Reefton's Namibian problems emerge
Jesse Riseborough
Tuesday, April 05, 2005
INVESTORS reacted angrily this morning to news from uranium hopeful Reefton Mining that renewal applications for prospecting licences at both its Erongo uranium and Skeleton Coast diamond projects in Namibia have yet to be approved.
The shareprice shed 32.5% in morning trade to 8.1c, continuing a turbulent few days for the explorer including the surprise exit late last week of managing director Vladimir Nikolaenko.
The company reported "significant delays" in dealings with the mining commissioner of the ministry of mines and energy in Namibia, and said it had engaged legal counsel to pursue the approvals.
"It is the board's view that the period of time the commissioner has taken to consider the renewal applications for the Erongo polymetallic and Skeleton Coast diamond projects is inappropriate and unreasonable," the company stated in a release to the market this morning.
Reefton chief executive officer Simon Gilbert told MiningNews.net today that Reefton were still awaiting the response from the Namibian Government, which he hoped would be achieved within the next two days, but acknowledged it could take longer for the issue to be resolved.
"Essentially we are waiting for a formal response from the Namibian government indicating the status of our renewal applications for our Namibian leases, and they were requested to respond to us by the close of business yesterday which they haven't done," Gilbert said.
"We don't know at this stage [when this will happen], hopefully sooner rather than later. All being well we could get response within the next 24-48 hours but of course it could take longer as well."
Reefton said the renewal application for the Erongo polymetallic project was initially lodged in March 2003 while the renewal application for the Skeleton Coast diamond project was lodged in August 2004.
Gilbert said a legal team representing Reefton would be meeting with the president of Namibia today in a bid to expedite the process. He also claimed that a failure to resolve the issue would have a major negative economic impact on the small African nation.
"We have engaged senior counsel, and they will be speaking with various levels of the [Namibian] government today including the president to expedite resolution of this issue, which obviously has significant consequences for Reefton but also major ramifications for Namibia as a country,"
Gilbert added that the failure to renew the licences at this point would have no impact on the drilling program at Erongo announced last week. However he was unable to state the short term impact it would have on Reefton's operations in Namibia.
"Obviously we are trying to seek resolution on this issue. Primarily the projects are the same as they were a week ago. They are advancing well but obviously we need to resolve this other issue regarding the ground," Gilbert said.
Gilbert said he didn't think the massive volume of shares traded on the market this morning necessarily represented growing scepticism about the company's operations in Namibia. More than 137 million shares have been traded in the opening two hours, representing a turnover of almost $13 million.
"There a probably a lot of day traders that are responsible for a lot of the volume, but as I have mentioned the projects are in good standing, and it is just now an issue of whether or not the renewals are going to be accepted. The investors, you would expect to be watching closely, and could potentially view this as a buying opportunity considering the state of the projects."
Gilbert added that Reefton believed there was be no chance the licences would not be renewed and ruled out any connection between today's announcement and the resignation of managing director Nikolaenko.
Last month the stock jumped 81% to around 12c before hitting a 52-week high of 18c (March 22) on the back of back of a new focus on uranium.
tarnor said:what carnage...
if they do get this sorted out within a few days could be a lot of upset sellers. imho the desperation to renew the leases might indicate some very good uranium results..
as gambly as they come please do your own research, i think thiers money to be made here but could just as easily lose it all...
Bertha said:From my observations of the market, and they are only my observations, I would be wary of buying in if RTM looks like closing on a low. If you think it was a massacre today, what will the end-of-day traders do with it when they look at the market tonight, and realize that they are down 30ish%. Could push price even lower tomorrow, unless the bargain hunters have a lot of push.
el_ninj0 said:I already predicted around 6c for tommorow, but I was wondering what your opinion was on when a stock closes on the low of the day. What does this usually indictate? That it will go lower the next day aswell?
