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ECR Minerals, Strategic Natural Resources, Leni Gas & Oil, Sunrise Resources and others feature in Fox-Davies Newsflash

Last updated: 04:34 22 Oct 2012 EDT, First published: 03:34 22 Oct 2012 EDT

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Mining News

African Barrick Gold plc (LON:BG) announced that following the unanimous approval by Aviva shareholders on 11 September 2012, the Kenyan Competition Commission has now formally approved the acquisition by ABG of Aviva Mining (Kenya) Ltd ("AMKL") from Aviva Corporation. All conditions have now been satisfied and the transaction will now be finalised. On completion of the acquisition of AMKL, African Barrick plan to continue systematic exploration programmes throughout the licence areas testing for new gold targets and we are targeting advancing one or more projects to resource category level during 2013. These exploration programmes will consist of mapping, soil and rock chip sampling campaigns, auger and aircore drilling, and reverse circulation and core drilling. The current core drilling programme is testing high priority regional targets in order to gain a better understanding of the geology and key controls on the gold mineralisation encountered at each prospect and to allow ranking of targets for future programmes.

Botswana Diamonds PLC (LON:BOD) announced an update on licence PL170/2012 in the Orapa area of Botswana lying 30kms to the east of the Letlhakane diamond mine. The licence, issued in May 2012, covers 249 sq kms and is 100 per cent owned by Botswana Diamonds. The mineral chemistry data from soil samples collected on the licence has been compiled together with an earlier review of aeromagnetic data. The data shows areas with concentrations of diamond indicator minerals, namely garnets, ilmenites with a few spinels and chromites. The garnets fall mainly within the G9 group with minor G10 garnets. These results are very encouraging and helped in the identification of five areas for follow-up ground geophysics. A geophysics team is currently conducting detailed ground magnetic and gravity surveys on four areas in the west of the licence and one area in the east for the purposes of identifying drilling targets. Results from this work are expected within six weeks, after which a percussion drilling programme will commence.

Bushveld Minerals (LON:BMN) has released an update on progress in its metallurgical testwork from the Massive Magnetite Ore at its Bushveld Iron Ore Project. The results cover both extraction/ concentration tests (Initial Davis Tube and Coarse grind DMS tests) and Pyro Metallurgical Tests on both fine and coarse materials. For the Fine fractions preliminary Davis Tube Test metallurgical testwork undertaken shows 79% - 84% recovery for Fe2O3, V2O5 and TiO2, and a magnetic separator concentrate grade in excess of 78% Fe2O3, 19% TiO2 and 0.36% V2O5. For the coarse (-12mm and -6mm) fractions, the Preliminary Dense Medium Separation tests shows 73% - 80% recovery for Fe2O3, V2O5and TiO2, and a concentrate grade in excess of 70% Fe2O3, 18.5% TiO2 and 0.32% V2O5. These are encouraging results as the coarse fraction results suggest that only a minimal amount of milling is required to obtain good recoveries for Fe2O3, TiO2 and V2O5 reducing both the water and energy requirements as well as making shipping easier.

Chelyabinsk Zinc Plant (LON:CHZN) has released its 3Q'12 production results. The Company produced 121,335 tonnes of saleable SHG zinc and zinc based alloys slightly below the 121,895 tonnes produced over the same period last year. Of this 66% was supplied to the domestic market. CZP's affiliated Company, Nova Zinc LLC, operator of Akzhal zinc and lead ore mine in Kazakhstan, produced 25,075 tonnes of zinc in zinc concentrate, 4.4% less than last year (26,222 tonnes). Lead in lead concentrate production decreased by 24.3% to 2,931 tonnes (vs. 3,872 tonnes in 2011). CZP's subsidiary, The Brock Metal Company Limited (the leading UK supplier of zinc die-casting alloys) sold 19,883 tonnes of zinc alloys in first 9 months of 2012, slightly above the 19,769 tonnes produced in the same period last year.

