Friday, 30 July 2010

EMED Mining making progress at Rio Tinto copper mine in Spain

Copper and gold miner EMED Mining (LON:EMED) has moved closer to achieving its ambitious goal of restarting production from the Rio Tinto copper mine in Spain in 2011 during this quarter, reaching “significant milestones” in the permitting process and securing access to the grid.

The most important developments achieved during the quarter included the submission of all relevant reports for the permission to commence production in 2011 and the receipt of authorization to connect the mine to the national power grid.

EMED highlighted what it called the “clarification of important commercial matters,” which included the settlement of a debt owed to the Department of Social Security by a previous owner of the mine, finalization of independent assessment of the bonding for compliance with environmental regulations and the completion of independent valuations of adjoining landholdings required for operations.
Operating cash flow is expected at US$117 million annually if the copper price meets forecasts of spot and average 10 year prices of US$3/lb or US$6,600/t (tonne). The initial capital required for the start-up of the Rio Tinto mine amounts to US$100 million, in line with previous estimates.

The project’s updated financial model calls for an increase in production to 9 Mtpa (million tonnes per annum) in two years, estimating the ore reserve at 123 Mt at 0.48% copper for 585,000 tonnes contained with contained copper in concentrate averaging 37,000 tonnes per annum.

Drilling programs have been planned along with project engineering to maximise the value, while also stating there was “significant potential” to expand the life of mine and annual production.

Meanwhile, EMED is continuing discussions with potential customers of the PRT product and financiers, while preparing to dual-list on the Toronto Stock Exchange (TSX).

“In Spain, the submission of detailed and independent reports supporting the company's regulatory submissions of mid-2009marks another significant milestone in the permitting process for PRT. The process which we have just been through has improved the project, deepened our local relationships, facilitated community consultation and complied with our timetable,” said managing director of EMED Mining Harry Anagnostaras-Adams.

The company has also noted the rejection by the European Union of a proposed ban on the use of cyanide in the extractive industry, which it said provided it with “renewed confidence”  that its strategy and timing “complemented a resurgence of the minerals and metal production sectors in European industry".

EMED also provided an update on its Biely Vrch gold project in Slovakia, where the regulators have recently approved the mineral resource estimate totalling 1.1 Moz (million ounces) of gold, marking the first statutory step in the permitting process.

Dana Petroleum discovers new oilfield in Egypt

Dana Petroleum iPLC (LON:DNX) the Fin-1X exploration well has discovered a new oil field, in the North Zeit Bay Production Sharing Contract (PSC) area onshore in the Gulf of Suez, in Egypt.  This follows the discovery of the Lorcan oil field, made just last month in the same PSC area.

The Fin-1X well - where Dana is 100 percent stakeholder and operator - was drilled to a depth of 10,038 ft, some 3km from the Lorcan oil discovery announced in June.  The well encountered good quality oil bearing sands in the Kareem formation, in line with Dana's prognosis prior to drilling.

During the drill stem test, the Fin-1X well flowed strongly with high downhole pressures delivering an average flow rate of 1,049 barrels of oil per day. The flow rate during this test was restricted by the temporary flow testing facilities and the requirements to truck the produced oil from the desert location. The well has been retained as a future oil producer.
The Fin discovery together with Lorcan, which flowed at 4,714 barrels of oil per day and was also constrained by the testing equipment, confirms this area will be very attractive to develop.

A preliminary development plan has already been submitted to the Egyptian General Petroleum Corp (EGPC) for agreement. Dana estimates that these two discoveries so far in this PSC area have proven up initial reserves of 10-12 million barrels of oil for the group with the potential for considerable upside beyond these initial proved volumes. Further drilling is planned.

Once the development plan has been agreed with EGPC, an application will be submitted to the Ministry for a development lease. Following the development lease being lodged, the potential for early oil production will be discussed with EGPC.

With EGPC's agreement, early production facilities which would allow oil to be exported by road tanker could be installed and operating within one month. The full development plan is to tie production from this PSC area back to the East Zeit oil and gas processing plant, which is situated just 15km to the south east of the Lorcan and Fin oil fields.

Dana also holds a 100% working interest in East Zeit, making these developments extremely efficient and commercially attractive.

The drilling rig will now move to another operator to drill one well, which was a pre-existing contractual commitment for the rig, before returning to Dana's North Zeit Bay concession.

Dana expects the rig to return in October, when it will drill at least one appraisal well on the Lorcan field plus a further exploration well in this important PSC area. Drilling on the North Zeit Bay concession will also continue in 2011.

Forte Energy ‘extremely encouraged’ by further uranium intercepts in Mauritania

Forte Energy NL (LON:FTE, ASX:FTE) reported significant uranium intercepts from reverse circulation drilling at the A238 anomaly in the northern part of its exploration  licences in Mauritania.
Uranium intercepts from A238 include 41 metres at 450 parts per million, including 8m at 814 ppm with a maximum of 1m at 1,349 ppm; 37m at 347 ppm, including 5m at 1,000 ppm with a maximum of 1m at 1,352 ppm; and also 50m at 345ppm, including 34m at 400 ppm with a maximum of 1m at 1,295 ppm.

Anomaly 238 is located 55km southeast of Bir Moghrein and is one of 10 uranium anomalies targeted by a recently completed 5,000m program of RC drilling. It lies 135km northwest of the recently completed JORC resource at Bir En Nar.

The uranium mineralisation at the anomaly is of medium grade but has potential for a large volume deposit. Further drilling, both RC and core, is planned to commence later this year.

The latest results for A238 follow promising results announced earlier this week from the first four of 10 prospects - Beso, Bir En Nar, M52 and M60, in the southern area of Forte Energy's licences. Drilling there discovered a new mineralisation and identified additional targets.

Forte currently awaits assay results from the remaining five anomalies drilled mainly in the northern sections of the company's licences areas.

At Bir En Nar, Forte has identified a new zone of mineralisation, between the existing North and South zones. From the new zone, the company’s drilling results included 3m at 1,027ppm uranium. Forte intends to carry out further drilling at Bir En Nar, to extend the recently updated resource.

