TABLE OF CONTENTS
Money Placed with Junior Gold Explorers
African Gold Underexplored - Attracting Australian Gold Miners
More Drill Results from Big Rossing South Uranium Project
Hana Discovers Mineralisation in New Area of Ghanzi Copper -Silver Project
Australian Junior Begins Mining Uranium in USA
Franco Nevada Bids US$600m Cash for International Royalty
Yukon Mining Exploration Booms, Expected to Triple in 2010
FLSmidth Receives $30m Copper Project Order in Peru
Agnico Eagle Starts Work at Mexican Gold/Silver Project
Yunnan Chihong Zinc & Germanium to Expand Lead and Zinc Production
Ivanhoe to Spend $758 Million Next Year on Oyu Tolgoi Copper/Gold Project
Gold Camp Bulong Shows New Life
Junior Explorers Find Gold in Virginal WA Regions
Xstrata to Boost 2010 Capex, Review Copper Smelters
Rosie May Be a Promising New Nickel Project
The investment industry is gambling increasingly sizeable sums of money on major mines-in-the-making, Mineweb reports. A recent example of this new trend involves Vancouver-based Exeter Resource Corporation. Specifically, a handful of top-tier investment banks snapped up the high-flying mining junior's CDN $57.5 million equity financing last month in less than 24 hours.
Exeter is using a sizeable amount to develop one of the world's largest gold discoveries in recent years. The Caspiche gold/copper deposit in Chile is weighs in at 33.7 million gold ‘equivalent' ounces. Stated another way, Caspiche boasts an inferred resource estimate of 19.8 million ounces of gold, 40 million ounces of silver and 4.8 billion pounds of copper.
Aaron Regent, CEO of the world's largest mining company, Barrick Gold, said at a recent gold investment conference in London that major gold mining companies are continually struggling to replace mined-out reserves. Especially their high-grade ore, much of which was severely depleted when gold was fetching much lower prices.
The problem is that fewer and fewer world-class gold deposits (at least five million ounces in size) are being found. The current success rate is about one per year, regardless of how many companies are hunting for them and the approximately US $4 billion per year that is being spent in this quest.
Prospectively world-class discoveries are becoming increasingly important to hungry mining majors with deep pockets. Especially since about three quarters of all significant discoveries are made by exploration-oriented mining juniors.
Increasingly, small companies with lucrative gold finds are being bought by mid to major sized gold producers. Exeter is unlikely to be an exception. Before that can happen Exeter's management says it is exploring ways to add significantly more value to Caspiche by way of additional detailed drilling and mine planning.
There has even been speculation that the company could spin off and commercialize its small but very high grade Cerro Morro gold/silver deposit in pro-mining Argentina. To date, the deposit has an inferred resource of 646,000 ounces of gold that includes the rich Escondida vein, which contains 518,000 gold equivalent ounces at a grade of 34 g/t gold.
The company plans to advance this resource to the more reliable ‘indicated resource' category during 2010, while also targeting a resource expansion to over one million gold ounces. The deposit is scheduled to be in production by 2011. Over time, it is expected to continue to grow significantly in size due to its largely untapped overall potential, according to the article.
In recent weeks, other major equity financings involving Canadian gold exploration-oriented mining juniors include an $86.33 million shot in the arm for Rubicon Minerals; $40 million for Ventana Gold; $67.5 million for Gabriel Resources; $63.35 million for Greystar Resources; and $71.87 million for Colossus Minerals.
Australia's third largest gold miner, Resolute Mining, wants to dig deeper into Africa's gold mining sector after spending $186 million on a new project in Mali, as expansion opportunities at home turn scarce, chief executive Peter Sullivan said recently. Rising bullion prices have ignited a rush to mine more gold across Australia, making it harder to peg new outback deposits, according to the executive.
This year, Australia will become the world's second largest gold producer behind China, with one-time top producer South Africa in fourth place, according to sector consultants Surbiton Associates.
Australia's second largest listed gold miner Lihir Gold, this year closed one of its Australian mines, redirecting more spending to Ivory Coast where it says mining opportunities are greater.
Resolute mined 127,000 ounces of gold in Tanzania last year, worth $150 million at current bullion prices. By 2011, it expects production from its new Syama mine in southern Mali to yield more than a quarter-million ounces annually after spending $186 million to rebuild an ore processing plant. This compares with 152,000 ounces produced at the company's Ravenswood mine in eastern Australia last year.
