Thursday, 28 March 2013

Mason Graphite, advancing the Lac Guéret; the highest grade of graphite in the world - PDAC2013

Benoit Gascon, Chief Executive of Mason Graphite (CVE:LLG), tells Proactive Investors about the company's Lac Guéret graphite project in north-eastern Quebec. He talks about the favourable economics, the geological make-up of the mineral and the geographical location all contributing to the attractiveness of the investment.

GoldON Resources closes $500,000 financing for Swayze property

GoldON Resources (CVE:GLD) says it has closed the $500,000 non-brokered private placement financing it announced last week,  with its largest shareholder - Iamgold(TSE:IMG) (NYSE:IAG) - raising its stake in the company. 
The company, which recently started trading under a new symbol after changing its name from Newcastle Minerals, placed 3.5 million non-flow-through units at a price of 10 cents each, and 1.5 million flow through shares at the same price. 
Each non-flow-through unit is made up of one non-flow through share and one warrant, with each warrant entitling the holder to buy an additional non-flow through common share at a price of 15 cents during the first year following the closing, and 20 cents during the second year. 
Iamgold purchased 1.5 million units to raise its stake in GoldON to 13.6 percent, the junior explorer said Thursday, or to 18.4 percent on a partially diluted basis, while FronTier Consulting purchased 750,000 units. 
The new funds will be used for exploration on the company's Swayze gold property, and general working capital. 
The company earlier this month said it started its 2013 exploration on its Swayze gold property that adjoins Iamgold's multi-million ounce Cote gold project in Ontario. 
The Canadian explorer is set for a busy year ahead after a planned reinvention of sorts, which has included a restructuring and rebranding of the company in a bid to raise funds for its projects in two of the prolific mining belts of Ontario. The financing that closed today is part of the restructuring plan sealed earlier this year. 
Along with the financing, the plan included a share consolidation, a name change, and a trading symbol change – all part of its “clean up” strategy to better position the company for long-term growth.  
The company’s focus is on two gold projects with large scale potential that are strategically located in the Swayze and Pickle Lake gold mining belts of Ontario. 
The 15,500 hectare Pickle Lake gold project is within the Pickle Lake greenstone belt in northwestern Ontario, where more than 2.2 million ounces of gold have been produced. The property ties onto both ends of PC Gold’s Pickle Crow mine trend and the past-producing Pickle Crow mine, which produced 1.45 million ounces of gold from 1935 to 1966.

