# "That was the week that was... in Australia"



## drillinto (16 April 2007)

April 15, 2007

That Was The Week That Was … In Australia
By Our Man In Oz

Minews. Good morning Australia, uranium again? 

 Oz. It really has become the only game in town, and is likely to stay that way for another two weeks as politics moves to centre stage in the Australian uranium market. Everyone here is fascinated by what is likely to emerge from the national conference of the Australian Labor Party which kicks off in Sydney on Friday, April 27, and runs over that weekend. The anti-nuclear lobby is praying that the party retain its opposition to new uranium mines. Investors are placing big bets that the ban will be lifted, clearing the way for the wholesale development of a series of new mines.

Minews. And while you play politics the uranium prices rockets up. 

Oz. Fabulous, isn’t it. A couple of years ago you could hardly give the stuff away. Now its over the US$100 a pound mark, and widely expected to go much higher because the cost of uranium fuel to a nuclear power station is really in the “can of beans” category when measured against the overall capital cost and the critical need to maintain a flow of fuel. 

Minews. Enough of the philosophy, time for some prices. 

Oz. Right. Well last week really was a uranium glutton’s smorgasbord. A raft of stocks hit new 12-month highs, including Curnamona Energy (CUY) which jumped A87 cents (47 per cent) to A$2.73 after receiving approval to conduct trials on its Oban uranium project in South Australia. The stock eased back to A$2.69 at the close on Friday but that price is still five-times higher than a year ago. Havilah Resources (HAV), which owns 51 per cent of Curnamona chimed in with a A47 cent (22 per cent) rise to A$2.59, down A1 cent on the 12-month high of A$2.60 reached in early Friday trade. Across the uranium sector there were wholesale price rises, including Omegacorp (OMC) which jumped A23.5 cents (19.7 per cent) to A$1.43 after receiving a counter takeover bid to that proposed late last year by Canada’s Denison Mines. 

Minews. Yes, interesting that fresh move on Omegacorp. We might take a closer look. Before we do that, more prices please? 

Oz. Continuing with the uranium crowd, we saw a new listing in Crossland Uranium (CUX) deliver spectacular profits for the stags who were quick enough to sell the A25 cent shares taken up in the float at Friday’s listing high of A72.5 cents, a “modest” return of A47.5 cents, or 190 per cent on their original investment. The stock closed its first day at A61 cents, for a gain of A36 cents (144 per cent). Takeover target Summit Resources (SMM) stormed ahead thanks to the entry of French nuclear giant Areva on its share register. Summit closed the week at A$5.97, a gain of A82 cents (16 per cent), but did get as high as A$6.50 on Wednesday. Paladin Resources (PDN) which looks like it will struggle to complete its bid for Summit was probably the only uranium stock to lose ground on the day, slipping a fractional A17 cents (1.6 per cent) to A$10.03. 

Minews. Let’s look a bit wider, how did your base metal sector perform? 

Oz. Solid, but subdued when compared with uranium. The rising value of the Australian dollar weighed heavily on the sector with a number of brokers suggesting that at US83 cents to the A$1 (the highest in 17 years) we could see up to 5 per cent shaved off profits this year. The nickel favourite, Jubilee Mines (JBM) eased back A54 cents (3 per cent) to A$17.38, while other nickel stocks posted modest gains. Minara (MRE) rose A8 cents (1 per cent) to A$8.20, Western Areas (WSA) was up A18 cents (3.5 per cent) to A$5.25 and Mincor (MCR) rose A20 cents (6.2 per cent) to A$3.41, but that price was down a little on peak Friday price of A$3.50, which was a 12-month high for the stock. Zinc stocks were also weaker on Friday on dollar fears, but generally finished up marginally over the week. 

Minews. Time for quick look at the gold sector, or was it too hit by the dollar? 

Oz. It should have been clobbered, but some reason most of the gold stocks managed small gains. The stand-out winner of the week was Kingsgate (KCN) which report clearance of environmental hurdles to a big mine expansion in Thailand. It rose A84 cents (17.5 per cent) to A$5.64, but did get as high as A$5.90 in early Friday trade, it’s best price in almost 12-months. Most other moves were around the A1 cent mark. In fact a whole series of gold stocks posted that minimal rise, including St Barbara (SBM), up A1 cent to A56 cents, Goldstar (GDR) by the same amount to A57 cents, Allied Gold (ALD) to A38 cents, and Bendigo (BDG) which could manage only half-a-cent to A38 cents. 

Minews. But, you say those rises were in the face of a tough gold market? 

Oz. Absolutely. Look at the dollar effect. While the gold price in U.S. dollars rose in London last week from US$673.50 an ounce to US$681.75/oz the Australian dollar gold price actually fell from A$824/oz to A$818 thanks to our dollar rising over the week from US81.67 cents to US83.24 cents. 

Minews. Thanks Oz. It seems the profit flows from the resources boom have finally caught up with your currency, but the producers will still be making a lot of money and , hopefully, paying dividends.


Source: www.minesite.com


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## drillinto (23 April 2007)

April 22, 2007

That Was The Week That Was … In Australia

By Our Man In Oz

Minews. Good morning Australia, how did your market perform last week? 



Oz. Mixed, is the one-word answer. Uranium stocks remained on the boil, and we had a number of notable revivals among stocks we haven’t heard from in some time, but overall the tone could be best described as flat.

Minews. Presumably the rising value of your dollar continues to weigh on miners? 

Oz. Definitely. And while we can pick out examples of stocks that shrugged off dollar fears to post 12-month share price highs the key measure of our market, the metals and mining index on the Australian Stock Exchange, managed a truly modest rise of just 2.4 points, rising from 4004.8 to 4007.2 – about as flat as you can get. The good news from the index is that Friday was easily the best day with a 23.8 point gain on that day wiping out mid-week losses. 

Minews. Enough of the index nonsense, how about some prices? 

Oz. Precious Metals Australia (PMA) was one of the big stories of the week, broken as we all know on Minesite with a timely report on the arrival of Michael Kiernan as the new boss of the born-again vanadium producer. That news was well received on the market with the stock jumping by A25 cents (15 per cent) over the week, including a A16 cent gain on Friday alone to end at $1.91. 

Rusina (RML) was another sometimes troubled company in revival mode as it makes headway with at Acoje nickel project in the Philippines. It stormed ahead by A12.5 cents (47 per cent) to A39 cents, but traded as high as A45 cents on Friday. Most flattering of all for a company which has had a difficult couple of years is that Rusina copped a speeding fine (price rise query) from the regulators. 

Andean Resources (AND) which remains a possible takeover target for Kingsgate Consolidated (KCN) hit a 12-month high of A62 cents after reporting fresh drilling results from its Cerro Negro project in Argentina, only to close at A53 cents for a gain over the week of A3 cents (6 per cent). Tawana Resources (TAW) was another in the “good news at last” category, winning mining rights to its Kareevlei Wes diamond project in South Africa and rising by A4 cents (28.6 per cent) to A18 cents on Friday. 

Minews. A mixed bag there of vanadium, nickel, gold and diamond stocks. Was there a theme to the week? 

Oz. Not really. We were all over the shop. The uranium sector continued to attract most attention from speculators as we head into the Labor Party national conference next weekend when its controversial three mines policy is expected to be dropped. Market leader, Paladin Resources (PDN) ran into some heavy selling after announcing that a deal had been concluded to acquire Summit Resources (SMM). Paladin dropped A$1.14 (10.7 per cent) to A$9.49, and Summit fell A35 cents (5.8 per cent) to A$5.62. 

Minews. Keep an eye on that situation, there might be more action ahead. 

Oz. Yes, it doesn’t yet seem to be a done deal, and Paladin might hit more heavy weather if it continues with its ‘expand at all costs’ strategy. No sooner had it reached an agreement with Summit than it announced the purchase of a bigger stake in Deep Yellow, a company with which it already has close ties and is now sitting on a stake of 11.8 per cent. 

Minews. How did your base metals and gold sectors perform? 

Oz. Nickel stocks continued to trade well. Mirabela Nickel (MBN) which is developing a mine in Brazil, hit a 12-month high of A$6.03 on Tuesday before easing back to end the week at A$5.86, up A16 cents (2.8 per cent). Mincor (MCR) also reached a new high of A$3.60 early in the week before easing back to close at A$3.44, up just A3 cents, and Western Areas repeated the trick on Friday when it hit A$5.50 before slipping to close at A$5.45, up A8 cents. Sally Malay (SMY) reported good news from recent drilling at its Lanfranchi project, and added A33 cents (7 per cent) to A$4.97, but did get as high as A$5.40 on Thursday, and fell rather sharply on Friday. 

Gold stocks were generally higher, but the best of the week’s metal price rise on Friday came after we had closed. The London price of US$691.40 is the highest this year and should flow into our gold shares on Monday, assuming the dollar doesn’t rise any further. Among the local gold stocks, St Barbara (SBM) was one of the best with a gain of A$4 cents (7 per cent) to A62 cents, Centamin (CNT) gained A2 cents to A99 cents, and  Mundo Minerals (MUN), which announced the go-ahead for a mine in Brazil traded up to a 12-month high of A48 cents on Wednesday before easing back to A43.5 cents, which was still a gain of A7 cents (19 per cent) for the week. 

Minews. Thanks Oz.
***************************
www.minesite.com


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## constable (23 April 2007)

Handy thread drill , thankyou for taking the time to post!


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## drillinto (30 April 2007)

April 29, 2007

That Was The Week That Was … In Australia
==> www.minesite.com/aus.html

By Our Man In Oz

Minews. Good morning Australia, how was your week? 

Oz. Similar to when we last spoke. A little directionless, with the odd flash of good and bad news. The high value of the Australian dollar continues to act as a dead weight on some of the better-known producers. At US82.5 cents it remains close to a 17 year high, and that means revenue numbers from metal sales will be hurt this year. Uranium stocks, which have kept speculators busy for the past few months, lost some of their momentum ahead of the narrow vote by the Labor opposition (and government in waiting given recent opinion polls) over the weekend to lift its ban on new uranium mines.

Minews. Keep an eye on what the reaction is on Monday, please. 

Oz. Will do. But before then consider how some of the better-known uranium stocks performed last week. The local leader, Paladin (PDN) managed a modest A16 cents (1.7 per cent) rise to A$9.65, and the most highly-rated explorer, Toro (TOE) gained A3 cents (2.4 per cent) to A$1.25, but most of the other uranium hopefuls slipped a few cents. Havilah (HAV) lost A3 cents to A$2.27, while Uranex (UNX) and Uran (UNA) eased back by half-a-cent each to A$1.82 and A68 cents respectively. The biggest locally listed producer, Energy Resources of Australia (ERA) also reflected the uncertainty about the immediate future for uranium mining by slipping A74 cents (2.9 per cent) on Friday to wipe out most of the gains made earlier in the week. At one stage on Thursday, ERA was trading as high as A$25.50, but ended the week as A$24.48, technically up A31c (1.3 per cent), but in reality down A$1.02 (4.2 per cent) in a day as speculation grew that the ban on new mines will be lifted. 

The best uranium news came in the shape of a new float, Territory Uranium (TUC), which is exploring in a couple of the historic hot spots for Australian uranium, including the delightfully-named Rum Jungle and Alligator River. Territory raised its modest A$4 million at A20 cents a share, and started trading on Thursday at A58 cents, which was a pleasant bonus for stags, slipped as low as A46.5 cents, and closed at A57 cents. 

Minews. A nice return for day’s work. So much for uranium, how about some of those highlights and lowlights to mentioned? 

Oz. Two stand-out performances are worth noting. Independence Group (IGO) which has mainly been seen as a nickel producer is fast becoming a gold stock thanks to its 30 per cent stake in the Tropicana gold discovery with AngloGold Ashanti. Located in the middle of nowhere - well, 400 kilometres north-east of east of Kalgoorlie - Tropicana is shaping as the best gold discovery down this way in decades, somewhere in the five million ounce range, but with drilling continuing. Independence rose another A66 cents (11 per cent) last week to close at A$6.71, but only after hitting a 12-month high of A$7.08 on Wednesday. A year ago the stock was trading around A$2.90, and even a month ago it was less than A$5. Kagara Zinc (KZL) was another outstanding performer, rising A93 cents (17.2 per cent) to A$6.34 on the strength of very solid March quarter production report which revealed that copper was now accounting for 70 per cent of the company’s cash flow. 

Minews. And the bad news for week? 

Oz. Thor Mining (THR) which came down here from your AIM market copped a slathering on Friday when it announced that a Chinese partner in its molybdenum project had withdrawn. The announcement took the market by surprise. Until Friday good news had been anticipated with Thor rising from A40 cents to A46 cents between Monday and Thursday. On Friday the stock crashed to A31 cents, before picking up some lost ground to end the week at A35.5 cents, down 11.3 per cent on the week. 

The gold sector was also flat, in line with the easier London bullion price. Troy (TRY) was hit hardest, dropping A26 cents (8.3 per cent) to A$2.85, St Barbara (SBM) lost A2 cents (3.2 per cent) to A60 cents, and Lihir (LHG) lost A10 cent (3.2 per cent) to A$2.96 as it went about its major refinancing package. 

The nickel stocks were generally weaker despite the price holding about US$23 a pound, in what might have been a reflection of the currency effect. Jubilee (JBM) slipped A61 cents (3.5 per cent) to A$16.86, Minara (MRE) eased A8 cents to A$7.46, and while Western Areas (WSA) technically ended the week up A34 cents (6.2 per cent) at A$5.79 that was well down on the stock’s high of A$6.05 reached on Thursday. 

Minews. Thanks Oz. Don’t forget that uranium special on Monday.


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## drillinto (1 May 2007)

April 30, 2007

Australia Still Exhibits An Ambivalent Attitude To New Uranium Mines Despite Vote

By Our Man In Oz

It wasn’t the flood that some uranium enthusiasts had forecast but there was certainly the sound of a logjam breaking earlier today on the Australian Stock Exchange. Some uranium explorers, but certainly not all, enjoyed buoyant trading during the first session since Saturday’s historic political decision to dump the country’s controversial “three mines” policy. Some of the better upward moves included Alliance Resources (AGS) up A22 cents (8.7 per cent) to A$2.77, Toro (TOE), up A7.5 cents (6 per cent) to A$1.32, PepinNini Minerals (PNN), up A16 cents (6 per cent) to A$2.81, and Summit (SMM) up A11 cents (2.1 per cent) to A$5.83.

But, set against those rises were a number of falls caused by investors trying to assess what has actually happened in Australia and how it influences the companies they follow. There were several cases of stocks opening strongly, but quickly running out of puff. In the breathless camp was the local sector leader Paladin (PDN), which started trading at A$9.85, up A20 cents on its Friday close, but as the day dragged on Paladin slipped back to A$9.67, up just A2 cents. Curnamona (CUY) did even worse, opening at A$2.73, a gain of A10cents on Friday, stormed up to A$2.84,a and then fell away to A$2.60, for a loss of A3 cents on the day. 

Wild Horse Energy (WHE) was in another category of uncertainty. It is an Australian explorer spending most of its time and effort in the U.S. With conditions in Australia changing local investors are looking closer to home despite Wild Horse being a favourite since its spectacular float last November when its A20 cent shares started trading at A90 cents. Earlier today, the stock opened at A$1.65 (up A3 cents on Friday) and then fell away to A$1.61, down half-a-cent. Berkeley Resources (BKY) was in the same boat thanks to its focus on Spain. It opened at A$1.80 (up A2 cents), and then dropped back to A$1.75, down A3 cents on its Friday close. 

Those share price moves indicate how the ground is shifting in Australia’s uranium sector. The best of today’s performers have tenements in South Australia, the State most likely to see new mine developments, along with the Northern Territory which is still partially governed by the central government in Canberra. If nothing else, the price movements illustrate how politics remains a major factor in the uranium game. To help explain the new Australian political landscape, subject to change without notice in typical political fashion, here is a potted picture. 

On Saturday the national Opposition, the Australian Labor Party, dropped its 24 year-old three mines policy and said it was now in favour of new mines. However, not all States, despite having Labor governments, say they will go along with the new national policy – and it is unlikely that their national leader, Kevin Rudd, will spend much political capital trying to force the States into line. Saturday’s vote was too narrow for that. What might easily emerge in Australia is a mix of pro and anti-uranium States. SA and the NT are pro. Western Australia is anti. Queensland is swinging and there’s little exploration activity elsewhere. 

In South Australia there is absolutely no doubt that uranium is seen as flavour of the month with that State’s Premier, Mike Rann, telling a mining conference this morning that his State was “pro business, pro mining, and pro uranium”. Across the border in Western Australia that State’s Premier, Alan Carpenter, was maintaining his anti-stance, which can loosely be described as “over my dead body”. Armed with more knowledge than you ever needed (or dare ask) about Australia’s  internal politics here’s a call of the card of the top 25 uranium explorers. 

The prices in the table start with Monday’s opening price, and then the price an hour before the close of trading: 

Arafura (ARU) opened at $1.84 and fell back to A$1.80
Berkeley (BKY) A$1.80 to A$1.75
Bannerman (BMN) A$3.46 to A$3.45
Compass (CMR) A$5.10 to A$5.02
Contact (CTS) A59 cents to A57 cents
Curnamona (CUY) A$2.73 to A$2.60
Deep Yellow (DYL) A67 cents to A68 cents
Epsilon (EPS) steady at A38
Energy Metals (EME) A$7.21 to A$7.09
ERA (ERA) A$24.81 to A$25.19
Extract (EXT) A82 cents to A83 cents
Giralia (GIR) steady at A79 cents
Havilah (HAV) A$2.33 to A$2.37
Korab (KOR) A$1.13 to A$1.08
Marathon (MTN) A$1.84 to A1.77
Newera (NRU) A32 cents, A31 cents, A32.5 cents
Nova (NEL) A$4.10 to A$4.15
Paladin (PDN) A$9.85 to A$9.67
PepinNini (PNN) A$2.86 to A$2.81
Summit (SMM), A$587 to A$5.83
Toro (TOE) A$1.29 to A$1.32
Uran (URA) A68.5 cents to A68 cents
Uranex (UNX) A$1.90 to A$1.86
Western Metals (WTN) A28 cents to A29 cents
Wild Horse (WHE) A$1.65 to A$1.61

Source ==> www.minesite.com


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## drillinto (1 May 2007)

April 25, 2007

Teck Cominco And Rudi Gomez Break Copper Drilling Records At Carrapateena

By Our Man In Oz

We all make mistakes in life, but it’s not often that we make multi-billion dollar mistakes. Mick Davis, however, and his merry crew at the Anglo/Swiss mining giant, Xstrata, can look back to a time in 2003 when they decided that exploration was for people with rocks in their head, and the way forward was to buy existing mines. Financially, that looks smart – that is until you run the numbers over a curiously-named copper discovery in South Australia called Carrapateena. Until 2003 Carrapateena was part-owned by MIM, the big Australian copper and coal miner acquired by Xstrata – which promptly shut down MIM’s exploration division and quit all exploration joint ventures. Included in the dismissal list was a project with a lone prospector by the name of Rudi Gomez at Carrapateena – the same place which on Tuesday re-wrote exploration record books with a drill core intersection measuring 905 metres (more than half-a-mile) averaging 2.1 per cent copper and one gram a tonne gold.
To describe this as a bonanza strike is a spectacular understatement. This is bonanza cubed. Not only is the thickness of the discovery mind-numbing. But it is in a part of Australia with a habit of throwing up world-class discoveries which include BHP Billiton’s Olympic Dam mine, and Oxiana’s Prominent Hill development. More importantly, Carrapateena is now being drilled by a serious-minded miner which still believes in exploration, the Canadian major, Teck Cominco. It was Teck which first alerted the world to the latest developments at Carrapateena, a godforsaken expanse of semi-desert about 500kms north-west of Adelaide, with a bland paragraph buried on page 13 of its latest quarterly report. 

“In Australia, recent drill results from the Carrapateena project (hole 50) included 905metres grading 2.1 per cent copper and one gram a tonne gold. Within this interval are intersections of 191metres grading 3 per cent copper and 0.9 grams a tonne gold, and 95metres grading 3.3 per cent copper and 0.6 grams a tonne gold.” If that isn’t enough to excite an exploration geologist (of the type not employed at Xstrata) there’s more. “Several drill holes 100metres to the north, east, and south-east, have reported visual copper mineralisation. Assays are pending for these holes.” 

It is a long time between a drill hit and a mine opening. WMC, the company which discovered Olympic Dam, then known as Roxby Downs, spent the best part of 20 years drilling and developing a mine which now contains much more than a treasure trove of copper. It is also the world’s largest known deposit of uranium, and a profit powerhouse inside BHP Billiton. But Teck is obviously getting a little excited by what’s being turned up at Carrapateena because it noted the terms by which is can acquired 100 per cent of the discovery; A$32 million in periodic payments, 75,000 metres of drilling, and a final payment equivalent to 66 per cent of the fair market value of the property as determined independently. 

Gomez, without a shadow of doubt, will be a very rich man, one day – and half his luck. Born in the Philippines, he studied geology in Australia under a student-assistance package known as the Colombo plan. He then moved to Australia and spent 16 years exploring on his own in the South Australian outback. In 1995 he picked up the Carrapateena block, attracting a number of joint venture partners, including MIM. When Xstrata took over, they dumped him – before the prospect had even been drilled. Fired with enthusiasm, Gomez called up friends and past the hat around, with a number putting in between A$20,000 and A$40,000 each. “I warned them the chance were only one in 200,” Gomez told Australian media in 2005. What a surprise in August, 2005, when hole No.2 came in with a hit of 107 metres assaying 1.94 per cent copper. It was enough for the South Australian Mines Minister, Paul Holloway, to describe the discovery as “phenomenal” – partly because his government had chipped in part of the drilling cost  which was a courageous move considering Xstrata’s vote of no confidence. 

Measuring the financial implications of Carrapateena are difficult at this stage of its exploration. For Gomez it’s probably a fortune maker, but he’s just one man. For Teck Cominco, it’s probably not yet a market-moving event, though it is worth noting that on the day it released its quarterly the company’s shares rose by 1.7 per cent – at a time when BHP Billiton’s share price was flat, Rio Tinto fell 0.3 per cent, and the company which might have had its foot on a world-class discovery (if it knew how to explore) Xstrata, eased back about two per cent. 

More drilling is required at Carrapateena but already Rudi Gomez can hold out his hands and say “look at what I caught”, Teck Cominco can say “look at the one I’m buying at a discount”, and Mick Davis an keep his hands behind his back and mutter about the “one that I let go.” 

Oops!

Source: minesite.com


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## drillinto (7 May 2007)

May 06, 2007

That Was The Week That Was … In Australia 
==> www.minesite.com/aus.html

By Our Man In Oz


Minews. Good morning Australia, it looks like you had an eventful week? 

Oz. It was certainly one full of highs and lows. Uranium came off the boil somewhat, but nickel returned to centre stage, iron ore stocks started to move higher on speculation of another increase in the price of their commodity, and gold had a mixed week of extreme ups and downs.

Minews. Gold first, please, because we saw an encouraging jump in the price late on Friday. 

Oz. Yes, that move up to US$688 an ounce should flow through to our stocks on Monday, though in the case of two small explorers the price is irrelevant. Ramelius Resources (RMS), which faded from view after mothballing a small openpit mine called Wattle Dam south of Kalgoorlie in Western Australia, caused a few jaws to drop on Friday when it reported a fresh drill intersection at Wattle Dam in kilograms of gold. The hit was only one metre wide but it assayed 1783 grams a tonne, which is close to 1.8 kilograms a tonne. That result came from within a wider intersection of 48m grading 154g/t – which is close to five ounces to the tonne. 

The region in which Ramelius made the big hit is known for tossing up the occasional nugget so this might be a fluke, though news of the intersection saw the stock instantly double in price. Just before the announcement Ramelius was trading at A54 cents. It re-opened after a trading half at A$1, and steamed directly up to A$1.40 before closing the week at A$1.38. 

Minews. Keep an eye on that situation, it’s just the sort of news the market wants to hear. And you mentioned another stock not affected by the gold price. 

Oz. Correct, but for the opposite reason. Gleneagle Gold (GLN) has been making heavy weather at its Fortnum project, also in WA, finally succumbed to financial pressures and called in administrators. Gleneagle was trading at A19 cents before the chopper dropped. It’s now suspended. 

Minews. A timely reminder of the risks in mining. Let’s move through some of the other newsworthy in the gold sector. 

Oz. Troy (TRY) came out with a reasonably positive quarterly and rose A10 cents (3.3 per cent) to A$3.10, Centamin (CNT) was also in the news with progress on its Egyptian gold project, adding A11 cents (11 per cent) to A$1.11, but also managed to hit a 12-month high of A$1.14 during Friday trade, and Apex Minerals (AXM) attracted a lot of attention with a bold three-way deal designed to acquire fresh assets, a complex move which saw the stock gain A9 cents (25 per cent) to A44 cents. 

Minews. You might find the time to a closer look at that Apex deal. Now for the nickel sector, please? 

Oz. LionOre (LIM), which is dual listed in Australia and Canada, was the star of corporate activity, first because of the takeover bid from Xstrata, then the counter bid from Norilsk Nickel, and now talk of a higher Xstrata offer. On the ASX, LionOre added A$5.70 (28.2 per cent) to close the week at A$25.90. Other nickel stocks benefited from that bidding war, and from the nickel price ending the week above US$24 a pound. Minara (MRE), which is also being talked about as a takeover target, added A$1.26 (17 per cent) to A$8.69, down slightly on Friday’s peak price of A$8.80, which was also a 12-month high. Jubilee (JBM) added A84 cents (4.9 per cent) to A$17.85. 

Among the iron ore stocks there was a flurry of fresh interest in Fortescue Metals Group (FMG) after a Sydney stockbroking firm, Southern Cross Equities, put out a research note suggesting the company was heading for a price of A$100 a share. FMG has got a fair way to go but it did manage to hit a 12-month high on Friday of A$24.35, before closing at A$24.04, a gain of A$1.29 on the day (5.7 per cent). 

Zinc stocks benefited from fresh doubts about development plans for Xstrata’s McArthur River project in Queensland. Perilya (PEM) rose A20 cents (4.7 per cent). Zinifex (ZFX) was up A$1.06 (6.4 per cent) to A$17.61. Terramin (TZN) gained A36 cents (18.9 per cent) to A$2.26, and Kagara (KZL) added A17 cents (2.7 per cent) to A$6.40. 

Minews. Perhaps time for a quick look at the uranium stocks before signing off. 

Oz. Lots of news about that sector after a very bullish mining conference in Adelaide during the week, but not a lot to show for it on the market. Bannerman Resources (BMN) received some positive publicity on its Namibian projects, but managed a modest gain of A5 cents to A$3.47. Summit (SMM) slipped A8 cents to A$5.65, and Alliance Resources (AGS) which was heavily promoted at the conference by the Premier of South Australia, Mike Rann, fell A5 cents to A$2.74. 

Minews. Thanks Oz.


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## drillinto (10 May 2007)

May 09, 2007

An Eventful Day In Melbourne As Rumours Of BHP Billiton Bidding For Rio Tinto Proliferate


By Our Man In Oz
www.minesite.com/aus.html


If BHP Billiton really is bidding for Rio Tinto then it’s one of the investment world’s better kept secrets. When Minesite’s Man in Oz popped in for a light lunch at the Melbourne office of Rio Tinto earlier today it was “controlled serenity”. The BHP name was scarcely mentioned as the chopsticks clacked over a rather delicious display of sushi and chardonnay. The only intrusion to this private world was the repeated beeping of Blackberries, Nokias, and Motorolas as pesky reporters from media not invited to lunch asked for a response to the rumored bid which had driven Rio Tinto shares to within A31 cents of being, what some younger finance reporters are describing, as the race to become the first Australian listed company to clear the magic A$100 a share mark.
Silly children. Yes, Rio Tinto got to A$99.69 in its race against fellow would-be “centurions” Macquarie Bank, Perpetual Trustees and CSL Ltd but, don’t any of them read their financial histories! Poseidon cracked the magic A$100 mark back in the last nickel boom of 1969-70. Minesite’s Man in Oz even remembers one of the great stockbrokers of the time, Hartley Poynton, proudly telling everyone that he paid A$250 for a single Poseidon share. A loud “harrumph” to the new kids in the game.

We digress, somewhat, though for a very good reason. Minesite’s Man has a confession to make. He really hasn’t got a clue as to whether anyone, including BHP Billiton, intends to lodge a takeover bid for Rio Tinto. Perhaps an email went astray, or Minesite has dropped off the private list of correspondence from BHP Billiton’s legal team. Whatever the reason, facts (rather than speculation) are proving awfully hard to come by in what might become the mining world’s biggest takeover battle.

Three thoughts to flesh out the looming (potential) battle for Rio.   One, isn’t this the most marvellous example of how most investors have so dramatically under-estimated the real story in the resources world? Here we have two of the world’s biggest mining companies, possibly locked in a takeover battle, but both trading on price-to-earnings  ratios that almost makes you blush. While worthy, but boring, banks are trading in Australia on PEs around 17, BHP and Rio have been priced around 10, or 11 – but have “jumped” this week to 12 and 13.

It makes any thinking man with an understanding of the resources world want to scream “don’t you get it”. China continues to grow at 11 per cent a year, and every Mrs Wong from Shangai to Beijing wants a new washing machine, dishwasher and dryer – and they are all built using metals. India, meanwhile, has just clocked up another year of 8 per cent growth, and is hot on the heels of Germany, and likely to overtake that country as the world’s fifth biggest consumer market by 2025 – with all of its Mrs Chaudrees wanting exactly the same appliances that Mrs Wong wants.

Humor aside, there is a spectacularly simple message here for even that legendary Australian character Blind Freddie and his dog to see. The resources boom is not over. It is just beginning, as is shown by the A$10 billion uplift in Rio Tinto’s market capitalisation today – which is some lift!

The second thought is that what you see in the low PE ratios of Rio Tinto and BHP Billiton you also see in most other mining stocks. If you believe that India and China actually exist, and three billion people are awfully hard to hide, then it’s not just the big boys of mining who are undervalued.

The third thought, and this is a private one. What will be discussed over coffee and croissants when Minesite’s Man pops in for a cuppa at BHP Billiton’s Melbourne office tomorrow? Perhaps football, of the dinkum Aussie variety, will be a safe topic!


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## drillinto (14 May 2007)

May 13, 2007

That Was The Week That Was … In Australia

By Our Man In Oz
==>  www.minesite.com/aus.html

Minews. Good morning Australia. Another interesting week, especially with all the rumours about the big two miners, BHP Billiton and Rio Tinto, getting together.
Oz. The top end of town was certainly the focus of attention for much of the week though the speculation seemed to die down towards the close. In fact, the entire mining market ran out of puff on Friday with much of the good early work wiped out by late sellers. Before looking at how our universe of stocks performed it is worth considering just one snapshot on how big a deal the Rio Tinto trading was. On Wednesday alone around A$17 billion worth of shares in that single company changed hands. By value, if that $17 billion had been the price of a full takeover bid, it would have ranked as the biggest ever takeover in Australia, of any category of stock – yet it was just a single day’s business in one stock. 

Minews. An interesting milestone in the ongoing resources boom. 

Oz. Precisely, because there is every indication that the boom is developing a second (or is that a third) wind. Iron ore led the way, again. Fortescue Metals Group (FMG) rocketed up another A$5.18 (21.5 per cent) to A$29.22, a price which values the stock at A$7.7 billion, and the value of the personal holding of the company’s chief executive, Andrew Forrest, at a rather impressive A$3 billion. 

Other iron ore stocks chimed in as news of more price rises filtered through to investors. Sphere Investments (SPH) which is working up an iron ore project in the north African country of Mauritania, added A43 cents (23.3 per cent ) to A$2.28, down a fraction on the 12-month high of A$2.30 reached during Friday trade. BC Iron (BCI) gained another A8 cents (5.5 per cent) to A$1.53, but got as high as A$1.79 on Tuesday. Two weeks ago BC, which is a spin off by Alkane (ALK) and Consolidated Minerals (CSM) was trading at less than A$1. Atlas Iron (AGO) is also starting to gain traction with its Ridley project in Western Australia, earning a strong buy tip from one local stockbroker, Hartleys, and an A8 cents (13.7 per cent) price rise to A66 cents. 

Minews. There also appears to have been fresh interest in the nickel sector? 

Oz. Correct. Of all the three-or-four nickel booms we’ve seen in this country this one is certainly shaping as the longest, and most widespread – with the added bonus that it’s genuine, and not just speculation-driven. Minara (MRE) led the way with a very solid upward run early in the week, before profit takers clipped it back. At one stage Minara, which might be a beneficiary of widespread takeover chatter, was up A88 cents (10 per cent) at A$9.57, an all-time high. The stock closed at A$8.95 for a gain of A26 cents (3 per cent). Jubilee (JBM) reached A$18.39 on Wednesday before slipping back to close at A$18.20, a rise of A35 cents (2 per cent), and Mincor (MCR) posted a modest gain of A4 cents (1 per cent) to close the week at A$3.86, well down on its Tuesday high of A$4.09, a 12-month high. 

Minews. Perhaps time for a quick look at the rest of the base metals sector, and your gold stocks? 

Oz. Before doing that let’s look at a couple of the special situations. Ramelius Resources (RMS), which received a special mention last week after a spectacular gold hit at its Wattle Dam project, stunned the market again, this time declaring that it would adopt a policy of fast dividend payments after starting production. News that a small Australian miner would actually spit out cash, rather than consume it, sent Ramelius up another A46 cents (33.3 per cent) to A$1.84. On May 1 you could have got some at A50 cents. 

Eromanga Uranium (ERO), was the stand out success in an otherwise lacklustre uranium sector, rising A24 cents (49 per cent) to A72 cents, on the stunningly inconsequential news that it has “started” two airborne surveys of its tenements in South Australia. It sounds a bit cynical but exploring from the air is somewhat easier than digging in the ground and, as far as the text books show, no-one has yet opened a mine in the sky. 

The most interesting aspect of the uranium market was its lack of performance at a time when the uranium price hit yet a fresh high of US$120 a pound. Among the regular uranium performers Havilah (HAV) dropped A34 cents (14.4 per cent) to A2.02, Alliance (AGS) delivered a lacklustre set of drilling results and fell A52 cents (18.9 per cent) to A$2.22 and Paladin (PDN) slipped by A50 cents (5.3 per cent) to A$9.06. 

Minews. And now for that wrap-up on gold and other base metals, please. 

Oz. Golds were mixed, but generally down. Among the usual suspects Troy (TRY) shed A27 cents (8.7 per cent) to A$2.83. Lihir (LHG) lost A3 cents to A$2.98 and Monarch Gold (MON) frightened the horses with a big placement of shares to institutional investors, and fell A2.5 cents (7.8 per cent) to A29.5 cents. Better news for gold bugs could be found with Alkane (ALK) which continues to make progress at its Wyoming project, it added A4.5 cents (13.4 per cent) to A38 cents, and Centamin Egypt (CNT) which technically crept up A1 cent to A$1.11, but at one stage was trading at A$1.27. 

Zinc stocks continued to firm along with the zinc price. Zinifex (ZFX) gained A36 cents (2 per cent) to A$17.97, and Perilya (PEM) was up A5 cents (1.1 per cent) at A$4.46, but at one stage on Tuesday was trading at A$4.76. The stand out base metals play was Argosy Minerals (AGY) which reported progress on its Musongati nickel project in the African country of Burundi and shot up A24.5 cents (33.8 per cent) to A97 cents, slightly off its Friday high of A$1.05. 

Minews. Thanks Oz.


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## drillinto (21 May 2007)

May 20, 2007

That Was The Week That Was … In Australia
www.minesite.com/aus.html

By Our Man In Oz

Minews. Good morning Australia, how was your week? 

Oz. Good, in parts. Flat in others. Uranium and iron ore led the way up. Coal stocks made a useful return, while gold and nickel were relatively flat. The dominant player in the game was the effervescent Andrew Forrest, a man who has come to personify everything that needs to be said about this boom. If Midas was re-born today he would struggle to keep pace with the mercurial Mr Forrest.

Minews. Presumably you’re talking about Fortescue Metals Group (FMG) comfortably clearing the A$30 barrier. 

Oz. And the rest.  Fortescue not only crashed through A$30 on Monday, it rushed straight up to A$38.50 by Thursday before easing back to close another remarkable week at A$34.45, a gain of A$5.23 (17.9 per cent). A couple of points are worth making about Fortescue. Volume remains low. This is a very thinly traded stock. On only four occasions this calendar year has the number of shares exchanged passed the one million mark. Last week while the stock was rocketing along only 3.5 million shares were traded over five full days, which is about 1.3 per cent of Fortescue’s issued capital. Read what you will into that statistic. 

Fortescue was not the only company keeping Mr Forrest busy. He has also found time to play a role in the resurrection of the Mt Windarra nickel mine through his directorship, and large option-holding position in Niagara Mining (NIA), another tear-away winner which has attracted almost as many speculators as it has corporate cops. Niagara dashed up from A$1.13 to A$1.38, a gain of A25 cents (22 per cent) over the week, though at one stage on Tuesday it touched A$1.66 – remembering that less than three months ago this was a A20 cent stock. 

What seems to be interesting the regulators, who hit Niagara with a series of questions, is the timing of an announcement relating to a marketing agreement with Fortescue, and who knew what, when. Everyone down this way is awaiting developments on that – especially the new players to the game of speculation who have dubbed Niagara the new Viagra. Apparently something to do with things that go up! 

Minews. Presumably the punchline is that they never come down? 

Oz. You’ve got it. Though, on a more serious note the games being played in stocks like Viagra (sorry, Niagara) are another warning tell-tale blowing in the breeze that we would all be unwise to ignore. Events in China, which has a market which also appears to have taken a dose of Viagra, are causing old hands down this way to think about cashing in a few chips at the ASX casino. 

Minews. Keep your eyes peeled, we’re certainly at a rather fascinating peak in the market. Let’s end the chit chat, time now for more prices, please. 

Oz. Best of the uranium stocks was Echelon Resources (ECH) which gained A38 cents (33 per cent) to A$1.53 after announcing, and you had better be sitting down for this one, the discovery of “historic” drillhole data relating to the Valhalla North uranium project. No fresh drilling, just an old file, that’s all it takes to drive Australian uranium stocks to new heights. 

Elsewhere among the uranium stocks, there were mixed results. One of the better performers was Mintails  (MLI), which has reported an extensive inventory of material in old uranium tailings in South Africa. It gained A18 cents (40 per cent) to A63 cents. Havilah Resources (HAV) gained A28 cents (13.8 per cent) to A$2.30, while Summit (SMM) ran out of puff, shedding A34 cents (6.3 per cent) to A$5.04. 

Among the iron ore stocks we had Fortescue lead the way, but with a few useful followers. Transit Holdings (TRH) which is a newcomer on the scene, reported encouraging exploration results, and promptly doubled in price by Wednesday, soaring from A19 cents to A38 cents. It later eased back to close at A34 cents, a rather pleasant 79 per cent gain over five trading day. Sundance (SDL) which has an iron ore project in the African country of Cameroon, added A4.5 cents (27 per cent) to A21 cents, and Cape Lambert (CFE) gained A2 cents (4.4 per cent) to A47.5 cents on news that a wily old fox in Ian Burston has been appointed executive chairman. 

Minews. Before signing off, any special situations worth noting? 

Oz. Two which stand out. Dwyka Diamonds (DWY) made a return to the winner’s circle with a rise of A29.5 cents (36.6 per cent) from A80.5 cents to A$1.10 on the strength of its new interests in nickel in Burundi and gold in Swaziland, and Ironbark Gold (IBG) which added A60 cents (13 per cent) on the strength of zinc in Greenland. 

Minews. Looks like a couple of name changes might be on the way with a diamond company going into nickel and a gold company chasing zinc. 

Oz. Yes. We do live in interesting times, don’t we!


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## drillinto (28 May 2007)

May 27, 2007

That Was The Week That Was … In Australia
Visit ==> www.minesite.com 

By Our Man In Oz

Minews. Good morning Australia. How was your week? 

 Oz. Good, in parts, but flat in others. No discernible pattern emerged, with the biggest winners to be found, again, among the iron ore stocks and a hotch-potch of speculative situations. Next week, if we dare caste an eye forward, should be much more interesting as the strong finish to base metals trading in London on Friday is yet to be reflected in the Australian market.

Minews. Don’t forget it is a holiday on Monday in London We’ll let next week take care of itself. Time now for prices. 

Oz. Let’s start with the iron ore stocks because a stand-out performer on Friday was Atlas Iron (AGO) which hit a 12-month high in busy trade on Friday which saw the stock add A7 cents (10.4 per cent) to A74 cents. Interest in Atlas has been triggered by a realisation in the market that the company has a viable mine development plan, and has the potential to attract a partner to its very big Ridley project near Port Hedland. 

Minews. We’ll take a closer look at Atlas next week. 

Oz. Other iron ore stocks to perform strongly included Grange Resources (GRR) which added A37 cents (21.7 per cent) to A$2.07 thanks to solid progress at projects in Malaysia and at Southdown in Australia. Sphere Investments (SPH), another Australian miner with global ambitions, traded up to a 12-month high of A$2.60 on reports of progress at its Mauritanian venture. That closing prices represented a gain of A26 cents (11.1 per cent) over the week. Sundance (SDL) was a third roaming Australian with an African iron ore project on its books. It added A4 cents (19 per cent) to close the week at A25 cents, down a fraction on its 12-month high of A26 cents reached during Friday trade. 

Minews. And presumably the sector favourite, Fortescue Metals (FMG) also did well. 

Oz. Not particularly, though it was perhaps more a case of taking a breather after a few rather spectacular weeks. The stock closed the week at A$33, down A$1.45 (4.2 per cent), and well below its 12-month high of A$38.50 reached 10 days ago. However, the latest prices need to be seen in the light of a stock trading at A$6 a year ago. 

Minews. Precisely. Perhaps time next week for a closer look at Fortescue as well as Atlas. Let’s move along now and look at other sectors. 

Oz. This is where is gets a little difficult because unlike iron ore there wasn’t a pattern. Nickel stocks were generally down, as were the zinc and gold stocks. Among the nickels, Sally Malay (SMY) dropped A56 cents (11.2 per cent) to A$4.43. Western Areas (WSA) was off A16 cents (3 per cent) to A$5.34, and Mincor shed A27 cents (6.5 per cent) to A$3.90. Jubilee (JBM) went against the trend with a modest rise of A14 cents (1 per cent) to A$17.20. 

Among the zinc stocks, Zinifex (ZFX) slipped A48 cents (2.8 per cent) to A$16.77, and CBH (CBH) was off A2 cents (3.6 per cent) at A53 cents. Perilya (PEM) went the other way with a A10 cent (2.4 per cent) rise to A$4.20. 

It was a repeat story among the golds. Most down, a handful up, largely reflecting the lacklustre gold price. St Barbara (SBM) lost A4 cents (7 per cent) to A50 cents. Troy (TRY) was down A6 cents (2 per cent) at A$2.80, and Lihir (LHG) slipped by A3 cents (1 per cent) to A$3.13. Avoca (AVO) was one of the rare winners with a rise of A3 cents (2.2 per cent) to A$1.35. 

Minews. Perhaps time for look at some of the speculative situations you mentioned earlier? 

Oz. This is where the market actually gets much more interesting because it seems that some of the hot money in the market is seeking out the next game to play. One of the more interesting was a previously unknown called The Gold Company (GGG) which, in keeping with the boom, is actually exploring for uranium in Greenland. It had been suspended since late last year when its last sale price was A28 cents. It burst back on the scene last week at A$1.50, rushed up to A$2.19, and closed the week at A$1.90. 

Other hot specs with a previous low profile included Carnavale Resources (CAV) which announced a molybdenum deal in Brazil and promptly shot up to a 12-month high of A$1.30, before easing to close the week at A$1.20, up A17 cents (16.5 per cent) on the week. Focus Minerals (FML), which recently completed a big capital raising for its gold and nickel exploration projects, copped a “speeding fine” from the Australian Stock Exchange thanks to a rise of A3 cents (52.6 per cent) from A5.7 cents to A8.7 cents during the week. Naturally, it knew of no reason for the sharp move, and the price settled at A7.6 cents at the close. Navigator (NAV), which has an interesting gold project on its books, was another star of the week, rising A18 cents (25 per cent) to A89 cents. 

Minews. Thanks Oz.


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## drillinto (4 June 2007)

June 03, 2007

That Was The Week That Was … In Australia
==> www.minesite.com/aus.html

By Our Man In Oz

Minews. Good morning Australia. It looks like another busy week on your market. 

Oz. Certainly better than when we last spoke. Most stocks improved, with a couple of outstanding performances, and a return of gold to centre stage after months of dominance by uranium and iron ore. Warwick Gold (WRK), which only listed in February, showed that a good gold drill result can still excite. It almost doubled in price during the week after reporting an 8 metre intersection of 22.3 grams a tonne of gold from its first ever drill hole. The result came from the Jimbelbar project in the Pilbara region of Western Australia and was described by management as a “good start”. Investors were a little more enthusiastic, running Warwick up by A21.5 cents (54.4 per cent) to a close of A61 cents on Friday, though at one stage during the day the stock hit A74 cents in heavy trade.

Minews. A good start indeed for a new explorer. 

Oz. There was more from the gold sector with Independence (IGO) back in the spotlight after it announced, with AngloGold Ashanti, that it would start a pre-feasibility study into an open pit development at the jointly-owned Tropicana discovery located in “tiger country” some 400 kilometres north-east of Kalgoorlie in what could be the start of a new gold province. That announcement sent Independence up by A91 cents (12.3 per cent) to a close of A$8.31, a fraction short of the stock’s 12-month high of A$8.50 reached about 10 days ago. 

Minews. And what about the rest of the gold sector? 

Oz. Sino Gold (SGX) also put in a strong week after announcing an expanded resource position at its Jinfeng project in China. It added A35 cents (6.1 per cent) to A$6.05. Apex Minerals said it had raised the A$32 million needed for its expansion projects, and gained A6 cents (10.5 per cent) to A63 cents. Most other gold stocks were flat to down on lack of news. Kingsgate (KCN) which has improved greatly on last year’s slump eased A30 cents (5.3 per cent) to A$5.33. Troy (TRY) lost A20 cents (7 per cent) to A$2.60, while St Barbara managed a gain of A1.5 cents (3 per cent) to A51.5 cents. 

Minews. If gold led the way does that mean iron ore and the other sectors dropped off? 

Oz. No. There were some special performances among the iron stock again. Fortescue Metals (FMG) cleared the A$40 barrier on Friday when it hit an all-time high of A$40.19 during Friday trade, before easing to close the week at A$39.50, a rise of A$6.50 (19.7 per cent) over the week. Never forget this was a A$6 stock a year ago. We also saw another strong performance from Atlas Iron (AGO) which added A14 cents (18.9 per cent) to A88 cents, down a fraction on its all-time high of A90.5 cents reached early on Friday. 

Minews. It seems that the entire iron ore sector is lifting to new heights? 

Oz. You could say that. Most iron ore stocks rose. The best performances came from Polaris Metals (POL) which rocketed up by A10.5 cents (41.2 per cent) to A36 cents on reports of a major new discovery in central Western Australia. At one stage the stock was trading at A39 cents. Territory Iron (TFE), one of the stable of stocks controlled by Michael Kiernan, rose A18 cents (24.3 per cent) to a close the week at A92 cents, down slightly on its 12-month high of A95 cents reached earlier in the week. Portman Mining (PMM) which clings to a listing despite being 80 per cent owned by Cleveland Cliffs, has become a speculator’s plaything in the belief that a mopping up takeover bid is one the way. It added another A40 cents (5.6 per cent) to A$7.50. On the downside, Grange Resources (GRR) came out with a highly encouraging announcement about a joint venture with a Japanese trading house over its Southdown project and proceeded to ease by A4 cents (2 per cent) to A$2.03. Most of the decline took place close to Friday’s final bell because at one stage Grange was trading at A$2.26. 

Minews. Time for a quick look at the uranium sector. 

Oz. Not a lot of uranium action. As we’ve discussed in the past this was very much a story of travel rather than actually arriving and having to do something, such as start a mine. Sector leader, Paladin Resources (PDN) continues to retreat in the face of French opposition to its takeover of Summit Resources (SMM). Paladin lost a modest A15 cents (1.7 per cent) to A$8.60. It’s now down more than A$2 from its all-time high of A$10.80 set earlier in the year. Summit lost A16 cents (3 per cent) to A$4.97. The easing trend was sector wide, taking stocks such as Uranex (UNX) down A3 cents (1.8 per cent) to A$1.60. 

