aug 06 update

Diversified resources group Exxaro Resources (Exxaro) started the construction programme for its new Inyanda coal mine, near Witbank in Mpumalanga, and expected it to reach full production during 2008.

The Inyanda mine would produce one-million tons a year of A-grade thermal coal for the export market, through Richards Bay Coal Terminal (RBCT), and involved an estimated R245-million of start-up capital expenditure, Exxaro said in a statement to the JSE.

Development of the Inyanda mine had been made possible by the granting of new-order mining rights from the Department of Minerals and Energy, as well as the go-ahead of the Phase 5 expansion of the RBCT, late in 2006.

Exxaro is a diversified resources group with interests in the coal, mineral sands, base metals, industrial minerals and iron-ore commodities. The group's coal business has a capacity of 45-million tons a year and is South Africa's fourth-largest coal producer. Exxaro is the largest supplier of coal to Eskom for power generation, and is the country's largest producer of metallurgical coal.

Pan African Expands Remit in Mozambique

Pan African Mining Corp has announced an agreement with African Eagle Resources plc for exploration, development and exploitation of five prospecting licenses in northwest Mozambique.

The licenses comprise approximately 909 sq. km and are controlled by African Eagle subsidiary Twigg Resources Limited. They are located in the Tete Province, close to the company’s other Fringoe area holdings.

Under terms of the agreement, Pan African earns the right to acquire African Eagle's Fingoe licenses by funding and carrying out a regional exploration program during the upcoming twelve months.

African Eagle will retain a customary 2% NSR with respect to all mineral production from the license area.

Very limited previous exploration has taken place, although there are known gold and Cu-Fe occurrences and reported veining, skarn mineralisation and hematitic breccias within the belt. A regional reconnaissance geochemical sampling program has been underway for several months. The African Eagle licenses will now be incorporated into this study.

"We are excited about the opportunity for potentially economic gold and metals discoveries in the highly mineralised Fingoe region of Mozambique," said Pan African CEO Irwin Olian.

"Acquisition of the African Eagle licenses is an important step toward consolidating our land position in the area, which now aggregates approximately 1359 sq. km. We are looking forward to results of our initial exploration programme in the region."

African Eagle Alliance with Troll Mining

African Eagle Resources PLC said it signed a strategic alliance agreement with Troll Mining Ltd, a private company that has prospecting licences over uranium, copper and gold properties in Southern Tanzania.

African Eagle will explore four of Troll's prospecting licences covering 1,225 sq km and a further four areas totalling 675 sq km where uranium, copper and gold mineralisation has been identified.

'The deal complements the company's recent acquisition of the Shikula copper-uranium property in the same area, and is in line with African Eagle's move to package its uranium prospecting rights into an energy minerals division for spin out or joint venture,' said African Eagle's managing director Mark Parker.

Under the three-year alliance, African Eagle has the exclusive right to enter into prospecting and mining agreements with Troll and to be granted 80 pct participating interests in the licences.

African Eagle will pay Troll 30,000 usd a year, and 60 usd per square kilometre while it is exploring any licence under a prospecting and mining agreement.

Asian American to Develop Second Chinese Mine

Asian American Coal Inc (AACI) is set to develop its second Chinese coal mine, state media reports. The project will cost $3 billion and is taken on with a local partner. It will be based in the northern province of Shanxi.

The site is apparently under construction and will begin operations in 2009. AACI CEO Zou Xiangdong was quotes as saying that it has reserves of 600 milllion tonnes and a projected output of six million.

The Lu’an Group will hold a 55% stake, with the remaining 45% belonging to AACI, the Shanghai Securities News reported.

AACI became the first multinational engaged in coal mining in China in 2000, with the joint development of Daning coal mine.

Medusa Mining Drill Results from Co-O Mine

Medusa Mining Limited, the Australian based company operating and developing gold mines in the Philippines, advises that it has continued to intersect high grade veins during the ongoing deep drilling programme of the Co-O Deposit within the 1.5 km long vein zone. The results confirm extensions of high grade veins to depth below the Central Vein for over 200 metres west of the Oriental Fault and along strike for over 300 metres east of the Oriental Fault. In addition, the drilling is outlining the significant potential of numerous parallel veins.

The results from the new drill holes MD 25-34 (and MD 20-24 announced in February 2007) re-inforce the Company's expectations for the potential size and grade of the Co-O Deposit.

NMDC to Invest in Overseas Coal Mines

National Mineral Development Corporation (NMDC) has announced that it will spend $3.2bn on raising output, building steel and iron plants and investing in coal mines overseas.

