• Increase font size
  • Default font size
  • Decrease font size

Tagged with: Reports

Jul 2002 - Independence Gold

Independence Gold NL (IGO) – Long Nickel Acquisition is part of the Aim to Create Substantial Shareholder Wealth

  • The Southstar Database is offering IGO a plethora of opportunities for the creation of individually focused companies.
  • The purchase of WMC’s Long nickel mine for $15m under the separately managed Lightning Nickel Pty Ltd is part of IGO’s aim to create substantial shareholder wealth.
  • Based on mining only Long and Victor South’s ore reserves of 750,000t at 3.6%Ni for 27,000t of nickel, at a rate of 150,000tpa, IGO’s Nickel management team (headed by Tim Moran) has estimated a 10% NPV of $46m for their attributable nickel. This was based on $60m in after tax cashflow over 5 years, using a nickel price of US$3.15/lb (US$6950/t), and an A$ exchange rate of US55c.
  • In our opinion, the 27,000t of Ni should be capable of being exceeded since it excludes almost the same again in the Long orebody’s resources, additional recoverable ore from the pillars (even allowing for geotech), and any possible exploration discoveries.
  • Lateral thinking by the IGO team following conceptual viewpoints outside of standard theory has resulted in evaluating two promising 100% owned gold prospect areas called Jeerinah (near Paulsen’s) and Yalgoo West, where initial results have been encouraging.

Oct 2002 - Aquarius Platinum

Aquarius Platinum Ltd – Quadrupling Production to 135,000ozpa by June 2003 at its Zimbabwean Mimosa operation

  • Aquarius acquired a 50% interest effective from 1 July 2002 in Zimasco Consolidated Enterprises Platinum Ltd, who own 100% of the Mimosa Platinum operation in the Wedza complex of The Great Dyke in Southern Zimbabwe for 6.86m AQP shares at GBP3.89/share or GBP26.7m (approximately A$74m).
  • The move is strategic with Mimosa having an expected life of far in excess of 30 years, currently quadrupling its production to about 135,000ozpa of PGE, and being one of the lowest cost platinum producers in the world.
  • In our opinion, after visiting the Mimosa operation in July 2002, the expansion should be achievable and if anything be conservative. Further upside potential appears possible in costs, recoveries, and throughput in addition to the gravity oxide testing, following up historic granite riffle tables that recovered Pt in 1926.

Oct 2002 - Zimplats

Zimplats / Makwiro Platinum – Profitably Commissioning Ngezi

  • By the end of the June Quarter 2002, following several modifications to the plant (as it had never run as Hartley at full capacity), the concentrator was operating at its 6000tpd design capacity of 2.2mtpa and ZIM was in positive cashflow, its 70% held Makwiro Platinum having produced and sold 18,680oz Pt in the quarter or 38,400oz PGE .
  • Given ZIM’s vast landholding containing delineated ore resources, there are significant upside scenarios for Zimplats and its resulting share price. In our opinion, there are 3 key factors influencing ZIM’s future, namely the success of the underground trial at Ngezi, the decision on a new plant probably in 2003, and the integration of Mwakiro and Impala into a simpler corporate structure.
  • A study appears likely to occur in 2003 to decide on the scope of the first expansion which could involve a doubling of production. The first expansion may be influenced by the progress of the trial underground mine, as to what mix occurs with possibly a new open-cut further north.
  • The underground mining at Ngezi has the advantage of having time on its side to develop a mining method since the open-cut is currently supplying the mill requirement of 2.2mtpa, and it can base its design on the (AQP/IMP) Mimosa mine to the south which has spent 6 years refining its underground mining method.

Nov 2002 - Apex Minerals NL

Apex Minerals NL (AXM) – Moving Into the Drilling Phase

  • Apex Minerals has made material progress since its inception only one year ago in October 2001, and IPO primarily as a platinum exploration company in June 2002. It owns 80% of two significantly sized projects in WA namely the Windimurra Superproject focusing on PGE, nickel and gold, and the Jillawarra Project focusing on copper – gold mineralisation.
  • Apex is run by Stephen Stone who favours lateral thinking and the use of the latest geological exploration techniques in combination with tried and tested methods, which resulted in one of his previous companies discovering the Weld Range PGE mineralisaton which apparently had not been recognised before.
  • This viewpoint has resulted in Apex going “back to basics” on its two projects while using up-to-date technology, and has highlighted areas of these projects that were apparently not considered prospective and have been little or poorly explored. While fieldwork is still continuing at Windimurra, drilling is expected to commence early in 2003.
  • The southernmost intrusion of the Windimurra Superproject is called Narndee and has been farmed out to a 50/50 JV between Falconbridge and Impala Platinum, in which the Falconbridge JV can earn 70% of Apex’s 80% by spending $4m over 5 years, or 80% of 80% of any specific areas it selects to take through to a BFS. The Falconbridge JV have completed their fieldwork following their recently completed aeromag, and also expect to commence drilling in the March Quarter of 2003.

