Agincourt Resources Ltd (AGC) – A >100,000ozpa Australian Gold Stock

• Agincourt has acquired the Wiluna gold mine which has been producing about 117,000ozpa at cash operating costs of up to A$420/oz since SQ02. However, it can be transformed under AGC within 2 years to produce >140,000ozpa at cash operating costs of possibly <A$350/oz, from a combination of reopening the East-West >6g/t U/G Lodes replacing low grade 1.2g/t stockpiles, and higher oxide or other non-refractory feed from a number of prospects.
• Apart from the prospects under the salt lake south of the mine (such as Regent and Williamson), there are other regional oxide prospects too. The old Wiluna mine has also been sparsely drilled at depth and most of the orebodies are open on strike and at depth. The expanded Wiluna mill is also very versatile, and can be subdivided back into a non-refractory (say oxide) and refractory (the biox) plant at minimal expense while achieving higher throughput and lower costs.
• AGC appears to have a very high grade virgin orebody under the salt lake south of the mine, namely Williamson that so far has only been considered as a bulk lowgrade proposition, but potentially could be a materially profitable >10g/t operation if mined as relatively narrow high grade quartz veins (like the historic and current Wiluna underground), with downhole intersections such as 3m @ 20.4g/t above vertically lower down 6m @ 26.4g/t.
• AGC’s current expected value is about A$1.50 to A$2.00 per share (using the standard 5% NPV applied to gold shares, being A$1.70 or A$100m over 9 years on 58.3m fully diluted shares). However, it has a high sensitivity to grade (which could easily be 10% higher) and that alone could increase the value by ~35%.

Just like old times as the new mining cycle increases its pace

Bobby Godsell, the MD of Anglogold commented at the INDABA 2004 Conference in Cape Town that mega mergers are over for the time being, which is probably true for the time being apart from perhaps Newcrest possibly being taken over once Telfer is in production.

Albidon Limited (ALB) – An Advanced Nickel – PGM float in Southern Africa

• The IPO Offer : Albidon Limited (ALB) offered a subscription of 20m shares at 50c to raise up to A$10m in an AIM listing and an additional 10m shares at 50c to raise up to A$5m in an ASX listing at the same time (the minimum subscription is 20m to raise $10m). ALB’s IPO is to develop its existing portfolio of relatively advanced nickel - PGM exploration projects in Eastern and Southern Africa, and copper-gold & zinc-oxide projects in North Africa.
• Albidon have delineated an “S” shaped Ni-PGM sulphide trend through Eastern and Southern Africa which can be correlated with the global “Grenville Trend”. The “Grenville Trend” is based on a comparison with the host rocks of Voisey Bay in the Middle Proterozoic – a geological era well known for hosting a number of the world’s famous metallogenic provinces. ALB’s Ni-PGM sulphide trend starts at Barrick/Falconbridge’s Kabanga Nickel project in Tanzania, and passes through Malawi and Zambia before reaching the Tati area of Botswana.
• ALB have established a number of projects along the trend and explored them to some degree since 2000 to result in projects that range in maturity from delineated resources through drill-ready to almost virgin ground. The most advanced project is Munali, about 60km south of Lusaka in Zambia which has an existing resource over its SE corner, (that may still require further interpretation) with encouraging intersections such as 15.5m (~7m true width) at 2.1%Ni and 2.6g/t PGM.
• There are three joint ventures namely with Gallery Gold in the Tati Ni-PGM region of Botswana (which has aeromag completed and delineated targets), with WMC Resources over Mpemba Ni-PGM in Malawi, and with BHP Billiton over Trozza (Zn) in Tunisia. Munali Ni-PGM has also been a joint venture, with the Lion Selection Group’s African Lion Limited, who is the major shareholder in Albidon.
• ALB also has a copper-gold project and zinc project in Tunisia, which like the other targeted project areas was delineated on the basis of adequate infrastructure, relative political stability, attractive fiscal regimes and demonstrated geological prospectivity.

The Commodity Cycle is Over ! – What Already ?....

…I thought this was supposed to be a super-cycle with at least another 12 months’ to go (about every 12 to 15 years, commodities experience a super-cycle in which they rally for about 18 months’ or so).

