"The best place to be is in commodities"

[drillinto]

June 24, 2011

"The Chinese Are Increasingly Being Drawn To New Iron Ore Frontiers in West Africa"
By Geoff Woade of ProspectingJournal.com
Source >> www.minesite.com/aus.html (FREE REGISTRATION)

Last week, Andrew Forrest, the billionaire chief executive of Fortescue Metals, the big Australian iron ore company, threatened to sue the Australian Government after it slapped a 30 per cent tax on the profits of local iron ore companies. BHP Billiton Rio Tinto and Xstrata also fought a proposed 40 per cent tax on the mining profits of internationals operating in Australia.

And it’s not just the federal government eyeballing the mining industry for revenue. Last week Western Australian Premier Colin Barnett blindsided mining companies with an additional A$2 billion in announced royalties. The Chinese are watching this very closely as China produces about half of the world’s steel, but only 14 per cent of the world’s iron ore.

According to Zhu Jimin, the chairman of the China Iron and Steel Association, “Sixty per cent of total Chinese domestic iron ore consumption is accounted for by imports.” The bulk of these imports are coming from Australia. In the first quarter of 2011, China spent US$13.2 billion more on iron ore imports than it did during Q1 2010. The average price of US$157.6 per tonne was up 55 per cent on a year-on-year basis.



Australian taxation schemes are not the only thing worrying the Chinese. The average wage of an Australian miner has skyrocketed in recent years to A$109,000. Not surprisingly, the Chinese are scouring the globe for high-grade iron ore projects with lower production costs. Some analysts expect the Chinese to spend US$25 billion in the next five years in this sector.



With increased Chinese investment in Africa, educated speculation suggests that a lot of this spending will be done in West Africa. The region fits many of China’s needs, with large scale high grade iron ore deposits, an improving business climate and competitive miners’ wages. “China plans an aggressive expansion of its iron-ore holdings,” confirms Luo Binsheng, Vice Chairman of the China Iron & Steel Association.



“Guinea, Sierra Leone, Liberia, Cameroon, Gabon, Ivory Coast, they all have potential,” said John Jorgenson, iron ore specialist at the United States Geological Survey in a recent interview with Reuters. “The reserves are a pretty good size, a quarter of a billion to half a billion tonnes, and some of the grade is 65% iron, which fits in the range of Australian and Brazilian deposits.” According to the Reuters article, the big players, such as BHP, Rio Tinto, Vale and Chinalco will spend around US$10 billion in total on projects in West Africa.



The biggest obstacle to most of West Africa’s iron ore plays, as with most bulk mineral projects, is the cost of transportation. For purposes of comparison, Fortescue Metals spent A$2.5 billion constructing a 280 kilometre rail line from its Cloudbreak Mine in the Pilbara to the Fortescue Herb Elliott facility at Port Hedland in Western Australia.



Bearing all this in mind, the Canadian-listed junior West African Iron Ore is an early stage iron ore project in Guinea that is likely to be on the Chinese radar. WAI’s lead asset is so close to the deep sea port of Benty that a conveyor belt could be built to deliver iron ore directly to the ocean freighters. The company holds two iron ore permits in Guinea, Forécariah and the Kerouane. Potential resources of between 2.9 billion and 5.1 billion tonnes have been estimated for the two largest targets, Kalyadi and Sambalama. An average grade of 36% iron was calculated on 186 surface samples within mineralized units in the Forécariah project, while an average grade of 39% iron was obtained on 78 surface samples from the Kalyadi and Sambalama targets.



WAI has also been granted exploration rights for a three-year period over iron deposits in an area covering 500 square kilometres in the prefecture of Kerouane. The company plans to spend approximately US$3.4 million initiating a Phase I exploration programme on the territory covered by the Forécariah permits. Compare this with the US$80 billion China spends on importing iron ore every year. Guy Deport, the chief executive of WAI speaks fluent Chinese and has a long history of deal-making with the Asian market. If that doesn’t say something about the future of West African Iron Ore it is difficult to know what will, as its market capitalization is still only C$45 million.

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[drillinto]

June 25, 2011

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


Minews. Good morning Australia. Your warnings about rising costs for project developers appear to have come true. And it looked like you had another flat trading week on the ASX.

Oz. It was a torrid time for a number of the smaller iron ore companies, especially those exposed to mining and processing low-grade magnetite ore. Worst affected was Murchison Metals (MMX) which is a major shareholder in both mine developments and a new port and rail system which is designed to service emerging iron ore mines in the Midwest region of Western Australia. Murchison was dealt a savage blow when one of the miners seen as major future user of the port shut its doors, throwing everything into doubt.


Minews. It sounds complicated, so just the quick version please as I gather you’re on the road again this week.

Oz. I am, and aiming to have a chat to the company behind a potential South Australia magnetite mine. More on that later, but the west coast problems started when Sino Midwest Corporation, a Chinese controlled miner, closed its small direct shipping ore (DSO) mine and mothballed the much bigger Weld Range magnetite project, apparently because the capital costs for the port had doubled to around A$7 billion, meaning that rail haulage rates for potential users would become prohibitively expensive. Trading in Murchison was halted before the Midwest bombshell was dropped so the shares ended the week up a few cents, but are unlikely to stay there when trading resumes and the company explains its future.

Among the other magnetite companies caught in the sell down was Grange Resources (GRR) which dipped to a fresh 12 month low of A44.5 cents on Thursday, but managed to add A1 cent to A45.5 cents by the close on Friday. Gindalbie (GBG) performed a similar trick, touching a fresh low of A78.5 cents, before bouncing back to close up the week at A84.5 cents, a rise of A1 cent over the week, which at least shows that someone believes in the future of the magnetite producers. Centrex (CXM), one of the South Australian hopefuls, lost A3 cents to A32 cents over the week, but did touch a fresh low of A26 cents on Thursday.

Minews. We might as well continue with the iron ore sector before we look at the rest of the market.

Oz. Good idea, though a quick glance at the overall picture reveals very flat trading, perhaps because we’re in the final days of the financial year. The all ordinaries index on the ASX rose by less than half a per cent. The metals and gold indices fell by less than one per cent.

Finishing with the iron ore companies, the really big loser was Brockman Resources (BRM), the company which has seen control pass to that mystery Hong Kong taxi hire firm, Wah Nam International (WNI). Last week, the wheels finally fell off Brockman, as it dived by A73 cents to A$3.20, a price close to half the A$6.25 level at which it was trading just three months ago. FerrAus (FRS), the other Wah Nam target slipped A1 cent lower to A64 cents, while Wah Nam itself officially became a penny dreadful, falling though the A10 cent barrier to end the week at A9.7 cents.

Elsewhere among the iron ore companies Atlas (AGO) slipped A10 cents lower to A$3.43, Fortescue Metals (FMG) added A11 cents to A$6.17, Iron Ore Holdings (IOH) eased back by half-a-cent to A$1.27, and Sherwin (SHD) added A1 cent to A14 cents. Territory (TTY), meanwhile, lost A1.5 cents to A50 cents when South Africa’s Exxaro said it would pull out of a bidding duel with commodities trader, Noble Group.

Minews. Over to the gold sector now, please.

Oz. Mixed is the one-word description of the Aussie gold space last week. There were a couple of strong rises, offset by a long tail of declines. Among the best performers was Gold Road (GOR), up A11 cents to A58 cents, perhaps reflecting new-found London interest after a presentation at the Minesite Forum this week. Silver Lake (SLR) shook off several weeks of lacklustre trading to come back with a rise of A17.5 cents to A$1.80. Kingsrose (KRM) performed a similar trick with a rise of A13 cents to A$1.33, and OceanaGold (OGC) added A10 cents to A$2.47. Other movers included Medusa (MML), down A64 cents to A$6.52, Integra (IGR), up A3.5 cents to A43.5 cents, Perseus (PRU), up A22 cents to A$2.66, and Gryphon (GRY), up A12 cents to A$1.80.