Dec 2002 - Hill End Gold

Hill End Gold Limited – Expecting to Generate Cashflow by mid - 2003.

  • The IPO Offer : Hill End Gold Limited (HEG) is offering a subscription of 17.5m shares at 20c to raise $3.5m (minimum subscription 13m shares raising $2.6m) to reopen the old Hill End goldfield in NSW. As part of the offer, 1 free option (exercisable at 25c before 30 June 2005) is to be issued for every 2 shares subscribed.
  • HEG is very aware of the pitfalls that some of the later 1980 or so syndicates were trapped under, and hence intend to generate cashflow as soon as practically possible, aiming by Mid - 2003, should the IPO attain its minimum raising (and preferably closure) by the end of December 2002.
  • HEG has an extensive line of strike of old workings (about 27km or so) on which to explore, so it has the potential to have a very long life. Although it is focusing on the old workings and the stope fill and unmined areas for its initial production, it has to be remembered that the veins are “open” at depth.
  • It has to be recognised that this is a nuggetty distribution in which it is extremely difficult to determine expected grades before the plant has been in production for as long as a year or so, at the same time it also has to be noted that nuggetty distributions can produce spectacular results, as have occurred in the past.
  • The grade of the stope fill is thought to be in the region of 4 to 6gpt, but could be much higher since extraction techniques were fairly archaic, as illustrated by Silver Orchid mining Golden Gully (which lies north of the Hill End township) and reputedly only achieving a 50% recovery treating 300t of 2oz/t ore using its stamp battery in 2000.

Jan 2003 - Lodestone Expl

Lodestone Exploration Limited – Targeting Gold and Copper Mount Morgan Look-alikes in Queensland

  • The IPO Offer : Lodestone Exploration Limited (LODE) is offering a subscription of 12.5m shares at 20c to raise $2.5m (minimum subscription 12.5m shares raising $2.5m) to find hidden gold and/or gold-copper Mount Morgan look-alikes southeast of the historic Mount Morgan mine in QLD. As part of the offer, 1 free option (exercisable at 20c before 7 December 2004) is to be issued for every 2 shares subscribed.
  • LODE’s underwritten offer (by ABN AMRO Morgans) is on a project that is actually relatively very advanced, having already flown three surveys since 1998 including aeromag and TEM in a joint venture/exploration alliance with BHP Billiton, and delineated a series of targets that are ready to be drilled.
  • The rationale behind the project is that Mount Morgan (which produced 9.4moz of gold and 360,000t of copper before it closed in 1990) has been classified as a VHMS (volcanic-hosted massive sulphide) deposit, and in other parts of the world where these types of orebodies exist (such as Noranda) they usually occur in clusters or multiple deposits. Hence this project to find the other orebodies possibly associated with Mount Morgan, which may be hidden, but can be exposed using the latest advanced exploration techniques.
  • Using a geological theory of LODE’s Chief Geologist with knowledge of VHMS deposits, a concept for the project was made and has been verified in the field by observation of the rock structures and the airborne electromag surveys. Initially 17 targets have been identified and ranked according to their prospectivity. Now those targets await drilling.

Feb 2003 - Cons Minerals

Consolidated Minerals Ltd (CSM) – Extending its Life Beyond 10 Years at Higher Rates of Production

  • CSM has already established an ore reserves/resource life of 10 years at Woodie Woodie Manganese and is extending Coobina Chrome’s life towards 10 years. In the current exploration programme, CSM is aiming to extend the lives of both operations beyond 10 years and enable Coobina to consider doubling its chrome production to 500,000tpa (our modelling factors in an increase to 350,000tpa).
  • CSM’s annualised manganese production appears to be capable of increasing closer to 580,000tpa of lump and fines, of which the lump component could be >380,000tpa based on the progress that has been achieved in the 6 months to December 2002, and the new reporting disclosure.
  • CSM appears to be fairly valued, however, its products are in a poorly understood “area” of the market in which product sales and prices realised are not easily identified (like precious or base metals). Consequently, CSM’s share price appears likely to rerate according to its profit results and resulting P/E ratios, Price/cashflow ratios, and relatively high dividend yields (currently of about 8%).