Minews. Thanks Oz.


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## drillinto (11 June 2007)

June 10, 2007

That Was The Week That Was … In Australia
==> www.minesite.com/aus.html

By Our Man In Oz


Minews. Good morning Australia, it looks like you had a bit of a rocky end to your week. 


Oz. Quite bumpy, thank you. The nickel sector took a hammering, as expected after the London Metal Exchange changed its warehousing rules and nickel fell out of bed. Uranium stocks also took a hit by a fall in the price of uranium, and a surprise profit warning from the country’s biggest uranium producer, Energy Resources of Australia (ERA). Against the bad news we did see a handful of stocks deliver excellent returns, but to paint a picture of how difficult it was on Friday BHP Billiton was rated as the 10th best performing resource stock on the day -- and it fell A6 cents.

Minews. Ouch! 

Oz. Indeed. But, like all market situations, it depends on the timing of your measurements as to whether you want to be gloomy or cheerful. The end of the week was pretty dreadful, but looked at in totality the key metals and mining index on the ASX actually rose modestly from 4363 to 4375 points despite the 44.9 point (1 per cent) fall on Friday. 

Minews. Let’s have whatever good news you have first, and then the bad. 

Oz. Iron ore stocks stood out, yet again, as more forecasts of price rises reached investors. This time it was Citigroup which joined the party with a tip of a 20 per cent hike next year. Last week it was Goldman Sachs tipping a 9 per cent rise. It’s forecasts like that which pushed Cape Lambert (CFE) to a 12-month high of A67.5 cents on Friday, up A 5.5 cents (8.9 per cent) on the day, and A16.5 cents (32.3 per cent) for the week. Gindalbie Metals (GBG) also hit a 12-month high of A97.5 cents on Friday, before closing the week at A95, also up A5.5 cents (6.1 per cent) on the day and A26 cents (37.4 per cent) for the week. 

Minews. Those are very impressive price moves in what was a tough week. 

Oz. They are, and the trend can be found across the iron ore sector. Talk about a fresh takeover bid for Portman (PMM) continues to grow and it was up another A80 cents (10.6 per cent) to A$8.30, down a fraction on the 12-month high of A$8.50 reach during Friday trade. Atlas Iron (AGO) added another A1.5 cents (1.3 per cent) to close the week at A90 cents, also down slightly on its 12-month high of A93 cents reached earlier in the week. The good news in iron ore spread right down to the smallest players, including Ferrowest (FWL) which rarely gets a mention but gained A6 cents (30 per cent) to A26 cents during the week. The only heavyweight loser was Fortescue Metals Group (FMG) which appears to have simply run out of puff, and into profit-taking after a stellar start to the week. On Monday, the stock rocketed to an all-time high of A$41.75, but then retreated to a low for the week of A$34.52 on Friday, and a close of A$36, down A$3.50 (8.8 per cent). 

Minews. Time for the tough news. 

Oz. Followers of the booming uranium sector got a bit of a fright from the latest metal sales which revealed a small fall of US$3 a pound to US$135/lb. It was that modest correction after a powerful upward run which combined with ERA issuing a profit warning on Friday because of flooding at its Ranger mine earlier in the year. Rather than post a profit, ERA is expecting a loss of between A$5 and A$10 million for the June half. That announcement saw the stock drop A$1.18 (5.3 per cent) to A$21.22 on Friday, taking the week’s loss to A$1.88 (8.1 per cent). 

The ERA fall, and the uranium price contraction saw most uranium stocks fall on Friday. Paladin (PDN) lost A30 cents (3.4 per cent) on Friday to close at A$8.50, though over the full week the drop was only A10 cent  (1.1 per cent). Havilah (HAC) slipped by A6 cents (2.7 per cent) to A$2.10. Wild Horse (WHE) was off A3 cents (1.2 per cent) to A2.52, and Uranex (UNX) eased by A1.5 cents (1 per cent ) to A$1.58. 

Minews. And the nickel sector? 

Oz. Hit hard by the sharp fall in the price of its metal. Jubilee (JBM) was the least effected, easing A14 cents (1 per cent) to A$17.36. Minara (MRE) was clobbered on Friday, losing A67 cents (7.9 per cent) to A$7.80. Western Areas (WSA) lost A24 cents (4.1 per cent) on Friday, and Sally Malay (SMY) was down A56 cents (12 per cent) to A$4.09 for the week, but was trading as low as A$4 on Friday. 

To finish on a positive note, most gold stocks strengthened a little despite a lacklustre gold price and continued strength in the Australian dollar exchange rate. Troy (TRY) added A12 cents (4.6 per cent) to A$2.72, Monarch (MON) was up A2.5 cents (8.3 per cent) to A32.5 cents, and Oxiana (OXR) gained A5 cents (1.5 per cent) to A$3.32. 

Minews. Thanks Oz.


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## drillinto (18 June 2007)

June 17, 2007

That Was The Week That Was … In Australia
==> www.minesite.com/aus.html
[Registration to this fine site is free]

By Our Man In Oz

Minews. Good morning Australia, how was your week? 


Oz. Good, in parts. Iron ore remained the favoured mineral. Nickel stocks followed the price down, and gold producers made a surprise return to favour despite the price doing nothing to encourage investors.

Minews. Let’s look first at gold because it sounds like some investors are building positions ahead of a more general uplift. 

Oz. That might be the case because a couple of the moves were rather interesting, plus we had the bonus of a few good drilling results. Kingsgate (KCN) certainly pleased the market by announcing on Thursday that it had closed all of its hedge positions. That sent the stock up to a 12-month high of A$6.06 in early Friday trade before closing closed at A$5.72, up A43 cents (8.1 per cent). Two figures underline just how important it was for Kingsgate to get out of its hedges. Forward sale deliveries this financial year have totalled 58,780 ounces at a price of, wait for it, US$316. In other words, Kingsgate was missing out on US$337 per ounce. If we use Friday’s London gold price as our measure, that equates to a “missing” US19.8 million from gold production. 

Minews. Sobering stuff, but a reminder of why gold banking can be so profitable when producers agree to tough hedge terms. More gold prices, please? 

Oz. Good upward moves were made by Perseus Mining (PRU) which reported excellent results on Friday from its Ayanfuri project in Ghana, including 110 metres assaying 3.8 g/t gold. The stock rose A11 cents (14 per cent) on the news to close the week at A89.5 cents, taking the week’s rise to A12.5 cents (16.2 per cent). Tasman Resources (TAS) also reported good drill hits on Friday, including 9 metres at 31 g/t from its Parkinson Dam project in South Australia. That news helped Tasman add A6 cents (25 per cent) over the week to close at A30 cents. 

Centamin Egypt (CNT) added to the good news on gold exploration with more promising hits at its big Sukari project, news that helped the company add A9 cents (8 per cent) to A$1.19. D’Aguilar Gold (DGR), which has been quiet for some time, was in the news during the week though not for a gold exploration. It reported strong molybdenum assays from its Anduramba in Queensland, and enjoyed a share price rise of A7.5 cents (18.7 per cent) to A47.5 cents. 

Minews. Now for those iron ore moves you mentioned. 

Oz. Yes, and once again it was Fortescue Metals which hit the headlines though not for any share price rise, more for its move to raise an extra A$1 billion to complete and expand its project in Western Australia. The stock went into a trading suspension on Friday with a last sale at A$34.95 on Thursday, which was down a modest A7 cents over the week. Details of the capital and debt raising are expected to be released on Monday. Atlas Iron (AGO) was also back in the news with a deal which will enable it to export its ore across Fortescue’s port. Atlas gained A6.5 cents (6 per cent) to close at A$1.15 on Friday, though it’s worth noting the 12-month high reached on Thursday of A$1.32. Sundance (SDL) and Sphere (SPH) also attracted buyers as they step up work on their African iron ore projects. Sundance added A12 cents (40 per cent) to A42 cents, and Sphere added A26 cents (8.7 per cent) to A$3.26. 

Minews. Good timing for your recent piece on Sundance. Now time for a dose of bad news, and that was in your nickel sector. 

Oz. Up to a point. The lower nickel price hit most producers. Minara (MRE) was down another A55 cents (7 per cent) to A$7.28. Western Areas (WSA) did better but still lost A7 cents (1 per cent) to A$5.50. Jubilee (JBM) slipped by A52 cents (3 per cent) to A$17.38. Mincor (MCR) swam against the tide, adding A10 cents (2 per cent) to close at A$4.78, though it was in retreat on Thursday and Friday after peaking in mid-week trading at A$4.95. 

Minews. Much uranium news? 

Oz. Not really, except a surprise production warning from Paladin Resources (PDN) which lost A20 cents (2.3 per cent) to A$8.30, and Omegacorp (OMC) which was surprised by the sudden withdrawal of a takeover offer by the London-based Central African Mining, a company which might be familiar to you. Central African claimed conditions had changed and it was walking away. The situation around Omegacorp is now rather tricky with the company having previously welcomed a takeover move by Canada’s Denison which has a 33 per cent as a result of that bid. 

Minews. We wondered at the time, if you remember,  whether Central African Mining would be able to follow  through with this one. Now we know. Anyway,  it sounds like your uranium sector has reached an interesting time. 

Oz. Yes, with most observers suspecting that we’ll get more news of the Omegacorp and Paladin variety. 

Minews. Thanks Oz.


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## drillinto (25 June 2007)

June 24, 2007

That Was The Week That Was … In Australia
Please visit ==> www.minesite.com/aus.html

By Our Man In Oz

Minews. Good morning Australia, it looks like another strong week for your iron ore stocks?

Oz. Yes, it was. But, the real story of the week was the way exploration success attracted investors back to the gold sector. Strong upward moves came from at least five small gold stocks, with rises of 30 per cent and more, in a week when the gold price fell by US$1, and even more when measured in Australian dollar which hit a 17-year high against the U.S. currency. 

Minews. Now that is interesting. Has there been a change of sentiment towards gold stocks? 

Oz. It certainly seems that way, perhaps at the expense of the uranium and nickel sectors which have gone rather quiet as the price of their commodities peak, or fall. 

Minews. Prices, please? 

Oz. Best of the gold news came from Barra Resources (BAR) which announced a series of high-grade intersections from underground diamond drilling at its Burbanks project near Coolgardie in Western Australia. Best hit, from a fresh discovery called the Dahmu Reef, was 25.1 metres at 31.8 g/t gold , almost precisely one ounce to the tonne, and  10.2 metres at 68.5 g/t. That result, announced on Friday, sent the stock up by A16.5 cents (32.7 per cent) on the day to A67 cents, and the rise for the week to A20 cents (42.5 per cent). 

Next best was one-time takeover target, Andean Resources (AND) which hit a 12-month high on Friday of A$1.18 after more good drilling news from its Cerro Negro project in Argentina. Andean’s best hit was 51.8 metres at 25.3 g/t. The drill result, and sharply higher share price, proved too tempting for traders who dumped stock near the close so Andean ended the week at A$1, which was still a gain of A29.5 cents (41.8 per cent). 

Not far behind was Alkane Exploration (ALK) which continues to generate highly encouraging drilling results from the Caloma prospect which lies inside its Wyoming project area in New South Wales. The latest assays include 33 metres at 5.02 grams a tonne from a depth of 78 metres. Included in that assay was a 15 metre zone grading 7.95 g/t. On the market, Alkane added A9 cents (25 per cent) to close the week at A45 cents – which was also a 12-month high. 

The fourth gold stock to enjoy an upward kick was freshly-listed Carbine Resources (CRB) which reported strong drilling results from its Red Dam prospect north-west of Kalgoorlie. Best result was 5 metres at 44.07 g/t from 32 metres, enough to send the stock up to A45 cents on Wednesday, its highest since listing in mid-March. The stock closed at A43 cents, a gain of A5 cents (13.2 per cent). 

Fifth runner in the gold stakes was Apex Minerals (AXM) which has embarked on a major gold asset acquisition project which this week saw it announce the acquisition of Oxiana’s Wiluna operations. That news on Wednesday saw Apex soar to its 12-month high of A$1.06, a gain of A20 cents (23.2 per cent) on the closing price of the previous week. Profit takers then chipped in, knocking the stock back to a close on Friday of A88 cents, shrinking the week’s gain to just A2 cents (2.3 per cent). 

Minews. What an interesting time in your gold sector. What about other areas of the market? 

Oz. Once again it was hard to avoid the iron ore players, of which there seem to be more on a daily basis. Mt Gibson (MGX) was a stand-out winner after announcing the first shipment of iron from its Koolan Island project, adding A16 cents (13.6 per cent) to A$1.33, down a fraction on the A$1.36 reached on Tuesday, the stock’s 12-month high. 

Murchison Metals (MMX) was an exceptionally strong iron ore performer after announcing a joint venture with Japan’s Mitsubishi. The deal, which promises to catapult Murchison into the ranks of significant iron ore producers, saw the stock add A$1.69 (42 per cent) during the week to close at A$5.72 – which was actually down a long way from the stock’s all-time peak of A$6.24 reached early on Friday. 

Atlas Iron (AGO) continued its remarkable upward move, hitting an all-time high of A$1.63 on Thursday before ending the week at A$1.44, a gain of A29 cents (25.2 per cent) 

Minews. We’re running out of time, much other news? 

Oz. The uranium sector, as hinted, was relatively flat. One of the multitude of new uranium floats, Uranoz (URO) flopped. Its A20 cent shares closed on Friday at A19 cents, perhaps the first of the uranium floats to sink, and perhaps a sign of the future. 

The small nickel stocks were mixed. Sally Malay (SMY) said it was paying off all debt, news that pushed the stock up by A41 cents (10.4 per cent) to A$4.36. Mincor (MCR) was equally interesting, falling sharply early and then recovering A31 cents (6.9 per cent) on Friday to end the week up A1 cent on renewed takeover speculation. Western Areas (WSA) frightened the horses with a big convertible bond issue, pushing the share price down A53 cents (9.6 per cent). 

Minews. Thanks Oz.


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## drillinto (28 June 2007)

Can anyone guess who is the journalist behind "Our Man in Oz" ?

It is not Barry FitzGerald (The Age)

Your feedback is most welcome


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## drillinto (1 July 2007)

The next weeks will be better...


July 01, 2007

That Was The Week That Was … In Australia
Source: www.minesite.com/aus.html
[The site registration is free]

By Our Man In Oz

Minews. Good morning Australia, it looks like you had a quiet end to your financial year. 

Oz. A curious week is perhaps the best way to describe the past five trading days. We started well; fell out of bed on Wednesday; and then staggered to a neutral sort of finish. It was almost as if everyone was so tired of what has been a marvellous year that they just wanted to draw a line in their trading accounts and watch football over the weekend before starting fresh on Monday.

Minews. Is that your way of saying not much happened? 

Oz. Oh, a lot happened, but nothing terribly exciting, and most share price movements were flat, once the mid-week slump was washed out of the equation. Overall, the Australian market, as measured by the all ordinaries index, finished the financial year up 24.9 per cent, while the metals and mining index closed up 32.4 per cent. 

Minews. Not a bad year. Prices now, please? 

Oz. Let’s start with the story of the week, the bare-knuckle scrap which is Michael Kiernan v Brian Gilbertson and friends at Consolidated Minerals. While harsh words were being tossed gaily about the CSM market opened strongly on Monday at A$2.92, a gain of A8 cents as rumours of a counter bid gathered, peaked at A$3.23 during Friday trade, a 12-month high for the stock, and then limped to the line, ending the week and the year at A$3.14, a gain of A30 cents (10.6 per cent) over the course of the week but, significantly, down on the intra-day high perhaps indicating that investors are wary of a company which is becoming too embroiled in an ownership struggle leaving no-one to keep an eye on the shop. 

Minews. An interesting observation. Perhaps you’re alluding to the tailings dam spill at Consolidated’s Woodie Woodie mine. 

Oz. Precisely. Attentive management does not let a tailings dam overflow. 

Minews. Enough of that saga. Let’s move through the market. 

Oz. Righto. The gold sector, which attracted so much interest two weeks ago, remained interesting despite the slide in the gold price. The two best performers were Perseus Mining (PRU) which we took a close look at mid-week because of its success in Ghana. It added A21 cents (22 per cent) to A$1.16, after trading as high as A$1.30 early in the week. Maximus Resources (MXR) joined the ranks of gold stocks to report good drilling results with encouraging results from its Bird In The Hand project near Adelaide, adding A3.5 cents (9 per cent) to end the week at A42 cents, well down on its Friday high of A47 cents. 

While we had two new leaders in the gold sector it’s worth looking back at last week’s report which covered five stand out performers. As is always the case no sooner had anyone noticed an upward move than sellers moved in. Barra (BAR), which led the way when we last spoke, slipped A11 cents (16.4 per cent) to A56 cents, still well ahead of a month ago, but down nevertheless. Andean (AND) drifted by A4.5 cents (4.5 per cent) lower to A95.5. Alkane (ALK) lost A3 cents (6.6 per cent) to A42 cents, and Carbine shed A7c (16.3 per cent) to A36 cents. Apex (AXM) was the only member of last week’s famous five to swim against the tide, adding a lowly A1 cent to A89 cents. 

Minews. Time to rattle through a few more prices. 

Oz. In no particular order, the nickel sector had a bruising week as the nickel price continued to retreat. Jubilee (JBM) lost A$1.27 (7.4 per cent) to A$15.95, Sally Malay fell A22 cents (5 per cent), and Western Areas slipped A14 cents (2.8 per cent to A$4.83. Mincor (MCR)  held up better, easing A9 cents (1.8 per cent), to A$4.70. 

The iron ore stocks also had a tougher time. Fortescue (FMG) felt the heat of its latest cost blow-out, dropping A$3.55 (9.4 per cent) to A$33.80. Cape Lambert (CFE) was down A7 cents (9 per cent), Grange (GRR) also lost A7 cents (3.3 per cent) to A$1.99, and Atlas (AGO) was off A6c cents (4.2 per cent) to A$1.38. 

Minews. Any special situations worth noting. 

Oz. Yes. TNG (TNG), the old Tennant Creek gold which has turned itself into a zinc hunter, was a bit of a star during the week, rising A17 cents (18.7 per cent) to a close of A$1.08, after peaking at A$1.12 on Friday. Vulcan (VCN), which we’re planning to take a closer look at, was up A6 cents (12.5 per cent) to A54 cents, and yet another new uranium float, Atom Energy (AXY) joined a very crowded sector with its A30 cent shares delivering a double-your-money experience for lucky punters. The stock first traded at A55 cents, peaked on Thursday at A76.5 cents, and closed the week at A61 cents. 

Minews. The boom goes on. Thanks Oz.


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## drillinto (8 July 2007)

That Was The Week That Was … In Australia
July 08, 2007

Source: www.minesite.com/aus.html
[The registration to this site is free]

By Our Man In Oz


Minews. Good morning Australia, your mining sector seems to have made a flying start to your new financial year. 

Oz. Yes, though the strength in the market was really as much the result of a bit of financial engineering as enthusiasm for mining shares. Before getting down to prices perhaps a bit of an explanation is required for a surprising 5.3 per cent lift in the mining and metals index.

Firstly, the index is dominated by the big two, BHP Billiton (BHP) and Rio Tinto (RIO). They both traded up to new 12-month highs of A$37.60 and A$102.79 respectively on Friday. They closed a few cents off those peak prices but their weight in the index did all the heavy lifting. Secondly, a wall of cash hit the market last week thanks to new superannuation rules which provided a special one-off tax benefit to anyone making a contribution of up to A$1 million into their pension or superannuation fund before June 30. Thirdly, that tax rule saw A$10 billion flood into the pension system, and fund managers then had to do something with it and two of the best bets on the market are BHP Billiton and Rio Tinto, along with other blue chip stocks. 

Minews. Interesting, but did the extra cash help the rest of the mining sector. 

Oz. It doesn’t look like the pension fund cash went far beyond the big two. The best action elsewhere came from rumoured and actual corporate activity, continued interest in the iron ore sector and the return of buyers to the nickel and copper sectors. 

Minews. Corporate games first, please. They’re always interesting. 

Oz. Oxiana (OXR) and Zinifex (ZFX) were strongly rumoured to be getting together in some way, though it remains uncertain as to who bids for whom, and who finishes up on top. Speculation of a move pushed Zinifex up to a 12-month high of A$20.34 during Friday trade, before the stock ended the week at A$20.22, for a gain of A$1.40 (7.4 per cent). Oxiana also traded up to a 12-month high of A$3.93 on Thursday, before easing back to end the week at A$3.74, which was a gain of A21 cents (5.9 per cent), but it is worth noting that the stock was noticeably weaker in late Friday trade, shedding A15 cents (3.9 per cent) towards the bell. 

Minews. And that other interesting battle you have between Consolidated Minerals (CSM) and Territory Resources (TTY). 

Oz. Lots of words and manoeuvring but not a lot to show on the market. Consolidated, which is the target of twin bids, one from a private equity syndicate led by ex-BHP chief executive, Brian Gilbertson, actually fell A6 cents (1.9 per cent) to A$3.08 in reasonably heavy trading. Territory, the vehicle being used by ex-Consolidated chief executive, Michael Kiernan, fell back to earth with a bit more of a thump, shedding A29 cents (19.6 per cent) to A$1.19. 

Minews. You’ll probably have a lot more to say about that rather messy situation in the coming weeks. 

Oz. There’s no doubt about that, though it must be said that until someone does a better job of explaining exactly what all the fuss is about Consolidated remains a somewhat lacklustre manganese miner without a great vision for the future. 

Minews. Good point. Now, let’s get on with the prices. 

Oz. A call of the cards, sector by sector, shows that the iron ore stocks were back in favour thanks to fresh reports of yet another increase in the iron ore price, making it six years in a row that steel mills have agreed to higher prices. Fortescue (FMG) was the traders favourite again, rising A$3.70 (10.9 per cent) to A$37.50 despite rattling the tin for more cash. The George Jones twins, Gindalbie (GBG) and Sundance (SDL) benefited from his marketing tour of London and North America. Gindalbie added A18 cents (17.6 per cent), down slightly on the 12-month high of A$1.26 reached on Tuesday. Sundance  also hit a new high of A53.5 cents on Friday, but closed at A50.5 cents, up A4 cents (8.6 per cent). Other iron ore players were in favour. Atlas (AGO) rose A12 cents (8.7 per cent) to A$1.50, and  BC Iron (BCI) gained A3 cents (1.5 per cent) to A$1.93 after announcing a marketing agreement with Fortescue. 

The nickel sector saw Mincor (MCR) respond to a stabilised metal price by adding A20 cents (4.3 per cent) to A$4.90. Jubilee (JBM) rose A96 cents (6 per cent) to A$16.91. Western Areas (WSA) gained A12 cents (2.5 per cent) to A$4.95, and Minara (MRE) was up A16 cents (2.2 per cent) to A$7.44 despite issuing a production downgrade. 

Minews. Much else to report? 

Oz. Just one more point. The gold sector remains curiously active despite a modest fall in the U.S. dollar gold price over the week, and a more hefty fall in the Australian price thanks to the Aussie dollar hitting a new 18-year high of US86 cents during the week. The lower price claimed a victim in Wedgetail (WTE) which has delayed its Nullagine project, paying the price with a fall of A3.5 cents (28 per cent) to A9 cents, but other gold stocks managed modest rises. Equigold (EQI) was up a sharp A14.5 cents (7.9 per cent) on Friday to close the week at A$1.98. Dragon (DRA) was up A1 cent (9 per cent) to A12 cents after announcing a production start in Finland, and Troy (TRY) gained A2 cents (1 per cent) to A$2.43. 

Minews. Thanks Oz.


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## Boyou (8 July 2007)

Hi drillinto,

Thanks for keeping this thread going.I do happen to receive the updates..albeit sometimes 12 hours delayed.

Have been wondering why the "mining focussed" folk have not been posting on here.Ideal general discussion opporunity I would have thought it would be good fodder!
Have recently bought some smallcap miners..and totally happy to see what unfolds.

Absolutely NO IDEA who the journo is

C'mon Miners ....your thoughts?


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## drillinto (16 July 2007)

July 15, 2007

That Was The Week That Was … In Australia
Source: www.minesite.com

By Our Man In Oz

Minews. Good morning Australia, another strong week? 

Oz. Very much so. Corporate activity, iron ore and a splash of exploration success dominated events on the upside. On the downside there was a touch of nervousness around some metal prices with uranium and nickel looking weaker and knocking the gloss off a few stars, while in the background a wall of fresh floats is gathering.

Minews. By corporate action you presumably mean Rio Tinto (RIO) and Consolidated Minerals (CSM)? 

Oz. Precisely. The proposed marriage of Rio and Alcan was the big deal of the week, and no doubt well reported by the daily media in your part of the world. Down this way it occupied a lot of the chatter, though it was really the expectation that BHP Billiton (BHP) would join in the game with a bid for Alcoa which generated most market interest, pushing BHP to a record high of A$39.79 on Friday, before closing at A$39.16, up A$1.62 (4.6 per cent). Rio, on the other hand, dropped a modest A75 cents to A$101.30. 

Minews. What we really want to know is how did the games of the big boys affect the rest of the mining market? 

Oz. The rub off was quite interesting. Alumina (AWC), which was once the alumina division of the old WMC, hit an all-time high of A$8.88 on Friday, before closing at A$8.55, for a gain of A60 cents (7.5 per cent). Alumina, by the way, is the only locally listed entry into the very tight world of bauxite mining and aluminium manufacture. 

The other big-ticket possibility remains the rumoured merger of Zinifex (ZFX) and Oxiana (OXR). There was no fresh news, just intense interest among investors for what is being hailed as marriage made in heaven. Oxiana added A17 cents (4.5 per cent) to close at A$3.91, but did hit a 12-month high of A$4.05 during Friday trade. Zinifex reached its 12-month high of A$21.60 on Monday, before closing at A$20.60 for a modest gain of A38 cents (1.8 per cent). 

The Consolidated Minerals situation, which is more to your taste, built a nice head of steam with more words tossed around, and a little action. The target itself pleased the market with a better than expected quarterly report and forecast of strong profits ahead. That helped lift the stock to a 12-month high of A$3.29 on Friday, before it eased to a close of A$3.26, up A18 cents (5.8 per cent). Territory Iron (TTY), the vehicle being used by ex-CEO Michael Kiernan to try and crash the merger party organised by ex-BHP boss, Brian Gilbertson, struggled to hold market support, slipping A9 cents (7.5 per cent) to A$1.10. 

Minews. Are you expecting the final act in the ConsMin drama next week? 

Oz. Perhaps not. Kiernan has said he’s thinking about a bid, and has aired possible prices, but is yet to submit a formal proposal. Consolidated said on Friday that it was waiting on Kiernan to move, and if he did a meeting to vote on the Gilbertson merger would be postponed. 

Minews. Messy stuff. Let’s move on to something simpler, such as your over-heated iron ore sector? 

Oz. You say it’s over-heated, and that’s understandable. But during the week we had a fresh forecast of another big upward move in the iron ore price. This time it was UBS which stunned the market with a tip that the price would rise by 25 per cent at settlement talks later in the year. 

The result of that was another upward run by Fortescue Metals (FMG), which topped the A$40 mark again, before closing the week at A$39.95, up A$2.45 (6.5 per cent). What made the rise particularly impressive is that Fortescue announced a US$300 million institutional placement, which is good news in that institutions are signing up for the stock, but might well signal a precursor step to raising more debt. 

Elsewhere among the iron stocks it was all good news. Atlas (AGO) despite a setback in the form of a longer-than-expected environmental review process, rose A5 cents (3.3 per cent) to A$1.55. Gindalbie (GBG) hit a 12-month high of A$1.52 on Friday before easing to close at A$1.42, up A22 cents (18.3 per cent). Cape Lambert (CFE) added A2 cents (2.9 per cent) to A69 cents, and a newcomer to the iron ore sector, Crusader Holdings (CAS) reported encouraging assays at a project in Brazil, and rose A4 cents (4.8 per cent) to A87 cents. 

Minews. You mentioned exploration success? 

Oz. A couple of good results. Copper Strike (CSE) reported a hit of 6.5 per cent zinc over five metres at its Bloodwood Knoll project in North Queensland, and added A6.5 cents (10.6 per cent) to A67.5 cents. Regis Resources (RRL) rose to a 12-month high of A15 cents on Tuesday before closing up A2.5 cents (20.8 per cent) at A14.5 cents after reporting excellent gold grades at its Moolart Well project in Western Australia. Best assay was 23.68 grams a tonne over seven metres, with a one metre slice of that hit grading 383g/t, and Andean Resources (AND) continued to report good gold grades from its drilling in Argentina, rising A3 cents (3 per cent) to A98 cents – though at one stage on Friday the stock traded up to A$1.05. 

Minews. Time’s short, much on the downside? 

Oz. Kimberley Diamond (KIM) was the big loser for the week after copping a sell advisory from Goldman Sachs. That rather critical note saw a mass exodus from the stock, and its close associate Blina Diamonds. Kimberley fell A17 cents (26 per cent) to close at A48 cents, which was A3 cents up on the Friday (and 12-month) low of A45 cents. Blina was hit even harder, dropping A12.5 cents (28 per cent) to A31.5 cents. 

Minews. Ouch! 

Oz. Yes, very ouch. Perhaps a final word now on the float situation because it seems there is no sign of an end to that part of the fund-raising game. At last count there were 17 new mining offerings making their way through the stock exchange listing process, which should provide us with more to talk about as the year progresses. 

Minews. Hope you don’t run into the same problem as AIM. Too may moderate companies come on the market and then don’t perform. Investors get fed up and liquidity drops. This affects all juniors and you get a bit of a hiatus. Let’s keep a very critical eye on the newcomers.


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## drillinto (23 July 2007)

July 22, 2007

That Was The Week That Was … In Australia

By Our Man In Oz
www.minesite.com/aus.html
[Note:The Editor of this website says that Our Man In Oz is "the authentic voice of Australia"]

Minews. Good morning Australia, it looks like corporate action dominated your week. 

Oz. It was certainly one of the highlights. The other positive news was continued evidence of revival in the gold sector, while on the negative side there was concern about the damage being done to profit margins by the rising value of the Australian dollar, and signs of nervousness in the uranium sector.

Minews. Corporate stuff first, then the gold stocks please? 

Oz. Kimberley Diamond (KIM) and Consolidated Minerals (CSM) took up most of the talking time about deals and takeovers, but there was also fresh interest in Oxiana (OXR) and its interest in a merger with Zinifex (ZFX), or plans to buy more left-overs from Rio Tinto (RIO) should it win control of Alcan. Neither Oxiana nor Zinifex did much during the week, Oxiana was down A8 cents (2 per cent) to A$3.83 and Zinifex was down A52 cents (2.5 per cent) to A$20.08. 

With Kimberley, as you reported mid-week, Gem Diamonds finally came to the party with a bid pitched at A70 cents, which is comfortably above the low point to which the stock had sunk, but a long way short of last year’s high. On the market, after a two-day self-imposed suspension, Kimberley closed the week up A15 cents (28.5 per cent) at A67.5 cents, which leaves a curious gap between the market and the Gem offer price. 

Minews. Is the market hinting at doubts about the Gem bid? 

Oz. No. The A70 cents has already been paid for a 14.9 per cent stake in the stock. What the market seems to be saying is that there are Kimberley shareholders keen to quit the stock quickly even if it means taking a small haircut on the way out, and doing something else with their money. Of course, it might also be saying something about what Gem will find when it finally gets control of Kimberley which has been hurt quite badly by the rising dollar. 

Minews. Aren’t all Australian miners caught in the same dilemma? 

Oz. Most are, which is why you saw a definite slow down in enthusiasm for mining stocks over the past week. It was largely interest in situations such as Kimberley and Consolidated that maintained momentum. At Consolidated, the picture remains very confused with Pallinghurst and Territory Resources slugging it out for control of the manganese and chromite miner. On the market, Consolidated added A20 cents (6.1 per cent) to A$3.46, which is comfortably above Pallinghurst’s latest offer of A$3.30, but below Territory’s cash and share mix. 

Minews. Perhaps best to sit on the sidelines and watch how that situation unfolds. Time for some of those gold prices you mentioned? 

Oz. This is where we certainly saw a focus of interest as gold started to perform strongly against the U.S. dollar. Apex Minerals (AXM) which is playing a leading role as a consolidator of high-grade, but difficult, orebodies added A11 cents (11.2 per cent) to close the week at A$1.09, down slightly on the 12-month high of A$1.10 reached on Wednesday. Equigold (EQI), one of the often forgotten but very successful goldminers, also hit a 12-month high of A$2.31 on Friday, before closing at A$2.30, up A15 cents (7 per cent). Mundo Minerals (MUN) confirmed its status as a stock to watch with a fresh capital raising and commitment to a second mine in South America, joined in with its own 12-month high of A70 cents on Friday, before easing back sharply to A63 cents at the close, still ahead by A6 cents (10.7 per cent) at A63 cents. 

Minews. Presumably this new found interest in gold was across the board? 

Oz. Pretty much so. Allied Gold (ALD) which is making brisk progress with its new mine in Papua New Guinea was another to set a fresh high at A59 cents on Thursday, only to slip away at the close to A54 cents, still up A4 cents (8 per cent). Centamin Egypt was another at a 12-month high of A$1.39 on Friday before easing to close at A$1.34, up A10 cents (8 per cent), and Norton Gold Fields (NGF), the company which bought the big Paddington processing plant near Kalgoorlie earlier this year, joined in the record-setting spree with sales up to A34.5 cents on Wednesday, but also slipped at the close to end the week at A33 cents for a very impressive gain of A7 cents (27 per cent). The primary exceptions to the new rule of gold was Troy Resources (TRY), which is looking for a replacement to retired chief executive, Tommy McKeith. It lost A10 cents (3.8 per cent) to A$2.50. 

Minews. A very interesting trend there, which should improve again next week after the strong afternoon rise in the gold price in London on Friday, long after you lot had wandered off to the pub. 

Oz. Good point. Elsewhere on the market nickel, zinc, and copper stocks were mixed. Jubilee (JBM) added A36 cents (2.2 per cent) to A$16.91 after fresh nickel exploration news. Minara (MRE) lost A56 cents (7.4 per cent) to A$7.04. Kagara Zinc (KZL) was up A39 cents (6.1 per cent) to A$6.74 while CBH (CBH) lost A1 cent to A58.5 cents. Among the uranium stocks Uranex (UNX) slipped A5 cents (2.6 per cent) to A$1.86. Bannerman (BMN) fell A12 cents (4.4 per cent) to A$2.60, and Paladin (PDN) gained a very modest A1 cent to A$8.57 despite speculation of a takeover bid from Canada’s nickel giant, Cameco. 

Minews. Thanks Oz.


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## drillinto (30 July 2007)

July 29, 2007

That Was The Week That Was … In Australia

By Our Man In Oz

Minews. Good morning Australia – or is it? 

Oz. An interesting question after a roller-coaster week on the market, but on balance the answer is yes. Share price falls certainly outnumbered rises, and the overall metals and mining index was down 6.6 per cent. The indications are that next week will start in the same gloomy mood.

However, the issue really is how much of what we saw last week was caused by events which have nothing whatsoever to do with mining and commodity demand in China, and everything to do with tightening U.S. credit markets and a rapid withdrawal of hot money. 

In Australia, the fundamental driving force of meeting the demands of fast-growing Asian markets has not changed, and do not look like changing for years, if not decades – a point highlighted by the fact that during last week’s correction could be a found a surprising number of stocks rising. 

Minews. Let’s have the good news first. 

Oz. Consolidated Minerals (CSM) was the star of the week thanks to speculation of a third bidder entering the battle for control of the manganese miner. On Friday, while all around were losing their heads, ConsMin added A36 cents (10 per cent) to close at a 12-month high of A$3.96. Over the course of the week ConsMin added A50 cents (14.5 per cent). There’s no identity yet for the possible third bidder but it has been suggested that a Russian metals group might be about to join the tussle between Pallinghurst Resources and Territory Resources which have competing bids on the tables. While ConsMin was rising, Territory was falling, losing A12 cents (11.7 per cent) to A$1.02, presumably because it could either get knocked out of the race, or because any counter bid will involve a promise of issuing more shares. 

Minews. Keep an eye on that situation. The price seems to getting very high for a relatively small business. 

Oz. Point taken. As was mentioned ConsMin wasn’t alone in the good news department. Other stocks to swim against the tide came from the iron ore, gold and speciality metals sectors. 

At least three of the small iron ore stocks performed strongly. Grange (GRR) fought its way to a 12-month high of A$2.75 on Thursday, before easing to close the week at A$2.60, which was still up A22 cents (9.3 per cent). Sundance (SDL) announced a big capital raising for its iron ore project in Africa and still managed to replicate Grange by also hitting a 12-month high on Thursday of A57.5 cents, and then running out of puff on Friday to close the week at A51 cents, for a gain of A6 cents (13.3 per cent). The third iron ore record setter was a new player in the game, Ferraus (FRS) which announced good drilling results from a project in Western Australia, and promptly rushed up to A$1.17 on Thursday, before easing to end the week at A$1.06, for a rise of A12 cents (12.7 per cent). 

Minews. Take us through the rest of the good news, and then a snapshot of the bad news. 

Oz. Among the gold stocks, the biggest of the local producers, Newcrest (NCM) added a modest A16 cents (0.6 per cent) to A$24.75, though at one stage early in the week traded up to A$26.55. Dominion Mining (DOM) surprised the market with excellent results from its Challenger mine in South Australia, and gained A36 cents (14.2 per cent) to A$2.90, down a fraction on its 12-month high of A$2.96 reached on Thursday. 

Among the speciality metal miners the emerging tungsten producer, Vital Metals (VML) moved up an impressive A13 cents (18 per cent) to A85 cents, and the vanadium producer, Precious Metals Australia (PMA) added A9c cents (4 per cent) to A$2.29. Significantly, both metals, vanadium and tungsten, are used by the steel industry which is the same power behind the iron ore miners. It was also an Asian steel mill which produced a winner in the coal sector with Cockatoo Coal (COK) stitching up a deal with Koreas Posco group and adding A10 cents (27 per cent) to A47 cents. 

Minews. But it seems the steel industry couldn’t produce any winners among the nickel stocks. 

Oz. No. Nickel remained under pressure. Losers included Jubilee (JBM) down A$1.66 (9.8 per cent) to A$15.25. Western Areas (WSA), down A25 cents (4.9 per cent) to A$4.80, and Mincor (MCR), down a very painful A72 cents (16.9 per cent) to A$3.53. There were also some iron ore stocks which paid a hefty price for getting a bit too far ahead. The biggest loser there was Fortescue Metals (FMG) which dropped A$6.95 (17.7 per cent) to A$32.15. Atlas Iron (AGO) was another to hit by sellers, sliding A11 cents (5.9 per cent) to A$1.76. 

Elsewhere, it was largely one way, downhill, traffic. Among the zinc stocks, Kagara (KZL) fell A29 cents (4.4 per cent) to A$6.37, Zinifex (ZFX) lost A98 cents (4.8 per cent) to A$19.10, and CBH (CBH) managed to virtually defy the trend by holding steady at A58 cents. Uranium stocks were uniformly down. Marathon (MTN) lost A54 cents (9 per cent) to A$5.43, Toro (TOE) lost A5 cents (5.5 per cent) to A85 cents, and Uranex (UNX), which we might take a closer look at next week, fell A19 cents (10.2 per cent) to A$1.67. 

Minews. Thanks Oz.


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## acooper (30 July 2007)

I have invested in a small Company in Outback Queensland that are Using Clean Coal technology to supply Clean Diesel.  
i invested in the Company in 13-12-2006 at 18c per share and now is 79c per share which is a profit of 338.89% I haven't found any uranium shares that are doing the same if so please let me know which ones are growing because i love making profits instead of losses.
acooper


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## BIG BWACULL (30 July 2007)

acooper said:


> I have invested in a small Company in Outback Queensland that are Using Clean Coal technology to supply Clean Diesel.
> i invested in the Company in 13-12-2006 at 18c per share and now is 79c per share which is a profit of 338.89% I haven't found any uranium shares that are doing the same if so please let me know which ones are growing because i love making profits instead of losses.
> acooper



Not Bad for one week  Who uses "*Clean Coal*" technology to make Diesel 
Can I/we have a ticker code, Should be intereting to research CHEERS


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## drillinto (6 August 2007)

August 05, 2007

That Was The Week That Was … In Australia
www.minesite.com/aus.html
[Free Registration]

By Our Man In Oz

Minews. Good morning Australia, another tough week? 

Oz. A bit rocky, but that’s the nature of these corrections. Next week looks like we’ll get more of the same after New York’s last minute slide on Friday. The really interesting aspect for the mining sector is how the 1800 souls gathering in Kalgoorlie for the annual Diggers and Dealers gabfest will react to the tricky times we’re passing through.

Minews. An interesting thought. Perhaps you’ll see more people on Blackberries checking share prices than listening to the speakers. 

Oz. Precisely. It’s become the way of all of these over-sized conferences with too many speakers. No-one actually listens to the presentations, it’s all about being seen while trying to run a business on the side. 

Minews. Enough of that, how about some prices? 

Oz. Thought you’d never ask. Or, more accurately, hoped you’d never ask because it’s been very hard to find much good news in a week of red ink. However, to bring a little cheer before reciting the list of the fallen let’s start with the few glimmers of good news, starting with a handful of gold stocks. 

Troy Resources (TRY) which you reported on mid-week rewarded its shareholders with a solid A32 cent (13.3 per cent) increase to A$2.73, with A13 cents of that increase coming on Friday alone and taking the stock back to its mid-June levels. Troy boss, John Jones, isn’t listed as one of the speakers at Diggers but he is planning to drive back from Perth to his hometown of Kalgoorlie on Sunday and will be permanent feature somewhere around the conference. 

A couple of other gold stocks performed well, and certainly better than the somewhat shell-shocked base metal and uranium sectors. Kingsgate (KCN) shrugged off the gloom to post a A10c (2.1 per cent) gain over the week to close at A$4.80, though at one stage the stock was trading as high as A$5.15. Dominion (DOM) was off A2 cents (0.5 per cent) at A$2.88, but did set a 12-month high of A$2.98 on Monday thanks to excellent results from its Challenger goldmine. Gold-sector leader Newcrest (NCM) was up A25 cents (1 per cent) to close at exactly A$25, with Friday trade particularly strong as the stock added A63 cents to more than make up a mid-week slump. 

Minews. Other than gold stocks what else performed well? 

Oz. Some of the small iron ore stocks managed to post gains. Mt Gibson (MGX) welcomed a positive environmental decision over its mine plans and added A10 cents (7 per cent) to A$1.53. Sphere Investments (SPH) rose A14 cents (4 per cent) to A$3.64 after announcing a deal with a group of Saudi investors. Giralia (GIR), announced good assay results and added A3 cents (4.3 per cent) to A72 cents, and Atlas Iron, despite the generally downbeat mood in the market appears to have successfully raised A$85 million to expand its operations. The shares went into a trading halt at A$1.68 on Monday and start trading again on Monday. 

Minews. That’s enough cheering up with the good news. Time for the bad. 

Oz. Well, there’s plenty of that, including a slide in the price of the local sector’s most interesting stock, Consolidated Minerals (CSM). Despite the intervention of a mystery Ukrainian investor the stock slipped A17 cents (4.2 per cent) to A$3.79. However, you would have to say the market on ConsMin is very confused because Friday trade actually saw the stock post a gain of A14 cents. Monday might see some light thrown on the situation as ConsMin is listed as the third speaker on the opening morning of Diggers. 

Going through the sectors we saw most nickel stocks lose ground. Jubilee (JBM) slipped by A75 cents (5 per cent) to A$14.50 despite an encouraging uptick of A30 cents on Friday. Mincor (MCR) performed in a similar fashion, losing A9 cents (2.5 per cent) to A$3.44 over the week, but actually gaining A24 cents on Friday, with that last minute rise giving you an idea of how far the stock fell midweek, down to A$3.04 on Thursday. Western Areas (WSA) was all over the shop, losing a modest A7 cents (1.5 per cent) to A$4.73, but oscillating during the week between a high of A$5 on Tuesday, and a low of A$4.30 on Thursday. 

Most uranium stocks lost ground. Uranex (UNX) was off A7 cents (4 per cent) to A$1.60 despite continued interest in its Bahi exploration project in Tanzania. Marathon (MTN) lost A32 cents (5.9 per cent) to A$5.11, though it was another stock to suffer extreme mid-week movement, dipping as low as A$4.76 on Wednesday before recovering on Thursday and Friday. Uran (URA), which we might take a closer look at soon, was off A6 cents (16 per cent) to A31.5 cents. 

Copper and zinc stocks were generally down, with a few exceptions. Kagara (KZL) reported encouraging assays from its highly ambitious Admiral Bay zinc project, but lost A42 cents (6.6 per cent) to A$5.95. Zinifex (ZFX) slipped a modest A11 cents (0.5 per cent) to A18.99, while CBH (CBH) went against the trend with a gain of A2.5 cents (4.2 per cent) to A61 cents. Equinox (EQN) was another to swim against the tide with a rise of A15 cents (3.5 per cent) to A4.46. 

Minews. Thanks Oz. We’ll watch out for news from Diggers and Dealers conference in Kalgoorlie.


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## drillinto (6 August 2007)

August 06, 2007

A Private Investor’s First Impressions Of Diggers ‘n’ Dealers
By Susie Boeckmann
[www.minesite.com/aus.html]

Little did I think that when planning to attend the Diggers ‘n’ Dealers Conference in Kalgoorlie as a private investor, I would be invited by a well respected contributor to Minesite to prune his roses in Perth before taking the short flight onwards. Not my strongest point but maybe an appropriate metaphor relating to the resource sector at this time.

Friday
Sunny warm day after a couple of weeks of much needed rain which has replenished dams and reservoirs. New water desalination/treatment plant coming on stream at Kwinana, 40 kms south of Perth, providing drinking water for Perth residents.  Lots of press about this but no mention of Suez, who built it and will maintain it. A good feeling of hustle and bustle and everyone talking about Diggers ‘n’ Dealers. 

Met with a top broker - Sandy Wylie of Pattersons - at the top of a splendid skyscraper, 2 The Esplanade.  He was very cautious and basically advised taking profits, especially in small companies for the time being until the banking/subprime position becomes clearer.  Still fairly convinced of resource strength in the long term. No surprises there. Big fan of Andrew Forrest, Fortescue Metals. 

Accosted George Jones, walking at a fast pace on his way to chair a charity committee, very chipper and upbeat about plans for Gindalbie Metals. (I am a happy shareholder.) I didn’t mention that Wylie had advised selling Gindalbie. 

Passed ‘Black Toms’  the miner’s pub, a couple of times, overflowing with mainly men talking mining; wished I knew who all the main players were. Had dinner with a couple of young guys who floated an exploration company called Jutt Holdings raising A$4million in April 2007.  I wish them luck but there’s a dotcom/top of the market situation if ever there was one! 

Several mining directors have expressed their dissatisfaction with the AIM market and seem to favour Canada as having more liquidity and a much better mindset for raising funds. 

Saturday
Picked up by Tim  at 12.00 from Duxton and drove to his home in Cottesloe for lunch and rose pruning with Ann. Lots of tips/guidance and names to watch out for – a veritable mine of information! Walked past Andrew Forrest’s house – not popular with the neighbours as he cut down wonderful old pines.  Also barbed wire and lots of security in a laid back residential spot. 

Sunday
Gorgeous weather.  Morning flight from Perth to ‘Kal’.  Couldn’t believe how many holes there are in the ground all over the terrain.  Met by Read Corporate who had kindly let me share in a house which turned out to be brand new and pretty swish.  On to the media centre to claim a good corner and then a quick tour round the booths to see who was presenting.  Friendly but tight security called me a taxi to go to the Kalgoorlie Races sponsored by Southern Cross Equities. 

The main host was Richard Granger who described the current market as ‘a drop in cabin pressure’. Talked at length with Gerard Farley of Finlay and Co and director of  Central Rand Gold. My race card read a bit like my investment list; the Metex Maiden, Reed Resources Handicap – Chris Reed told me that he came from four generations of miners and horse breeders,  His father and brother had horses racing today. Not sure about the company and the horses didn’t win! 

Next the Apex Maiden Stakes. I am a shareholder and had sent an email to the managing director, Michael Ashley, to ask if Apex were doing any other additional presentations. He replied by sending me a ticket for the races.  Considers his shareholders! They seem to be in a good position and have just successfully completed a large fundraising so are motoring away with their recent gold acquisitions.  Most of their personnel are ex Lionore – it felt like a well focussed and confident team. 