Also in the gold sector we have two interesting takeover bids unfolding. Catalpa (CAH) is planning to merge with Conquest (CQT) in a deal led by Newcrest (NCM), and which freezes out a rival move by St Barbara (SBM). And Focus (FML) is bidding for Crescent (CRE). On the market, most of the players in these complex deals lost ground as investors tried to work out the likely winners and losers. Catalpa fell by A13 cents to A$1.40. Conquest lost A2 cents. Newcrest was A5 cents lighter at A$36.52. St Barbara slipped A4 cents lower to A$1.83. Focus lost A0.6 of a cent to A7.1 cents, while Crescent was the one winner, putting in a rise of A0.6 of a cent to A5.6 cents.

Minews. Your gold sector does seem to be undergoing quite a shake out, so keep an eye on how those deals work out. Meanwhile, let’s speed up and move across to base metals.

Oz. There were two interesting base metal moves, one relating to a discovery and one relating to corporate news. Discovery news came from recently-floated Kidman Resources (KDR), which shot by A16.5 cents to A49.5 cents after reporting excellent assays from its Blind Calf project in New South Wales, including 23 metres at 7.07% copper plus 8.87 grams of silver. The corporate move was from nickel miner, Mincor (MCR) which launched an on-market share buyback, signalling that it has plenty of spare cash, and helping the shares rise by A3.5 cents to A90.5 cents.

Across the base metal sectors most moves were down. Copper first, where fallers included Sandfire (SFR), down A29 cents to A$6.84, OZ Minerals (OZL), down A24 cents to A$12.75, Rex (RXM), down A17 cents to A$2.35, Metminco (MNC), down A1.5 cents to A27.5 cents, Exco (EXS), down A2.5 cents to A63.5 cents, and Hot Chili (HCH), down A5.5 cents to A51.5 cents.

Nickel companies performed marginally better with Mincor’s buyback acting as a reminder that profits remain strong. Mirabela (MBN) added A7 cents to A$1.74, and Western Areas (WSA) gained A3 cents to A$5.74. Offsetting those small rises were equally small falls from Albidon (ALB), down A1 cent to A10 cents, and Panoramic (PAN), down A7 cents to A1.66.

Zinc produced one winner, and a long tail of declines. Perilya (PEM) gained A2 cents to A62 cents. But Terramin (TZN) lost A1.5 cents to A30.5 cents, Blackthorn (BTR) fell A6.5 cents to A44 cents, and Meridian (MII) was weaker by the smallest amount possible, one-tenth of a cent, dropping to A9.5 cents.

Minews. Let’s wrap it up with coal, uranium and minor metals, please.

Oz. Coal was no different to the rest of the market. There were a few modest rises, offset by a general malaise in the rest of the space. Pick of the pack was Coal of Africa (CZA), which added A1.5 cents to A$1.10. Next best was Bathurst (BTU), up by the minimum amount of half a cent to A$1.02. Aquila (AQA), which is locked in a nasty dispute with Brazil’s Vale, dropped A24 cents to A$7.07. Macarthur (MCC) was down A22 cents to A$10.55, and Stanmore (SMR), shed A9 cents to A$1.01.

Uranium produced two winners, as far as can be seen. Paladin (PDN), after an awful month of falls clawed back A14 cents to A$2.56, perhaps on takeover chatter. Berkeley (BKY) added A1 cent to A40.5 cents. Falls were recorded by Manhattan (MHC), down A2 cents to A37 cents, Aura (AEE), down A1 cent to A20.5 cents, and Energy and Minerals (EMA), down A2 cents to A10 cents.

The trend in the diverse family of minor metals was also weaker pattern, with one stand-out fall. Arafura (ARU), one of the rare earth plays, surprised investors with a feasibility study slowdown at its Nolans project, and paid a hefty penalty of a share price decline of A14.5 cents to A77 cents. Alkane (ALK), another rare earth favourite, was also hit by a sell-off, shedding A26 cents to A$2.14, while the sector leader, Lynas (LYC) added A20 cents to A$2.04. Tin companies were weaker. In phosphate, South Boulder (STB) was hit with a fall of A62 cents to A$2.80.

Minews. Thanks Oz, you can enjoy Adelaide now.

Oz. More like McLaren Vale where the wine producers need a helping hand. Someone has to set an example, so why not Minesite’s ever generous Man in Oz?

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[drillinto]

"Silver at multi-month closing low"

To view the chart, please click the link below:
http://www.bespokeinvest.com/thinkbig/2011/6/27/silver-at-multi-month-closing-low.html

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[drillinto]

"Metals & Mining Analysts' Ratings & Estimates - Juniors"
By Bill Matlack(USA), Jun 28 2011

Junior Producers, Development/Advanced Exploration Stage

Iron Ore, Base Metals, Gold, Silver, Pt-Group Metals, Specialty Metals, Uranium, Coal, Fertilizers

To view the tables, with many OZ miners, please click the link below:
http://www.kitco.com/ind/matlack/jun282011_juniors.html

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[drillinto]

July 02, 2011

That Was The Week That Was … In Australia
By Our Man in Oz
Source >> www.minesite.com/aus.html >> Free Registration


Minews. Good morning Australia. You seem to have had a strong end to the week, and the financial year.



Oz. And there might be more to come next week as we seem religiously to follow New York, and New York posted another sold rise after we closed on Friday. All the major ASX indices gained ground on both a weekly and an annual basis. Metals and mining added three per cent last week, taking the gain over the past 12 months to a rather impressive 20 per cent. Gold gained 2.5 per cent last week, taking its annual rise to 12.7 per cent, and the all ordinaries put on two per cent to be nine per cent ahead of this time last year.


Minews. Solid rises, which should help wash away some of losses of the past two months.



Oz. They do, though some of the news flow down this way still has a negative edge to it. Greece, and the other sick members of Europe’s Club Med weigh on our market as much as yours, because of the debt-contagion concern. And on top of that we have our never-ending tax debate as the left side of politics continues to seek ways to skin the mining industry. Last week’s headline grabber was Green Party leader, Bob Brown, wanting to shut completely the coal industry, Australia’s second biggest export income earner, limit iron ore production, and kick foreign investors out of the country.



Minews. Is he being taken seriously?



Oz. He has to be, because from July 1st his party has the swinging vote in the Senate, our upper house, splitting the major right and left parties, but always siding with the left, and constantly egging them on to be more radical. What the political numbers mean is that the mining super-tax debate will not go away, and minerals other than iron ore and coal remain on the left’s “must tax” list while the new carbon tax could come in at a painfully high rate.



Minews. At least you’ve still got China wanting to buy all you can produce. Time for prices, please.



Oz. Gold is always a good starting point, and last week produced a number of strong performers, though next week could be a bit tougher given the fall in the price of the metal below US$1,500 an ounce after our Friday close. Among the strongest risers was Resolute (RSG), which forecast a 24 per cent increase in gold production and a 19 per cent fall in costs for the year ahead. That news saw Resolute rise by A11 cents to A$1.18. Silver Lake (SLR) also staged a strong recovery after a few down weeks, adding A14 cents to A$1.94, perhaps aided by chief executive Les Davis giving an upbeat presentation at a mining conference. Troy (TRY) joined the positive trend with a rise of A17 cents to A$3.59. Other companies on the rise included PVI (PVM), up A5 cents to A48 cents, Gryphon (GRY), up A11 cents to A$1.79, St Barbara (SBM), up A9 cents to A$1.92, and Northern Star (NST), up A4 cents to A46.5 cents. Gold companies that were worse off included: Adamus (ADU), down A3 cents to A58 cents, Medusa (MML), down A4 cents to A$6.48, and Navigator (NAV) down a very sharp A3.1 cents to A2.8 cents after it slashed the price on a big capital raising. Catalpa (CAH) eased back another A3 cents to A$1.37 as it struggles to gain traction for its merger with Conquest (CQT), which itself lost A2 cents to A40 cents.



Minews. We might take a closer look at that Catalpa deal next week because the company’s chief executive, Bruce McFadzean, will be doing the rounds in London over the next few days.