ECR Minerals PLC (LON:ECR) announced an update on its activities and strategy. The planned programme of geochemical sampling within historical underground workings at ECR's El Abra gold prospect, part of the Company's Sierra de las Minas gold project area in La Rioja Province, Argentina, has been completed and the Company expects to be in a position to announce assay results from the programme before the end of October 2012.  In August 2012 the Company advised that its representatives in La Rioja Province had been approached by a South American group interested in holding preliminary joint venture discussions with regard to Sierra de las Minas. These discussions have not progressed beyond the initial stage but the Company remains open to joint venture approaches.

Following the appointment of three new directors in May 2012, ECR has pursued a revised strategy with the following key elements. Realising value from investments, including ECR's position in THEMAC Resources Group Ltd ("THEMAC"), as far as it is possible to do so on attractive terms.  Continuing exploration within the Sierra de las Minas gold project area, in line with a policy of focusing on mineral projects over which the Company can exercise direct control.

Reducing the complexity of ECR's operations by disposing of non-core interests such as the Company's stake in ACS Asia, a manufacturing business located in Thailand. Work towards this objective is on-going.

This strategy is being implemented as quickly as possible in an uncertain global economic environment, and further updates will be provided as and when developments of sufficient magnitude occur. ECR is evaluating options to achieve the sale of all or a substantial part of the Company's interest in THEMAC Resources Group Ltd (TSX-V: MAC). Such a transaction is a high priority for ECR on the basis of the significant benefits that increased financial strength could be expected to bring the Company and its shareholders.

New World Resources (LON:NwR) has reported the death of a 48 year old miner on Saturday, 900m underground at its Paskov Mine of OKD, a.s. ('OKD'), its Czech mining subsidiary, which took place on Saturday 20 October. Although this will not impact production an investigative committee comprising members of the District Mining Authority in Ostrava, Paskov Mine management, OKD management, the OKD Trade Unions representatives and the Police of the Czech Republic is now conducting an enquiry into the accident.

Rambler Metals and Mining (LON:RMM) has released its Full Year results to the end of July, 2012 as it continues to ramp up production at the Ming Copper-Gold Mine and further development and exploration of the asset located on Newfoundland and Labrador's Baie Verte Peninsula. At October 19, 2012 the Company had $6.5 million in cash and cash equivalents.

Highlights include:

Operational

14,918oz of gold were sold during the year at an average price of CAD$1,650 as the mine was commissioned generating revenue of $25.2 million. Following the completion of construction and commissioning of the copper concentrator, first revenue of $3.0 million was realised from the sale of 1,271 tonnes of concentrate in July 2012.

Finalized off-take agreement with Transamine Trading S.A. for the sale of 85,000 tonnes of copper concentrate over the initial 6 years of mine production.

Announced the completion of a preliminary economic assessment to include all Lower Footwall Zone mineralization and evaluating the potential for an expansion of the Ming Mine into a 20+ year bulk tonnage operation.

Finalised construction of the 9,500 wet metric tonne concentrate storage facility at the Goodyear's Cove Port. At year end, 2,500 tonnes of copper concentrate was in storage at the facility generated during the commissioning of the new floatation facility.

Financial

The Company generated first revenue of $28.2 million from its Ming Mine project during the commissioning of the operation during fiscal 2012. Ming Mine revenues were credited to the Mineral Properties asset and will continue until commercial production is declared.

Revenue in fiscal 2011 ($3,523,000) and 2012 ($1,219,000) and related operating costs arose from tolling milling agreements and mining of the Company's Tilt Cove East Mine and Nugget Pond crown pillar satellite deposits.

During the year repayments of US$7,855,411 were made from the delivery of 4,774 ounces of gold. The payments satisfies the requirements in the gold loan agreement to repay a minimum of US$3.6 million in each of the first two 12 month periods of production.

Corporate

Accepted an offer from Tinma International Ltd to become a strategic shareholder through non-brokered private placements raising total proceeds of $8.71 million. Tinma now holds 16 per cent of the issued share capital of the Company.

Completed the acquisition of a total of 5,088,230 shares of Maritime Resources Corp for a total of $1,135,000  providing Rambler with a 17% equity stake and an invitation to appoint a representative to join Maritime's Board of Directors.