Next race was the Gindalbie Metals Handicap; followed by the Metals X Nickel Tin Cup Handicap.  Peter Cook (managing director) and Warren Hallam (executive director) talked at length and will soon be making some announcements.  I asked why tin was now important again.  Use of tin has risen from 250 tons 3 years ago to 360 tons today and they expect the metal price  to rise to US$20,000 per ton by end of year.  Big growth in soldering for mobile phones, computers, other electrical equipment and fire retardant brake pads, as many countries become lead free.  Also increased use for cans especially in Europe. Growth in mixture with other metals to avoid corrosion. 

The CBH Resources Dig Handicap came next – Bob Besley and Jim Wall on good form. This was followed by the Jubilee Nickel Handicap where I met Kingsgate Consolidated Ross Smyth Kirk and Gavin Thomas.  Pure gold play. They had flown from Sydney, spent the night at Broken Hill, arriving at Kal in a Constellation – sounds like the only way to fly!  

Joined by Avoca Resources managing director Rohan Williams, we all walked to Hannon Street as no taxis and they dropped me off at the Hannon Club for the Consolidated Minerals dinner. About 100 people attended. Sat next to David Brooks who has just joined as investor relations manager. Completely new company with many changes of management. Rod Baxter gave a witty speech referring to the takeover activity – good for shareholders and board. 

Also said that he thought Belize was in South America until he discovered that this one was in Ukraine.  Privat now has 13.5 per cent of Cons Min and has not revealed its hand – could even be a third party in the bidding as they have a blocking stake.  Baxter stressed that although both Pallinghurst and Territory had tabled bids, the board is open at this point to any other offer. Refrained from standing up and pointing out that it had not been exactly helpful to Territory. 

Also met Julian McCormack of Credit Suisse (Australia) Ltd – showed obvious concerns of market and ‘fear of contagion factor’.  Andrew Richard of Merrill Lynch Sydney, a gold and resource analyst, was also there. Generally analysts and brokers seem cautious but see good opportunities in a couple of months. 

Left the party with Jim Reagan of Reuters Sydney who is staying in same house and called it a night.  Everyone else went off to the Palace Hotel where Kingsgate gave out flashing buttons which apparently ended up on the ‘skimpies’ without much else. One pub is apparently advertising outside on a board that they have ten skimpies– last year they only had six. Sign of the times.


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## drillinto (8 August 2007)

August 08, 2007

A Private Investor Works Her Way Round Booths, Talks And Entertainment At D’n’D

By Susie Boeckmann
www.minesite.com/aus.html

Tuesday 

Very full day today with eight companies having 15 minutes only and fifteen presenting in all. 8.30am kick off with Barrick.Gold. Usual question – what is the hedge book position – US$400 million. Followed by confident presentation by Vulcan Resources managing director Alistair Cowden and chairman Barry Eldridge which has just additionally listed in Norway. They have just completed a fundraising to raise A$52 million so are ‘happy and unconstrained by money’. He described Finland as being like Kalgoorlie but with snow. All the base metals plus platinum. No political risk in Finland and very business friendly – reckons his company should be ‘at a premium against other business environments’.

Monarch had its first gold pour at Davyhurst yesterday and had some great photos. Michael Kiernan started the presentation with a film of past gold mining clips and the song ‘Those were the days’. Very atmospheric. ‘Hopes the tail wags the dog’ and his project at Minjar goes into production next month.  Obvious questions about Cons Min situation.  He has written a very strong letter to Cons Min shareholders from Territory Resources attacking Pallinghurst’s previous bid as ‘ complex and inadequate’ and restating his superior offer backed by an independent valuation by BDO Consultants and reinforced by the A$225 million equity commitments from Noble Group, DCM, DECOmetal and Lehman Brothers at A$1 per Territory share……  .     

General talk afterwards regarding Monarch was described by a senior analyst as an ‘impissibility’. (spelling correct). 

Jabiru’s Scott Donaldson emphasised that he had taken the company from A$60million two years ago to a market cap of A$600million today. Went to Ausdrill’s stand and talked with Ron Sayers (All big strong men!). They had an offer last May but there has been no news since. Hopefully in a month to six weeks: but they have a full order book and doing well.

Bendigo’s booth.was well attended but from a market cap a year ago of A$1.3 billion they are now capitalised at A$150million with A$10million in the bank. Share price of 30c is backed by 14c cash. Since their downgrade on 8th January they now have a new plant ready to go and have completely changed their exploration strategy. They are confident that they will find the ‘veins’ again as Bendigo is the second largest historic gold area after Kalgoorlie and produced gold from 1841 – 1954. Described as a good option play.

Sally Malay Mining had a good reception and were strongly recommended by KPMG in Perth (along with Zinifex).Interesting presentation from Gareth Dixon of Gindalbie but there still seems to be scepticism about the new rail link which would not be finished for many years and has been talked about for fifteen. But share price has been excellent over the past few months.

Another gold company that has not been talked of  much in London, apart from an article on Minesite, although has US following is Citigold (ASX: CTO) First gold company to list on Dubai exchange. They are producing from Charters Tower which was discovered in 1871 and traditionally produced gold from 1898 -1916. (During Charters Tower Goldfield’s first 40 years, 130 mines produced a historic 200 tons of gold at a depth of not more than 700 metres). Bad years after as first world war took all their fuel (trees): the workers’ compensation act and wages greatly increased costs. People also sold their gold shares which had paid good dividends and patriotically bought Government bonds which plunged and paid no dividends. 

Managing director Chris Towsey now has a 30 year plan in place and Citigold’s corporate goals include developing several mines and an annual production of 250,000 ounces. The cost is budgeted at below US$320 per ounce.  Warrior is the first mine which started producing in November 2006 and will eventually reach 100,000 ozs.

Independence Group  also had a full turnout. Analysts and successful institutional broker from Sydney seem keen on this company and saw the recent share price retraction to A$6 from A$9 as a strong buying opportunity. (Good dividend stream).Said to be one of the cheapest nickel sulphide producers in Australia, producing 9,000 tonnes/year. Are in a JV with Anglo America Ashanti at Tropicana, south of Perth. Also have a greenstone belt described as under ‘a farmers paddock’ at Pithara. Mentioned that it  is  a very civilised area as lots of pubs! 

Could mention lots of other companies but decided to call it a day as have been invited along with other press to go up in the ‘Connie’ (Constellation aircraft) by the sponsors who are Kingsgate, Nautilus Minerals and CBH Resources.  Great roomy aircraft lovingly cared for by a group out  at Albion Park at Woolagong, who are mostly ex Qantas pilots and engineers.

Takes half an hour to get engines going and flames come out on the wing. Quite quiet and we could walk around with drinks and snacks but the most amazing experience was flying over the Super Pit gold mine  which has been producing for over 100 years and still an enormous undertaking.  Seeing it at night with all the lights on it and dozens of trucks moving earth was extraordinary. Truly magnificent. Also flying over Kalgoorlie lit up – all at just 1600 feet  -was amazing. 

We  had a party on the plane on landing and then headed for the Palace Hotel which was throbbing and packed.  Girls are very expensive and running around with glass vases, accepting large amounts of money to do kind of strip tease but actually quite tame (Maybe it was too early). 

Continued on to the Exchange which was also heaving with happy revellers. Downstairs there was a covered white sheeted tent in one corner – leave the rest to your imagination. Charming Kingsgate guys poured me into a taxi….


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## Boyou (8 August 2007)

Great reading ,drillinto.

The author must be a pretty substantial shareholder to get her legs in the door at these amazing events! Or maybe it is her Legs that are substantial??  

Perhaps she is Minesites "Man in OZ" 
She writes very well and has some savvy .I think


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## drillinto (8 August 2007)

Boyou said:


> Great reading ,drillinto.
> 
> The author must be a pretty substantial shareholder to get her legs in the door at these amazing events! Or maybe it is her Legs that are substantial??
> 
> ...




Boyou: Yes, Susie Boeckmann writes very well. On her piece of August 6, she  gives a hint(paragraphs 1 and 7) about the name behind "Our Man In OZ". It is most probably Tim Treadgold.


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## drillinto (10 August 2007)

August 10, 2007

A Private Investor Makes It To The End Of Diggers ‘n’ Dealers 2007
By Susie Boeckmann
[ www.minesite.com/aus.html][/url ]
...ards joined long and cold line for taxi home.


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## drillinto (12 August 2007)

August 12, 2007

That Was The Week That Was … In Australia
[ www.minesite.com/aus.html ]

By Our Man In Oz

Minews. Good morning Australia, another interesting week? 

Oz. You could say that, though it really should be seen as a series of five separate daily events rather than a coherent and consistent week of trading. Business among the miners was undoubtedly affected by the fear and greed flowing through the financial sector but the overall result was perhaps better than most casual observers would expect.

Minews. You’re saying it wasn’t a correction? 

Oz. It was that, but not a major correction. Overall, the Australian mining market, as measured by the Metals and Mining index on the ASX, was down 4.8 per cent over the week, but all of that occurred on Friday when the index plunged by 241 points, or 5.2 per cent. Wednesday and Thursday were actually “up” days, and you would have to say that next week looks like it might get off to a reasonable start after New York calmed a little on Friday. 

Minews. The market certainly gave delegates at your annual Diggers and Dealers forum plenty to talk about? 

Oz. True. But, rather than go back over the ground which was so excellently covered by your roving correspondent and active investor, Susie Boeckmann, let’s go through some prices to demonstrate how the week really evolved starting with a surprise – a selection of stocks which actually rose. There weren’t a lot, but the fact that there were any is news in itself. 

Leading the pack of contrarian stocks was the unstoppable Andrew Forrest and his Fortescue Metals Group (FMG). It started the week on a seriously weak note, dropping to A$28 on Monday, which was the first time the stock has been below A$30 since early May, and is a country mile short of the A$40 FMG was fetching as recently as July 20, just 15 trading days ago. However, as the week rolled on FMG shrugged off the gloom, peaking on Thursday at A$33.50, being hit by the Friday sell-off to close at A$31.29, which was still up, only just A39 cents (1.3 per cent), but up nevertheless. 

Some of the smaller iron ore stocks shared in Fortescue’s positive light. Atlas (AGO) was a bit of a star, rising A7 cents (4.6 per cent) to A$1.58, but that modest move should be seen alongside where the stock was mid-week, trading as high as A$1.81 which means you might also read the Atlas share price as falling A23 cents (12.7 per cent) from that Thursday high. Cape Lambert (CFE) also had a strong Thursday, reaching A57 cents before giving it all up on Friday to end the week at A52 cents, down A1.5 cents (2.8 per cent). 

Minews. Take us through any other stocks to defy the trend, and then the bad news, please? 

Oz. The sector to hold up better than most, as might be expected in a crisis, was gold, and that’s the area with the greatest concentration of stocks which rose, albeit modestly in most cases. Kingsgate (KCN) led the way with a rise of A15 cents (3.1 per cent) to A$5.05. Like most stocks it was hammered in the Friday sell-off, but not hard enough to undo all of the mid-week good work which followed an upbeat presentation at the Diggers forum. On Thursday, Kingsgate traded as high as A$5.51. Resolute (RSG) was another gold stock to defy the downward trend, adding A2 cents (1.3 per cent) to close the week at A$1.53, down on the Thursday peak of A$1.58. Tanami (TAM) was a third gold to creep higher, albeit by a lowly A1 cent to A14 cents. 

Other stocks to post modest price increases included the specialist vanadium producer, Precious Metals Australia (PMA) which added A5 cents (2.5 per cent) to A$2.05, and the Scandinavian-focused base metals miner, Vulcan (VCN), which rose A3 cents (7.7 per cent) to A42 cents, but was as high as A46.5 cents midweek. 

Minews. Time now for the bad news. 

Oz. OK. Perhaps an interesting way to look at that week is to conduct a partial roll call of Minesite subscriber companies, starting with the gold stocks which did not do as well as the three mentioned earlier. Adamus (ADU) eased A1 cents (1.8 per cent) to A53 cents, in very thin trade. Apex (AXM) lost A9 cents (8.9 per cent) to A92 cents. Centamin (CNT) fell A7 cents (5.3 per cent) to A$1.26, but did get as high as A$1.33 midweek. Monarch (MON) lost half-a-cent to A29.5 cents. Perseus (PRU) was off A19 cents (16 per cent) to A$1. and Troy (TRY) slipped A6 cents (2 per cent) to A$2.63, but did get as high as A$2.69 on Friday, and actually gained A2 cents in Friday trade, which was a solid effort when everyone else was losing their heads. 

Among the base metal stocks it was pretty grim news. Sticking to Minesite subscribers the call of the card looks like this: Aim  Resources(AIM) was down A2 cents (6.9 per cent) to A27 cents. CBH (CBH) lost A7 cents (11 per cent) to A54 cents, but did trade around A60 cents for most of the week. Consolidated Minerals (CSM) lost its takeover shine, shedding A38 cents (10 per cent) to A$3.41 after Territory Resources (TTY) failed to launch a revised bid, and Territory itself was hit hard, losing A18 cents (18 per cent) to A80 cents. Mincor (MCR) was caught by the falling nickel price, dropping A30 cents (8.7 per cent) to A$3.14, Vital Metals (VML) lost A11 cents (12.5 per cent) to A77 cents, and Oxiana (OXR) fell A18 cents (4.9 per cent) to A$3.48. 

Uranium stocks, as you would expect, were weaker thanks to the general market sell-off and the US$10 a pound fall in the uranium price. Uranex (UNX) dropped A22 cents (13.7 per cent) to A$1.38. Marathon (MTN) was hit hard with a drop of A$1.06 (20.7 per cent) to A$4.05, and Equinox (EQN) which is emerging as both a copper and uranium play fell A66 cents (14.7 per cent) to A$3.80. 

Minews. Thanks Oz. Talk to you next week.


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## drillinto (13 August 2007)

August 13, 2007

A Private Investor Looks Back On Diggers ‘n’ Dealers With Affection

By Susie Boeckmann
[ www.minesite.com/aus.html ]

Wanted to see a little more of the area of Kalgoorlie so drove out to the Super Pit with Lynne Persall, whose ancestor (Findlater) had been one of the three pegging the original claim on finding gold in Kalgoorlie in 1897. Paddy Hannan is the one remembered by a statue that is now in the Town Hall as he actually registered and signed the ‘claim’.
The size of the Super Pit has to be seen to be believed with terraces and snaking dirt tracks as far as the eye can see with heavy earthmovers and diggers winding around in every direction in a cloud of greyish/green dusty activity. Now operated by Barrick and Newmont.  They will soon be going deeper than the 700 metres to date but there is always a danger as in the past as there were over 100 small prospectors working at any one time and the area is riddled with tunnels and old workings which can cause cave-ins and rock falls.  If one prospector hit a good patch the next door miner would often try to tunnel into his area to profit too! 

On to the Mining Hall of Fame which demonstrates the History of Kalgoorlie, with a good array of old mining equipment and the way miners existed in the past. Also shows how gold is poured (but only a replica). Must find a local mine to show you the real stuff! Good collection of nuggets and rocks.  You can also go down a working pit.  Back into town via Williamstown – bit of an eyesore as full of battered corrugated iron houses.  Residents can only rent and not buy there. Astonishing to see a  herd of alpaca. Apparently there are lots of alpaca and llama being bred in WA. 

On to the Boulder/Kalgoorlie Mine Museum at the top of Hannan Street which is fascinating and shows a full aspect of the history of the evolvement of Kal’s mining.  Just time for a coffee at the Dome which is the most frequented coffee venue.  Now very subdued and mainly occupied by locals dissecting the impact of 1,700 strangers in their town.  They seemed to enjoy it and the party atmosphere it brings. 

As there is a shortage of  accommodation  many of them had moved in with friends and let their houses. Even top mining executives had rented ‘winnibagos’ (motor caravans) and stayed in caravan parks which were really basic.  There was not a hotel room to be found at any price.  As for booking next year most hotels will not commit on price and only take an ‘expression of interest’. 

Time for the airport.  A long line of very tired looking people carrying ‘Diggers and Dealers’ wheelie bags (me included and very proud of my trophy).  One man passed out completely at the Quantas counter. Another tripped outside and hit his head on concrete and was carried off in an ambulance. 

Again extraordinary sight flying over the reddish/brown mining area, covered with pits working or not.  No trees for over a 30 mile radius as had long ago been used for fuel or building – the environmentalists would stand no chance here of re-instituting forest and foliage. 

Arrived in Perth and checked into the tax office (now the Duxton Hotel).  Many told me that they still had nightmares staying there thinking of their tax returns.  Visited the ‘club floor’ hospitality area to have a glass to be greeted ‘hey you’ve come from Diggers’ and the party began again! 

One man told me that he had worked 10 years on the same mine but it had changed names 8 times – not an unusual event if the Kalgoorlie  area.  Ended up talking ‘Shortie’ of Aggreko who has been involved with building plants all over the world.  They have just signed a huge contract in China.  I had met him on the Ausdrill stand and he filled me in on all sorts of local lore.  To quote – ‘It’s more incestuous than any sheep station re deals and holes in the ground’. 

To summarise I would say that D’n’D was a unique venue where open networking and all over friendliness shone through.  For me it was Australians at their best – open to ideas.  Pragmatic about success and failures but always willing to get up and go. The current stars of the success stories were approachable to all.  All thanks go to the organisation for what appeared to be a smooth, efficient, secure and very well run forum. The media room was excellent (and a haven of peace) with instant press releases given out and space to spread and work with the latest technology. 

Presentations shown live from the auditorium and press interviews available immediately after each company’s pitch.  As a newcomer everyone was helpful and welcoming.  Certainly Minesite opened many doors and I am grateful for the tips and pointers given in  London and Australia beforehand. 

A few other points are that many companies are now concentrating on paying dividends to shareholders and even some of the mid tier companies are planning buy backs.  Some are well funded so will continue in spite of the current volatility.  

There seemed a greater emphasis and better understanding of Asian markets than in Europe.  It is certainly boom time in WA and any current drop in share prices in my humble investor’s opinion will create good buying opportunities.  Australia has the benefit of a stable political structure unlike other areas in the world with the possible exception of Canada, Finland and perhaps Brazil. 

There are also more women joining at executive and management level.  Costs and skill shortages are testing company’s efficiency of management and this will obviously become clear in their quarterlies. Some of the smaller companies need to up the management grade of executive skills even if they have become producers (Any companies with problems in this regard might like to visit www.Jobs4Mining.com. Ed) 

It is also clear that following the ‘stars’ in the industry is as important as reading the balance sheet. There is much talk of consolidation and it will be interesting to see who will win through, maybe even competing with the Rios and BHP Billitons of this world. 

As a private investor it was an immensely rewarding experience and I sincerely hope to attend next year.  A huge thanks to everyone and to Minesite for giving me the opportunity to experience this event first-hand.


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## drillinto (20 August 2007)

August 19, 2007

That Was The Week That Was … In Australia

By Our Man In Oz
[  www.minesite.com/aus.html  ]

Minews. Good morning Australia, trust you survived the stock market blitz? 

Oz. It has been a bit like that, with shares falling all over the place. Next week, however, promises some respite because we’re all taking our lead from Wall Street, no matter how illogical that might be in the modern resources world where China dictates the terms.

Minews. That would seem to be especially true for iron ore, one of your hottest exports? 

Oz. Correct. And unless we’re both missing something, or the market has already priced in the next price rise, there is some good news on the horizon with iron ore said to be heading for a 25 per cent increase at the next meeting of the miners and the steel mills. 

Minews. That’s for later in the year, time for prices now, and any crumbs of good news would be appreciated before your long list of gloom. 

Oz. Believe it, or not, and only after sifting through mountains of information, we found a stock that did rise last week, and it was an old Minesite favourite. Troy Resources (TRY). Perhaps it’s a case of quality shining through, or the fact that Troy is one of the few regular dividend payers among the smaller miners, but it managed to post a gain of A2 cents during a week when everybody else was losing their heads. The move from A$2.63 to A$2.65 is less than 1 per cent, but a rise is a rise. 

Minews. I reckon the dividend policy has something to do with it, and of course there is the buy-back but not much stock was bought back last week. And that’s it? 

Oz. For the full week that’s the best we could do down this way. However, if it’s good news you’re after there were a few stocks to rise on Friday in what was, overall, another down day. Atlas Iron (AGO), one of the likely beneficiaries from the expected iron ore price hike, managed to post a A1 cent rise on Friday, though its closing price of A$1.17 still reflected a fall of A38 cents (24.5 per cent) over the full week. Sundance (SDL) was another of the small irons to end the week in the green with a rise of A3 cents (8.2 per cent) on Friday, though the full week’s trade reflected a drop of A4 cents (9 per cent) to A39.5 cents. 

Elsewhere, it was a tough job finding anybody with green ink alongside their name. Vulcan Resources (VCN), the emerging Finnish base metal miner, put on A2 cents on Friday, but was down A7 cents (16.6 per cent) at A35 cents for the week. Apex (AXM) and Kingsgate (KCN) were Friday winners in the gold sector with gains of A6.5 cents and A3 cents respectively. But, both were down over the week. Apex lost A6 cents (6.5 per cent) to close at A86 cents, and Kingsgate lost A34 cents (6.7 per cent). 

Minesite. Well done in finding some good news. Time now for a run through the sectors with the bad news. 

Oz. Before doing that a couple of big picture items. The Australian dollar, which has been hurting miner by rising sharply over recent months, fell out of bed with a thump last week, dropping US6 cents (7 per cent) to US78 cents. That is, apparently, the sharpest correction in the dollar ever, and believed to be a direct result of hot money exiting both the Australian and New Zealand currencies in the so-called “carry trade” which chases high interest rates around the world. Miners will welcome that bit of good news. Also, it is worth pointing out that while a lot of small stocks have been hammered in the correction the overall metals and mining sector, as measured by the XMM index on the Australian Stock Exchange was down by “only” 7.5 per cent last week, a nasty fall, but not a catastrophe. 

Minesite. Thanks for that, now the prices, please? 

Oz. The gold sector appears to have held up best, as illustrated by the Friday gains by Apex and Kingsgate and Troy’s sterling effort for the week. St Barbara (SBM), however, was in the red all week, ending down A8 cents (16.3 per cent) at A41 cents. Adamus (ADU) also lost A8 cents (15 per cent) at A45 cents, and Allied Gold (ALD), which you took a close look at during the week, was down A11 cents (23.4 per cent) at A36 cents. 

Uranium stocks, apart from Toro (TOE) had a horrid week. Toro, which is closely associated with Oxiana (OXR) and is merging with Nova Energy (NEL), was one of those rare Friday risers with a very modest, but noteworthy, addition of half-a-cent, closing the week at A68.5 cents, still down A9.5 cents (12.2 per cent) for the full week. Other uranium plays were hit hard. Uranex (UNX) lost A53 cents (36 per cent) to A94 cents, but was steady at that price on Friday. Uran (URA), which is pushing ahead manfully with its plans to get control of advanced uranium projects in Eastern Europe, lost A10 cents (34.5 per cent) to A19 cents. 

Nickel stocks have been hit hard by the sharp fall in the price of their metal. Jubilee (JBM) lost another A$1.80 (13.6 per cent) to A$11.40. The stock has now fallen A7.04 (38.2 per cent) since peaking at A$18.44 on June 5, little more 10 weeks ago. Minara (MRE) fell by A99 cents (17.7 per cent) to A$4.60. It is now down A$5.07 (52.4 per cent) from its peak price of A$9.67 reached on May 22. Western Areas (WSA) slipped by A76 cents (16.2 per cent) last week to A3.94, and Mincor (MCR) was off by A48 cents (15.3 per cent) to A$2.66. 

Iron ore stocks held up better than most, as shown by the modest Friday rises posted by Atlas and Sundance. Other iron ore plays did less well. Grange (GRR), despite reporting a deal with Rio Tinto over the eastern extension of its Southdown magnetite deposit, fell A70 cents (25 per cent) to A$2.10. Gindalbie, another of the iron ore specialists wanting to launch an expensive magnetite mine, dropped A39 cents (28.8 per cent) to A96 cents, and Cape Lambert (CFE) fell A12 cents (23 per cent) to A40 cents. Fortescue (FMG), the most ambitious of all, lost A$4.79 (15.3 per cent) to A$26.50, which is A$15.25 (36.5 per cent) below the stock’s peak price of A$41.75 reached as recently as June 4. 

Minews. I think that’s all we can take this week. Thanks Oz.


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## drillinto (26 August 2007)

August 26, 2007

That Was The Week That Was … In Australia
By Our Man In Oz
==>  www.minesite.com/aus.html  <==

Minews. Good morning Oz, trust you enjoyed last week’s share market recovery? 

Oz. It was certainly more fun than the previous month of sliding prices. The biggest factor down this way, apart from central banks pumping cash into the system, was the flow of excellent profit results. For investors in mining stocks last week was the pay off they had been waiting for since the boom started in 2003. Not only did BHP Billiton weigh in with the biggest profit ever posted by an Australian-based company, but a whole series of smaller fry chimed in with what were, arguably, even more exciting results. Stock like Mincor (MCR), Jubilee (JBM), Minara (MRE), Kagara (KZL), and Independence (IGO) produced record profits, and paid out record amounts in dividends.

Minews. The dividend flow is an interesting point which we might look more closely at next week. Time now for prices, please? 

Oz. First a point about prices. The last time we looked at the Australian market we joked about finding a stock which rose in price. This week we flip over. Try as you might, it’s impossible to find a stock which fell last week. Much of the movement was recovery from the August sell-off, but we also started to see excitement from discovery news, and profit flow. 

Hottest stock of the week was Ramelius Resources (RMS) which operates the Wattle Dam gold project near Kambalda in Western Australia. On Friday, the stock rocketed up on news of a fabulous drill result which included one metre assaying 6770 grams a tonne, or 217 ounces to the metre. The region around Kambalda is famous for its occasional “jewellery shop”, or bonanza grades, and this might be one of those one-hit wonders, but it pushed Ramelius up from a close on Thursday of A$1.32 to an intra-day high on Friday of A$2.10, a gain of A78 cents (59 per cent). It eased back to close at A$1.90, but the rise, and the heavy turnover of 4.7 million shares was the best sign that traders are still keen for mining news. 

Minews. Take us through the sectors, starting with gold. 

Oz. The flat price of gold during the week didn’t help, but we saw a number of upward moves on drilling results. Centamin (CNT) came out with a fresh set of numbers on its Sukari project in Egypt and shot up A36 cents (37.5 per cent) to A$1.32. But, and this is important, that rise was also an example of the affect of the overall recovery because, on August 9, just 12 trading days earlier, Centamin had been trading at Friday’s closing prices, A$1.32. 

Minews. The point being that we’ve simply returned to where we were? 

Oz. Precisely. The pattern can be seen across the market, perhaps less so in gold, but certainly evident among the nickel, zinc and iron ore stocks. But, to finish your request about the golds here are a few more prices. St Barbara (SBM) was up A6c (14.6 per cent) to A47 cents, roughly back to where it was. Avoca (AVO) added A16 cents 12 per cent) to A$1.48, which is still well down on the A$1.80 of early August, and Norton Gold Fields, which has wrapped up the purchase of the Paddington project near Kalgoorlie, rose A4.5 cents (19.5 per cent) to A27.5 cents. Non-movers included Kingsgate (KCN) and Bendigo (BDG), which were steady at A$4.71 and A28 cents respectively. 

Nickel, thanks to the flow of profit news, and a steadier price for the metal, produced a number of winners, though mainly in the recovery sense of returning to where they were. Jubilee (JBM) shot up a very sharp A$2.06 (18.5 per cent) to A$13.20, but is still down on the A$15 price of a month ago. It impressed everyone with its record profit and high dividend payout. Independence (IGO) also rode the nickel express, adding A82 cents (17.7 per cent) to A$5.45. Mincor (MCR) rose A59 cents (22 per cent) to A$3.25, and Western Areas (WSA) gained A25 cents (6.3 per cent) to A4.19. Cougar Metals (CGM), which is a new player in the nickel game, reported good drilling results from its Pyke Hill project, and added A5.5 cents (34.3 per cent) to A21.5 cents. 

Minews. Was there a similar pattern among the iron ore stocks? 

Oz. Very much so, aided by the surprise news that a Russian oligarch, Victor Rashnikov, has snapped up a 5.37 per cent stake in Fortescue Metals Group (FMG). The Russian buying helped FMG added A$4.25 (16 per cent) to A$30.75, though the stock was weak again on Friday, losing A$1.65 (5.1 per cent) on the day. Other iron plays did well. Cape Lambert (CFE) rose back over the A50 cent mark with a gain of A14 cents (35 per cent) to A54 cents, the same price as August 13. Grange (GRR) added A25 cents (12 per cent) to A$2.35. Atlas (AGO) was up A14 cents (11.9 per cent) to A$1.31, and Golden West (GWR), which has its foot on a high-grade haematite discovery near Wiluna, rose A32 cents (21.3 per cent) to A$1.82. 

Minews. How did the uranium sector perform with the latest fall in its price? 

Oz. No real damage. The trend in stock prices was in line with other sectors. Most were up, or back to where they were. That latest uranium price fall to US$90 a pound does mean that the stuff has now fallen 30 per cent from its recent peak, though another way of looking at it is to say that the price is 650 per cent above where it was a couple of years ago. Share prices moves included Paladin (PDN) adding A66 cents (12 per cent) to A$6.16. Uranex (UNX) gaining A10 cents (10.6 per cent) to A$1.04. Extract (EXT) rising A4 cents (7.7 per cent) to A56 cents, and Bannerman (BMN) outperforming them all with a gain of A45 cents (31.3 per cent) to A$1.89, perhaps in the hope that it will get good media reports from a site tour which started last week. 

Minews. Time left for a look at any special situations? 

Oz. Only one, really. The Consolidated Minerals (CSM) saga dragged on with mystery buyers, takeover offer extensions, and more rude words at 10-paces from the opposing sides, but no real change. On the market, ConsMin added A46 cents (14 per cent) to A$3.75, which is back where it was two weeks ago. One of its suitors, Territory Resources (TTY), did better, adding A20.5 cents (32 per cent) to A84.5 cents on news that production from its Frances Creek iron ore mine is growing. 

Minews. Thanks Oz.


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## drillinto (1 September 2007)

August 31, 2007

FT Lex Column Promulgates Some Odd Views On Australia And Gold
Source: www.minesite.com

It is not the job of a newspaper to be popular, but it is its job, particularly of an upmarket pink sheet such as the Financial Times, to give an informed and rational comment on events around the world. On 8 august the Lex column got right up the noses of the Aussie investing public according to broking firm Southern Cross Equities when it said “Aussie punters are as ignorant of bear markets as the first explorers were of monotremes. All equities do is go up. This has created an investment environment as unique as the platypus, the country’s famous egg laying mammal.”
Just to prove Lex wrong the ASX fell quite sharply in the following days as hedge funds shorted financial and resource stocks. In fact two weeks ago our Man in Oz reported that he could find only one stock in Australia’s mining sector that had recorded a gain. But as the brokers pointed out this did not detract from the fact that Australian corporate earnings growth is the strongest in the developed world and mining is part of the whole, not the whole.

On the subject of mining poor old Lex missed the point completely that Australia is shipping metals and  minerals on a massive scale every day to China, India and other countries in the Far East. If Lex had listened to the outlook commentary from BHP Billiton it would have heard that the world’s largest mining house reckoned that the “Chinindian story” remained stronger than ever and there had been no impact on demand from US credit volatility. In support of that came the news that iron ore is expected to benefit from a 25 per cent increase at the next meeting of the miners and the steel mills.

Southern Cross Equities suggested that the Lex writer had not managed to get his head round the fact that China and India were now the drivers of commodity demand, and not the US. This is excusable as the Financial Times has long had a love affair with the US; its editor is an ex US correspondent; and it reckons that it is fighting toe to toe against the Wall Street Journal. As a result the Saturday paper – the only one read by Minews – has as many stories about the US by US journos as it does about the UK and Europe. A sad predicament to have  got into.

As if to emphasise that it was willing to shoot itself in the  foot more than once the Lex column also took a swing at gold  last week-end entitled Stolid Gold. The price of gold had not rocketed earlier that week as investors scrambled  for quality and the yields on three month Treasury bills fell by almost 200 basis points and Lex felt it had failed in its duty to demonstrate safe haven status.

Maybe these young men, who have probably never invested in their lives, overlooked the fact that the price of gold has risen by an annual compound rate of 19 per cent since their friend George Brown sold off most of  the UK’s reserves. They were more interested in the economic comment by Goldman Sachs that there has been little correlation over the past 20 years between inflation and the gold price.

Lex then focussed on the booming demand for gold from India and China and wondered if the rising wealth in these regions was really bullish for gold. As if that question needed answering, the last sentence said it all. “As banking infrastructure develops, wearing one’s savings may lose its bing.” How trite!


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## drillinto (3 September 2007)

September 02, 2007

That Was The Week That Was … In Australia
By Our Man In Oz
Source:  www.minesite.com/aus.html

Minews. Good morning Australia, it looks like a little normality returned to your market last week? 

Oz. In a way, though it continues to surprise hardened observers, well let’s be honest and call them what they really are, older observers, that small Aussie miners are doing what they’ve never done before; make profits, pay dividends and re-invest. The latest example is Troy Resources (TRY) which reported a 26 per cent profit increase on Friday to a record A$20.1 million, lifted its normal dividend to A7.5 cents a share, and announced a one-for-25 bonus share issue. The market loved it, lifting Troy by A15 cents (5.6 per cent) on Friday to close at A$2.80.

Minews. The profit flows, and dividends, are really setting this period in your market apart from anything we’ve seen before. 

Oz. Absolutely. And that’s what some outsiders, such as your friends who write the Lex column at the Financial Times, just don’t seem to realise. 

Minews. Teenage scribblers they used to be called. Never invested in their lives nor given mining any serious thought. 

Oz.So they don’t realise that times really have changed. China is driving everything that’s happening in this part of the world, and while the U.S. catching a cold might cause the rest of the world to snuffle a bit, it no longer means a bout of pneumonia. To put Australia’s position into perspective there once was a time when Britain was our major export market. Today, Britain barely scrapes into the top 10 with China, Japan, Korea, India, and the Middle East dominating exports. Business with Britain, in fact, is now roughly equal to trade with Thailand. 

Minews. And no doubt the trend to focussing on Asia is accelerating? 

Oz. That’s the point. The changes underway in global business are quite remarkable and commodity exporting countries such as Australia and Canada are the big winners. Enough of the geopolitical stuff, let’s look at prices and action, with the big game in town last week being another old favourite, Consolidated Minerals (CSM). After months of “phoney war” we got down to the real action on Friday when the Ukrainians, operating under the name Palmary Enterprises, lobbed in a cash bid of A$3.95 a share. Traders instantly took ConsMin up to A$4.09, before closing the week at A$4.07, a gain of A32 cents (8.5 per cent). 

Minews. Is that likely to be the killer bid? 

Oz. It would be brave man to tip that, though it is interesting that Territory Resources (TTY), one of the other bidders, has effectively sidelined itself, saying it will not be raising its offer, but adopting a wait and see position. Significantly, Territory’s boss, Michael Kiernan, has offered to run the Woodie Woodie manganese mine for the Ukrainians, and suggested a few other deals with them. If that relationship blossoms it will freeze out the original bidder, the Pallinghurst group led by Brian Gilbertson, which has spent the best part of a year trying to get a very complex merger across the line. 

Minews. We’ll keep an eye on that situation. Time now for a call of the prices card, please? 

Oz. After ConsMin that most interesting situation was the one-time iron ore hopeful Cazaly Resources (CAZ) which, you might remember tried to snatch control of the Shovelanna project from Rio Tinto. Cazaly had what might be its final day in court during the week, lost, and the stock was smartly chopped in half, falling from a pre-legal decision of A56.5 cents to A28 cents. It limped up to end the week at A34 cents, down A22 cents (39.3 per cent). Ouch! 

Elsewhere, the mood was solid. The overall market, as measured by the mining and metals index on the exchange, was up 4.1 per cent over the week to close at 4694.8 points. The reason that’s mentioned is that the market has now risen by 653.3 points, or 16.1 per cent, since it bottomed in the August sell off. 

In the sectors, nickel regained favour with investors as the price of the metal appeared to steady at around US$13 a pound, and rose beyond that in trade on the London Metal Exchange after we closed down this way. Sally Malay (SMY) joined in the nickel-mining profit stampede with a record A$88.1 million, plus a maiden dividend of A12 cents a share, and rose A58 cents (16.8 per cent) to end the week at A4.03. Jubilee (JBM) stormed back with a rise of A$2.22 (16.8 per cent) to A$15.42, and Western Areas (WSA) added A20 cents (4.8 per cent) to A$4.39. 

Iron ore stocks were also in demand, again. Fortescue Metals (FMG) bathed in the limelight of extensive media coverage in the local press after a site tour, adding A$3.25 (10.6 per cent) to A$34. Mt Gibson (MGX) announced plans to expand its an annual exports to six million tonnes of ore a year and rose A4 cents (2.7 per cent) to A1.53. Atlas (AGO was up A7 cents (5.3 per cent) to A1.40, and FerrAus (FRS) gained A4 cents (6 per cent) to A70 cents. 

Minews. How did the gold sector behave? 

Oz. Mixed. Troy, as mentioned, led the way, with Dominion (DOM) not far behind, also driven by fundamental profit and dividend news. It added A15 cents (5.6 per cent) to A$2.80. Apex (AXM) was the strongest of the emerging producers, gaining A17.5 cents (21.2 per cent) to A$1. Lihir (LGL) gained A9 cents (3 per cent) to A$3.07, despite the threat of a staff strike at its namesake mine. and St Barbara (SBM) crept up A1 cent to A48 cents. The weakest performance came from Kingsgate (KCN) which lost A11 cents (2.3 per cent) to A$4.60. 

Other moves worth noting came in the uranium division where Bannerman (BMN) also benefited from a media tour of its Namibian exploration projects, and rose A34 cents (18 per cent) to A$2.23, and Uranex (UNX) regained lost ground with a rise of 12 cent (11.5 per cent) to A$1.16. The only loser was the sector leader, Paladin (PDN), which eased A10 cent (1.6 per cent) to A$6.06. 

Zinc stocks were mixed. Perilya (PEM) lost A23 cents (5.6 per cent) to 
A$3.85. CBH (CBH) slipped A4 cents (6.8 per cent) to A54 cents, but the biggest producer, Zinifex (ZFX) added A13 cents (0.7 per cent) to A$16.88, and AIM (AIM) was steady at A23 cents despite announcing a sales agreement for its Perkoa mine in Burkina Faso. 

Minews. Thanks Oz. We’ll be taking a close look at this dividend business first thing this week. Possibly send the article to Lex.


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## drillinto (4 September 2007)

September 03, 2007

Mining In Australia Assumes The Mantle Of Legitimate Business

By Our Man In Oz
www.minesite.com/aus.html

Novice investors in Australian mining shares have sometimes wondered why the people assembling stock exchange quotes tables bother to incorporate columns showing dividend and yield. For the past, roughly, 100 years, those columns have largely been blank; just little dashes showing what might have been. Predecessor companies to the modern BHP Billiton and Rio Tinto did manage to do the right thing by shareholders and make regular profit distributions. But for the other 99.99 per cent of Australian miners the concept of actually giving money back to the owners of the business was totally foreign, abhorrent even (“dividends, wash your mouth out, boy!) – until now.
The boom, god bless it, is filling in the dashes. Companies that once did nothing more than suck in capital from unsuspecting punters, including many innocent Brits, are now doing the unthinkable and paying handsome dividends, effectively reversing the river of capital which once only flowed in. Jubilee Mines, Independence Group, Kagara Zinc, Oxiana, Troy Resources and even the troubled Consolidated Minerals, are among the growing band of small Aussie stocks mailing out dividend cheques as you read this, and promising more in the future.

For investors this is a sea change. No longer will they be forced to value mining stocks using some spurious comparison such as ounces of gold in the ground (but not mined), or tenements “close to” something big, owned by someone else, (the science of near-ology), or “what if” scenarios such as what if some kind government built a 1000 kilometre railway to our marooned orebody in the middle of the Gibson Desert. Now, there are yields to compare, earnings per share to calculate, and consideration of the tax treatment of the payout. In short, mining has become a business.

And what a business! Jubilee, for example, lifted net profit to a record A$173.1 million in the year to June 30, a figure which represents a gross profit margin of 70.6 per cent. The reward for shareholders is a final dividend of A37 cents a share, taking the full year’s payout to A67 cents, which means the company is sticking to its plan of paying at least 50 per cent of its profit in dividends. In the current financial year, the profit might not be as high as the nickel price retreats to something resembling a more normal level, whatever that is in what still looks like a 20 year boom, but the key consideration here is margin. Jubilee is producing nickel at US4.05 a pound and the price of the stuff remains above US$12 a pound.

Jubilee, to be fair, is an extreme example of what a high-grade nickel mine is capable of doing in a high-price environment. But, isn’t that what we were promised in 1969 when Poseidon discovered Mt Windarra and the share price shot to A$250 on a wing and a prayer – and not a dividend in sight. This time, as they used to say during the tech-boom, there really has been a paradigm shift. This time many ,but not all, Australian mining companies are being professionally managed. There is a natural order evolving which has always existed in other businesses – investment in research (exploration), building the factory (a mine), making widgets (mining the minerals), making a profit, and paying a dividend, year-after-year.

Consider some of the other results which snuck in under the blizzard of news media commentary in the week when BHP Billiton announced its monster US$13.4 billion profit, and lifted the annual dividend to US47 cents a share. While everyone was gawking at those numbers a one-time financial disaster called Minara Resources chimed in with a 147 per cent increase in profit to A$246 million and said it would payout A$116 million of that via a dividend of A25 cents a share. Ten years ago, when Minara was known as Anaconda Nickel and holders of its junk bonds were baying for blood, no-one would have believed you if a suggestion had been made that one day this most troubled of businesses would be paying dividends.

The story goes on. Independence Group lifted profit by 201 per cent to A$105 million and is paying out A18 cents a share made up of two conventional payments and two one-off special dividends, presumably to shovel the cash out the door. Kagara Zinc’s profit was up 152 per cent to A$89.8 million with a final dividend announcement still being considered by the board, but whatever it is it will be on top of a maiden A10 cents a share last year. Oxiana saw its profit slip 34 per cent to A$173.5 million for the six months to June 30, but will still lift its interim dividend by 33 per cent to A4 cents a share, and even Consolidated Minerals, under siege from competing bidders, managed to remember a A4.5 cent a share dividend after posting a profit of A$31 million in the June 30 years, a noteworthy turnaround on last year’s loss of A$6.5 million.

What makes the rising tide of dividends so interesting is that it’s coming from across the full spectrum of the mining world. Nickel miners are paying handsomely, as are copper miners, zinc miners, coal miners, gold miners, and soon there might even be a flow of cash from the current market favourite, iron ore. The question for everyone is what does this new-found interest in paying dividends mean for mining? The answer is everything. It means that mining in Australia, after decades  - possibly a century - has finally come of age. Management now realises that capital invested must eventually be rewarded. The amazing thing is it has taken so long to get to this position,  and even more amazing that investors have stuck with the sector through so many lean years, dreadful deals, and even more dreadful management.

Mining in Oz has gone legit, believe it, or not, and all those little dashes in the yield and dividend columns of quotes tables will steadily be filled in. Perhaps the only miracle greater than this would be England retaining its World Cup rugby title in France.


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## drillinto (6 September 2007)

September 05, 2007

Unknown Bidder Makes Approach To Golden West Resources

By Our Man In Oz
www.miningsite.com/aus.html

If the Australian city of Melbourne had not already been used as the backdrop for an end-of-the-world-movie (On The Beach with Gregory Peck and Ava Gardner, 1959) then the producers might have chosen somewhere even closer to the edge, Wiluna, in central Western Australia. It’s here, where harsh sheep-farming country fades into the never-never of the Gibson Desert that a handful of oldtimers once eked out a living in narrow-vein goldmines, and no one really did much else, save for a few courageous attempts to grow citrus and melons using underground water. It was the promise of finding more of the elusive Wiluna gold which drew Gary Hutchinson and the crew at the aptly-named Golden West Resources to the area in 2005, but it’s something completely different which will keep them there – iron ore.
Never, even in the wildest dreams of a generation of prospectors who have kicked the rocks around Wiluna, has anybody imagined that the surfboard flat geology was hiding some of Australia’s richest deposits of iron ore. But, the latest assays from a series of elongated structures, some outcropping at the surface, and running for at least 45 kilometres north-south, are eye-popping to say the least. In one astonishing drill hit the assay was 106 metres at 67.9 per cent iron – about as rich as the stuff can get in a natural environment, and similar to the grades originally reported in the 1960s from the rich (and massive) deposits of iron discovered by prospectors working with Rio Tinto and BHP Billiton in the Pilbara region further to the north. 

As well as the grade and thickness the ore type is just what Japanese and Chinese steel mills want, high-quality haematite ore which is low in the steel-killing impurities of phosphorous and alumina. Silica grades are relatively high, but manageable, says Hutchinson who has been struggling to get the outside world to take much notice of what he’s on to. Minesite’s Man in Oz, despite a couple of invitations, has not been able to find the time to visit the Wiluna site. Booms mean time is short, and he also remembers past visits to Wiluna, a godforsaken dump where his mother used to canter around the scrub country on horseback. 

The return trip to Wiluna can wait, but news of what is being proved up at the discovery site known as Wiluna West cannot. An early Joint Ore Reserves Committee (JORC) compliant resource is of 50.1 million tonnes of haematite grading 61 per cent iron. Much more will come. “We’re pretty confident that we’ll get the resource up 100 million tonnes by the end of the year, and then up to 200 million tonnes,” Hutchinson said. He declines to put a dollar figure on that potential resource but even Minesite can multiple 200 by the current price of iron ore, which is about A$77 a tonne, and arrive at A$15.4 billion, enough to make anyone keen to turn a resource in the ground into ore on a China-bound ship. 

Hutchinson said the immediate plan for Wiluna West is to keep on drilling. The five near-parallel mineralised units identified so far offer a wide range of targets and so far only two, Bowerbird and Joyners Find, have been incorporated in that initial JORC resource. “We’ve only looked at about 30 per cent of the total mineralised units which cover about 125 kilometres when you add together the total strike of the five formations,” Hutchinson said. “We expect to have many more assays available by the end of the year, and an early-stage scoping study which will help with offtake  agreements and funding to get us into production.” 

For investors, Golden West has been a surprise packet. The stock was trading at less than A50 cents a share at the beginning of 2006 before rushing to an all-time peak of A$3.35 just before Christmas, driven by euphoria about Chinese demand for iron ore and the haematite assay grades. Since those heady days the market has become more cautious, asking this critical question: “how will Golden West get its ore to market?” The trip west, to the port of Geraldton, is 700 kilometres and in need of a new railway. The trip south, is a truck-and-train option, to the established iron ore export port of Esperance, and covers 900 kilometres. 

What this almost certainly means is that Golden West will start small, via Esperance, at a rate of around one million tonnes a year, sufficient to generate a cash surplus (after heavy transport costs) of around A$10 a tonne, or A$10 million a year. As the tonnage grows, the margin rises. One study points to a margin of A$25 a tonne when shipping levels reach 10 million tonnes, for a cash surplus of A$250 million a year, or more than double the current A$120 million capitalisation of the company. 

“We have two plans for export,” Hutchinson said. “The first was to head south, and the latest is to look west. We have taken an option on space at Esperance, but if we go that way, and want to get to the 10 million tonne level, then we’ll need to build a railway from Wiluna to Leonora, and upgrade the line to Esperance. The cost of that looks to be around A$1 billion, but the line could eventually be upgraded to take 20 million tonnes a year.” The western option, he said, is to join one of three groups looking to build a rail to a new port called Oakajee near Geraldton. “We’re getting approaches from everyone, but our attitude is we love you all, but whoever wins the race, we’ll join.” 

No sooner said than done. A small company called Fairstar Resources apparently wants to make a bid for Golden West. Nobody seems to know much about it except that is based in the Perth industrial suburb of Osborne Park and has some  reasonable directors, but zero publicity. Maybe someone overheard Gary Hutchinson talking to our Man In Oz and realised this was too good an opportunity to miss.


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## drillinto (8 September 2007)

September 07, 2007

The Bidding For Consolidated Minerals Descends Into Farce

By Our Man In Oz
Source:  www.minesite.com/aus.html

Seven months ago the directors of Consolidated Minerals were convinced that the company they run was worth roughly A$2.30 a share, and they recommended a partial takeover bid pitched at that price. Today, the same people believe the company is worth A$4.10 a share and they now recommend that price. Tomorrow, who knows, because on the market ConsMin is trading at A$4.30, 4.8 per cent more than what the directors currently recommend and 87 per cent more than the original deal proposed in February by Pallinghurst Resources, a business run by South African deal-maker, Brian Gilbertson.
There are many questions to be asked of everyone involved in the ConsMin saga. So far, no-one seems to have asked the directors what they really (truly, cross-your-heart) reckon their business is worth, or why Gilbertson conceived a merger so complex that it required a 400-page explanatory memorandum, mailed to thousands of shareholders, and now used to press flowers.