7 April 2004
Company Announcements Office
Australian Stock Exchange Limited
Exchange Centre
20 Bridge Street
SYDNEY NSW 2000
Dear Sir/Madam
FURTHER REPORT ON THE STATUS
OF RENEWAL APPLICATIONS FOR ERONGO AND SKELETON COAST EXCLUSIVE
PROSPECTING LICENCES - NAMIBIA
Further to the announcement of Tuesday 5 April 2005 Reefton Mining advises that the
Permanent Secretary, the Director of Mines and the Mining Commissioner of the Ministry of
Mines and Energy, Namibia (MME) have provided the Company with clarification and written
assurances that Exclusive Prospecting Licenses (EPL’s) covering the Erongo Polymetallic
Project (EPL 2805 - 2811) and the Skeleton Coast Diamond Project (EPL 2698 - 2700) remain
valid pending the determination of Renewal Applications by the MME, which are under
consideration.
In terms of Section 71(3)(a) of the Minerals Act (Namibia), 1992 the EPL’s covering the
Erongo Polymetallic Project and the Skeleton Coast Diamond Project remain valid pending the
determination of Renewal Applications, and the MME has confirmed that this is the case.
The MME has acknowledged the delays to date and has assured the Company that they
appreciate the importance and need for a timely outcome to this matter.
The Company is pleased to advise that it remains fully committed to the exploration and
development of natural resources within Namibia for the benefit of all stakeholders, including
the people of Namibia, the employees and shareholders of the Company.
The Company will provide an update as to the progress of the renewal of the EPL’s in due
course.
Yours faithfully
BS MOORE
Chairman
1st Floor, 47 Ord Street
West Perth
Western Australia 6005
Email: quadrant@optusnet.com.au
Website: www.reeftonmining.com.au
Tel: (61 8) 9322 7822
Fax: (61 8) 9322 7823
A.C.N. 010 546 675
tarnor said:announcement out this should take off today should maker a few people some quick $$$
The Namibian (Windhoek)
April 7, 2005
Posted to the web April 7, 2005
John Grobler
Windhoek
THE announcement by an Australian-listed mining company, Reefton Mining NL, that it has made a uranium discovery on the farm Hakskeen outside Usakos, has been greeted with widespread scepticism by analysts and geologists.
Rather, it is being suggested, the 'uranium discovery' might well have been the result of alleged sloppy geology, as the specific deposit is well known to be thorium, another radioactive substance that is sometimes used in fluorescent lighting fixtures.
"I would be very, very sceptical of any announcement of a major uranium find at Hakskeen," said Cape Town-based geologist Dr Nick Stevens, who has written his doctorate on the geology of the area where Reefton said it made its find.
On March 18, Reefton NL announced to the Australian Stock Exchange (ASX) that it has identified four new radiometric anomalies in close proximity to the Langer Heinrich deposit.
The Langer Heinrich deposit is again close to the Roessing deposit, which is the fourth largest uranium mine in the world.
In the announcement, titled 'New Uranium Discovery', Reefton NL said: " the company has discovered a new uranium target at its wholly owned Erongo Polymetallic Project in central Namibia, Africa".
"The company has commenced radiometric surveying returning significant readings of up to 94 320 counts per minute, thereby indicating the presence of uranium-bearing mineralisation," the letter to the ASX Company Announcement Office stated.
Reefton also said it had found "radiometric anomalies" at three other farms in the area, namely Vergenoeg, Sukses and Hoopverloor.
The company said these anomalies "occur within alluvial basins interpreted to have developed on palaeochannels similar to the Langer Heinrich uranium deposit owned by Paladin Resources Ltd located south of Hakskeen".
The Langer Heinrich deposit is a proven uranium-vanadium deposit.
BOOMING PRICES
Booming uranium prices appear to have created a bull market for new uranium discoveries, and Reefton's stock price shot up in the week after the announcement, made late last month.
Its stock increased by another 40 per cent on the London-based Alternative Investment Market, a somewhat speculative venture capital market.
According to Reefton, the price of uranium has increased from an annual month-end spot price of US$11,54 per pound (about N$70 per pound) to US$21,75 per pound (about N$130,50 per pound, or N$293,63 per kg).
Current world production is estimated at 46 000 tons a year, while the estimated demand is 79 000 tons a year.