Strategic Natural Resources (LON:SNRP) has announced that its 74% owned subsidiary, Elitheni Coal (Pty) Ltd has entered in to an agreement with Thelo Rolling Stock Leasing (Pty) Limited for the lease of up to 1,500 rolling stock containers for an initial term of 6 years. Thelo, is a 50/50 JV between Thelo Rolling Stock Partnership and the Industrial Development Corporation (IDC) and will use Transnet Rail Engineering for the supply of the containers. Rental of the containers is calculated on a per container per month basis and full production of them is underway, with first delivery expected during the first half of November 2012, which will enable the Company to deliver its first shipments under the Trasteel off take agreement.

Sunrise Resources (LON:SRES) has responded to comments in last Fridays Investors Chronicle. The Company is holding net cash of approximately £620,000 and expects to release news flow to the market this week regarding the preliminary diamond sampling results from the Cue 1 kimberlite outcrop and around the end of this month in respect of the scoping study at the Company's Derryginagh barite project. Whilst it awaits the results from which it can determine the facts, the Board, at this juncture, has no reason to believe that these news updates will not be of a positive nature.

ZincOx Resources (LON:ZOX) has on the 19th October 2012 entered into a Joint Venture Agreement with Ural-Recycling LLC, a wholly owned subsidiary of Magnezit Group Limited. The JV will cover the first phase of a programme to establish a waste dust recycling facility in Russia. The JV provides for an ownership participation of 51%:49% ZincOx: Ural-Recycling respectively, with Ural-Recycling as the operator. ZincOx will provide testwork and the knowhow of the rotary hearth furnace recycling technology, plant design and commissioning and technical support. The JV will cover all Russia and the Commonwealth of Independent States. The JV envisages the preparation of a feasibility study over the course of the next 22 months so that by the end of 2014 the project could be ready for the commencement of construction.

Oil & Gas News

Circle Oil (LON:COP): Solid Performance - Time to Tell the Story - As we have come to expect from Circle Oil, management has again delivered a solid performance at the drill bit, taking a responsible, sustainable approach to the development and exploration of its assets. While in the short term this might be frustrating, management of these resources limits the need to further equity, which at these levels could be excessively dilutive. We believe that the operational management of the Company is solid and the assets are world class for a company this size, but that the management team is not getting that story across to the market. Nevertheless, we are reiterating our BUY Recommendation and 95p price target.    

In this news:

Geyad-6 Well

Infill producer

Spudded on 10th September

Located in the south central part of the Geyad field.

Appraise both the Shagar and Rahmi sands for production in that location.

7ft of net pay in the Kareem Shagar sand and the well has been completed as a Shagar sand producer.

Well now producing at an 913 bopd using an 18/64" choke.

Geyad 1X ST Well Work Over

Well is being re-completed as a producer in both Shagar and Rahmi sands.

Al Amir SE 13 Well

Following the successful completion of the Geyad-6 ST1 well, the rig has been mobilised to drill the infill production well AASE-13 in the west central part of the AASE field, located between AASE-4 and AASE-11 ST and updip of water injector AASE-7 ST.

Production and Injection

Currently producing 9.1m bopd (gross) from the AASE, Geyad and Al Ola

In the event of commercial discoveries, the concession agreement includes the right of conversion to a production licence of 20 years plus extensions. The NW Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest) and Sea Dragon Energy (10% interest).

Leni Gas & Oil (LON:LGO): Takes 100% ownership of Gourdon Field, Trinidad -The Company has acquired 100% working interest in the Incremental Production Service Contract (IPSC) granted by the Trinidad and Tobago Petroleum Company ("Petrotrin"), which gives LGO rights to produce oil from the Goudron Block and consequently recognise the revenues. It has already commenced a work-over programme on the next set of five wells and after successfully completing a work-over on the first five wells. On-going work programme is part of revitalising the existing 92 wells currently available on the field.  With work-over cost of just ~$50,000 for the combined five wells and an expected flow of 10 bopd from each well, the entire capital expense ($50m) can be recovered in less than a month, making  a work-over programme a highly profitable venture.  Independent CPR report estimates 2P reserves at 7.2mm bbl with 3P reserves estimated at 30.4mm bbl along with review of the contingent resources (63.2mm bbl) associated with a possible water-flood programme. We would be looking for further updates on the production and work-over programme.