Sullivan said he wants to turn Resolute into a 400,000-to- half-million-ounce-per-year gold producer, enabling the company to shed its junior status and attract a wider shareholding. But even at its current size, Sullivan said there was little difficulty raising more than $100 million to get its Mali mine running thanks to strong bullion prices. British funds manager M&G Investments recently bought a 10.5 percent stake in Resolute, making it the company's second largest shareholder behind Alliance Life Common Fund with 24.5 percent.
Opportunities in Africa outweigh the negatives, Sullivan said.
"Australia is relatively mature from the amount of exploration that's been conducted over the key areas, reducing the chances of finding gold," Sullivan said. "But in Africa, a lot of the gold-bearing geology has had no modern exploration whatsoever. So, when we look at where to spend our exploration dollars, its going to be in an area where there's a high chance of finding gold and no one else has even looked."
Uranium and copper explorer Kalahari Minerals recently reported a drilling update from its 40.44% owned Extract Resources Ltd for the Rossing South uranium deposit at the Husab project in Namibia, where exploration efforts are currently being accelerated with new rigs set to be sourced to the site.
The results from Zone 2 included intersections of 47m (metres) grading 2,741 ppm (parts per million of U3O8, 28m at 4,544 ppm U3O8 and 3m at 32,865 ppm U3O8.
"We believe that these outstanding results once again reiterate the world-class nature of the Rossing South uranium system. Extract is making strong progress with additional drilling programmes to upgrade the current resource," said Chairman of Kalahari Mark Hohnen.
Extract has also announced the commencement of a RandoX exploration programme over the entire Rossing South area to delineate additional uranium anomalies, while the feasibility study was on track and was still slated for completion in mid 2010.
Exploration and resource definition efforts are currently being accelerated with more rigs being sourced to add to the 13 rigs currently on site. Infill drilling at Rossing South is currently focused on Zone 1 and Zone 2 to upgrade the resource status with the aim of defining reserves for the ongoing feasibility study.
The current resource stands at 292 Mlb (million pounds) graded 439 ppm U3O8 of which 267 Mlb at grade of 487 ppm on zones 1 and 2. The company is also looking to establish a maiden resource on the additional zones of mineralisation identified south of zone 2.
Hana Mining has announced completion of 14 new RC drill holes at its Ghanzi copper-silver project in Botswana which extends total mineralisation in the Company's current focus area, Banana zone. During an interview with Mineweb, Hana Mining CEO Marek Kreczmer said the findings will likely increase the overall resource to 80 - 100m tonnes. This also extends mineralisation by 1600m along strike for two sections in the Banana zone, the South Limb and Southwest Fold Closure.
The highlights of the recent drilling results show that four new holes in the South Limb extend mineralised strike length by 600 metres to 1.8km. Ten new holes in the Southwest fold represent new mineralised strike length of 1000 metres in an area never tested by any type of drilling.
The company said the results in the South Limb show continuation of mineable grade copper/silver mineralisation trending south from previously released results. Results from the Southwest fold show lower grade, near surface mineralisation over large widths (16 to 48 metres) and at shallow dip. Hana said the main copper minerals in the Southwest fold are malachite and chalcocite, unlike other areas which are predominantly bornite and chalcopyrite.
Kreczmer said he has been spending the past week in Botswana's capital, Gaborone meeting with government officials and looking at various office spaces. He said they hope to have an established office early 2010 in Gaborone.
White Canyon Uranium Ltd disclosed recently that it had started production of development material from its 100% owned Daneros uranium mine in south eastern Utah in the United States.
The company said it will be delivering ore to North American uranium producer and processor Denison Mines Corporation which has the White Mesa Mill. Trucking will begin this month. First payment for delivered ore is expected in January.
In October, White Canyon agreed to sell material produced in the Daneros mine's development stage into what was called the Denison Ore Buying Schedule.
White Canyon's managing director, Peter Batten, believes the mining and sale of the development material from Daneros marks the achievement of two significant milestones in the company's transition from explorer to uranium producer.
"The sale of this development material will allow Denison to derive critical processing parameters with regard to the Daneros mineralisation, will assist with how to best treat this mineralisation through the White Mesa Mill in the future and will provide pertinent information required for the finalisation of a long term treatment agreement with Denison," Batten said.