To be fair, ConsMin is at the centre of a bidding war with large egos, armed with larger cheque books, tossing cash around as if it were confetti, leading to a corollary question on value: has the price of ConsMin now entered cloud cuckoo land, or is this simply the sharp end of the boom as cash-rich buyers battle for scarce assets?

The answer to the first question about whether the directors know what their company is worth has to be that the poor darlings haven’t a clue. The answer to the second question is that the battle for ConsMin has undoubtedly taken on all the finesse of a rugby scrum, on a sticky pitch, during a thunderstorm. It really is a case of the winner being the biggest and ugliest brute left standing, and not really caring about the prize, or that the prize might well be a wooden spoon.

To understand the ConsMin fiasco it’s best not to call it that. Patient shareholders of the small Australian manganese, chromite and nickel miner are doing very nicely as they enjoy a ride as wild as anything since the days of the Poseidon nickel boom when everyone left their brains at the door of the now defunct Perth Stock Exchange. With ConsMin the game started on the day Michael Kiernan saved it from oblivion after - and remember this-  after the Woodie Woodie manganese mine effectively failed, sending its then owner, Valiant Consolidated, almost to the knackers yard.

The historic troubles of Woodie Woodie, a mine worked intermittently for more than 50 years,  depending on the price of manganese, have been as conveniently forgotten today as the popped Poseidon bubble. Perhaps this really is a boom forever (note to editor: that was typed with fingers crossed!). On a more serious note what is happening with ConsMin does no-one any credit. Yes, it’s making money for the players involved, but there is an unmistakable odour of boom-time excess wafting off the stock.

Consider the facts. Talk of a takeover/merger between ConsMin and Pallinghurst first surfaced in October last year. A formal merger proposal was delivered on February 23. The four month gap between the referee blowing the whistle and ball actually being kicked should have rung a warning bell. There should also have been warning bells ringing about Kiernan’s desire to get back on the field and repay a few courtesies dished out by some ConsMin directors as he was departing. And, there should have been a warning about the background role of Richard Elman, chief executive of the commodities trading business, Noble Group, a supporter of Kiernan, and the man holding a “life of mine” marketing contract over Woodie Woodie.

In any event, Kiernan counter bid via one of his new companies. Gilbertson countered. Kiernan countered the counter. Then a heavy duty Ukrainian steel maker, Gennadiy Bogulyubov, entered the game, and finally a Norwegian alloy specialist, Tinfos, weighed in. At the last count, Tinfos had 5 per cent of ConsMin, Bogulyubov 14.36 per cent (through a company called Palmary), and Pallinghurst 10 per cent. Kiernan had very little, and appears to have backed away from the bidding.

This final point about Kiernan appearing to “run dead” by not increasing his cash and share swap offer is critical to what’s afoot because no-one, and that includes the board and management of ConsMin, knows Woodie Woodie as well as he does. Unlike the chaps in slick suits, he once lived in a converted bus at the mine gate acting as truck tally man. It was his intimate knowledge, and extreme annoyance at not being paid by Valiant, which led him into his first deal with Elman. The nature of that deal was that Elman finished up with ownership of the mine, hence today’s life of mine contract, but he needed someone to run it. Between them, Elman and Kiernan make an excellent pair of blunt instruments – but they are far from being stupid blunt instruments, and they also know exactly what an asset is worth.

Which takes us back to the top, and the critical questions - what’s ConsMin worth? The market, which is always right, says A$4.30. Gilbertson says A$4.10 , but with a clever rider on his offer that he will match any rival bid, and he’s ready to pay now, effectively a “top up” facility to encourage quick acceptances. That puts the ball on Bogulyubov’s side of the pitch, and it needs to act quickly, or Gilbertson steals the day.

But, even if Gilbertson wins what is  it that he’s actually won? For a price, presumably north of A$4.10 once the mud settles, he gets a pre-loved manganese mine which is suddenly being praised as one of the best in the world. Well, 10 years ago, and even 50 years ago, it certainly wasn’t one of the best. Yes, the manganese price has risen,  but it has been known to fall just as often, and this is a company which, seven months ago, was valued at A$2.30 by the people who run it, and a company which was once run by a man who is now not interested.

Poseidon time? Jolly close!


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## drillinto (10 September 2007)

September 09, 2007

That Was The Week That Was … In Australia
By Our Man In Oz
www.minesite.com

Minews. Good morning Australia, looks like it was a big week down your way. 

Oz. It was. Half of Sydney was closed to accommodate George Bush, and the other half was closed for China’s president Hu Jintao, and the Russian leader, Vladimir Putin. But before you tick me off for seeming to talk about irrelevant political matters, such as the leaders gathering for the APEC forum, there is method in my madness. Bush was a waste of space and didn’t seem to know where he was , but Hu and Putin were very useful in reinforcing the resources boom which your friends at the Financial Times are struggling to recognise.

During his time in Oz, Hu has been merrily plonking his chop ( a Hong Kong expression for signing deals, not what you think. Ed), or overseeing deals involving new iron ore mines, new liquefied natural gas sales, and looking for more uranium. Putin, who has plenty of gas which he sometimes sells to Europe. or not, depending on his mood, signed up for Aussie uranium, and was in town as some of his “bizziness” friends were snapping up iron ore investments. 

Minews. Your point being that Britain and the rest Europe really isn’t getting a look in? 

Oz. Precisely. The game is changing with results as surprising as an Argentinean win in the rugby world cup - an event we should stop laughing about after France got walloped on Saturday. 

Minews. Enough of all that, time for prices, please? 

Oz. Two sectors and one special situation stood out last week. Gold and iron ore were hot, and Consolidated Minerals was red hot, as you reported on Friday. ConsMin, for the record, ended the week at a 12-month high of A$4.31, up A24 cents (5.9 per cent), and a very handsome A$2.68 (164.4 per cent) above the low point of the past year which was A$1.63. Someone, as discussed, is paying a whopping premium for control of a relatively small manganese miner. 

Elsewhere, it was the turn of gold and iron ore stocks to shine, and for nickel, uranium and base metal stocks to retreat to the shadows. The golds, obviously, were assisted by the price of the metal climbing back over the US$700 an ounce mark, a beneficiary of the U.S. credit crisis, or is it a debt crisis, or is it just bankers being too clever by half lending money to people who could never meet the repayments. 

Minews. Prices, please? 

Oz. Right, sorry, but that sub-prime situation really is quite bizarre. Among the gold stocks, and we can expected better next week, there was a wholesale uplift. Dominion (DOM) hit a 12-month high of A$3.29 on Friday thanks to excellent results from its Challenger mine. Profit-takers, however, clipped the price back at the close with the stock ending the week at A$3.16, up A31 cents (10.8 per cent). Troy (TRY) was another to join the game, adding A40 cents (14.3 per cent) to A$3.20, but did get as high as A$3.25 during Friday trade. As well as riding the gold price, Troy has just reported a strong profit result, and has about A$100 million in cash sitting in the bank, and with its eye on more deals in Brazil. 

Other gold stocks to join the party included: Tribune (TBR), which we don’t hear a lot about but which has reported good results from its share of the Higginsville mine. It added A24 cents (19 per cent) to A$1.50, though in fairly thin trade. Monarch (MON), which lodged promising exploration results, rose A4.5 cents (16.6 per cent) to A31.5 cents. Goldstar (GDR) said it was making progress with its Tubal Cain high-grade exploration project in Victoria, and gained A4 cents (11 per cent) to A40 cents, and St Barbara (SBM) put on A5 cents (10.4 per cent) to A53 cents. Overall, most of the sector benefited in some way and, with the London bullion market closing above US$700 an ounce on Friday, the good times should continue. 

Minews. And there was also good news among the iron ore stocks? 

Oz. Yes. This really has been a remarkable performance with Asian demand for steel showing no sign of slowing, and now with Russian and Ukrainian steel makers joining in the rush for resources. Our old favourite, Fortescue Metals Group (FMG) stormed back into the headline after Russia’s Magnitogorsk Iron and Steel said it had snapped up a 5.37 per cent stake in the rapidly-emerging iron ore miner. The stock added A$3.75 (11 per cent) to close at A$37.75. Elsewhere in the sector, Golden West (GWR) benefited from a takeover bid, rising A28 cents (15.1 per cent) to A$2.13. Murchison Metals (MMX), one of the big potential beneficiaries from Chinese participation in a new railway and port, gained A21 cents (4.8 per cent) to A$4.58, and Atlas Iron (AGO) was up A12 cents (8.6 per cent) to A$1.52. A couple of the iron ore stocks did fail to fire, perhaps because they are both chasing high-cost magnetite developments, and the cost of debt is rising. Grange Resources (GRR) lost A7 cents (3 per cent) to A$2.25, and Cape Lambert was A1 cent (1.8 per cent) at A54 cents. 

Minews. Time for the bad news on nickel and uranium. 

Oz. It’s not really bad, just weaker all over because of commodity price worries. Most of the nickel sector fell, but not a lot. Sally Malay (SMY) was down A26 cents (6.5 per cent) to A$3.77, Poseidon (POS) lost A3 cents (3.5 per cent) to A84 cents, and Western Areas (WSA) lost A1 cent to A$4.38. On the flipside, Jubilee (JBM) continues to expand, impressing investors, and adding A64 cents (4.2 per cent) to A$16.06. 

Uranium stocks, while generally lower, but also not badly affected. Paladin (PDN) lost A11 cents (1.8 per cent) to A$5.95. Uranex (UNX) fell A6 cents (5.2 per cent) to A$1.10, and Marathon (MTN) was down A5 cents (1.3 per cent) to A$3.85. Deep Yellow (DYL) went against the trend, adding A2 cents (5 per cent) to A42 cents. 

Minews. Thanks Oz.


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## drillinto (11 September 2007)

September 10, 2007

Pity Australia Did Not Awake To Mining Potential Of African Countries Earlier
Source: www.minesite.com/aus.html

In the very recent past Australian mining companies who ventured into Africa got short shrift from local investors. Basically that is the reason why Anvil Mining, Equinox Resources and Red Back Mining took additional listings in Canada where money was more forthcoming and ratings were higher. The trend has changed, however, and at the Africa DownUnder conference in Perth last week there was a huge attendance and it was reported that no fewer than 125 ASX listed resource companies are now operating in African countries.
As one of the organisers reported “the Australian contingent in Africa is now starting to generate a string of mining success stories and this is having a flow-on effect of attracting new Australian players to Africa’s underdeveloped mineral opportunities. While this success profile is not much more than five years old, as most had humble beginnings, little cash in the bank and few believers – the new breed of Australian-African exploration and mining partnerships is proving that Africa is far less ‘hot and scarey’ than this popular but increasingly outdated stereotype.”

There is clearly still a degree of ignorance, however, even among the organisers of the Conference, when they say that  Australia also recognises that Africa it is not one, single amorphous mass, but individual states keen on attracting foreign investors able to work within black empowerment protocols. For a start Africa is made up of  51 different countries, not states,  with their own governments and languages and only South Africa has so far introduced black empowerment. Some of these countries are keener on outside investment than others; some have a pretty shakey legal  and political systems; some have more or less infrastructure; but most have highly prospective mineralization. 

It therefore tends to be unwise to generalise about Africa as a whole. Nevertheless Roger Donnelly, chief economist  of the Australian Government’s Export Finance and Insurance Corporation contends that greater stability across Africa is contributing to that continent’s resources boom. He noted that at least 13 countries had significantly improved their stability ratings by last year compared to their standing in 1996. As a result Foreign Direct Investment  inflows into Africa are booming, if from a low base, and had nearly tripled by late last year with South Africa and Egypt as the biggest beneficiaries.

Again he slightly missed the point. South Africa and Egypt have long outpaced most of the rest of the countries in Africa as South Africa was once the biggest gold producer in the world and Egypt has long had a strong economy based on products other than mining. In fact apart from two Australian companies, Centamin Egypt and Gippsland, little exploration has taken place there in modern times. South Africa, of course, is the land of Black Empowerment  and its misuse  has deterred many companies from getting involved there. Mr Donnelly ended up on a slightly patronising note by saying that  “Africa now measures up okay internationally and its World Bank ratings performance is no worse than some of its competitors outside Africa such as Papua New Guinea, Laos, the Philippines and Indonesia.”

Again a tone of generalisation creeps into his comments as it does when he says that debt relief has been a contributing factor to Africa’s greater stability as well as  conflict resolution and better economic performance. The Democratic Republic of Congo is a case in point as there is still conflict in the north west of this huge country, but it does not affect Equinox and Anvil down on the Zambian border, nor Mawson West in its joint venture with Anvil in Katanga province. What he  failed to mention was that Australia is quite late into Africa, well behind  Canada and the  UK, but it is China that has really made the running  and will end up with some of the best mining projects as a reward.

Driven  by its demand  for raw materials China moved much more quickly in many African countries that its rivals around the world. According to Standard Bank there are now 700 Chinese companies active in nearly 50 of the African countries which means that there are very few exceptions. Small wonder that exports to China have risen by 40 per cent every year since 2002 and there are clear signs that China is intent on acquiring primary production of oil and metals as world prices rise. Unlike the US, which always seems intent on exerting influence through loans and political interference, the Chinese get to the nitty-gritty by installing  railways, roads, water pipelines and other vital infrastructure.

Credit should be given to Australian  companies such as Resolute, Adamus, Gryphon, AIM Resources, Paladin, Albidon and Zambezi Resources which have been working in various countries of West Africa for some time, but there is room for plenty more. And one thing they can be sure of is that they will get a good hearing in London as their projects become more advanced.


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## drillinto (16 September 2007)

September 16, 2007

That Was The Week That Was … In Australia

By Our Man In Oz
www.minesite.com/aus.html

Minews. Good morning Australia, it looks like you had a quiet week? 

Oz. Taken as five trading days, that’s a fair description. There was a degree of fear and loathing about on Monday, and then a steady, rising trend for the rest of the week. The net result was we effectively ended back where we started which made for an interesting hunt through the sales data to find much price movement.

Minews. Surely the gold sector performed well with the price closing the week here at US$716 an ounce. Good old Lex  of the Financial Times set it on the move, as you will have seen, with its negative comment on gold on August 25th. Its comment about the banking infrastructure developing is also pertinent in view of the subprime mortgage shambles that  was  developed at the time. 

Oz. Amazing some of the rubbish these bright young graduates come out with.  Sadly the extra US$10/oz added to the gold price in London came after we had closed, but it certainly sets the Australian market for an interesting opening on Monday, and something for your readers to watch. 

The story is best told through prices. Leading gold producers such as Dominion (DOM), Kingsgate (KCN), and Troy (TRY), moved a few cents either way. Dominion was up A3 cents (1 per cent) at A$3.19. Troy was down A8 cents (2.5 per cent) at A$3.12. Kingsgate was up A24 cents (5 per cent) at A$4.89, while Mundo (MUN) was perhaps the best of the gold stocks, adding A8 cents (15 per cent) to A61 cents on excellent exploration news from its South American operations. The biggest of the local gold stocks, Newcrest (NCM) was in a trading halt for the week as it completed a A$2 billion capital raising to extinguish its hedge book. 

Minews. Another interesting move for Master  Lex to take on board. It is only going  to spend this money because its shareholders demand full exposure to the gold price. 

Oz.  Precisely. Among the gold explorers, and emerging producers, which should show some benefit from the higher gold price next week, we saw Adamus slip A1 cent to A54 cents, and St Barbara (SBM) ease by the same amount to A52 cents. Crescent (CRE) and Wedgetail (WTE) didn’t move from their respective prices of A36 cents and A17 cents despite good news from their operations, in the case of Crescent, and a management shake-up at Wedgetail. 

Minews. Rather than go through the sectors, which all sound rather flat, why not pick out the best of the moves and any special situations? 

Oz. That might be more fun, because it means we can start with Consolidated Minerals (CSM) which has moved up a notch on the novelty scale as the warring bidders outdo each other, and the board of ConsMin is forced to change its mind on almost a daily basis. The latest twist, and bear in mind this might all change on Monday, has our Ukrainian friend, Gennadiy Bogulyubov, upping his offer price to A$4.50, which tops the A$4.10 last offered by Brian Gilbertson. But, to spice things up it’s worth noting that the stock itself closed the week at A$4.70, after briefly touching a 12-month high of A$4.78 during Friday trade. 

Minews. Can anyone in Australia figure out what game is being played? 

Oz. Not really. Perhaps it’s because so many games are being played elsewhere with rugby finals meshing neatly with our Aussie Rules finals that the boys on the market have decided to play games as well. More seriously, that closing price of A$4.70 lifts the value of ConsMin over the A$1 billion mark. At this time last year you could have bought the business for A$380 million. 

Minews. Terrific news for shareholders, but you seem to be hinting that someone is going to be left holding an expensive parcel. 

Oz. Precisely. If you pay A$1 billion for a business you expect it to generate at least A$200 million in annual pre-tax earnings, and that seems a big ask for a relatively small producer of manganese, chromite and nickel. 

Minews. We will watch with interest. Time now to run through the sectors, even if they were a bit flat. 

Oz. Iron ore stocks looked like the gold sector, some up, some down. Fortescue Metals (FMG) came within a whisker of cracking the A$40 mark for the first time in months. It posted sales up A$39.80 on Friday, before closing at A$39.19, for a gain of A$1.44 (3.8 per cent). Sundance Resources (SDL) was the subject of merger rumours with Gindalbie (GBG). Sundance rose A10.5 cents (20.5 per cent) to A61.5 cents, and Gindalbie fell A9.5 cents (5.6 per cent) to A$1.60. Grange Resources (GRR) added A14 cents (6.2 per cent) to A$2.39, with all of that rise coming on Friday. Midwest Corporation (MIS) rose A12 cents (4.5 per cent) to A$2.79, but Atlas (AGO) lost A5 cents (3.2 per cent) to A$1.47, and BC Iron (BCI), slipped A1 cent to A$1.19. 

Uranium stocks were also mixed. Paladin (PDN) rose A32 cents (5.4 per cent) to A$6.27 partly on takeover chatter. Marathon (MTN) was down A36 cents (9.3 per cent) to A$3.49, and Uranex (UNX) fell A8 cents (7.3 per cent) to A$1.02. Nickels performed a similar trick. Some up, some down. Mincor (MCR) added A4 cents (1.1 per cent) to A$3.60. Western Areas (WSA) was down A11 cents (2.5 per cent) to A$4.27, and Jubilee (JBM) rose A79 cents (4.9 per cent) to A$16.85. 

Minews. Thanks Oz. 

Oz. Before disappearing for a week, just one final point worth noting. The new float game appears to have come to a grinding halt. Most of the floats which have made it to market over the past two months are underwater, a direct result of being priced in May/June and floated in July/August. The latest loss maker for stags was Avonlea (AVZ) which joined the market on Friday with its A20 cent shares starting at A18 cents, and ending the day at A17.5 cents, a rather painful 12.5 per cent shortfall, and a sobering message for the 20, or so, floats planning to list. 

Minews. There might even be a bit of re-pricing underway as we speak. Bit like the way the bookies have re-priced the English rugby team, but hopefully not quite so drastic.


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## drillinto (24 September 2007)

September 23, 2007

That Was The Week That Was … In Australia
By Our Man In Oz
Must visit => www.minesite.com/aus.html

Minews. Good morning Australia, you must be celebrating the rise in the gold price? 

Oz. We certainly are, plus a widespread expectation that the iron ore price is likely to rise further next year. The combination of gold and iron underpinned most activity in Australian mining shares last week, supported by a modest return of confidence to the base metal sector, and more intrigue around the battle for Consolidated Minerals.

Minews. Gold first, please. 

Oz. Most shares rose, as you would expect with the gold price itself rising from US$716.35 an ounce to Friday’s close in London at US$737/oz. But, it is interesting that not all stocks were up. Weighing on the minds of some investors was the damaging effect of the Australian dollar which is moving higher in sympathy with commodity prices, especially oil and gold. Last week’s US$20.65/oz rise in the U.S. dollar gold price was hurt by a 3 per cent rise in the value of the Aussie dollar  which went from US84.39 cents to US86.92 cents. The end result is that our gold price actually fell A$1.15 an ounce. It was the dollar effect which probably lay behind Troy Resources (TRY) slipping A2 cents to A$3.10. 

With that note of caution it is worth looking at the good news, which starts with Newcrest (NCM), the biggest of the local goldminers, and a company feeling liberated after extinguishing its hedging programme. Newcrest steamed ahead by a very impressive A$5.68 (24.8 per cent) to close the week at A$28.56, down a fraction on the 12-month high of A$29.67 reached on Thursday. 

Other gold stock moves included: Kingsgate (KCN), up A46 cents (9.4 per cent) to A$5.35. Centamin (CNT), up A15 cents (12.2 per cent) to A$1.38. Lihir (LGL), up A46 cents (13.6 per cent) to A$3.84. Apex (AXM), up A13 cents (13.4 per cent) to A$1.08. Leyshon (LRL), up A1.5 cents (2.8 per cent) to A54 cents, and Avoca (AVO), which reported another excellent suite of assays from its Higginsville project, up A29 cents (17.2 per cent) to A$1.98, a 12-month high. 

Minews. Iron ore now, please? 

Oz. The star, as ever, was Fortescue Metals Group (FMG) up an impressive A$3.42 (8.7 per cent) to A$42.61 for the week, but down fractionally on the all-time high reached on Thursday of A$43.44. Fortescue, and its chief executive, Andrew Forrest, have been hogging the headlines recently with Russian investors pouring into the stock, and Forrest announcing plans to give away A$100 million of his fortune to charities and needy family members. 

MInews. Joining Frank Giustra, Clinton et al, I suppose. You can’t buy your way into heaven. 

TT. Precisely. Other iron ore stocks on the move included: Midwest (MIS) up A25 cents (8.9 per cent) to A$3.04. Atlas Iron (AGO), up A11 cents (7.5 per cent) to A$1.58. Gindalbie (GBG), up A10 cents (6.3 per cent) to A$1.70, and Grange Resources (GRR), up A20 cents (8.4 per cent) to A$2.59. 

Another interesting mover, but more in hope than because of anything substantial, was Cazaly Resources (CAZ), the small explorer which thought it had won the rights to a Rio Tinto project called Shovelanna. Despite repeated court losses, Cazaly said it was now taking its appeals to the Australian High Court, which is the end of the legal road. A handful of happy speculators supported this latest twist, lifting the stock by A3.5 cents (11.5 per cent) to A34 cents. 

Minews. Time for a quick look at the base metals and then any special situations? 

Oz. Nickel stocks firmed, while copper and zinc shares were mixed. Among the nickels, Sally Malay (SMY) was very strong, adding A77 cents (19.5 per cent) to A$4.72. Mincor (MCR) rose A53 cents (14.7 per cent) to A$4.13, and Jubilee (JBM) gained a more modest A38 cents (2.2 per cent) to A$17.23. Oxiana (OXR) was the best of the copper producers, but also a beneficiary of the gold price, rising A25 cents (7.2 per cent) to A3.70, and Kagara (KZL) the best of the zinc stocks, adding 74 cents (14.3 per cent) to A$5.93. 

Minews. And the specials to finish, please? 

Oz. Consolidated Minerals (CSM) remains the outstanding special down this way. On Friday, the stock hit a new 12-month high of A$5, which is A50 cents (11.1 per cent) above the highest bid on the table, the A$4.50 bid from the Ukrainian player in the game, Palmary Enterprises. The closing price on Friday was A$4.91, which represents a gain for the week of A21 cents (4.5 per cent), and certainly points to the market expecting a fresh round of offers next week from some of the four bidders pursuing ConsMin. But, and this is becoming very important, at A$4.91 ConsMin is valued at a very generous A$1.12 billion, roughly three-times what is was valued at less than a year ago. There’s an awful lot of ego in the latest market for ConsMin. 

Other special situations worth noting for investors outside Australia is that a few dodgy deals surfaced during the week. Tony Rechner, one time boss of a mineral explorer called Eagle Bay Resources, was found guilty of making false statements in regard to a project in South Australia about five years ago. He waits to be sentenced. The stock itself fell A0.6 of a cent (11.3 per cent) to A4.6 cents, and two former directors of Chameleon Mining were charged with providing false and misleading information in that company’s 2003 prospectus. They’ll have their day in court next year. The stock itself fell half a cent (12.8 per cent) to A3.4 cents. 

Minews. Sounds like your regulators are having a busy time? 

Oz. Well, you would expect that after five years of boom. It’s probably more surprising that we haven’t seen more activity from the investigators, though it is good to know someone’s awake. 

Minews. Thanks Oz.


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## drillinto (30 September 2007)

September 30, 2007

That Was The Week That Was … In Australia

By Our Man In Oz
www.minesite.com/aus.html

Minews. Good morning Australia, back to the boom for you? 

Oz. Remarkable, really. One bad month in August and then right back to the China-driven resource thesis, complete with record prices virtually across the mining and energy sectors. Iron ore stocks, powered by talk of another price rise when the miners meet the steel mills, led the way. Uranium stocks made a useful return despite no movement in the commodity price. Base metals improved, but gold stocks were surprisingly muted, possible a result of all this good news boosting the Australian currency back close to the US90 cents mark.

Minews. You might see more action among your gold stocks next week after London bullion prices closed above US$740 an ounce on Friday. 

Oz. You’re probably right. There is growing support for gold but every time it makes a run the Aussie dollar chimes in and knocks the gloss off the gain. Let’s start this week’s call of the card by looking at the gold stocks just to make that point. The price of the metal stuck nicely above the US$730/oz mark, which must be the longest it’s remained that high, ever when looking back to those remarkable days in 1980 when it was up, and down, in a flash. 

Despite the strong gold price we saw the sector leader, Newcrest (NCM) slip A56 cents (1.9 per cent) to A$28, largely because of a very weak close to business on Friday. At one stage on the last day of the week Newcrest was trading at A$29.50, a fraction short of its 12-month high of A$29.67 reached last week. Then the wheels fell off. Investors dumped the stock, and Newcrest ground to a loss for the week. 

Minews. Very strange. What frightened the horse? 

Oz. Possibly the dollar effect. Possibly the fact that the stock has run a long way in a short time. It was down around the A$24 mark just two weeks ago. Possibly because it’s a long weekend down this way with the exchange closed on Monday, and the winners decided to take their money off the table to watch a bit of football. Not only have we got the rugby union in France to watch, but there’s also the grand finals of league and Aussie rules to get through on Saturday and Sunday. 

Minews. Poor you. Back to the prices, please. 

Oz. Continuing with the golds, we saw Adamus (ADU) deliver one of the better performances with a gain of A8 cents (15.3 per cent) to A60 cents. Sino Gold (SGX) had a good week, adding A40 cents (5.6 per cent) to A$7.52. Troy (TRY) added A15 cents (4.8 per cent) to A$3.25. Kingsgate (KCN) creep A2 cents higher to A$5.37, but Tanami (TAM) dropped half-a-cent to A13 cents. 

Minews. Let’s switch to the iron ore companies because they certainly seem to be the hottest sector. 

Oz. Very much so, despite on-going disputes with government over questions of rail and port access. Midwest Corporation (MIS) was in the thick of the political flak last week with the state government in Western Australia saying it would tear up a 1973 State Agreement covering Midwest’s iron ore deposits. There was much huffing and puffing from all sides which, naturally, got the headlines. But, on the market investors ignored the heated, and allegedly negative, atmosphere by buying merrily to lift the stock by A32 cents (10.5 per cent) to a Friday close of A$3.36, down slightly on the intra-day high of A$3.42. 

Minews. No publicity is bad publicity? 

Oz. Something like that. Elsewhere, Fortescue Metals Group (FMG) the darling of the day traders and a few Russian oligarchs, cleared the A$50 barrier and looks like it could be on its way to a century at a pace which would even impress Australia’s star wicket keeper batsman, Adam Gilchrist. The official numbers for FMG were a rise of A$5.08 (11.9 per cent) to a Friday close of A$47.69, though in the intra-day trade on Friday it hit an all-time of A$50.18. A year ago, just to make you smile (or wince) you could have loaded up the cart with a pile of FMG’s at A$8.50. 

The other iron ore play which caught attention was the proposed merger of Gindalbie Metals (GBG) and Sundance Resources (SDL). Long speculated, the deal was greeted with mixed feelings on the market. Sundance rose, and Gindalbie fell, initially. By the end of the week, Sundance was up A10 cents (13.5 per cent) to A84 cents, and Gindalbie was almost even at A$1.69, technically down A1 cent, but it could have been much worse with the stock sliding as low as A$1.47 in the days after the deal was announced. 

Minews. It has just been so obvious for a long time, especially with George  Jones bringing them both up here on a simultaneous road show in the summer. But is there a real benefit to shareholders and if so, which ones? 

Oz. I will take a look. Territory Resources (TTY), the new play thing of the very entrepreneurial Michael Kiernan had a good week after announcing the loading of its first shipment of ore from its Frances Creek mine at the port of Darwin.  You wrote about it last week and got the shiploading spot-on. The market was much happier with Michael doing what he’s best at, mining, and less of the corporate games he had previously been playing at his old roost, Consolidated Minerals (CSM). Territory rose A11 cents (12.4 per cent) to A$1 on news of its ship sailing, while the one-time takeover target (or should that be revenge target) ConsMin was steady at A$4.91 with the multiple bidders all appearing to have taken time off to consider what next in a bizarre corporate game. 

Cape Lambert (CFE) joined in the iron ore stampede, adding A7 cents (12.9 per cent) to A61 cents, and Atlas Iron (AGO) was up A30 cents (18.9 per cent) to A$1.88 with investors at a Gold Coast seminar impressed with a presentation by Atlas chief executive, David Flanagan. 

Minews. Time for a quick look at the uranium sector you mentioned earlier. 

Oz. Yes, uranium was back in favour thanks largely to an expansion announcement at the Ranger mine of Energy Resources of Australia (ERA), confirmation that BHP Billiton’s Olympic Dam mine is the world’s biggest single blob of copper and uranium, plus one of the biggest deposits of gold and a host of other metals. ERA rose A$2.55 (14.5 per cent) to A$20.09, and BHP was driven up A$3.55 (8.6 per cent) to A$44.55, down a little on the all time high of A$45.09 reached on Tuesday. 

But, the point of looking at the big boys of Aussie uranium is that the good news trickled down, lifting all boats as a rising tide always does, and Australian rushes further towards its future as the world’s primary source of uranium. Uranex (UNX) rose A25 cents (27 per cent) to A$1.17, reclaiming much of its lost ground. Toro (TOE) was up A13 cents (19 per cent) to A81 cents, and Marathon (MTN) added A21 cents (7 per cent) to A$3.24. 

Minews. Thanks Oz.


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## drillinto (7 October 2007)

October 06, 2007

That Was The Week That Was … In Australia
By Our Man In Oz
www.minesite.com/aus.html

Minews. Good morning Australia, glad that you could tear yourself away from sporting matters to discuss the market? 

Oz. Always a pleasure talking to London, especially when there’s a bit of news about, which is what we had last week, and not all of it good.

Minews. Do tell? 

Oz. Prices movements were not too bad. Overall, the mining market slipped just a couple of points. The real news was the shock caused by two proposed iron ore projects being caught in the sub-prime credit backwash. Cape Lambert (CFE) was forced to walk away from a funding deal with a potential Chinese partner, and Sphere Investments (SPH) had a similar problem with a Saudi investment group. 

On the market, Cape Lambert fell by A10 cents (16.3 per cent) to A51.5 cents, and Sphere fell A71 cents (17 per cent) to A$3.44 as investors digested the loss of financial backers. Interestingly, part of the blame for Cape Lambert losing support was attributed to the continued rise in the value of the Australian dollar which is starting to cause real concern in regards to future profits. 

Minews. Presumably that news about funding and the rising dollar flowed through to other iron ore stocks? 

Oz. As you would expect, though it wasn’t all gloom. Grange (GRR) fell A30 cents (10.6 per cent) to A$2.52. Gindalbie (GBG) slipped A12 cents (6 per cent) to A$1.57, while it’s takeover target, Sundance (SDL) was off A6 cents (7 per cent). Atlas (AGO) suffered less with a decline of A6 cents (3.2 per cent). On the other hand, two iron ore plays actually rose. Fortescue Metals (FMG), which scored a fresh legal win over BHP Billiton in its battle for access to rail networks, gained $A2.02 (4.2 per cent) to A$49.71, and Territory Resources (TTY) made a bigger than expected inaugural shipment of iron ore to China and added A13 cents (13 per cent) to A$1.13. 

Minews. Tell us more about the dollar because it seems to be a major influence in the current market. 

Oz. It certainly is. During the week the Australian Government’s commodities research agency (ABARE) reported that if the Aussie currency holds its current level of US88 cents, or creeps higher, it could knock A$9 billion off revenue from sales of minerals and oil in the current financial year. The strength of the currency is causing most overseas investors to take a second look at the Australian market which is also being hit by sharply rising costs. 

Minews. We might take a closer look at that next week, especially in relation to some of the deals underway, such as the Gem Diamonds  takeover of Kimberley Diamond. Time for more prices, please? 

Oz. Let’s go through the sectors to put the week into perspective. Gold stocks, like the iron ore companies, were mixed. Kingsgate (KCN) and Andean (AND) welcomed the decision of Kingsgate to quit Andean and focus on its gold assets in Thailand. News of the exit saw Kingsgate rise A13 cents (2.4 per cent) to A$5.50, while Andean bolted away on news of its new-found freedom, adding A19 cents (17.7 per cent) to A$1.26. Other upward moves among the gold stocks came from Resolute (RSG), which announced a fresh development program for its assorted mine assets, adding A12 cents (6.5 per cent) to A$1.95, and Apex (AXM) gained A4 cents (3.6 per cent) to A$1.14. 

On the way down, we saw Gryphon (GRY) slip A3 cents (5.6 per cent) to A50 cents, though the fall comes after a strong run which took the stock as high as A60 cents last week, compared with the A28 cents at this time last year. Other gold stocks on the wrong side of the ledger included Troy (TRY), off A19 cents (5.8 per cent) to A$3.06. Adamus, down half-a-cent to A59.5 cents, while Lihir (LGL) was steady at A$3.94 despite announcing plans to start hunting for takeover targets. 

Minews. Let’s a have a look at the base metals, and then finish with uranium and any special situations, please? 

Oz. The nickel sector was all over the place. Minara (MRE) was up A4 cents to A$6.25, Mirabela (MBN) which is making good progress with its Santa Rita project in Brazil, was down A7 cents to A$5.67, with the percentage moves too small to bother about. Western Areas (WSA) was up A1 cent, while Jubilee (JBM) was the surprise loser of the week, slipping A$1.25 (7.2 per cent) to A$16.11. 

Copper stocks were equally mixed. Oxiana (OXR) slipped A9 cents (2.3 per cent) to A$3.79, while CopperCo (CUO) was up A1.5 cents (1.3 per cent) to A$1.18. Zinc stocks performed a similar trick. CBH (CBH) fell A2.5 cents (4.7 per cent) to A50.5 cents, while AIM Resources (AIM) was up A3.5 cents (17 per cent) to A24 cents. 

Uranium stocks suffered from the latest decline in the price of the metal, though it is worth reflecting on a conversation your Man in Oz had with the chief executive of Paladin Resources, John Borshoff, during the week. He pointed out the extremely erratic nature of the spot market for uranium, and the fact that the spot price is now below the long-term contract price, which is an extremely interesting situation, and perhaps another outworking of the sub-prime situation as speculators liquidate uranium exposure to settle their accounts. Among the u-stocks, Uranex (UNX) fell A12 cents (10.2 per cent) A$1.05, Uran (URA) eased A2 cents (5.7 per cent) to A33 cents, and Paladin (PDN) lost A92 cents (11.8 per cent) to A$6.82. 

Minews. And the specials. 

Oz. Nothing fresh to report on Consolidated Minerals (CSM) except that it continues to trade a country mile above the last official bid of A$4.50. The stock, technically, closed up A4 cents on the week at A$4.95, but could go any direction as the various bidders sort themselves out. Kimberley Diamond (KIM) is another special worth watching as it has a bid on the table at A70 cents from London-based Gem Diamonds but trading on-market refuses to clear that price. The stock closed last week at A66.5 cents, down half-a-cent. Kimberley’s close associate, Blina Diamonds (BDI) was down A2 cents (7.4 per cent) to A25 cents, but touch a 12-month low of A24 cents on Wednesday. 

Minews. Thanks Oz, we might take a closer look at Kimberley and Blina early next week.


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## drillinto (15 October 2007)

October 14, 2007

That Was The Week That Was … In Australia
By Our Man In Oz
Visit ==> www.minesite.com/aus.html

Minews. Good morning Australia, how was your week? 

Oz.Strong, but not too strong. Most stocks moved higher, some faster than others, with a handful going into reverse. The gold sector improved, but not dramatically. If there was a favourite among the various categories it was iron ore, again. A series of forecasts during the week claimed that the Chinese have steeled themselves for a price hike of as much as 25 per cent when producers and customers settle later in the year.

Minews. A price rise of that magnitude should answer any doubts about the future performance of new entrants such as Fortescue Metals (FMG).

Oz. It certainly would, and you could see the increased optimism flow into the stock early in the week when it rushed up to a 12-month high of A$56.20, before easing later. FMG closed the week at A$52.10, for a rise of A$2.39 (4.8 per cent), but the real way to look at the performance is to go back just two months when FMG dipped as low as A$25.04 during the August sell-off. At its closing price on Friday, the stock had gained 108 per cent over 42 trading days.

Minews. Remarkable. But I find it a bit worrying.

Oz. What’s even more remarkable is that the company is now capitalised at A$14.5 billion, and FMG’s chief executive, Andrew Forrest is walking around with paper fortune valued at A$5.3 billion, before you add up his interests in other companies – and just to help your readers that converts into £2.34 billion sterling.

Minews. Not bad for a man running a company which is yet to actually produce anything.

Oz. Another good point, because as FMG gets closer it is possible that the stock will achieve the forecasts being made down this way that it’s heading for a price of A$100 a share.

Minews. Careful, careful. Remember Poseidon. We’ll watch with interest. Now for the rest of the iron ore players, and then take us through the other sectors, please?

Oz. Atlas Iron (AGO) was the second iron ore star of the week, rising A42 cents (23 per cent) to close on Friday at A$2.24. That price was down a fraction on Friday’s intra-day high of A$2.33, which was also a 12-month high. Helping the entire sector along was a takeover move by Murchison Metals (MMX) on Midwest Corporation (MIS). These two are battling for top roles in the emerging mid-west iron ore province just to the south of the main Pilbara region of Western Australia. It’s a complex situation which has more to do with railway systems and ports, but the result on the market was that Murchison rose by A31 cents (6.2 per cent) to A$5.32, and Midwest rocketed up by A$1.56 (46.5 per cent) to A$4.91, down a little on its 12-month high of A$4.98 reached on Thursday and Friday.

Other iron ore movers included: Grange (GRR) which added A18 cents (7.1 per cent) to A$2.70. Cape Lambert (CFE) which shrugged off its problems with a troubled financing deal to rise A3 cents (5.8 per cent) to A54.5 cents, and a newcomer to the iron ore game, the somewhat inappropriately-named Great Gold (GBL) which reported encouraging assays from its Mt Bevan prospect in Western Australia and promptly jumped A1.3 cents, which doesn’t sound a lot, but actually represents a 43 per cent rise as the closing price on Friday was A4.3 cents. Other, better-known iron ore stocks did not perform as well. Gindalbie (GBG) gained A1 cent to A$1.58, and its acquisition target, Sundance Resources (SDL) was steady at A58 cents. 

Minews. Gold stocks now, please.

Oz. Not a lot to report really, which is odd because the gold price is looking extremely attractive. The problem down this way is that there’s too much to choose from with money that would normally make its way into gold finding a home in the iron ore, uranium, nickel and petroleum sectors

The best of the gold stocks included: Apex (AXM) which reported excellent assays from drilling at Wiluna, and rose A19 cents (16.7 per cent) to A$1.33. Norton Goldfields (NGF) which acquired the Paddington Mill and leases near Kalgoorlie earlier this year is finally attracting some interest, rising A9 cents (33.3 per cent) to A38 cents. Andean Resources (AND) was another beneficiary of good news from the field in the form of a resource upgrade which helped the stock add A17 cents (13.5 per cent) to A$1.43. Troy (TRY) rose A7 cents (2.3 per cent) to A$3.13. Perseus (PRU) was up A4 cents (2.8 per cent) to A$1.44, and Adamus (ADU) managed a rise of half-a-cent to A60 cents.

Minews. Was there much among the uranium stocks?

Oz. Corporate activity was the most interesting news in that area. There were reports that Rio Tinto is close to offloading its big Kintyre project in Western Australia where uranium mining remains banned. That was followed by the announcement of a merger between Monaro Mining (MRO) and Uranium King (UKL), a move greeted with a yawn by investors who knocked A3 cents off Monaro which slipped to A99 cents, and added A1 cent to Uranium King. The sector leader, Paladin Resources (PDN) was also a shade weaker, losing A5 cents to A$6.77.

Minews. Any other corporate news, or sector worth noting.

Oz. Nickel stocks were up fractionally. Jubilee (JBM) was the best of the bunch adding A$1.29 (8 per cent) to A$17.40. Sally Malay (SMY), rose A37 cents (7.7 per cent) to A$5.16. Western Areas (WSA) added A7 cents (1.4 per cent) to A$5.16, and Mincor (MCR) had a strong end to the week with a gain of A22 cents (5.1 per cent) to A$4.52, but thanks mainly to a promising copper discovery in New South Wales.

The big corporate game, Act 7 (or is it 8?), was Consolidated Minerals (CSM) which received a revised A$4.50 offer from Brian Gilbertson’s Pallinghurst Resources. Gilbo said this was his final (cross my heart and hope to die) price. The market yawned. ConsMin closed the week at A$4.79, above his best price, but down A16 cents (3.2 per cent) over the week – and everyone prayed that the game might soon be over.

Speaking of games,  well done to England for getting into the finals of the rugby. If anyone beats Australia we expect them to win the tournament, so keep going. 

Minesite. Thanks Oz.


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## drillinto (21 October 2007)

That Was The Week That Was … In Australia
By Our Man In Oz | Oct 21, 2007
www.minesite.com

Minews. Good morning Australia, it looks like another good week for your gold and iron ore stocks?
Oz. Up to a point. The tone for most of the week was positive, but it weakened quite noticeably on Friday, and that might be the trend for next week following New York’s sharp fall after we had closed.

Minews. True, but surely that’s good for the gold sector?

Oz. It should be. We certainly saw most gold stocks improve after several curiously poor weeks when the price of the metal was rising but gold explorers and miners refused to budge. Last week we saw a much stronger rally among the golds, led by the sector leader and plum takeover target, Newcrest (NCM). On Friday, Newcrest touched a 12-month high of A$30.20, before easing in the final hours to close the week at A$29.93, up A$1.84 (6.5 per cent) for the week. Since closing out its hedge book little more than a month ago, Newcrest has added the best part of A$8.

At least two other gold stocks repeated the Newcrest trick of reaching a fresh 12-month high on Friday, before easing fractionally. Allied Gold (ALD), which is close to its first gold pour at the Simberi project in Papua New Guinea, traded up to A85 cents, before easing to close at A80 cents, up A12 cents (17.6 per cent) over the week, and Adamus (ADU) rose to A71 cents before closing at A70 cents, up A10 cents (16.6 per cent) for the week.

Minews. Was that trend repeated across the entire gold sector?

Oz. No. Some gold stocks actually fell, and others soared on a whiff of discovery. It was a very curious market, perhaps showing the first signs of speculative cash being rotated out of some other sectors and into gold with spectacular moves by rarely mentioned stocks such as Republic Gold (RAU), and Greater Bendigo Gold (GBM).

On the downside, we saw Perseus (PRU) run out of puff after a couple of solid weeks. It lost A1 cent over the week to close at A$1.43, but all of the loss came on Friday when the stock fell A4.5 cents (3.1 per cent). During the August sell-off Perseus traded down to A$1. Troy (TRY) was another stock to respond modestly to the higher gold price, adding A1 cent to A$3.14.

While those better-known “names” were marking time it was bonanza time for the lucky few who got aboard Republic, an explorer with its foot on promising gold, copper and tungsten prospects in North Queensland and New South Wales. A few days ago it reported the occurrence of visible gold from drilling its the Northcote gold tenement, and the Burrago copper/gold, news that pushed the stock up to a 12-month high of A12.5 cents on Thursday, only to see sellers take their profits on Friday, marking Republic down to A9.6 cents, which still represented a gain of A4 cents (71.4 per cent) for the week.

Greater Bendigo Gold, an even smaller explorer with high hopes, staged an even better rally after reporting fabulous assays from its Maxwells project in Victoria. Best grab sample, which is not the most scientific way of testing a prospect, returned 1118 grams a tonne gold (35.9 ounces to the tonne) with the sample almost certainly containing one of those famous Victoria nuggets which lured the oldtimers to Victoria 150 years ago. News of the assays drove Greater Bendigo to a 12-month high of A38 cents on Wednesday, before the stock was trimmed back to close at A24 cents, a gain of A11.5 cents (95.8 per cent) for the week.

Minews. Nice for someone. Obviously gold is on the way back. Now for that other hot sector, iron ore, please.

Oz. Mixed, with some terrific rises, and some curious falls. On the downside, we saw Fortescue Metals Group (FMG) finally run out of puff, dropping back below the A$50 mark, perhaps noting your warning last week about “remember Poseidon”. Over the week, FMG eased A$3.10 (5.9 per cent) to A$49. Other prominent iron ore stocks to retreat included Gindalbie (GBG) which lost A6 cents (9.5 per cent) to A$1.52, Grange Resources (GRR) which slipped A10 cents (3.7 per cent) to A$2.60, and Murchison Metals (MMX) which eased A7 cents (1.3 per cent) to A$5.25. Murchison’s takeover target, MidWest Corporation (MIS) rose A17 cents (3.5 per cent) to A$5.08.#

Much better moves came from smaller, and less well known stocks, much the same as the gold sector. Cullen Resources (CUL), which is probably getting its first mention on Minesite, reported excellent drill results from its Catho Well project in Western Australia, adding A5.1 cents (57.3 per cent) to A14 cents. While not prominent, Cullen has an impressive corporate pedigree and has Chris Ringrose as its chief executive. For many years Ringrose was chief geologist under John Jones at Troy.

Another iron stock with no previous profile to move higher during the week was Intermet (ITT) which reported a thick and rich iron ore (magnetite) discovery in Queensland, and immediately doubled in price from A18 cents to A37 cents on Thursday before running out of puff and closing the week at A27.5 cents, up A9 cents (48.7 per cent)..

Minews. What about other sectors, such as the base metal stocks, and any special situations.

Oz. The only special was Consolidated Minerals (CSM) which officially passed the first anniversary of the proposed Pallinghurst takeover bid by rising A10 cents (2 per cent) to A$4.89, still comfortably ahead of the competing takeover bids priced at A$4.50. The ConsMin battle remains a lawyers picnic.

Nothing special to report from the base metal sector. Zinc stocks were hit by the mid-week fall in the price of their metal, but not too badly. Zinifex (ZFX) dropped A90 cents (4.8 per cent) to A17.69. Perilya (PEM) lost A31 cents (7.3 per cent) to A$3.94, while CBH (CBH) added A3.5 cents (6.6 per cent) to A56 cents.

Nickel stocks were generally easier. Jubilee (JBM) fell A81 cents (4.6 per cent) to A$16.59, and Western Areas (WSA) slipped by A14 cents (2.7 per cent) to A$5.02. It was a similar story among the uranium stocks. Toro (TOE) lost A1.5 cents (1.9 per cent) to A75.5 cents, while Uranex (UNX) was up A2 cents (1.9 per cent) to A$1.06. The biggest winner among the uranium stocks was Extract (EXT) which report encouraging news from a scoping study at its Ida Dome prospect in Namibia, and added A17 cents (22.2 per cent) to A93.5 cents.

Minews. Thanks Oz.

Oz. Sorry you lost in Paris. Its hard when you play against sixteen men.