Max Petroleum (LON:MXP): Strikes Goal with the First Well -  The on-going testing results of the first exploration well - BCHW-1, in the Block A&E, Kazakhstan have been very positive with the well flowing at a stable rate of 450 bopd with no water breakthough. The Company believes that it is a commercial discovery with oil in place of approximately 16mm bbl and expected recovery factors between 20% and 40%. This news is valuation positive and we wait for more data as the Company plans to test produce for 90 days followed by testing of a deeper secondary zone. An on-going four well exploration programme is financed through its drilling contractor - Zhanros Drilling through issue of equity shares on a monthly basis and the Company plans to complete drilling before the expiry of  exploration period in March next year.

In this news:

The BCHW-1 well at the Baichonas West prospect has begun testing in a Triassic reservoir from depths between 1,184 and 1,190 metres, flowing at a stable rate of 450 barrels of 48 degree API gravity oil per day ("bopd") with no water.

This zone was initially reported as Jurassic, but is now believed to be Triassic pending final age determination, and will be produced on test production for 90 days, after which time a second zone will be tested.

Petroneft (LON:PTR): Time to Roll Up the Sleeves… - Arbuzovskoye continues to be proven up, and the results are becoming increasingly encouraging. With production now at 2.7m bpd, between the Company's other licences and Arbuzovskoye, the 2P stands at ~118mm bbl. Given that the difficult part has been completed (finding the oil), now the hard work (development) remains for management to tackle.

In this news:

Arbuzovskoye well 102 successfully completed with an initial flow of 540 bopd

Flow rate is the highest ever achieved without fracture stimulation in Licence 61

Production confirms good reservoir properties interpreted from log and core data

Arbuzovskoye well 109 drilling ahead

Group production increases to over 2,700 bopd with addition of well 102

Salamander Energy (LON:SMDR): Exploration Innings Starts in Greater Bualuang area - The Company continues to make good all round progress across its assets in Thailand and Indonesia. Commencement of an exploration drilling campaign in the Greater Bualuang area, offshore Gulf of Thailand is positive. The B8/38-8 (NW-1) well is testing one of a number of fault terraces with a resource potential of 10 - 15mm bbl. With the development drilling on the Bualuang field expected to commence by month end, we are upbeat about the production trajectory.

San Leon (LON:SLE): Second Well in Oil Prone Zone Spudded - the latest well to be spudded on the Nowa Sol licence block comes with added frisson as the first well intersected an oil accumulation, which is currently being tested. Given the fact that the Company has been measured in its programme, and especially with respect to the results of the technical evaluation, we believe that the pace of news flow surrounding this well in particular will pick up pace, which in turn will be reflected in the wider portfolio as the drilling and testing programme matures. At this stage, we are reiterating our BUY Recommendation and 60p Price Target.

Sterling Energy (LON:SEY): Growth Needle Missing - Interim Management Update - With no plans to further develop and/or explore the only producing field - Chinguetti (Mauritania), the two other exploration fields -  Ntem concession area (Cameroon) and the Ampasindava and Ambilobe blocks (Madagascar) in force majeure and suspension respectively, we believe the Company is seeking suitable projects to "move the needle" in the near to medium term, which given the cash resources of $116.5mm (which accounts for 33p of the current valuation), the scope for upward movement is significant, depending on the project, and given the cash position, it is well positioned to do so. We are reiterating our HOLD Recommendation and 35p Price Target. 

In this news:

Production, net to Sterling from the Chinguetti field, averaged 569 bopd for the third quarter 2012 (Q3 2011: 622 bopd).

Adjusted EBITDA in third quarter of $0.6 million (Q3 2011: $1.7 million) (unaudited).

Loss after tax in third quarter of $0.7 million (Q3 2011: profit $0.05 million) (unaudited).

Cash as at 30 September 2012 of $116.5 mm.

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