Earlier this month, Forte reported a maiden JORC mineral resource estimate for Bir En Nar, with a total of 2m lbs of contained U3O8 - 1.33Mt grading 704ppm U3O8 - in the Indicated and Inferred Resource categories.

Managing director Mark Reilly commented on the latest results: "These results from the A238 anomaly in northern Mauritania are extremely encouraging for a first pass drilling program.

"Not only has the program intersected mineralisation with true depths of up to 60 metres - the highest to date of any prospect in Mauritania - but the anomaly is over 1.2 kilometres long and up to 100 metres wide. Exploration plans are being formulated now for additional drilling on this and other prospects in the region at the end of the Mauritania summer later in 2010. In the interim, we look forward to reporting the results from the last five prospects."

Lonrho expects further growth after Q3 revenues jump 45%

Africa focused investment group Lonrho (LON:LONR) achieved a year-on-year turnover increase of 45% in Q3 as all businesses expanded with divisional revenues increases ranging between 20% and 118%, and it now expecting to duplicate this success in the remainder of 2010 and in 2011.

Quarterly revenues for the period to end-June 2010 jumped 45% to £26.8 million, bringing the total for the first three quarters to £74 million, which is a 23.4% improvement over the equivalent period of the previous year.

After making a loss of £2.4 million in Q3 2009, Lonrho achieved a positive EBITDA (earnings before interest, taxes, depreciation and amortisation) of £1.5 million. EBITDA for the year to date amounted to £4.3 million, compared to a £7 million loss at this point in 2009.
Losses for the year to date shrank from £6.2 million in 2009 to £2.5 million.

The operational highlights of the quarter included the opening of the 197 room Hotel Grand Karavia in Lubumbashi in the DRC (Democratic Republic of Congo), the purchase the remaining 49% of of agri-processing company Rollex and the acquisition of Trak-Auto, the John Deere tractor and Komatsu equipment dealership in Mozambique.

Revenues at the Agribusiness division rose 39% year on year to £13.7 million and by 14.9% for the first nine months. Back in June, the company bought African seafood supplier Oceanfresh Seafoods, aiming at expanding the operations of Lonrho Agriculture into new markets including the US, later winning a contract from Costco to ship seafood to Los Angeles.

The Transport division has achieved a revenue growth of 23%, raking in £4.8 million during the quarter to bring the nine month total to £14.6 million. Infrastructure revenues soared 118% to £4.3 million, revenues at the Hotels business jumped 61% to £1.4 million, while the Support Services division made £2.4 million in revenues, marking a 20% year on year improvement.

Lonrho offered an upbeat outlook, saying it was expected the strategic acquisitions made during the quarter, which includes Oceanfresh Seafoods, to add value to the group’s divisions and deliver a further boost to revenue growth through the year end and in 2011.

“Lonrho continues to deliver on its core strategy of investing in, and growing businesses with focused synergies to the core economic drivers of Africa; Oil, Agriculture and Minerals...having completed, or nearly completed the investment phase in many of the businesses the company can be confident that the last quarter of 2010 and 2011 will reflect the strong foundations for growth that have now been successfully established,” said executive chairman of Lonrho David Lenigas.

Epistem Holdings issues upbeat trading statement for FY

Stem-cell biotechnology company Epistem Holdings PLC (LON:EHP) said trading over the year to end-June 2010 was in line with market forecasts and the it expects to report a growth in after tax profit from a year earlier.
In a pre-close trading statement, Epistem said sales in all of its business divisions have made strong progress in the period.
It expects to release its final results for the year on October 5 2010.
Epistem specialises in epithelial stem cells in the areas of oncology, gastrointestinal and dermatological diseases. Epistem develops innovative therapeutics, biomarkers and diagnostics alongside providing contract research services to drug development companies.
The group's core expertise is focused on the regulation of adult stem cells located in epithelial tissue, which includes the gastrointestinal tract, skin, hair follicles, breast and prostate. Epistem does not conduct research in the areas of embryonic stem cells or stem cell transplantation.
At the interim stage, Epistem revealed the commercial progress being made through its partnership with Novartis as it reported, in March, a 90% year-on-year increase in revenue during the six months ended 31 December 2009. Revenue in the first half saw rose to £2.8m compared with £1.5m in the same period a year earlier.

Epistem broke even in the first half, compared to a £500,000 loss previously, furthermore the company said it anticipates further revenue growth over the second half, to provide an improved financial profile.

AVIA Health Informatics guardedly optimistic after transformational full year

AVIA Health Informatics (LON:AVIA) gave a guardedly optimistic assessment of prospects after a transformational, but loss-making year.

The shortfall widened £90,000 to £320,000 for year ended March 31 2010 on revenues of £1.75 million.  What the results fail to reflect is the upheaval as the group bought Plain Software, moved from PLUS Markets to AIM and raised £1.19 million.

The group also invested £400,000 in developing its suite of Odyssey health diagnosis products.
Chairman Barry Giddings said: "The board sees a move away in the current financial year from the company’s dependence on the UK market to major international growth markets, specifically emerging markets in the Far East, the Americas and elsewhere.

"Our product development resource is focused on meeting the customers’ needs in these markets. We also expect to expand our cost effective 'route to market' strategy of working with value added partners, resellers and distributors into these new developing market areas.

"I am excited by the potential for the company in overseas markets and remain cautiously optimistic about the current financial year due to the financial pressures on its customer base in the UK market," Giddings said.

The Odyssey system is currently available in five languages – English, German, French, Italian and Dutch.

The plan  is to soon make it available in Mandarin, the business language of China, Spanish, Portuguese and “possibly Russian", Giddings revealed.

This will make the Odyssey platform a truly international product.

Currently the company has two strategic partners – one in the US, the other in Asia.

By the end of next year, Giddings predicts the number of partnerships will be in double figures, ensuring in the process that the group is profitable.

The products Avia sells under the Odyssey brand promise to revolutionise the way people receive health advice. They can be used for self-assessment on a touch screen device, or accessed via the internet by clinicians working over the telephone or directly with the patient. 