Pan Australian Resources NL (PNA) – Starting Gold (and later Copper) Production in Laos from March 2005

• PNA is still relatively on-track for the targets it gave in July 2003, with the BFS on the Phu Bia Gold Project expected to be completed in July 2004, and 1.5mt to 2.0mtpa heap-leach initial production from the Phu Kham (PK) gold cap targeted to commence at 50,000ozpa to 70,000ozpa during the first quarter of 2005.
• For the Phu Kham copper-gold orebody, the current concept is to complete the BFS by mid-2005, for a 9mtpa to 12.5mtpa operation producing >60,000tpa copper and >50,000ozpa gold or so in concentrates, starting possibly by mid-2007.
• Both Projects have the capability of producing higher grades in their initial years, which could result in higher production, improved cashflows and lower pay-back times.
• The Phu Bia Gold heap-leach plant is expected to be located between the PK gold cap and the Long Chieng Track (LCT) gold deposit. LCT is expected to be treated after the gold cap, followed by Ban Houayxai (BH). Gold resources as at 4 June 2004 are 570,000oz, and are expected to be upgraded further from the current drilling of the gold cap resulting in revisions to the BFS in July, and ahead of final pit designs in September 2004.
• Construction has been timed to occur between the “wet” seasons. With all approvals expected to have been received by mid-October 2004, so that main construction can occur from October 2004 to January 2005, stacking of heaps in February 2005, and the first gold pour in March 2005.

Heritage Gold NZ Ltd (HTM) – Recently Completed Scoping Study Highlights the Viability of HTM’s Karangahake region

• Heritage have recently completed a scoping study which focused on the mining viability of the Talisman mine within the Karangahake Project, and resulted in a conceptual relatively small underground operation treating ore at an average grade of 13g/t and producing 50,000ozpa from late 2006 / early 2007.
• Heritage have made significant progress in the past year and recently announced initial indicated and inferred JORC gold resources of almost 110,000oz (335,400t @ 10.2g/tAu & 40.7g/tAg) in the old Talisman mine, as part of the completion of Phase 1. HTM have already started on their Phase 2 aimed at defining a 300,000ozgold equivalent resource on which to base a preliminary feasibility study.
• Consequently HTM are in the process of refurbishing part of the old Talisman mine and have focused on the adit accessing the 8 Level Maria Lode (and extension on strike to the BM37 cross-cut), with its link through a main cross-cut into (and on the same elevation due to a different numbering system) 5A Level Crown/Welcome Lode. The main cross-cut also passes through the Mystery Lode, which has little historical record, but also appears to contain mineable resources.
• The BM37 cross-cut was renowned in the early 1990s because of its intersection of 1.8m @ 682 g/t gold and 2,094 g/t silver, with grab samples reputedly up to 1.4% (13.8kg/t) gold. It had been overlooked because it lies in the Dubbo shoot or section which was historically regarded as unpayable. While the BM37 area has been partly “grab-mined” before the previous mine closed in the early 1990s, it appears to have been barely touched from a mining viewpoint.
• Apart from the old Talisman section, there appears to be a number of potential ore sources within Karangahake and its adjacent region, based on the examination of the mine plans, extensions on strike north-east beyond Taukani Hill to Rahu, and south-west into the Dominion Knoll region.
• At Rahu (north-east on strike from Karangahake) and following a conceptual downthrown model, HTM are drawing parallels between the similar geological setting, geophysical resistivity anomalies and delineated vein structures of the Favona discovery near the Martha Mine, to the geological setting and resistivity anomalies at Rahu. Some initial drilling has found encouragement.

Michelago Limited (MIC) – Approaching BioGold Plant Acquisition Final Approval

• The approved restructure of Laizhou Jincheng Gold Mining Company (the primary vendor of the BioGold Facility) into a private company by the Laizhou City Government in June 2004, has advanced MIC into the final approval stages.
• The submission of the final financial audit to June 2004 by Deloitte, Shanghai in mid-August 2004, infers that final approval (MOFCOM and SAFE) at the Shandong Province level to acquire 82% of the BioGold SFJV and hence the BioGold Facility is expected to be attained within the next 3 months to the end of November 2004.
• The required acquisition cost of ~A$12m for 82% of the BioGold Facility is being met from a combination of MIC’s own cash, the almost $4m BacTech agreement at $0.13 per share and a $6m Convertible Note facility (expected to be at least $0.13 per share) with the LinQ Resources Fund (prev Rothschild Golden Arrow Fund).
• On attaining final approval, MIC becomes entitled to up to 20% of the spot gold price for 82% of the ore being treated through the bacox and cyanide leach circuits, currently of 140,000ozpa to 160,000ozpa, but increasing to a rated 200,000ozpa, and expected to expand further beyond that.
• MIC can also attribute 51% of 82% of the 300,000ozpa in dore treated at the refinery (on which it only receives a marginal profit), received from processing through the bacox and cyanide leach circuits and ~100,000ozpa purchased dore.
• Virtually nothing currently appears to be being ascribed in MIC’s share price to the Shandong Exploration SFJV with Laizhou Jincheng in which MIC has an LOI to earn a 51% interest in any JV areas below 500m from surface. Based on a visit to Dongji (one of the current four mine properties), the mineralisation (which can be significant) appears capable of continuing deeper there from the last intersection of 5m @ 18.2g/t, already about 480m below surface.