Falcon Oil & Gas stacked with game changers

“You get a lot of bang for your buck,” says Philip O'Quigley assessing the potential of his company,Falcon Oil & Gas (LON:FOG) (CVE:FO).
Over the course of our 45-minute briefing, one that has taken us from Australia, to South Africa and then to Hungary, he constructs a compelling investment case ahead of the TSX-listed group’s debut in London and Dublin this week.
Falcon has relationships with HessChevron and Gazprom and a programme, if fully executed, that adds up to a possible 18 wells, or US$400mln-worth of investment.
The group has management of real pedigree. Chief executive (CEO) O'Quigley is former finance director ofProvidence Resources, the poster-child for Ireland’s emerging oil and gas industry, while his chairman is John Craven, the guiding light behind Cove Energy.
Cove, you will remember, was sold to Thailand’s PTT Exploration & Production for £1.22bn. And the Falcon model owes much more to Cove than Providence in the sense that Falcon wants to be a large minority shareholder in any discovery, but certainly doesn’t want to be the operator.
The assets come with a history dating back to 2005, says O'Quigley.
Craven, who came on board in 2011, has given the strategy some coherence. The CEO, meanwhile, has put Falcon’s costs on a more realistic footing and is charged with delivering value from its unconventional oil and gas assets by leveraging off major and even super major oil companies.
All three properties are potential game-changers, though the one nearest to crystallising value is Falcon Oil & GasAustralia.
It holds four exploration permits covering seven million acres of the highly prospective Beetaloo Basin in Northern Territory.
The potential resource is 162 trillion cubic feet of gas and over 21bn barrels of oil, according to RPS Energy, which compiled the group’s competent person’s report.
It has a joint-venture with Hess that covers 6.2mln acres. The American giant has already paid US$20mln upfront, shot 3,500 kilometres of seismic data at an estimated cost of US$60mln and still doesn’t have its name on the licence.
Hess has until 30th June 2013 to elect to drill five wells at an estimated further cost of US$75mln, at which point it will take a 62.5% stake.
There is no guarantee the American giant will exercise its option. Hess, of course, is embroiled in a bruising battle with an activist investor, which has only served to heighten the uncertainty over the Australian deal. However, O’Quigley remains confident.
Another deal to be done is the farm-out of the nearby Shenandoah and EP99 licences not subject to the Hess agreement. This is a hidden value driver that could have a big impact on Falcon’s valuation.
“The interest I’m getting for these assets is immense,” reveals O’Quigley. “I could take out an insurance policy and farm out now, but I will wait until July (after the Hess decision).”
Currently, Falcon’s land holding in Oz is valued at around US$13 an acre. Contrast that with the $813 an acre paid last month byChevron farming into 810,000 (gross) unconventional acres owned by Beach Energy.
Beach attracted the interest from Chevron after drilling just six vertical wells and one vertical – one fewer than Hess plans. Beyond that the appraisal value can go as high as US$4,000 an acre.
In South Africa, Falcon holds a technical co-operation permit (TCP) covering 7.5mln acres of the Karoo Basin estimated to contain an eye-popping 485 trillion cubic feet (TCF) of shale gas.
Shell owns the adjoining TCP, while Falcon has an exclusive co-operation agreement with Chevron, which came with a US$1mln contribution to past costs.
The process of turning that technical co-operation permit into an exploration licence was thwarted by a moratorium on development of the Karoo put in place in 2011.
However, there is every indication the group will receive the green light in the second half of the year, following an announcement by the government in September 2012 of its intentions to lift the moratorium. Only at this point will Falcon look to farm down its position in South Africa.
In Hungary, the company holds a 245,775-acre licence in the Mako Trough, around 10 kilometres from the prolific MOL-owned and operated Algyo Field, which has produced 2.5 TCF of gas and 220mln barrels of oil to date.
Seven wells were drilled into the deeper unconventional play that encountered hydrocarbons, but it was never fully developed by the previous management.
Three wells will be drilled this year by Gazprom subsidiary NIS at a total cost of US$20mln, with Falcon fully carried.
However, the Russians will target the shallower, potentially gas bearing targets that show up as AVO anomalies (hot spots) sitting right above the hydrocarbon source kitchen for the whole area.
“If this works it is a game changer; there is a gas pipeline nearby and all the infrastructure we need,” said O’Quigley.
The deeper-lying unconventional play below isn’t covered by the NIS deal, leaving Falcon to find a partner willing to invest heavily (US$25m initially) to land the big prize – an estimated 35.3 TCF of gas and 76.7 million barrels of oil. “You won’t see Falcon spending a dollar on this,” says the company’s chief executive.
The AIM-listing will add US$25mln to Falcon’s coffers, US$10mln of which will be used to repay debentures due in June. A total of US$5mln has been set aside to meet the group’s work commitments, leaving US$10mln for “general corporate purposes”.
Dublin-based Dolmen Stockbrokers reckons the fund raise creates a cash cushion that may even allow Falcon to make “opportunistic acquisitions”.
Analyst Bryan Mattei reckons Falcon is worth 33 cents a share, a 50% premium to the current share price. This, he admits, is a conservative assessment of business’s true worth.
“The valuation is heavily dominated by Hungarian and Australian assets,” he adds. “However, there remains considerable upside potential for South Africa given Falcon’s large acreage, its partner Chevron, and vast resource estimates for the Karoo basin.”

Transeuro Energy confirms Povorotnoye financing

Transeuro Energy Corp. (CVE:TSU) says that partner Aleator Energy (ASX:AWD) has secured funding of $20 million to support the drilling obligations under a farm in deal between the two parties on the Povorotnoye gas field in Crimea, Ukraine. 
Transeuro has retained a 10.8 percent interest in the joint activity agreement to develop the gas field. Under the terms of the farm-in deal, the company will receive US$500,000 upon spudding of the POV 105 well.
Aleator signed a binding term sheet for the US$20 million with financier Gres holding Ltd earlier this week. Under the agreement, the facilitator will provide a cash backed bank guarantee from a "AA rated" major bank to secure the loan funds. 
Aside from being used for the POV 105 well, the funds will also be allocated for the provision of a pipeline and plant to process and delivery anticipated gas and condensate when the well is completed and prepared for production, according to Aleator's statement. 
Final agreements are currently being prepared, subject to a number of conditions, and are planned to be signed in April with the funds available roughly 20 days later.
Meanwhile, Aleator has arranged funding to consolidate infrastructure in Ukraine, such as warehouse and administrative facilities, in preparation for the drilling of the POV-105 well.  Construction of the access road, drill pad, and cellar has been completed, the company said, and work has also continued in taking delivery into Aleator's warehouse of long lead items.
Earlier this week, Transeuro confirmed its first draw down on its funding arrangement with Yorkville Advisors’ Global Master fund. The facility was arranged in February and Transeuro confirmed that it is initially issuing 7mln new shares to Yorkville at a price of 5 Canadian cents each. In total it will raise around C$350,000 (NOK 2mln) from this first draw down.
It is expected that further shares will be issued by Transeuro to raise more of this available capital on an ‘as needed’ basis. The company says this will support development of its existing assets and implement its strategic plan.
Transeuro Energy is a junior oil and gas exploration and development company with properties in Canada and in Ukraine.

