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Tagged with: 2010

Jan 2010 - Gryphon Minerals

Gryphon Minerals Limited (GRY) –Moving its Banfora Gold Project in Burkina Faso towards a Scoping Study and BFS during 2010.

  • Gryphon Minerals’ (GRY’s) current main focus is on its Banfora Gold project in Burkina Faso. GRY has reviewed prospects in and adjacent to Burkina Faso with a view to keeping GRY as a West African gold company, while possibly undertaking an IPO of its WA gold and nickel projects
  • Burkina Faso is a stable West African country located north and adjacent to the Ivory Coast and Ghana. Its current government has enhanced its infrastructure, inflation is negligible, roads are good and radiate from the capital of Ougadougou, while traffic is significantly less congested than Dakar in Senegal. There is a main railway link to Abdijan in the Ivory Coast, and the main crops are cotton and rice.
  • GRY’s ~35km x 35km Banfora Gold Project is located in SW Burkina Faso on the Tongon/Senoufo greenstone belt (one of the many major greenstone belts that pass N/S through the country), above the river border with the Ivory Coast.
  • It is an area that contains a number of significant gold mines, such as Randgold’s 4 to 5 moz Tongon mine (in the Ivory Coast) on strike to the south, Resolute’s Syama (5moz mined, 6.5moz resource) to the NW (on strike from Perseus and Etruscan). Further NW is Anglogold/Randgold’s Morila (>5moz).
  • GRY have already established a >1moz resource to a depth of ~100m, mostly at Nogbele and are currently infilling/upgrading the resource targeting towards 2moz or higher with a view to completing a scoping study that leads into a BFS during 2010. Additional resource progress is being made at nearby Fourkoura, although there are historic artisanal gold workings in a number of areas of the property.
  • While there are a number of historic and new artisanal workings (following the drill rigs / exploration progress), the artisanal workers have moved on and the old workings bulldozed (partly due to reducing the spread of malaria). However, it could be seen that the artisans were mostly focusing solely on the near surface gold-in-quartz mineralisation, under the laterite cover down ~7m to 10m to the water table, and usually missing the halo alteration.

Feb 2010 - Catalpa Resources

Catalpa Resources Limited (CAH) –Cracow could achieve >100,000ozpa for ~10yrs as a Significant Asset for Catalpa

  • Catalpa’s merger with Lion has resulted in a far simpler share structure and a 30% holding in the Cracow gold mine in QLD. Cracow appears to have a market perception of only being a 3 to 5 year life mine at ~100,000ozpa. However, that vastly underestimates its potential with exploration alone having added at least the 100,000ozpa mined for the past 5 years, maintaining resources ~1moz at ~8g/t.
  • The Cracow plant has already gradually crept up to 42,000tpm (500,000tpa) following the replacement of the secondary crusher and some cyclones. With possible further modifications, production ~550,000tpa may be achievable.
  • The original NCM target at Cracow was a deep porphyry copper (and it is still a target), but the mine switched its focus to the historic higher grade veins following the successes at the nearby Pajingo mine, and since then has made a number of discoveries, including the recent apparently higher grade Phoenix ore shoot.
  • The size of the ore shoots at Cracow has been significant, typically ~300m to 400m long by 150m to 250m high as in Crown at 680,000oz, with Sovereign and Kilkenny both initially at 200,000oz. The intersection of Phoenix in the decline infers that it also could be ~300m to 350m long. Royal was high at ~350m for its ~500,000oz.
  • Construction of the plant at Edna May, appeared to be well ahead of schedule, and looks impressive considering it is the second hand Big Bell plant. Its only sign of age being some of the belt idlers. The pit was also taking shape, looking neat.
  • CAH has already had two unexpected “wins” at Edna May, being the ~30,000t soft backfill in the previous open-cut available to dry commission the plant at 0.8g/t to 1.0g/t, and the original hard rock bund wall (around the edge of the open-cut) available to wet commission the plant at >1g/t. The plan was to use lower grade (ideally <0.8g/t) to wet commission, but this ore is readily available at little cost.

