Hard Hat Wrap: weekly round-up of mining news

This week in Stockopedia’s Hard Hat Wrap, African Aura Mining (LON:AAAM), reported that a recently completed airborne geophysical survey undertaken across its Nkout, Ngoa and Akom iron ore projects in southern Cameroon had defined a major iron ore target close to Nkout.

African Consolidated Resources Plc (LON:AFCR), the AIM listed resource development company working in Zimbabwe, published a maiden JORC resource statement for its Blue Rock gold project, located in the Gadzema greenstone belt near Chegutu. The resource totals 8.5m tonnes @ 1 g/t for 270,000 oz, using a cut-off grade of 0.6 g/t. ACR's total JORC compliant gold resources at its Pickstone-Peerless, Giant and Blue Rock projects now 1,085,000 ounces.

Altona Resources (LON:ANR), the Australian based energy company, said it was making progress towards meeting the regulatory requirements connected with its JV with Chinese oil company, CNOOC-NEI, over the Arckaringa coal project. Altona has successfully completed the extension and transfer of interests in the exploration licences central to the JV and confirmed that the appointment of the Study Engineer was currently pending the completion of CNOOC-NEI approval processes. CNOOC-NEI is taking on a 51% stake in Arckaringa in return for its full funding of a bankable feasibility study there.

Amur Minerals Corp (LON:AMC), an exploration and development company focused on Far East Russia, entered into an agreement with broker Hybridan to raise up to £1.236m in a placing of shares priced at 3.5p each.

Anglesey Mining (LON:AYM) made a profit last year of £8.2m following the sale of shares in its Labrador Iron Mines (LIM) subsidiary, which took its holding from 50% to 41%. LIM is a TSX quoted Canadian company developing 150m tons of direct shipping hematite iron ore near Schefferville in Canada, with production due to commence later in 2010. Elsewhere, Anglesey owns 100% of the Parys Mountain copper-lead-zinc project in North Wales with a total historical resource of 7.76 million tonnes at 9.3% combined copper, lead and zinc.

Aquarius Platinum Limited (LON:AQP) said it would be appealing against a new directive from the Principal Inspector of Mines in the North West region of South Africa concerning bord and pillar mining techniques. The new rules were triggered after five people were killed at Aquarius’s Marikana mine in a “fall of rock” incident earlier in July. The company said the new directive would not make the mining technique any safer and would have a detrimental economic effect on those Bushveld chromite and platinum mines that use the bord and pillar mining method.

Baobab Resources Plc (LON:BAO), the iron ore, base and precious metals explorer with a portfolio of mineral projects in Mozambique, signed a joint venture heads of agreement connected to its Changara base metal and manganese project with Australian company Southern Iron Ltd. The deal involves a four stage investment that ultimately gives Southern Iron the chance to fund a definitive feasibility study of Changara in return for an 80% stake ion the project.

Beacon Hill Resources (LON:BHR), the AIM listed resource group, entered into an agreement with Consolidated Minerals Pte Ltd and Global Coke Ltd for a strategicUS$55m investment into BHR Mining, to rapidly advance the development at its Minas Moatize coal mine in the Tete Province of Mozambique. The investment was also accompanied by an intention to enter into a mine gate off-take agreement to purchase all of the coking coal produced during the mine life of the Minas Moatize coal mine.

Caledon Resources Plc (LON:CDN) reported a fall in production at its Cook mine in the three months to June 30 as it concentrated on increasing staffing levels, which had been cut in March in response to dire economic conditions. Nevertheless, the company said it expects productivity to increase in the second half and is still targeting 700,000 tonnes of saleable production for 2010.

Irish mining group Connemara Mining Plc (LON:CON) reported that drilling at Stonepark North in Limerick had defined a zone of zinc-lead mineralisation with a strike length of at least 650 metres. Hole 55 intersected 4.9m at 10.57% zinc and 3.05% lead from 195.0 metres depth, including a 2.75m interval at 16.47% zinc and 5.26% lead. Connemara is planning 10,000m of diamond drilling in Limerick for 2010 following a £1.06m fundraising.

Central China Goldfields (LON:GGG) raised £1.125m in a share placing, with over £1m raised from specialist institutional resource funds. The new cash, coupled with £0.3m recently received from the sale of Chinese assets, as well as a further anticipated receipt of £1.6m after tax due in the coming months, will give the company cash resources in excess of £3m. As a result, it is fully funded to fast-track its principal asset, the Bullabulling gold project, to banking feasibility, which is scheduled for the third quarter of 2012.