Avia’s high end database has been deployed by a local ambulance service to identify the most urgent cases and its software is also being utilised by receptionists and nurses in primary care centres.

The programmes are based on the pioneering work of leading academic Professor Jeremy Dale, who is a director of Avia, a major shareholder and one of the original founders of Plain.

The software powered the NHS Direct helpline until 2000, when the contract was awarded to Axa Assistance and MDS International.

The products rely on a Bayesian, or statistics-based system of questions and answers that mimics human reasoning processes. Unlike decision support programmes which use algorithms, this is intended to make Odyssey much more intuitive to use.

Its creators say that patient assessments with Odyssey are faster and safer. They also cut down unnecessary hospital referrals and treatment costs. 

MobileAssess is the latest addition to the Odyssey stable. And the first product in the range is a programme called Odyssey MarineAssess, which is specifically targeted at global cargo shipping companies.

It is designed to save considerable costs associated with diverting or evacuating of a vessel in the event of injury to or illness of a crew member.

Under Giddings’ chairmanship the Avia developers have taken what used to be a very clunky system and made it fit for the internet era.

It can be downloaded or stored remotely using cloud-based computing. Customers don’t even need an always-on connection to the net, which is helpful for users in remote or developing parts of the world.

Not just this, the Odyssey system can be sliced, diced and served up in any form you want it – from the very basic suite you might get as a mobile app, to the more complex, all singing, all dancing service provided to  insurance call centres.

Stratex International's Oksut gold project continues to deliver

Turkey and Ethiopia operating gold miner Stratex International (LON:STI) said that latest drilling results from its Oksut gold project in Turkey showed potential for high-tonnage, low-grade gold deposit at Ortacam zone and phase two was underway on the first of five drill targets.
The company and joint venture partner Centerra Gold (TSX:CG) has completed five diamond drill holes at the Ortaçam Zone of the Oksut project to expand the preliminary resource. The best intersections included 334.90 metres oxide + sulphide grading 0.52 g/t (grammes per tonne) gold including 51 metres oxide grading 1.74 g/t gold, 30.30 metres oxide grading 1.61 g/t gold, 34.65 metres oxide grading 2.26 g/t gold and 109.70 metres oxide grading 1.73 g/t gold including 80.30 metres oxide grading 2.22 g/t gold.
On top of that, the drilling also confirmed long intersections of low-grade oxide and sulphide mineralization. These included 334.90 metres grading 0.57 g/t gold and 109.70 metres at 1.73 g/t gold.
Wireframe 3D modeling of the mineralized zone is currently being undertaken. The initial focus of phase two drilling is on outcropping gold-bearing zone within the wider Öksüt licence area.
Stratex stated that the results demonstrated the “exciting” prospectivity of the project and highlighted the potential of developing the Ortacam Zone as a large-tonnage low-grade gold deposit in the future.
“Importantly, the drilling has increased our understanding of the geometry of the gold mineralization and illustrates the potential to increase the resource in the Ortaçam Zone…the Öksüt discovery, we believe, is also showing the potential to contain a significant porphyry gold-copper system, something which would create a major value uplift for the company. With this in mind, we look forward to reporting further exciting news as the programme continues to develop,” said Stratex chief executive Bob Foster.
A preliminary estimate for the Ortacam zone currently stands at 3.8 Mt (million tones) grading 1.21 g/t gold for 147,814 oz (ounces) gold. This includes 2.88 Mt grading 1.38 g/t for 127,825 oz, or 86% of the total, in the indicated category. The inferred resource amounts to 927,970 tonnes at 0.67 g/t for 19,989 oz.
Under the terms of the option/JV agreement, Centerra is to fund US$3 million over three years to acquire a 50% interest in the project with a minimum commitment of US$500,000 in the first year. Centerra has the option to increase its interest to 70% after the first three years by expending an additional US$3 million over the following two years.

Caza Oil & Gas data from Bongo prospect indicates hydrocarbons

US focused Caza Oil & Gas (LON:CAZA, TSX-V:CAZ) told investors that its O.B. Ranch #1 well, on the Bongo prospect in Wharton county, Texas, has reached a depth of 12,964ft and preliminary data indicates the presence of hydrocarbon bearing sands in a shallower horizon.

The company said that the sands will require further evaluation. Intermediate casing has been installed, cemented and the formation integrity has been tested. 

Drilling has now recommenced to the target depth of 16,000ft.
"We are pleased that drilling on the O.B. Ranch #1 well is progressing as planned and anticipate reaching the target depth within approximately fifteen days," Caza chief executive W. Michael Ford commented.

When the well was spudded, back in June, Caza said it expects the well to encounter multiple, potential, hydrocarbon bearing reservoir sections.

Bongo is a significant 3-D seismically defined, three-way closure in the Wilcox formation. Caza has previously farmed out a portion of its 65% participating interest in Bongo to Verus Investments Limited and Singular Oil & Gas, Inc, retaining a 40% working interest in the O.B. Ranch#1 well with an approximate 30% net revenue interest.

African Aura Mining starts resource definition drilling at Nkout iron ore project

African Aura Mining (LON:AAAM, TSX-V:AUR) has started a first phase 4,200 metre initial resource definition drilling programme at its wholly owned Nkout iron ore project in southern Cameroon after an airborne geophysical survey returned “encouraging results”, defining a major iron ore target.

Previous grab sampling at Knout has returned grades of up to 68% Fe (iron) and 55% Fe. The company added that Nkout was “strategically well located” in an emerging iron ore province, in proximity of the 2.5 Bt (billion tonne) Mbalam iron ore deposit and close to the proposed rail route to a port, which will service Mbalam.

The data produced by the airborne survey over Nkout suggested the presence of an east-west striking antiform with two limbs approximately 100m thick and magnetic susceptibilities of around 2.0, which the company highlighted as being consistent for a prospective banded iron formation.
“Having recently announced the highly encouraging results from the airborne geophysical survey at Nkout in southern Cameroon, it is very pleasing to already be commencing the initial resource definition drill programme...we look forward to updating shareholders on progress in due course during 4Q 2010,” said president and chief executive Luis da Silva.