Apr 2010 - Vantage Goldfields

Vantage Goldfields Limited (VGO) –Increasing Production to ~50,000ozpa

  • In April/May 2010, Vantage Goldfields Ltd (VGO) expects to raise A$30m in an IPO (led by Shaw Corporate) for its wholly owned subsidiary, Eastern Goldfields SA, resulting in 224m shares on issue at a nominal price of A$0.40c for a market cap of A$89m.
  • VGO’s main assets are all in the Barberton region of Eastern South Africa, and comprise of the operating Lily underground gold mine (that is undergoing a mill expansion to ~400,000tpa), recommissioning the Barbrook mine and plant complex, and exploration over ~165sq km of the Barberton Greenstone belt (including the old Worcester gold mine).
  • The Barberton Greenstone Belt is comparable to the typical greenstone gold mine deposits of WA, yet it has not been subjected to standard Australian geological exploration techniques. For example, although it supported ~350 mines in its heyday and produced >10moz, no one has ever flown aeromag there, which is 101 basic geology in Australia. VGO intends to fly helicopter aeromag in JQ 2010.
  • VGO initially mined Lily as an open-cut at ~2.2g/t and ~10,000ozpa for ~5 years, before declining underground in June 2007 and switching to full underground production in January 2009. Recognising the need to upgrade the plant, Barbrook was acquired providing greater production potential to ~50,000ozpa.
  • VGO had intended to expand earlier, but were caught in the GFC limiting the ability to raise finance, until now. During that period VGO undertook studies and examined the capability of bringing Barbrook back into production, while exploration found depth extensions to the old Worcester gold mine (NW of Barberton, on a classic NW/SE structure).
  • There appears to be significant upside potential for VGO in the Barberton Greenstone Belt of South Africa.

May 2010 - Mundo Minerals

Mundo Minerals Limited (MUN) – Aiming to Increase Production to 100,000ozpa by 2012/13

  • Mundo Minerals Ltd (MUN) currently has two operating gold mines in South America, being Engenho near Belo Horizonte in SE Brazil and Torrecillas near Chala in Southern Peru. There are also two advanced exploration properties in Brazil being Jacqueira and Tocantins in northern and central Brazil respectively.
  • Engenho has settled down to produce ~25,000ozpa from its ~22,000tpm plant based on recovered underground grades ~ 3g/t from its namesake Engenho orebody, and has established 3 other orebodies which it intends to bring into production, being Crista, Olhos and Mazoca, stepping up to ~50,000ozpa.
  • The Engenho plant capacity is being almost doubled through adding a duplicate ball mill and two tanks, for treating the higher grade ~ 4g/t to 5g/t apparently simpler Crista mineralisation, initially as an open-cut in late 2010 and later underground. The current plan is to bring in Olhos as Crista goes underground.
  • Torrecillas has increased production to ~8,000oz to 9,000ozpa from toll treatment of its namesake Torrecillas underground mine’s vein being ~ 12,000tpa at ~20g/t. Two other veins (5th November and Torrechico) are under evaluation to establish their strike lengths and average grades, for completion of a BFS and possible plant construction near Chala, which may be delayed by cashflows to ~2012.
  • Depending on lode thicknesses, strike length continuity and better ground conditions than the Torrecillas orebody, Torrecillas’ production could gradually increase to 30,000ozpa and later 50,000ozpa with a conceptual eventual target of 100,000ozpa. When combined with Engenho, this takes MUN’s potential production up to >100,000ozpa by 2012/2013.
  • MUN is also progressing with exploration at Jacqueira to establish a minimum specified resource during 2010, while also making progress at Ampar in its Tocantins tenements.

Jun 2010 - Kingsgate Cons

Kingsgate Consolidated Limited (KCN) –Receiving renewed BOI incentives for the new Chatree North Plant, paves the way to a very profitable future Kingsgate

  • Kingsgate should score a double-premium for having no RSPT payments (because its operations are not in Australia) and receiving the BOI investment incentives (the same as before : 8 yrs’ tax-free, then 5 yrs at 15% tax, as Thailand moves ahead in encouraging mining investment). Receipt of the BOI, means that production from the second train of the Chatree plant could occur during SQ2011.
  • KCN’s Chatree gold mine in Thailand was a hive of activity in April 2010, initially aiming to increase gold production by ~50% to >200,000ozpa, and then using satellites and underground to reach ~300,000ozpa. Kingsgate is still exploring for possible stand-alone operations; following up epithermals that it has identified; and using its extensive database to find orebodies in other parts of Thailand.
  • Chatree was examining increasing the mine’s life by : deepening the pits using US$950/oz or US$1150/oz pit shells (compared to the existing US$750/oz pit shell of June 2009), extending Chatree on strike NNW or SSE, and delineating higher grade epithermal lodes that can be economically mined underground.
  • KCN intends to capitalise on its perception as an established, proven developing Asian gold producer while it leads the emerging mid-tier Australian listed gold producers into the A$1bn to A$2bn market cap category (following the takeover of Lihir by Newcrest).
  • The Thailand IPO float of 51% of Chatree under Akara Mining Ltd (the preference shares are redeemed for common stock in one movement) is expected to occur during DQ2010/MQ2011, and could raise ~A$400m to A$500m (being ~50% of Kingsgate’s current market cap, plus some capital for ~50% of the mill expansion plus ~50% of the exploration). (It should be noted that Akara may receive an Asian trading multiple and have a higher market cap than Kingsgate).
  • Kingsgate effectively retains mine management control with regional and near mine exploration under KCN’s Issara Mining (exploration) company. KCN/Akara’s Chatree controls an area of ~7kmN x 5kmE including the Chatree mine and MLs, while KCN’s Issara has the rest of the SPLs and SPLAs . Should Issara make a discovery, Akara Mining has first right of refusal in acquiring it for Chatree.