Minera IRL boosted by Corihuarmi longevity

Minera IRL's (LON:MIRL TSE:IRL) full year results came in better than expected thanks to a continued good performance from the Corihuarmi mine in Peru.
Corihuarmi is coming to the end of its life, but produced a better than expected 27,321 ounces of gold in 2012, though this was down 18% on the previous year.
Costs were also affected by an increase in the amount of waste mined and lower grades
Broker Canaccord added that Corihuarmi has now passed the original planned mine life by a year and potentially could produce until to 2015/16. 
Revenues for the year were US$46mln, down 13%, with income boosted by a realised gold price of US$1,673.
Net profits came in at US$3.3mln (US$9.8mln).
The focus now is on the developing projects at Ollachea in Peru and Don Nicolas in Argentina, where Minera completed feasibility studies for both in the past twelve months.
Courtney Chamberlain, executive chairman, said "Whilst now mature, Corihuarmi continues to produce at above expectations providing important cash flow. 
“The robust feasibility studies at both Ollachea and Don Nicolas have paved the way for rapidly moving both projects toward production." 
Canaccord said 2012 was an eventful year with the feasibility studies (Ollachea - IRR 22% at US$1,300/oz gold & Don Nicolas - IRR 23% at US$1,250/oz)  combined with major investment (US$50m in 2012), primarily at Ollachea and drilling around Don Nicolas.
On an enterprise value/resources basis, Minera’s 3.4M ounces are trading at $27/oz, around a 50% discount to  the peer average of $60/oz, said the broker.
Securing finance for Don Nicolas is the next target, says Canaccord, while also following up on heap leach studies for the low grade resource. 
At Ollachea, underground exploration drilling of the eastern and down-dip extensions has commenced, while the EIA has been submitted with approval expected in the second half of 2013.
Canaccord reiterated its buy stance with a 130p target price. Shares today were 38p.

Caledonia Mining posts record gold sales

Caledonia Mining (LON:CMCL, TSE:CAL) finished the year on a high, posting record gold sales.
Its strong operational performance, coupled with a dip in cash costs, made for a profitable and very cash generative year.
Gross profit for the period jumped to US$40.91mln from US$29.11mln previously, although the pre-tax figure was almost static year-on-year after Caledonia made US$14.6mln of share based payments this time round.
The Zimbabwe-focused company ended the period in a very strong financial position with almost US$28mln of cash and equivalents.
After agreeing to pay a maiden dividend last year, the group said it will assess the pay-out policy “at least annually”.
However, Caledonia added that it wanted to maintain a strong financial position to implement its growth strategy and retain the flexibility to take advantage of “further opportunities” without the need for outside finance.
Output from the company’s Blanket gold mine was 45,465 ounces of the precious metal in the 12 months to December 31, which represented a 27% increase on the year earlier.
It achieved a price of US$1,666 an ounce, while cash costs came down 1.7% to US$571 an ounce. The plan is to lift output to 76,000 ounces of gold a year by 2016.
Chief executive Stefan Hayden said: “Exploration and development work is currently well underway at the first three satellites and I look forward to announcing the preliminary results of this work in due course.
“Importantly, the Blanket crushing and metallurgical plant has surplus capacity and any incremental ore from these satellites could be treated with modest additional capital investment.”
Separately, Hayden said Caledonia hopes to compile a NI 43-101-compliant copper resource this year for its Nama project in Zambia.

The shares were marginally higher at 8.15 pence in morning trade and are up 30% in the year to date.
Broker Canaccord believes there is headroom for the stock to double in value in the next year.
Reiterating his ‘buy’ advice, Dmitry Kalachev added: “Caledonia has proven track record of delivering results in a challenging environment and has the financial strength to finance growth internally.
“Strong balance sheet and cash generation leave ample room for further dividend growth.”