Feb 2003 - Kanowna Lights

Kanowna Lights Limited (KLS) – Reviewing Mount Carrington in NSW

  • In November 2002, KLS acquired an option from Virotec (VTI) over the historic Mount Carrington epithermal polymetallic field (primarily gold and silver, with minor copper and zinc) in northern NSW. The requirements of the option are for KLS to raise about $1m to complete a feasibility study by 15 March 2004.
  • The feasibility study requires a mining operation capable of producing 200,000ozpa of gold equivalent for at least 5 years (there is already a resource of 280,000oz gold and 10.3moz silver), and if the option is exercised VTI is issued with 19.9% of KLS’ ordinary shares and an equivalent number of options.
  • Mount Carrington has been mined at various times since 1886 and parts have been joint ventured with most of the major companies at one stage or other. The last mining was a series of shallow open-cuts between 1989 and 1990 by Mt Carrington Mines (MCM) who closed their operations citing lower grades than expected and poor metallurgical recoveries, which appears to have mainly
  • resulted from a geological misinterpretation of probably steeply dipping veins.
  • A joint venture with CRA from 1990 to 1994 resulted in a completely different interpretation and a new stratigraphy with 75% more intrusives than those previously recognised. However, CRA did not have access to the entire field and after they withdrew, little work was undertaken as MCM passed through various guises before becoming Virotec focusing on cleaning acid mine drainage water.
  • Although the MCM open-cuts focused on the central area of the field, there were significant mines outside of the central area which appear to have been barely explored such as Lady Jersey which produced 25% of the field’s wealth from gold, and possibly Pioneer, White Rock etc. KLS intends to take a two pronged approach focusing on the old open-cuts and the other historic mining areas.

Feb 2003 - Independence Gold

Independence Gold NL (IGO) – Long Nickel Mine Acquisition Could be Significantly Profitable for IGO

  • IGO’s wholly owned subsidiary Lightning Nickel Pty Ltd bought WMC’s Long/Victor nickel mine for $15m on 17 Sep 2002. This was based on IGO’s estimated return of $60m in after tax cashflow, from producing 27,000t of nickel over 5 years (treating 750,000t of 3.6%Ni ore reserves at 150,000tpa) and receiving a nickel price of US$3.15/lb (US$6950/t), and an A$ exchange rate of US55c.
  • IGO ramped up beyond their targeted production rate of 12,500tpm (150,000tpa) inonly 3 months (by January 2003), and are also achieving 10% to 15% highergrades than expected of >4% nickel (due so far to less dilution than expected).
  • Long’s life appears likely to be at least 7 years all probably at greater than an average annual grade of 4%Ni. This is based on our site visit observation of progress to date, the driving towards Gibb South and new extensions there, probably a favourable decision on Victor South in 2003, the current mining rate of 34% in resources (outside of reserves) and additional remnant mining,
  • The geology appears to be so complex that it is virtually impossible to put strike limits on the orebodies, resulting in a strong probability of extensions to them within the lava channels. There also appears to be at least 3 possibilities of finding new unmined orebodies : either within the existing channels, below the Long lava channel, or there could be a link between the Durkin orebody (to the northwest) and Long as shown in figure 6 on page 4.

Apr 2003 - Zimplats

Zimplats (ZIM) – Turning the Vision into Reality

  • The Hartley complex’s 170moz of platinum resources have been incomprehensible in terms of actually being mined, yet Implats in their February 2003 half-yearly presentation in Johnannesburg stated that Zimplats could increase its current platinum production from 85,000ozpa to 440,000ozpa within 10 years using 100,000ozpa modular units.
  • The transformation of the vision into potential reality has been due to the initial success of the Ngezi open-cut followed by encouraging early development signs from the Ngezi underground. These early indications and signs are probably what is behind the IMP remarks that ZIM is the jewel in IMP’s crown and is of strategic long-term importance to Implats.
  • The initial progress at the Ngezi underground has resulted in Zimplats starting a BFS on the first expansion phase to double production by about 200,000ozpa 4E (platinum, palladium, rhodium and gold) to attain nearly 400,000ozpa 4E by Dec 2005 with about 2mtpa from the Ngezi open-cut and 2mtpa from underground.
  • The platinum price rose by 45% or US$210/oz to peak at US$700/oz in the past year before falling back towards US$600/oz, however demand still appears to be favourable, driven by 3 previously overlooked factors such as Chinese jewellery demand (higher than IMP’s mine production), increasing Chinese autocatalyst demand, and accelerated American development of the fuel cell.