It also, he said, propels White Canyon into the ranks of being a producer.
The company has lodged a draft listing application to join the Venture exchange of the Toronto Stock Exchange.
Mega mining royalty player Franco-Nevada has launched an unsolicited US$600 million all-cash takeover bid for rival upstart International Royalty.
IRC Chairman and CEO Doug Silver said in a statement the IRC board will meet with its legal and financial advisors "to consider an appropriate response to Franco-Nevada's intention regarding the offer and the board will communicate further with IRC's securityholders in due course."
IRC holds 84 royalties including an effective NSR royalty on the Voisey's Bay mine, a sliding scale NSR on the Chilean portion of the Pascua-Lama project, a NSR on the Las Cruves project and a NSR royalty on gold in Western Australia.
Its market cap on the AMEX as of December 4, 2009 was $421.4 million.
Franco Nevada holds 300 royalties with 82% of its revenue coming from the U.S. and Canada. Those holdings include royalties from Goldcorp operations, Stillwater Mining, Newmont's Gold Quarry operation, Coeur d'Alene's Palmarejo mine and First Quantum's Robinson project.
Among Franco's new royalties are Newmont's Ahafo South mine in Ghana, Goldcorp's Marigold mine in Nevada, and BHP's Mt. Keith in Australia. Franco had a market cap of $3.1 billion as of December 1, 2009.
Mineral exploration spending in the Yukon far exceeded territorial government forecasts, more than doubling this year. Government forecasts now predict Yukon mining production will triple in 2010.
In the recently published Yukon Economic Update, the territorial government estimates mining exploration expenditures will total around C$90 million (US$85m), far exceeding the original estimate in the May Economic Update.
"The upward revision to the estimate for 2009 is due in part to increased interest in properties near Underworld Resources' White Gold property following excellent drill results...in the spring of 2009," the update revealed.
"Recent positive results along with strong gold prices throughout 2009 have helped contribute to over 7,000 new claims stake in the area around the Underworld Resources property," the document said.
Other projects including Northern Freegold, Victoria Mining's Eagle Gold, and Western Copper's Casino are all expected to contribute to future growth in the territory's mining sector.
In a speech to the 37th Yukon Geoscience Forum in Whitehorse, Mike Burke, the head of mineral services for the Yukon Geological Survey, also highlighted the Yukon Zinc Corp Wolverine Mine project, which is now preparing for production southeast of Ross River. "Development dollars are going through the roof, mostly with Yukon Zinc's Wolverine Mine," he said.
Burke said 47% of exploration dollars in the Yukon are going to gold, 23% for silver, and 30% for base metals.
Placer geologist William LeBarge told the forum the value of placer gold production is expected to achieve a 20-year high. He speculated that this year's placer gold total could hit 66,000 ounces with a value of C$57 million, the highest in twenty years.
The Dawson district has yielded 86% of the placer gold production so far this year.
In recent months, the higher Canadian dollar has been a positive for operators who needed to buy machinery for exploration or development activities as many of the items are priced in U.S. dollars, according to the Economic Update.
For placer gold producers, the high price of gold in U.S. dollars has softened some of the negative impacts resulting from the strengthening Canadian dollar, the report suggested.
Two new mines, Aleco Resource Corp.'s Bellekeno silver mine near Keno, and the Wolverine zinc-silver mine, are scheduled to begin production in the Yukon by the end of next year. They will join the territory's only currently producing mine, Capstone Mining's Minto copper mine, which has increased its measured and indicated resource by 32% in contained copper, more than 38% in contained gold, and 28% in contained silver since the last estimate reported in 2007.
Mineral processing and materials handling equipment giant, FLSmidth, has signed a contract with Chinese-owned Minera Chinalco Peru for equipment for its Toromocho copper mine in the Morococha mining district about 140 kilometres east of Lima, the capital of Peru. The contract value is expected to be worth in excess of USD 30m (DKK 150m).
FLSmidth is to provide detailed engineering and design, as well as manufacture and delivery of equipment, including two overland conveyors, seven in-plant conveyors, and two belt feeders. The overland conveyor will be one of the most complex conveyors in the world. It will be 5.2 kilometres in length and have 9 MW of installed power. The conveyor will have complex vertical and horizontal curves and can demand or regenerate power depending on loading conditions.