Oz. Okay, I’m sure we can arrange an update to fit in with Bruce’s schedule. In the meantime we’ll continue the call of the card. Iron ore next, as the deal flow there seems to be accelerating. Last week saw Atlas (AGO) move on FerrAus (FRS). Atlas added A34 cents to A$3.77 and FerrAus shot up by A28 cents to A92 cents. The planned merger pushes Hong Kong’s taxi hire company, Wah Nam (WNI) out of the race for FerrAus, though Wah Nam also managed to post a modest rise for the week, up A0.3 of a cent to A10 cents. Biggest loser from this shuffle of interests was Wah Nam’s captive, Brockman Resources (BRM) which plunged another A35 cents to A$2.85, taking its fall in just three months to A$3.40, or 54 per cent.



Minews. Keep an eye on that Brockman, Wah Nam situation because it has an odd look to it.



Oz. Will do. Finishing with iron ore prices it’s worth noting that the trend for conventional miners and explorers was positive, while companies on the lookout for the more unconventional magnetite posted a more mixed performance. Gindalbie (GBG), the leader in the magnetite business, slipped another A3 cents lower to A81.5 cents after it reported a fresh cost blow-out at its Karara project, and warned that a capital raising could be on the cards. The two other leading magnetite companies, Grange (GRR) and Murchison (MMX), performed differently. Grange recovered recently lost ground by adding A6.5 cents to A52 cents, but Murchison did not trade because management is working on a plan to keep alive its complex mine, rail and port plans. Other iron ore movers included: Iron Ore Holdings (IOH), up A7 cents to A$1.36, Fortescue (FMG), up A22 cents to A$6.39, Mt Gibson (MGX), up A14 cents to A$1.88, and Cape Lambert (CFE), up A2 cents to A46 cents.



Minews. Base metals next, please.



Oz. Copper and nickel companies firmed. Zinc was flat. Best of the coppers was Hot Chili (HCH), which added A10.5 cents to A62 cents. PanAust (PNA) added A23 cents to A$3.93, and Sandfire (SFR) put on A30 cents to A$7.14. Other movers included Discovery (DML), up A8 cents to A$1.23, Metminco (MNC), up A4 cents to A31.5 cents, and Oz Minerals (OZL), up A59 cents to A$13.34.



Best of the nickel companies was Panoramic (PAN), which ended weeks of decline with a rise of A16 cents to A$1.82. Mincor (MCR) also recouped some lost ground with a rise of A2.5 cents to A93 cents. Mirabela (MBN) rose A8 cents to A$1.82, while Poseidon (POS) slipped A1 cent lower to A18.5 cents. Western Areas (WSA) was steady at A$5.74.



Zinc companies barely moved. Terramin (TZN) caught the eye as it hit a 12 month low of A25 cents on Thursday, before closing the week at A27 cents, a loss of A3.5 cents. Perilya (PEM) added A1.5 cents to A63.5 cents, and Blackthorn rose by A1 cent to A45 cents.



Minews. Coal, uranium and minor metals to close, please.



Oz. Most coal companies firmed, in line with the higher oil price, as did uranium companies, which had one of their better weeks since the Fukushima nuclear incident in Japan. Among the coal companies, solid rises came from Whitehaven (WHC), up A31 cents to A$5.80, Aquila (AQA), up A23 cents to A$7.30, and Metro Coal (MTE), up A4.5 cents to A58 cents. New Hope (NHC) gained A14 cents to A$5.14, and Macarthur (MCC) added A42 cents to A$10.97.



The uranium space was much more interesting, as a number received solid buying support. Bannerman (BMN), after a long session in the dog house, rebounded with a rise of A5 cents to A28.5 cents. Extract (EXT) returned to life with a rise of A19 cents to A$7.96. Aura Energy (AEE) did best of all on a percentage basis, putting in a rise of A4 cents to A24.5 cents. Manhattan (MHC) did not join the rising trend, slipping A1 cent to A36 cents, while Berkeley (BKY) was down A1.5 cents to A39 cents.



Tin was the pick of the minor metals last week, ending a torrid period of sustained selling. Kasbah (KAS) shot up by A6 cents to A22.5 cents, and Venture (VMS) gained A5 cents to A35 cents.



Phosphate stocks strengthened. South Boulder (STB) added A19 cents to A$2.39 and Minemakers (MAK) rose by A5 cents to A44 cents.



Rare earth stocks were mixed. Alkane (ALK) added A4 cents to A$2.18, while Arafura (ARU) continued to slide, putting in a loss of A2.5 cents to A74.5 cents. The sector leader, Lynas (LYC) was marked down heavily on news of tougher environmental rules at its proposed Malaysia smelter. Lynas ended the week at A1.75, down A29 cents, its lowest in four months.


Minews. Thanks Oz.
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[drillinto]

July 03, 2011

"That Was The Week That Was … In London"
By Martin Li

Anglo American boss Cynthia Carroll gave the main speech at the Melbourne Mining Club dinner at Lord’s cricket ground on Thursday. In what proved to be a good week for commodities and mining equities, Ms Carroll emphasised that there are many reasons for the mining industry to remain optimistic. In particular, she said, the world remains “much closer to the beginning than the end of the developing world growth story”. Ms Carroll added that China, which has accounted for so much of global growth in recent years, is still only now where Japan was in 1950, just before its living standards really began to catch up with those in the US. On this basis, India has even further to travel.

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[drillinto]

World Trade Organization(WTO) condemns China's commodity policy

To read the full story, please click the link below:
http://economicsnewspaper.com/polic...o-condemns-chinas-commodity-policy-41376.html

 

[drillinto]

ISM Commodity Survey(June 2011)

Please click the link below to read it:
http://www.bespokeinvest.com/thinkbig/2011/7/5/ism-commodity-survey.html

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[drillinto]

"With more evidence that China's economy might face a hard landing, much of the momentum for commodities is starting to subside" (by A. Gary Shilling)

To read more, please click the link below:
http://www.csmonitor.com/Business/2011/0705/The-commodities-bubble-is-about-to-burst
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[drillinto]

July 09, 2011

"That Was The Week That Was … In Australia"
By Our Man in Oz
Source >> www.minesite.com/aus.html (The registration is free)


Minews. Good morning Australia, your stock market seems to have had a better week, though politics keeps getting in the way.



Oz. We are passing through confusing times. There was an upward trend in share prices late last week, with better expected next week in the wake of the sharp jump in the gold price after we had closed on Friday. But, as you suggest, before we start trading on Monday we’ll have to absorb the next instalment in our never-ending tax debate. Because Sunday is the day the government unveils the details of its proposed carbon tax.


Minews. A tax which might target the mining sector.



Oz. Little doubt about that. The major worry for miners is a likely increase in the price of diesel, which the industry uses heavily in mobile fleets and remote area power generation, though we’ll have until what’s been termed “Carbon” Sunday for the detail. At that point the bean-counters will get to work, to tell us what it all means, and how it fits in with that other new tax, the super-tax on mining profits.



The other big news last week was confirmation that the resources sector in this country is being stretched to breaking point, and beyond. Troubles at Murchison Metals (MMX), one of the west coast companies planning to mine, process, rail and ship low-grade magnetite ore, was a timely reminder that cost inflation is accelerating, that infrastructure is not being developed in a timely fashion to handle Asian demand for commodities, and that workers of every sort, from skilled to unskilled, are in alarmingly short supply.



Minews. You’re concerned that the Murchison crisis could spill over into other projects?



Oz. I don’t see how it can’t, because everyone is in the same boat when it comes to finding people and equipment. Murchison discovered that a project expected to cost around A$4 billion would probably cost more than A$10 billion, which is an impossible undertaking for a company valued on the ASX at A$300 million. Little wonder its share price has crashed from around A$3.00 last year to a closing price on Friday of A69 cents.



But with all that said it was an up week. Overall, the Australian market as measured by the all ordinaries index, rose 1.4 per cent last week, with most of the gain coming on Friday. The metals and mining index did better, putting in a rise of 3.3 per cent, while gold went a step better with a gain of 3.6 per cent.



Minews. Right. Let’s move on to prices, starting with the strongest sector, gold.