Jan 2010 - The Lucky Break

The “Lucky Break”

Occasionally in underground mining, a company has a “lucky break”, unexpectedly intersecting mineralisation that completely transforms the geological understanding of the mine, the area, and its mineralisation.

It is usually more easier in an open-cut to see what the mineralisation has done based on looking at the walls or the floor, but underground it depends largely on development.

Jan 2010 - Year End & China

  • I must admit that even after all this time, the recent falls (mid/late January 2010) in share prices and commodities on the basis of a China slowdown still comes as a surprise – as if China could suddenly grind to a halt. The market has yet to accept that China has a planned vision of where it wants to be and how it is going to get there for the next 20 years. The main beneficiary should be Australia because of its proximity and relatively high grade orebodies. We re-iterate what we have said before, if anyone gives a China view, ask them when was the last time they were there?
  • The market’s behaviour implies that the share prices are going down because China is slowing, but commodity prices appear to be ignoring LME stockpiles & the major producers are struggling to expand as fast as possible to meet demand that has pushed spot prices of iron ore and coal well above their benchmarks. In September 2009, the brokers were forecasting gold to fall and drop to ~US$900/oz in 2010, whereas instead it rose to ~US$1300/oz on physical (an increasingly wealthy growing middle class in China, plus India and the central banks), and currency demand.
  • As it turns out, the 9.5% expected increase in China’s GDP for 2009 (at the time of the China Mining Conference in Tianjin TEDA in October 2009) was in fact ~10.7% (according to the latest statistics [21 Jan 2010]). In fact the last quarter of 2009 may have been at the blisteringly unsustainable pace of 13%pa (the official figure for the first half of 2009 was 7.1%). So it is no surprise that credit is being reined back, to an expected 7.5trnRMB (US$1.1trn at 6.8RMB to 1US$) compared to 2009’s 9.6trnRMB (US$1.4trn). Has the market already forgotten that in early April 2009 it looked like China was heading for a growth rate of < 6% compared to the long-term target rate of 7%pa to 8%pa?
  • April 2009 was actually the turn, when a number of construction sites in a number of cities in China moved to double-shifting and almost overnight, there was an immediate shortage of copper wire and copper piping. [Note : as per our comment last year, China only produces ~15% to 20% of its annual copper requirements, or 0.9mt with 4.5mt imported in 2008]. ERA business wise, we restarted marketing at the Paydirt Gold Conference at the beginning of April and by the end of April 2009, our forward book was back to normal (ie booked about 1 year ahead, [it had been booked up to 2.5years’ ahead], when the crunch hit we lost everything from Sept08 to Dec08 & other spots).
  • We (ERA) did in fact state on ABC TV [7.30 Report on 12 Dec 2008] that we expected the turn to be about Mar/Apr 2009 (while some thought 2nd half 2009 was a possibility, most appeared to be expecting 2010 or 2011). Our estimate was made on the basis of China slowing down ~6 months ahead of the August 2008 Beijing Olympics and then at least 6 months to recover afterwards, allowing for Chinese New Year and China’s new regulations on emissions), whereas timing wise, kick-starting China’s economy appears to have been the main reason for the recovery.

Mar 2010 - Gold Mining Costs

Gold Mining Industry Facing Rising Costs

At the recent Paydirt Gold Conference in March 2010,delegates were surprised to hear that the cash costs of Gold Fields’ (GFI’s) South African operations were US$650/oz, with total costs of US$900/oz. And in response to a second question, that costs were expected to rise by 10% just on the doubling in power costs over the next 3 years.

Mar 2010 - Epithermal Trends

Do Epithermals Usually have at Least 2 Trends?

It may be sheer coincidence but we could not help noticing a number of similarities between some epithermal deposits after visiting NQM’s Pajingo in September 2009, NCM/CAH’s (Newcrest/Catalpa’s) Cracow (also in Queensland) in January 2010, attending Paydirt’s NewGen conference in November 2009 and see Andean present Cerro Negro, followed by Exeter Resources presenting Cerro Moro.

Apr 2010 - 5g/t Rule of Thumb

Is it Time to Reduce the
/t Rule of Thumb” ?

Underground mining has a number of “rules of thumb”, one of which that has stood the test of time, is that for most mines you need 5g/t in order to mine underground. And if it is refractory add 20% so it becomes 6g/t.