Finders Resources (LON:FND) revealed “extremely encouraging” drilling results from its 72%-held Ojolali gold-silver project in Sumatra, Indonesia following a recent programme of infill reverse circulation drilling at the Jambi oxide gold prospect. The company said the drilling had delivered the best gold assays from the prospect to date, and strongly supported the interpretation of high grade structurally controlled zones at Jambi.

Frontier Mining (LON:FML), the AIM listed gold and copper exploration and development company focused on Kazakhstan, completed the second gold pour at its Koskuduk deposit. This pour was solely from Koskuduk ore and consisted of 329 ounces of gold and 1,000 ounces of silver. The company plans to leach 500,000 tons of ore this year and has currently extracted 135,000 tons, of which 75,000 tons is already on the leach pads.

Gem Diamonds Ltd (LON:GEMD) said that it had been hit by various operational challenges at its diamond production operations at Letšeng in Lesotho and Ellendale in Western Australia during the first half of the year. Nevertheless, the company said it was confident of hitting 2010 production targets at Letšeng, although it may fall short of full year targets at Ellendale.

Goldplat Plc (LON:GDP), the AIM quoted gold producer, noted that the Commissioner of Mines and Geology in Kenya, had confirmed that all the relevant documentation required for a Mining Lease to be granted for the company's operations at the Kilimapesa Hill gold mining project had been approved. The only outstanding requirement is the formality of the issuance of a Mining Right number from the Director of Survey. The management of Kilimapesa Gold has now started preparations for the up scaling of its operations in readiness for the Mining Lease.

Goldstone Resources Ltd (LON:GRL), the AIM quoted company focused on gold in West Africa, said it had successfully completed an airborne electromagnetic survey (VTEM system) over the southern part of the Homase concession in Ghana. GoldStone has also entered into an agreement with Minerex Drilling Contractors Limited to execute a 4,000 metre drilling programme which is due to commence on the Homase property in the next few weeks, subject to final agreement being reached with local communities regarding crop compensation. Elsewhere, a regional desktop study and geological mapping programme on the Manso Amenfi project will commence shortly followed by the selection of target areas for a detailed soil sampling programme.

Highland Gold Mining (LON:HGM) acquired a licence for exploration and mining rights for an area of 33 km sq surrounding its existing Belaya Gora deposit in the Khabarovsk Region of Russia. The US$ 180,752 acquisition covers an area which encapsulates the Belaya Gora deposit and represents excellent near-mine exploration potential for planned operations there. The Belaya Gora mine is currently undergoing a JORC compliant resource audit of the GKZ-registered C1+C2 reserve of 820,000 oz contained in 7.3m tonnes of ore with an average grade of 3.5 g/t of gold.

Hochschild Mining Plc (LON:HOC) reported a 12% quarter-on-quarter increase in production to 6.8m attributable silver equivalent ounces in the three months to June 30. H1 2010 production touched 12.8m attributable silver equivalent ounces leaving the company on track to achieve its 2010 production target of 26.3m attributable silver equivalent ounces.

Jubilee Platinum (LON:JLP) said that it was fast-tracking an engineering and design study ahead of the installation of its first commercial ConRoast DC arc furnace at the newly acquired Middleburg processing facility. Jubilee got its hands on the ConRoast licensing rights when it acquired Braemore Resources last year. In June a development programme for the ConRoast smelting process was completed, leaving the way clear for Jubilee to press ahead with commercialising the technology. It has now commissioned a four-phase feasibility study for the refining of metals in ConRoast PGM alloy using the CVMR process.

Karelian Diamond Resources (LON:KDR) said it had concluded a confidentiality agreement with Rio Tinto (LON:RIO) that will see the mining giant disclose confidential information and physical geological samples relating to exploration in Finland for the purpose of Karelian considering that information in relation to its potential and existing exploration programmes in the country. In return, Rio will have the option to earn a 51% interest in any project identified by Karelian in Finland as part of a “back in” agreement.

Kalimantan Gold Corp Ltd (LON:KLG) raised C$661,750 from a non-brokered private placement financing announced in April. The company intends to use the proceeds to fund its ongoing copper and gold exploration projects, as well as general working capital purposes.

Platinum group metals producer Lonmin (LON:LMI) said the three months to June 30 (Q3) had seen it deliver a 10.3% increase in output at the Marikana underground operations to 2.6m tonnes. Year to date, the group’s underground tonnage is up on the comparable prior year period whilst metal in concentrate is at the same level as last year as the increased ounces from underground operations have offset the impact of the operations closed last year.