Avrupa Minerals says work so far at Covas indicates positive potential, next exploration phase to start in April

Avrupa Minerals (CVE:AVU) reported Thursday on further progress at its Covas tungsten joint venture in northwest Portugal, saying the work so far has indicated positive potential for the prospect. 
The project, which is being operated by Avrupa, is being funded by tungsten explorer Blackheath Resources under an earn-in agreement signed back in May 2011. 
Phase 1 of the exploration program at Covas is now finished, Avrupa told its investors on Thursday, with all outstanding results in hand, successfully confirming known "skarn-related mineral occurrences and extensions" as well as new targets. 
Review of all data, from work including 1,606 metres of core drilling in five separate areas, is now underway in preparation for the next phase of the program that will start in April. 
Notable results from the most recent drilling program include intercepts of high grade tungsten mineralization, particularly 2.11% tungsten over 7.98 metres at the Telheira target and 1.56% tungsten over 11.40 metres at the Lapa Grande target. 
Other results from the drilling confirmed extensions of tungsten mineralization in the skarn zones at Covas . The drill holes were all vertical, the company said, and intercepts are considered to represent close to true thickness of the mostly flat-lying mineralized zones.
"The work, to date, indicates positive potential for the Covas prospect," said the company in its statement, citing president and CEO, Paul W. Kuhn. 
"We will continue our targeting work this spring, with the objective of increasing the size of the known skarn-related tungsten deposits, and with developing a larger tungsten-gold target in the Covas Dome area. We expect to advance the next exploration phase with a drilling program designed to fulfill both objectives during 2013."        
Covas is a past-producing tungsten mine, and remaining historic resources on the property were estimated in 1980 at 922,900 metric tonnes of 0.78% WO3 in the indicated and inferred categories by Union Carbide, based on work including 327 drill holes on the property. 
Mineralization is open to expansion, Avrupa said. 
The junior mineral explorer operates two joint ventures in Portugal, including the Alvalade joint venture with Antofagasta, and the Covas joint venture with Blackheath.              
The company also has several other precious and base metal targets that it is upgrading to JV-ready status, including the porphyry copper-gold potential in southern Portugal in the Alvito license area.
In addition, Avrupa holds properties in Germany and Kosovo, where in late November, the company announced the discovery of a polymetallic gossan zone on its newly-acquired Slivovo exploration license.

Caza Oil & Gas mulls new financing

Caza Oil & Gas (LON:CAZA, TSE:CAZ) said it is actively considering new sources of financing as it looks to optimise its work programme and drive economies of scale.
The Texas-based company also reported it had pared its losses considerably from US$23.3mln in 2011 to US$12.2mln in the last year, with net loss per share being cut in half.
Revenues rose 22% to five million dollars from US$4.1mln previously, as average production volumes jumped 19% to 285 barrels of oil equivalent per day.
Quarterly revenues for the three month period to the end of December increased 31% to US$1.6mln.
Chief executive Michael Ford said the firm was pleased with its progress in 2012.
"The latter portion of the year was particularly positive with material increases in both production and revenues," he said.
The company's near term intention is to continue to participate in three or four wells a year funded from production revenues, existing cash resources and currently available financing.
However, the firm's management believes that accelerating and expanding this drilling programme will significantly increase both production and cash flows, which will optimize the work programme and drive economies of scale.
"The company and its advisers have been actively considering alternative sources of capital, including a review of possible joint-venture and strategic financing partner options and other debt instruments, which will provide the company with sufficient leverage and capital to adequately exploit the opportunity but mitigate material equity dilution during the 'value accretion' drilling phase," its statement said.
Subject to the availability of appropriate financing, Caza's objective is to embark on an accelerated and expanded drilling programme in the Bone Spring play over the next two years.
Broker Cenkos said at current levels, Caza was trading at a substantial discount to risk exploration net asset value (RENAV).
"However, we believe that the unlocking of the Bone Spring play and the transformational increase in production should go some way to restoring market confidence in the stock," it said in a note.
Cenkos has  a price target of 30p and has a 'buy' recommendation on Caza.
The firm's shares are currently changing hands at 10.1p.