With especially developing economies like India and Russia opting to build more nuclear power stations to cope with exponential growth in demand for electricity, analysts projected that there would be a massive shortfall in world uranium production.
Another Australian company, Paladin Resources, which owns the rights to the Langer Heinrich uranium deposit, recently raised more than US$38,9 million (about N$233 million) on the international market for the development of the new mine.
Pending some environmental impact assessments and feasibility studies, construction of a mine at Langer Heinrich is expected to start by the middle of this year.
WRONG KIND OF ROCK
Professor John Moore of the Rhodes University Geology Department said in a telephonic interview that he would be very surprised if real and viable quantities of uranium were to be found at Hakskeen.
While many of the rock formations between Usakos and the coast display levels of radioactivity (the Spitzkoppe are considered to be quite "hot"), Moore said that Hakskeen basically had the wrong kind of rock for a genuine uranium deposit.
The Hakskeen area is something of a legend among geology students, and many master's degree students have, over the years, visited this site as part of their training to differentiate between real and false indications of uranium deposits, he explained.
"Thorium is a close relative, if you will, of uranium, and in the process of its radioactive decay, produces small quantities of uranium," Moore said.
But the deposit at Hakskeen consisted largely of thorium potassium and small quantities of uranium, with most of the radioactivity attributable to the thorium, he noted.
The area was part of an extensive, French-sponsored aerial radio-magnetic survey in the early 1990s, and subsequent drilling at the site proved that it was unlikely to contain any uranium.
Dr Nick Stevens also pointed out that as a granite-based deposit, it was unlike the Roessing or Langer Heinrich deposits.
"It is what we call a monozite, a rare earth phosphate normally associated with heavy beach sands but one that also can give off a radioactive signal," he said.
He elaborated that the sophisticated modern Geiger counters used by geologists would be able to show differences in radiation from thorium, potassium or uranium.
"Each one gives off a distinct signal, which you can tweak on a computer to see what exactly it is you are looking at," he said.
All the granite formations between the Ebony siding, on the way to Swakopmund, and the coast gave off radio-active signals, Stevens said.
"A place like Spitzkoppe would also give a strong radioactive signal, but in that kind of granite formation it is basically geologically implausible," he said.
The ASX also appeared to have had its doubts over the likelihood of the new uranium find, and at one point suspended trading in Reefton shares to ask the company to issue further clarifying information.
Reefton Mining also has an Exclusive Prospecting Licence along the Skeleton Coast in an area north of Moewe Bay, where for the past four years it has been struggling to prove a viable diamond deposit.
So far, it has only been able to produce micro-diamonds - diamonds smaller than 0,20 of a carat - although these have been favourably priced.
But Reefton seemed very sure of its uranium find, and announced that the company had retained the services of Dr Christian Schlag, a well-known uranium geologist, to substantiate the find.
Relevant Links
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tarnor said:Don't know if you saw this one yet el_ninj0, its being posted everywhere.
maybe the journo is planing to pick some up cheap tonight in the uk
hasn't effected our sp today.
was tempted to bail but i'm going to continue to hold, rtm have specified in previous ann that they used up to date equipment, have a geoligist specualised in that area, why would thier be such a fuss about getting leases renewed etc..
tarnor said:slipping away now, i'm going to wait till monday as a potential exit with a little more upside, apparently thier will be a response to the newspaper article. who knows, not much more to be said really
cheers
tarnor said:* some people apparently contacted reefton on friday about the sceptical newspaper article and were told that reefton would make an ann monday to address the claims
* more rumours - on another forum someones broker has apparently read an article in a nambian newspaper about a further uranium find by reefton.
if those things were true particually another uranium target you would expect more buying, should really be in a trading halt if that was the case.
I think its bottomed today, but its hard to know whats going on behind the scene on no news a slight recovery to .088 possibly would be my guess, if that newspaper article is rebutted i'd guess a close touching on 10c
at the moment i think its just been traders exiting :/
all guesses i'm afraid, lamenting that i didn't jump on HRR last friday
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