The company said that the current 10 hole programme was designed to refine the geological model and to establish a maiden iron ore resource this year. The phase 2 programme will include drilling of a further 8,000 metres within the current approved budget.

Broker Evo Securities said that it anticipated results from the drilling programme in Q4 2010 and expected a newsflow from the company over the next six months that could heavily impact its share price. Evo also noted the convenient location of the project.

African Aura has three principal iron ore projects in Cameroon, namely the Nkout, Ngoa and Akom Hills and considers that their combined dimensions represent a potentially significant iron ore asset.

Nkout is defined by a major geophysical anomaly co-incident with a significant range of hills with at least 8 km (kilometres) of strike length with a further 12 km of targets existing around the deposit.

African Aura Mining was formed late last year through a merger between Mano River Resources and African Aura Resources. The merger was completed in October 2009, and the enlarged company has a considerable portfolio of projects focused on iron ore and gold deposits in highly prospective, underexplored countries of sub-Saharan Africa.

In April 2010, African Aura conducted a private placing with certain institutional and other investors to raise approximately £11.3 million, issuing 17.39 million new shares at 65 pence each. The proceeds are intended to fund work across its project portfolio over the next 14 months, including the New Liberty gold deposit and the Weaju deposit in Liberia, and the Nkout iron ore project.

Medusa Mining promotes Peter Hepburn-Brown to operations director

Medusa Mining (LON:MML, ASX:MML, TSX:MLL) has promoted Peter Hepburn-Brown from his role as a non-exec director to a new position of executive director of operations.

Hepburn-Brown will be responsible for the management of all operational and technical aspects of the companys operations in the Philippines.

"Peter has a proven track record of operational management. His skills and experience will prove invaluable for Medusa, as the company heads towards an exciting phase of further expansion and growth", Medusa MD Geoff Davis commented.
"The company is currently undergoing steady growth. Peter's appointment to an executive role in charge of the company's operations in the Philippines reinforces the company's position as a serious mid-tier gold producer."

Medusa highlighted that Hepburn-Brown has 28 years of experience in a wide range of mining situations, commodities and overseas jurisdictions, and his experience includes hands-on shaft sinking and airleg mining in narrow vein mines, experience that is well suited to the current operations in the Philippines.

The newly promoted director also has experience with mining large open pit, disseminated ore bodies.

Hepburn-Brown has previously held senior management positions for Harmony Gold (NYSE:HMY) and Great Central Mines, as well as other executive, operational and consulting positions at other companies.

The company also noted that, as a result of the promotion, Medusa's board of directors will comprise three non-executive directors and three executive directors. Consequently, in order to ensure that the majority of the board are independent directors - in line with the principles of the ASX Corporate Governance Council - Medusa plans to hire an additional non-exec director once a suitable candidate has been identified.

In the Philippines, the company's primary project is the Co-O underground gold mine. Last week, through its Philippines operating company, Philsaga Mining Corporation, Medusa increased the Indicated Resource at Co-O by 4% to 603,000oz gold and increased the Inferred Resource by 36% to 898,000oz. The grade of both categories also increased.

Alongside the new resource estimate, the company also announced additional information, supporting estimates of the conceptual target sizes for the mine.

The target size estimates we done by using various parameters which indicate a range of 3Moz (million ounces) in 9.3Mt (million tonnes) to 7Moz in 22Mt using a grade range of 9-11 g/t (grams per tonne) gold with a preferred average grade of 10g/t gold.

The company noted that potential target size and grade is conceptual in nature, and there has been insuffiicient exploration to define a mineral resource, and it is uncertain if further exploration will result in the target being defined as a mineral resource.

On June 30, the company said a number of rigs which will continue drilling on the Co-O Mine and surrounding area will be rationalised to four or five rigs over the next few months as some of the rigs are planned to be transferred to commence feasibility study related drilling at the Bananghilig Deposit.

ZOO Digital launches automated style-guide system, wins Warner Home Video as first client

Provider of software and software-led services for the filmed entertainment market, ZOO Digital Group (LON:ZOO) has launched an automated style-guide production system for home entertainment products and has secured Warner Home Video International as its first customer.
The company stated that the system enabled entertainment companies to improve operating efficiencies and had applications in other markets where consistency of branding across multiple language versions is important, including customer products, videogames and publishing.
“In the past, style-guides - those all important standard, style and format-setting documents for product packaging and marketing campaigns - have been created manually. Now with our new automated system, these documents can be produced more quickly and easily, saving time and cost and providing greater centralised control,” said chief executive of ZOO Digital Stuart Green.
In June, broker FinnCap revised its projections for the company after it reported better than expected preliminary results, forecasting sales reach US$16.2 million in 2011, up from US$15.1 million in 2010 and US$11.3 million in 2009. The EV (enterprise value)/EBITDA (earnings before interest, taxes, depreciation and amortisation) has been projected at 7.7x for 2011 compared to 10.3x in 2010.
ZOO achieved its goal for the year of winning new customers, having recently signed agreements with a major Hollywood studio and Multi Packaging Solutions (MPS), while the revenue from the existing significant customer jumped by 72%.
ZOO takes a two-pronged approach to its business, with two distinct business lines. It licenses-out its software, primarily charged with a SaaS (Software as a Service) style per-use structure. Separately, the company has its own production facility, utilising the same propriety software from which it provides a full-service creative and production service. The company has stated that a mixed offering enables it to generate recurring revenues from most clients which increase as its software products become established components of their internal systems and workflows.

Frontier Mining on track for 10,000oz gold in 2010 with continuous leaching now underway at Koskuduk

Frontier Mining (LON:FML) has now begun continuous leaching operations at the Koskuduk deposit on the Naimanjal licence in northeast Kazakhstan, after completing its second gold pour, for 329oz of gold and 1,000oz of silver. The company plans to leach 500,000 tons of ore in 2010, it has already extracted 135,000 tons, and 75,000 tons is currently on the leach pads.