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## drillinto (29 October 2007)

October 28, 2007

That Was The Week That Was … In Australia
By Our Man In Oz

Minews. Good morning Australia, it looks like a big week for gold on your market.
Oz. And about time. The gold sector has been under the thumb of base metals, iron ore, and uranium for so long that it started to look like the metal had not  been invited to the party. Last week however, even with the Aussie dollar hitting a fresh 28 year high against the U.S. dollar, the gold stocks started to shine. Some iron ore stocks did well, but the overall tone for the non-gold sector was mixed, at best.

Minews. Let’s start with the good news first, and then we can taper off with the rest.

Oz. There were widespread rises across the gold sector with many stocks hitting 12-month share price highs, and a handful declining. Newcrest (NCM) continued to lead the way and is looking more than ever like a stock in “takeover play”. It added another A$1.32 (4.4 per cent) to close the week at A$31.25, down a fraction on the 12-month high of A$31.40 set early on Friday. To put Newcrest into perspective it has now risen by A$8.37 (36.6 per cent) since mid-September when it announced the closing out of its hedge book to give itself full exposure to the gold price.

Minews. Presumably we can expect even better next week as the gold price continued rising after your market closed.

Oz. Perhaps. But Friday’s closing London gold price of US$779.15 an ounce has to be set against the Aussie dollar which is also in near-record territory. It closed on Friday at US91.19 cents, and is causing a lot of pain for Australian exporters. What’s interesting with the dollar/gold equation is that in our dollar terms gold at the Friday price was A$854.42/oz. In early September, when the U.S. dollar gold price was US$701/oz, and the Aussie dollar was at US82.33 cents the gold price converted to A$851.45, so the gold price rise for producers down this way has been all of A$2.97/oz.

Minews. A sobering calculation, but also perhaps an indication that investors believe gold has just started its upward run.

Oz. That would seem to be the case when you look at some of the prices. Among the stocks to reach new share prices peaks were Allied Gold (ALD) which got as high as A94 cents on Friday as it moves closer to the first gold pour at its Simberi Island project. At the close, Allied ran out of puff, ending the week at A86 cents, up A6 cents (7.5 per cent). Two months ago the stock was trading at A40 cents.

Dominion Mining (DOM) continued its spectacular revival as production and exploration news gets better at its flagship Challenger mine in South Australia. It closed on Friday at a 12-month high of A$6.20, up A$1.21 (24.2 per cent), including A28 cents (4.7 per cent) on Friday alone. Andean Gold (AND) continued its strong run since shaking Kingsgate Consolidated (KCN) off its share register, rising A20 cents (13.9 per cent) to A$1.64, a down marginally on its 12-month high of A$1.69 reached earlier in the day. Lihir (LGL) was another of the pure gold plays to reach a new high of A$4.36 during Friday trade. It closed at A$4.34, up A9 cents (2.1 per cent).

Minews. Perhaps a quick call of the “gold card” might help, rattling off as many as you can.

Oz. OK. Carrick (CRK), continues to have a terrific time with spectacular drilling hits pushing it up to a high of A$1.98, before closing at A$1.90, a gain of A13 cents (7.3 per cent). Adamus (ADU) added A9.5 cents (13.6 per cent) to A79.5 cents. Centamin Egypt (CNT) rose A5 cents (3.6 per cent) at A$1.45, and Troy (TRY) gained A11 cents (3.5 per cent) at A$3.25.

On the downside, we saw St Barbara (SBM) frighten the horses with a big capital raising, shedding A5 cents (6.8 per cent) to A68 cents. Perseus (PRU) continued to slide, losing another A17 cents (11.9 per cent) to A$1.26. In the neutral camp, both Monarch (MON) and Alkane (ALK) were steady at A27.5 cents and A34 cents respectively.

Minews. Time for a look at the rest of the marker.

Oz. Nickel stocks were all over the shop. Jubilee (JBM) was up A51 cents (3 per cent) at A$17.10, and Minara (MRE) gained A35 cents (6.1 per cent) to A$6.05. But Sally Malay (SMY) eased a fractional A8cents (1.6 per cent) to A$4.90 and Albidon (ALB) lost A17 cents (5.5 per cent) to A$2.93. If there was tone to the nickel sector it was positive, just.

Iron ore stocks behaved in a similar way, mostly up, just. Fortescue Metals (FMG) gained a modest A30 cents to A$49.30. Atlas (AGO was up A5 cents (2 per cent) to A$2.55 and Ferraus (FRS) added A7 cents (5.7 per cent) to A$1.30. On the way down was Cape Lambert (CFE) which eased A7 cents (14 per cent) to A43 cents, while Grange (GRR) was steady at A$2.60.

Uranium stocks were also mixed. Paladin (PDN) added A29 cents (3.8 per cent) to A$7.84, but Wildhorse (WHE) eased A25 cents (10 per cent) to A$2.23. Uranex (UNX) slipped A2 cents to A$1.04, and Toro (TOE) lost A3 cents to A75 cents.

Minews. A final word, please, on any special situations.

Oz. Well, nothing could be more special than the Consolidated Minerals (CSM) situation after the mid-week report of a mystery holder (or holders) of 17.7 per cent of the takeover target. Everyone involved issued denials that they held the disputed block of shares, while on the market ConsMin slipped a fractional A3 cents lower at A$4.86.

The other special was the cancelled merger of two iron ore players, Gindalbie (GBG) and Sundance (SDL). Investors in Gindalbie welcomed the decision, lifting the stock by A18 cents (11.8 per cent) to A$1.70, but trashed Sundance (SDL) which fell A23 cent (31.5 per cent) over the week to close at A50 cents, with A11.5 cents of that fall coming on Friday.

Minews. Thanks Oz. Poor old George Jones will have to think again. Maybe one job is enough. Depends which one.


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## drillinto (4 November 2007)

November 04, 2007

That Was The Week That Was … In Australia
By Our Man In Oz
www.minesite.com/aus.html

Minews. Good morning Australia, how did your market manage last week’s shake-out? 

Oz. Better than might have been expected. It seems that investors in this part of the world are determined to disprove the adage about America sneezing and everyone else catching a cold. That might turn out to be a foolish belief because there are pressures building in the international trade arena which could soon catch up with our run-away resources sector.

Minews. That sounds a bit worrying. Please explain? 

Oz. In case you hadn’t noticed Australian iron ore miners, led by BHP Billiton, are demanding yet another massive increase in the price of their products. There is even talk of the next iron ore settlement delivering another 50 per cent increase, and perhaps more if the Australians can claw back lost shipping costs. The Chinese, at the highest level of government, are peeved. Threats are being made about retaliatory action, and there’s even talk of a buyer’s strike orchestrated by the government. 

Minews. An interesting concept, but unlikely to happen, surely? 

Oz. It did three years ago when the manganese price hit US$4 a pound, and that very quickly killed an overheated market, which is what the Chinese would like to do with iron ore. 

Minews. We’ll watch carefully. Time now for prices, please? 

Oz. Hard to escape the impact on the nickel market of Xstrata’s US2.8 billion bid for Jubilee as the event of the week, but we’ll get to that later. Overall, last week’s most active areas remained the combination of iron ore and gold. Stocks in those sectors led the way but with coal making a strong comeback thanks to the high oil price. Giralia (GIR) was the star of the week after reporting that it might be on to a new iron ore province in central Western Australia. It rocketed up by A66 cents (61.1 per cent) to A$1.74 on the first sniffs from drilling which returned high grades of haematite, the preferred direct shipping ore. 

Other iron ore moves were more restrained, with most running out of puff in the latter part of the week. Atlas Iron (AGO) started the week at A$2.62, which was up A7 cents on the closing price of the previous week, and then fell away to close at A$2.44, down A11 cents (4.3 per cent). Takeover target Golden West (GWR) did better, but also lost support towards on Thursday and Friday. At one stage on Wednesday Golden West was trading as high as A$2.74, up A46 cents (20 per cent) on the previous week, but then slipped away to close on Friday at A$2.45, still up A17 cents (7.5 per cent). 

You could see this up/down trend across the iron ore sector as traders moved in, then out. Fortescue Metals (FMG) rose to A$52.40 on Tuesday, but closed the week at A$49.22, technically down A8 cents over the week, but with a percentage change not worth calculating. Ferraus (FRS), one of the new player in the back blocks of the Pilbara iron ore province slipped by A2 cents to A$1.28, but did trade up to A$1.37 early. Grange (GRR) rose to A$2.74, but closed at A$2.51, down A9 cents (3.5 per cent) at A$2.51. 

Minews. Let’s switch to gold where the tone should have been even better with the price testing the US$800 mark. 

Oz. It was better, but at the risk of replaying the same boring record what the gold price gave the Aussie dollar took away, until Friday. After we had closed for the week there were two interesting developments which should make for an interesting time next week. The gold price in London closed at US$796.50 an ounce, and the Aussie dollar actually fell quite sharply, down from US93.05 on Thursday to US91.68 on Friday. 

Minews. That looks like your gold sector could be on the move next week. 

Oz. Quite possibly. We saw more signs of the sector wakening last week, but nothing too exciting. Perseus (PRU) resumed its upward trend after a couple of bad week, adding A14 cents (11.1 per cent) to A$1.40. Allied (ALD) reported a cost overrun at its Simberi project, but still managed a gain of A4 cents (4.7 per cent) to A90 cents, and the sector leader, Newcrest (NCM) made waves by hinting that it was on the takeover trail, perhaps a case of eat, or be eaten. It added A$1.45 (4.6 per cent) to close at A$32.70, but was trading as high as A$33.91 on Thursday, a 12-month high for the stock. 

Other gold stocks were less impressive, one way of saying that some actually fell in a week when the gold price rose strongly, a rather curious sight. Kingsgate (KCN) slipped by A7 cents (1.4 per cent) to A$5.06, but had made it up to A$5.51 on Tuesday. Apex (AXM) also lost modestly, down A3 cents (2.3 per cent) to A$1.27. Monarch (MON) was also off A3 cents (11.1 per cent) to A24 cents. Adamus (ADU) did better with a gain of A5 cents (6.3 per cent) to A84 cents, and support continued to build in Centamin (CNT) which, arguably, had the best week of all, closing at a 12-month high of A$1.50, which represented a gain of A5 cents (3.4 per cent). 

Minews. Time’s short, base metals, uranium and specials to finish, please? 

Oz. Nickel stocks were the base metal stars after Xstrata’s bid for Jubilee. Everyone benefited from that high-ball offer bid. Mincor (MCR) added A32 cents (7 per cent), Sally Malay (SMY) A99 cents (20 per cent), Western Areas (WSA) rose A83 cents (16.2 per cent), and Minara (MRE) was up A40 cents (6.6 per cent). 

Uranium stocks caught the benefit of last week’s latest US$5 a pound rise in the uranium price to US$85 a pound. Uranex (UNX) starred with a rise of A28 cents (27 per cent) to A$1.32, Curnamona Energy (CUY) added A13 cents (12.2 per cent) to A$1.19, and Marathon (MTN) gained A46 cents (18 per cent) to A$3.01. 

The only special remains Consolidated Minerals (CSM) which eased itself up by A3 cents to A$4.89, which is still comfortably above the competing A$4.50 bids for the stock, though it must be said that there are now so many corporate regulators crawling over ConsMin and its suitors that the only winners look like being the lawyers. Two words sum up ConsMin “godaful mess”. 

Minews. Thanks Oz.


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## drillinto (11 November 2007)

A must-read !



That Was The Week That Was … In Australia

By Our Man In Oz
November 11, 2007

Minews. Good morning Australia, BHP Billiton’s attempt to merge with Rio Tinto must have injected a bit of life into your market. 

Oz. It did, but only up to a point. The major beneficiaries were Rio itself, and other suspected takeover targets, such as Oxiana (OXR), Zinifex (ZFX), Alumina (AWC) and Fortescue Metals Group (FMG). The rest of the market reacted modestly, and overall the metals and mining sector ended the week down a few points despite Friday’s excitement.

Minews. Let’s look first at stocks viewed as potential targets, please. 

Oz. FMG was the curious one. Technically, it ended the week up A$1.33 at A$50.55, but that price move needs two explanations. First it is a rise of just 2.8 per cent. Second, it masks a roller-coaster week for the rapidly emerging iron ore producer. On Thursday, after a bruising encounter with dissident shareholders, FMG dropped to as low as A$44.51, its weakest since late September. The rebound was quite spectacular on Friday with the stock trading as high as A$52.10. 

Minews. Presumably that’s because FMG is seen as a natural target for Chinese steel mills keen to secure a future source of supply should BHP and Rio merge? 

Oz. Precisely. FMG has set itself up in a win-win situation. Either it enjoys the forecast rise in iron ore prices, or it is served up as a takeover plum with its chief executive, Andrew Forrest, able to deliver effective control thanks to his 36.7 per cent stake which was valued at A$5.17 billion at Friday’s close. 

Among the other widely talked-about takeover targets, Oxiana rose to within a whisker of its 12-month high, hitting A$4.31 on Friday, before closing at A$4.28 for a gain on the day of A21 cents (5.2 per cent). That takeover chatter inspired rise, accounted for all of the stock’s move because Oxiana had slipped to as low as A$3.91 earlier in the week. Zinifex which is seen as a natural merger partner with Oxiana, performed a similar trick, falling early and then storming back as speculators jumped on anything with a whiff of takeover wafting off it. Zinifex rose by A64 cents (4.3 per cent) on Friday, but still ended the week down A71 cents (4.4 per cent). 

Minews. Iron ore seems to be the big draw card in this proposed BHP/Rio deal, how did the other iron ore stocks behave? 

Oz. Apart from FMG, the reaction was largely unexceptional. Most of the smaller players in the iron ore sector rose on Friday, but ended the week down. Atlas Iron (AGO), one of the more favoured players in the same region as Fortescue, added A17 cents (7.6 per cent) on Friday, but was down A2 cents overall. Grange (GRR) was up A16 cents (7 per cent) on Friday, but down A5 cents (2 per cent) at its closing price for the week of A$2.46. Other small irons did better, but not by much. Gindalbie (GBG) gained A4 cents (2.6 per cent) on Friday to end the week at A$1.57, but that only left the rise for the full week at A3 cents. Murchison (MMX) and Midwest (MIS) which are fighting their own takeover battle were hit hardest. Murchison managed a small gain of A13 cents (2.8 per cent) on Friday, but lost A29 cents (5.7 per cent) overall. Midwest lost on a daily and weekly basis. Down A3 cents on Friday, and down A34 cents (6.6 per cent) for the week. 

Minews. Let’s switch to your gold stocks because they should have been in demand with the gold price sticking above US$800 an ounce. 

Oz. The trend was certainly positive, but there’s nothing outrageous to report. The sector leader and long-rumoured takeover target, Newcrest (NCM), was the pick of the pack, rising A$3.15 (9.6 per cent) to A$35.85, with that closing price the highest for 12-months, and representing a gain of A$1.05 (3 per cent) on Friday alone, a sign that Newcrest caught a bit of the merger backwash. 

Other gold stocks of interest included Monarch (MON) which announced a deal to buy the historic Hill 50 goldmine from South Africa’s Harmony Gold, a potentially good deal, but not one which enthralled investors Monarch added A1 cents (4 per cent) for the week, closing at A25 cents, but did trade as high as A27.5 cents on Wednesday. Alkane (ALK) added A2 cents (5.8 per cent) to A36.5 cents. Allied (ALD) was up A6 cents (6.6 per cent) at A96 cents, having briefly touched A$1. Centamin (CNT) continued to attract attention with a rise of A7 cents (4.7 per cent) at A$1.57, down a fraction on the A$1.62 reached on Thursday which was a 12-month high for the stock. 

Minews. And elsewhere, please. 

Oz. Mixed. Uranium stocks failed to respond to the rise in the uranium price back to US$90 a pound. Wildhorse (WHE) slipped by A10 cents (4 per cent) to A$2.31. Uranex (UNX) also lost A10 cents (7.5 per cent) to A$1.22, and Marathon (MTN) was another to lose exactly A10 cents (3.3 per cent) to A$2.91. 

Coal stocks did slightly better in the energy-linked area. Riversdale (RIV) continues to run hard, adding another A$1.49 (17.7 per cent) to A$9.91, but was trading as high as A$10.18 at one stage on Friday, a 12-month high. A year ago you could have jumped aboard the stock at A$1.64. Other coal moves were more modest. Straits Resources (SRL) was up A20 cents (3 per cent) to A$6.69, and Aquila (AQA) added A94 cents (13 per cent) to A$8.19. 

Minews. Perhaps a final quick word on the rest of the base metal sector. 

Oz. Not a lot to report. Nickel stocks, after the excitement of Xstrata’s raid on Jubilee (JBM), were generally down. Sally Malay (SMY) slipped A17 cents (2.8 per cent) to A$5.72 despite a A12 cent hike on Friday. Mincor (MCR) eased A10 cents (2 per cent) to A$4.75, and Minara (MRE) was off a A20 cents (3 per cent) at A$6.25. 

A few special situations before signing off. Consolidated Minerals (CSM) seems to be settling at last with the stock down A19 cents (3.8 per cent) to A$4.70, and very close to the twin bids on the table of A$4.50. What we need now is for someone to slap a $5 bid on the table and it should be the end of a bruising encounter. Vulcan Resources (VCN) is also worth a mention after a hammering thanks to a confirmed delay in its feasibility study into a mine in Finland, an event which Minesite predicted some weeks ago. The stock lost A11 cents (19.6 per cent) to A45 cents. 

Minews. Thanks Oz. More of your fellow Aussies need to read Minesite to see what’s really happening. I believe you have a  mining website out there, but it mostly seems to re-hash press releases. The difference is that we have a writer with a brain to interpret events, not just report them.


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## drillinto (26 November 2007)

November 25, 2007

That Was The Week That Was … In Australia

By Our Man In Oz

Minews. Good morning Australia, it looks like you had a tough week at the office? 

Oz. Yes, there was red ink everywhere, but most of the damage was done early and there were signs of a bottom forming on Friday. Next week, if stronger metal prices in your part of the world are a guide, should be better down this way.

Minews. Let’s have whatever good news you can find first to cheer us up, and then wade through the red ink. 

Oz. There wasn’t much in the black among the better known stocks, but a couple of flyers which provided the day traders and other speculators with a spot of sport. The best of those was a one-time diamond hopeful called Flinders Diamonds (FDL). It had a week to remember, delivering a 750 per cent return over five trading days with a rise from A1 cent to A8.5 cents. 

Minews. Some move, but it wasn’t diamonds, was it. 

Oz.  No. The inappropriately named Flinders Diamonds claims to have made a major iron ore discovery in Western Australia’s Pilbara region, and the market loves anything with a whiff of iron attached. Much more work is required to demonstrate that Flinders has a mine, or that it will be able to get its ore onto a rail line and then onto a ship. But let’s not be churlish, the fact is the speculators turned the stock into their favourite with the equivalent of the company’s total issued capital turning over three times on Thursday and Friday. To put that in numbers, 2.9 billion Flinders shares (yes, billion) were exchanged over just two days, not a bad effort for a company with 972 million issued. Thursday saw 1.9 billion traded when the stock rise to a high of A8.9 cents. Friday saw 973 million traded, taking the stock to a peak of A15 cents, at which point the week’s rise stood at 1400 per cent, before sliding back to the close of A8.5 cents. 

Minews. Astonishing stuff. 

Oz. But pretty much an isolated event, not that the day traders haven’t had fun trying to run a few other stocks. Kalgoorlie-Boulder Gold (KAL) which was mentioned last week after it reported an encouraging gold discovery near the town of Norseman was again heavily traded but without the share price moving far. It closed up A1 cent (4.7 per cent) at A22 cents, but trading volume over the week was just short of its issued capital of 110 million shares. In the previous week, when Kalgoorlie-Boulder was discovered by the traders, and the price rose from A13 cents to A21 cents there was a day when more close to 150 per cent of its issued capital was traded. 

Minews. So much for the exceptions, now for the real market, please. 

Oz. Sticking to the good news first approach the best results came from the coal and gold sectors. Iron ore, despite the odd flyer, was flat, as was uranium, nickel and the other base metals. Among the golds, Newcrest (NCM) added A76 cents (2.3 per cent) to A$33.01, and Lihir (LGL) crept A6 cents (1.5 per cent) higher to A$3.87. One of the better performers was the rarely-mentioned South Boulder (STB) which added A3 cents (20 per cent) to A18 cents, but did get as high as A20 cents on news of good assay results from its Duketon gold project. The rest of the gold sector was flat, or down. Troy (TRY) fell A29 cents (8.7 per cent) to A$3.05. Apex (AXM) slipped A5 cents (4.2 per cent) to A$1.15, while Adamus (ADU) and Alkane (ALK) lost A1 cent each. 

Minews. Time to have a look at those base metal and iron ore stocks. 

Oz. Before the list of price falls, one item of good news. Heron Resources (HRR), one of the more interesting nickel hopefuls, had a good week, rising by A12 cents (11 per cent) to A$1.20 on news that it is becoming more of an object of desire for two of the world’s biggest miners. Both BHP Billiton and CVRD are increasing the investments in Heron which has its foot on a vast resource of low-grade laterite nickel. After Heron, however, it was all down hill. Western Areas (WSA) lost A32 cents (5.4 per cent) to A$5.63. Minara (MRE) fell A20 cents (3.2 per cent) to A$6.09, and Poseidon (POS), which is really the re-named Niagara Mining, crashed back by A22 cents (16.7 per cent) to A$1.10. 

Over in the iron ore sector it was more red ink. Fortescue Metals (FMG) was hit with a couple of stockbroker downgrades, including one from Macquarie Bank tipping a 12-month price target of A$35.57 when the stock was trading above A$55. Those comments, plus confirmation of more cost blow-outs at Fortescue’s project saw the stock ended the week at A$54.81, down A$3.69 (6.3 per cent). Two weeks ago, Fortescue traded as high as A$64.99. Other iron ore moves included: Gindalbie, down A17 cents (11.6 per cent) to A$1.29. Territory (TTY), down A11 cents (6.7 per cent) to A$1.53, and Atlas Iron (AGO), down a heavy A41 cents (17 per cent) to A$1.98. 

Minews. Time left for other sectors and special situations. 

Oz. Coal, as mentioned earlier, was one of the better sectors thanks to the high oil price. Macarthur (MCC) added  A15 cents (2 per cent) to A$7.84, and Aquila added A89 cents (10.7 per cent) to close at A$9.19. Riversdale (RIV) and GVM (GVM) both lost ground, but only after big capital raising. Riversdale eased A73 cents (7.2 per cent) to A$9.42 and GVM slipped A7 cents (4.5 per cent) to A$1.49. Uranium stocks were generally weaker. 

Among the specials just two worth mentioning. Consolidated Minerals (CSM) remains unfinished business, but the price has settled back to A$4.85, down A11 cents (2.2 per cent) over the week, and close to the Ukrainian offer price of A$4.70. Oxiana (OXR) and Equinox (EQN) were named as potential marriage partners after the no-show of an Oxiana/Zinifex link. None of the trio performed well last week. Oxiana was down A38 cents (9.6 per cent) to A$3.57. Equinox lost A78 cents (13.9 per cent) to A$4.82, and Zinifex slipped A93 cents (6 per cent) to A$14.46. 

Minews. Thanks Oz. See you have a new Prime Minister. Half your luck!


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## drillinto (2 December 2007)

December 02, 2007

That Was The Week That Was … In Australia
By Our Man In Oz

Minews. Good morning Australia, how did the market handle your change of government? 

Oz. Surprisingly well. Before last weekend there was the usual nervousness, but after Australia swung to the left with the election of Kevin Rudd as its new Prime Minister there was general euphoria. 

Minews. That’s an interesting measure of general sentiment, but how did it affect the mining sector?

Oz. Broadly the same, though the ASX metals and minerals index makes it look better than it really was. Officially the mining sector was up a cracking 6.5 per cent, including 2.5 per cent alone on Friday.

Minews. But, you’re about to tell me that most of that was the Rio Tinto effect.

Oz. Spot on. As well as the change of government down this way we had another ultra big ticket event rumbling away in the background, distorting the view of the overall mining market. Between them, BHP Billiton and Rio Tinto dominate the mining industry and Rio’s A$5.94 (4.3 per cent) rise on Friday created an impression that the entire mining market lifted, which really wasn’t true.

Minews. Enough of the external distortions, take us through the sectors, please.

Oz. Starting with the best, it was coal which caught the imagination of investors. Most of the small coal stocks performed very well thanks to rising prices, and an expectation of more to come next year. Riversdale (RIV), which is on to something quite big in Mozambique, and has struck a very useful relationship with the Tata group in India, added A48 cents (5 per cent) to A$9.90. 

Minews. Great article from you about that last week Now we are going to follow up from the Indian end.  Have a feeling in my bones about this one.

Oz. GVM (GVM), which is also expanding operations in southern Africa, did even better with a rise of A30 cents (20 per cent) to close the week at A$1.79, which was actually down a fraction on the 12-month high of A$1.82 reached on Thursday. Other coal moves included: Macarthur (MCC), up A$1.14 (14.5 per cent) to A$8.98. Felix (FLX) up A49 cents (6.5 per cent) to A$8, and Centennial (CEY), up A42 cents (9.8 per cent) to A$4.70. It wasn’t all one-way traffic with Whitehaven (WHC) slipping A2 cents to A$2.72.

Minews. And what of that other energy mineral, uranium.

Oz. Not nearly as interesting. Paladin (PDN) initially disappointed after reporting a hefty loss for the September quarter, but regained support late in the week to end up A36 cents (5.6 per cent) at A$6.80, which is a good result, but needs to be put in the context of the A$10.80 price reached earlier in the year when the uranium stocks were on fire. Marathon (MTN), another boom time favourite, lost A15 cents (5.3 per cent) to A$2.68. It has now lost exactly A$4 (59.8 per cent) since peaking at A$6.68. Uranex (UNX) slipped A5 cent (4.7 per cent) to A$1.02, while Toro also lost A5 cents (10 per cent) to A45 cents. 

Minews. Presumably the market is waiting to see the shape of uranium policy from your new government.

Oz. That’s a reasonable assumption, though it should be positive. The resources minister is a former trade union boss, Martin Ferguson who, somewhat surprisingly, is very supportive of more uranium mining.

Minews. You are heading into interesting times. Time now for a look at the iron ore sector. Did it remain a favourite of the market?

Oz. Not really. The iron ore stocks have been very strong for much of the year in anticipation of a big price rise from the current round of price talks with Asian steel mills. Now that we’re close to a deal investors seem to be getting a little nervous. Fortescue Metals (FMG) was one of the better performers, regaining some recently lost ground with a rise of A$1.79 (3.3 per cent) to A$56.60. 

Minews. Funny you should mention Fortescue. Why is it always the big ones  that keep ‘forgetting’ to pay their bills? Too much arrogance or too much bureaucracy so nobody knows who is responsible for what. Not a good sign.

Oz. Gindalbie (GBG) was also up modestly at A$1.33, a gain of A4 cents (3 per cent), and Atlas (AGO) added A7 cents (3.5 per cent) at A$2.05, though that closing price compares with a mid-week peak of A$2.20. On the downside among the iron stocks, the takeover battle between Midwest (MIS) and Murchison (MMX) took its toll of both stocks. Midwest slipped A7c lower (1.7 per cent) to A$4.08, and Murchison eased A1 cent to A$4.01. Territory Iron (TTY) lost A6c (3.9 per cent) to A$1.47 and Grange (GRR) lost A1c at A$2.49.

Minews. Time to look at the gold stocks, and then base metals, please.

Oz. Generally weaker, but with a few pleasant surprises. Independence Group (IGO) was somewhat of a star thanks to an expectation that its partner in the Tropicana gold discovery, AngloGold Ashanti, will soon release a big resource and reserve upgrade. Independence has a 30 per cent stake in what is shaping as Australia’s best gold discovery in 20 years. It rose A33 cents (4.2 per cent) during a week when the gold price fell quite sharply.

Minews. We might take a closer look at Independence. How did other gold stocks perform.

Oz. Most moves were modest. Allied Gold (ALD) was up A2 cents (2.6 per cent) to A77 cents. Troy (TRY) added A15 cents (4.9 per cent) to A$3.20 and Wedgetail, which is selling surplus assets as part of a major overhaul, added A1.5 cents (13 per cent) at A13 cents. On the flipside, Ramelius (RMR) was hammered after a disappointing resource statement from its Wattle Dam project, plunging A46 cents (27 per cent) to A$1.22. Kalgoorlie-Boulder lost A3 cents (13.6 per cent) to A19 cents, and Monarch (MON) slipped A1 cent (3.8 per cent) to A25 cents.

Minews. Base metals, now and then finish with any special situations.

Oz. Nickel stocks firmed, copper and zinc were mixed. Among the nickels, Western Areas (WSA) rose A22 cents (3.9 per cent) to A$5.85. Poseidon (POS) was up A8 cents (7.3 per cent) to A$1.18, and Minara (MRE) added A16 cents (2.6 per cent) to A$6.25. Among the copper stocks, Oxiana (OXR) was best with a rise of A36 cents (10 per cent) to A$3.93. It was downhill for the zinc sector leader. Zinifex (ZFX), which dropped to a 12-month low of A$13.74 on Friday, before bouncing back to close at A$14.40, down A6c cents for the week. CBH (CBH) added A3 cents (5.3 per cent) to A59.5 cents, and Perilya (PEM) was up A7 cents (2.4 per cent) at A$2.96.

There’s little to report on specials. That year-old favourite, Consolidated Minerals (CSM) continues to drag along with the market remaining comfortably above takeover bid prices. ConsMin closed the week at A4.93, up A8 cents (1.6 per cent).

Minews. Thanks Oz.


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## drillinto (9 December 2007)

December 09, 2007

That Was The Week That Was … In Australia
By Our Man In Oz

Minews. Good morning Australia, how was your week? 

Oz. Showing signs of flattening out ahead of the Christmas break, but kept alive by plenty of corporate activity. After trading closed on Friday we saw a state-owned Chinese steel company launch a counter-bid for one of our small iron ore producers, and we also rejoiced when the Consolidated Minerals (CSM) battle drew to a close.

Minews.  ConsMin has certainly been tortuous. Why not start this week with a look at the corporate side of things since that seems to be the most interesting aspect of the market.

Oz. You’re probably up to speed with ConsMin, but for the record the Ukrainian-owned Palmary group won the day with an offer of A$5/share. That was enough to encourage the main rival bidder, the Brian Gilbertson-led Pallinghurst, to accept the cash and walk away promising more bids to come, but perhaps deals that take less than a year to complete. Brian’s not a young man anymore!

Of greater interest than Gilbo’s defeat was the late offer of A$5.60 a share from Sino Steel for Midwest Corporation (MIS) You couldn’t say that it took the market totally by surprise after a few well sourced leaks and a stock exchange inquiry, but the suggested bid price was well above a rival offer from another small iron ore miner, Murchison Metals (MMX). Next week could see this become a battle worth watching because Sino’s offer is A$1.07 (24.5 per cent) above Midwest’s closing price on Friday of A$4.35.

Minews. The Chinese are becoming quite a force in your mining market, aren’t they?

Oz. They certainly are. The big one, which will probably never happen, is speculation of Chinese government intervention in BHP Billiton’s proposal to merge with Rio Tinto. The common thread linking that deal, and the much smaller raid on Midwest, is China protecting its supplies of iron ore.

Another deal which we should hear a lot more about next week was confirmation from First Quantum that it had snapped up a 17.3 per cent stake in fellow Zambian copper miner, Equinox. On the market, Equinox (EQN) rose A$1.08 (21.5 per cent) to A$6.09. It doesn’t require too much imagination to see other bidders start to chase Equinox which is one of the best emerging copper and uranium plays in the world.

Before switching to look at the sectors it’s worth putting Kingsgate (KCN) in the corporate category after it was hit by negative publicity in Thailand. Investors have been holding out for news that Kingsgate would get government approval to expand its Sepon goldmine. There’s no definite news yet but Thai media reported that the government might not give Kingsgate what it needs. Before management asked for a trading suspension Kingsgate fell by A95 cents (19.4 per cent) to A$3.95.

Minews. Time now to go through the sectors, starting with iron ore, please?

Oz. Apart from the Midwest situation the rest of the sector was mixed, though most moves were small. Fortescue Metals (FMG) probably had its quietest week for a year, rising a truly modest A15 cents to A$56.75. Gindalbie (GBG) was up A2 cents to A$1.35, and Cape Lambert (CFE) rose A3 cents to A43 cents. Golden West (GWR), which is fighting off a takeover bid, fell A9 cents to A$2.03.

Minews. And the coal sector, was that hot again?

Oz. Certainly hotter than iron ore. Riversdale (RIV) just keeps rocketing away, up another A$1.10 (11 per cent) to A$11 as interest builds in its Mozambique coal assets and its joint venture with India’s Tata group. Macarthur (MCC) was another favourite, rising A32 cents (3.6 per cent) to A$9.52. Aquila (AQA) reacted positively to receipt of a large cheque from Brazil’s renamed Vale (the old CVRD) for a bigger share of a coal mine in Queensland, adding A67 cents (7.3 per cent) to A$9.87, and Felix (FLX) rose A42 cents (5.3 per cent) to A$8.42.

Minews. Gold, nickel and anything else that looks interesting, please?

Oz. Not much from the golds, despite a modest rise in the U.S. dollar price during our trading week. The Kingsgate situation might have rattled a few traders. Centamin (CNT) slipped A7 cents (4.9 per cent) to A$1.36. Lihir (LGL) lost A16 cents (4 per cent) to A$1.36. St Barbara (SBM) raised more cash, and eased A2 cents to A$76 cents. Apex (AXM) reported good drilling results, but still fell A10 cents (8 per cent) to A$1.15, and even Independence (IGO), which received excellent publicity thanks to its stake in the Tropicana gold discovery, lost A69 cents (8.4 per cent) to A$7.48.

Nickel stocks were up marginally, and there’s actually a corporate situation evolving there which we perhaps could have look at earlier. Jubilee (JBM) lost A12 cents during the week closing at A$22.90, or fractionally below Xstrata’s takeover offer price of A$23. What makes that particularly interesting is that Xstrata is struggling to close the deal despite Jubilee’s founder, and major shareholder, Kerry Harmanis accepting for his 20 per cent stake. The bid was been extended but the fact that Xstrata has only been able to attract acceptances of 36.12 per cent, a number which presumably includes Harmanis’s stake, points to the potential for interesting developments.

Elsewhere among the nickels, Western Areas (WSA) rose a modest A9 cents to A$5.94. Sally Malay (SMY) was up A25 cents (4.8 per cent) to A$5.38, and Minara (MRE) benefited from finalising a process plant upgrade project, rising A27 cents (4.3 per cent) to A$6.52, good enough for its long-serving chief executive to take a couple of weeks off to cruise the Nile with his family. On the downside, Mincor lost A7 cents to A$4.40.

Minews. Thanks Oz. Have a good time in Dubai and I will speak to you next week.


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## drillinto (14 January 2008)

January 13, 2008

That Was The Week That Was … In Australia
By Our Man In Oz
www.minesite.com

Minews. Good morning Australia, apart from gold it looks like a bad week all-round. 

Oz. That pretty much sums it up, though even among Australian gold stocks there was evidence of selling, or perhaps rotation into higher quality miners and explorers. Overall, the metals sector was down a rather painful 4.8 per cent, though a lot of that can be attributed to the solid falls posted by the big two, BHP Billiton and Rio Tinto. If it’s any compensation the overall Australian market, as measured by the all ordinaries index was off by a fraction more than metals at 5.2 per cent.

Minews. Cold comfort. Let’s kick off with the good news first, a trip through the gold stocks, please?

Oz. Most golds were up, but no-one stood out despite last week’s 4.2 per cent rise in the price of the metal as measured on the London Bullion Market where it closed at US$891 an ounce. Down our way, with the exchange rate at US89.53 cents, the gold price was A$995 an ounce, a tantalising A$5 away from a magic A$1000 an ounce closing price.

That solid rise in the gold price, and a widespread expectation that there is more to come, was partly reflected in the share market where we saw some solid rises, but also a few unimpressive performances, and even a few falls. Sector leader, Newcrest (NCM) was up A98 cents (2.6 per cent) to A$37.99, with a poor show on Friday when it actually slipped back by A26 cents. The other big gold producers delivered equally unimpressive week-on-week performances. Lihir (LGL) was up a lowly A3 cents to A$3.94, SinoGold (SGX) was steady at A$7.70, and Equigold (EQI) lost A20 cents (4.8 per cent) to A$3.92.

Minews. Not what you would have expected in such a strong gold market.

Oz. No. But probably an accurate reflection of the fear and loathing in the overall market where there is a definite drift to quality stocks, and cash because unlike the rest of the world which is looking to lower interest rates Australia is still likely to raise rates as part of an attack on inflation caused, ironically, by the mining boom.

Minews. Those divergent views on interest rates certainly serve to illustrate how you’re seeing the future in a different light to Europe and the U.S.

Oz. Absolutely. And we can explore that a bit further next week in the snapshot of commodity price forecasts that you mentioned in a separate story last week.

Minews. More prices from the gold sector please, and then a run down of the rest of the market.

Oz. A call of the gold card looks like this. Centamin (CNT) continues to power along as its Sukari project looks better by the month. It closed the week at A$1.57, up A12 cents (8.3 per cent), but did go as far as A$1.63 on Friday, a 12-month high and probably an all-time high for a company which has spent more than a decade trying to get into production. Allied Gold (ALD) was another mid-tier favourite as it makes brisk progress on its Simberi project in Papua New Guinea. It added A9 cents (10.8 per cent) to A92 cents. Other rises worth noting included: Tanami (TAM), up A1.5 cents (11.5 per cent) to A14.5 cents, and definitely worth a more detailed report some time next week. Norton Goldfields (NGF), the new owner of the Paddington processing plant near Kalgoorlie, added A12 cents (24 per cent) to A62 cents with most of that coming from a belated recognition that the company owns one of the best gold mills in the world. Resolute (RSG) was another gold producer winning late respect for its revival plans. It rose A23 cents (12.3 per cent) to A$2.10.

After those admirable rises came a long tail of more modest results. Apex (AXM) managed a gain of A3 cents (2.2 per cent) to A$1.38. Kingsgate (KCN) added A5 cents (1 per cent) to A$4.90, and Dragon (DRA) gained A1.5 cents (11 per cent) to A15 cents. Then we have the surprise packet of gold stocks which actually fell in a rising gold market. Crescent (CRE) slipped by A2 cents (4.6 per cent) to A41.5 cents. View (VRE) dropped A2.5 cents (10.4 per cent) to A21.5 cents. Ramelius (RMS) eased by A4 cents (2.9 per cent) to A$1.30, and Carrick (CRK) fell by A14 cents (7.4 per cent) to A$1.76.

Minews. A very mixed bag when so much more might reasonably have been expected. Time for the other sectors, and any special situations, please?

Oz. This is where it gets very hard to find anything in black ink with widespread falls in all sectors. Iron ore stocks probably held up the best. Fortescue (FMG) slipped by just A9 cents (1.3 per cent) A$6.59. Grange (GRR) also fell by A9 cents (3.3 per cent) to A$2.59, while Gindalbie (GBG) was down a more substantial A21 cents (18.6 per cent) to A92 cents and its close associate, Sundance Resources (SDL) dropped an even more painful A10 cents (23.5 per cent) to A32.5 cents.

Nickel stocks were also down. Minara (MRE) lost A38 cents (6 per cent) to A$5.87. Western Areas (WSA) dropped by A66 cents (11.7 per cent) to A$5, and Sally Malay (SMY) fell A55 cents (9.7 per cent) to A$5.10.

Uranium stocks weakened across the board. Paladin (PDN) dropped A$1.01 (14.4 per cent) to A$6.01, Wildhorse (WHE) lost A7 cents (5.7 per cent), and Uranex (UNX) fell A6.5 cents (7.9 per cent) to A75.5 cents. The other energy mineral, coal, was also in decline. Straits Resources (SRL) lost A26 cents (3.9 per cent) to A$6.31. Aquila (AQA) slipped A38 cents (4.1 per cent) to A$8.87, but Riversdale held its ground, closing steady at A$9.40.

Minews. Any specials?

Oz. The only situation worth watching is Jubilee (JBM) which continues to trade above the recommended A$22 takeover price offered by Xstrata. On Friday, Jubilee closed at A$22.74, or 3.4 per cent above the bid price which indicates that some investors reckon a sweetener is on the way.

Minews. Thanks Oz. Looking forward to actually seeing you next week as the royal tour passes through London.


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## drillinto (5 April 2008)

Sell The Beach House! Shockwaves From The Opes Prime Margin Call Crisis Crash Over Australian Miners

By Our Man in Oz | April 04, 2008
www.minesite.com/aus.html

In every boom someone in business comes up with a really stupid idea. A decade ago it was the boys at Bre-X who dreamt up the Busang gold fraud. In the US a few years ago it was the banks who thought it smart to lend money to poor people who couldn’t pay it back, thereby leading directly to the sub-prime crisis. But neither of those two - nor anything that went before - matches what has happened in Australia over the past week where 677 stock exchange listed companies, 25 per cent of the total on the ASX, suddenly found themselves embroiled in an almost unimaginable margin call crisis. Many of those stuck in this newly revealed tangled web of intrigue - and possible criminal activity - are miners. Some are well known to regular Minesite readers, and while the companies themselves are innocent, it turns out that there are some very dopey shareholders on their share registers who have now discovered to their personal loss that over the last 48 hours they’ve had their investments sold out from under them.
Well-known names such as Gindalbie Metals, Bannerman Resources, Image Resources, Fairstar Resources, Golden West Resources, Thundelarra Exploration, Ord River Resources, and Cazaly Resources are among the companies affected. Big blocks of their shares have been snaffled by banks which originally only regarded them as collateral for margin loans, but which have now taken possession of the shares themselves. And they are selling. Lawyers are having a picnic as the crisis comes to a head. The legal investigation into the failure of the stockbroker at the heart of the disaster might last for years. As will action against it. Some once-rich individual investors have been cleaned out, and even members of the royal family of Malaysia are licking their wounds.

Before the detail of what happened, and why a string of companies, including Golden West, Fairstar, and Image remain suspended, there is a single word which sums it all up: greed. Boiled down, the story goes like this: a stockbroking firm called Opes Prime conceived a plan to make margin loans to about 1200 fat cat clients against holdings in generally small companies which are also often illiquid and subject to sharp share price movements. It was a cheap and easy scheme. But, what the investors appear to have not known, or not been told, or did not discover in the fine print, was a clause which allowed all the shares involved to be “pooled” under what is called the Australian Master Securities Lending Agreement. So far, so good.

But, when the market corrected - okay let’s be honest and call it a crash - in January and February, someone at Opes Prime decided to help out a few mates. It’s what Aussies do in times of need. The problem was the help appears to have consisted of telling Merrill Lynch and the ANZ Banking Group a few “porkie pies” which made it appear that certain individuals behind certain lines of credit owned more shares than they really did. Justice Ray Finkelstein in the Victoria Supreme Court is unravelling exactly who said what to whom, and when, but one of the borrowers, Sydney lawyer Chris Murphy, has already admitted that he had loans somewhere in the vicinity of A$100 million. Murphy was one of the people Opes Prime tried to protect.

As with all really stupid ideas it has came unstuck. Spectacularly. In the week before Easter Opes Prime discovered that it had a problem. Management trotted off to the ANZ and asked for a bit of extra cash to cover a hole in its margin lending business. The bank was deeply suspicious but chipped in A$95 million to get through Easter. Immediately after Easter the bank called in the accounting firm, Deloittes to dig a little deeper. And what did the bean counters find? An even deeper hole, of course. They also found that the pooling arrangement meant that stock exchange rules regarding declarations of large shareholdings had been breached, in several dozen cases. Whistles were blown loudly. The banks took possession of the Opes Prime margin books and started selling, hard.

Merrill Lynch moved fastest. Within a day it had sold shares worth A$500 million. The ANZ was slower and caught in a couple of legal challenges, most of which it has won. It is still selling. Some investors will get a portion of their funds back, but it’s likely to be between A33 cents and A50 cents in the dollar. In one case known to Minesite’s Man in Oz a 70 year old investor placed A$14 million worth of scrip with Opes Prime in order to secure a loan of A$4 million. Much of his portfolio consisted of small mining stocks which are not regarded as highly liquid and not the sort of security against which a normal margin loan is made. He’ll probably lose everything.

Of the companies involved a furious scramble is underway to help the receivers and liquidators appointed by the banks find new owners for big blocks of their paper. At Gindalbie a search is underway to find an owner for 16 million shares once held in the name of Melawar Steel Ventures, an investment vehicle of the king of Malaysia and his family. That situation is still in the melting pot and Gindalbie says it is working with the banks and Melawar to achieve a satisfactory outcome. At Golden West, which is busy beating off a take over bid from Fairstar, an even more interesting situation has emerged. Late on Friday 4th April, Australian time, Golden West said 11 million of its shares, or 10 per cent of its capital, had been acquired by Portman, the local iron ore mining arm of the big U.S. miner, Cleveland Cliffs. For Fairstar, that’s a disaster which will almost certainly torpedo its all-share takeover offer.

By next week, when the banks have finished their selling and short-term legal injunctions run out of time, the Opes Prime disaster will move into the forensic scrutiny phase. The directors of the broking house have surrendered their passports. Corporate cops and ASX investigators are now picking through the bones of the failure. An astonishing 677 Australian companies will be making adjustments to their share registers, and 1200 really stupid investors will be licking their wounds, and explaining to their families why the beach house has to be sold.


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## drillinto (11 April 2008)

Money Laundering, Fraud, Hitmen, Maseratis, Dentists, Drug Trafficking, Wire-Tapping: The Opes Prime Scandal Works On So Many Levels

By Our Man in Oz | April 10, 2008 | www.minesite.com

Maserati sports cars as gifts... one-time underworld figures on the hunt for missing millions… and a curious “crime” website set up by a dentist who specialises in mouthguards for footballers. Welcome to “level one”, the glamour level, of the currently unravelling and increasingly bizarre world of Opes Prime, the stockbroking firm which recently failed and last week caused mayhem on the Australian Securities Exchange (ASX). “Level two”, which is not yet open for public scrutiny, promises to be even more interesting. It’s on this level that stock exchange regulators are pondering how Opes Prime got away with it, and, more to the point, exactly what the firm and its clients did get away with? Share price manipulation is one allegation. Money laundering is another.
But, before we even consider levels one or two in the Opes Prime saga, it’s highly likely that a third level will appear, and that could be far more significant than everything else. The Australian Government is deeply concerned about the way Opes Prime flouted the law and, more fundamentally, about how the ASX failed to manage the situation, and failed even to know that a disaster was taking place under its nose. Talk has already started about the need for more direct government intervention in regulating the stock market, and that extra regulation would include much tighter rules on short-selling and margin lending, and possibly removing some regulatory duties from the ASX. 

First, however, an Opes Prime refresher for novice readers. Two weeks ago the stockbroking firm, which specialised in providing margin loans backed by small, and generally illiquid Australian mining and technology companies, collapsed. The immediate cause was a failure to force six rich clients to top up their accounts which had been scorched in the January market correction. There was also an apparent attempt to help those clients by shifting shares owned by other investors across to the favoured six. When this began to come to light it was also found that Opes Prime had been using a pooled share ownership system in which the broker’s banks held legal title to all shares in the pool. Most of those shares have now been sold and Opes Prime clients, who might have assumed they owned the shares they’d bought, look like they’ll get just A30 cents in the dollar. 

Now for “level one” of the intrigue which has followed the collapse and the market mayhem generated as the banks sold down shares in the 677 listed companies that were swimming in the communal pool. It’s on this level that can be found a certain Mick Gatto, one-time boss of an underworld gang called the Carlton Crew, and a man acquitted in 2005, on grounds of self-defence, of shooting the Melbourne gangland hitman, Andrew “Benji” Veniamin. Yesterday, amid much fanfare, the 150 kilogram, and heavily tattooed, Gatto jetted into Singapore with two equally “heavy, heavies” for “talks” with the former bankers to Opes Prime. Gatto, who now runs a “mediation and dispute resolution business” wants aggrieved Opes Prime clients to register their interests on a purpose-created website called www.opescrimefund.com.au. Perhaps even more bizarre than the appearance of Gatto and his website is the fact that it was set up by Dominic Di Luca, a dentist who supplies mouthguards to the Carlton Football Club. As well as being a noticeboard for Opes Prime stories – it’s worth a visit - the site asks for the account number of Opes Prime clients and their estimated loss. 