Oz. As mentioned earlier, there were several strong risers among the gold companies. Gryphon Minerals (GRY) was rewarded with a rise of A24 cents to A$2.03 after it reported excellent assays from its Nogbele prospect in Burkina Faso. Best drill hits included eight metres at 38.75 grams of gold a tonne from a depth of 68 metres, and five metres at 17.41 grams per tonne. Mt Isa Metals (MET) joined in with its own discovery news, also in Burkina, reporting on intercepts of four metres at 7.45 grams per tonne, with a core of two metres in that hit grading 14.08 grams per tonne. On the market, the Mt Isa added A8 cents to A39 cents. Ramelius (RMS) was a third significant winner from good gold news, this time on the production side. The company went through the 100,000 ounce a year mark, an event which moved the shares up A12 cents to A$1.37.



Most movement among the rest of the gold companies was up, although there were a handful of declines. Crusader (CAS) rose A9 cents to A$1.27. Tanami (TAM) rose A9 cents to A97 cents. Ampella (AMX) rose A22 cents to A$2.07. OceanaGold (OGC) rose A24 cents to A$2.76. Medusa (MML) rose A63 cents to A$7.11. Integra (IGR) rose A7.5 cents to A50 cents. Silver Lake (SLR) rose A22 cents to A$2.16. And Kingsgate (KCN) rose A51 cents to A$8.44. Companies that were worse off included: Troy (TRY), down A7 cents to A$3.52, AusGold (AUC), down A10 cents to A$1.46, and Reed (RDR), down A3.5 cents to A46.5 cents.



Minews. Over to the iron ore sector now please.



Oz. Conventional iron ore producers and explorers performed well, though not as well as the gold companies. The unconventional iron ore companies, those focussing on magnetite, did less well, in the face of a potential double hit from the super-profits and carbon taxes. Iron Ore Holdings (IOH) benefited from news that its overall resource had swollen to more than one billion tonnes, helping lift the shares by A5 cents to A$1.41. Amex (XZ) continued its remarkable run by adding another A9 cents to A$1.35 on news that it has received the results of a positive prefeasibility study on its Mba Delta iron sands project in Fiji. Fortescue (FMG) was another mover of note, up A14 cents to A$6.53 as interest grows in its expansion plans. Atlas (AGO) added A13 cents to A$3.90. Iron Road (IRD) put on A4.5 cents to A90 cents, while among the leading magnetite stocks Gindalbie (GBG) crept A1 higher to A82.5 cents, and Grange (GRR) recouped some of its recently lost ground with a rise of A4.5 cents to A56.5 cents.



Minews. Base metals next, please, starting with copper.



Oz. Strength in the price of copper was only partially reflected in the copper company share prices. Sandfire (SFR) led the way with a rise of A34 cents to A$7.48. Rex (RXM) wasn’t far behind, rising A13 cents to A$2.48. Other companies on the rise included: OZ Minerals (OZL), up A36 cents to A$13.71, PanAust (PNA), up A13 cents to A$4.06, and Anvil (AVM), up A70 cents to A$6.60. Losses were posted by Hot Chili (HCH), down A3.5 cents to A58.5 cents, Resource and Investment (RNI), down A6 cents to A$1.21, and Metminco (MNC), down a fractional half a cent to A30 cents.



Nickel companies continued to firm after a few bad months. Mincor (MCR) recovered another A4.5 cents to A97.5 cents, up considerably on the A82.5 cents price of three weeks ago. Western Areas (WSA) added A31 cents to A$6.05. Independence (IGO) put on A 26 cents to A$5.84. Mirabela (MBN) firmed by A10 cents to A$1.92. Even Minara (MRE) managed a rise of A2 cents to A75 cents, despite an equipment failure at its Murrin Murrin mine which is likely to cut annual nickel output.



Zinc companies also shrugged off a long spell of negative sentiment. Kagara (KZL) gained A6.5 cents to A64.5 cents. Perilya (PEM) put on A2.5 cents to A66 cents. Blackthorn (BTR) rose by A6.5 cents to A51.5 cents. Terramin (TZN) closed the week at A29 cents for a gain of A2 cents, but did trade up to A31.5 cents on Wednesday. Meridian (MII) added A1.9 cents to A11 cents.



Minews. The energy stocks next, coal and uranium, please.



Oz. All up, in sympathy with the oil price. Best of the coal companies was Coal of Africa (CZA), which rose A18 cents to A$1.29 after it delivered some good news on a South African project.



Minews. Yes, we’ll be hearing more on that from John Wallington, the chief executive, on Minesite next week.



Oz. Look forward to it. Also on the move in coal was Whitehaven (WHC), up A28 cents to A$6.08. Metro Coal (MTE) rose A12 cents to A70 cents. Carabella (CLR) rose A19 cents to A$1.99, and Bathurst (BTU) rose A9 cents to A$1.11.



Minews. Those coal rises would appear to indicate that the carbon tax isn’t seen as too much of a worry?



Oz. Or that investors are looking through the tax and seeing a change of government, caused to some extent by the introduction of these unpopular taxes. Whatever the reason, the market has redeveloped a taste for energy companies. That was evident too in the continued rebound among the uranium explorers. Bannerman (BMN) was the star in the uranium space last week, adding A10 cents (35 per cent) to A38.5 cents. Forte (FTE) gained A1.6 cents to A7.6 cents. Berkeley (BKY) rose by A5 cents to A44 cents. Deep Yellow (DYL) had its best week for some time, with a gain of A3 cents to A19 cents, and Aura (AEE) gained A2.5 cents to A27 cents.



Minews. Minor metals to close, please.



Oz. Rare earths led the way among the more exotic mineral commodities. Lynas (LYC) announced a joint venture with Germany’s Siemens to produce high-strength magnets and its shares moved strongly as a result, closing A26 cents higher at A$2.01. Alkane (ALK) added A10 cents to A$2.28, and Arafura (ARU) put on A5.5 cents to A80 cents.



Potash companies rose marginally. South Boulder (STB) rose A12 cents to A$2.49, and Minemakers (MAK) added A3 cents to A47 cents.



Lithium companies weakened. Galaxy (GXY) fell A3 cents to A75 cents, and Orocobre (ORE) by A1 cent to A$2.08 cents.



Minews. Thanks Oz. Have fun on Carbon Sunday.

==============================

 

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July 23, 2011

That Was The Week That Was ... In Australia
By Our Man in Oz
www.minesite.com/aus.html >> Free registration

Minews. Good morning Australia, after what has been a difficult week here in London with the death of our founder.



Oz. I don't doubt it, because the influence of Charles Wyatt was also felt throughout the Australian mining industry. His was always a voice of reason, cutting through bombast and going to the heart of the story. He had a nose for value in a mineral discovery, often being first to alert readers about companies to watch, and companies to avoid. There is also no doubt, shown in the way he left us without a murmur of complaint, that he would want the show to go on, which is what we will do now.

Minews. Thanks for those thoughts, and let’s keep the preamble to a minimum because there is a lot to think about at the moment.



Oz. Understood. The big issue on our market last week was the gold price, and what it reflected - continued uncertainty about the financial stability of Europe and the US. As we’re speaking, on Saturday morning, down this way gold is back over US$1,600 an ounce, perhaps because the US debt talks appear to have broken down again, or perhaps because investors don’t believe that Greece can be saved by the latest EU intervention. Whatever the reason, gold is performing brilliantly as the canary in a cave full of financial problems. Having said that, the gold price did not push all Australian gold companies higher, perhaps because the Aussie dollar also rose, steaming up to US$1.08. Our rising currency eats away at mining profits, driven in turn by China’s continued high level of demand for resources, and by wary investors who are shifting cash back into commodity-linked assets.



Minews. Sounds like a complex set of factors at work in your market.



Oz. It is a bit messy, and the picture is further clouded by the remarkable collapse in the popularity of the government, as shown in the latest set of opinion polls. Concern about rising taxes, including the proposed carbon and mining taxes, and plans to re-regulate the labour market, is being reflected in a collapse in Australian retail. Aussies are worried, which is ironic given that we’re in the middle of a resources boom. We have the best-ever terms of trade, but we also have a government fiddling with social engineering issues, which was perhaps inevitable, given the bizarre red/green alliance that’s held the levers of power ever since our indecisive election last August.