SilverCrest Mines files updated La Joya resource, including metallurgy work that supports production of high grade concentrate

SilverCrest Mines (CVE:SVL)(NYSE MKT:SVLC) says it has filed the updated resource report for its La Joya property in Mexico that it announced earlier this year, which includes preliminary metallurgical results that support the production of a high grade, copper-silver-gold concentrate from the site with over 30% copper. 
In January, the company announced that at a global case cut off grade of 15 grams per tonne of silver equivalent, inferred resources at La Joya stand at 198.6 million ounces, almost 95% higher than the 101.9 million ounces at the same cut off grade previously.
Using a base case cut off grade of 30 g/t silver equivalent, inferred resources total 159.8 million ounces, or 100.8 million ounces using a high grade cut off of 60 g/t silver equivalent. 
There are also 75.1 million pounds of inferred tungsten resources at the project, at a cut off grade of 0.05% tungsten, hailing from the Contact Zone on the property - which also contains gold, silver, copper and tin that could add secondary value.
"The significant increase of Inferred Resources at La Joya and the identification of a potential high grade starter pit have increased the attractiveness of the project," said the company in a statement on Thursday, citing president J. Scott Drever. 
"Confirmation by preliminary metallurgical test work that a high grade, copper-silver-gold concentrate, with high recoveries of copper, silver and gold can be produced is extremely important and encourages us to push forward with our Preliminary Economic Assessment to define preliminary operating and capital parameters for the project."
The company says it believes that the 60 g/t silver equivalent portion of the deposit, or the high grade case, constitutes a "priority area" to be examined as a potential starter pit for initial operations, which is being looked at more closely in a preliminary economic assessment (PEA) that started in January. 
SilverCrest also said the property has "excellent potential" for additional resources with the deposits being open in most directions. Further infill and expansion drilling has been recommended to increase and convert resources from the inferred to indicated category, it added.  
Initial metallurgical testing was done in 2011, with further test work ongoing. Current results from "batch cleaner flotation tests" indicate that the main zone of mineralization at La Joya is amenable to conventional flotation processes for production of high grade copper concentrates with high silver and gold credits, the company said. 
The company's primary asset, Santa Elena, is expected to produce 2.4 million ounces of silver equivalent this year, at cash costs of $8.50 an ounce. The mine has a higher grade open pit that is currently being mined, and an underground resource that is being developed, remaining open with exploration upside. 
SilverCrest said earlier this month its plan for this year is to complete the contruction of a new 3,000 tonne per day mill facility at Santa Elena for the first quarter of 2014 in its effort to double production at the mine.

Century Iron Mines rallies after latest news as management endorses the iron ore developer

After releasing preliminary economic reports for two of its iron ore projects in the past week, management of Century IronMines (TSE:FER) has been showing its confidence in the iron ore development company, with its VP of corporate development and investor relations, Bob Leshchyshen, buying up 63,200 shares yesterday. 
Leshchyshen was joined by the company's corporate secretary and general counsel, Michael Skutezky, who also acquired 6,000 shares in the public market on Wednesday. 
Shares of Century Iron rallied more than 17.6 percent on Thursday, with investors seemingly encouraged by the company's latest news, lately trading at 40 cents this morning. 
On Tuesday, the company took another step toward de-risking one of its iron ore assets in Canada by releasing a preliminary economic assessment report for its Joyce Lake direct shipping ore (DSO) project, just days after announcing a similar report for its Duncan Lake property. 
The latest NI 43-101 compliant report, based on 100 percent ownership, shows a pre-tax net present value of $94.5 million at an 8 percent discount rate for Joyce Lake, which is located in the province of Newfoundland and Labrador, near Schefferville, Quebec. 
The internal rate of return was pegged at 35 percent pre-tax, with initial project capex estimated at $96.6 million including contingency, and a projected payback period of just under three years from production start-up. 
The Joyce Lake DSO deposit is part of the Attikamagen project in which Century has joint ventures with Wuhan Iron & Steel Company (WISCO), the fourth-largest steel producer in China, and Champion Iron Mines (TSE:CHM). Century and WISCO hold a 56 percent stake in Attikamagen through a joint venture company called Labec Century Iron Ore, with Champion holding the remainder. 
The company's strategy is to build value initially by low-capital expenditure DSO projects to generate early cash flow, positioning Century for the "much larger" magnetite/taconite projects - like its Rainy Lake property in Quebec - which require higher capex and financing. 
Direct shipping ore refers to iron ore that can be shipped directly to a steel furnace. DSO mines are typically rarer than the magnetite-bearing banded iron formations, but are considerably cheaper to mine and process as they require less beneficiation due to the higher iron content. 
The company, which is aiming to become a major iron ore producer, is one of the largest iron ore companies in Canada, in terms of number of claims by area. It has 6,493 claims and titles, covering some 198,779 hectares in the provinces of Québec and Newfoundland & Labrador. It has interests in four iron ore projects, none of which yet generate revenue.
At the end of last week, it also unveiled the results of a preliminary economic assessment for its Duncan Lake joint venture project in northern Quebec, projecting a 20.1 percent internal rate of return (IRR) pre-tax. The preliminary economics report, done by Met-Chem Canada, concluded that based on 100 percent ownership of the project, the net present value is estimated at $4.1 billion pre-tax for a project with a mine life of 20 years. 
Initial capital costs were pegged at $3.8 billion, for a project generating 12 million tonnes per annum of iron pellet production - with a payback period of 4.2 years. 

