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Petroceltic International, Galileo Resources, GoldStone Resources, Strategic Natural Resources and others feature in Fox-Davies Newsflash

Published: 03:36 10 Dec 2012 EST

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Daily Mining Monitor  

Premier Gold Resources (LON:PGR) has raised £1.2m to fund an accelerated work programme at its Cholokkaindy gold licence in Kyrgyzstan. The monies were raised at 0.4p ps with the entire board participating £112,000 in aggregate.  The board has also made an offer to the holders of 175,799,093 warrants, which are exercisable at any time prior to 24 October 2013 at 1p per warrant to purchase the Warrants for a consideration of GBP0.0001552 per Warrant for cancellation. Holders of 84.3% of the Warrants have accepted the Offer and the Offer remains open to other Warrant holders until 5pm on 11 January 2013.  In addition, the Company has entered into an Equity Swap Agreement with Lanstead Capital.   The Equity Swap Agreement provides that the Company's economic interest will be determined and payable in 24 monthly settlement tranches as measured against a benchmark price of 0.53333 pence per share (the "Benchmark Price"). If the measured share price exceeds the Benchmark Price for that month, the Company will receive more than 100 per cent of the monthly settlement due. There is no upper limit placed on the additional proceeds receivable by the Company as part of the monthly settlements. Should the share price be below the Benchmark Price, the Company will receive less than 100% of the expected monthly settlement.  In no case would a decline in the Company's share price result in any increase in the number of ordinary shares received by Lanstead or any other advantage accruing to Lanstead. The Company will issue 25,000,000 shares to Lanstead in consideration for the Equity Swap Agreement.

Nord Gold (LON:NORD) has announced that its offer to acquire all of the outstanding shares of High River Gold Mines Ltd. not already owned by Nordgold expired at 12:01 a.m. (Toronto time) on Saturday, December 8, 2012. At expiry, Nordgold took up all High River shares then validly deposited under the Offer and not previously taken up, being an additional 77,776,721 shares. With the acquisition of these shares, Nordgold has acquired an aggregate of 192,039,770 High River shares under the Offer, representing approximately 91.6% of the High River shares held by shareholders other than Nordgold as of the commencement of the Offer. Nordgold now owns 822,667,242 shares of High River, representing approximately 97.9% of the issued and outstanding High River shares.

Strategic Natural Resources (LON:SNRP) has granted a total of 7,974,000 share options to certain directors and employees under the SNR share option plan .The Share Options may be exercised from 10 December 2014 until 10 December 2022 and have an exercise price of 26.375p.  Following the Option Grant, the total number of options outstanding over ordinary shares in the Company is 14,079,540, which represents 8.28% of SNR's current issued share capital.

Goldstone Resources (LON:GRL) has announced that Jonathan Best, who was appointed a Non-Executive Director of the Company on 8 October 2012, was appointed Chairman with effect from 7 December 2012.  Gennen McDowall, formerly Chairman of the Company, has stepped down from the Board.

Coal of Africa (LON:CZA) has confirmed that the Save Mapungubwe Coalition has withdrawn from the Memorandum of Understanding signed with CoAL on 24 November 2011. The Coalition and CoAL signed the MoU committing to working together and strengthening cooperation in the interest of sustainable development and the preservation and protection of the Mapungubwe Cultural Landscape. The Coalition states that past and on-going non-compliance with water legislation at the Vele Colliery, as well as existing detrimental impacts that now require remediation are the basis for its withdrawal. CoAL responded that Vele has valid regulatory licenses and permits, including the Integrated Water Use Licence, for all of its activities and production will continue as planned. In this regard, CoAL confirms that the Coalition's withdrawal from the MoU will not have an impact on the daily operations at the mine. The Company is of the firm view that the basis on which the Coalition is withdrawing and its allegations are inaccurate, which CoAL has addressed on numerous occasions with the Coalition. In addition, the Coalition has to date not been to the Vele mine site in spite of the numerous invitations from the company for it to visit in order to observe and appreciate the systems introduced to manage the environment.

Obtala Resources (LON:OBT) through its agriculture and timber subsidiary Montara Continental has increased its forest land holdings in Mozambique with the successful application for two additional concessions in northern Mozambique. The total forest land area has increased by 43,000 hectares with the new concessions located adjacent to existing operational infrastructure. Management and forest inventory studies indicate a combined permissible annual cut volume of 9,432m3 timber based on a 20 year cycle. The first shipment of cut hardwood has left the port of Nacala for buyers in South Africa. Additional timber is on the water to a third party timber manufacturing facility in Europe to process high-end engineered flooring and decking. In addition the company has initiated the process to secure Forest Stewardship Council certification which will allow sales into the European market. The Company has already put into place certain criteria, such as fire breaks, signage and the establishment of a sapling nursery for replanting purposes, which are prerequisite to the initial FSC site inspection, planned for mid-January 2013.