Level one of this saga is also where news has surfaced about one aspect of the way the brokerage did business: if you were a really, really, good client you got a Maserati as a gift. The client with the highest profile, Sydney lawyer Chris Murphy, has confirmed that he received a car, but added that he reverted to driving his Toyota Corolla after damaging a wheel on the Maserati on his first spin and finding out that the replacement would cost him A$6,000. Equally busy in Singapore, and chasing cars, is one of the official receivers of Opes Prime, Chris Campbell, an accountant with Deloittes. He is said to have located five more luxury cars in Singapore, including another Maserati, a Ferrari and a Lotus. The receivers are also looking for five more sports cars in Australia. Ownership of the cars could prove to be one of the most interesting aspects of an already interesting investigation. 

Level two is where inquiries are focussed on whether trading in certain ASX stocks was manipulated. The allegation is that someone associated with Opes Prime did a bit of manipulating by operating through a company called Riqueza which is registered in the Caribbean tax haven of the British Virgin Islands, a getaway which markets itself as “one of nature’s little secrets”. Riqueza is alleged to have played a role in propping up share prices to assist Opes Prime clients. The Australian Financial Review newspaper reported on Thursday morning that among the transactions being closely analysed was one involving a five per cent stake in Challenger Financial Services, a firm which has suffered a 68 per cent drop in its share price over the past 12 months, and which was a favourite on the margin lending books of Opes Prime. 

It is also on level two that we find allegations of leaks about takeover bids and the possible “infiltration” of the stock market by organised crime. Also on Thursday morning The Melbourne Age newspaper reported that the Australian Federal Police are investigating whether information relating to the proposed takeover of Golden West Resources by Fairstar Resources was leaked to Gatto and his partner in a crane hire business, Matt Tomas. It is alleged that the police have even tapped and taped telephone calls revealing how market sensitive information was leaked. The Age story, and a choice picture of Mr Gatto, can be found at business.theage.com.au. That story also alleges that another company caught in the Opes Prime collapse, Boss Energy, has a convicted drug trafficker among its top 20 shareholders. 

Moving on from level two of Opes Prime, but quickly noting that it is shaping as a brilliant film script to rival the British comedy/crime classic Lock, Stock and Two Smoking Barrels, we find the potential for government intervention – and that’s where it all becomes very messy. If there has been criminal activity in Opes Prime it falls into two legal jurisdictions, state and Federal. The Victoria police will be very interested in the cars. The Federal cops, and their good friends in the Australian Tax Office, will be looking at the tax and international money movement angles. Then we have another arm of government, the Australian Securities and Investments Commission taking a very close look at who was on duty at the ASX while some naughty boys were playing shenanigans. On this score the ASX looks very exposed because it’s supposed to know what’s happening in its market and it didn’t, and it’s supposed to be both a regulator and a listed company in its own right working for profit – a potentially hopeless conflict of interest. 

There are undoubtedly a lot more juicy bits to be exposed as Opes Prime is ripped apart, and we’ll be watching closely here on Minesite. We’re also looking forward to the movie in which Mick Gatto might even get a staring role, playing himself – while Minesite’s Man in Oz, being a well-known coward, will be far, far away.


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## drillinto (19 April 2008)

Equinox Will Soon Have The Largest Producing Copper Mine in Africa, Not To Mention A $1.5bn Uranium Stockpile

By Our Man in Oz / www.minesite.com / April 17, 2008

Try as he might Minesite’s Man in Oz cannot see Craig Williams, chief executive of Equinox Minerals, sitting for long on top of the world’s most valuable waste dump. That’s why the dual-listed Australian and Canadian company, with its flagship asset in Zambia, will press the “go” button later this year on the uranium phase of its Lumwana project. All that’s needed is a clear set of laws from the Zambian government and Equinox will not only be ranked as one of the world’s biggest copper producers, but also as one of the biggest uranium producers, a combination which should be of immense appeal to investors, and predators alike. Little wonder that since the start of 2007 the Equinox share price has been marching north, starting at A$2, rushing up to A$7, and now nestling at around A$5. That’s roughly the same price paid by the first raider on the Equinox share register, First Quantum, late last year.
It’s First Quantum’s 17.27 per cent stake in Equinox, as much as the uranium phase of Lumwana, which ought to have everyone interested in mining dusting off their Equinox file, as the company gets down to the business end of a 10 year odyssey in Africa. From being a company regarded as something of a curiosity when it moved early to secure an asset position before the resources boom took hold, Equinox today is in a near-priceless position, poised to play a starring role in the minerals world. Or as a perfect addition to the base metals and uranium division of a major miner. Xstrata or Anglo American rank among the natural marriage partners for Equinox, if First Quantum lacks the firepower to complete what it seems to have started last year. 

Williams disagrees, however. He’s determined to see Equinox achieve its potential as a free-standing and independent minerals producer with an outstanding growth profile. “We can see a range of growth opportunities,” he says after Minesite tracked him down to his office in Perth. “First there is a de-bottlenecking project which will lift us from 20 million tonnes [of ore] a year to 24 million tonnes,” he says. “Then there is the potential for building our own [copper] smelter, and then there is the uranium.” If awarding prizes for confidence Minesite’s Man in Oz would give Williams a gold. But he’s probably deserved that since the 1990s when he and his late partner in exploration, Bruce Nisbet, embarked on the Lumwana project, a mission which followed their joint discovery of the Ernest Henry copper-gold project in Queensland, and their joint 1994 award for prospectors of the year in Australia. 

Lumwana is a step up from Ernest Henry. It is a project with an “initial” 37 year mine life, and an orebody which contains discrete uranium zones, as well as copper. Mining, which started last year, is focussed on getting to the copper, and stockpiling the uranium–rich material, which isn’t allowed to pass through the concentrator. So Equinox’s government-approved design for Lumwana is to mine both types of ore, recover 169,000 tonnes of copper in each of the first six years, followed by a subsequent 122,000 tonnes a year, stockpiling uranium ore all the while. 

That plan looked good when uranium was US$11 a pound. It looks completely daft with uranium at US$71/lb. In dollars that means the value of the eventual 21.8 million pounds of uranium destined for Equinox’s waste dump has risen from US$240 million to US$1.5 billion – a number which is deliciously close to double the total capital cost of bringing Lumwana’s copper phase on-line. 

Williams laughs when Minesite’s Man in Oz asks whether he really wants to be the man in charge of the world’s most valuable rubbish tip. “We’re working on it,” he says. “Over the last six months we’ve been running a full feasibility study on uranium, and that’s being written up right now.” Perhaps, asks Minesite somewhat cheekily, Williams would care to share the results with our readers. “Not yet,” he says. “Given that the uranium ore is going to be in a stockpile it’s a fairly straight forward exercise, with simple metallurgy, and we’re going to be, essentially, treating a stockpile.” 

So, why doesn’t Equinox just get on with it and shift the 3,000 strong workforce on site at Lumwana across from copper duties to uranium duties, especially since Williams confirms that the results of the feasibility study should be released “within a month”. That, however, is when government enters the conversation. “What the process is from here is hard to say,” he says. “There are still permitting issues, and environmental impact studies.” But isn’t Zambia a uranium-friendly government, asks Minesite. “Yes, but as of right now the government doesn’t have uranium export legislation. They’ve been working on that for some time and it’s expected to be released soon. I would hope that our environmental permitting and the export legislation will be all ticked off by mid-year.” 

Those comments about the process through which the uranium stage of Lumwana is passing should catch the eye of investors. What it means is that mid-2008 becomes a red-letter phase in the life of Equinox. First copper concentrate is due by then, and if all goes to plan the resulting proof that the project works as promised ought to trigger one stage of a re-rating of the company. A government green light on uranium exports would be a second trigger. Then comes the expansion plans Williams has in mind, something which he is obviously thinking about, but which might be eluding the wider market. 

“This isn’t just a case of switch it on and watch it all happen,” he says. “There are a range of things happening after commissioning. We’re going to be looking at expansion, which starts with de-bottlenecking to push throughput up from 20 million to 24 million tonnes a year. In the medium term, perhaps over five years, we could crank it up another notch, perhaps to 35 million tonnes, something in that order. That’s one of the luxuries of having a 37 year mine life.” 

He’s right, obviously. Lumwana is not a small mine, nor is it a short-life mine. It will be, when full-scale production starts, Africa’s biggest producing copper mine, and while other projects in the planning and construction stage, such as Tenke Fungurume, might eventually surpass Lumwana’s first stage, Williams has no desire to stand still. After expansion comes early-stage thinking about a dedicated copper smelter, and the potential development of additional orebodies that Equinox has identified close to Lumwana. 

All good, so far. Now comes the tricky question: “What’s you relationship like with First Quantum,” asks Minesite, a question which draws an interesting - as in extremely interesting - reply. “Basically, we don’t have one,” Williams says with a throaty laugh. “Well, you know, they’re a shareholder, and that’s it. We’ve had no communication with them.” How interesting, thinks Minesite’s Man in Oz. Someone buys 17.27 per cent of your stock and there’s no communication – perhaps a case of silence speaking louder than words. That developing situation could well add further excitement to the already propitious mid-year that Equinox is expecting.


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## Plasmo (19 April 2008)

> There is clearly still a degree of ignorance, however, even among the organisers of the Conference, when they say that Australia also recognises that Africa it is not one, single amorphous mass, but individual states keen on attracting foreign investors able to work within black empowerment protocols. For a start Africa is made up of 51 different countries, not states,




A "state" is a generic term for a government.  Eg "Iraq is a failed state", what kind of illiterate tool writes an essay on correct knowledge of African politics without knowing that?


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## drillinto (20 April 2008)

April 19, 2008 / www.minesite.com /

That Was The Week That Was ... In Australia
By Our Man in Oz

Minews. Good morning Australia. How was your week? 

Oz. Calmer, is the one-word answer. The trend in the mining sector was up. Base metals, especially the nickel stocks, performed well. Iron ore, gold and uranium were mixed, and there was much less concern about stocks hit by the margin-lending crisis. The focus in that ongoing saga has now switched from the financial impact to legal argument over who sold what, and when.

Minews. It might have faded, but it was a fascinating storm in your teacup. 

Oz. Absolutely. One of the more bizarre incidents of recent years. One day we might even learn why some investors handed over title to share portfolios worth A$30 million - and more - to obtain a modest margin lending facility. The risk reward ratio was completely out of kilter. 

Minews. Let’s leave that for the historians, time now for prices. 

Oz. Starting with nickel stocks this week because there appears to be a bit of revival underway in this space, thanks to China’s continued demand for stainless steel, as what used to be known as the Middle Kingdom switches its economic engine from exports to internal growth. Western Areas (WSA) continues to shape up as the next Jubilee Mines. It is a small producer, but from very rich orebodies, which means it has takeover target written all over it. During the week Western Areas hit a 12 month share price high of A$7.90, before easing back to close at A$7.70, up A41 cents. Driving the stock was a report from the company that its Spotted Quoll discovery contains at least 34,500 tonnes of nickel in ore averaging a very attractive 6.3 per cent nickel. Mining could be underway before the end of the year. 

Other nickel stocks also had a good week. Breakaway Resources (BRW), the nickel specialist spun out of the old LionOre group, reported a maiden resource from its Horn discovery in Western Australia. At 8,300 tonnes of nickel and 1,800 tonnes of copper it’s a small deposit, but it is a first for Breakaway which has one of the best tenement positions in the nickel belt after it inherited most of LionOre’s ground. On the market, Breakaway rose A1.5 cents to A43 cents. Albidon (ALB), meanwhile is weeks away from first production at its Munali mine in Zambia, as reported on Minesite on Friday. It rose A17 cents, or 4.4 per cent, to A$4. Elsewhere, Sally Malay (SMY) rose A22 cents to A$5.05 while Poseidon (POS) did best of all in percentage terms, with a rise of A8 cents, or 12.3 per cent, to A73 cents. At one stage on Friday Poseidon traded as high as A81 cents. 

Minews. Iron ore next, please, then gold. 

Oz. Mixed, in both cases. The most interesting iron ore development was Atlas Iron’s decision to seek an extra A$100 million in capital to accelerate its exploration and mine development plans. The stock was in a self-imposed suspension for much of the week, but other iron ore hopefuls are watching with interest to see if investors have the appetite for such a big raising by a mid-sized miner. Another iron ore stock to self-suspend was Cazaly Resources (CAZ) which had its 15 minutes of fame last year when it claimed title to a tenement held by Rio Tinto. During the week Cazaly lost what appears to be its final appeal in front of the High Court. Cazaly’s last sale price on Thursday before the court decision was A21 cents. The company’s chief executive, Nathan McMahon, was one of the investors stung by the collapse of the Opes Prime margin lender, so you would have to say it’s been a pretty grim time for the company. 

Iron ore stocks that moved higher during the week included Gindalbie (GBG) which shook off its encounter with the margin lending crisis, rising A9 cents, or 11.6 per cent, to A86 cents. Fortescue Metals (FMG) continues to generate attention as its May export deadline draws nearer. Shares in Fortescue rose A42 cents, or 6.2 per cent, to A$7.18. Golden West (GWR) seems to have shrugged off its takeover worries, and this week rose A7 cents, or 4.8 per cent, to A$1.52. Interestingly, Fairstar Resources (FAS), the company chasing Golden West, was also in the news, though not for its iron ore interests. During the week Fairstar reported interesting gold assays from its Kurnalpi tenements, and its shares rocketed up by A9 cents, or a whopping 78.3 per cent, to A20.5 cents. At one point on Thursday, Fairstar was trading as high as A27 cents. 

Iron ore stocks trending down included BC Iron (BCI) which fell A5.5 cents to A94.5 cents. Brockman Iron (BRM), which reported a positive scoping study on its Marillana project, slipped A9 cents lower to A$2.01, while Cape Range (CFE) eased back by half a cent to A68.5 cents, ending several good weeks of share price recovery. 

Minews. Golds now please, and then a quick wrap of the rest of the market. 

Oz. Not a bad week for gold stocks, though the sharp sell-off in the London bullion market on Friday might hurt Australian gold stocks on Monday. Companies that moved higher last week included Newcrest (NCM), which was up A64 cents at A$33.34. Kingsgate (KCN) rose A15 cents to A$4.10. Ramelius (RMS) reported a high-grade hit from drilling at its Wattle Dam project and rose A16 cents, or 15.8 per cent, to A$1.17, while Navigator (NAV) also reported good gold grades from its Leonora project, and that pushed the company’s shares up A6 cents, or 13.7 per cent, to A49.5 cents. Going down, we saw Troy (TRY) ease back by A7 cents to A$2.83. Alkane (ALK) slipped A1.5 cents to A37 cents, and Silver Lake (SLR) fell A3 cents, or 9 per cent, to A30 cents. But Silver Lake is one of the more interesting new floats around, and we might take a closer look at it next week. 

Minews. Last words on the sectors and any specials, please? 

Oz. Coal stocks continued their upward run, which is hardly surprising with oil at US$115 a barrel. Coal of Africa (CZA) shot up to A$2.90, a rise of A57 cents, or 24.5 per cent. The company was obliged to issue a statement to the Australian market to the effect that there was no undeclared material information concerning the company. The statement also served to remind investors, though, that the price the company will receive for this year’s coal is up by 200 per cent, and that there may well be strategic buyers around looking to take a stake in the company. Straits Resources (SRL) announced a shuffle of its coal assets, and the shares rose A92 cents, or 15.3 per cent, to A$6.92 in response to the news. Macarthur Coal (MCC) rose A31 cents to A$13.25. Uranium stocks were mixed, though one deal during the week might flag a change of sentiment. Lion Selection, one of the smarter resource-focused investment funds, reported an increased stake in uranium explorer Havilah (HAV), which in turn rose A4 cents to A$1.32. Not a big deal, but a sign that fund managers are taking a fresh look at the uranium sector. 

Minews. Thanks Oz.


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## drillinto (19 May 2008)

May 18, 2008

That Was The Week That Was … In Australia
By Our Man in Oz
Source => www.minesite.com

Minews. Good morning Australia, another big week? 

Oz. Yes and no. It was big for iron ore, as Fortescue Metals Group loaded its first ship, and big for the top two in Aussie mining, BHP Billiton and Rio Tinto, but not so big elsewhere. Officially, the mining index on the ASX rose by 3.7 per cent to a 12-month high of 6,036.8. But when you analyse that record high you find that most of the rise, which started from a base of less than 5,000 at the start of April, has been caused by the remarkable upward run by Fortescue, BHP Billiton, Rio Tinto and a handful of coal stocks.

Last week was a good example of what’s been happening. On Friday, Rio Tinto and BHP Billiton both hit all-time highs. Rio traded up to A$156.69 before easing to close at A$155.35, and BHP Billiton was driven by rumours of Chinese buying to A$50 before closing at A$48.70. Those rises of six per cent and 4.7 per cent respectively also lifted the overall Australian market, as measured by the all ordinaries index, to a three month high. 

Minews. Interesting at the top end, but what happened further down? 

Oz. Good, in part. Most moves were modest, either way, with a few stand-out performances. Iron ore stocks seemed to run out of puff on the day Fortescue proved that its A$3.5 billion project works, perhaps a case of it being better to travel than arrive. Coal was the best overall sector. Nickel stocks were stronger. Gold stocks were weaker, with a few exceptions. Other base metal companies were all over the shop, and uranium stocks were marginally stronger. 

Minews. Let’s start with iron ore, because that’s obviously what’s been driving interest in the mining market. Fortescue’s first ship must have caused a stir. 

Oz. It certainly did, but there are a few people wondering whether we also witnessed the iron ore sector reaching its high-water mark on Thursday, when Fortescue (FMG) started loading. Fortescue itself did its best work as loading started, rising to an all-time high of A$9.74, and then slipping away to a Friday close of A$9.29, which was still up A11 cents for the week. 

Other iron ore stocks delivered similar unimpressive performances. Atlas Iron (AGO), one of the stars of the sector, rose A5 cents to A$3.77, well down on its mid-week high of A$4.17. Aquila (AQA), another of the new breed of iron ore miners, did better with a rise of A93 cents to A$14.23, but that price should be seen against last week’s peak of A$17.45. Those moves were among the best in the sector, but there was also a long tail of small rises and falls. Gindalbie (GBG) slipped A2 cents to A$1.21. Brockman (BRM) dropped A8 cents to A$2.84. BC Iron (BCI) was A2 cents lighter at A$1.51, after a mid-week peak price of A$1.69. Cape Lambert (CFE) fell A2.5 cents to A61.5 cents, and Grange (GRR) dropped A3 cents to A$1.66. The only small stock to deliver a decent upward move was FerrAus (FRS) which rose by A17 cents, or 13.8 per cent, to A$1.40. But that closing price was also down on the mid-week high of A$1.48. 

Minews. Let’s move on to the base metal stocks, starting with nickel, which still seems a favourite in your market. 

Oz. The story, as it has been for the past few months, was all about Western Areas (WSA). The company hit an all-time high on Friday of A$12, before easing back to end the week at A$11.65, an overall gain during the week of A$1.20, or 11.5 per cent. The excitement about Western Areas remains centred around its latest discovery, Spotted Quoll, which seems to be getting bigger and richer with each assay result. Other nickel stocks chimed in with reasonable rises. Sally Malay (SMY) rose A43 cents to A$5.91. Minara (MRE) crept A3 cents higher to A$5.91, while Mincor and Albidon dropped A19 cents and A5 cents respectively to A$3.50 and A3.94. 

Copper and zinc stocks were mixed. Most of the interest in this area still focussed on the Oxiana-Zinifex merger, and the possibility of a spoiler bid from Xstrata. Oxiana (OXR) rose a marginal A3 cents to A$3.51, and Zinifex (ZFX) gained an equally marginal A25 cents to A$10.72. Xstrata, meanwhile, did show that it remains on the acquisition trail after it launched a bid for Indophil, its partner in the Tampakan copper-gold project in the Philippines. Indophil promptly shot up by A37 cents, or 48.7 per cent, to A$1.13. 

Minews. Gold and coal, to finish, please. 

Oz. Not a lot to talk about with the gold stocks, largely because the price didn’t do much while we were awake. That last minute gold price surge up to US$897 in London on Friday should produce a different result down this way on Monday. On the ASX last week Kingsgate (KCN) crept higher, rising A6 cents to A$5.49. Resolute (RSG) rose A3 cents to A$1.98. Also, an old favourite of ours, Croesus (CRS) returned after a major reconstruction. It started its new life at A1.3 cents, and ended the week at A3.4 cents. Other moves were generally down. Troy (TRY) dropped A13 cents to A$2.24. Allied (ALD) slipped A1 cent to A65 cents, and Apex fell A7.5 cents to A80 cents. 

Coal stocks kept rising, largely in sympathy with the oil price. Coal of Africa (CZA), Macarthur (MCC), and Felix (FLX) all hit 12 month share price highs. Coal of Africa traded up to A$3.97 on Friday, before closing at A$3.87 for an overall gain of A6 cents on the week. Macarthur rose to A$18.33 before closing at A17.75, for an overall gain of A75 cents, and Felix got to A17.33, but ended the week at A16.91, a rise of A$1.10. 

Minews. Thanks Oz.


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## drillinto (25 May 2008)

May 24, 2008

That Was The Week That Was … In Australia
By Our Man in Oz => www.minesite.com

Minews. Good morning Australia. How was your week? 

Oz. Mixed. Iron ore and coal stocks led the way up, and uranium played a cameo role as a beneficiary of the high oil price. Gold stocks were generally higher, but base metals weakened. Overall the Australian mining market was down about one per cent, but most of that was because the recent strength in BHP Billiton and Rio Tinto has now run out of puff.

Minews. Let’s start with the bulk commodities as they seem to be reaping the benefits of Chinese demand. 

Oz. They do, though the most interesting news this week among the bulks was the entry into the Australian market of an Indian-led business, ArcelorMittal. ArcelorMittal splashed out A$630 million for a 14.9 per cent stake in Macarthur Coal (MCC). One of the vendors was Macarthur’s founder, Ken Talbot, who’s facing a few legal challenges and is working on an exit strategy. The arrival of ArcelorMittal effectively cuts Xstrata out of the bidding for Macarthur, but shareholders weren’t worried. Macarthur shares hit an all-time high of A$20.98 on Wednesday, before easing to close on Friday at A$19.85, up A$2.10, or 11.8 per cent, at A$19.85. A year ago, you could have loaded up with Macarthur shares at A$5.50. 

Other coal stocks joined in, some with rises even stronger than Macarthur’s. Felix Resources (FLX) soared on Friday to an all-time high of A$20.85 as speculation about a possible takeover bid grew. Felix eased marginally at the end of the week to close at A$20.10, but that was still up A$3.19, or 18.8 per cent, on the week as a whole. A year ago, Felix was trading at A$5.20. Centennial Coal (CEY), meanwhile, rose A57 cents, or 12 per cent, to A$5.30, and Riversdale (RIV) rose A99 cents, or 11.4 per cent, to A$9.70. One of the few coal stocks to swim against the trend was Coal of Africa (CZA) which slipped A12 cents to A$3.75. That ended a strong run from the company which is perhaps now starting to be discounted because of the fresh outbreak of racial strife in South Africa. 

Minews. Iron ore next, because that still seems to be powering along. 

Oz. It is, and the pace of deals is also accelerating. During the week one of the local favourites, Aquila Resources (AQA), announced that it was splitting up its production and exploration arms. No-one seems quite sure what that actually means but Aquila’s chairman, Tony Poli, reckons it will unleash unrecognised value from the exploration assets. On the market, Aquila rose A$1.22 to A$15.45, and Poli cemented his position as Australia’s latest billionaire. 

Epsilon (EPS), which was better known as a uranium hopeful until last week demonstrated how hot, or perhaps even overheated, iron ore has become. On Wednesday it announced it was “looking for” one billion tonnes of iron ore at its Mardie project in Western Australia. That was enough to drive the stock up from A17 cents to A87 cents in a matter of minutes, a 411 per cent gain which told seasoned observers of the Australian market that we have now entered the sharp end of a highly speculative boom. Epsilon later clarified its statement, acknowledging that it hasn’t actually done any drilling yet, and the price retreated to A36.5 cents. Those wild movements produced this fabulous equation: the shares were up A20.5 cents, or 128 per cent, on the week, but down A31.5 cents, or 46.3 per cent, on Friday. It’s fun, but is it investment? 

On a more serious note, FerrAus (FRS), which is proving up a high-grade haematite orebody adjacent to BHP Billiton’s flagship Mt Newman mine in Western Australia, performed strongly, rising A19 cents, or 13.6 per cent, to end the week on a 12 month high of A$1.59. Other upward moves worth noting included Gindalbie (GBG), up A15 cents, or 12.4 per cent, to A$1.36; BC Iron (BCI), up A24 cents, or 15.9 per cent, to A$1.75; and the sector leader, Fortescue Metals (FMG), up A27 cents to A$9.56, a closing price which was down on the all-time high of A$9.98 reached during earlier trade on Friday. If not for last year’s 10-to-one share split Fortescue would be within a whisker of A$100 a share. 

However, as interesting as Fortescue is, there are an increasing number of analysts starting to pick up on a point made here last week about how the stock may well be a classic example of why it can be better to travel than arrive. Having proved that it can run a mine, a railway, and a port, Fortescue how has to prove that it can run a business. 

This more critical approach to iron ore, and especially to companies that are proposing to build high cost magnetite processing operations, with their higher levels of fuel consumption, was demonstrated in a number interesting share price falls during the week. Grange Resources (GRR) was hammered on Thursday and Friday, dropping A16 cents, or 10.6 per cent, over those two days, to end the week at A$1.35. The fall is not only against the run of play, but takes Grange to less than half the A$3 price reached last August. 

Minews. We’re running out of time. Let’s move to the gold sector, then base metals, uranium and any specials, please? 

Oz. Best of the gold stocks was Resolute (RSG), which we took a look at last week. It rose A21 cents, or 10.6 per cent, to A$2.19. Kingsgate Consolidated (KCN) rose A20 cents to A$5.69, continuing what has been a significant upward re-rating over the past few weeks. Lihir (LGL) rose A25 cents to A$3.35, and Silver Lake (SLR) returned to favour with a rise of A3.5 cents, or 10.3 per cent, to A37.5 cents. 

Nickel, copper and zinc stocks were generally weaker, in line with the metals markets. Among the nickels, Western Areas (WSA) finally slipped back after a spectacular three month upward run. It fell A63 cents to A$11.02. Sally Malay (SMY), meanwhile, eased back A86 cents, or 14.5 per cent, to A$5.05, and Mincor slipped A12 cents to A$3.38. Going against that trend was takeover target Albidon (ALB), which rose A43 cents, or 10.9 per cent, to A$4.37. 

Oxiana (OXR) headed a weaker crop of copper stocks, dropping A21 cents to A$3.30. Also among the fallers, Kagara (KZL) dropped A65 cents, or 11.3 per cent, to A$5.10, while CBH was off a sharp A4 cents, or 11.6 per cent, and closed at A30.5 cents. 

Uranium stocks were interesting because most rose, even though there was no reported movement in the price of uranium. Paladin (PDN) rose A47 cents to A$5.87. Toro (TOE) rose an even more impressive A10 cents, or 37.7 per cent, to A36.5 cents. Wildhorse (WHE) rose A5.5 cents to A$72 cents, and Uranex rose A5.5 cents, or 11.5 per cent, to A53.5 cents. 

The only special of note was an aggressive takeover bid for drilling specialist Ausdrill (ASL) by mining contractor Macmahon Holdings. Macmahon launched an all-scrip bid, pushing Ausdrill shares up by A72 cents, or 38.7 per cent, to A$2.58. That sounds like a good price but it’s actually less than the 12 month high of A$2.86 that Ausdrill hit in June last year. 

Minews. Thanks Oz. Keep an eye on those uranium stocks, you might be seeing the first stirrings of a fresh upward move by the sector.


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## drillinto (1 June 2008)

May 31, 2008

That Was The Week That Was … In Australia

By Our Man In Oz
Source ==> www.minesite.com/aus.html

Minews. Good morning Australia, it looks like a somewhat rougher week for your miners?
Oz. It was, though once again most of the damage was done by the slide in the value of the very big companies. BHP Billiton and Rio Tinto both came down with a thump, as they would have in London. The difference is that in Australia those two companies get a disproportionately heavy weighting in the metals and mining index. The result was that the metals and mining index dropped by 6 per cent over the week while some of the stocks we routinely follow went up quite strongly.

Among the sectors a snapshot looks like this; gold mixed but generally stronger, base metals down, but with a few upward moves mainly thanks to a dash of corporate activity, coal mixed, iron ore generally up with some quite strong moves, and uranium showing more signs of life after a 12-month slumber.

Minews. Let’s start with iron ore again because that seems to be the Australian favourite this year.

Oz. It certainly is, and much of the credit for that goes to the way in which Fortescue Metals Group (FMG) has successfully created a viable rival to BHP Billiton and Rio Tinto. During the week FMG’s exuberant chief executive, Andrew Forrest, was in the news for two reasons. First came his travel to Shanghai to greet FMG’s first shipment of 170,000 tonnes of iron ore. Then came his naming as Australia’s richest person, knocking off media and casino king, James Packer. On the market, FMG continued to deliver for investors, adding another A$1.09 (11.4 per cent) to close the week at A$10.65. Given that the company split its shares on a 10-for-one basis last year it is now above A$100 per share on a pre-split basis.

Elsewhere among the iron ore stocks there were a number of star performances. Gindalbie (GBG), which we took a look at a few days ago because of its fresh focus on the fast cash-flow possible from developing a bigger haematite operation, added A29 cents (21.3 per cent). Part of that rise can be attributed to a tour by Australian analysts of the operations of Gindalbie’s Chinese partner, AnSteel, and the very encouraging comments made by AnSteel executives.

Other reasonable upward moves among the iron ore stocks came from Atlas Iron (AGO, which added A30 cents (7.9 per cent) to A$4.10 after reporting the acquisition of additional exploration tenements. FerrAus (FRS) rose A31 cents (19.4 per cent) to A$1.90 after announcing fresh exploration success near BHP Billiton’s big Mt Newman mines, and Grange Resources (GRR) continued to recover after a period in the doldrums, rising A25 cents (18.5 per cent) to A$1.60. Golden West Resources (GWR) was another stock to attract interest amid speculation that it might soon received fresh attention from its major new U.S. shareholder, Cleveland Cliffs. On the market, Golden West rose by A48 cents (29.6 per cent) to A$2.10.

On the negative to downside Cape Lambert (CFE) showed little sign of movement despite a Chinese investor winning government approval to buy the company’s namesake project. On the market, Cape Lambert traded at a steady A62 cents. Another stock not moving despite hitting the news was Jupiter Mines (JMS). During the week the Brian Gilbertson-led Pallingh

Minews. Coal now and then move across to the base metals and gold.

Oz. Coal just gets hotter thanks to ArcelorMital’s move into Macarthur Coal (MCC) though last week the action shifted to other stocks, probably in the belief that they will be the next takeover targets. Felix Resources (FLX) shot up another A$3 (14.9 per cent) to A$23.10. Coal of Africa (CCZ) rose A30 cents (8 per cent) to A$4.05, and Riversdale (RIV) added A$1.10 (11.3 per cent) to A$10.80 on news that Macarthur founder Ken Talbot had acquired a 6 per cent stake in the stock. Macarthur itself eased a marginal A20 cents (1 per cent) to A$19.65.

Base metal stocks, as mentioned earlier, produced most of the week’s losers, with a few exceptions. Let’s get the bad news out of the way first. Oxiana (OXR) was hit by lower metal prices and news of a small fire at its Sepon copper plant. Those two events cost the company A24 cents (7.2 per cent) as it fell to A$3.09. Oxiana’s merger partner, Zinifex (ZFX) also slithered lower, shedding A78 cents (7.6 per cent) to A$9.50. Kagara (KZL) was another copper/zinc play to lose altitude despite good news from site. It fell A20 cents (4 per cent) to A$4.90, and CBH (CBH) eased back a modest half-a-cent to A29.5 cents.

Nickel stocks, apart from a few exceptions, were also hit by the sliding price of the metal. Despite talk of a takeover moves Sally Malay (SMY) slipped A25 cents (5 per cent) lower to A$4.80, while another takeover favourite, Albidon (ALB) went the other way rather rapidly, adding A73 cents (18.7 per cent) to A$5.10. Elsewhere among the nickels it was a gloomy sight. Mincor (MCR) slipped A18 cents (4.7 per cent) lower to A$3.22. Western Areas (WSA) ran out of steam after a few remarkable weeks, ending the week at A$10.07, down A95 cents (8.6 per cent), while Minara Resources (MRE) fell a very sharp A87 cents (15.5 per cent) to A$4.74, perhaps reflecting the higher costs it is facing for both fuel and sulphur used extensively in its laterite ore processing plant.

Minews. Gold stocks now, please?

Oz. One or two good moves, but not real fire in the sector. Resolute (RSG), which we looked at last week was the star of the sector, adding A38 cents (18.4 per cent) to A$2.55, a sign that interest is building in the stock as it gets closer to re-starting the Syama project in Mali. Andean Resources (AND) also performed well thanks to a steady flow of positive news from its Cerro Negro project in Argentina with the shares rising A24 cents (14.7 per cent) to A$1.87. Sino Gold (SGX) was the third riser of note, adding A34 cents (8.4 per cent) to A$5.66, but most other moves were modest, either way. Troy (TRY) gained A3 cents to A$2.35. Dragon Mountain (DMG) lost A3 cents to A42 cents and Kingsgate (KCN) slipped A9 cents lower to A$5.60 after a very strong month.

Minews. Keep an eye on Kingsgate, it seems to be in recovery mode?

Oz. Will do. I might be speaking with the managing director, Gavin Thomas, next week.

Minews. Any final news, or specials.

Oz. Uranium continues to show signs of fresh life, but without a definite trend developing yet. Wildhorse (WHE) was up A13 cents (18 per cent) to A85 cents, and Toro (TOE) was up A2 cents (5.5 per cent) to A38 cents, but Uranex (UNX) was down A3 cents (5.6 per cent) to A50 cents, Bannerman (BMN) was down A7 cents (3.5 per cent) to A$1.93, and Extract (EXT) was down A1 cent to A$1.15.

Minews. Thanks Oz. Will speak to you early next week.


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## drillinto (9 June 2008)

June 08, 2008

That Was The Week That Was … In Australia

By Our Man In Oz
www.minesite.com

Minews. Good morning Australia, how did your market hold up in a fairly tough week?
Oz. Surprisingly well considering the depth of global gloom. Overall, the metals and mining index slipped a very modest 0.5 per cent, a sign that rises roughly equalled falls. Next week, however, could be much more interesting because we’re likely to see a clear gap open between Australia’s commodity-based economy and the manufacturing economies of Europe and the U.S. Those record oil prices posted on Friday, plus higher precious and base metal prices, will flow directly into ASX-listed stocks when the market opens on Tuesday after our version of the Queen’s Birthday public holiday on Monday.

Minews. You don’t think your west coast gas shortage will hurt?

Oz. It probably will, but not for long. Most of the damage will be in the form of higher costs as miners are forced to switch from natural gas to diesel, but that cost should be largely absorbed by higher metal prices. That’s why we didn’t see too much damage done when the gas plant on Varanus Island blew up. Companies directly affected fell, but not a lot. Iluka (ILU), the big titanium minerals producer slipped A7 cents (1.8 per cent) to A$3.62. Oxiana (OXR) after initially moving up closed the week at A$2.97, down A12 cents (3.8 per cent) for the week, and the small copper miner, Jabiru (JML) lost A10 cents (12.2 per cent) to A72 cents, a price which might cause some problems with a A$52 million capital raising announced a week before the gas outage with new shares to be issued at A82 cents.

Minews. Fingers crossed that the issue was thoroughly bedded down before the gas was turned off. Let’s move through the sectors now, starting with what looks like bad news in the base metals sector.

Oz. True. Not a pretty sight, with some brokers turning quite sharply against the traditional base metal leader in the Australian market, nickel. Goldman Sachs went as far as to recommend selling three of the leaders, Western Areas (WSA), Minara (MRE) and Independence (IGO). That advisory note, which was widely-reported in the daily news media, did its job with Minara falling a very sharp A88 cents (18.6 per cent) to A$3.86. Independence dropped A$1.05 (16.3 per cent) to A$5.40, and Western Areas lost A40 cents (4 per cent) to A$9.67. Minara’s fall was the harshest of all because it is a Varanus gas customer, and a big user of sulphur in its treatment process and the price of sulphur has risen sharply this year.

Other nickel stocks also suffered in the sell-off, but not as badly. Mincor (MCR) lost A12 cents (3.7 per cent). Albidon (ALB) fell A78 cents (15.3 per cent) and Kagara (KZL), which is better known as a zinc and copper producer, slipped A5 cents (1 per cent) to A$4.85. The reason Kagara is included is that during the week it reported excellent assays from its Lounge Lizard nickel exploration project which is adjacent to Western Areas promising Spotted Quoll discovery.

Minews. If nothing else you guys certainly come up with some bizarre names for your projects.

Oz. We do, but at least we’re having fun as well as making money. Moving on to other parts of the base metals complex we saw zinc and copper stocks slip lower. Zinifex (ZFX) eased back by 17 cents (1.8 per cent) to A$9.37. CBH (CBH) lost A4 cents (13.7 per cent) to A25 cents, a closing price which was A1 cent above the 12 month low of A24 cents reached on Wednesday. CBH’s merger partner, Perilya (PEM) fell even harder, shedding A21 cents (24.4 per cent) to A65 cents.

Minews. Time for some good news. Let’s go through the iron ore, coal and gold sectors, and any specials, please

Oz. Iron ore was curiously mixed last week. The sector darling, Fortescue Metals Group (FMG) ran out of puff after a spectacular upward run. Officially, it dropped A65 cents (6.5 per cent) to A$10, but on Wednesday it traded up to an all-time high of A$12, so you could argue that it fell 16.6 per cent over the last two days of the week. Other iron ore stocks to lose ground included: Atlas (AGO), down A34 cents (8.3 per cent) to A3.74, BC Iron (BCI), down A15 cents (8.7 per cent) to A$1.57, and Gindalbie, down A12 cents (7.3 per cent) to A$1.53.

Going up we had Cape Lambert (CFE) add A5 cents (8 per cent) to A67 cents. Interest in the stock was fuelled by rumours that one of your favourite Russians, Roman Abramovich, of Chelsea Football Club fame, is poised to emerge with a 13 per cent stake in Cape Lambert via a complex option exercising move. Sundance Resources (SDL) was another iron ore play returning to the limelight after a long stay in the doghouse. It added another A4 cents (10.8 per cent) to A41 cents, and IMX Resources (IXR) continued to please its patient followers with an increase of A6 cents (10.2 per cent) to A65 cents on news that it has started a trial dig at its Cairn Hill iron and gold project.

Most coal stocks continued to perform well, with once notable exception, Felix Resources (FLX). It dropped a very sharp A$3.45 (14.9 per cent) to A$19.65. Offsetting that fall was a modest A30 cent (1.5 per cent) rise by Macarthur Coal (MCC) to A$19.95, and a very strong performance by the AIM-listed Caledon Resources (CCD) which raised a fresh A$15 million at A$1.10 as part of obtaining an ASX quote. Caledon shares opened down here at A$2.90, a handsome profit for stags, before ending its first week at $A2.67, up A$1.57 (143 per cent) on the issue price.

As part of the overall coal industry we have been watching some red-hot trading in coal-seam gas stocks, a sector which seems to be in a half-way house between mining and the petroleum industry. Of particular interest are two underground coal gasification hopefuls, Metex (MEE) and Linc Energy (LNC). Metex added A15 cents (23.6 per cent) last week to A78.5 cents, and Linc rose A$1.10 (36.6 per cent) to A$4.10.

Minews. Gold and specials to finish, please.

Oz. A downward trend was again evident among the gold stocks. St Barbara (SBM) slipped A5 cents (8.2 per cent) lower to A56 cents. Kingsgate (KCN) shed a modest A5 cents (1 per cent) to A$5.55 after a very strong upward move. Troy (TRY) eased back another A20 cents (8.5 per cent) to A$2.15 and Centamin lost A4 cents (3 per cent) to A$1.29.

The only specials worth mentioning where the phosphate stocks which have been somewhat of a speculator’s favourite thanks to rising global fertiliser demand. Last week saw more hectic activity with sector leaders Minemakers (MAK), Uramet (URM) and South Boulder (STB) continuing to rise. Minemakers added A22 cents (12.7 per cent) to A$1.94. Uramet rose A2 cents (13.3 per cent) to A17 cents, South Boulder gained A9 cents (32 per cent) to A37 cents.

Minews. Thanks Oz.


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## drillinto (3 August 2008)

August 02, 2008

That Was The Week That Was … In Australia
By Our Man in Oz
www.minesite.com/aus.html

Minews. Good morning Australia. Was there much excitement on your market last week? 

Oz. Not really. Everyone here seems to be doing the “eggshell” walk, while holding crossed fingers behind their back. Most share price moves last week were pretty flat, either way. A body count shows roughly half those which did move went up, and half down while the metals and mining index (XMM) actually rose by a somewhat misleading 4.3 per cent, with almost all of that attributable to the top end stocks, BHP Billiton (BHP) and Rio Tinto (RIO), although a couple of other major producers chimed in with upward moves. Iluka (ILU) and Alumina (AWC) offered interesting examples of institutional funds seeking to build positions in two late entrants in the China story.

Minews. Now that is interesting, because it appears to indicate that professional investors believe demand from China for minerals and fuel will re-start the upward price run after the end of the Olympic shutdown. 

Oz. It’s looking a bit that way, but you would also say there’s a degree of wishful thinking. Iluka is the interesting player in this “late blooming” game because its products, titanium minerals and zircon, are traditionally late movers in the commodity cycle. Over the past week it rose an eye-catching A64 cents, or 14.7 per cent, to A$4.98, and briefly popped above the A$5.00 mark for the first time since October last year. To put Iluka’s run into an even brighter light, this is a stock which was trading as low as A$3.04 in mid-June, so the upward run since that low amounts to A$1.94, or 63.8 per cent. 

Minews. How very interesting. And Alumina has been performing as strongly? 

Oz. Not quite as strongly, but it was up A12 cents to A$4.50 last week, mainly as a result of China’s aluminium production cuts, which, it has to be said, might prove to be temporary. Interestingly, both Iluka and Alumina could emerge as beneficiaries of another force in the Aussie market, the sliding value of the local dollar. After rushing headlong up to take a peek at parity with its US cousin, the Aussie sank last week all the way to US93.7 cents. 

Minews. Alright. Let’s go through the sectors, starting with gold, please. 

Oz. Not a lot to get excited about here, a point best made by a look at Newcrest (NCM), the sector leader, which opened and closed the week at A$28.95. It bobbled about a bit in between, briefly clearing the A$30 mark, and then slipping to A$27.70, before ending exactly where it started. Elsewhere among the gold stocks it was hard to find a winner. Centamin (CNT) was probably the best after it released more good news from its big Sukari project. Centamin added A7 cents to close at A$1.15. Silver Lake (SLR) was also in the black, creeping half a cent higher to A28 cents. After that came a long list of losers. Apex (AXM) fell A6 cents to A60 cents, Avoca (AVO) dropped A7 cents to A$1.81, Adamus (ADU) came back a rather sharp A5.5 cents, or 12.2 per cent, to A39.5 cents, and Allied Gold (ALD) did even worse with a fall of A7 cents, or 15.9 per cent, to A37 cents. 

Minews. Presumably base metals were even less impressive. 

Oz. Actually no. They seem to have passed through their price correction phase, allowing for a few exceptions either way. Among the nickel stocks, Panorama (PAN), the old Sally Malay, surprised with a rise of A11 cents to A$2.25, and Mirabela (MBN) was another nickel stock to deliver a strong rise, adding A35 cents to A$4.62 as it delivered new resource numbers. Albidon (ALB) managed a rise of A2 cents to A$2.52, but Mincor (MCR) lost A15 cents to A$1.72. Minara (MRE), meanwhile, continued to pay the price for higher fuel and sulphur costs, dropping A20 cents, or 10.4 per cent, to A$1.72. 

Copper stocks produced a few interesting moments. There was a blast from the past from Bougainville Copper (BOC), which attracted investor interest as a tentative group of activists tried to urge management into doing something with its mothballed mine in Papua New Guinea. The publicity associated with some very pointed questions from these investors helped lift Bougainville by A17 cents, or 16.5 per cent, to A$1.20, though admittedly in very light trade, as the stock remains a captive of Rio Tinto. The other copper stock to hit the headlines was Citadel (CGG), one we haven’t heard much from before but which has a project in Saudi Arabia, and a new high-profile adviser in the form of Owen Hegarty, the man who made Oxiana. On the market, Citadel was up A1 cent to A28 cents. 

Zinc stocks also produced a couple of promising moves, particularly from Silver Swan Group (SWN) which reported a rich copper-zinc discovery close to the Golden Grove zinc mine owned by OZ Minerals near the Australian west coast. More news will be released about the discovery at a media conference scheduled for Monday in Kalgoorlie, to coincide with the start of the annual Diggers & Dealers forum. Meanwhile, on the market, and despite a flat outlook for zinc, Silver Swan shot up a very impressive A33 cents, or 78.5 per cent, to close at A75 cents. That rise included one of A16 cents, or 27.1 per cent, on Friday alone. 

Minews. That sounds like a positive start to Diggers & Dealers, but let’s leave that until next week, and finish off last week’s market. 

Oz. The two bulk commodities, iron ore and coal, seemed to be moving in different directions. Coal stocks soared and iron struggled. Felix Resources (FLX) was the coal star, putting in a spectacular rise of A$4.31,or 24.5 per cent, to A$21.90, largely on takeover speculation. Other impressive movers were Riversdale (RIV), which added A$1.08, or 12.1 per cent, to close at A$9.98. Macarthur (MCC) did even better with a rise of A$2.18, or 16.1 per cent, while Whitehaven (WHC) rose A70 cents, or 20.4 per cent, to A$4.12. 

Most iron ore stocks were flat to lower, with one stand-out performer in Portman (PMM), which is at the centre of what seems to be a twin takeover battle. Portman rose A$1.24 to A$18.27, but did hit an all-time high of A$18.62 on Thursday as its US parent, Cleveland Cliffs, became the centre of a struggle for control. Meanwhile Portman itself stepped up its move to gain control of Golden West (GWR), which ended the week steady at A$1.75. Elsewhere among the iron ore stocks, Atlas (AGO) slipped A2 cents lower to A$2.53, BC Iron (BCI) dropped A2 cents to A$1.11, and Territory (TTY) slipped A7 cents, or 10.6 per cent, lower to A59 cents. But the biggest loser for the week was Cape Lambert Iron Ore (CFE) which dropped A21.5 cents, or 26.7 per cent, to A59 cents amid fears that it is struggling to get a promised A$400 million cheque from the Chinese buyer of its Cape Lambert project. Meanwhile a Russian investor moved to secure control of Cape Lambert itself, in partnership with the Chinese. 

Minews. Thanks Oz. What an interesting time you’re having on the corporate front. Enjoy Kalgoorlie.


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## drillinto (1 September 2008)

August 31, 2008

That Was The Week That Was … In Australia
www.minesite.com/aus.html

By Our Man in Oz

Minews. Good morning Australia. It looks like it was a better week among your mining stocks last week. 

Oz. It was, thank you. The metals and mining index was up a comfortable three per cent, which was actually slightly less than the four per cent overall rise enjoyed by the all ordinaries index. Having said that it was actually rather difficult to define a trend. In every sector you can find stocks that rose, and stocks which fell, with very few extreme moves either way.

Minews. A little bit of normality is not a bad thing. 

Oz. Quite right, and perhaps we are at last seeing the formation of the bottom of this bear market. But perhaps too, there aren’t yet many investors brave enough to take large positions. Just a small bite at a time. So let’s start this week by cheering everyone up with the best of the performers and then go for a stroll through the sectors. 

The surprise of the week came from a stock we rarely mention, but which is a very good small performer, Jabiru Metals (JML). It rose an eye-catching 31 per cent, or A9 cents, over the week, to close at A38 cents, and apparently for the best of reasons. On Monday, the company presented at a mining conference in Melbourne and highlighted the low cost of production at its flagship Jaguar copper-zinc mine in Western Australia. Neither metal is in favour with investors at the moment but when Jaguar revealed a cost of US34 cents per pound of zinc-equivalent in July, now falling to less than US20 cents per pound, everyone took notice. The Jaguar mine suddenly looks a very profitable proposition, with a targeted output of 8,000 tonnes of copper next year, plus 30,000 tonnes of zinc. 

Minews. The message from the market being that investors bought the production story, because that’s what this stage of the market is all about. 