May 2003 - Aquarius Platinum

Aquarius Platinum Ltd – Overcoming its Operational Issues

  • Aquarius’ share price has more than halved in the past year to a low of A$5.00 due to the Rand’s strength, and lower non-Pt PGE prices, while possibly overreacting to BEE (Black Economic Empowerment), the expected Money Bill’s royalty rates, the perceived forex exposure/money pipeline (due to accounting the sale of pges 3 months before they occur, and booking the difference), Zimbabwe’s financial influence on Mimosa, and operational restrictions at Kroondal and Marikana.
  • The strengthening Rand is materially increasing the costs on the South African operations, (a R125/t cash cost at Kroondal becomes US$17.90/t at ZAR7/US$, compared to US$13.90/t at ZAR9/US$). The Rand corrected slightly to 7.5/US$ on Friday 2 May, but remains volatile as the US$ continues to weaken against the Euro (reputedly from the oil nations switching currency, and the US financing Iraq)
  • The operational restrictions being encountered by Kroondal in the form of potholes and other geological disturbances were being rectified during the March Qtr 2003, since face availability had risen to over 80% on one of the shafts in February, while only 67% is required to attain a 250,000tpm throughput rate.
  • Marikana is being commissioned on low recovery oxide and transition ore for the period to May 2003 when it is expected to begin increasing its blend of sulphide to about 75% by September 2003, with production gradually building up to an expected 130,000ozpa 4E, and possibly an expanded 160,000ozpa.

Jun 2003 - Heritage Gold NZ

Heritage Gold NZ Ltd (HTM) – Given An Unexpected Opportunity to Potentially Achieve Gold Production

  • Heritage is a North Island NZ gold exploration company that was established in 1984 by Peter Atkinson and has the opportunity to toll treat ore through Newmont’s Waihi Gold (or Martha Mine), following the discovery of the Favona mineralisation and extension of Waihi’s life to ~2015 at 300,000t and >100,000ozpa.
  • Newmont’s expected >1moz Favona gold mineralisation was discovered using geophysics, following up the relationship between vent breccias and gold mineralisation that HTM had proven at its Onemana project. HTM are applying similar geophysical techniques (and the same consultant) at its Waihi North project, located almost on the edge of the Waihi open-cut and extending through to the old Golden Cross mine.
  • Heritage initially uses an inverted aeromag technique to target potential gold mines in its main project areas of Waihi North and Karangahake, before following up with geophysics. The inverted aeromag technique highlights epithermal alteration that can be shown as identifying the historical gold mining districts (adjacent to HTM’s projects) of Waihi and Golden Cross.
  • Apart from Onemana, all HTM’s exploration projects are located within about a 10km radius of the Waihi gold mine. At Karangahake, Heritage are using the inverted aeromag technique and a recently completed 3-D perspective of the old workings, development and stopes, so as to prioritise where to explore with a view to attaining early cashflow.
  • At adjacent Rahu, HTM have identified a hidden potentially mineralised system through applying geophysics, that can now be drilled with a focus on attaining early cashflow by potentially using the spare capacity in Waihi’s 1.3mtpa mill.