Bezant Resources (LON:BZT) has extended the option and proposed subscription for the disposal of Asean Copper Investments Limited to Gold Fields Netherlands Services BV. The original proposal was granted in October 2011 and was due to expire on 31 January 2013. The new terms are that a further US$2.5m non-refundable upfront payment be made to Bezant with Gold Fields funding the Company's 2013 licence commitments on the Mankayan Project. The option will be extended until 31 January 2014 with revised consideration of US$60.5m (originally US$63m) to be paid on future exercise of the Option. Gold Fields will also subscribe for US$7.5m of equity in Bezant at a price of 25.97p ps. Bezant also announced its planned initial return of capital to Bezant's shareholders in the first half of 2013 with a minimum amount of US$7.5m intended to be returned to shareholders, excluding Gold Fields, subject, inter alia, to shareholder approval at the appropriate time. Approximately 50% of the gross US$60.5m sale proceeds will potentially be available for further distribution to all Bezant shareholders, assuming future exercise of the Option and completion of the sale of Asean.

Anglo Pacific Group (LON:APF) has announced it will not offer shareholders a scrip dividend alternative in respect of the interim dividend for the year ending December 31, 2012. The interim dividend of 4.45p ps for the year to December 2012 will be paid in cash on February 5, 2013 to shareholders that were on the share register at the close of business on November 30, 2012. The shares were quoted ex-dividend in Canada and London on November 28, 2012.

Highland Gold Mining Ltd. (LON:HGM) announced the acquisition of a license for exploration and mining rights for the Western Flank, a 3.9 km(2) property immediately adjacent to the Company's existing Mnogovershinnoye (MNV) mine operations. The acquisition resulted from an open auction held on 6 December in the regional capital of Khabarovsk for a bid price of 8.690 million roubles (ca. US$ 280,322). This new license area includes the highly prospective Chaynoye zone which has good potential to deliver new resources at MNV. The Chaynoye prospect is approximately 1,000m in length and varies from 40 to 150m in width. It is situated in a favourable structural setting near the intersection of two major faults immediately northwest and adjacent to the current MNV license area. Chaynoye was partially explored in the past and has a historical reported prognostic resource of 3.5t (112,500 oz) of gold. Gold mineralisation is hosted within zones of quartz and quartz-carbonate veins and veinlets as well as within areas of quartz-sericite altered and silicified volcanic rock. Explored vein widths range between 0.3 to 3.0m for up to 115m along strike and reported historic gold grades as high as 207 g/t. An aggressive trenching and drilling programme is being designed for 2013 in order to upgrade the resource potential of Chaynoye for future exploitation via the Company's operations at MNV. This acquisition underpins the Company's continued focus on its near-mine exploration efforts at MNV with a goal of verifying and further increasing

Eurasian Natural Resources Corporation (LON:ENRC) announced the proposed private acquisition by its wholly owned subsidiary, ENRC Congo BV, of the remaining 49.5% of the share capital of Camrose Resources Limited, as well as the outstanding minority shareholdings in certain Camrose subsidiaries, for an aggregate cash payment of US$550M. The transaction is expected to complete by 28 December 2012. Simplifying the Group's organisational structure and consolidating its position within the Democratic Republic of the Congo are key strategic priorities for the Group and will allow the Group to optimise the value of the Camrose assets.

Galileo Resources PLC. (LON:GLR) announced positive and significant progress on the Preliminary Economic Assessment of its Glenover Rare Earth Project in South Africa, a joint venture with Glenover Phosphate (Pty) Ltd. The Glenover Resource Statement (announced April 2012) has been independently reviewed including data on the Rare Earth Oxide (REO) distribution applicable to the Resource Estimate. The relative density (RD) of surface stockpiles and their volumes were retested and redefined respectively, the net effect of which increased by8 % the reported Inferred stockpile resource to a gross amount of 2.940Mt from 2.723Mt reported in the Glenover Carbonatite Geological and Resource Report - August 2012. The mining geotechnical report was completed indicating strong wall rock competency characteristics and the open pit planning determined a low stripping ratio of 1.5 to 1. An enviromental study was completed which showed no fatal flaws in this area and extensive metallurgical testwork is being carried out and the results to date suggest that a high grade marketable REO product can be produced. Engineering, costing and marketing studies are progressing to schedule with the completion of the PEA anticipated in early Q1 2013.

African Copper PLC. (LON:ACU) announced it made excellent progress during the six month period ended 30 September 2012 toward achieving stable operations at the Mowana plant and attaining profitability. We produced copper in concentrate of 4,490t, 29% higher than the corresponding period from last year, and we generated operating income from mining operations of $4.3M, compared to an operating loss of $4.3M for the corresponding period last year. Although we are not yet operating profitably, we reduced our overall loss for the period by 44%, to $9.0M from $16.0M. This all lays the groundwork for an excellent second half of the year.