"We have now begun continuous leaching operations at Koskuduk and plan to reach our daily production targets within a few weeks, as scheduled,” Frontier chief executive Erlan Sagadiev commented. “Grades and recovery rates are within our expected range and we are firmly on track to achieve our production target of 10,000 ounces of gold for 2010."

At Koskuduk, the current ore crushing rate is 2,500tpd (tons per day) and it will increase to 6,000tpd as the all the recently commissioned equipment ramps up to operating capacity.
Frontier said it intends to report on its ore and gold production on a monthly basis.

On the Naimanjal licence, Frontier’s focus turned to production at the Koskuduk deposit, with the company’s mining operations being relocated from the Naimanjal complex, to access the Koskuduk resource.

The total resource on the Naimanjal license - which hosts the Koskuduk, Baitimir, Naimanjal, Beschoku deposits – currently stands at approximately 1Moz (million ounces), with the Koskuduk deposit hosting  180,000oz of gold at an average grade of approximately 2 grams per tonne (g/t).

At Koskuduk in 2009, a new gold leach plant was built along with the installation of crushing equipment, and pit excavation began during the winter.

Frontier has been growing its profile as a gold mining and mine development company, with an ever-growing footprint in Kazakhstan. Aside from its operations on the Naimanjal license, the company is currently working on a major development project at Benkala, on the Urals copper/gold ore belt in northwest Kazakhstan.

Frontier is developing the Benkala project through its KazCopper subsidiary in a 50:50% joint venture with Colville Intercorp. The JV partners are currently working towards the completion of a merger, which is set to complete in the third quarter of 2010.

The merger sees Frontier take full control of Benkala and it also adds another key development project to the portfolio, the Maminskoye gold project in Russia. In June, Frontier announced the results of independent technical reviews and preliminary economic assessments at Benkala and Maminskoye.

The assessments, carried out by Wardell Armstrong International (WAI), envisage a 5 million tonne per annum (Mtpa) copper open-pit mining operation at Benkala. The economic assessment estimates that Benkala has an US$191m NPV, using a 10% discount rate and an internal rate of return (IRR) of 116% based on initial CAPEX of US$55m and a US$6,000/mt copper price. 

The WAI preliminary economic assessment is based on 5Mtpa ore mining rate, average grade of 0.36% copper and 63% overall recovery.

At Maminskoye, MAI’s a preliminary model contemplates the development of an open-pit mine, operating at an initial mining rate of 700ktpa for the first three years, and increasing to 1Mtpa for a 14 year project life. 

Frontier noted that WAI sees Maminskoye as an "attractive project" with the NPV estimated at US$110.9m, using a 10% discount rate and IRR of 48% with a 3 year payback. The assessment is based on an estimated capital cost of US$75M and a US$950/oz gold price.

Petroceltic hires Dalma Energy for 4-well appraisal programme on Isarene permit in Algeria

Petroceltic International (LON:PCI) has hired a Dubai-based drilling contractor Dalma Energy for a four-hole appraisal programme on the Isarene permit, Algeria. The company believes that the Ain Tsila gas discovery, which is hosted on Isarene, “may turn out to be a world class hydrocarbon resource”.

The rig is currently stacked in Hassi Messaoud, in south-east Algeria, and it is being mobilised immediately. The rig is expected to arrive on location in time to start drilling on schedule in October 2010, and the drilling and testing programme is expected to last between six and seven months.

The drilling programme follows up the successful five-well programme in 2009/2010, which discovered the Ain Tsila gas discoveries which demonstrated an “extensive and probably continuous gas accumulation”, capable of flowing at over 30mmscf/d (million square cubic feet per day), following fracture stimulation.
"Securing this rig is a significant step towards re-starting drilling operations on the Isarene permit. We expect to drill a minimum of four appraisal wells including at least one horizontal well”, Petroceltic chief executive Brian O'Cathain commented.

“Our interpretation and analysis of the results from the five well programme in 2009/10 is progressing, supporting our belief that the Ain Tsila gas condensate discovery, on the Isarene permit, may turn out to be a world class hydrocarbon resource,” O'Cathain added.

At the end of the appraisal programme, Petroceltic intends to submit a Final Discovery Report / development plan to the Algerian Authorities. The programme is fully funded following April’s US$120m fundraising.

Isarene is being developed through a joint venture with and the Algerian oil & gas company Sonatrach. With a 75% working interest and 100% of the paying interest, Petroceltic is the primary stakeholder and operator of the permit. Sonatrach owns the remaining 25%.

The Isarene permit was a major focus of activity for Petroceltic in 2009, the drilling campaign began in May 2009. Drilling was focused on the appraisal of gas and oil discoveries, which had already been made by both Petroceltic and previous operators.

The campaign has focused on the Ain Tsila discovery and the Issaouane North West (INW) structure. In February 2010, the company completed the highly successful five well appraisal drilling programme with four of the five wells drilled successfully testing at commercial gas flow rates - ranging from 4mmscfd (million standard cubic feet per day) to 33mmscfd.

Subsequently, Petroceltic‘s Ain Tsila Ridge discovery was rated as the tenth largest in the world and the largest in Africa so far by HIS Petroconsultants.

London Mining enters iron ore JV in Chile

London Mining PLC (LON:LOND) said it has entered into a joint venture with am unspecified Chinese and Chilean based partner to take advantage of several iron ore opportunities in the Atacama region of northern Chile.

The UK based developer of mines to supply the steel industry said the joint venture company, Atacama Mining Resources Corp, through its Chilean subsidiary, holds options over concessions to iron ore deposits in the Atacama. Under the agreement, London Mining has subscribed for 50 percent of the JV shares of Atacama.

London Mining has also agreed to make additional loans of in aggregate US$5million to the Chilean subsidiary of Atacama to fund acquisitions of a number of concessions in the area and to get exclusive rights from the JV partners on future iron ore prospects in Chile.

The loans will be repaid to London Mining from the earlier of first sales of ore made by the joint venture or third party funding into the joint venture.
The subscription by London Mining in the Atacama JV is in consideration for the waiver by London Mining of previously advanced convertible loans in the aggregate amount of US$5 million.