On the market, all of the major indices moved marginally higher thanks to continued strength in commodity prices, especially gold, copper and iron ore. The all ordinaries added 1.8 per cent, the minerals and metals index rose by 2.3 per cent, but the gold index, and this is the surprise of the week, did worst of all with a rise of just 1.3 per cent. That relative weakness was almost certainly a result of the sector leader, Newcrest (NCM), falling by A25 cents to A$40.02. That’s a small decline but the company has a big effect on the index.



Minews. That is an odd result. Gold price at a record high and the biggest gold miner loses ground.



Oz. The only plausible explanation is that some investors took profits, given that Newcrest was trading as low as A$35.60 a month ago. But it’s worth continuing with the gold sector, because there were some reasonable rises to offset Newcrest’s decline. One such came from Troy (TRY), which added A22 cents to A$3.86 following positive discovery news at its Casposo mine in Argentina. Catalpa (CAH) finally got some traction from its complex merger proposal, rising by A19 cents to A$1.58. Kingsrose (KRM) rebounded after a few down weeks, putting in a gain of A18 cents to A$1.56. And Mt Isa Metals (MET) added A5.5 cents to A48 cents. Other reasonable rises came from Reed Resources (RDR), up A7 cents to A47.5 cents, Integra (IGR), up A5 cents to A53 cents, Kingsgate (KCN), up A60 cents to A$9.20, Gold Road (GOR), up A5.5 cents to A68 cents, Tanami (TAM), up A12 cents to A$1.10, and CGA (CGX), up A9 cents to A$2.74.



Minews. Iron ore next, please, as you mentioned you’re making a trip up to the mines on Sunday.



Oz. Just a flying visit to the operations of Fortescue Metals (FMG), but should be able to file a report on what I see, which I suspect will be frantic activity as we play catch up with China’s demand. On the market last week, Fortescue added A23 cents to A$6.64. Atlas (AGO), which is leading the latest burst of sector-wide consolidation, put on A31 cents to A$4.22, while Brockman (BRM) continued its recovery from the bruising raid by Hong Kong’s Wah Nam, rising by A32 cents to A$3.49.



And interest in the iron ore Aussies in Africa rose strongly after Hanlong’s takeover bid for Sundance (SDL). Africa Iron (AKI) added A9 cents to A35 cents. Cape Lambert (CFE) rose by A15 cents to A59 cents, and Sundance itself put on A13.5 cents to A53.5 cents, to close at above the A50 cent level of the Hanlong bid. Among the other movers was Iron Ore Holdings (IOH), up A2 cents to A$1.34, Gindalbie (GBG), up A3.5 cents to A79 cents despite announcing a fresh capital raising, and Murchison Metals (MMX), up A6.5 cents to A72.5 cents.



Minews. Over to the base metals now, please.



Oz. It was stronger in all sectors, with copper leading the way. Pick of the copper producers was OZ Minerals (OZL), up A $1.28 to A$14.17. Other copper companies that performed well included Sandfire (SFR), up A17 cents to A$7.40, Rex (RXM), up A17 cents to A$2.68, Hot Chili (HCH), up A18 cents to A70 cents, PanAust (PNA), up A29 cents to A$4.29, Resource and Investment (RNI), up A19 cents to A$1.20, and Anvil (AVM), up A42 cents to A$6.70.



Nickel companies had their best week for a long time as nickel moved up to a shade under US$11 a pound. Western Areas (WSA) added A52 cents to A$6.04. Panoramic (PAN) rose by A20 cents to A$1.90, with the caveat that its new-found interest in gold might have also been bringing buyers in. Mincor (MCR) gained A2 cents to A93.5 cents. Minara (MRE) rose by A3.5 cents to A71.5 cents, and Mirabela (MBN) put on A12 cents to A$2.02.



Zinc companies firmed, but modestly. Perilya (PEM) rose by A6 cents to A69 cents. Kagara (KZL) put on A7 cents to A69 cents as the market continued to digest recent solid production numbers. Blackthorn (BTR) gained A9 cents to A59 cents, and Terramin (TZN) added A1.5 cents to A30 cents.



Minews. Coal and uranium, with minor metals to close, please.



Oz. We had a handful of stars in the coal sector, but not much to get excited about among the uranium companies. There were two stand-out performers in coal. Carabella (CLR) rose a very sharp A38 cents to A$2.23, and Aston (AZT) added an equally impressive A$1.78 to A$10.91. Other movers included Bathurst (BTU), which rose A13 cents to A$1.17, and Whitehaven (WHC), which rose A26 cents to A$6.61.



Toro (TOE) led the uranium sector for the first time in years, putting in a rise of A2 cents to A9.8 cents on news that its Wiluna project in Western Australia has reached the public review phase of the approval process. Most other moves were modest. Paladin (PDN) added A18 cents to A$2.69. Berkeley (BKY) shed half a cent to A39.5 cents. Manhattan (MHC) added A3.5 cents to A33.5 cents, and Energy and Metals (EMA) fell A3.5 cents to A10.5 cents.



Titanium and zircon companies led the minor metals. Iluka (ILU) rose A$1.01 to A$18.90, and Image (IMA) rose A4 cents to A48 cents. Tin companies also gained ground. Venture (VMS) added A2.5 cents to A36.5 cents, and Kasbah (KAS) rose by A3 cents to A23.5 cents. Rare earths were mixed. Lynas (LYC) added A8 cents to A$1.99 but Alkane (ALK) lost A4 cents to A$2.06. South Boulder (STB) was the best of the potash players, putting in a rise of A19 cents to A$2.30.



Minews. Thanks Oz.



Oz. Best of British for the week ahead, and have a beer for me when you farewell Charles.

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July 25, 2011

"The Germans Blinked And The Greeks Smiled, But Watch Out For Copper Shortages Down The Tracks"
Rob Davies
www.minesite.com/aus.html


The QE2 rally took risk assets like commodities and equities on a powerful run between March 2009 and January 2011. Base metals, as measured by the LMEX index rose 141 per cent in that period, from a starting level of 1,700. But since January, the index has risen a measly 3.7 per cent, and last week closed at 4,252. Now, the markets are looking at the authorities and asking what comes next. Without any further stimulus there is a real risk of stagnation, or worse. Weak figures from Caterpillar on Friday, regarded as a bellwether for the US economy, reinforced that worry.

Unfortunately the powers that be are too worried about the pressing problems of the US debt ceiling and the situation in Greece to be focussing on growth. Last week’s euro deal was the sixth in eighteen months, and like all the others, it was declared definitive. But all it really proved is that the Greece discovered it had a lot more clout than its creditors. Other debtors, like Ireland and Portugal, will presumably have learnt a lot from the exercise.



Meanwhile, the US situation has deteriorated again after both sides stopped talking to each other. The difference there is that the debtors and creditors are mostly in the same country – well, apart from China - so they have more incentive to cut a good deal.



The net effect of all the jaw-jaw was a rise in the euro and a fall in the dollar that helped base metals gain 0.9 per cent over the week. However, there’s little conviction in the markets that the eurozone is fixed now. A 20% rally in some bank shares would suggest that bond holders’ worries are over, but it would be a brave man who said there would be no more dramas in the eurozone.



A gold price over US$1,600 an ounce also indicates that these concerns are widely shared. According to Bloomberg 2,121 tonnes of gold are now held by investors through exchange traded products. That is a US$109 billion insurance premium against matters getting worse.



The good news is that these high metal prices are fuelling a lot of exploration activity. According to Metals Exploration Group of Canada the industry spent US$12 billion on exploration in 2010, US$1.4 billion of which was in Africa. Given the glamour of gold it is perhaps unsurprising that 59 per cent of the total spend went on looking for more of the yellow metal, even though, as the data shows, there is no shortage of it. There is a genuine shortage of copper and only US$4.5 billion worth in warehouses, but even so, copper exploration only attracted 21 per cent of the total African spend, and most of that was in the Congo.



At a push the modern world could survive a genuine shortage of gold, although the price would obviously go sky high. On the other hand our modern electrified economies would not last long if no one could source copper to make new gadgets, generate power or reticulate water.