Mwana Africa plc. (LON:MWA) announced its unaudited results for the six months to 30 September 2012. Consolidated Group revenues were up 61% to $60.7M (H1 2011: $37.6M) and the profit before tax was of $10.1M (H1 2011: $0.7M loss). Freda Rebecca production increased by 66% to 36,335 oz of gold in the six months to September 2012 (H1 2011: 21,893 oz). A new strategic shareholder in China International Mining Group Corporation (CIMGC) was introduced, allowing recapitalisation and restructuring of Bindura Nickel Corporation, enabling the restart of the Trojan nickel mine.  First sale of concentrate are expected Q2 2013. Positive drilling results at Zani Kodo with 34 holes drilled for a total of 11,047m. Cooperation and Development Agreement worth up to US$40M signed with Hailiang to jointly explore and develop 28 of SEMHKAT's licenses in the Katanga province of the DRC. The parties are currently finalising joint venture agreement which will govern the joint venture relationship.

Daily Oil & Gas Monitor 

New World Oil & Gas (LON:NEW) – Smoking Gun Found: The Company’s update is a positive as it has intersected a horizon with oil shows, sufficiently strong as to be interpreted as being below the oil water contact. This is positive news, but as they say, many a drop spilt betwixt cup and lip – shows do not indicate a commercial find, and ultimately, this is what success should be determined by. The Company has a range of targets to drill, in both Belize and Denmark, and given that there is ultimately a low probability of success with any one single well, you really need a wide range of differing play types and locations to provide a better balanced opportunity base for investors.

In this news:

Presence of a working hydrocarbon system confirmed by results of the Blue Creek #2 well ('Blue Creek#2')

45% and 65% oil saturation in the lower Cretaceous Dolomites of the Y3 and Hill Bank formations following petrophysical interpretation of open-hole logs

Currently drilling a deviated well, the Blue Creek #2A ST ('the Well'), targeting   potential commercial oil accumulation up structure above the interpreted oil water contact

The Well will be drilled to an angle of 35 degrees relocating the bottom hole location of Blue Creek #2 by some 4,535 feet to the SSE and up-structure 300 feet 

o As at 7 December 2012, the Well is at 4,500 feet Measured Depth ('MD')

o The Directors believe the chances of discovering a commercial oil accumulation at B Crest have materially increased due to: 

§ targeting oil bearing formations seen in the vertical well, Blue Creek#2, and drilling 300 feet up-structure

§ observing on seismic an enlarging wedging or thickening effect of Y3 and Hill Bank formations up-structure where the Company believes a significant trap exists

§ relocating above the interpreted oil water contact to maximise chances of obtaining commercial flow rates during planned testing operations

§ The proposed total depth ('TD') of the Well is 10,880 feet MD and is expected to be reached on or about the end of 2012

Jubilant Energy (LON:JUB) – Balance Returning, but Headwinds Remain: Today’s interims are a timely reminder of the work that has gone in to the building of the the near, medium and long term portfolio. With the Deen Dayal on-stream in 2H’13, Tripura declaration of commerciality being prepared and the exploration portfolio currently in place, including the new Myanmar blocks, the medium-term cash flow and longer-term outlook remains as buoyant as it has been for a while. What causes us more concern, however, is the near-term cash flow, especially if there are project overruns on Den Dayal. Nevertheless, on the back of this announcement, we are reiterating our BUY Recommendation and 55p Target Price.   

In this news:

Financial Overview 

o Revenues stable at USD 8.6 million in the first half of the current financial year, despite lower international oil prices. 

o Average oil price realised decreased by 5 % to USD 112 per barrel.

o Profit from operating activities of USD 2.2 million against a loss of USD 49,000 in the corresponding period of the previous year.

o New rupee loan agreement signed with a consortium led by State Bank of India for a 12 year term loan facility of INR 1,340 crores (approximately USD 254 million) in September 2012. Facility to fund the capital expenditure for appraisal and development of the Company's KG Block and repayment of the existing facility of INR 650 crores (USD 123 million).

o Net debt of USD 328 million as of 30 September 2012. Undrawn facilities for the KG Block and cash balance available to the company total approximately USD 151 million (converted at USD 1 = INR 52.65 as of 30 September 2012).

o Operational Overview 

§ Production and near term production upside- Kharsang Field (WI - 25%) 

§ Average gross production of 1,857 bopd during H1 2012-13, up from 1,757 bopd in the same period of 2011-12 as a result of the successful seven well development drilling programme.

§ Cumulative production from the field was 10.47mm bbl as at 30 September 2012.

