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Archipelago Resources, Patagonia Gold, Sirius Minerals, Aureus Mining and others feature in Fox-Davies Newsflash



Daily Mining Monitor

Serabi Gold* (LON:SRB) has entered into an agreement to acquire Kenai Resources Ltd (TSXV:KAI).

In this news:

Deal subject to shareholder approval

Serabi will issue 0.85 new Serabi share for each Kenai share, anticipated to be 90,020,724 new Serabi Shares in total and 20.8% of enlarged share capital

Deal values Kenai at £6.19M, a 87% premium to the closing price on 3rd May and a 66% premium to the current shareprice

Kenai’s wholly owned subsidiary Gold Aura do Brasil Mineração Ltda (“GOAB”) owns the high-grade Sao Chico gold deposit, some 23km from Serabi’s Palito gold mine

Sao Chico hosts a NI 43-101 compliant combined Measured and Indicated Mineral Resource of 25.275koz of gold at 29.77g/t an Inferred Mineral Resource of 71.385koz at 26.03g/t

Serabi has provided Kenai with  US$7.75M secured loan to start an estimated 6,000m diamond drilling programme at Sao Chico and for general working capital

Serabi will assume the required payments to the original Brazilian vendors of Sao Chico as follows

US$600k at US$75k per quarter to September 2014 of which US$150k has already been paid 

US$3.5M on securing project finance of US$15M or more of which US$1.5M is payable within 30 days of securing finance and US$2M payable over 36 equal monthly instalments starting 11 months after project finance acquired

3% NSR up to US$10M and an additional US$3.75/oz on all gold produced

Sao Chico will provide additional feed to Serabi’s Palito gold mine which is expected to enter production at the end of 2013 producing 24koz pa at 9g/t and will have additional processing capacity.

FD Comment:

This is the first play in Serabi’s planned consolidation of the regions. Originally our understanding was that Serabi would bring Palito into production and then look to increase the minelife before using the projects cashflows to enable Serabi to be a regional consolidator. However, the Company has the opportunity to fast track its plans by acquiring Kenai. The transaction values Kenai’s current resource at US$149.97/oz including the initial original vendor payment and US$193/oz once the project finance is secured. However, Serabi believe there is significant scope to increase the resource (thereby lower the actual acquisition cost), but more importantly quickly turn it into cash flow by utilising the spare capacity at Palito. Ore from Sao Chico would be trucked 32km by road to Palito and as it doesn’t contain any copper so won’t require any floatation, reducing costs further.

Afferro Mining (LON:AFF) has released a maiden National Instrument 43-101 compliant Mineral Resource for the Ntem iron ore project in Cameroon.

In this news:

A total Indicated Mineral Resource of 39.1Mt at a grade of 34.0% iron

A total Inferred Mineral Resource of 76.4 Mt at a grade of 34.2% Fe

Positive pilot-scale metallurgical testwork indicates a saleable and high grade product.

FD Comment:

With Ntem only 80km from the proposed deep-water port at Kribi, Afferro believe this resource will be able to be developed a smaller scale operation capable of providing early cash flow. This should be clearer once the infrastructure scoping study is released. This will be based on using existing road haulage and is expected shortly.

African Mining & Exploration (LON:AME) has released its final results to the end of December, 2012.

In these results:

Finished period with £1.76M at 31 December 2012 and since implemented measures to save £350k during Cy’13

The Company's cash balance at 2 May 2013 was £1.18M

Acquired Caracal Gold Mali SARL in July 2012 with positive drilling results published in December

Expects to provide maiden resource later in 2013

Significant board changes initiated by major shareholders Praetorian Resources Limited and Fiske plc in February

Non-Executive Directors, Stephen Oke, Roger Williams and Douglas Chikohora resigned and Mike Johnson (Chariman), Charles Cannon-Brookes (nominee for Praetorian) and Clive Harrison (nominee for Fiske) were appointed to the Board alongside Mark Jones, the existing Chief Executive Officer.

Archipelago Resource (LON:AR.) has announced that Marcus Engelbrecht will resign as Managing Director and Chief Executive Officer of the Company to pursue other opportunities.

In this news:

Managing Director and Chief Executive Officer resigns effective 30 May 2013.

Colin Sutherland, currently CFO will become CEO

Matthew Salthouse, currently Vice President - Investor Relations and Corporate Affairs, will become President - Corporate Strategy.

Aureus Mining (LON:AUE) has ordered a new Ball Mill for its New Liberty gold project in Liberia.

In this news:

The 145t/hr Ball Mill is expected to be delivered in May 2014

Commissioning and pre-commissioning checks on the mill are scheduled to be carried out in October 2014

First gold production is expected in December 2014.

Edenville Energy (LON:EDL) has released its Final Results.