The Atacama projects are located within a short distance from a number of potential port opportunities and logistics arrangements for export to China are being investigated.

London Mining chief executive Graeme Hossie said: "We are very excited to have concluded these arrangements which bring a strong pipeline of future development potential to the group. We are currently undertaking resource definition activities and investigating the potential to obtain early production with very low investment by Atacama. We look forward to releasing updates on this activity later this year."

London Mining is focused on identifying, developing and operating scaleable mines to become a mid-tier supplier to the global steel industry. London Mining is developing four iron ore mines, Marampa in Sierra Leone, Wadi Sawawin in Saudi Arabia, Isua in Greenland and one in China through a 50 percent stake in a JV, as well as a coking coal operation in Colombia. All London Mining's assets have deliverable production with potential for expansion.

Liberia: Fertile Ground for Ambitious Equatorial Palm Oil

Rarely is Liberia cited as one of Africa’s emerging, vibrant economies.

This tiny nation of three and half million people, sandwiched between Sierra Leone and the Ivory Coast, is probably best known as the birthplace of international footballer George Weah.

And during the 1980s and 90s, it was synonymous with violence as the country was gripped by two bloody civil wars.
The United Nations maintains a strong presence there and the influential CIA World Factbook tells us the ‘security situation is still fragile’.

However today under President Ellen Johnson Sirleaf, Liberia’s very own ‘iron lady’, its economic potential is slowly being unleashed.

And it is becoming a magnet for some of the giants of international commerce.

BHP Billiton PLC (ASX: BHP; LON: BLT), Severstal  and Arcelor Mittal have beaten a path to this west African backwater,  while China has invested significant sums.

Against this back-drop, London-listed Equatorial Palm Oil (LON:PAL) aims to build a world class oil palm plantation business in Liberia.

Palm oil is to food production what iron ore is to heavy industry. It is an ingredient found in everything from Galaxy chocolate to Goodfella’s pizza. It even crops up in Persil soap powder.

And in common with many basic minerals and hard commodities, demand for palm oil is buoyant and expanding all the time.

The Chinese are recent converts as are the Indians. But the biggest surprise is America is slowly switching from soya bean oil to palm oil as a result mainly of the scare over trans-fats.

EPO has almost 170,000 hectares of land suitable for sustainable crude palm oil cultivation and its aim is to be a 100,000 hectare producer with output totalling 250,000 tonnes per annum.

However it will take a decade to have 50,000 hectares under cultivation and a further five years to hit its ultimate target, according to executive chairman Michael Frayne.

The near term aim is more modest:  to reinstate 3,000 hectares of abandoned palm production this year while planting a further 1,200 hectares in 2011 as part of a planting ramp up.
Road links from EPO’s two plantations to the nearby ports of Greenville and Buchanan are decent and a palm oil mill imported from Malaysia is expected to be on-site by the end of the month.

Frayne likens the process to developing a mine, or proving up the reserves of a major oil and gas project.

"You need to take time to set up a palm oil project properly .... but if you plant out your first 10,000 hectares and you can show you can go on to 100,000, especially if you plan to plant out sustainably,  then you are on a roll. There is a value re-assessment. By getting the initial planting going you upgrade the whole value."

Initial production will be modest, but it will contribute to financing the company’s ambitious planting programme.

The firm raised £6.5 million from the market when it listed back in February and went on to raise a further £5 million from a strategic investor in May.

But at the current burn rate - and even with cash coming in from palm oil sales - EPO will need a fresh injection of cash in around two years, Frayne estimates.

Whether the group taps the market again probably depends on the share price, though there are other sources of finance including development banks, which will lend cash on very "attractive terms".

"We are not a cash-flow story we are an asset growth story," Frayne asserts. "However we will be self funding in five or six years."

In the world of natural resources, a junior prospector sitting on a world-class asset might expect to be taken out by one industry’s majors.

The analogy is not lost on Frayne, particularly with EPO’s plantations sandwiched between the operations of Sime Darby and Golden Agri – the heavyweights of the industry.

"That could create opportunities down the track, particularly as we are a sustainable palm oil developer," Frayne concedes.

One wonders then, if the story is so straightforward why the share price has traded down to 11.5p from the 17.5p listing price.

Frayne refutes the suggestion that Liberia is the reason. Most of the world’s palm oil production takes place in Malaysia and Indonesia. So Liberia, with all its baggage, would seem to be a bit of punt.

Not so, says Geoff Brown, the company’s plantations director and an industry veteran with 40 years experience.

"Liberia has come a long way" Brown says. "It has put the framework in place for stable government with US support.

"It has a very good leader who is keen to encourage foreign investment. So it is a good west African nation. It has set up some very good frameworks."

Frayne blames a "trickle of selling" for the depressed share price. He knows signs of clear progress in accordance with the timetable set out at the time of the February listing will shore up sentiment.

The chairman also hopes to attract a number of new blue chip investors onto the share register after the traditional summer lull on the stock market.

That said, the current list of backers is impressive. On it are JP Morgan, Henderson and Blackrock.

But perhaps the most interesting is the Siva Group, the conglomerate run by Indian billionaire C Sivasankaran, which owns 29 per cent of the firm. Frayne says:  "He’s looking to invest in palm oil assets of scale with management.  He brings a lot of firepower and access to other funding routes."

Sivasankaran will also have looked at the fundamentals for palm oil - the fact the demand cannot be sated while finding new, sustainable sources of the product is proving difficult.

And this is reflected in the palm oil price, which at US$837.50 a ton, is buoyant for a market emerging from recession. The recent high is US$1,200 a ton and the low around US$500.

Frayne says the EPO model works all the way down to around US$250. Not that it is ever likely to get this low, with demand from the biofuels market keeping the price well above this break-even figure.

"The price outlook is very good," Frayne says. "No one company dominates the market. It is a fundamental supply and demand story."

It also means that economically, Liberia becomes a very attractive destination, even for the normally risk averse giants of palm oil.