Gold Resource Corp declares March dividend

Gold Resource Corp (NYSE MKT:GORO) has declared its monthly dividend of 6 cents per share for March, payable on April 25 to shareholders of record as of April 11.
Earlier this month, the company announced record mill production last year, and stood by its outlook for 2013, despite some challenges it experienced in 2012 with the first year of underground mining at its Arista deposit - part of its El Aguila mine in Mexico.
The U.S.-based gold and silver producer, with operations in the southern state of Oaxaca, Mexico, said it produced 90,432 ounces precious metal gold equivalent in 2012, and sold 72,399 ounces at a total cash cost of $419 per ounce. 
This compares with 60,690 ounces produced in 2011, and 58,514 ounces sold.
The company made record annual revenue of $131.8 million, compared to a $105.2 million in the prior year. 
Gross profit from its El Aguila mine was $87.8 million, up from 80.6 million in 2011. 
Net income for 2012 was $33.7 million, or 64 cents per share, versus $58.4 million, or $1.10 per share in the prior year. 
For 2013, the company is aiming to produce between 80,000 to 100,000 ounces gold equivalent, and is targeting to be in the lowest quartile of total cash costs, ranging from $300 to $500 per ounce. Gold Resource Corp is implementing cost cutting measures and production increases aimed at lowering costs.

Northern Vertex Mining boasts 118% IRR from Moss project's preliminary economics

Northern Vertex Mining (CVE:NEE) has today unveiled its long-awaited preliminary economic assessment report for its Moss gold-silver project in Arizona, showing a whopping 118 percent internal rate of return (IRR), pre-tax. 
The NI 43-101 report, which is based on the updated resource estimate the company put out earlier this month, looks at the economics of open pit mining and heap leach processing for the Moss project. 
Using a gold price of $1,500 an ounce, the project was estimated to have a net present value of $110 million, pre-tax, at a 5 percent discount rate, with an IRR of 117.9 percent. 
Capex was projected at $26.6 million, with a payback period of 15 months before tax. 
Cash costs per gold equivalent ounce were pegged at $490 an ounce, for a mine with a life of five years producing at 5,000 tonnes per day for 42,000 ounces of gold equivalent per year. 
Northern Vertex has the right to earn a 70 percent interest in the property from Patriot Gold Corp by spending $8 million and preparing a feasibility study. It has spent a total of $5.6 million so far. 
"The results from this preliminary economic assessment are positive and show the potential economics associated with the Moss Mine Gold-Silver project," said the company in a statement on Thursday, citing president and CEO Dick Whittington. 
The Moss project has a three-phase mine development plan, which is designed to move the project forward from conceptual design and lab test work to on-site pilot plant testing and then onto operations, the latter of which would be dubbed phase II. 
The third phase, which the company says is conceptual only and will depend on the success of phase II, would involve mine life extension or expansion, and is not included in the preliminary economic report released today. 
The first phase, which will involve pilot plant testing, has been recommended by the technical report, Northern Vertex said Thursday. If it is successful, the company can assess the feasibility of moving forward with operations subject to required financing. The anticipated operating period for phase I is 15 months. 
"We believe that there continues to be upside in maximizing results from the in-field operations, from possible pit expansions as a result of the mine exploration programs and of course, possible Mine Life Extension or Expansion (Phase III)," added Whittington in the statement. 
"We look forward to advancing the project towards mine operations and to creating both shareholder value and stakeholder value in the Bullhead City Region."            
The economics report is based on an updated resource that includes 12.6 million tonnes of measured resources and 9.98 million tonnes of indicated resources, for a total of 653,600 measured and indicated gold equivalent ounces.                 
The company also said Thursday that overall metallurgical data shows that ore from the project is "readily amenable to agglomeration - heap leach cyanidation processing", with recoveries ranging from 75 to 84.6 percent for gold and from 61.3 to 76.6 percent for silver. 
"Although positive results have been obtained to date, additional metallurgical test work will be required," the junior explorer said in its release today.                
The PEA report recommended continued exploration at the site to further define mineralization, with the deposit still being open at depth and to the west. The recommended program includes an additional 2,200 metres of drilling, Northern Vertex said, with total costs for the campaign estimated at $562,000. 
At a higher $1,700 an ounce gold price, the economics of the project boast an IRR of 150 percent, with a net present value of $137 million pre tax, at the same 5 percent discount rate. 
Shares of the company were halted Wednesday prior to the news release today, and resumed trading immediately after the release early this morning. Northern's stock is now trading at $1.02 on the TSX Venture Exchange.