At 5g/t it meant that the mine should be able to achieve a capital return and return the invested money back, allowing for the odd occasional thing to go wrong – or in other words provide a reasonable margin for error.

Jun 2010 - Paste Failures

Paste Failures Provide a “Wake-Up” Call

I must admit that when I first encountered paste being used to fill stopes instead of concreted tailings and the way it behaved, I thought “WOW this is fantastic, looks like rock, fills the void perfectly, can be cable bolted, can be mined against, etc”. So it is understandable how complacency occurred, and why failures in the past year have been met with surprise.

Jul 2010 - Panoramic Res

Panoramic Resources Limited (PAN) – Settling into a Production Range ~19,000tpaNi

  • Accepting that production in FY2010 was lower than expected, and having given guidance for FY2011 of 18,000t to 19,000tNi, Panoramic appears to be settling into a nickel production range of ~18,500tpaNi to 19,500tpaNi or ~19,000tpaNi as shown in our/ERA production scenario forecast.
  • Lanfranchi could produce more tonnage (given it was producing at ~80,000tpm on the day of our visit, applying a revised sub-level stoping method), and grades could be higher as the mine moves into the higher grade keel zone of Deacon, while Savannah’s grades may also be higher.
  • Although Deacon remains open at depth, as do the other orebodies of Schmitz and the namesake Lanfranchi, PAN’s Lanfranchi mine continues to search for another significant orebody. A new approach has shown that the nickel mineralisation at Lanfranchi appears to be controlled both N/S and NNW/SSE, which has resulted in a number of new targets, along with the Lanfranchi West extension.
  • The intersection of 2.9m @ 3.0%Ni in drillhole KUD 810 and EM plate into the deeps below the 900 fault at Savannah opens up another extension to Savannah’s life. A drill drive is planned to be developed in the coming FY to June 2011 to further delineate the upside depth potential at Savannah.
  • Panoramic intends to have a significant exploration programme during the coming year of 2010/2011, undertaking deep drilling at Lanfranchi plus drill drives to probe the extensions of the known lava channels. While at Savannah, aside from the drilling beyond the 900 fault, a number of new near mine and regional targets are to be tested following results from the recent higher resolution gravity survey.

Aug 2010 - Avoca Resources

Avoca Resources Limited (AVO) – Becoming a >$1bn Mid-Tier Gold Company at >350,000ozpa gold with a life of >10 years

  • The recent intersections of ~50m @ 3.5g/t and 29m @ 5.0g/t in Apollo-style mineralisation ~200m north of the Trident orebody on the ~400RL have a significant impact on AVO’s life at Higginsville, inferring a life (when combined with Chalice and regional orebodies) of 180,000ozpa to ~200,000zpa for >10years.
  • At this stage, Chalice appears likely to commence production in 2H2011, following completion of the dewatering of the pit (by end 2010), and then declining down to the Olympus mineralisation. Timed to come into production as Trident moves deeper, Chalice provides increased production flexibility in the 1.3mtpa plant.
  • Following its acquisition of Dioro, Avoca announced in July 2010, that it is starting a feasibility study aimed at doubling South Kal’s Jubilee plant to ~2.4mtpa through cutting back the HBJ (Hampton Boulder – Jubilee) pit and using satellite open-cut/underground sources such as the Mt Marion (West lode) and Barbara-Surprise/Noble areas, resulting in production of >90,000ozpa for at least 10 years (Note : based on 2mtpa at 1.5g/t & 92% recovery, although grades could be higher, and also note 0.4mtpa is for treating AVO’s 49% of Frog’s Leg).
  • Avoca acquired 49% of Frog’s Leg as part of the Dioro acquisition, and Frog’s Leg appears to have a life of at least 10 years, treating ~800,000tpa (or possibly higher) at ~5.0g/t to 5.5g/t for attributable gold production of >60,000ozpa.
  • AVO is gradually working its way through the recently acquired vast South Kal assets which extend arc-like south around Kalgoorlie from the defunct Golden Ridge mine in the SE through HBJ, Mt Marion and Barbara in the SW, and which appear to contain significant upside potential.

Aug 2010 - Floating Quartz

Current Trends Include “Floating” Quartz Rocks.

We have noticed a number of trends (being at least 3 occurrences) among the different companies that we have analysed so far this year since January 2010. Those trends mostly include cyclone upgrades, proposed ventilation shafts, possible drill drives and significantly deeper drilling, EM plates, visible gold, stamp batteries, plant upgrades and newly commissioned plants, and fields of quartz resulting from “floating” quartz rocks.

Sep 2010 - PDU Fires up...

PDU fires up the West African Golds

Any doubts anyone may have had about Burkina Faso being the current world exploration “hot-spot” were quickly dispelled by the behaviour of the West African gold shares in the week of PDU (Paydirt Down Under) in early September 2010.