That tells us that the market is more worried about a financial meltdown and slower growth than any scenario in which higher growth leads to a shortage of industrial commodities. And the market may well be right. However, there is always the temptation to bet the other way and actually be bullish among so much gloom.



After all, if the explorers find gold and copper in the same ratio as their exploration budgets suggest they will, then there really will be a shortage of copper. However, there is one slight hitch. The stagnant capital markets have dramatically reduced the amount of new money being raised in the both the senior and junior equity markets. In the short term that is painful for the brokers that are being laid off. Over the next year or so it won’t be good news for exploration crews either. However, once the dust settles and German voters realise they have been stiffed by Greek civil servants, who knows what will happen in capital markets?

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[drillinto]

"Metals & Mining Analysts' Ratings & Estimates - Seniors"
By Bill Matlack
Jul 26, 2011

Please click the link below to view the lists of senior producers:
http://www.kitco.com/ind/matlack/jul262011.html

 

[drillinto]

July 30, 2011

""That Was The Week That Was ... In Australia""
By Our Man in Oz
www.minesite.com/aus.html [Free Registration]

Minews. Good morning Australia. It looks like you had another tough week.

Oz. It was. We certainly didn’t escape the worldwide concern about excess debt in the financial system, public and private. Even the gold sector was sold down despite the record high price, though the latest peak of around US$1,632 an ounce occurred after we had all gone to the pub on Friday night. Next week will be the big test because that’s when we see whether the US Congress is really prepared to plunge the country into bankruptcy, and at that point all bets will be off.


Minews. We really are living in interesting times.

Oz. We are, and we’re also learning why living in interesting times is a Chinese curse. The other, slightly more immediate interesting time that’s happening down this way is the annual Diggers & Dealers forum, which is taking place in Australia’s gold capital, Kalgoorlie. As you might expect there is a record crowd heading to the region we know as the Eastern Goldfields, for three days of mingling with miners, bankers and assorted support staff.

About half the official speakers have gold connections, so they should be well followed, and even the unusual keynote speaker should pack the hall at the Arts Centre where the event is held. Todd Buchholz is not a name many mining types are familiar with, and when he was nominated as guest speaker a few months ago it produced blank looks everywhere. However, it seems that Todd might be the man for the moment. He was director of economic policy during the first Bush administration in the US, managed a big hedge fund before that, and has won awards for his economics teaching at Harvard University.



Minews. Maybe he’s the man who can explain what’s happening in the US?

Oz. Possibly, though I suspect that might be asking too much. Two other big name speakers will be the founder of Fortescue Metals, Andrew Forrest, and the enigmatic founder of the Ivanhoe group, Robert Friedland, who will probably perform his usual trick of jetting in, and out on the same morning. No-one is expecting much from the speakers because all the action will be on the markets, and at times like this Kalgoorlie is a long way from the action. It won’t be a surprise if most delegates spend a lot of their time on their mobile phones checking out what’s happening in the rest of the world.

But Kalgoorlie can wait. Let’s have a look at what happened on the ASX last week, starting with the indices which, not surprisingly, were all down. The all ordinaries fell 3.7 per cent. Metals and Mining lost 3.3 per cent, and the gold index was down 2.6 per cent. Very few share prices rose, so much of this week’s report will be a grim affair. To lighten the load for Minesite’s readers it seems like a good idea to do the positive movers first, and then look at the negative news.



Minews. Positive news is always welcome, just so long as you’re not hiding anything.

Oz. Wouldn’t dream of it. Gold first, because that sector produced the biggest collection of shares that rose in a down week. Pick of the gold companies was one of our old favourites, Troy (TRY), which delivered a sparkling report for the June quarter. This included a 17 per cent rise in gold production, and more discovery news. On the market, Troy rose by A21 cents to A$4.05, but did get as high as A$4.18 on Wednesday. Ausgold (AUC), another stock we follow quite closely, added A8 cents to A$1.73, while Alacer (AQG), the company which emerged from the merger of Australia’s Avoca and Canada’s Anatolia, put on A39 cents to A$8.90. Most other upward gold moves were modest. Norton Goldfields (NGF) added A1 cent to A17.5 cents, and Gold Road (GOR) closed half a cent higher at A68.5 cents.

Gold companies that lost ground included Gryphon (GRY), down A13 cents to A$1.87, Perseus (PRU), down A17 cents to A$3.10, Kingsgate (KCN), down A32 cents to A$8.88, Kingsrose (KRM), down A12 cents to A$1.44, Silver Lake (SLR), down A14 cents to A$2.03, and St Barbara (SBM), down A20 cents to A$1.83. Also worse off was OceanaGold (OGC), down A46 cents to A$2.37, after it filed a June quarter report which confirmed high operating costs at A$921 an ounce.



Minews. Base metals next, please.

Oz. Two copper companies and one zinc producer went against the downward trend. Sandfire (SFR), which will host a big pre-Diggers media tour on Sunday, led the copper contingent with a rise of A40 cents to A$7.80, but did get as high as A$8.08 on Wednesday. Exco (EXS) was the other copper company on the rise, putting in a gain of A2.5 cents to A66.5 cents. The solitary zinc company to rise was Perilya (PEM), up A2.5 cents to A71.5 cents.

The rest of the base metal sector was in negative territory. Among the copper stocks OZ Minerals (OZL), lost A54 cents to A$13.63, Hot Chili (HCH) slipped A1 cent lower to A69 cents, Metminco (MNC) lost A3 cents to A30 cents, and Rex (RXM) shed A40 cents to A$2.28.

All nickel companies lost ground as the pincer effect of the rising Australian dollar and the stagnant nickel price did its work. Western Areas (WSA) fell A17 cents to A$5.87. Mirabela (MBN) lost A12 cents to A$1.90. Panoramic (PAN) fell by A12 cents to A$1.78, and Mincor (MCR) was down A4 cents to A89.5 cents.

In zinc, aside from Perilya, it was all down. Fallers included Kagara (KZL), down A7.5 cents to A61 cents, Blackthorn (BTR), down A4 cents to A55 cents, and Terramin (TZN), down A1.5 cents to A28.5 cents.



Minews. Iron ore and coal now, please.

Oz. It was more of the same in iron ore and coal. Most companies were worse off, although a handful did rise. Murchison (MMX) was the best of the iron ore explorers, adding A5 cents to A77.5 cents, a rise which makes up a small fraction of the ground recently lost by the company. Metro Coal (MTE) was the pick of the coal sector, putting in a rise of A16 cents to A96 cents. Other iron ore movers included Fortescue (FMG), down A33 cents to A$6.31, Atlas (AGOI), down A17 cents to A$4.05, and Mt Gibson (MGX), down A20 cents to A$1.80. Three iron ore companies did well holding their ground. Cape Lambert (CFE) was steady at A59 cents, Gindalbie (GBG) at 79 cents, and Iron Ore Holdings (IOH) at A$1.34. Aside from Metro, other coal movers included Coal of Africa (CZA), down A9 cents to A$1.08, Bathurst (BTU), down A12 cents to A$1.05, Carabella (CLR), down A16 cents to A$2.07, and Whitehaven (WHC), down A3 cents to A$6.58



Minews. Uranium, and minor metals to close, please.

Oz. There were a few encouraging rises in both of these sectors. Best of the uranium companies was Manhattan (MHC), up A7 cents to A40.5 cents. Also doing well was Berkeley (BKY), which rose A5.5 cents to A45 cents. Deep Yellow (DYL) also managed to post a modest half a cent rise to A17 cents. Hardest hit, following a disagreement with the South Australian government, was Marathon (MTN), which plunged 39 per cent to A15 cents. Extract (EXT) was 16 cents weaker at A$7.82, and Paladin (PDN) slipped A7 cents lower to A$2.62.

Among the others, tin explorer Venture Minerals (VMS), reported more encouraging news from its Tasmanian exploration project, adding A9 cents to A47.5 cents. South Boulder (STB) led the way among the potash companies, putting in a rise of A19 cents to A$2.49. Lynas (LYC) was the pick of the rare earth companies, up A16 cents to A$2.15. After that it was all down. Alkane (ALK) lost A7 cents to A$1.99, and Platinum Australia (PLA) continues to struggle in South Africa, shedding another A6 cents to A30.5 cents, which is less than half the level it was trading at in mid-January.