Medusa Mining (LON:MML) advised that it had increased the indicated resource at its Co-O mine in the Philippines by 4% to 603,000 ounces and increased the inferred resource by 36% to 898,000 ounces. The grade of both categories was also increased.

Christian Candy, the multi-millionaire property developer, launched a move through his Solomon Capital vehicle to buy Metals Exploration Plc (LON:MTL) in a 13p per share cash offer that values that AIM listed mining group at £35.76m. Candy has been steadily building his stake in MetEx for some time and took his holding from 29.9% to 44.1% when it raised £12m in a share placing in May 2009. At the time, Candy said the company was significantly undervalued with substantial upside potential.

Reporting on its operations between March and mid-July, Namakwa Diamonds (LON:NAD) said the development of its Mining Division remained on track, with positive results from Lesotho and marked improvements in grade in the Democratic Republic of Congo during early phase pre-production mining, in line with management expectations. Elsewhere, the group’s Sales & Trading Division continued to benefit from the strength in rough prices and the continued overall upward trend in polished prices.

Obtala Resources (LON:OBT), the resources investment and development and production company, said it had recovered a 23.30 carat and 11.92 carat “special” stone from its Bakidu operation in Sierra Leone. The discovery follows a string of sizable recoveries from Bakidu in recent months, following the implementation of a revised mining strategy there. Obtala has implemented a mobile dense-media separation (DMS) unit on the project which has opened up the opportunity to combine low cost production with high profitability.

Petmin Ltd (LON:PTMN), the multi-commodity company, said its board had approved capital expenditure of R120m for the construction of a second coal processing plant at its Somkhele mine in Kwa Zulu-Natal, South Africa. The construction of a second plant will double current production capacity to approximately 1.1m sales tonnes a year.

In an update ahead of its full year results to June 30, Petra Diamonds (LON:PDL) said that gross mine revenue had increased by 88% to US$177.7m during the year, with gross carats sold up 11% to 1,125,098 and gross production up 6% to 1,164,856 carats. During the year the company took its stake in the flagship Cullinan mine 74% and sold the remarkable 507 carat Cullinan Heritage diamond for US$35.3m. It also raised US$120m in an equity financing and agreed terms for debt facilities totalling US$78m. The company said it was now fully financed to roll out its planned capital expansions to treble annual output to over three million carats.

JSC Polymetal (PMTL) reported that gold production in the second quarter to June 30 had jumped 61% year-on-year due to increased throughputs at Dukat and Voro, higher grades at Voro and Khakanja, and contribution from Varvarinskoye. Quarterly silver production grew by 13% due to increased throughput at Dukat and higher grade at Khakanja. The company reiterated guidance to produce 430-450 Koz of gold, 19-20 Moz of silver and 4.0-5.0 Kt of copper in 2010.

Randgold Resources (LON:RRS) reported that construction on the Kibali project in the Democratic Republic of Congo, potentially one of the world's largest gold mines, is being targeted to start in mid 2011, six months earlier than originally anticipated. The earlier start-up target date is attributable to encouraging progress that has been made on the pre-development programmes as well as the active co-operation of the local community and the government of the DRC, which holds a 10% stake in the project. Randgold and £AGD each have a 45% interest.

Sirius Exploration (LON:SXX) said it was need to raise further capital during the coming year in order to progress its strategy of becoming a significant potash producer as quickly as possible. The company acquired 100% ownership of three potash companies last year and is now set to develop those companies whilst potentially acquiring other potash projects to diversify risk.

Strategic Natural Resources Plc (LON:SNRP) announced a 55% increase in the coal resource of its 74% owned subsidiary, Elitheni Coal (Pty) Ltd following an updated assessment by Golder Associates. The new report confirmed an increase in Elitheni's resources from 97.2m tonnes to 150.3m tonnes, comprising, 45.6m tonnes measured resource, 45.5m tonnes indicated resource and 59.2m tonnes inferred resource.

Coal producer Uk Coal (LON:UKC) said it was on course to deliver half year operating losses of around £52m, with full year production expected to be around 7.6m tonnes, with deep mines production of around 6.0m tonnes and production from surface mines of around 1.6m tonnes.

Western Canadian Coal Corp (LON:WTN) reported that shareholders of Energybuild Group Plc (LON:EBG) had approved Western's 100% acquisition of Energybuild and said the deal was scheduled to close on August 6. Keith Calder, the president and chief executive of Western, said: “Having the Energybuild team join Western reinforces and enhances our platform for growth.”