In this news:

Upgraded resource of 173 million total tonnes in-situ at Mkomolo, Namwele and Muze combined, of which 57.5Mt Measured and Indicated at 17.42MJ/kg (float density = 2.0, yield = 34.4%)

Company believes quality is suitable with appropriate processing, for coal fired power generation

Scoping Study has now started at the Namwele coal deposit

Second option exercised on the Rukwa Coalfield project in south western Tanzania. Interest in two prospecting licences and 66 primary mining licences increased to 90% with the remaining 10% held by the local partner on the project

Sally Schofield appointed Chairman and Rufus Short appointed Non-Executive Director

Finished period with 784,072 cash and since raised £106,895 for working capital through Equity Financing Facility with Darwin Strategic Limited.

Firestone Diamonds (LON:FDI) has released the results of diamond tenders held in February and April at the independently operated Antwerp World Diamond Council's ("AWDC") facility.

In this news:

Tender attended by 80 diamond buyers in February and 109 diamonds buyers in April 2013

Total sales of 55,950 carats for ~US$5.1M

35,718 carats sold at February tender at average of US$84.49/ct and 20,232 carats sold at April tender at an average of US$101.67/ct (+20% on February)

All parcels sold and no high value stones tendered in April 2013.

FD Comment:

These are good sales figures from Firestone, with all parcels sold and stronger demand and prices. With a record attendance in April with 109 buyers, the rough diamond market looks robust. The Liqhobong DFS was carried out assuming US$100/ct, which as no high value stones were tendered, looks conservative in the current market. 

Patagonia Gold (LON:PGD) has issued a progress update on the Lomada de Leiva, Cap-Oeste/COSE and La Manchuria Projects in the Santa Cruz province, Argentina.

In this news:

Lomada de Leiva:

Preparation works for the 200,000 tonne expansion of the existing trial heap leach pad were completed in late March 2013 with loading of mineralised material, irrigation and production of gold in progress

Construction of the first stage of the main heap leach pad remains on schedule for completion in late Q2 2013. The PVC membrane lining of the drainage dam and buttress sections is now in place with pipework installation underway

Patagonia Gold's mining fleet has been delivered to site and commissioned. Operator training and demobilisation of hire gear is underway, with all contractor equipment scheduled to be off site by the end of May 2013.


Drilling in the structural corridor between the Cap-Oeste and COSE deposits continues to intersect wide zones of gold-silver mineralisation with drill-hole CSE-091 intersecting 66.6m at 2.04 grammes per tonne (g/t) gold and 36.18 g/t silver

COSE resource update to include the newly identified mineralisation scheduled to commence in Q3 2013 with completion in Q4 2013

Pre-Feasibility study on the Cap-Oeste deposit is set to commence in May 2013 led by Newfields Inc. of Reno, Nevada USA.

La Manchuria:

Drilling has recommenced at La Manchuria with 4,000 metres of extension and exploration drilling scheduled for completion in Q2 2013

The Manchuria deposit is currently being re-evaluated as a potential bulk tonnage heap leach target that will incorporate mineralisation not previously included in the model.

FD Comment:

Targeted mine production of 65kt per month is scheduled to be reached by June with the main heap leach project well advanced and expected to achieve full 'nameplate' production of 21koz pa towards the end of the current quarter. This will provide funds to the Company for exploration to build on the current resource base.

Richland Resources (LON:RLD) has announced a Letter of Intent between Tanzanite One & STAMICO, which is the mining arm of the Tanzanian Government.

In this news

Letter of Intent signed between TML and STAMICO the mining arm of the Tanzanian Government  with main points being:

A new mining licence to be issued on a 50:50 basis between TML and STAMICO in the next few days

Full legal documentation to be completed between TML and STAMICO over the coming weeks. The documentation will cover the price to be paid by STAMICO to TML for their 50% interest in the licence

STAMICO will facilitate and liaise with the Tanzanian Government authorities to ensure that necessary regulatory and law enforcement actions are taken to curb tanzanite smuggling and illegal mining operations

Assets, including all buildings, plant, equipment and infrastructure to remain the sole ownership of TML

Graphite project to be subject to separate provisions.

FD Comment:

The price remains to be agreed and STANICO can pay for their equity in full or more likely utilise 40% of the annual profits due to them from the mining of tanzanite. In return Tanzanite One will look to the Government (through STAMICO) to stop the illegal mining and smuggling which has been a blight on the project.

Sirius Minerals (LON:SXX) has released an update resource for the York Potash project.

In this news:

Increase of Total Mineral Resource to 2.66Bt at an average grade of 85.7% polyhalite within an area representing 7% of the York Potash Area of Interest

Upgrade of 820Mt of polyhalite at an average grade of 87.3% to Indicated Category

Upgrade to Indicated Resource provides basis for a Reserve estimate expected later in the year.

FD Comment:

The upgrade reflects the recent results from SM11 and its deflections. With the Project Study update indicating the project is economic and the reserves estimate expected later this year, the project is progressing well. The key risk at this stage is now the permitting process and how this will impact the development timetable.


Quick facts: Archer Daniels Midland

Price: 41.14 USD

Market: NYSE
Market Cap: $22.85 billion

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