Jun 2003 - Perth Mint Gold

Perth Mint Gold (PMG) (ZAUWBA) – At Last, the Ability to Buy Gold on the ASX

  • On the 16 May 2003, the Gold Corporation (a statutory authority of the WA Government ) issued a new AAA rated tradeable gold product called PMGs (Perth Mint Gold Quoted Product) where 1 PMG = 1/100th of an ounce of gold, with the ASX Code : ZAUWBA.
  • Investors can buy on market through any stockbroker (with the settlement being made through CHESS, T + 3) at the same charges applicable to shares. Being 1/100th oz, the individual PMGs would currently trade at about A$5.40 each, which should encourage healthy trade as the product achieves market penetration.
  • Deutsche Bank has been appointed as market maker for PMGs to ensure that the trading value is close to the spot gold price (based on the US$/oz gold price and A$/US$ exchange rate). Gold Corporation can also support the market in PMGs.
  • In order to satisfy the ASX, the product is classified as a call warrant with a closing date of 6 May 2004. Theoretically that means that the original allowed issue of 100t of gold or 321.5m units (or 3.215moz) cannot be increased beyond that date, and remains at that number until 31 December 2013, when it is likely to be rolled into a similar product. If a trading volume of more than 100t of gold is required after 6 May 2004, then another series can be issued.
  • The PMGs are guaranteed by the Perth Mint. They can be converted into cash at a cost of $0.50/oz plus $100 (settlement T + 5). They can also be converted into gold that can either be stored at the Perth Mint or physically delivered in various specified forms with typical delivery charges.
  • Although there is risk due to the strength in the A$, an investment in PMGs is not subject to issues that can affect gold shares such as falling gold production, rising cash costs or lower grades than expected which has affected some shares in the past year, such as Kingsgate (KCN) down from A$3.79 to A$2.96 between 28 May and 2 Jun 2003 when A$ gold was little changed from A$554/oz to A$556/oz, or Gympie (GYM) down from $0.73 to $0.43 between 2 Jan and 5 Feb 2003 when A$ gold rose from A$610/oz to A$647/oz.

Jly 2003 - LionOre Mining

LionOre Mining International Ltd (LIM) – Developing Into A Premier Nickel & Gold Company

  • LionOre Mining (LIM) has had a staggering growth record in terms of gold and nickel discoveries and converting them into producing assets within only the past 2 years, to become a major nickel and gold company focused on Australia and Botswana with a market cap exceeding A$1bn.
  • LIM currently has three operating mines, being two nickel (Emily Ann in Australia, and Tati’s Phoenix in Botswana) of which both are in phases of expansion, and one gold (Thunderbox in Australia). LIM is aiming to convert some of its exploration prospects (like the Waterloo/Amorac nickel prospect) into mines too.
  • On 3 June 2003, LIM announced its intention to list on the ASX in July 2003 and merge with Dalrymple (DRE) on the basis of 1 LIM –for- 2.92 DRE shares requiring about 25m new LIM shares to be issued. The merger was expected to be completed in September 2003, and result in LIM holding 100% of Thunderbox, Waterloo, and the North Eastern Goldfields, plus Dalrymple’s other exploration assets, in addition to LIM’s existing holdings at Tati and the Emily Ann area of WA.
  • In its latest 2002 Annual Report, LIM stated its 3-year strategic targets as doubling attributable nickel production to at least 30,000tpa, and increasing the Thunderbox asset in WA to achieve sustainable gold production of more than 200,000ozpa.

Jul 2003 - Pan Aust Resources

Pan Australian Resources NL (PNA) – Phu Bia Gold Project Approaching the Completion of its Pre-feasibility Study

  • The current focus for PNA is the completion of its pre-feasibility study which is on schedule for September 2003. Perhaps not surprisingly, Phu Kham (which literally translated means “mountain” of gold) is shaping up as the most prospective area with spectacular intersections such as GRC58’s 30m at 3.7g/t in the oxide gold cap ending in mineralisation and showing fairly regular grade continuity throughout the drillhole.
  • PNA provided targets in a presentation in late July 2003 of potentially commencing production from its Phu Bia Gold Project in late 2004, increasing to an annualised rate of 50,000ozpa gold from 2005, and then rising to 110,000ozpa gold and 50,000tpa copper as the Phu Kham copper-gold orebody (beneath the gold cap) comes into production from 2007.
  • The pre-feasibility study appears to be heading towards a combined 1.5mt to 2.0mtpa CIL and heap-leach plant located at Phu Kham (PK), possible trucking from Long Chieng Track (LCT) and a heap-leach at Ban Houayxai (BH).
  • Although the infrastructure is already reasonably good, it is being dramatically upgraded by the new south to north power line from the hydro-power station through to Phonsavan, which bypasses about 8km east of Phu Kham and is scheduled for completion in December 2003. A partly sealed road parallel to the power line is also scheduled for completion some 2 years’ later.

Kitco Spot Gold Price

   Click Chart for Spot Gold Price[Most Recent Quotes from www.kitco.com]

Stock Quote

  (Add .ax for ASX)