Oz. Precisely. If you’re in production, and have costs under control, you are going to be a winner as China re-starts its industrial engine after the Olympics party. Meanwhile, another base metal stock which caught the eyes of investors, but this time with a discovery story, was Azure Minerals (AZS), which reported bonanza grade copper at its Promontorio prospect in Mexico. Assays of up to 46% copper from thin veins of a thickness of about half a metre helped push the stock up 17.8 per cent, or A2.5 cents, to A16.5 cents. Also on the up was Citadel Resources (CGG), the Saudi copper play which has attracted the attention of ex-Oxiana boss, Owen Hegarty. Citadel was 11.5 per cent, or A3 cents, to the good at A29 cents. 

Minews. Those look interesting moves from a few of the base metal stocks, so let’s start the sector-by-sector round-up in that area and then roam across the bulks and precious metals areas. 

Oz. Finishing with copper and zinc, it was interesting to see Perilya (PEM) manage a very modest A1 cent rise to A53 cents, in a week when it hung all its dirty linen out on the line by reporting a net loss from its Broken Hill zinc operations of A$22.1 million, and an impairment write-off of A$188.2 million caused by the mass sackings and production cut-backs aimed at getting costs down. At its closing price for the week Perilya is now A13.5 cents, or 34 per cent, up on its 12 month low of A39.5 cents set in early August, perhaps another straw in a fairer wind. Other copper and zinc stocks performed less well. OZ Minerals (OZL) fell A13 cents to A$1.75, Kagara (KZL) slipped A14 cents to A$3.13, and Anvil (AVM) dropped A30 cents to A$7.70. Nickel stocks were mixed, but trending up. Independence (IGO) added A23 cents to close at A$3.30, Minara (MRE) rose A15 cents, or 10.7 per cent, to A$1.55, and Albidon (ALB) put on A5 cents to close at A$2.19. On the way down, we saw Mincor slip A10 cents to A$1.90, ending a strong recovery, and Panoramic (PAN) drop by A13 cents to A$2.19. 

Minews. Iron ore and coal, and finish with gold, please. 

Oz. Golden West (GWR) was the iron ore star attraction of the week, though for an odd sort of reason. At the company’s extraordinary meeting in Perth on Friday a fist fight broke out between warring factions. Some of those involved were from Fairstar Resources which tried to snatch control of Golden West last year. Sadly, your man in Oz missed the punch-up, but local media reports said about a dozen people were involved, with staff at the Hilton hotel called in to break-up the fracas which also involved tossing a few chairs across the meeting room. 

Minews. What is it with you Aussies and hotels? 

Oz. We enjoy the beer, that’s all. Anyway, the end result of the meeting was a stalemate. Portman (PMM) had been trying to insert a couple of its representatives onto the board, but seems to have failed. On the market, Golden West fell A30 cents, or 17.6 per cent, to A$1.70, though not because of the brawl, but more because Portman ended its top-up share buying which aimed to ensure that it retains a 20 per cent stake in its target. 

Elsewhere among the iron ore stocks, Fortescue (FMG) rose a modest A31 cents to A$7.65 it announced a big preference share issue to fund its expansion plans. Atlas Iron (AGO) also moved ahead by a rather sharp A35 cents, or 18 per cent, to A$2.28, while Brockman (BRM) rose A23 cents, or 15.4 per cent, to A$1.72. On the way down, we saw Cape Lambert (CFE) drop A2 cents to A49 cents, and BC Iron (BCI) slip half a cent to A85.5 cents. 

Coal stocks were generally stronger as the oil price rose, although the big exception was Macarthur (MCC) which fell A$1.05, or 7.3 per cent, to A$13.40. On the way up was Riversdale (RIV), which put in a rise of A84 cents to A$10.41, Coal of Africa (CZA), stronger by A10 cents at A$3.05, and Gloucester Coal (GCL) which rose A$1.43, or 13.9 per cent, to A$11.70. 

Minews. Gold stocks to finish, please. 

Oz. It was a better week for golds, with some encouraging upward momentum. Apex (AXM) reported good drill results from its Cascade project, and the stock responded by rising A9 cents, or 25 per cent, to A45 cents. Kingsgate (KCN) was also one of the better performers, A47 cents, or 10.4 per cent, to the good at A$4.97. Also stronger were Resolute (RSG), up A18 cents, or 12.7 per cent, to A$1.60, and Troy (TRY), which ended a few tough weeks with a rise of A19 cents to A$1.60. Westgold Resources (WGR) attracted a lot of interest with a series of excellent drill hits at its Rover project near Tenant Creek in the Northern Territory, news which propelled the shares up by A6 cents, or 18.7 per cent, to A38 cents. Most falls were modest. Silver Lake (SLR) posted the heaviest loss, slipping A2 cents to A19 cents, while Norton Goldfields dropped half a cent to A21 cents, and Tanami fell 0.4 of a cent to A3.5 cents. 

Minews. Thanks Oz. Try and make it to the next Golden West meeting, and don’t forget to ask for a ringside seat.


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## drillinto (6 October 2008)

October 05, 2008

That Was The Week That Was … In Australia
By Our Man In Oz >>> www.minesite.com

Minews. Good morning Australia. Should we ignore the market and talk about sport today?
Oz. What a good idea, unfortunately I believe some of your readers might see last week as the “point of no hope” which signals that the bottom of a very painful share price slide is near. If it’s not then we might have nothing but sport to talk about in the future. Until then, let’s trawl through the wreckage and see who got clobbered hardest and who might have swum against a very fast moving tide.

In terms of good news, it was only to be found in a handful of gold stocks, one iron ore stock and one zinc stock. And, for finding those I believe I’ve earned a brownie point.

In terms of bad news, you can take your pick. Nickel and copper stocks were murdered as base metal prices finally succumbed to the awful outlook for demand in the industrial metals sector. Iron ore stocks, apart from Cape Lambert (CFE), retreated as fears grew that their day of reckoning approaches at the next price setting negotiations. Coal and uranium stocks joined in the withdrawal, and some of the speciality metals were slaughtered as the twin problems of falling commodity prices and the collapse of the banking sector made it perfectly clear that many of the grand plans of the past five years have been returned to the filing cabinet, and the new float game is officially dead after a trio of horrible debuts.

Minews. Let’s start with the big picture, and then move through the sectors, starting with gold as that seems to be the sector which has most to gain from what’s happening.

Oz. Overall, the metals and minerals index on the ASX dropped by 10 per cent, perhaps one of the biggest falls ever. Set against that was a modest 2.8 per cent slide in the all ordinaries index, and miniscule rise in the financials index, which was probably more of a rebound after weeks of falling. To put the mining sector into an even clearer focus Cape Lambert’s A5 cents (13.2 per cent) rise to A43 cents made it the top performing resource stock for the week, though largely because of corporate activity rather than a reflection of the overall iron ore market. CBH (CBH), the zinc stock to rise, was also pushed along by corporate interest after it lodged a hostile takeover bid for one-time merger partner, Perilya (PEM). CBH’s rise of half-a-cent (6.6 per cent) to A8 cents made it the fifth best performing resource stock. Its target, Perilya, fell A1 cent (3.2 per cent) to A30 cents.

Minews. Time for gold, and then the rest.

Oz. Apart from the sector leaders, Newcrest (NCM) and Lihir (LGL), Apex Minerals (AXM) was one of the better performers after completing a very rare capital raising and then locking in forward sales for more than half its forecast gold output for the next three years. Those two developments, plus an upbeat mid-week presentation at an investment conference by Apex chief executive, Mark Ashley, saw the stock trade as high as A48 cents, before easing to end the week at A42 cents for a gain of half-a-cent. Not much, but up nevertheless. Sub-Sahara (SBS) was another gold stock to rise modestly after fresh drill results from an exploration project in Eritrea. The stock added the smallest imaginable amount of one-tenth of a cent to A3 cents but, like Apex’s half-a-cent you take whatever rise you can these days.

Other gold moves were erratic, and while the results for the week were down there was interesting activity. Kingsgate (KCN), for example, lost A13 cents (2.6 per cent) to A$4.75 but was up slightly on Wednesday and then oscillated spectacularly on Friday, moving between a low of A$4.16, and the closing high of A$4.75. Other gold moves included Newcrest slipping A45 cents (1.6 per cent) to A$27.59 despite trading up to A$29.64 on Thursday. Lihir lost A7 cents (2.6 per cent) to A2.63, but was as high as A$2.80 on Thursday. Troy (TRY) dropped A12 cents (8.8 per cent) to A$1.24 after its founder and long-term chairman, John Jones, announced his shift to a back-bench directors role. Resolute (RSG) fell 25 cents (19.4 per cent) to A$1.04 and St Barbara (SBM) slipped A3.5 cents (11 per cent) to A28 cents.

Minews. Base metals, then iron ore and any specials to finish.

Oz. All red ink among the nickel and copper stocks, and apart from CBH, the same among zinc stocks. Poseidon (POS) which had raised hopes of re-developing the historic Mt Windarra nickel mine bombed out badly when it announced the sacking of workers and a retreat to the surface. On the market, Poseidon lost A14 cents (36.8 per cent) to A24 cents. Western Areas (WSA) fell A$1.33 (16.4 per cent) to A$6.76. Mincor (MCR) dropped A20 cents (15 per cent) to A$1.12 and Albidon (ALB) slipped A6 cents (4.8 per cent) lower to A$1.19.

Among the copper producers, the recovery by OZ Minerals (OZL) ran out of puff with the stock losing A22 cents (13 per cent) to A$1.48. Equinox (EQN) frightened the market by announcing an increase in its debt load, paying the price with a fall of A76 cents (21.7 per cent) to A$2.74, and CopperCo (CUO) lost A6 cents (21 per cent) to A22.5 cents.

Zinc stocks, perhaps because they were already so low, looked better than the other base metal producers. Bass Metals (BSM) ended the week steady at A14.5 cents, which is almost as good as a rise, Terramin (TZN) eased A8 cents (5.7 per cent) to A$1.31, while Kagara (KZL) was hammered hardest after suggesting that it might sell its Lounge Lizard nickel discovery and focus on the high-risk Admiral Bay zinc project. That bemused investors who knocked A65 cents (21.3 per cent) off Kagara which closed the week at A$2.40.

Minews. Iron ore, please.

Oz. Nothing going up, but most falls were relatively soft in an awful week. Fortescue Metals (FMG) remains the target of idle gossip about difficulties with its radical continuous mining process and uncertainty about its highly-ambitious expansion plans in a depressed market. It fell A63 cents (11.2 per cent) to A$4.97, but did trade as low as A$4.53 on Friday. Atlas Iron (AGO) announced that it has won environmental approval to start its Pardoo mine, but lost A29 cents (16.4 per cent) to A$1.47. Doubts grew about the deal which will see Grange (GRR) merge with a Chinese-led group with the stock dropping A23 cents (17.3 per cent) to A$1.10, and Gindalbie (GBG) fell A13 cents (16.5 per cent) to A66 cents.

Minews. Uranium, coal, and specials before we sign off.

Oz. All uranium stocks fell, but not substantially. Coal stocks weakened in line with the oil price, and most of the speciality explorers were sold off sharply. Windimurra Vanadium (WVL) dropped A50 cents (30 per cent) to A$1.17 and Moly Mines (MOL) fell A48 cents (35 per cent) to A90 cents. Tungsten explorer, Vital Metals (VML), held up relatively well after mothballing its Watershed project, a move which only cost in A1 cent (5.8 per cent) as it slipped to A16 cents.

Leaving the worst to last, we saw three mining stocks float during the week. Copper and gold explorer, Queensland Mining Corporation (QMN), saw its A50 cent shares start trading at A19.5 cents, and then slide to a close of A18 cents, a 64 per cent bath for initial subscribers. Investors in bauxite explorer, Aluminex (ALM), watched their A40 cent investment open at A12 cents, and then creep up to A15 cents for a 62.5 per cent loss. Base Iron (BSE) did best of all with its A20 cent shares closing the week at A17 cents for a relatively minor loss of 15 per cent.

Minews. Thanks Oz. Let’s hope we have something better to talk about next week.


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## drillinto (13 October 2008)

October 12, 2008

That Was The Week That Was … In Australia
By Our Man In Oz >> www.minesite.com/aus.html

Minews. Good morning Australia, what a devastating week. How bad was it on your market?
Oz. Perhaps the worst I’ve seen in almost 40 years of reporting on the ASX, and its predecessors, such as the old Sydney and Perth Stock Exchanges. Devastation is a word being used often. Carnage is another favourite. However, before we conduct a roll call of the wounded it seems reasonable to lighten your day with two bits of good news which might be a pointer to where the market in mining shares goes now.

In my trawl through the impossibly long list of stocks that fell sharply I came across two which rose which, in a week of utter chaos, is quite an achievement. Both, naturally, were gold related. Gold Bullion Securities (GOL), the locally listed vehicle created in part by the World Gold Council, hit a 52-week high of A$137.81, a price which reflects its underlying asset being one-tenth of an ounce of gold. That closing price represents a rise over the week of 23.7 per cent, which is exactly how much the gold price rose when measured in Australian dollars, which is more a comment on the falling value of our dollar than it is of the U.S. dollar gold price.

The second asset yielding a positive result for the week was the gold explorer Silver Lake (SLR). It rose by the smallest measurable amount of half-a-cent to close the week at A19.5 cents.

Minews. There is something interesting in what you’ve said. Only two ASX listed gold assets rose in a week when the Australian gold price shot up by 23.7 per cent?

Oz. Precisely. Now, if you’re a British investor with any cash left, and I heard a rumour that one such person is to be found in the Outer Hebrides, the low value of the Aussie dollar and the potential for gold to trend upward, represents a fascinating opportunity to get a double-whammy effect. You can buy into a currency which is currently depressed, but which retains direct exposure to China, the country in the world likely to suffer the least damage from the global downturn, and get exposure to the commodity likely to perform best, gold.

Minews. Enough theories, let’s go through the prices.

Oz. Before doing that, a snapshot of how bad it was on the ASX last week. A list of rolling year records, both highs and lows, normally occupies a small panel in the national business daily, The Australian Financial Review. On Saturday, there was one stock listed as setting a high, Gold Bullion Securities, and a full page of rolling year lows. The four columns of closely typed tabloid newsprint represents more than 500 stocks which set new 52-week lows.

For the price call, let’s start with gold because that’s where the damage was minimised as the dollar sank and the gold price held relatively high during our trading hours, and avoided the late Friday sell-off in the U.S. Newcrest (NCM) the biggest and best of the gold stocks fell A$1.95 (7 per cent) to A$25.64. During the week it moved between a low on Wednesday of A$23.20 and a high of A$27.79 on Thursday. Lihir (LGL), the second biggest gold producer lost A14 cents (5.3 per cent) to A$2.49.

Other gold stocks which we follow more closely fared somewhat worse than the big two. Kingsgate (KCN) fell A81 cents (17 per cent) to A$3.94. Resolute (RSG) frightened the horses by announcing a one-for-three renounceable rights issue priced at A55 cents to raise up to A$51 million to finalise its Syama goldmine in Mali. The fund raising and market malaise knocked A30 cents (28.8 per cent) off Resolute with the stock ending the week as A74 cents. Troy (TRY) fell A17 cents (13.7 per cent) to A$1.07 despite sending a letter to shareholders pointing out that each share was backed by A80 cents in cash. Centamin (CNT) slipped A8 cents (11 per cent) to A65 cents, and Allied (ALD) lost A5 cents (16 per cent) to A24 cents.

Minews. If that’s the good news the rest of the roll call must be awful.

Oz. It is, so we’ll keep it short. Hit hardest were the twin bulk commodities, iron ore and coal. Their problem was an outbreak of concern about future Chinese demand with the small exporter, Mt Gibson (MGX) letting the cat out of the bag with a report to the ASX that some of its small Chinese customers had asked for shipments to be delayed. That immediately cut Mt Gibson’s share price in half, and took the rest of the sector with it. Mt Gibson closed the week at A71 cents, down A79 cents (52.6 per cent).

Other iron ore falls included: Atlas (AGO), down A37 cents (25 per cent) to A$1.10. Gindalbie (GBG), down A33.5 cents (50.7 per cent) to A32.5 cents. Grange (GRR), down A40 cents (36..4 per cent) to A70 cents. BC Iron (BCI), down A21 cents (45.6 per cent) to A25 cents, and Fortescue Metals (FMG), down A$2.29 (46 per cent) to A$2.68. That fall by Fortescue takes its loss since June 25 (when it hit a peak of A$13.15) to A$10.47 (79.6 per cent), and the personal loss of its chief executive, Andrew Forrest to A$10 billion, or around A$100 million a day.

Minews. Astonishing stuff. Let’s have a quick look at the coal sector, and finish with base metals and uranium, please.

Oz. All bad among the coals, with everyone hammered flat as the oil price crashed. Riversdale (RIV) fell A$3.98 (48 per cent) to A$4.30. Coal of Africa (CZA) fell A$1.10 (52.8 per cent) to A98 cents. Macarthur Coal (MCC) fell A$3.40 (36.9 per cent) to A$5.80, and Felix (FLX) lost A$7.28 (44.7 per cent) to A$9.

Nickel, copper and zinc stocks all fell sharply, taking them back to the prices of five years ago. Mincor (MCR) fell A25 cents (22.3 per cent) to A87 cents. Minara (MRE) fell A64 cents (45.7 per cent) to A76 cents. Western Areas (WSA) lost A$2.99 (44.2 per cent) to A$3.77, and Independence (IGO) lost A66 cents (28.7 per cent) to A$1.74, with the price held up marginally by its exposure to gold.

Among the copper stock, OZ (OZL) fell A47 cents (31.7 per cent) to A$1.10. CopperCo (CUO) fell A11 cents (48.8 per cent) to A11.5 cents, and Equinox (EQN) fell A71 cents (26 per cent) to A$2.03. Zinc falls well less severe on a percentage basis, but only because much of the damage was done weeks ago. CBH (CBH) fell A1.5 cents (18.7 per cent) to A6.5 cents. Kagara (KZL) fell A78 cents (32.5 per cent) to A$1.62 and Perilya (PEM) fell A9.5 cents (31.6 per cent) to A20.5 cents.

Uranium stocks were not spared as the wave of selling rolled through the market. Uranex (UNX) fell A5.5 cents (27.5 per cent) to A14.5 cents. Toro (TOE) fell A7 cents (35 per cent) to A13 cents. Energy and Minerals (EMA) fell A10 cents (25 per cent) to A30 cents, and Paladin (PDN), the sector leader through the boom, lost A$1.76 (46.2 per cent) to A$2.05, taking its fall over the past 12-months to A$7.31, or 78 per cent.

Minews. That’s enough Oz. We’re off to the pub.

Oz. Good idea.


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## drillinto (20 October 2008)

October 19, 2008

That Was The Week That Was … In Australia
By Our Man In Oz  >>  www.minesite.com/aus.html

Minews. Good morning Australia, how was your week? 

Oz. Curiously positive is the ambiguous answer. The overall market, as measured by the all ordinaries index, was up an infinitesimal 0.1 per cent. The mining market, as measured by the metals index, was down a thumping 11.1 per cent but the unofficial Minesite count of the movement at the small end of market discovered a rather pleasing change of mood. When we last spoke, it was only after a mighty effort that two stocks out of 75 tested were found to be on the plus side of the ledger. This week 25 stocks out of 75 ended the week in the black, some with very impressive gains.


Minews. Which means all the damage was done at the big end of town.

Oz. Precisely. Stocks such as BHP Billiton (BHO), Rio Tinto (RIO) and Alumina (AWC) were trashed while smaller stocks staged some impressive recoveries, along with one of the bigger miners which showed the benefit of the falling Australian dollar mentioned briefly last week. Iluka (ILU), the zircon and titanium sands miners, issued a very unusual profit upgrade thanks to the dollar’s decline, and was rewarded with a rise of A63 cents (18.4 per cent) to A$4.05.

Minews. But surely all Australian mineral exporters selling in U.S. dollars are sharing in the currency effect?

Oz. They are, and that’s a point which seems to have restored a bit of interest in the local mining sector, though not among the big producers which have their mines scattered around the world and report in U.S. dollars. Before going through a price call there are two other general observations about the Australian market. First, that there was no pattern to the performance with the 25 stocks to rise. They were scattered across all sectors. Second, that the slightest whiff of a capital raising is the kiss of death, as Resolute (RSG) discovered with plans to raise A$51 million through a one-for-three rights issue priced at A55 cents. Before it was announced on October 9 Resolute was trading at A$1.04. A day later the stock closed at A74 cents. By the end of the week Resolute was down to A48 cents, either down A26 cents (35 per cent) over the week, or A56 cents (53.8 per cent) since announcing the capital raising.

Minews. There’s a message in that for anyone thinking about raising money in this market.

Oz. There certainly is, which is why Avalon (AVI) postponed/ pulled a very modest raising of A$1.95 million, and the list of new floats at the ASX has all but dried up.

Minews. Time for prices, starting with gold please as that is the sector that ought to be performing best.

Oz. It is, but there’s no pattern and most movements were modest. On the way up we saw Centamin (CNT) add A7 cents (10.7 per cent) to A72 cents after reporting a fresh upgrade in the resource at its Sukari project in Egypt. Tianshan Gold (TGF) added A2.5 cents (25 per cent) to A12.5 cents but was very lightly traded. Allied Gold (ALD) broke a long losing streak to gain A1.5 cents (5.7 per cent), and Tanami (TAM) which was the subject of a positive midweek report on Minesite added A1 cent (14.3 per cent) to A8 cents.

Encouraging as the list of gold stocks rising was there were more falling. Kingsgate (KCN) lost A23 cents (5.8 per cent) to A$3.71. Perseus (PRU) fell A6 cents (12 per cent) to A44 cents. Apex (AXM) slipped A1.5 cents (4 per cent) to A36 cents, and Adamus (ADU) fell A2.5 cents (10.4 per cent) to A21.5 cents. Stocks at the top end of the gold sector were not immune to the easier trend, Newcrest (NCM) lost A$2.94 (11.5 per cent) to A$22.70 and Lihir (LGL) fell a very sharp A52 cents (20.8 per cent) to A$1.97.

Minews. Let’s have a look at the twin bulks, iron ore and coal because they seem to have the greatest exposure to a weaker looking China.

Oz. Quite right. Reports of China catching a dose of the flu spreading out from the U.S. and Europe has been worrying the iron ore and coal sectors, though it was possible to find stocks in both areas which ignored the concern. Fortescue Metals (FMG) shook off reports of troubles in the market and troubles at its mines by adding A25 cents (9.3 per cent) to A$2.94, though even with that price rise the stock looks awfully skinny compared with the A$13.15 of just four months ago. Other upward iron ore moves included Gindalbie (GBG) shaking off a nasty fall with a rise of A8 cents (24.6 per cent) to A40.5 cents. Territory (TTY) also recovered some of its lost ground to close at A23.5 cents, up A5 cents (27 per cent). BC Iron (BCI) also rose by A5 cents (20 per cent) to A30 cents. Falls came from Mt Gibson (MGX), which did most to upset the sector with a report of delayed shipments to China, cutting the stock back to A46 cents, a loss for the week of A25 cents (35 per cent). Grange (GRR) has struggled to sell its Chinese-linked merger, dropping A26.5 cents (37.8 per cent) to A43.5 cents, and Golden West (GWR) eased back by A10 cents (13.3 per cent) to A65 cents.

Coal stocks were evenly mixed with rises equalling falls. Straits Resources (SRL) was the big winner after successfully refinancing US$230 in debt, which is a notable achievement in this market. That help lift the stock by A40 cents (38 per cent) to A$1.45. Coal of Africa (CZA) shook off its losing streak to add A12 cents (12.2 per cent) to A$1.10, and Gloucester Coal (GCL) rose A25 cents (6.6 per cent) to A$4.03. Going down we saw Riversdale (RIV) shed A51 cents (11.8 per cent) to A$3.79. Felix (FLX) fell A41 cents (4.5 per cent) to A$8.59, and Macarthur (MCC) slipped A20 cents (3.4 per cent) to A$5.60.

Minews. Let’s finish with base metals and uranium please.

Oz. Once again, we have a mixed bag with a surprisingly high number of base metal stocks to rise in a gloomy market. Among the copper stocks, CopperCo (CUO) was a star, adding A3 cents (26 per cent) to A14.5 cents with that percentage exaggerated by the low base. Marengo (MGO) also reversed a losing streak with a rise of A1 cent (8.3 per cent) to A13 cents, and Citadel (CGG) added A2 cents (15.4 per cent) to A15 cents. On the way down, Equinox (EQN) fell A11 cents (5.4 per cent) to A$1.92 and OZ (OZL) continued to lose altitude with a fall of A3 cents (2.9 per cent) to A98.5 cents.

Nickel and zinc stocks were mixed with falls marginally outnumbering rises. Takeover target Perilya (PEM) added A3 cents (14.6 per cent), and Terramin (TZN) rose A4 cents (4.4 per cent) to A94 cents, but CBH slipped a fractional 0.1 of a cent to A6.4 cents. Among the nickel stocks, Panoramic (PAN) added A3 cents (3 per cent) to A$1.03. Mincor (MCR) rose A2.5 cents (2.8 per cent) to A90 cents, but Western Areas (WSA) continued its downward spiral with a fall of A32 cents (8.5 per cent) to A$3.45 and Albidon (ALB) fell a very sharp A14 cents (25 per cent) to A42 cents.

Among the uranium sector, in a week when the price of the metal continued to decline, we had two notable rises, and plenty of falls. Uranex (UNX) managed a modest gain of half-a-cent to A15 cents, and a newcomer, Aura Energy (AEE) shot up A8 cents (72 per cent) to A19 cents after announcing a deal covering a potential uranium resource in Sweden. Other moves were down with Paladin (PDN) a victim of its own words, losing A26 cents (12.7 per cent) to A$1.79 after warning that the credit crisis might slow construction of nuclear power plant, and then try to cover up its foot shooting exercise by claiming later that the warning was general and not specific to Paladin.

Minews. Sounds like an own goal on the part of Paladin.

Oz. A perfect example.

Minews. Thanks Oz.


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## drillinto (2 November 2008)

November 01, 2008

That Was The Week That Was … In Australia
By Our Man in Oz  >>  www.minesite.com

Minews. Good morning Australia. You seem to have had a much better week. 

Oz. It certainly was, though it might be more accurate to describe it as an extraordinary week which opened and closed quietly and did all the heavy lifting in the middle. In fact, trading on individual days has become such a tiresome experience that it is actually rather useful to sit back and look at events through a week-by-week filter to get a better idea of where we’re heading.

Monday, for example was ho-hum of the first order with the mining market utterly flat. Tuesday saw a bit of interest return, followed by strong gains on Wednesday and Thursday, all of which was then rounded off by a down day to close on Friday. Emerging from this mix of up, down, and flat, comes the overall result: a remarkable rise of 14.7 per cent in the metals and mining (XMM) index of the Australian Securities Exchange, three-times better than the 3.9 per cent gain posted by the all ordinaries index. 

Minews. How do you explain such as enormous difference between mining shares and the overall market? 

Oz. The big boys certainly influenced the index, with BHP Billiton and Rio Tinto rising strongly down here, as they did on your market. But underneath the heavyweights there was a groundswell of new-found enthusiasm, which saw most sectors, other than uranium, enjoy the most positive week we’ve seen in a very long time. Big gains among the nickel stocks, a stronger gold sector, and signs of a recovery among small iron ore companies sparked a debate about whether we have started the long haul back to the surface after 12 months underwater. 

Minews. I think you’ll find the answer to that question is a loud “perhaps”, because we still have the US election and Christmas to slow things down. But enough of the general chit-chat. Time for prices, please, starting with the nickel revival. 

Oz. Events in the nickel market were quite astonishing, and there may, perhaps, be more drama to come. Minara (MRE), the big laterite miner which is effectively controlled by the commodities trader Glencore, rose strongly despite announcing a deeply discounted rights issue to fill a financial hole. It wants an extra A$210 million and proposes to get that by issuing 700 million new shares at A30 cents, a 12 per cent discount to the pre-announcement price. However, rather than fall after the big share issue was reported, Minara took off like a rocket, closing on Friday at A$1.04 for a gain over the week of A69 cents, or 197 per cent. 

Minews. Astonishing indeed, but was it just a Minara event or more widespread? 

Oz. Most other nickel stocks joined in the celebrations. Albidon (ALB) had an equally eventful week, plunging on Tuesday to a 12 month low of A24.5 cents, and then more than doubling by Friday when it traded as high as A52 cents. The closing Friday price of A44.5 cents represented a gain for the week of 31 per cent. Other upward nickel movers included Panoramic (PAN) which rose 30 per cent to A$1.08, Western Areas (WSA), up 35 per cent to A$4.05, and Independence (IGO), up A8 cents to A$1.41. Mincor (MCR) was the only nickel to swim against the tide, losing a fractional half a cent to A69.5 cents. 

Minews. Sector-by-sector now please. 

Oz. After the big bounce in nickel stocks the best performing sector was gold. Gold also managed to climb out from the hole dug by the forced selling of cash-short investment funds. Newcrest (NCM) led the way with a rise of 19.2 per cent to A$20.80, regaining much of the ground that was lost in the mass exodus of the past month. Lihir (LGL), another favourite of the international fund managers, rose 27.5 per cent to A$1.95. Meanwhile, Kingsgate (KCN) shook off uncertainty about a delay expanding its Chatree mine in Thailand and rose 18.2 per cent to A$2.60. Andean (AND) continues to make solid progress with its Cerro Negro project in Argentina, and rose an eye-popping 70 per cent to A85 cents. Avoca (AVO) recovered from several weeks of selling to rise 29.8 per cent to A$1.48. Sinogold (SGX) joined in the rebound with a rise of 47.7 per cent to A$3.50, and St Barbara (SBM) started to shake off the influence of the non-believers in its big dig at the Gwalia Deeps mine, putting in a rise of A1.5 cents to A23 cents. Not all gold stocks rose, though. Apex (AXM) slipped 19 per cent lower to A25 cents. Perseus (PRU) dropped 22 per cent to A33 cents and Adamus (ADU) fell 18 per cent to A18 cents. 

Minews. Perhaps you should take us through the rest of the base metals, and finish with iron ore, coal, uranium and any specials please. 

Oz. It was a better week for copper stocks and for some zinc miners, but there were also some heavy losers. Equinox (EQN) recovered some lost ground as investors renewed their interest as start-up nears at the Lumwana mine. The project is currently closed to journalists, so we’ve no way of knowing how it’s going, but the Equinox team are planning to host a fully comprehensive tour in February, which does seem to give grounds for confidence. Equinox shares rose 14.8 per cent to A$1.32. Marengo (MGO) also shook off the bears that savaged its share price in recent weeks, putting in a rise of 56.7 per cent to A10.5 cents. The size of that move in percentage terms is a prime example of how it feels to come up off a low base. OZ Minerals (OZ) staged a very modest bounce of A3 cents to A94.5 cents, but Kagara (KZL) remains a target for the sellers, dropping 28.4 per cent to A53 cents, which takes its fall from grace to 92.3 per cent when measured against last year’s all-time high of A$6.90. Zinc stocks were subdued. CBH (CBH) fell 18.5 per cent to A5.3 cents. Terramin was A0.8 cents lower at A8 cents, but Perilya (PEM) rebounded with one of those very strong rises off a low base, to close up 51.6 per cent at A23.5 cents. 

Iron ore stocks were almost uniformly better, but modestly so. Atlas (AGO) shrugged off several weeks of negative publicity to rise 14.2 per cent to A81.5 cents. Gindalbie (GBG) rose 18.5 per cent to A41.5 cents. Brockman (BRM) rose 23 per cent to A61.5 cents. BC Iron (BCI) rose 22 per cent to A30.5 cents, and FerrAus (FRS) put on a 32 per cent gain to close at A31 cents. 

Coal stocks were all up, some better than others. Riversdale (RIV) rose a modest A10 cents to A$3.05. Coal of Africa (CZA) rose a more significant 17.6 per cent, and Felix (FLX) by 27.3 per cent to close the week out at A$11.86. 

Most uranium stocks were weaker despite the US$1.00 per pound rise in the spot uranium price. Uranex (UNX) fell 27 per cent to A12 cents. Energy and Metals (EMA) dropped 27 per cent to A20 cents, and Toro (TOE) fell 21 per cent to A10 cents. 

Minews. Any specials worth mentioning? 

Oz. Platinum Australia (PLA) recovered strongly after a few torrid months, rising by 40.7 per cent to A59 cents, but Moly Mines (MOL) continued to slide lower, dropping A3 cents to A36 cents, and Windimurra Vanadium (WVL) dropped A8 cents to A81 cents. 

Minews. Thanks Oz.


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## drillinto (9 November 2008)

November 08, 2008

That Was The Week That Was ... In Australia

By Our Man in Oz
www.minesite.com

Minews. Good morning Australia. Another tough week? 

Oz. Yes and no. It was a week very much in the mould of one we saw in late October, a week which was split neatly in half, but the end result of which created the impression that we went nowhere, when we actually went up a long way, and down a long way. The big difference this time was that we squeezed in two major events. The Melbourne Cup, our biggest horse race of the year, took everyone’s interest off the market for a day. And that was followed by the hoopla of an election in the US. Interestingly, the stock market was up after race day and down after the election, which tells you that most of us would probably prefer a day at the races than a day listening to rubbish about voting trends in South Dakota or North Florida, or some other useless information about an election in a foreign country.

Minews. And a very foreign country at that. Enough of elections, tell us about your market. 

Oz. Technically, the mining sector rose by 0.6 per cent, while the all ordinaries fell by 0.5 per cent - margins which are about as thin as you can get. But, another way of looking at the mining index is that on Wednesday it was actually ahead by a very impressive 12.6 per cent, thanks to strong share price rises on Monday and Wednesday. On Tuesday the index dropped by 2.3 per cent, but the real damage started on Thursday when it fell by 7.7 per cent. That was followed by a decline of another 4.3 per cent on Friday. The jury is out on the cause of the poor end to the week, but the popular theory down here is that a Democrat president is likely to withdraw into the US, causing problems for exporters such as China, and hence for raw material suppliers feeding China, such as Australia. 

Minews. Did any sectors stand out for harsher treatment than others? 

Oz. Not really. In fact, as you cruise through the sectors it’s actually easier to pick out stocks that rose rather than stocks that fell. What seems to have happened is that the bulk of the damage was done at the top end of the industry, where leaders such as Rio Tinto fell a rather sharp 6.3 per cent, while the small and mid-tier end of the game held up quite well, perhaps because so much damage was done in October. 

Let’s start this week with the good news - to buoy the spirits of UK readers who seem to be having such a horrid time. Pick of the sectors, with a long overdue rally, was uranium where we saw a number of stand-out performances without any visible upswing in the uranium prices. Perhaps it was largely due to corporate activity. Bannerman (BMN), which controls the land surrounding Paladin Energy’s (PDN) Langer Heinrich uranium mine in Namibia, led the charge with a 73 per cent rise to A48.5 cents. There is a theory going around that Bannerman’s sharp share price rise might be a result of Paladin Energy seeking to snap up its neighbour to ensure future feedstock for Langer Heinrich. If that’s right it is in line with activity on the share register of another Aussie uranium hopeful in Namibia, Extract Resources, which owns the Rossing South uranium project next to Rio Tinto’s big Rossing mine. There was little movement in Extract last week, though, as the shares slipped a mere three per cent lower to A97 cents. 

Other uranium movers included Toro (TOE), which secured a fresh injection of capital, largely from its biggest shareholder, OZ Minerals (OZL). Over the course of the week Toro rose 40 per cent to A14 cents. Uranex (UNX), which continues to shape as a beneficiary of political changes in Western Australia, was another star, rising 41.6 per cent to A17 cents. 

Minews. The percentage moves look impressive, but they also reflect the low base from which they are rising. Let’s go through the other sectors now, starting with gold. 

Oz. Mainly up was the story in gold, but there were a few stragglers who slipped a little lower, in a week when the gold price did absolutely nothing, and neither did the Australian dollar. Kingsgate (KCN) ranked among the better performers. It continues to recover lost ground after a few horrid weeks, and rose 25 per cent to A$3.25. Perseus (PRU) was another gold play in recovery mode, rising 18 per cent to A39 cents, while Carrick Gold (CRK), which we took a look at mid-week, rose 17 per cent to A82 cents. Also on the up were Allied (ALD), which rose 14 per cent to A24.5 cents, Newcrest (NCM), up A89 cents to A$21.69, Lihir (LGL), up A12 cents to A$2.07, and Medusa (MML), which saw off its takeover suitor Crosby Partners, and rose A1.5 cents to A65 cents. On the way down were Adamus (ADU), off 11 per cent at A16 cents, Troy (TRY) down A2 cents to A99 cents, and Centamin (CNT), down A1 cent to A71 cents. 

Iron stocks were generally down, as concern rose about future Chinese demand for raw materials. One of the few stocks to rise was BC Iron (BCI), which was one of a very long line of stocks to announce downgraded, postponed or delayed mine plans, but still managed to rise A1 cent to A31.5 cents. The rest of the iron ore traffic was one way. Fortescue (FMG) dropped 11.8 per cent to A$2.60, as it mothballed a number of expansion plans. Atlas (AGO) fell 11.6 per cent to A73 cents. Mt Gibson (MGX) slipped A2.5 cents lower to A38 cents, and Golden West (GWR) dropped 11.3 per cent to A43 cents. 

Minews. Base metals and any specials please. 

Oz. Most nickel stocks rose, continuing the recovery after October’s wholesale sell-off. Mincor (MCR) was one of the best, rising 20 per cent to A83.5 cents, although it did trade as high as A93.5 cents on Wednesday. Albidon (ALB) also bounced back from tough times, rising 14.6 per cent to A50 cents, while Panoramic (PAN) rose 11 per cent to A$1.20. On the way down Minara (MRE), which is struggling in a depressed nickel market, dropped 40 per cent to A62 cents, with that fall raising doubts about the strong rise in the previous week, which is now looking somewhat artificial. 

Zinc stocks were all over the shop. Most moves either way were pretty modest. Perilya (PEM) dropped 14.9 per cent to A20 cents and CBH (CBH) fell by one tenth of a cent to A5.2 cents, after both announced further production cutbacks. On the way up we saw some interesting moves, with Kagara (KZL) shaking off a long losing streak to rise 20.7 per cent to A64 cents, and Mt Burgess (MTB) which raised extra cash by selling a copper prospect, was also two tenths of a cent better off at A1.1 cents. Copper stocks were also mixed, but with small moves. Marengo (MGO) rose half a cent to A11 cents , CopperCo (CUO) rose six tenths of a cent to A10.5 cents and Hillgrove (HGO) rose A1 cent. 

Minews. Finishing specials. 

Oz. Platinum Australia (PLA) stood out as a recovery situation, after a long downward slide courtesy of heavy selling coming out of London. Over the week PLA rose 29.6 per cent to A76.5 cents. At the end of October, PLA hit rock bottom of A36 cents, which means it has now risen by 112.5 per cent in eight trading days, which is rather encouraging to say the least. 

Minews. Thanks Oz.


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## drillinto (23 November 2008)

November 22, 2008

That Was The Week That Was … In Australia
By Our Man in Oz >> www.minesite.com

Minews. Good morning Australia. Was that the bottom on Friday? 

Oz. Perhaps... The big bounce in the gold price, as we were closing for the week, was a very positive sign, as was the continued recovery in the price of uranium. Having said that, we are so far down the hole that the slightest glimmer of light is as welcome as the first beer is after a day in the scrub country east of Kalgoorlie. In truth, the first four-and-a-half days of this week just gone were bloody awful, and Friday’s late recovery made little overall difference, even if it did claw back a few lost cents. Overall, the metals and mining index fell 15.7 per cent last week, easily outstripping the all ordinaries which was “only” down 9.1 per cent. Those latest falls take the decline over the past 12 months to 54 per cent for metals, and 47 per cent for the all ordinaries - a difference which highlights how hard hit the metals sector has been since the bear market started.

Minews. Grim stuff indeed. Was there any good news? 

Oz. A couple of the gold stocks caught the first whiff of the higher gold price, and there was a bit of action among some of the uranium stocks, especially after BHP Billiton said it was re-starting work on its long-mothballed Yeelirrie project now that the government of Western Australia has formally lifted a ban on uranium mining in that state. Among the iron ore stocks, which have been hit very hard by China’s demands for production cuts, there was a spectacular bounce in the price of Fortescue Metals (FMG), possibly the result of short positions being closed out, but maybe the start of something better (fingers crossed). 

Minews. Let’s go straight to the gold stocks because that’s where the action is likely to be next week, with the price back over US$800 an ounce. 

Oz. Good decision, because in Australian currency at more than A$1,200 an ounce gold is moving back into record price territory, and if you can’t make money at that level you ought to give up. Best move among the local gold stocks was Avoca (AVO) which kicked up towards the close to end the week at A$1.31, a rise of A7 cents. Perhaps at this point it’s worth pointing out that Avoca was the one Australian stock in Susie Boeckmann’s nine stock portfolio which you reported on mid-week actually to rise. The rest of her stable of stocks fell, some a little, some a lot. They included Kingsgate (KCN), which just cannot shake off its doubters despite an optimistic outlook. It fell by 34 per cent to A$2.37, perhaps under pressure because of delayed expansion plans. 

Elsewhere in the gold sector it was a prettier picture. Centamin (CNT) regained some of its lost ground by putting in a rise of 15 per cent to A69 cents, all of it on Friday. Also better off over the course of the week was Bendigo Mining (BDG), which appears to be making progress with its big Bendigo project in central Victoria. Bendigo rose 13.4 per cent to A 11 cents. Other risers included Newcrest (NCM), up A69 cents to A$20.29, and Lihir (LGL) up A3 cents to A$1.80. 

Joining Kingsgate on the way down were Troy (TRY) which slipped A6 cents lower to A70 cents, and which now appears to have become one of the growing breed of Aussie miners trading below the amount of cash they have in the bank, which says a lot about this dreadful market. Meanwhile, St Barbara (SBM) gets ever closer to announcing that it has started pulling high grade ore out of its Gwalia Deeps project, but it nonetheless fell A2 cents to A22.5 cents. Apex (AXM) is also within sight of re-starting gold production, but nonetheless dropped 15 per cent to A22.5 cents this week. Also weaker, Adamus (ADU), which fell 21.8 per cent to A12.5 cents. 

Minews. Uranium next, please, because that latest US$5.00 a pound rise in the spot-market price seems to have been overlooked amid all the gloom. 

Oz. You’re probably right, but so were two other positives for the uranium sector. First came the lifting of the mining ban in Western Australia (WA). Then along came BHP Billiton’s decision to dust off Yeelirrie, starting with a fresh round of drilling. On the market, stocks with exposure to the WA sector were mixed. Toro (TOE), which has recently received a fresh capital injection, rose 21.7 per cent to A14 cents, with most of the rise coming on Friday. Energy and Minerals (EMA) rose 11 per cent to A20 cents. But Uranex (UNX) went against the trend, dropping 14.7 per cent to A14.5 cents. 

The prize for biggest upward move in the uranium sector went to one of the small Australian stocks working projects in Namibia. Bannerman (BMN) benefited from the recruitment of a new chief executive and the successful raising of a fresh A$20 million in capital. The extra cash was probably the major plus for the company, but the appointment of Len Jubber as the new chief executive didn’t hurt either. Jubber previously worked with OceanaGold, and more recently with the troubled zinc miner, Perilya (PEM). Investors greeted Bannerman’s news enthusiastically, adding 49 per cent to Bannerman’s share price which closed at A48.5 cents, after trading as high as A55 cents on Tuesday. 

Minews. Now for the iron ore sector, and a comment on what happened at Fortescue during the week. 

Oz. It was a remarkable week for Australia’s highest profile iron ore player, though it seems we haven’t seen all the cards played yet. On Thursday the stock dropped to a low of A$1.16, a fall of 39 per cent on the previous week’s closing price of A$1.90. On Friday, after a “bells and whistles” presentation from Fortescue’s chief showman (sorry, chief executive), Andrew Forrest, the stock was back up at A$1.80. Whether you want to talk up the 55 per cent rise in a day or the 5.2 per cent fall for the week depends rather on your own personal take on Fortescue and Mr Forrest, but one thing we will say: this company is never dull. 

The news which drove the market in Fortescue up this time round was a claim that Chinese steel mills have increased their buying orders with Fortescue. What makes some seasoned observers a bit suspicious, though, is a nagging worry about why the Chinese would buy more from one company when they’re buying less from everyone else. The missing fact from these so-called “increased sales” is the price. If, as seems likely, the extra sales are at a big price reduction then there might be a bit of share price retracement in the next few weeks. 

Elsewhere among the iron ore stocks there was nothing but gloom. Atlas Iron (AGO), which was hit by a shareholder revolt at Friday’s annual meeting, dropped 18 per cent to A45 cents, despite being almost ready to make its first shipment. Gindalbie fell 19.7 per cent to A34.5 cents, despite pulling in a huge pile of cash from its Chinese partner, AnSteel. Murchison (MMX) dropped 28.4 per cent as doubts grew about the entire Midwest iron ore sector, and Territory (TTY) was hammered after describing the outlook as grim at its annual meeting on Thursday. Territory dropped 60 per cent to A8 cents. 

Minews. Tough stuff, but falls which make that Fortescue rise on Friday all the more interesting. 

Oz. Absolutely. Let’s get a wriggle on and flash across the base metals, coal and specials, because there isn’t much good news for us to send you to lighten up those ever-shortening days in London. All nickel stocks fell. Independence by 10 per cent to A$1.23, Mincor (MCR) by 20 per cent to A52 cents, and Albidon (ALB) by A2.5 cents to A25 cents. It was the same with copper and zinc, where the stand-out performer was Equinox (EQN) on the basis that it only fell by A1 cent to A$1.50 while most other stocks lost a lot more. OZ Minerals (OZL), for example, dropped 32.7 per cent to A59.5 cents and faces a potential shareholder revolt after a frightful five months. 

Minews. That’s enough Oz. Good luck for next week, and watch that gold price.


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## drillinto (7 January 2009)

January 06, 2009

Australia Looks Better Poised Than Most Other Western Economies For Recovery In 2009 

By Our Man in Oz
www.minesite.com

Perhaps it’s the sun which sets Australians apart from their British cousins, both in pallor and confidence. While many Brits can only see gloom and doom as they struggle through a freezing northern winter, Aussies are frolicking at the beach and approaching 2009 with a cautious but breezy confidence. The difference is especially obvious to anyone who has his roots in Australia (like Minesite’s Man in Oz) but finds the time to pop over to see how the rest of the world is handling the great asset-value meltdown. Over the past few weeks the differences observed have been remarkable. Sure, Australia has been hit by the financial crisis and commodity-price collapse. Fortunes have been lost, just as they have in London. But, whereas the view in Britain seems to be that recovery is eons off the view in Oz is that the first green shoots of spring can already be seen. It’s a classic case of someone seeing a glass half-full, and someone else seeing the same glass half-empty.
For investors, a quick heads-up alert is important in looking at the year ahead, if only to avoid over-confidence and a belief that the destruction of 2008 will be quickly forgotten. It won’t, and that means share price recovery will be erratic. But, by the end of 2009 there seems little doubt that the stock market will be at a higher level, perhaps even substantially higher, than the level at which it ended last year. Most forecasts, which are really nothing more than best guesses, are for a rebound in the order of 25 per cent. Admittedly a gain of that size can only come as a consequence of rising from a low base, but it still looks infinitely better than leaving cash in the bank at some miserable interest rate of two per cent, or less. 

There are three major reasons why Australia has entered 2009 with more confidence than Britain, the US, or Europe. Firstly, Australia’s highly-regulated banks were less exposed to the horrendous losses posted by other international banks which gambled on exotic financial instruments. This means the banking sector has survived with some bruising to profits but largely in a business-as-usual mode. Secondly, the Australian government entered the crisis with a large, by Australian standards, budget surplus of A$20 billion, and zero net debt. In the weeks before Christmas, in a move which kept the retail sector ticking over, the government “returned” A$10 billion of the surplus in the form of bonus payments to pensioners and people on low incomes. Much of the cash was spent immediately. Thirdly, Australia remains curiously close to China, and while China has been hit hard by the global slowdown it does continue to buy raw materials and maintains (perhaps overly optimistically) that its economy will grow by eight per cent this year. 

There are a number of ways of measuring the difference in how the world is seen from Australia. Currency values are a good starting point, and even though they are still subject to the occasional wild fluctuation, it is significant that the Australian dollar has risen by 16 per cent from its November low point against the US dollar. The stock market is another guide to the upward trend - and never forget the market maxim that “the trend is your friend”. Since bottoming at 2,278 points on 20th November, just 30 trading days ago, the metals and mining index on the Australian Securities Exchange has jumped (yes, jumped) by 38.3 per cent to 3,151. Metals prices, like the stock market, are also showing promising recovery signs. Commodity-future indices, such as those maintained by UBS and CRB, are up by around 10 per cent. Recently the nickel price has risen 40 per cent, up by US$1.50 a pound from US$4.00 to around US$5.60. Copper has climbed out of the US$1.20 per pound range into the US$1.40 range, and gold continues its slow plod back towards the US$900 an ounce mark. 