Wednesday, 27 March 2013

Great Western Minerals says second strip casting furnace at rare earth manufacturing unit delivered

Rare earth processor Great Western Minerals Group(CVE:GWG), which is aiming to become a producer of the metals,  has said that its second strip casting furnace has been delivered to its rare earth alloy manufacturing subsidiary, UK-based Less Common Metals (LCM). 
The company said in a statement Wednesday that it expects the second furnace, which it notes arrived on schedule, will be fully installed and commissioned by the end of the second quarter. 
The rare earths processor, which is transitioning to a fully integrated rare earths producer, makes specialty alloys used in the magnet, battery, defence and aerospace industries from two facilities in the U.S. and U.K. Its development program at its Steenkampskraal rare earth mine in South Africa, which includes a restart of the historical mine, is central for a strong flow of feedstock for its downstream processing unit. 
Great Western's plan is to be one of the first to produce significant quantities of the more valuable heavy rare earth oxides, which are important materials for alloys. It recently announced a series of management changes to prepare for a new stage of life in the company, including the promotion of Vic Fitzmaurice to the position of Steenkampskraal managing director.
Last month, its shares rallied after it said Less Common Metals started commerical production with its first rare earth alloy strip casting furnace - all a part of Great Western's plan to boost the facility's capacity in preparation for Steenkampskraal coming online. 
"Following the successful commissioning of the first strip casting furnace a number of design features were built into the second furnace during its construction at the Chinese manufacturing plant," said the company in a statement Wednesday, citing LCM's managing director, Ian Higgins.
"This is expected to significantly reduce the time required for installation and commissioning of the second furnace. As we move forward, we will ensure our strip casting capacity continues to match the requirements of our customers."
Earlier in March, the company took another crucial step toward de-risking its Steenkampskraal mine, announcing a strong preliminary economic assessment (PEA) of the project with an IRR of 66 percent after tax.  The preliminary report shows a $555 million net present value after tax, when applying a 10 percent discount rate.

Madalena Ventures sees significant activity by oil majors on neighbouring lands

Madalena Ventures's (CVE:MVN) CEO Kevin Shaw says that two recent events on oil activities in Argentina are significant for the company, as they show that the regional Vaca Muera shale, within the oil window in the Coiron Amargo region, is "evolving with continued offset activity" by oil majors. 
The Calgary-based company has a massive 233,000 net acre land position in Western Canada and in Argentina, split between 135,000 acres in the Neuquén Basin across three key blocks and 98,000 acres in Alberta within the Great Paddle River Core area. 
Its plan is to grow existing production through its lower-risk, horizontal development wells in Canada, and to continue to prove up its large in-place shale assets in Argentina.
Madalena's exposure to multiple, high impact tight sand plays in the Neuquén Basin is key, specifically the Vaca Muerta shale - which the company calls the most tangible shale play outside of North America.
Indeed, there is proof. Shell recently announced a Vaca Muerta shale oil discovery in Argentina, which is the first shale discovery in the country. The discovery well tested at 465 barrels per day of 35 degree API oil. 
The well is located on the Sierra’s Blancas block which is located directly south and adjacent to Madalena Ventures' Coiron Amargo block, and is in-line with other well results from the Vaca Muerta in the area.
The Coiron Amargo block, where the company is now working on a drill program with partners, is located within the heart of the Vaca Muerta oil play and is also within kilometres of the recently announced Chevron and Bridas proposed billion dollar farm-in deals on Argentina-based YPF’s lands.
Meanwhile, Dow Chemical (NYSE:DOW) also signed a memorandum of understanding with Argentina's state run oil company YPF - the largest land owner in the region - to invest in shale gas. 
The companies are now entering into talks on how to work out the final details of a deal to uncover unconventional gas in the so-called Orejano block in Argentina's resource-rich Neuquen province.
Argentina stopped exporting gas in 2004 to ensure it had enough gas to meet domestic demand that was rising alongside its then booming economy.
But demand for gas grew at a faster pace than production, turning the country into a net importer and requiring the government to spend billions a year on imported energy. 
YPF is attempting to reverse this, putting Argentina on a path to energy independence by investing in exploration and production and getting other local and foreign companies to do the same. 
Madalena's position in Argentina is in a prime spot. Its properties are spread across three blocks - Coiron Amargo, which stretches 35,027 net acres and where Madalena holds a 35% weighted interest, Curamhuele that spans 50,400 net acres, and Cortadera, which totals 49,600 net acres.