Minews. Thanks Oz. Enjoy Diggers and Dealers.
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Must read !
Review of global trends in the mining industry(2011)

Please click below to read it
http://www.pwc.com/en_GX/gx/mining/pdf/mine-2011-game-has-changed.pdf

 

[drillinto]

August 01, 2011

""Diary Of A Private Investor At Diggers And Dealers: First Impressions On A Tour Of Perth""
By Susie Boeckmann
www.minesite.com/aus.html (((The registration is free)))

Whilst the world is struggling with debt and political issues it is a pleasure to arrive in this thriving city and hear good news for a change. Prices are high, though. Yesterday it cost A$47 to park for an hour at the Hilton Hotel, and most ‘mains’ in average restaurants seem to come out at over A$50. You can buy an iron for just under A$10, the same as you pay for a good hamburger. The TV news is pretty cheerful too, at least relatively speaking: Whacky the red kangaroo is attacking a family whenever the family members come out of the house; a woman has bumped into a metre-and-a-half crocodile outside her drive; and there are protests in Melbourne against beauty pageants for toddlers.

Onto mining: The day kicked off with a meeting with Richard Mehan, the recently appointed managing director of Jupiter Mines. Jupiter has several projects, in Australia, as well as the Tshipi Borwa manganese project in South Africa. This latter has the potential to make a world-class manganese mine as an open pit, low cost operation producing fine and lumpy material at a rate of 2.4 million tonnes per year. The projected mine life is over 60 years. Infrastructure is good and there are several port options for eventual exports. It’s on track for first production in the second half of 2013. The company’s other major projects are in the Central Yilgarn region of Western Australia. Among these is Mount Ida, which has an inferred JORC resource of 530 million tonnes grading 31.9% iron, and is set to become a 25 million tonnes per year mining operation producing 10 million tonnes per year of magnetite concentrate grading 68%-plus iron. Nearby, Jupiter has also committed to a feasibility study on Mount Mason. This has the potential to become a A$40 million hematite project.



Jupiter is backed and funded by Brian Gilbertson and his Pallinghurst group, which owns 16.5 per cent. Also on the register are Posco, a consistent Gilbertson partner, and Investec and AMCI. The free float stands at around 25 per cent of the shares, and the company has a market capitalisation of A$290 million. With the very experienced Richard Mehan at the helm, this company looks well set to make good and rapid progress towards production. London-based readers should also note that Andrew Bell’s Red Rock Resources has a stake in Jupiter, and owns a royalty on Mount Ida.



Next up on the merry-go-round was Avalon Minerals. Avalon operates in Sweden, 1,200 kilometres north of Stockholm in a well-developed mining district which hosts operations run by several majors. Avalon’s managing director, Andrew Monkton, explained that the company’s main project, the Viscaria project, has delivered significant mineralised intersections of both copper and iron ore. Avalon has now deferred its bankable feasibility study until 2012, following a successful drilling campaign which will continue in the September quarter of 2011. The company has delineated a global resource of 66.2 million tonnes of ore containing 601,000 tons of copper and 2.4 million tonnes of iron. The current plan is for first ore delivery to take place in the first quarter of 2013. Avalon has announced a A$10 million share placement which is mainly supported by the company’s largest shareholder, a non executive director.



Moving onto silver, Alcyone Resources is one of the only pure silver companies in Australia, and has just announced production from its Texas mine in Queensland of over 100,000 ounces of silver. Andrew King, the managing director, told us that his company has been completely reorganised and the operations refurbished. There’s now a new crushing circuit on site, and quicker methods of leaching the silver out of the ore have been devised. Grid power will be provided soon and this will bring costs down considerably.



As a result of all that, Alcyone is now ramping up to produce between 1.5 million and two million ounces of silver per year, on a projected five year mine life. One that’s mined out, the plan is to move on to various satellite mines. The company also has 200,000 tons of stockpile with 180,000 at the bottom of the current pit which has been pre-stripped so it should be pretty easy to get to the ore. A 5,000 metre drill programme is planned, and the company is also investigating polymetallic targets. The processing can be adapted for other metals.



It is an exciting time for silver and this company has a strong team who should be able to take advantage of the current conditions. With increasing concern about fly-in/fly-out labour in mines across Australia, it is interesting to note that Alcyone is employing local labour to reduce this effect and is making every effort to contribute and involve the local community.



Andrew King is also non executive chairman of Base Resources which is developing the world-class Kwale Mineral Sands Project in Kenya, East Africa. This is a project well supported by the Kenyan Government, and lies just 50 kilometre from Mombasa, Kenya’s principal port, so it’s well-serviced by existing physical infrastructure. Base Resources has just announced credit approvals for US$170 million in syndicated project debt finance facilities and is planning to announce off-take arrangements shortly. The plan is to put Kwale Project into production in 2013. The company is currently in a trading halt, but with mineral sand prices, should be well worth watching when it comes back to market.



With jetlag kicking in, it was a pleasure to meet up for a glass of wine and a catch up with Peter Buck, the non-executive chairman of PMI Gold, which has gold projects on the Ashanti goldbelt in Ghana. The flagship project, Obotan, boasts a resource of 1.2 million ounces, and may yet yield more, as drilling conducted by Ausdrill will shortly get underway. The company is also bring the Kubi project rapidly along, too. Kubi is located 65 kilometres east of Obotan, along strike of AngloGold Ashanti’s 60 million ounce Obuasi mine, which is the largest underground gold mine in West Africa and boasts 113 years of continuous mining history.



Peter may be a non-executive, but he’s actually very hands on. PMI has lately been completely reorganised and now has new management, including several well-connected Ghanaians, and Collin Ellison as managing director. Collin was formerly with Goldbelt Resources, and was responsible for the development of the Inata gold mine in Burkina Faso. And, in spite of a tricky start when reserves were downgraded three days before its TSX listing went live late last year, PMI now has a market capitalisation of around A$95 million, supported by a tidy A$28 million cash in the bank.



All good stuff for a first pass ahead of the main event, but it is a strange feeling running around Perth, and then on to Kalgoorlie, to know one is “treasure hunting” without the guiding hand of Charles Wyatt, the man who was responsible for developing and encouraging my enthusiasm for researching and investing in mining companies. His knowledge was deep and uncompromising. He never suffered fools or liars, but he supported closely those he respected. The least that we can do is to try and continue the tradition that he nurtured at Minesite, of independent and honest reporting.
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[drillinto]

Strategy
USA Commodity ETF Flows: Investors Continue to Flock to GLD

Please click the link below to view the relevant tables:
http://seekingalpha.com/article/283...ontinue-to-flock-to-gld-dump-xle?source=yahoo

 

[drillinto]

August 02, 2011

Diary Of A Private Investor At Diggers And Dealers, Day One: Gold Takes Centre Stage
By Susie Boeckmann
Source >> www.minesite.com/aus.html [Free Registration]

Most of the important resource companies are rushing around still setting up their wares and pitch. The day started, as most of the important companies were still rushing around setting up their wares and pitch, with the chairman of Diggers, Barry Eldridge, highlighting the serious uncertainties facing the Australian mining industry in the context of resource taxes, the carbon tax, and an indecisive government. Following his introduction, Todd Buchholz, a former White House director of economic policy and apparently well known as a commentator from the US, gave an enthusiastic speech that covered every subject under the sun but wasn’t particularly relevant to mining or Australia. That left the press room a little flummoxed as to how to report him.

But as to mining, that’s clear enough. Gold companies are obviously the flavour of the month at the moment and the mining presentations started with Newcrest, Australia’s largest gold producer and, with a market capitalisation of A$30 billion, the third largest gold company in the world. Looking ahead, Newcrest is very confident, supported as it is by low-cost, long-life operating mines. The company is currently producing around three million ounces of gold and 80,000 tonnes of copper per year, and boasts a strong pipeline of expansion opportunities.