None of this evidence is convincing if looked at in isolation. The trick is to see the pattern that emerges as global markets recover, banks are repaired, trade is resumed and industry starts the slow grind back out of the hole into which it has fallen. Two factors are working in favour of commodity producers and investors. High-cost producers are being knocked out of business which makes a useful dent in the supply surplus, and the whole process - both the going down and now the coming up is happening at a speed never seen before, thanks to instantaneous communications and just-in-time stockpile management. 

On the stock market the first early-bird speculators are making their return. Well-capitalised mining companies with strong management and good projects are being picked over by interested parties, and picked up. Gindalbie Metals (GBG) which has strong Chinese connections and an ambitious iron ore project has effectively doubled in price from A32 cents late last year to around A62 cents today. Avoca (AVO), one of the new breed of gold mining companies, has also come close to doubling, putting in a rise from A87 cents to A$1.55. Mincor (MCR) is riding the nickel-price recovery with a 104 per cent rise in little more than a month, up from A45.5 cents to a recent price of A93 cents. And Equinox (EQN) has shrugged off problems with a delayed commissioning phase at its Lumwana copper mine in Zambia to stack on more than A$1.00 in a matter of weeks with a rise from A95 cents to A$1.96. 

There’s a pattern in those prices and its spelled r.e.c.o.v.e.r.y. Early days, certainly, but recovery nevertheless, and just as shoppers in the high street have been picking their way through bargain basement displays of surplus goods, so too are investors moving in to mop up bargains by acquiring positions in the better-run companies, especially those with the ingredients for (a) survival through what will be a tricky year, and (b) future growth as the wheels of world industry re-engage. That process ought to accelerate in the second half of the year as government-sponsored economic revival plans take hold and “make work” construction schemes boost the demand for raw materials. 

Hurdles ahead cannot be avoided. There is more bad news to come out of America as its housing sector lurches from crisis to crisis. Banks are also yet fully to open their new-loans departments, car loans remain hard to get, and the entire car industry remains a basket case. In Australia, there will also be disturbing news about the fate of troubled companies burdened with excess debt. OZ Minerals (OZL) is yet to emerge from its self-imposed meltdown. CopperCo (CUO) is in the hands of administrators. High cost mines will be high-graded over the next 12-months and face early closure. China will demand (and get) massive price cuts on iron ore and coal purchases, and even the once mighty Rio Tinto will struggle to shake off its US$40 billion in debt. 

News of corporate failures, marriages (mergers) of convenience to save costs, mine closures, and job losses will continue to trickle in as 2009 unfolds. But, the news trend will undoubtedly become more positive over time, and even the bad news will have the odd silver lining. With OZ, for example, the possible sale of assets such as the Prominent Hill copper/gold mine will initially be seen as a negative, but quickly become a positive because (a) a sale means it will remain in production and (b) it might go to a new (and freshly capitalised) owner who can start life at the bottom of the cost curve and not at the top. 

The first months of 2009 will be a time when the bravest souls emerge from their bunkers. As the months tick by, and investors realise that the world did not end, rather it merely got a well-deserved scare, the business of commodity consumption will resume. China, if you can actually believe the statistics produced by its government has its eight per cent growth target for the year. Toy manufacturers in Guangdong might be closing in their hundreds, but steel mills which make long products for projects such as bridge building are starting to crank up output, and reports from the wharves of Shanghai point to stockpiles having dropped below the desired safety level to keep blast furnaces operating. 

Capital raising, the stuff which keeps the small end of the market going, will not be in the first recovery wave. Banks, brokers and wise investors want to see more evidence than the small jewels observed by Minesite’s Man in Oz during a global jaunt which has taken him across the U.S., into parts of Europe and now into a freezing London. Having seen a series of economies, sniffed the air and drunk the beer (quite a lot, if you must ask) then the clearest picture is of Australia, with its time-honored propensity for extreme highs and extreme lows, coming out of this downturn at a fairly rapid rate – and certainly at a faster pace than in those parts of the world locked in ice.


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## drillinto (9 February 2009)

February 08, 2009

That Was The Week That Was ... In Australia
By Our Man in Oz >> www.minesite.com

Minews. Good morning Australia. Your market seems to have continued to improve, even after the improvement reported in our last conversation. 

Oz. It was another good week, as strong support for gold stocks spilled over into the iron ore sector thanks to the positive comments from BHP Billiton boss Marius Kloppers, which we flagged during the week in our story on Golden West (GWR). Overall, the metals and mining index (XMM) on the Australian market rose by a rather impressive 5.2 per cent, which takes the gain over the past two weeks to 14.2 per cent. Curiously, the same positive trend in the mining sector has not spilled over into the wider Australian market. Over the past two weeks the all ordinaries index has risen by a lowly 3.2 per cent.

Minews. That is interesting. It seems to indicate that investors are picking up on the possible effects of the Chinese revival story which Kloppers mentioned. 

Oz. Very much so. The key point from Kloppers, and others in the know, is that the Chinese “de-stocking” process appears to be over. That, obviously, is very good news because it means normal business can be resumed. The 64,000 dollar question is whether normal business means the Chinese will be seeking to lock in long-term contracts at significantly lower prices. 

Minews. Time for prices. Let’s start with iron ore, as that seems to have been where the action was. 

Oz. There were notable rises across the iron ore sector in the wake of Kloppers’ optimism. Fortescue Metals (FMG) acted as a magnet for speculators as its chief executive, Andrew Forrest, smoothed out a few operational wrinkles. Amongst other things he settled a disputed shipping contract, and spoke of a full order book - for the next month anyway. That news helped lift FMG by 31 per cent to A$2.32. Gindalbie (GBG) was another significant winner after its shareholders approved a big placement to the Chinese steel maker Ansteel. This vote of confidence in management and their plan to integrate Gindalbie into Ansteel’s production operations lifted Gindalbie’s shares by 15.7 per cent to A66 cents. 

Also on the rise in the iron ore space was Jupiter Mines (JMS), which rose 25.7 per cent to A8 cents after the company confirmed its close ties with Brian Gilbertson’s Pallinghurst group. This is a complex situation, but Minesite was one of the new media outlets to explain what’s afoot, for which see our recent article on Red Rock Resources, which is also involved in the Pallinghurst connection to Jupiter. Meanwhile, FerrAus (FRS), which has high hopes for projects deep inland near BHP Billiton’s Mt Newman mining centre, rose 17.6 per cent to A20 cents. And Northern Iron (NFE), which continues to make good progress with its Norwegian iron ore re-development project, rose 12.1 per cent to A$1.18. Brockman Iron (BRM) was also better off, 15.3 per cent to the good at A$1.02, while BC Iron (BCI) was up a slightly more modest-looking A1.5 cents at A36.5 cents. The two stocks we followed most closely during the week, Golden West and Fairstar (FAS), did little late in the week. Golden West closed at A30 cents, the same price that it had reached as mid-week, up 11.1 per cent on the week before, while Fairstar rose 15 per cent largely in response to its possible sale of its stake in Golden West. 

It wasn’t all one-way traffic among the iron ore stocks, though. Atlas (AGO) slipped A1 cent lower to A$1.18, but did trade as high as A$1.24 early on Friday. Giralia (GIR) also eased modestly, dropping half a cent to A32.5 cents. Cape Lambert (CFE) lost ground too, A1 cent lighter at A25.5 cents, although that closing price came before the company had announced that it’s to buy the secured debt of CopperCo from Macquarie Bank and the Linq Resources Fund for a total of A$72.7 million. CopperCo went into administration late last year. 

Minews. Sounds like an interesting case of bottom fishing, perhaps you might find the time to have a chat to Cape Lambert boss, Tony Sage, next week. 

Oz. It would certainly be interesting to hear what he has in mind. Let’s move along now and look at the next best sector, gold, where we also had some upward momentum, though it wasn’t as strong as it was in late January. Pick of the pack was Centamin (CNT) which continues to attract attention with work at its Sukari mine in Egypt. It stacked on another 26.5 per cent to close at A$1.09. And Perseus (PRU), one of our favourite stocks, also continued to forge ahead as investors re-discovered its attractions. The stock added rose 10.2 per cent to A81 cents, but traded as high as A83.5 cents early on Friday. Resolute (RSG) was a third strong performer as it raked in a few extra dollars to pay for final work on its Syama mine in Mali. It was sufficient to convince investors to get back aboard and lift the shares by a very impressive 31.7 per cent to A56 cents. That’s a handsome gain for supporters who took up extra Resolute shares at A40 cents. 

Other upward gold moves came from Troy (TRY), which rose 11.6 per cent to A$1.15, Adamus (ADU), which came surging back with a 33 per cent rise to A24 cents, New Zealand-focused OceanaGold (OGC), which rose A3.5 cents to A47.5 cents, and Bendigo (BDG) which crept A1 cent higher to A16.5 cents. 

Minews. Base metals, uranium and any specials to finish, please. 

Oz. We’re still waiting for signs of recovery in the base metal sector. Share price movements across the copper, nickel and zinc sectors flat-to-down over the past week. The problem remains high global stockpiles. Mincor (MCR) was the best of the nickel stocks, rising 12.5 per cent to A71.5 cents, while Independence (IGO) also managed a gain of A8 cents to A$2.57, though that rise translates into a percentage gain of just 3.2 per cent. Equinox  (EQN) was the best of the copper stocks, rising A18 cents to A$2.10. Citadel (CGG) issued a swag of press releases during the week about copper and gold assays, but rose just half a cent to A13 cents. Zinc stocks were generally flat, though Perilya (PEM) posted a rise of 23 per cent to A18.5 cents after shareholders voted through a big placing to a Chinese company. Other moves came from Terramin (TZN), which was down 10.3 per cent to A35 cents, and Bass Metals (BSM), which fell 10.9 per cent to A9.8 cents. 

Uranium stocks were generally weaker, except for Uranex (UNX) which rose 17.6 per cent to A20 cents. Extract (EXT) eased back by A10 cents to A$1.52 as a boardroom battle continued to rage. 

The only special worth mentioning is Stirling Resources (SRE) the vehicle being used by Michael Kiernan for his encore performance. Our midweek report seems to have attracted a small amount of interest, and the stock rose by 35.7 per cent to A1.9 cents. 

Minews. Thanks Oz.


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## drillinto (22 February 2009)

February 21, 2009

That Was The Week That Was … In Australia
By Our Man in Oz >> www.minesite.com

Minews. Good morning Australia. Your week must have been all about gold. 

Oz. Well, the record high gold price in Australian dollar terms certainly created a lot of interest, but so too did the Chinese invasion of the local mining sector. News next week looks like shaping as a fascinating mixture of gold-driven activity among the smaller miners and heavy-duty political action in regard to Rio Tinto, Fortescue Metals (FMG), OZ Minerals (OZL), and the swag of other companies which are attracting direct Chinese investment.

Minews. Before we look at share prices, how do you see that Chinese investment question unfolding? 

Oz. It will undoubtedly require government-to-government involvement at the highest level. Australian law is not designed to handle foreign investment from a monolithic state such as China, where all companies are ultimately controlled by the central government. However, there also seems little doubt that some Chinese companies are currently acting independently and causing friction within China because of their competitive bidding for assets. In a way, that’s what happened last year when the same highly competitive companies drove up the price of commodities. It seems from this part of the world that some companies in China have become diplomatically embarrassing. 

Minews. Does that include the Rio Tinto situation? 

Oz. Not yet - that seems to be more a case of the directors of Rio Tinto embarrassing themselves with a rushed rescue effort that effectively hands control of their business to their biggest customer. It would be surprising if many members of the Rio Tinto board survive 2009. 

Minews. Enough of events to come, let’s look at what happened on your market last week. 

Oz. Gold was the best performing sector, but not to the extent you might have imagined. The global financial crisis, which is helping drive the gold price higher, is also weighing heavily on everyone, even gold investors. Over the week the metals and mining index fell by five per cent, slightly more than the overall Australian market which was down by 4.1 per cent. Most gold stocks rose, but modestly, given the attraction of a fabulously high gold price. On Friday, after we closed, the US dollar gold price kept rising on European and US markets. The last price we saw was US$994 an ounce, which, when converted at the latest exchange rate of US64.52 cents, produces an Australian gold price of A$1540 per ounce, up A$100 per ounce over the week. 

But, apply that remarkable gold price to share prices and you get a pretty flat result. Allied Gold (ALD) was one of the best performers on the week, putting in a rise of 25.6 per cent to A51.5 cents. Centamin (CNT) also performed well as interest grows in its Sukari project in Egypt. Centamin rose by A11 cents to A$1.24. Silver Lake (SLR) also showed the benefits of full exposure to the gold price and the consequent healthy cash flow by putting on 10.7 per cent to close at A36 cents. Other useful upward moves in the gold sector came from St Barbara (SBM), up 10.8 per cent to A46 cents, and Kingsgate (KCN) which rose 10.3 per cent to A$4.40. 

Minews. Useful rises, but well short of what you might have expected with you gold price at a record high. 

Oz. Precisely. And as you trawl through the market it quickly becomes obvious that most moves were actually fairly modest. Other rises worth reporting came from Adamus (ADU), up A2 cents to A24 cents. Scotgold (SGZ), which you took a look at midweek, was also better off, up 15 per cent to A7.5 cents. And also showing considerable strength was West Wits (WWI), which reported an encouraging resource upgrade at its South African project, rose 28.5 per cent to A9 cents as a result. 

Offsetting those rises, somewhat surprisingly, were a number of gold stocks which fell, even as the gold price was rising. To take two: Perseus (PRU), which has been a strong performer for several weeks, ran out of puff and slipped by A1.5 cents to A68.5 cents, while Troy (TRY) eased back by A2 cents to A$1.33. 

Minews. Let’s switch across to the other sectors, starting with iron ore. 

Oz. In a word, most iron ore stocks were flat. The one stand-out rise came from a stock we took a look at a few weeks ago, Golden West Resources (GWR), which rose by 43.6 per cent to A39.5 cents for a very interesting reason. One of GWR’s biggest shareholders is the Hunan Valin steel company of China. And Hunan Valin is also one of the potential investors in Fortescue Metals (FMG). Speculators have linked GWR with the possible FMG move, if only because it might create all-important rail and port access for GWR’s future ore production. FMG itself was up and down over the week, initially copping a speeding fine from the ASX for an 18.8 per cent dash up to a midweek high of A$3.34, and then dropping back down to close at A$2.83. That retreat shrunk FMG’s overall rise for the week to just A2 cents. The only other iron ore stock to rise was BC Iron (BCI), which rose 19 per cent to A50 cents. 

Most other iron ore moves were down. Atlas (AGO) slipped by A5 cents to A$1.21, Northern Iron (NFE) completed a fresh capital raising and dropped A12 cents to A$1.10, Territory (TTY) fell A1 cents to A14 cents, and Giralia (GIR) fell 13 per cent to A33 cents. 

Minews. Time to roam across the other sectors, starting with base metals, please. 

Oz. Not a lot to report from copper, nickel or zinc. Everyone seems to be waiting for recovery in base metal prices, or at least for a sign that demand has picked up. Aditya Birla (ABY), an Indian company listed on the ASX and operator of the troubled Nifty copper mine, was hammered after reports of more problems at the project. As a result it fell by 27.5 per cent to A10.5 cents. Last year this was a stock that traded as high as A$3.00. Equinox (EQN), meanwhile, fell 11 per cent to A$1.78, as a dispute with the Zambian parastatal electricity company lingered on. And last, but certainly not least, OZ Minerals (OZL) made an undistinguished return after a couple of months in the sin bin of self suspension, opening at A71 cents and falling to A65 cents. This puts OZ still A17.5 cents short of the proposed acquisition price from China Minmetals, its preferred suitor. 

Nickel stocks were as flat as copper, as the nickel price bumped along at under US$10,000 per tonne. Mincor (MCR) was the only company swimming against that tide, A1.5 cents better off at A70 cents. But Mirabela (MBN) dropped 22.6 per cent, even in spite of optimistic talk from the company’s management about funding for its proposed mine development in Brazil. Heron Resources (HRR) was another faller, dropping by 20.5 per cent to A13.5 cents, despite similarly optimistic noises about a big new laterite mine. Zinc stocks barely rate a mention, as all producers struggle with a US49 cents per pound zinc price. 

Minews. Final call, uranium, coal and specials please. 

Oz. Despite a theoretical spot price which remains relatively weak, there were fresh signs of interest in uranium. Extract (EXT), which is caught up in Rio Tinto’s raid on Kalahari, jumped an eye-catching 26.4 per cent to A$2.30. Mantra (MRU) also attracted attention as announced further progress on its Tanzanian projects. Traders bid the company’s shares up by 14.5 per cent to A$1.26 on that news, some key buyers coming in in the form Highland Park, a vehicle for ex-LionOre executives. Also better off in the uranium space was Uranex (UNX), up 14.3 per cent to A19 cents, but how much this means isn’t clear, as Uranex has been yo-yoing in price for the past six months. 

There was also a fair bit of interest in coal as Coal of Africa (CZA) continued to show signs of a sustained recovery, rising A2.5 cents to A90 cents. Notable share price weakness in the space came from two of the better-known miners in Australia, Whitehaven (WHC) and Gloucester (GCL), after they announced merger plans. Both promptly fell: Whitehaven by 13.2 per cent to A$1.45, and Gloucester by A10 cents to A$3.40. 

The only special worth mentioning was a successful new float - a very rare event indeed these days. Dragon Energy (DLE) is looking for phosphate in Queensland, and, naturally, has a Chinese investor as its cornerstone shareholder. Its A20 cents shares started trading on Thursday at A21.5 cents, and closed on Friday at A24 cents, a 20 per cent gain for stags. 

Minews. Thanks Oz.


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## drillinto (16 June 2009)

June 14, 2009

That Was The Week That Was … In Australia

By Our Man in Oz
www.minesite.com

Minews. Good morning Australia, it looks like iron ore was the hot commodity on your market last week. 

Oz. Very much so. There were fabulous profits to be had all round for followers of the iron ore sector last week thanks to Rio Tinto’s proposed deal with BHP Billiton and the dumping of a Chinese suitor, Chinalco. And investors seized on angry comments from aggrieved Chinese officials who seemed to hint at a re-allocation of iron ore buying orders away from BHP and Rio, and over to anyone else. Much of the reaction was theatrical because China simply cannot do without BHP and Rio, but there seems little doubt that Chinese steel mills will now do all they can to sponsor rival projects, perhaps develop their own, or perhaps buy another producer, such as Fortescue Metals Group (FMG).

Minews. Presumably it was FMG which led the way up. 

Oz. It was, as Fortescue rose by a very sizeable A97 cents to A$4.15. At one stage on Friday FMG was trading at A$4.55, though the fact that the stock crossed the A$4 mark was significant itself because that’s the first time it’s been that high since last October. Adding to interest in the stock was an official speeding fine for FMG which was treated by followers of the sometimes controversial company as a badge of honour. Naturally, management said it wasn’t aware of what was driving interest in the stock, which means they were about the only people in Australia claiming to not know about the Chinese reaction to the BHP/Rio deal, and its knock-on effects. 

Minews. Right then. Let’s start with iron ore, before flipping across to gold which was the favourite commodity at the World Resource Investment Conference in Canada last week. 

Oz. After FMG, which is widely seen as a takeover plum for China because it already owns a railway and port, it was the turn of those smaller iron ore stocks which have struck a transport deal with FMG. BC Iron (BCI) was one of the stars, thanks to a recently signed deal that could see it start shipping next year. It rose by A46 cents to A$1.33, well on the way back to a 12-month high of A$1.65, set at this time last year. FerrAus (FRS) wasn’t far behind, with a rise of A20 cents to A53 cents. Meanwhile, Iron Ore Holdings (IOH) added A28 cents to A85 cents. And Gindalbie (GBG) came back strongly after a few bad weeks, rising by A12 cents to A90.5 cents, fired up by very optimistic comments from chairman, George Jones, who was attending investment talks in Beijing last week. 

Minews. That must have put Jones at the centre of the action. 

Oz. It did, and I was fortunate enough to track him down to his hotel during the week. Over a brief chat he made it clear that the Chinese were mightily annoyed with both Rio Tinto and BHP Billiton. However, he also added that Gindalbie has already secured its Chinese partner in AnSteel, so he’s a bit of a sideline observer, though one in the good books of the Chinese. 

Continuing on with prices there was a man missing in action, but likely to make a star return next week. Atlas Iron (AGO) is in voluntary suspension, with local media speculating that management is seeking to raise A$100 million in fresh capital to accelerate mine development plans. When suspended on Tuesday Atlas was trading at A$1.70, having risen from A$1.50 in late May. Digressing for a second, our exchange was closed on Monday for the Queen’s Birthday holiday – same Queen as you but different birthday, which is rather curious. 

Minews. Best if you stick to the market and leave the Queen alone. 

Oz. Sorry. Finishing with the small irons, there were one or two other movers of note. Warwick Resources (WRK), a stock we hear little of, was one. We might hear more of it in the future, as it rose by A6.5 cents to A22 cents after reporting an expanded resource base at its Jimblebar prospect in the north of Western Australia. Also on the up, Territory (TTY) added A5 cents to A27.5 cents, Cape Lambert (CFE) rose by A5 cents to A37 cents, Northern Iron (NFE) rose by A27 cents to A$1.60 and United Minerals (UMC) managed a modest gain of A1 cent to A$1.05. The only iron stock to fall was Grange (GRR), which slipped A2 cents lower to A61.5 cents. 

Minews. Over to gold now, please. 

Oz. Not a lot to report really with the gold price losing ground for much of the week and the Aussie dollar rising to A82 cents. The two stand-out movers were Kingsgate (KCN), which came within an inch of cracking the A$7.00 mark on Thursday when it set a new 12-month peak price of A$6.98. On Friday, it eased back a fraction to end the week at A$6.90 for a gain of A31 cents. The other star was an old favourite which has been pretty moribund for a few years, Eurogold. On Friday, Eurogold’s chairman, Peter Gunzburg, quietly slipped out a one page announced which said the company had realised certain investments and had A$14.5 million in the bank, equivalent to A23 cents a share. Given that the stock had closed the previous night at A12 cents there was quite a reaction, with Eurogold adding A7 cents to end the week at A19 cents. But, there’s more. Not only is the stock still below cash backing but it’s due to receive another US$3 million next month from further asset sales which will lift the cash backing per share by A5.8 cents. The equation will then show a stock at A19 cents with A28.8 cents backing each share. 

Minews. Watch Eurogold closely because Gunzburg is not going to sit on a pot of cash forever. Let’s rush through the gold sector and then slide across to uranium and base metals. 

Oz. Most other gold moves were down, with Andean (AND) and Adamus (ADU) the exceptions. Andean rose thanks to reporting a lift in its Cerro Negro gold resource to three million ounces. Shares in Andean hit A$2.08, before falling back to end the week at A1.95, a gain of just A2 cents. Adamus added A1.5 cents to A41.5 cents after giving the green light to its Southern Ashanti gold project in Ghana. Going down, we saw Perseus (PRU) lose A7.5 cents to A90 cents, and Norton (NGF) drop A2 cents to A24.5 cents despite a small celebration to mark the start of underground mining at its Homestead project near Kalgoorlie. Allied (ALD), Apex (AXM) and West Wits (WWI) all slipped half-a-cent lower to A51.5 cents, A20 cents, and A10.5 cents respectively. 

Uranium stocks remained in strong demand, led by that tear-away Extract (EXT), which soared another A90 cents to A$6.90. On Wednesday, Extract hit a fresh 12-month high of A$6.99 and is now capitalised at A$1.5 billion, which is a big price for a small stock. Other uranium moves included Mantra (MRU), up A58 cents to A3.53, well on the way back to its 12-month peak of A$4 set on June 30 last year. Uranex (UNX) was also on the march, up A3.5 cents at A48.5 cents. Meanwhile, Deep Yellow (DYL) gained A5.5 cents to A44 cents, Toro (TOE) added A2.5 cents to A26.5 cents, and Nimrodel (NMR) rose by A1.5 cents to A10 cents after it completed a capital raising in the wake of our mid-week report. 

Base metals were generally flat, with the big event of the week being OZ Minerals (OZL) winning shareholder approval to sell most of its assets to China Minmetals. OZ is now a pure copper play centred around its Prominent Hill mine, and a takeover plum. On the market, OZ rose by A13 cents to A$1.04, a price which values the owner of a single mine at a rather stretched A$3.26 billion. Among the other copper stocks, Equinox (EQN) added a fractional A1 cent to A$3.25, Anvil (AVM) gained A10 cents to A$2.05, while Exco (EXS) was steady at A30 cents after raising a fresh A$7 million. 

Nickel stocks were stronger thanks to the nickel price clearing the US$7.00 per pound mark for the first time in eight months. Mincor (MCR) gained A16 cents to A$1.72. Independence (IGO) was up A39 cents to A$4.86 and Croesus Mining (CRS) made a return as a nickel play after striking a deal with Apex and prominent prospector, Mark Creasy. The deal started with a transfer of mineral tenements and a cash injection of A$7 million, which helped lift the share price of Croesus by half-a-cent to A2.1 cents. 

Minews. Anything else to report before signing off. 

Oz. Yes. Kagara (KZL) became the latest company to accept Chinese capital as part of a refinancing operation. That was not enough to save the stock from falling by A28 cents to A90 cents. The rest of the zinc sector was quiet. 

Minews. Thanks Oz.


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## drillinto (10 August 2009)

August 09, 2009

That Was The Week That Was … In Australia

By Our Man in Oz
www.minesite.com

Minews. Good morning Australia. It looks like you had a busy week. 

Oz. There was plenty happening, though the end result was nothing to write home about. Overall, mining shares, as measured by the metals index on the ASX, managed rise of less than 0.3 per cent, which was a surprise given the level of publicity that the sector was getting, courtesy of the annual Diggers & Dealers conference in Kalgoorlie, and given some rather solid upward moves by smaller companies. But ot even a nice rise in the gold price and a slight decline in the exchange rate, could take away the feeling that we went nowhere last week.

Minews. Was it the mining majors which kept a lid on the indices? 

Oz. No, both BHP Billiton and Rio Tinto managed to rise marginally. It was more a case of the good work on three days being offset by damage done on two bad days, especially Friday, when most of the gains were wiped out by a two per cent decline in the metals and mining index. Perhaps with this week’s review we should focus on individual stocks because there really isn’t a dominant trend to discuss. So how about starting with a look at how companies on display at the Diggers conference performed? 

Minews. Presumably they reacted positively on their day in the spotlight, and then tapered away? 

Oz. That was pretty much the case, though there were a few which hung on to their gains. Troy (TRY) was one of the stars, choosing Diggers as the forum to announce a major reduction in the capital costs of development at the newly-acquired Casposo gold project in Argentina. The ability to marry a mothballed processing plant with the orebody has produced a 47 per cent cut in the capital outlay to just US$45 million. That, following on from earlier news of fresh gold discoveries at the company’s Sandstone operations, suddenly woke investors up to the reality that Troy is on the way to becoming the operator of three gold mines, rather than just the one which looked likely a few months ago. On the market, Troy added A22 cents to end the week at A$1.72, having touched A$1.74 during Friday trade. The stock is now just a few cents short of its 12 month high of A$1.83, reached last September. 

Chalice Gold (CHN) was another company flying its flag at Diggers, and while there was no formal presentation Chalice’s chairman, Tim Goyder, was busy spreading the news that the company’s merger with Sub-Sahara Resources is close to completion. That helped Chalice trade up to a fresh 12 month high of A33.5 cents, before it eased fractionally to close at A33 cents for a gain over the week of A4 cents. Meanwhile, Silver Lake (SLR), which has become one of the darlings of the gold sector thanks to its no-frills approach to mining, also attracted a great deal of interest, adding A3.5 cents to A73.5 cents. Also on the up was Mincor (MCR), which reinforced its status as a leader of the nickel sector, adding another A30 cents to close the week at A$2.50. That was down slightly on the 12 month high of A$2.55 reached on Thursday, and thousand miles away from the lowly A45.5 cents low set at the depth of last year’s big share market shake-out. 

Minews. Let’s continue picking the eyes out of the week’s trade before switching to a sector-by-sector run down. 

Oz. That’s a good idea because, as we said earlier, there really isn’t a trend to follow, just a number of eye-catching moves to catch up on. Moly Mines was one of the most interesting. Not a presenter at Diggers, Moly still managed to rush back into the spotlight on speculation that its Spinifex Ridge molybdenum project is back on track thanks to a sharp rise in the price of molybdenum. Whatever the reason - and Chinese involvement in the company was also being talked about too - Moly copped a speeding ticket from the ASX, as its shares rose 77 per cent to close the week at A95.5 cents. Even that was down on the mid-week high of A$1.16. 

Meanwhile, CuDeco (CDU) gave us another blast from the past as it added A63 cents to A$3.38, with no specific news reported. Still, it was in line with the revived interest in copper stocks, as also demonstrated by the charge mounted by Sandfire Resources (SFR) over the past two months. This week, though, Sandfire itself ran out of steam, shedding A27 cents to A$2.00. But another stock to star, but very much from the unknown category, was Iron Road (IRD), a South Australian iron ore hopeful which reported an encouraging 110 million tonne resource at its Warramboo project. That news was enough to see the stock more than double from A24 cents to A51.5 cents, with a brief peak above A60 cents on Friday. 

Minews. Time for the sectors, starting with iron ore, which remains in the news thanks to events in your part of the world, and in Africa. 

Oz. Stronger overall, as China continues to suck in vast amounts of raw material for its booming steel sector. Iron Road was the star, as we’ve mentioned. But solid rises were also posted by other emerging producers such as Brockman (BRM), which added A11 cents to A$1.30, BC Iron (BCI), which rose A7 cents to A$1.13, and Grange (GRR), which put on A5 cents to A47 cents as it continues to make headway with its Southdown project. DMC Mining (DMM) was also stronger, up A8 cents to A29 cents thanks to its African iron ore assets and strong financial support from Cape Lambert (CFE). Cape Lambert itself put on A3 cents to A38.5 cents. Moving the other way, after a strong start when it traded up to A$2.10, Atlas Iron (AGO) faded to close at A$1.92 for a decline of A6 cents over the week. This was somewhat of a surprise as Atlas won the “Digger Award” at the Kalgoorlie conference for best overall performance by a small miner during the year. 

Minews. Gold and then base metals please. 

Oz. Troy was the star of the week, though good rises were also posted by a number of other gold stocks. Sino Gold (SGX) gave a very positive presentation at Diggers, and rose A27 cents to A$5.56 on the market over the course of the week, although it did trade as high as A$5.72 on Tuesday. Shares in Centamin (CNT) reacted positively to the company’s announcement that it will move to the official list of the London stock exchange, adding A12 cents to A$1.86. 

Meanwhile, Dominion (DOM) continues to attract support, thanks to the excellent performance of its Challenger mine. Dominion’s shares rose by A26 cents to A$4.38. Perseus (PRU) was also better off, rising A11 cents to A86 cents. But it wasn’t all good news among the gold stocks, as Scotgold (SGZ) slipped by A2.5 cents to A14.5 cents, Resolute (RSG) fell A2 cents to A60 cents, and Kingsgate (KCN) eased back by 36 cents to A$6.59. 

Base metals offered the mixed picture as gold, with no discernible trend to report on. Among the copper stocks, Equinox (EQN) rose A3 cents to A$2.95 after trading as high as A$3.13 early in the week, while Anvil (AVM) rose A15 cents to A$2.55. Other copper movers included OZ Minerals (OZL), which dropped A4 cents to A$1.08, and PanAust (PNA), which slipped A3 cents lower to A38 cents. Nickel provided a similar picture. Mincor was up as mentioned earlier, Independence (IGO) added A3 cents to A$5.33, but Panoramic (PAN) lost A16 cents to A$2.60. Meanwhile, and Western Areas (WSA) eased back by A5 cents to A$6.03 after its biggest shareholder, Terry Streeter, suffered a big defeat in court in a battle over a disputed share deal. Zinc was dull, as ever. 

Minews. Uranium and coal to finish. 

Oz. More of the same, with one star. Extract (EXT) hit a fresh 12 month high of A$8.38 in early Friday trade, before easing to close at A$8.13 for a gain over the week of A66 cents. Mantra (MRU) managed a rise of A3 cents to A$3.80, but Uranex (UNX) dropped A3 cents to A40 cents. Biggest loser of the week was Metals Australia (MLS), which was hit by a negative court decision in Namibia. That sent the company’s shares plunging by almost 50 per cent, down from A3.1 cents to A1.7 cents. Coal stocks were generally down. Coal of Africa (CZA) slipped A11 cents to A$1.66, Macarthur Coal (MCC) lost A7 cents to A$7.77, and Riversdale (RIV) fell A32 cents to A$6.28. 

Minews. Thanks Oz.


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## drillinto (11 October 2009)

October 11, 2009

That Was The Week That Was … In Australia

By Our Man In Oz
www.minesite.com/aus.html

Minews. Good morning Australia, it’s not often you have a week when everything rises.

Oz. It was really quite bizarre. I never thought I’d see a time when Australian interest rates, the overall stock market, gold, and most other commodities all rose at the same time. In fact, I’m not sure whether what we saw last week was a good thing, or a worry that we’re at the start of another round of asset bubbles, and we all know what happens to bubbles.

Minews. Don’t be so grumpy. Why not take a rise when you get it.

Oz. Because some of last week’s moves were quite strange, and perhaps driven forces other than conventional supply and demand. The disintegration of the U.S. dollar is one factor that no-one seems to quite understand because there’s nothing to replace the dollar yet, except perhaps gold, and that’s not going to happen if governments can prevent it. Ultra-low, almost non-existent interest rates, are also fuelling irrational investment decisions because the cost of money is being held down by a flood of government stimulus spending, rising government debt levels, and quantitative easing which, we all know, is nothing more than the Zimbabwean solution of speeding up the money-printing press.

Minews. Enough of the theories, tell us what happened in Australia last week.

Oz. Overall, the stock market as measured by the all ordinaries index rose by a relatively modest 3.2 per cent, while the metals index added 6 per cent, and the gold index rocketed up by 11.7 per cent, which is perhaps the most curious move of all.

Minews. Why, surely gold stocks were in strong demand with the price holding above US$1000 an ounce.

Oz. There’s no denying the strong U.S. dollar gold price, but on conversion to Australian dollars the gold price has actually been falling all year. Last week the Australian dollar gold price rose, but by exactly half the U.S. price. Gold in Australian dollars has fallen from around A$1500 an ounce earlier this year to A$1162/oz on Friday. That was a rise of 2.4 per cent for the week while the U.S. dollar gold price rose by 4.8 per cent. All of the damage to the local gold price was caused by currency movement, with the Aussie dollar adding another US 2 cents to close on Friday at US90.48 cents, taking the gain since January to 30 per cent.

Minews. All very interesting, but what happened to share prices, starting with gold, please.

Oz. Not a fall to be found, despite a fine-toothed search. Best performance of the week came from a Minesite member, Eleckra (EKM) which reported excellent results from drilling at the Central Bore deposit on its Yamarna tenements in Western Australia. At one stage on Wednesday Eleckra had almost tripled from A6.7 cents to trade at A18 cents, but eased back to end the week at A13 cents, which is just short of doubling in the week. Best assay results from the latest drilling included three metres at 25.6 grams of gold a tonne starting at a depth of 75 metres and 2 metres at 26.5g/t. Eleckra’s Yamarna project already has close to a million ounces in the resource category, so these latest results could be what’s needed to elevate the project from exploration to development.

Other good gold moves included Centamin (CNT) hitting a 12-month high of A$2.10 on Friday, before closing at A2.04 for a gain of A34 cents. Silver Lake (SLR) traded up to A99 cents, but also suffered a late sell-off, ending at A97 cents, for a gain over the week of A8.5 cents. Kingsgate (KCN) continued to attract interest in its Chatree mine which is rapidly picking up speed after winning expansion approval from the government of Thailand. It rose A19 cents to A$8.47. Troy (TRY) made progress on construction at its Casposo project in Brazil, and despite some boardroom disquiet. It added A28 cents to A$2.42.

A quick call of other prices saw Medusa (MML), up A18 cents to A$3.45 after fresh drilling news from its Lingig project in the Philippines. Avoca (AVO) added A18 cents to A$1.69 on news of lower operating costs at its Higginsville mine. Highlands Pacific (HIG) made a return to the headlines on reports of progress at its Frieda River project in Papua New Guinea, while adding A4.5 cents to its share price which closed the week at A24.5 cents, down on the 12-month high of A26 cents reached on Wednesday. Resolute (RSG) was up A8 cents to A70 cents. Focus (FML) rose by A0.8 of a cent to A4.7 cents, and Catalpa (CAH) added A1.5 cents to A16.5 cents.

Minews. Let’s switch across to the other sectors starting with the base metals, please.

Oz. Copper led the way thanks to its strong price rise to back over US$2.80 a pound. OZ Minerals (OZL) added A17 cents to A$1.27, a move which looks especially interesting given the launch of a class action by aggrieved investors over last year’s near collapse of the company. Equinox (EQN) continues to attract support, adding A37 cents to A$3.80, but did trade up to a 12-month high of A$3.94 on Friday. Sandfire (SFR) remained a speculator’s favourite thanks to its Doolgunna discovery, rising A36 cents to A$3.76, while the list of “near-ology” beneficiaries grew to four. Talisman (TLM) we know about. It rose by A9 cents to A83 cents, and two newcomers chimed in, Chrysalis (CYS) rose by A7.5 cents to A39 cents after reporting it has acquired a tenement 20 kilometres west of Doolgunna, and Sipa (SRI) added A4.4 cents to A14 cents thanks to its Thaduna project being nearby.

Nickel stocks were also on the move up. Independence (IGO), which we took a close look at last week, rose A18 cents to A$4.53. Mincor (MCR) added A9 cents to A$2.42. Mirabela (MBN) gained A33 cents to A$2.94 and Minara (MRE) reported record cobalt production from its Murrin Murrin mine and rose A11.5 cents to A$1. Zinc stocks continued to improve as the outlook for its close metallic associate, lead, brightened on speculation of increased battery sales to the vehicle industry. Perilya (PEM) rose by A3.5 cents to A50.5 cents. CBH (CBH) gained A0.9 of a cent to A10.5 cents, and Bass Metals (BSM) moved up an eye-catching A7.5 cents to A32 cents after announcing a deal to treat material mined by the submarine mining specialist, Nautilus Minerals. The only zinc stock to retreat was Ironbark (IBG), which we also took a look at last week. It fell A4.5 cents to A18 cents.

Minews. Iron ore, uranium and any specials to finish, please.

Oz. Like gold, it was hard to find an iron ore stock which fell last week. Atlas (AGO) added A10 cents to A$1.72. Giralia (GIR) rose A7.5 cents to A$1. Fortescue (FMG) gained A14 cents to A$3.77, and Polaris (POL), which has received competing takeover bids, closed at a 12-month high of A62.5 cents, a rise of A11.5 cents. However, the stock everyone is watching is United Minerals (UMC) which asked for a suspension in trade on Wednesday amid speculation of receiving a takeover bid from BHP Billiton. While UMC was stuck at its pre-suspension price of A91 cents, its major shareholder, Thundelarra (THX) gave the game away by hitting as 12-month high of A72 cents on Friday, before easing to close at A67 cents for a gain of A3 cents over the week.

Uranium stocks didn’t miss out on last week’s strong market. Extract (EXT) reported more encouraging assays results from its Rossing South project in Namibia, an announcement which helped the stock rise by A46 cents to A$9.29. Mantra (MRU) added A17 cents to A$4.70, and Paladin (PDN) gained A45 cents to A$4.79.

Minews. Specials to close.

Oz. Interestingly, there were quite a few, mainly in the fields of platinum and lithium. Platinum Australia (PLA) rose by A6.5 cents to A91.5 cents on encouraging news from its South African operations. Nkwe Platinum (NKP) joined in with a rise of A6.5 cents to A33.5 cents. Among the lithium players, Galaxy (GXY) crept A5 cents higher, despite a big capital raising, to A$1.80, and Haddington (HDN) almost doubled after reporting a fresh lithium discovery. The stock, once best known as a tantalum producer, rocketed up from A17 cents to a 12-month high of A39.5 cents on Friday, before easing to end the week at A31 cents.


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## drillinto (19 October 2009)

October 17, 2009

That Was The Week That Was ... In Australia
By Our Man in Oz
www.minesite.com/aus.html

Minews. Good morning Australia. It looks like you had an up-and-down week. 

Oz. That’s a fair description. Three up days, and two down days, which produced a relatively flat overall result. The all-ordinaries index on the ASX rose 1.8 per cent, the mining index rose by 3.3 per cent, but the gold index slipped by a marginal half a per cent.

The sectors told the same story. Iron ore was hot thanks to the proposed takeover of United Minerals (UMC) by BHP Billiton. Gold was flat, while base metals and uranium were mixed, trending up. The bogeyman for Australian investors, the local dollar, was strong again, adding another US2 cents over the course of the week, taking its gain since June 30 to US11 cents, or 13.8 per cent in less than four months, with half of that rise coming in the past month. 

Minews. Presumably there is still talk of parity with the US dollar? 

Oz. Absolutely, with the mooted timing of that event moving from mid next year to early next year, especially if Australia’s Reserve Bank does what it was tipped to do this week and rapidly lifts interest rates. The 0.25 basis point rise earlier this month has been absorbed without any reaction in the broader economy, except to boost confidence. The bank is now talking about a series upward moves, starting as early as next month to get away from the “emergency” rate setting of the past year. 

Minews. Which puts you completely out of step with the rest of the world. 

Oz. Out of step with the rest of the English speaking and European world certainly, a situation which reflects that fact that Australia is very much plugged into fast-growing Asia, and much less reliant on the slow-growing US and Europe. The lucky country is a hackneyed term for Oz, but it’s coming true again, this time because no-one spotted that the real effect of global government stimulus spending is that it requires more resources, and that’s what Australia sells. It actually doesn’t matter whether it’s the private sector spending, or government, it all consumes steel, copper, aluminium and zinc. 

Minews. Enough of the economic theories, time for prices, starting with iron ore and that UMC deal, please. 

Oz. The target itself, UMC, traded as high as A$1.28 and closed at A$1.27, A3 cents short of the BHP offer price of A$1.30, a pretty good sign that no counter bid is expected. That rise represents a gain of A36 cents on UMC’s last sale which was back on October 6 when management requested a suspension in trade. However, the deal and the price is not what really caught the attention of local observers who have been quick to point out that BHP has just given China Incorporated another black eye. Followers of UMC will remember that it had already struck a deal with China Railway Commercial to give the Chinese an 11.4 per cent stake in UMC, while it busily proves up the Railway iron ore deposit which butts into an existing BHP mine. Given that it is less than a year since BHP gazumped China’s plans to snatch control of Rio Tinto (RIO), and the Chinese were thwarted in their attempt to get all of OZ Minerals (OZL), the UMC action will not go down well in Beijing. 

Minews. Oh dear, what a pity. Let’s move along and look at the rest of the iron ore sector. 

Oz. There was uplift for all iron ore stocks with a number of them hitting 12 month highs. Fortescue Metals (FMG), which had been a potential bidder for UMC, added A40 cents to A$4.17. It can be expected to do even better next week as news flow increases as it hosts a full-scale media tour of its operations, a tour which will include your very own Man in Oz. 

Elsewhere, Atlas (AGO) added A15 cents to A$1.87, and its merger partner, Warwick Resources (WRK) gained A8 cents to a fresh high of A60 cents. Also on the move was Giralia (GIR) which rose A21 cents to A$1.21, although the close was down slightly on a new high of A$1.24 set during Friday trade. Meanwhile, BC Iron (BCI) rose by A8 cents to A$1.16, Brockman (BRM) rose a very sharp A39 cents to A$2.17, Iron Ore Holdings (IOH) rose A7 cents to A87 cents, while FerrAus (FRS) rose A2.5 cents to A77.5 cents and Golden West (GWR) also A2.5 cents to close at A37 cents. 

Minews. Since gold was flat, let’s do something different at look at any specials now, before we go to base metals, uranium and finish with gold. 

Oz. That’s a good decision because we had a number of interesting situations during the week. The revitalised interest in manganese was at the top of the list, with the Minesite report on Spitfire (SPI) getting most of the credit for that stock effectively doubling last week from A8.2 cents A16 cents in early Friday trade, before settling at A15.5 cents. Other manganese stocks, which are benefiting from a looming takeover struggle for OM Holdings (OMH), also did well. Shaw River Resources (SRR) added A2.5 cents to A20 cents, and OM itself rose by A12 cents to A$1.81, but did get as high as A$1.93 on Friday. 

Other specials included useful rises by the handful of Australian stocks playing in the platinum space. Platinum Australia (PLA) added A8 cents to A98.5 cents, but did trade up to A$1.10 on Wednesday after news broke that billionaire speculator, George Soros, had snapped up a nine per cent stake in the stock, his second plunge into Australian-based resource stocks in less than a month. His previous move was on the copper explorer, Marengo Mining (MGO) which had a down week, losing A2 cents to A19 cents, still about double what Soros paid. 

Minews. Base metals next, please. 

Oz. This is where the game starts to slow, despite continuing interest in selected copper stocks. Sandfire (SFR) was the leader after further spectacular assay results from its Doolgunna prospect. That lifted the stock by A40 cents to close at A$4.06, down from an all-time high of A$4.39 reached during Friday trade. Its near-neighbour, Talisman (TLM) added A35 cents to close at A$1.18, also down on an all-time of A$1.21 reached earlier in the day. Rex (RXM), the third run-away copper story of the past few weeks, had a down week, losing A5 cents to A$2.09. Other copper moves included Equinox (EQN), which was up A32 cents to A$4.12, Hillgrove (HGO), which was up A2.5 cents to A32 cents, and Syndicated (SMD), also up by A2.5 cents to A25 cents. Citadel (CGG) was a rare loser, slipping by half a cent to A43 cents. 

Nickel stocks trended up, but not by much. Independence (IGO) and Western Areas (WSA) were the picks of the bunch, with Independence rising by A18 cents to A4.71 and Western Areas adding A25 cents to A$5.08. Another nickel stock we don’t hear much about was Fox Resources (FXR). It rose by A5 cents to A25 cents after the chairman of Western Areas, Terry Streeter, boosted his personal stake in the stock to 16.1 per cent via on-market purchases. Mincor (MCR) was steady at A$2.42 and Poseidon (POS) added half-a-cent to A29.5 cents. Zinc stocks were flat all over. 

Minews. Uranium now. 

Oz. Mixed, as mentioned earlier. Energy and Metals (EMA) was well supported, perhaps after its presentation at the Minesite forum in London. It added A3.5 cents to A28.5 cents. Extract (EXT) added A65 cents to A$9.94, and Manhattan (MHC) attracted interest with a rise of A9 cents to A79 cents. But after that it was generally downhill. Forte (FTE) slipped A1.5 cents lower to A17.5 cents, and Uranex (UNX) lost A2.5 cents to A27.5 cents. 

Minews. And gold to finish. 

Oz. Not a lot to report in a week when the earnings damage from the rising Australian dollar received closer attention. Among the best performers were Perseus (PRU) which added A10.5 cents to A$1.52, and Eleckra (EKM) which rose by A1.5 cents to A14.5 cents as interest grows in its Yamarna discovery. Laconia (LCR) was an interesting addition to the gold sector, with its freshly-floated A20 cent shares selling at an opening A25 cents, before easing to close at A23 cents, a useful premium and a reminder that the new float season is almost upon us. The only other gold move of note was Crescent (CRE) which announced the start of ore processing, enough to lift the stock by an impressive A12.5 cents to A28.5 cents. 

Other gold moves were minor, either way, or not at all. Troy (TRY) was steady at A$2.42 after a tumultuous week of boardroom name-calling. Kingsgate (KCN) slipped A2 cents lower to A$8.45. Centamin (CNT) eased back by A4 cents to A$2.00. Adamus (ADU) was steady at A45 cents. Silver Lake (SLR) lost A5 cents to A92 cents, and Catalpa (CAH) gained half a cent to A17 cents. 

Minews. Thanks Oz. Have fun visiting Fortescue’s Pilbara iron ore mines where it seems summer has arrived with a vengeance with temperatures already in the 40s. 

Oz. At least the beer’s guaranteed to be cold at the end of the day.


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