Rambler Metals & Mining eyeing M&A in its own back yard

Moving into the black for the first time is a justifiable excuse to splash out on the cigars and a bottle of two of champagne but Rambler Metals and Mining (LON:RMM, CVE:RAB) has plenty of productive uses in mind for its cash flow.
The second quarter of its fiscal year saw the company make its maiden profit in what was its first full quarter as a commercial copper and gold producer.
In the three months to January 31, 2013, the group logged a pre-tax profit of C$1.93mln, compared to a loss in the corresponding quarter of last year of C$1.04mln.
Cash resources at the end of January were C$7.3mln and had declined to C$5.0mln by March 27. However, operating cash flows are anticipated to continue to build throughout the balance of the fiscal year now the revenues are flowing in.
As the company’s treasury increases, the immediate plan is to pay down any outstanding debts but beyond that, the company has its eye on a number of junior miners in Canada that have decent assets but lack the financial firepower to exploit them.
Paying down the debt on the company’s loan makes financial sense, George Ogilvie, president and chief executive officer of Rambler, told Proactive Investors, because the company is paying an annual interest on its debt of 9.25%.
“We want to pay off the debt and then, obviously, these markets are very dire for junior mining or exploration companies, they are finding it very difficult to raise capital, and we’ve been in conversation with several juniors in our own back yard about potentially assisting them or acquiring their properties.
“We think over the next 12 to 18 months, if these markets continue, it’s an ideal opportunity to look at mergers & acquisitions,” Ogilvie said.
In the company’s result statement, Ogilvie said: “We have retained the financial flexibility to fulfil our operational goals of continuing development and exploration of the Ming Copper-Gold Mine while optimising the Nugget Pond processing facility. We will also continue the work we started in Q1 2013, to reduce costs and improve efficiencies.”
In his conversation with Proactive he explained a bit more about the plans for the processing facility at Nugget Pond in Baie Vert, and how this ties in with the acquisition opportunities.
“We’re particularly interested in copper and gold. The reason why is, obviously the mill that we have at Baie Vert is both a gold hydromet [hydrometallurgical] and a copper mill, and we’d like to try to leverage and take advantage of that facility.
“So, one of the things we’d like to do in the next 12 to 18 months as well is put in another crushing and grinding circuit at the Nugget pond mill; it feeds right into our copper flotation plant.
“As soon as we do that, then both the gold mill and the copper mill can be operated independently of one another but also simultaneously,” Ogilvie explained.
Such a development would see the mills processing capability go up from about 650 wet metric tons (wmt) a day to about 1,000 wmt a day.
“Rambler could realise a 30 to 40% revenue increase on its copper production, because the mine is capable of producing at a thousand tonnes a day, and then, suddenly, the gold hydromet is now able to be run simultaneously and we could recognise gold revenue from a separate circuit,” Ogilvie said.
Most win-win scenarios involve victories for two parties; in this win-win case, Rambler gets what in vernacular terms is called “double bubble”.
With clearly identifiable opportunities to achieve a turbo boost to revenue and earnings, the future looks bright but Ogilvie is aware of the potential pitfalls.
“The biggest risk we have in our company at the moment is all of our eggs are in one basket, in that we only have one mine in production,” Ogilvie said.
“If we’ve got the opportunity to diversify a little bit, but stay in our own geographical location, and utilise the assets that we’ve got … it’s going to put the company in a much, much stronger position."
Shares in Rambler rose to 35.75p at one point before drifting back to 33.25p, up 0.375p on the day.