Thursday, 21 July 2011

Celamin Holdings advances phosphate and base metals projects in North Africa

Celamin Holdings (ASX: CNL) is making steady progress with operations at its Bir El Alfou and Chaketma phosphate and tailings projects in Tunisia and its Oued El Kebir base metals project in Algeria.

The Bir El Alfou Phosphate Project, located in Western Tunisia, is a joint venture between Celamin Ltd and Tunisian Mining Services, with an 80%/20% split.

Celamin will be responsible for an earn-in that will fund and complete a Bankable Feasibility Study, at which time each partner will hold an equal 50% interest. The company expects to complete due diligence and Pre-Feasibility Studies by September of 2011.

At Bir El Alfou a diamond core drilling program is progressing at the Bir El Afou prospect (Blocks A, B and C), with 10 holes completed totaling 623.6 metres.

Diamond core drilling is also continuing at the Bir El Afou (Boukechrid) prospect with 16 holes totaling 1,428.6 metres in Block G.

Process testwork has commenced at laboratories in Australia and Tunisia and a proposal has been received from SNCFT (Tunisia Rail) for transportation of product to port. A suitable site has been identified and applied for at the Port of Rades for ship loading.

Celamin’s work in the Bir El Afou permit area was not affected by the ongoing political situation in Tunisia.

Drilling activities were slower than planned, affected by site conditions due to the overburden previously reported and the continued non-availability of reverse circulation drilling equipment in Tunisia.

The original planned drilling program of 52 holes totaling 2,570 metres has been curtailed and a revised program planned of 30 holes totaling 2,555 metres has been undertaken, focused on more detailed drilling at Bir El Afou and Boukechrid prospects.

The original planned program will be completed in a later phase. At Bir El Afou one hole did not successfully intersect phosphate mineralization; at Boukechrid three holes did not intersect phosphate mineralization.

Block faulting at the margins of mineralized blocks is currently interpreted as the cause of not intersecting mineralization at these localities.

Results received for samples sent for analysis during the quarter are still being evaluated as part of the Pre-Feasibility Study work.

The company plans to cease drilling at Boukechrid at the end of July on the commencement of Ramadan.

Resource modeling has commenced at a number of prospect sites, but will be delayed at Bouklechrid until all the drilling and analytical results are received and evaluated.

Process testwork commenced in Australia and Tunisia during the quarter and has progressed as planned. Flotation testwork results in Tunisia prepared internally will be independently evaluated using reputable, experienced International process engineers.

Environmental and Hydrological site work as planned is ongoing.

Importantly, phosphate production is expected to commence at the end of calendar 2013, with projected EBITDA of +US$50 million per year, making the project extremely profitable.

A Memorandum of Understanding with a major un-named international fertilizer company has been executed, who will contract to take all of the production from Stage One, and future capacity upgrades from the project at market price.

Chaketma Phosphate Exploration Permit

Celamin has a second Tunisian phosphate joint venture with Tunisian Mining Services called Chaketma that is contained within 56 square kilometre area, and carries conceptual targets with potential to host 150 to 200 million tonnes of P2O5 at grades of 17 to 22%.

Celamin holds an 80% interest in the 3 year exploration permit, and has already identified multiple exploration targets with an initial focus at the Gasaa El Kebira Prospect. This project has larger target potential than Bir El Afou.

Fieldwork commenced in this permit during the quarter with reconnaissance mapping and sampling being undertaken, at Gassaa El Kebira, Gassaa El Sghira and Kel El Louz.

With regards to tailings, the metallurgical testwork program will commence on receipt of a testwork reagent which is currently ordered.

A $300,000 Scoping Study is planned to be completed during 2011.

A positive outcome will trigger Feasibility Studies at a cost of US$2.0 million, with completion set down for mid 2013. Development costs have been estimated at US$7.5 million, with a production start planned in 2014.

Oued El Kebir Project in Algeria

A joint venture agreement has been completed on this project, with Celamin planning to sign this and commence due diligence activities.

A site visit to plan drilling was undertaken during the quarter. Drill access roads have been largely completed and a  further visit is required to locate the drillholes exactly.

The company has planned three drillholes to intersect mineralisation interpreted from the past drilling in both Silver – Lead – Zinc and Silver – Gold – Copper dominant zones.

Due diligence drilling is planned to commence as soon as practicable after Ramadan.
The project has an Inferred Resource of 11.5 million tonnes (Mt) at 2.6% lead (Pb), 2.1% zinc (Zn), 0.7% copper (Cu) and 95 grams per tonne (g/t) silver (Ag) from more than 160 diamond drill holes and U/G development sampling previously completed by Russians.

Lion Selection Group Ltd, Celamin’s largest shareholder has recently been making substantial on market purchases to increase its holding to 14.55%. Rand Merchant Bank owns 5% of Celamin.

Commonwealth Bank of Australia (ASX: CBA) has also built a stake in Celamin of 2.07 million shares or 6.02% of the company. CBA further increased its stake in Celamin in June.

Phosphate demand is driven by rising food prices and worldwide demand, with Dundee Securities of Canada recently predicting a long term bull market for phosphate with a target of C$700 to $750 per ton within 24 months.

Celamin Holdings is well funded and had A$2,357,443 cash at the end of the June quarter.

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