India’s biggest state-run iron ore producer plans to increase its iron-ore production by 85% through an investment of 35bn rupees. 90bn rupees will be spent on iron, steel and power plants, and 10bn rupees has been set aside for coal-mine purchases.

India has seen an unprecedented rise in its demand for iron. Asia’s fourth-largest economy has grown 8% annually in the past three years, also fueling demand for coal from steelmakers and power generators.

NMDC will invest 10bn rupees, alongside four other state-run companies, to bid for coal mines abroad. Tata Power, the nation’s second biggest utility by sales, has already agreed to pay $1.3bn for a 30% stake in two coal mining units in Indonesia.

The special company, which will have a total fund of $2.3bn, will be set up jointly by Coal India, NTPC, Steel Authority of India, Rashtriya Ispat Nigam and NMDC.

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Larox Wins Contracts in Australia and Chile

Larox has received two major orders for filtration equipment with ancillaries from mining and engineering companies in Australia and Chile. Total value of the orders is approximately 9.2 million euros. Deliveries will take place during 2007.

Oxiana Limited, the owner of the Prominent Hill copper-gold project in South Australia has ordered a large size Larox PF Automatic Pressure Filter for copper concentrate filtration. Construction of the new mine has commenced with production expected to commence in the second half of 2008. In its early years the mine is expected to produce 104,000 tonnes of copper in concentrate and 115,000 ounces of gold per annum.

SNC-Lavalin Chile S.A. has ordered several units of different filter types and a large package of ancillaries for the Cobre Las Cruces S.A.’s greenfield copper project in Spain. The Larox delivery scope includes a large size Larox PF filter, Pannevis RB horizontal belt filters and Scheibler polishing filters for various applications in the leaching, solvent extraction and electrowinning process. Cobre Las Cruces S.A. which is 70 % owned by Inmet Mining Corporation and 30 % by Leucadia National Corporation is scheduled to begin production in early 2008. The plant will have a design capacity of 72,000 tonnes of copper per year.

ffalo Gold to Move Uranium Assets to Bondi Mining

Buffalo Gold to Move Uranium Assets to Bondi Mining

Buffalo Gold Ltd. [TSX-V: BUF] has signed a letter of intent to move all of its Australian uranium assets to Bondi Mining Ltd. [ASX:BOM] in exchange for a 44% stake in that company.

Bondi will acquire 100% of Buffalo's Australian uranium portfolio, which is made up of 10 granted tenements and 13 applications in three major uranium provinces in the Northern Territory and Queensland.

In consideration for acquisition of the portfolio, Bondi will issue 25 million of its fully paid ordinary shares to Buffalo Gold along with 5 million options to subscribe for ordinary shares at 60 cents per share with an exercise period of 24 months following execution of a definitive agreement for the proposed acquisition. Bondi will also grant Buffalo Gold the right to appoint two additional members to the Bondi Board of Directors. Buffalo plans to nominate Damien Reynolds and Mark Dugmore to the Board.

Zeehan Zinc Sees Mining at Western Tasmania Starting in June

Zeehan Zinc Ltd said it is scheduled to start mining at its operations in Western Tasmania during June, with production of pre-concentrate expected to follow in July.

It said these dates are a result of expectations that the Gravity plant at the location will be fully operational by the end of June.

Zeehan added it has completed the first phase of its 2007 exploration drilling programme, on budget, at end-Ap

Xtrata Launches Bid for Gloucester Coal

Xstrata Coal has launched a AU$390m takeover for Gloucester Coal. The Australian coal miner has recommended that its shareholders accept the offer.

The cash offer of AU$4.75 per share has been unanimously recommended by Gloucester Coal directors.

Sydney-based Gloucester Coal produces both coking and thermal coal from its Stratford and Duralie mines in New South Wales. The company produced 1.9 million tons of saleable thermal and coking coal in the year ending June 30, 2006 and reported a net profit of AU$40.4m.

"The board believes the offer recognises the potential future growth of coal mining operations in the Gloucester Basin and in the board's opinion represents an excellent outcome for Gloucester Coal shareholders," Gloucester Chairman Andy Hogendijk said in a statement.

Xstrata Coal chief executive Peter Coates was equally effusive about the deal. "Gloucester Coal's operations further extend the life of Xstrata's New South Wales mines, with good potential to add to the resource and reserve base through near-mine explorations and further resource conversion," he said.

"Our ability to blend thermal coal production from Xstrata's existing Hunter Valley mines with Gloucester Coal's thermal coal product, together with the addition of high-fluidity coking coal to our portfolio, diversifies our coal product offering further and presents significant synergy potential."

Xstrata Coal, which is part of Swiss-based major Xstrata Plc, is already the world’s largest producer of thermal coal.

