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PROACTIVE NEWS SUMMARY: Regency Mines, Westminster Group, Premier Oil, Tantalus Rare Earths, Caspian Energy

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Shares in miner Regency Mines (LON:RGM) and security group Westminster Group (LON:WSG) surged today after Regency unveiled the maiden JORC compliant resource estimate for the Mambare nickel project, while Westminster secured its latest airport contract.

The US$128,000 contract sees Westminster supplying Saudi Arabia with airport security equipment, for scanning both people and luggage. And it is another sign that Westminster’s newly established aviation security division is beginning to take off.

Today’s contract follows a massive long term contract win, worth over US$150 million, to kit out and operate the entire security services at an international airport in Africa. 

"I am delighted to be able to announce this latest airport security contract following on from other recent aviation contract wins and an expansion of our aviation business,” said chief executive Peter Fowler.

Operations under the African contract, awarded in February, will get underway next month and it is should generate US$4.5 million in revenue for the first year.  This represents a significant boost in revenues – with this one contract giving its more than 30 per cent of last year’s annual revenue.

Revenues are derived from the airport’s passenger volumes, and therefore the number of people processed through airport security. And according to Westminster’s own estimates the 15 year contract may conservatively generate more than US$150 million in revenue over its life.

Back to Regency, the mining group said Mambare, which is located in Papua New Guinea, has the potential to be one the world’s largest single nickel laterite deposits, after it announced the maiden JORC compliant resource estimate for the project.

Mambare is being explored through a 50:50 joint venture with Sydney-based firm Direct Nickel.

The estimate was produced by CSA Global and gives Mambare an indicated and inferred resource of 95.1 million tonnes grading 0.96 per cent nickel and 0.08 per cent cobalt, for 912,595 tonnes of contained nickel, using a 0.60 per cent nickel cut-off grade.

The estimate is based on the results of the 2011 exploration campaign and only those holes from the 2008 exploration campaign located within the 2011 drilling area, 162 drill holes and 5 test pits in all.

The maiden resource was calculated across a combined area of 9 square kilometres, with only 2 square kilometres in the primary target, the 80 square kilometre plateau. The remainder of the resource is on the southern slopes below the plateau.

Mambare project manager Ian Warden said: "This resource estimate of 95 million tonnes is three times the size of our initial target for this campaign.

"We found better thicknesses and grades than we anticipated. Within the total JORC compliant resource there appear to be significant tonnages of higher-grade material, which bodes well for future project economics.

"We have drill tested less than 3 per cent of the plateau surface, with mineralization open across the plateau to the north and west of the current drilling. This indicates the very significant potential upside of this project.

"These results reinforce our belief that the combined potential of the Mambare nickel laterite project and the revolutionary Direct Nickel process for extracting nickel from laterites will allow us to create a truly outstanding project," Warden said.

Proactive Investors also covered today’s news from Premier Oil (LON:PMO), whose planned development of the Solan oilfield received approval from the UK’s Department of Energy and Climate Change.

Solan is a significant project in the West of Shetland area of the UK North Sea and it is now set to produce 24,000 barrels of oil per day starting in the fourth quarter of 2014, Premier said.

Over its life it is expected that the Solan field will produce around 40 million barrels of oil.

"DECC's approval of the Solan Field Development Plan marks another significant milestone for Premier and further endorses our capabilities as an operator as we continue to build a substantial business in the North Sea,” said chief executive Simon Lockett.

“We look forward to the Solan project contributing materially to our production target of 100,000 boepd in the medium term."

The Solent development phase will see Premier drill four subsea well, two of which will be producers and the other two will be for water injection. Additionally Premier says that the production facility would not be permanently manned after one year of operation.

Today’s approval follows a recent tax break for projects in the West of Shetland area. In last month’s budget chancellor of the exchequer George Osborne proposed a new field allowance specifically for projects located in the technically challenging region.

UK energy minister Charles Hendry today said: “Premier's Solan project will bring considerable benefits to the UK.

“In addition to contributing to the UK's future energy supplies, a sizeable proportion of the contracts are expected to be awarded to UK companies. 

“Premier's investment is excellent news and further demonstrates the significant remaining opportunities to develop new oil and gas fields in the UK Continental Shelf."

Another article by Proactive took a closer look at Tantalus Rare Earths’ (XETRA:TRE). The company’s development and offtake deal with Rhodia has validated the huge potential of its flagship project in Madagscar, its boss said.

Describing Rhodia as the “Rolls-Royce of the rare earths business” David Rigoll, Tantalus’s chief executive, said it would enable the Frankfurt–listed firm to fast track the project.

The two firms have signed a letter of intent to work together on how to extract “heavy” rare earths metals at the Madagscar site, ahead of a full technical co-operation agreement.

An exclusive supply deal will also see Rhodia take 15,000 tonnes of rare earths concentrate per year, a huge quantity says Rigoll.

Tantalus’s Madagascar project is one of the largest clay hosted rare earth resources outside of China, with 20 per cent of the rare earths found in the most valuable "heavy" category.

Rigoll said that the tie-up with Rhodia was a major milestone for the company.

“If I was making cars and Rolls – Royce came in and said it wanted to be a partner, you would know you were on to something. That’s the best way I can describe it.”

“We want the most efficient, environmentally friendly, most economical, purest concentrate we can get. That’s the difference between Rhodia and everyone else. Their oxides are the purest in the world.”

China currently supplies over 90 per cent of the world’s rare earths.

Proactive also dedicated a story to junior oil explorer Caspian Energy (TSE:CEK), whose transformation has gone largely unnoticed by the market with the share price bumping along around the 15-18 cents level since it teamed up with a new Chinese partner.

The alliance with Asia Sixth Energy, a special purpose investment vehicle with backing from the People’s Republic, brings in around US$80 million of investment, which will be used to develop and explore three exciting sections of Kazakhstan’s North Block. 

It is important to say that this is a free carried investment, so Caspian doesn’t have to kick in any cash. There is a small caveat, however. 

As the cash is offered in the form of a loan to the local Kazakhstan company, Aral Petroleum, it will have to be repaid before meaningful dividends can be distributed to investors.  

Asia Sixth became involved when it bought out Caspian’s local partner Azden to take a 60 per cent share of Aral for up to $50 million (with $20 million paid upfront).

This transaction provides a benchmark valuation for Caspian and reveals the company’s current $40 million market capitalisation takes no account of the potential of the lead asset, East Zhagabulak.

Here it has two producing wells and another two under development.

The net present value of East Zhagabulak (and remember it is one of three assets), is 77 cents, fully-diluted before income tax, based on 20 million barrels of proved, probable and reserves, valued at US$95.70 a barrel. 

If West Zhagabulak and Baktygaryn live up to their potential, then you could probably add at least another dollar (possibly two) to this valuation, based on the initial independent assessments of these assets.   

This compares to a current share price of just 18 cents.

 

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