on production to a 10% fall (52,143 tonnes) and a 5% drop in sales (51,092 tonnes) compared to the previous quarter, better than previous guidance
• Furnace 2 reached near record production in December
• Sky Chrome mining operations produced 149,000 tonnes run-of-mine ore for the quarter, down from 190,000 tonnes in previous quarter due to holiday periods
• Co-generation plant produced 8.9GWh of electricity for the quarter, 4.3% of total requirement
• 27% of targeted production cost savings achieved for the quarter
• Entrance into new, high-growth market by securing first sales in India, expanding spread of customer base
• Net borrowings increased from ZAR390 m at 30 September 2012 to ZAR436 m at 31 December 2012, comfortably within the ZAR500 m working capital facility and better than previous guidance of ZAR460 m
• Post period – signed an agreement today with Eskom to participate in the energy buy-back programme with one furnace to be shut down for the period 1 February to 31 March 2013
• European benchmark price up 2.5¢ to US112.5¢/lb in January, with spot price improvement exceeding that of the benchmark price.
FD Comment: We have struggled to reconcile the long term viability of such an energy intensive business in South Africa faced with strong Chinese competition and a government unwilling to step in a ban to export of chrome ore. Although the Company has made substantial cost savings and prices are showing signs of life, with debt increasing we remain unconvinced about the long term future of the Company.
Papillon Resources Ltd (ASX:PIR) announced an updated Mineral Resource Estimate for the Company’s flagship Fekola Project, located in south western Mali, adjacent to the border with Senegal. The resource has grown by 34% to 3.41M oz, with 83% being in the Measured and Indicated categories. The grade of the measured and indicated resource is 2.46g/t gold and the mineralisation is open at depth and along strike and potential exists to further grow the resource; and this resource will be incorporated into the pre-feasibility study which is anticipated to be completed in the June quarter of 2013.
SolGold PLC (LON:SOLG) announced that channel sampling at the Alpala Prospect within the Cascabel Project in Ecuador has returned highly encouraging gold and copper assays and confirmed the presence of a significant gold-copper porphyry system. The channel returned 46m grading 0.81g/t gold and 0.59% copper.
Stratex International (LON:STI) has fully completed the sale of its 30% stake in the Öksüt gold project to Centerra Exploration B.V. and has now received US$20m in cash.
• Transaction was conditional on the conversion of six exploration licences to two operation licences and other customary conditions
• The two operation licences were received on January 16, 2013
• Centerra is now the sole owner of the Öksüt Gold Project and has assumed operatorship and day to day management of the project
• As part of the offer, Stratex is entitled to receive up to a further US$20m payable through a 1% Net Smelter Return upon the commencement of production.
FD Comment: This is great news for the Company began to turn the corner when it started looking how to monetise the Company’s assets. Fully cashed up the Company is now in a good position to develop its own assets, especially in Ethiopia rather than be forced to JV its projects too early and on cheap valuations