"Peru continues to be one of the most active minerals areas in the world and FLSmidth has a long time presence in the country. FLSmidth owned Conveyor Engineering has been providing material handling solutions in Peru since the mid 1990's and has supplied some of the largest systems in the country. The conveyor solution included in this order consists of cutting-edge technology and know-how - making it one of the most complex conveyors yet," Group CEO Jørgen Huno Rasmussen comments.
Canada's Agnico Eagle mining company has started work at its Pinos Altos gold and silver project in northern Mexico with an investment of $240 million, Mexico's economy ministry said recently.
"Pinos Altos is one of the most important and modern mining projects in Mexico, with a capacity to process 4,000 tonnes of material a day in its underground and open pit operations," said a statement from the ministry.
Agnico's property is in the Sierra Madre gold belt in the state of Chihuahua near the U.S.-Mexico border and has probable gold reserves of 3.6 million ounces and a large silver reserve of 100 million ounces.
The company expects production at around 175,000 ounces of gold and 2.6 million ounces of silver a year, according to Agnico's website.
Yunnan Chihong Zinc & Germanium Co, China’s fifth-largest zinc smelter, said recently it plans to raise up to 1.8 billion yuan in a rights offer to expand its lead and zinc production capacity. Yunnan Chihong will offer three shares for every 10 at a price of 7.69 yuan apiece, the company said.
Analysts said the capacity expansion will boost its core business and also indicates better earnings prospects in the long run.
Yunnan Chihong said that the funds raised from the rights offer would be used for a project that can produce 100,000 tons of zinc plating per year. The company said the project would involve a total investment of 2.7 billion yuan and increase its total capacity of zinc products to 215,000 tons a year, while crude lead capacity will rise 75 percent to 140,000 tons.
"Demand for zinc will remain strong driven by the country's urge to develop eco-friendly products like zinc-air batteries," said Chen Yue, an analyst at Shanghai CIFCO Futures Co.
The spot price of zinc has almost doubled this year and lifted Yunnan Chihong's third-quarter profit by 24 percent to 105.2 million yuan from a year ago.
Ivanhoe Mines said recently it will spend $758 million in 2010 on its Oyu Tolgoi copper-gold project in southern Mongolia and should have the $3.5 billion open-pit component of the mine finished in 2012.
That timetable, which envisions an early start to development and commercial production by 2013, would seem a bit more accelerated than what Ivanhoe predicted in October, when company officials eyed output by late 2013.
Rio Tinto is a minority stakeholder and funding partner in the project. Ivanhoe, Rio and Mongolia wrapped up a long-awaited investment agreement on Oyu Tolgoi in October, giving the Mongolian government a 34-percent stake in the project.
Oyu Tolgoi is seen as one of the world's largest untapped copper and gold deposits, and lies in the Gobi Desert, about 80 km (50 miles) from the border with copper-hungry China.
The initial open-pit phase of the project is expected to cost $3.5 billion, while the partners will concurrently spend $1 billion to begin to develop an underground component to the mine.
In a statement, Ivanhoe said the 2010 budget provides for an early start on a site-wide development program, pending the successful completion of remaining conditions required to put the investment agreement in effect. Those conditions include review of a feasibility study, which Ivanhoe expects to be concluded in coming weeks.
Work in 2010 is expected to include construction of a 97-metre (320 foot) concrete headframe and a regional airport capable of accommodating Boeing 737-sized aircraft.
The company, which has a cash position of about $1 billion, has said the mine should produce an average of more than 1 billion pounds of copper and 500,000 ounces of gold annually over the first 10 years of its 30-plus years of life.
Ivanhoe recently received $388 million from Rio Tinto, completing the second phase a private placement financing deal.
Under the financing agreement between the two companies, Rio has the right to buy 43.1 percent of Ivanhoe's common shares over the next two years. It may increase this stake to 46.6 percent through purchases on the open market. Rio currently owns a 19.7 percent stake in Ivanhoe.
Southern Gold Ltd said recently that it had received more outstanding drill intersections at its Bulong prospect in Western Australia as a follow up to an earlier hole that produced a wide intersection of medium grade gold.
The new drill hits at Bulong included 66 metres grading 2.9 grams/tonne gold, 42m @ 2.7 g/t and 43m @ 3.4 g/t gold.
The company said it was now targeting mineralised extensions at the Cannon and Monument prospects at Bulong.