"China and the United States are investing in Liberia in a big way," Ahmad Zubir Murshid, chief executive of Sime Darby said recently. "We cannot wait until everything is perfect and then invest. By then it will be too late."

Vatukoula Gold funded for 2-year exploration programme with £7.4m placing

Vatukoula Gold Mines (LON:VGM) has raised £7.4m through an equity placing, to fund a two year exploration programme focused on the wholly-owned Vatukoula gold mine and the special prospecting licenses covering the Tavua Cladera mining area in Fiji. Investors welcomed the news, with shares rising just over 5% on London’s AIM market.

"We are pleased to announce this £7.4 million placing that will allow the company to carry out an initial two year exploration programme at Tavua Cladera in Fiji ... We believe the exploration programme has the potential in this gold price environment to add reserves and therefore greater value to our Vatukoula asset,” Vatukoula chief executive David Paxton said.

“Initial exploration studies utilising the wealth of data available to us from historic work and more recent surface drilling previously reported have been extremely encouraging.”
The company placed 400m new shares at 1.85p each, a 10% premium to 1.68p - the closing mid-market price when the placing letters were dispatched on 19 July. The placing shares will represent approximately 9.8% of the company’s enlarged issued share capital.

On closing, Vatukoula will have cash, and cash equivalents, of approximately £12m.

Following the interpretation of historic data, along with preliminary results from the desk study, the company has identified several highly prospective surface and underground exploration targets. Overall the two-year programme will cost approximately £5.4m, and it will be completed in December 2012.

The remaining funds will strengthen Vatukoula's balance sheet and will be used for general working capital purposes.

Vatukoula’s largest shareholder, Sprott Asset Management (TSX:SII) participated in the placing, subscribing for 70.8m shares.

The company is currently ramping up production and modernising the underground Vatukoula gold mine in Fiji. In the company’s most recent operations update, June’s Q3 report, the company reported that the Vatukoula treatment plant (VTP) processed 312,003 tonnes of ore at an average grade of 4.59g/t during the nine month period, compared to 143,033 tonnes during the equivalent period of the previous year.

Gold recovered increased from 26,313oz to 38,402oz in the nine months to 31st May, and sales for the first three quarters were up from 26,629oz to 35,391oz. The improved level of production, and higher gold prices, led to a significant improvement in the mines overall financial performance.

Net earnings for the first three quarters amounted to £7.3m, compared to a loss of £1.2m for the equivalent period of 2009.

The Vatukoula mine has a current JORC-compliant resource of 4.3Moz gold.

In a recent analyst note to investors, WH Ireland said there is still exceptional extensional and near-mine exploration prospectivity at Vatukoula, even though the mine currently has more than three decades of in front of it.

The stockbroker estimates that Vatukoula’s gross pre-mine mineralisation system is in-excess of 20Moz Au, and that current ore resources could materially increase within the next two to three years.

“We would expect, even predict, the likelihood of several smaller multi-million ounce shear zones within Vatukoula, including possibility of numerous smaller deposits nearby ... Given our understanding of the mineralising system, we believe that if adequately resourced, a substantial maiden discovery within 12 to 18 months could be announced,” WH Ireland said in May.

Kryso Resources lands major Chinese investor for Pakrut gold project

Kryso Resources (LON:KYS) has secured a £10.99m investment from China Nonferrous Metals International Mining (CNMIM) in a conditional placing of 73.27m shares at 15p each. The proceeds will help fund the development, and further exploration, of the Pakrut gold project and further exploration at the Hukas nickel-copper project, both in Tajikistan.

The placing shares representing 29.9% of the total issued share capital of the company.

Last month, the company announced it held talks with an un-named Chinese investor, with the parties signing an exclusivity agreement. The exclusivity period lasted for 7 days and ended without agreement.
Crucially, the new investor intends to procure debt financing for no less than 70% of Pakrut’s development costs, within three months of the board approval of the bankable feasibility study (BFS). The debt financing would fund the constructing and commissioning of a mine at Pakrut.

“Kryso is extremely pleased to have entered into a strategic agreement with a company with such a strong track record in the successful development of major mining projects”, Kryso chairman and acting MD Trevor Davenport commented.

“CNMIM is supportive of Kryso's primary objective, to develop the Pakrut gold project to commercial production at the earliest opportunity, and we are confident that CNMIM will be able to source the necessary financing for the company to fulfil this objective.”

The company highlighted that the BFS results will be published shortly.

Kryso has been finalizing the expanded Bankable Feasibility Study (BFS) on its 3Moz (million ounce) Pakrut gold project in Tajikistan. The study’s completion was expected earlier, however Kryso decided to extend the BFS to include the most recent drilling results which were ‘better-than-expected’. According to Kryso, the latest results indicate excellent potential to expand the underground resource base.

CNMIM have also been issued warrants - one for every ordinary share - as part of the placing, with a 21p exercise price. Furthermore, CNMIM will have the right to appoint two directors to the Kryso board. The company also stated that one of these new directors will assume the role of non-executive chairman.

At the end of March, Kryso told investors that high grade drill results from Ore Zone 1 had shown that the mineralization widens at depth, sparking a rethink from the company and BGRIMM. Kryso and the BGRIMM (Beijing General Research Institute of Mining and Metallurgy) now believe that a more robust mine development plan will be forthcoming if Pakrut is developed solely as an underground gold mine to exploit the widening underground gold structure.

The assay results reported by the company in late April included intercepts of 25.5 metres at 7.5 g/t (grams per tonne) gold, 42.4 metres at 5.4 g/t gold and 12 metres at 6.4 g/t gold from Ore Zone 1, while Ore Zone 3 assays included 9 metres at 7.5 g/t gold and 13.5 metres at 7.5 g/t gold containing 4.5 metres at a higher grade of 20.1 g/t gold.

With all other major elements of the study largely complete, Kryso now expects to complete a fully optimized BFS, including the new resource model, in August.

Also in June, Kryso increased the project’s measured & indicated JORC resource by 26%, with a further 353,300oz, taking the total JORC resource to over 3.024Moz of gold. The company also anticipates further upgrades to Pakrut’s resource with the 2010 drilling programme well underway.