Newcrest was followed by Alacer Gold. This company was created in February 2011 as a result of the merger of ASX-listed Avoca Resources and TSX-listed Anatolia Minerals. This deal was initially greeted by the market rather badly. But that’s all changing now, following first production from the company’s Cöpler gold mine in Turkey in December 2011. The total for the second quarter rang in at 41,122 ounces of gold mined at a cash operating cost of US$381 per ounce. Alacer has now demonstrated that Cöpler 4.6 million ounces, and there is talk of more to come. Alacer means “fast and courageous” in Latin, which fits the profile of the company as the second largest gold company on the ASX with a market capitalisation of A$2.7 billion. Production is up at Alacer’s South Kalgoorlie operations too.



On then, to a few smaller companies that will be well-known to Minesite readers. Campbell Baird from Focus Minerals gave a confident presentation highlighting that his company now has three operating mines supported by a 2.3 million ounce resource. The company also has its 1.3 million tonnes per year mill. Focus plans to increase its production to 130,000 ounces or more in 2012. Campbell also produced 10 ounce gold nugget that one of the artisanal miners had brought to him over the weekend from the company’s latest mine at Tindals. And as far as recent newsflow is concerned, the grades continue to look excellent at the company’s Treasure Island exploration project. The company has also bid for Crescent Gold but there is talk of someone taking a blocking stake in this company.



Following on from Focus was an excellent presentation from Chris Cairns on Integra Mining. Integra seems to be shaping up as one of the lowest cost Australian producers. The company’s flagship Randalls project, 60 kilometres east of Kalgoorlie, commenced production in September 2010, and is targeting an annual production of 100,000 ounces per year. It is interesting to note that although the mines of Focus and Integra are relatively close, the cash costs of Integra are half of Focus’ costs. Integra is a well run company with a strong board, well funded, with plenty of potential for increased exploration both from open pit and underground mining. One of their exploration projects is called ‘French Kiss’ – where do they get their names from?!



Taking a break from the presentations to go round the stands, and Beadell Resources’ chief financial officer Greg Barrett loomed large, keen to talk about the company’s Brazilian projects. The Tucano Gold Project is a 4.3 million ounce resource, with a 1.23 million ounce interim reserve. Mining commenced in mid June 2011 and the idea is to get production up to 180,000 ounces of gold per year. The company’s Tapereba AB Resource is interesting, as it has shallow high-grade gold deposits and also iron ore, a combination that has been the cause of much speculation as to the appropriate next steps. Anglo American and Cliffs Natural Resources have a jointly-owned iron ore production plant next door to Beadell’s property, which would be a natural fit, although it’s not clear how far negotiations have progressed. Beadell has A$50 million cash in the bank, and one or two other irons in the fire too, including a gold discovery in Western Australia at Tropicana East. This discovery is 60 kilometres along strike from the AngloGold Ashanti/Independence five million ounce Tropicana gold deposit.



Quite a lot of talk then led on to an investigation of an exciting story involving Regis Resources. Managing director Mark Clark spoke of the huge progress made by the company in the last 24 months. Regis has made two major gold finds at Garden Wall and Moolart Well, has another seven satellite projects beyond, and has now started mining. The company has also increased its resource base to three million ounces, but there could be more as Garden Wall has mineralogy confirmed to depth of 270-plus metres and is still open. The plan is to get production up to 100,000 ounces by 2012-13. This is a company worth looking at in depth, and has generated a lot of interest from the locals.



Time for a glass of wine and then on to the Atlas dinner where David Flanagan will be a very good and enthusiastic speaker.
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ISM Commodity Survey[USA] Drops For Third Straight Month

http://www.bespokeinvest.com/thinkb...ty-survey-drops-for-third-straight-month.html
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August 04, 2011

"Diary Of A Private Investor At Diggers And Dealers, Day Two: Speed Dating In Mining"
Susie Boeckmann
www.minesite.com/aus.html

The second day of Diggers and Dealers is always frenetically busy, as it’s a case of trying to keep up with all 16 companies presenting and going round the stands. And not just the stands. This year there are over 2,200 delegates, including among their number many representatives of interesting companies cruising around and networking too.

Nickel and gold specialist Independence Group gave a robust presentation, in which progress at various projects was outlined. Among the company’s interests is a 30 per cent stake in the Tropicana gold project. This continues to grow under Anglo’s management, as modern exploration methods reveal high grade mineralisation beneath the salt/sand cover which it was not possible to discover in the past. Independence has also recently completed the acquisition of Jabiru Metals, adding copper, zinc and silver to its production profile. Independence pays a regular dividend, and delivered profits of A$29 million this year. The current market capitalisation stands at around A$700 million.



Kingsgate Consolidated, a gold producer with a market capitalisation of A$1.1billion, presented a new angle to investors, putting an emphasis on silver as well on its Chatree gold mine in Thailand. The company has just bought the Bowdens silver project in New South Wales from Canada's Silver Standard for A$75 million. But that's not the only recent acquisition, Also new is the Challenger underground gold mine in West Australia. And Kingsgate also has an interesting project at Arqueros in Chile which it hopes to bring into production in 2013. Three years ago the gold resource in Kingsgate stood at three million ounces. Today the company boasts over 10 million ounces, with plenty of scope for increasing that through continuing exploration and development. Kingsgate has strong cash flow from Chatree, which puts it in a strong position when it comes to considering acquisitions. The company delivered profits of A$73.1 million this year, has around A$50 million in cash, and debt facilities in place for another A$50 million. It has also built a track record as a regular payer of dividends.



And for anyone out there who believes in the wisdom that people are almost as important as projects, it’s worth noting that the chairman of Kingsgate, Ross Smythe-Kirk, has recently gone on the board of the reconstructed silver company Argent Minerals which has assets in New South Wales. Argent has a current resource of 30 million ounces of silver on an estimated cut off grade of 40 grams per tonne.



Staying on silver, Cobar Consolidated Resource was keen to tell the story of its Wonawinta silver project, also in New South Wales. This has an inferred and indicated resource of 51 million ounces of silver, including a probable reserve of 14 million ounces. The company expects silver production to commence in December 2011. Following a A$28 million equity raising and with terms agreed for a A$22 million project finance facility, Wonawinta is fully funded. Cobar has a market capitalisation of A$178 million.



Ian Gordon of Ramelius Resources gave a robust presentation about the rapid progress of his company has made lately. Ramelius has just announced a pre-tax profit of A$90 million for the year to 30th June, up from the A$28 million delivered in 2010. The company started mining at the high grade Watts Dam gold mine near Kambalda, back in 2006, and will look to increase output fairly soon if this gold price continues. Ramelius also has Mount Magnet, which it expects to start mining this month, targeting production in January 2012. Ramelius has A$100 million in cash in the bank and gold on hand, so plenty of money to put towards its other exploration projects are in North Queensland and Nevada, US.



Elsewhere, Anglo Gold Ashanti caused enormous interest with a spectacular collection of bespoke gold jewellery. Some of the pieces weighed up to half a kilo of gold, and models were walking around the exhibition hall leaving people marvelling. Anyone after an insight as to what was on offer, www.goldauditions.com is worth a look.



In terms of the market, Anglo emphasised the growth of buying from China and India and that the company has been revitalised since a new team came on board in 2008. Tropicana was obviously a major topic of conversation.



For lunch it was off to the Palace Hotel to see Northern Star Resources, already familiar from a recent Minesite presentation. The company confirmed ongoing success with the Paulsen’s Gold Mine, and reiterated its production target of 75,000 ounces per year. Northern Star recouped the A$40 million acquisition cost of Paulsens through cashflow after just seven months of production and is now unhedged and debt free. The company has several highly prospective exploration assets too.



Another ongoing success story this year has been the numerous gold discoveries delivered by Gold Road Resources. The current tally is five in 15 months. The company has managed, so far to work up two gold resources, and in exceptional circumstances the grades have run as high as 1,000 grams per tonne. Even so, less than one per cent of the company’s land position at Yamarna has been explored so far. Not a bad proposition to think about, with gold heading towards US$1,700.



Still, that’s enough for today, although there’ll be plenty more soon. Minesite has three invitations for dinner and will report in due course.


The writer may hold shares in some of the companies mentioned
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