Gloucester Coal shareholders will vote on the scheme in early July

FLSmidth to Acquire GL&V's Global Minerals Activities

FLSmidth has signed a conditional agreement with the Board of Directors of Groupe Laperrière & Verreault Inc. (GL&V), to acquire the latter's Process Division (GL&V Process), which is among the world's leading providers of separation technology for the metal and minerals industries. The agreement is subject to several conditions, including the approval of at least 75% of GL&V's shareholders, on a per class basis and the attainment of governmental approvals.

GL&V Process employs some 1,000 people and is expected to post a turnover of approx. CAD $523m for the past financial year (1 April 2006 to 31st March 2007). GL&V Process is primarily comprised of the companies Dorr-Oliver Eimco and Krebs International which are world leaders in their respective fields.

The acquisition of GL&V Process enables FLSmidth to realise the global growth strategy for its Minerals activities. This is a strategy based on growing the Group's minerals business to the same magnitude and strength as the cement business. As a result of the acquisition the Group will therefore reduce its long-term exposure to cyclical market developments.

The FLSmidth Group's minerals activities are today marketed under the name of FFE Minerals. Going forward, the Minerals business will represent a substantially greater portion of the FLSmidth Group's overall activities, and the intention is to see increasing global integration between Cement and Minerals activities. Within this context it has been decided that the FLSmidth Group's overall Minerals business in the future will be marketed under the name of FLSmidth Minerals.

Complementary businesses

FFE Minerals and GL&V Process complement each other both geographically and product-wise, as has been demonstrated through several years of partnering in international projects.

FFE Minerals is an expert in pyro technologies and in crushing and grinding of minerals, whilst GL&V Process has specialised in the downstream separation processes. Together, their products represent one complete process technology from the extraction of minerals to the end product.

Similarly, the two companies complement each other on the commercial front.

FFE Minerals' main commercial focus is on selling individual machine units, whilst GL&V Process has an organisation that focuses on aftermarket sales and service. Geographically, the strengths of the two companies are well distributed across the globe. GL&V Process and FFE Minerals will together have a strong presence in all the relevant markets worldwide.

The joint operation, FLSmidth Minerals, will become a global market leader in crushers, mills, hydrocyclones, flotation, sedimentation, materials handling and calcination.

Mining Companies Renew Their Interest in Interior Alaska's Gold

Interior Alaska saw a surge of new mining claims last year with prospects north of Big Delta near the Pogo Gold Mine leading the way.

New mining claims around Fairbanks increased 53% last year, according to state figures gathered by the Fairbanks North Star Borough. Of the 3,140 new claims filed in 2006, more than 70% were in the Big Delta quadrangle, a parcel 70 miles by 90 miles that runs approximately from Harding Lake to the eastern boundary of the Fairbanks North Star Borough, and from Chena Hot Springs Road to Delta Junction.

Areas near the Pogo Mine were especially attractive, inspiring exploration after the mine began full production last year. The new claims do not necessarily represent drilling but show an interest in exploration, said Dave Szumigala of the state Division of Geological and Geophysical Surveys.

"Active mining claims overall kind of show the health of the industry and the new mining claims show where people are going that year," Szumigala said.

Each potential property contains multiple mining claims. For example, the LMS project near Pogo, discovered in 2004 by AngloGold Ashanti (USA) Exploration Inc. and explored through a joint venture with International Tower Hill Mines Ltd., contains 92 state mining claims.

New claims in other areas around Fairbanks have shown a cyclical pattern over five years, rising and falling as certain areas show more or less promise.

Washington Group to Operate Copper Mine in Arizona

Copper mining is to restart at the Pinto Valley Mine, Arizona following a $310m deal. BHP Copper Inc., an indirect fully-owned subsidiary of BHP Billiton Ltd, has awarded the contract to Washington Group and mining is expected to begin in June 2007.

Under a five-year, $310m, cost-reimbursable contract, Washington Group will provide contract mining services including the supply of mining equipment; drilling, blasting, loading, and hauling of ore and waste; mining of approximately 33 million tons per year; and maintenance of equipment and facilities. Procurement and mobilisation activities are under way.

"We are very pleased that BHP Copper Inc. has awarded us this contract. We look forward to supporting BHP Copper in bringing Pinto Valley back into production and significantly advancing our business interests in the region," said Robert Zaist, president of Washington Group's Mining Business Unit, headquartered in Denver, Colorado.

With more than $3bn in annual revenue, Washington Group employs approximately 25,000 people globally. It boasts coal, zinc, silver, copper, gold, lead, bauxite and phosphate mining operations in the US, the Caribbean, Canada, Latin America and Europe.

McIlvaine Company

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