The Pakrut gold project, Kryso’s primary focus, is located within the southern portion of the Tien Shan Fold Belt, north-east of Tajikistan’s capital, Dushanbe. The Tien Shan Fold Belt, extends from near the Aral Sea in Uzbekistan through the northern part of Tajikistan into China and then into Mongolia.                       

Nighthawk's Jolly Ranch is proving very attractive

Nighthawk Energy’s (LON:HAWK, OTC:NHEGY) David Bramhill gave an upbeat assessment of the size and quality of would-be bidders for a stake in the explorer’s Jolly Ranch shale oil project in Colorado.

"We have a lot of very big companies interested," the managing director told Proactiveinvestors.

Yesterday the group revealed that no fewer than seven interested parties have been short-listed by consultants Macquarie Tristone, which is conducting the auction process.
They will now be allowed access to the data room to assess the quality of Jolly Ranch before tabling definitive offers for a stake in the acreage, which is jointly owned by operator Running Foxes.

"We will not sell out completely," Bramhill said.  "We will partner up. This is what this whole sale is about.

"It may be 10 per cent, it may be 75 per cent. But we have no intention of completely selling out. It is lucrative project, and what it needs is capital investment.

"We have a lot of very big companies interested. It is significant. In order to make the best of this project you need someone with extremely deep pockets. The fact is the people coming into our data room are of the highest quality."

In the meantime, the remainder of the year promises to be a busy period for Nighthawk, with Schlumberger preparing a £250,000 report assessing the quantity of oil that might be economically extracted from Jolly Ranch.

In July 2009 the P50, or most likely estimate of the oil-in-place in the Marmaton, Cherokee and Atoka areas of Jolly Ranch were assessed at 1.462 billion barrels gross.

The latest work by Schlumberger, due for official publication at some point in the fourth quarter, will give proved and probable reserves on which investors can make an objective valuation of Nighthawk as its assets.

"I’m not expecting anything nasty," said Bramhill, who says Schlumberger did its own due diligence on Jolly Ranch before embarking on such a comprehensive and  expensive piece of analysis.

"They thought we had a viable project. If they didn’t then they would not have embarked on a report of this scale."

Nighthawk Energy acquired a 50 per cent interest in some 40,000 acres at Jolly Ranch in June 2007.

The position has subsequently been substantially increased and now covers approximately 370,000 gross acres in the Lincoln, Elbert and Washington Counties of Colorado.

This asset is located within the Denver Basin which has supported significant hydrocarbon production from Pennsylvanian sandstones and carbonates.  Jolly Ranch contains multiple conventional and unconventional oil producing horizons.

The primary targets are the Marmaton carbonate and the Cherokee and Atoka shales, which are located above each other in the Pennsylvanian, the Marmaton being above the Cherokee, with the Atoka at the bottom.

The sedimentary layers below the city of Denver are 15,000 feet thick and the Pennsylvanian formations are between 6,100 and 7,800 feet below surface.

The sources of the hydrocarbons are the black shales which are laterally continuous throughout the area studied by Schlumberger when compiling the 2009 report. These are rich in the ancient organic material from which the oil forms.

Taking control of Araguaia nickel project: Horizonte's shrewdest move yet?

Horizonte Minerals’ (LON:HZM) latest tie-up with a mining partner looks to be its shrewdest.
It is taking full control of the Araguaia nickel project in the Carajas region of Brazil currently owned by Teck Resources (TSX:TCK) and merging it with its neighbouring Lontra development.
It creates at a stroke a 100 million ton high grade resource which could, over time, creep up to 150 million tons and even 200 million tons, according to Horizonte chief executive Jeremy Martin.
In return the Canadian giant gets a 50 per cent stake in an enlarged Horizonte, worth around £7.5 million.
Horizonte is also raising £5.1 million by issuing shares at 10p each – well above the suspension price of 8.75p.
So why is it shrewd? Well, Horizonte is getting Araguaia for a song.
The deal values the combined assets at a bargain-basement 0.7 cents a pound of nickel in the ground compared with a peer group average of 3 cents.
"When you put the Araguaia project together with our Lontra project, that gives you a base case 100 million tons resource, which starts to put it up there with global big boys," Martin told Proactiveinvestors.
"I think we will get to 150 million tons, perhaps even 200 million. And a real driver behind the deal is the cost, which is at a significant discount to our peer group."
Horizonte can thank the global financial crisis for its good fortune, for it left Teck with some huge debts it was unable to refinance after buying the Fording Canadian Coal Trust in 2008.
The result was a major austerity drive as Teck’s exploration budget shrivelled. It partnered out many of its early stage projects, but baulked at completely offloading Araguaia.
Hoping to keep its aspirations of being a nickel player alive it jumped into bed instead with a relatively junior partner in the form of Horizonte.
There are echoes of the Onca Puma nickel project just up the road, which was bought by Canico Resources for US$20 million seven years ago.
Canico shelled out the same again to get Onca Puma to the feasibility stage before being taken out by Vale for CA$870 million.
"I’m not telling you today we can complete that transaction," Martin says.
"But we have the resource, we are in the right part of the world and have the partners to recreate it."
As a post script, it is interesting that Horizonte is hiring the Canico brokers that negotiated the Vale to deal organise next year’s listing on the Toronto Stock Exchange.
Martin believes the tie-up with Teck should give Horizonte investors something to cheer.
"We have a transformational joint venture that takes us ten steps up the ladder," he adds.
"We are going from a £5 million market cap company to a £25 million firm – with potential growth well beyond that.
"By the year end I want to be valued at least in the mid range of our junior peer group. We should be valued at 2-3 cents a pound (of nickel) and the resource will be twice if not three times those peer group companies."

Mid August – Drilling on Araguaia/Lontra project begins
Three drill rigs are on standby ready to drill 6-7,000 metres before December
First stage resource out in December or January at the latest
Horizonte to list on the TSX in Q1 next year
Metallurgical test work will also start Q1
Second-stage resource out by June 2011
Pre-feasibility stage by Q3