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.

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.

Elkedra Diamonds NL (IPO Raising $3.5m) – Targeting Kimberlite Pipes in the NT using classic diamond formation models – SPECULATIVE BUY at 25c

• Elkedra Diamonds NL is offering 14m shares at 25c by way of an underwritten IPO. Over-subscriptions of a further 6m shares could increase the total amount raised to $5m.
• Due to Elkedra’s relationship with its current parent Metex (MEE), MEE shareholders are to receive a preferential offer of the minimum parcel of 10,000 shares each ($2,500). Up to 2m shares are accessible by MEE shareholders.
• Funds raised through the IPO are to be spent drilling 31 high priority magnetic anomalies that have been identified on Elkedra’s tenements in the Altjawarra Craton in the Northern Territory. Drilling is expected to start by April 2002. These anomalies were identified from a 400m spacing aero-magnetic survey, completed by the NT Dept. of Mines and Energy, and released in March 2000.
• The recent release of the detailed aero-mag data, (made available free), dramatically altered the economics of undertaking exploration in this potentially very prospective region. Previously, exploration was regarded as extremely difficult for explorers without GPS to know exactly where they were, due to few roads in apparently a virtually featureless landscape. As a result most of the areas have largely been un-tenemented since 1989.
• Following the release of the aero-mag data and using theoretical models developed over several years by Elkedra’s management, the company pegged some 48,000 km2 of ground focusing on the nucleus of the Altjawarra Craton. Less than 24 hours before Elkedra submitted its applications, De Beers Australia had pegged 4 tenement blocks within the outer boundary of Elkedra’s target area.
• This region has long been of interest to the diamond “majors,” with RIO and Stockdale (DeBeers) having held exploration licences over the area in the early 1970s to late 1980s. To date, some ten micro-diamonds and 1 macro-diamond have been reported on Elkedra’s leases, as well as numerous diamond indicators such as deep-sourced chromites and several picro-ilmenites. So far, most of the work focused on the fringes of the target area.
• Recent work by Elkedra has indicated that at least five of the magnetic anomalies have coincident geomorphic crater-like appearances, with one hosting a micro-diamond and others hosting diamond indicator minerals.

Aquarius Platinum Ltd (AQP) – A Buying Opportunity based on potentially significant profit growth

• The share price of AQP has drifted sideways up to about 900c for most of the past year since January 2001, despite a number of very positive fundamental improvements amidst ongoing uncertainty over Russian deliveries impacting on the pge prices, especially platinum.
• During 2001, AQP increased the holding in its main operation (Kroondal) from 45% to 95%, and In mid-2001 upgraded the Kroondal mill by 50% by installing a regrind circuit, with production attaining that higher level before December 2001. The regrind circuit also expected recoveries to improve by about 10%. •
• The increased holding in Kroondal was made using a placement and some Rand-denominated loans (about R629m) which with the 50% fall in the Rand against the A$ and US$ during 2001 reduced the loan by approximately one-third, from US$79m to US$52m. Operational costs have similarly fallen with the rand’s value, enhancing profitability too.
• Marikana has started construction, and could be in production by very late 2002, while the more profitable Everest South is still in feasibility study.

Golden Cross Resources Ltd (GCR) – Gaining a Step on the Production Ladder

• Golden Cross is in the process of making the transition from a pure exploration company to a gold producer through re-opening the Adelong goldfield in NSW, with initial production targeted at up to 35,000ozpa.
• GCR has a number of prospects all in NSW, and has moved to farm-out a number of them in the past 4 months as it focuses on Adelong, such as with MIM in February over Copper Hill, Triako in April over Yellow Mountain and Sipa in May over its Broken Hill properties. In most cases the farm-out is for up to 70% of the prospect.
• GCR is currently in the process of negotiating its financial arrangements to enable it to move into construction and development of the Adelong goldfield. Although there are 3 styles of gold-in-quartz mineralisation that we observed, based on the different wallrocks and strikes of the lodes, the old Challenger mine is the first that is planned to be re-opened.
• The recently completed feasibility study showed that payback of the $3m to $3.5m required to re-open the mine and commence plant throughput could be achieved within 1 year depending on the treatment rate through the plant.

Elkedra Diamonds NL (EDN) – Encouraging Signs in the First Drilling programme

• Elkedra is already seeing encouraging signs (or potential indications of diamond bearing formations) from the geochem analysis of its first drilling programme at Mt Ultim.
• The initial success consists of individual drillholes containing a darker red sandy unit, a micaceous chip, and a thick clay zone, which are all regarded by EDN as possibly anomalous, and could potentially indicate highly weathered kimberlite. These units or zones and others are to be subjected to second-stage heavy mineral analysis to identify possible diamond indicator minerals (results possibly by end July 2002).
• While the initial geochem results continue to be assessed from both Mt Ultim’s 7 drillholes and Central Craton samples, the second drilling program commenced in the last week of June 2002 in the Central Craton focusing on at least 15 high priority anomalies, consisting of aeromag and photo-feature anomalies.
• Manganese was also found in two grab samples in the Central Craton prospect. Although it has to be acknowledged that they were grab samples, one of the manganese values was relatively high at 42%Mn along with lower percentages than usual of deleterious elements such as iron (Fe) at 0.16% and silica at 5.8% SiO2.

Tanami Gold NL (TAM) – Bringing Prospects into Fruition in Elephant Country

• Tanami Gold are first and foremost a gold company, focusing on gold with the view that should base metal prospects emerge within their tenements, then TAM may consider possible joint ventures or other options to fund or divest such assets. TAM does not intend to use their gold assets to finance diversification into base metal assets.
• Over the past 8 years, Tanami Gold has built up a tenement package of 64,000sq km focused in 4 regions of the Tanami-Arunta Province (essentially all within the Northern Territory), which has become the envy of virtually all the world’s major resource companies as they have gradually realised that the NT is “elephant country”.
• The NT has become elephant country partly because it was classified as too hard to explore in and its restrictions on mining and royalties were regarded as archaic and insurmountable. Whereas, TAM has shown that they are not insurmountable, and more importantly there are structures on a mega scale that cause geologists to salivate, and yet have still not had one drillhole into them.
• TAM has established farm-in jvs with some of the gold majors such as Newmont and Barrick, and appear to be centred within a “land grab” with Anglogold even pegging “postage stamp” blocks probably because Callie’s (>10moz resource) surface footprint was only about 40m by 20m.