§ Six of the seven wells of the Phase III development drilling programme tested oil and put on production, currently contributing to approximately 700 bopd. One well tested gas and has been kept shut for future gas utilization, as it is commercially viable.

§ Drilling of an additional six development wells under the Phase III extension drilling programme, commencing Q1 2013.

§ Various production enhancement pilot schemes commenced from November 2012.

§ Acquisition of 3D seismic of 87 square kilometres underway and expected to complete by May 2013, before the rainy season.

§ A Reserves and Resources Estimation prepared by Gafney, Cline & Associates ("GCA") as of 31 December 2011, updating its earlier estimate as of June 30, 2010:

§ Gross reserves increased by 9.5% to 5.31mm bbl, adjusted for production.

§ Gross Contingent gas resources ranges from 15.9 bcf to 43.5 bcf, with 2C gas resources at 27.7 bcf, increase of 45%.

§ Gross Contingent Oil resources range from 2.47mm bbl to 3.85mm bbl, with a 2C Oil resources of 3.13mm bbl, an increase of 286%.

§ Significant exploration upside.

Development Programme - Deen Dayal West Field in Krishna Godavari basin ("DDW") (WI - 10%) 

o Development of KG on track for first gas in H2 2013.

o The Well Head Platform set in May 2011 and currently being used for batch drilling of four development wells.

o Other facilities such as the Production and Living Quarter Platform ("PLQP"), Onshore Gas Terminal ("OGT") and pipeline are all on schedule for first gas production in H2 2013. The OGT 80% complete, whilst the PLQP and submarine pipeline were 74% and 48% respectively completed by end October 2012.

o The Government approved the extension to the existing DDW development area by 20.5 square kilometres in January 2012 thus increasing the total development area to 37.5 square kilometres.

o Reserves and resources update by GCA as of 31 May 2012, post the approval of the DDW Extension area and the drilling of the appraisal wells in the DDE area. Upward revision in the Gross Contingent Resources (2C) in the Deen Dayal Structural complex revised upwards by approximately 11% for gas and 10.2% for condensate over the earlier estimates of June 2010.  

o Exploration and Appraisal Upside 

§ Tripura (WI - 20%) 

§ Declaration of Commerciality ("DOC") for the Kathalchari discovery, incorporating the results of the wells drilled in the Tulamura anticline, currently being finalised. DOC scheduled for submission on 28 December 2012 after necessary approvals.

§ The first deeper exploratory well, Matabari-1 on Tulamura anticline, under the Phase-II programme, spudded in May 2012 and drilled to 3,287 metres against a target of 4,060 metres due to drilling complications. In the Middle Bhuban formation, gas bearing sands encountered of which one sand interval tested with mini DST. Detailed testing is scheduled for December 2012 with a workover rig.

§ The second deeper exploratory well, North Atharamura-1 in Atharamura anticline, expected to be spudded in December 2012 with a targeted depth of 4,060 metres.

§ Completed the 2D seismic survey of 125lkms under the Phase-II programme in Atharamura. Recording of 70% completed.

Manipur - North and South Blocks (WI - 100%) 

o Approximately 30% of 540 kilometres of 2D seismic acquisition completed in both the North and South blocks.

o Received the processed data of the Airborne Gradiometric survey from the Government, and is being integrated with current geological dataset.

o Six drilling locations based on prospect and logistics feasibility shortlisted in the two blocks.

Myanmar (WI -77.5%) 

o Strategic entry into Myanmar achieved with the acquisition of the PSC-I block. PSC signed in May 2012.

o Commenced operations activities and successfully completed reconnaissance survey in August 2012.

o Sub-surface technical work underway. Completed archiving of subsurface and seismic data collected from MOGE.

o A tender for 2D seismic acquisition floated and bids are currently being evaluated.

o Branch Office registration Certificate received from DICA in October 2012 and necessary bank accounts opened and operational.

Oilex LTD (LON:OEX) – That was……Average: The past management have been replaced but the experience remains. The good thing is that it looks, reads and details exactly as we have seen before, so continuity should remain. If the next change is to revitalise the Company’s narrative, it needs to demonstrate a clear step change in approach or ability. We liked the approach of the old management team, but recognised that it suffered extensive setbacks along the way. We will await the details of the new execution phase that is planned, but we think there will be little to change our view that there will be a further cash call between now and start of production.

Other news

Faroe Petroleum – Rodriguez Spudded: Norwegian North Sea well has been spudded, and is expected to take 75 days. (Story here) 

Salamander – Kecapi Spudded: Bontang PSC’s Kecapi-1 well targeting 275bcf and 20mm bbl of liquids has been spudded. No details has been given on duration, but we estimate the well will take between 30 and 45 days. (Story here)   

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