Managing director Stephen Biggins said geophysical data suggests that Cannon may connect with the nearby Pinner prospect and may also link with the Homerton and Monument prospects.
The latest drilling will take in RC drilling at Cannon and the identified 550 metre long Monument prospect including a target 50m away which is held as a joint venture. First assay results are expected by early January 2010.
Beadell Resources Ltd said that drilling at the Handpump prospect in the West Mustgraves Complex has produced some significant new gold intercepts that may be a stepping stone for unearthing a new gold province in Western Australia's far east.
Also Beacon Minerals Ltd recently announced high grade intersections at the Halleys West Zone at its Barlee gold prospect in the south Murchison region, about 150 kilometres north of the old Bullfinch gold mining camp. Beacon has been getting encouraging search results at Barlee for more than 18 months.
The area of the West Musgraves being explored by Beadell is a sparsely vegetated region and even more sparsely populated.
The latest drilling from Handpump took in a shallow intercept of 65m grading 0.83 g/t gold that included 5m @ 5.1 g/t within a zone beginning at 30m where there was a 15m intercept @ 2.3 g/t gold.
Beadell's managing director, Peter Bowler said: "The significance of this discovery cannot be understated as it represents the first economic gold intersection in the Meso-Proterozoic Musgrave block and may herald the beginning of a completely new and sparsely explored gold province in Australia. "This RC drill intersection is the most significant in Beadell's short two year existence."
He said the West Musgrave area was largely unexplored and has the potential to host gold mineralisation of a significant size.
Mining group Xstrata plans to boost capital spending next year by 89% to $6.8 billion to expand output and is considering whether to close or sell any of its four profit-squeezed copper smelters.
The firm, which aims to boost overall production by 50% by 2013, estimated capex of $3.6 billion this year, Chief Financial Officer Trevor Reid told an investor seminar.
Most of the increased capex would go towards the nickel, coal and copper divisions for new and expanded mines, Reid added.
Recently Xstrata said its board had approved spending $542 million to extend the life of its Ernest Henry copper and gold mine in Australia until at least 2024 by shifting to underground mining.
The copper unit has six advanced projects to deliver 60 percent production growth by 2015, Charlie Sartain, chief executive of Xstrata's copper division, said.
But Xstrata, the world's fourth-biggest producer of mined copper and third largest in refined copper, was performing a review of its four smelters with a combined capacity of about 800,000 tonnes, he added.
"We're analysing in some detail the value benefits of the different elements of those smelters and each one of those assets needs to stand the scrutiny of whether or not it deserves to remain within the portfolio," he said. The group has looked at whether individual smelters have a strategic advantage due to location or mix of byproducts, Sartain said.
Treatment and refining charges (TC/RCs) for copper are nearing record lows and the outlook is not bright, he added.
Due to a rapid expansion of China's smelting sector, overcapacity is due to grow to around 2 million tonnes over the next three to four years, Sartain said.
"The current capacity plus what is being constructed at the moment is well in excess of what's going to be delivered in coming years. We see a pretty tough environment for smelters for some years," he said.
Junior explorer South Boulder Mines Ltd announced an important nickel-copper intersection at the Rosie prospect in the Duketon region joint venture with Independence Group NL.
The hole, the first to be released from a drill campaign on the Rosie and The Bulge prospects at Duketon, took in 20 metres grading 1.32% nickel, 0.23% copper and 1.54 grams/tonne platinum and palladium. This included a 2m section of 7m @ 2.61% Ni, 0.42% Cu and 3.75 g/t Pt + Pd.
South Boulder's managing director, Lorry Hughes, said the mineralisation encountered was of a massive, matrix and disseminated style. The hole's intercepts were on the same section as an earlier hole that intercepted sulphide nickel below an oxide intercept announced in October that produced 10m @ 0.40% Ni, 0.49% Cu and 2.2g/t Pt + Pd.
Hughes said further assay results from the remainder of the 6-7 hole drilling programme at Rosie were due to be received over the next 3-4 weeks and results of a 4-5 hole programme on The Bulge C2 prospect were due over the same time period.
McIlvaine Company
Northfield, IL 60093-2743
Tel: 847-784-0012; Fax: 847-784-0061
E-mail: editor@mcilvainecompany.com
Web site: www.mcilvainecompany.com