Stocks Unleashed (ASX)

Perseus well placed for acquisition as gold sector consolidates

2011-08-23T16:27:00.000+10:00

http://www.theaustralian.com.au/business/mining-energy/perseus-well-placed-for-acquisition-as-gold-sector-consolidates/story-e6frg9df-1226120382921

PERSEUS Mining and Teranga Gold could be the next gold miners in corporate activity after the $600 million Adamus Resources deal, as juniors continue to consolidate to fill the "genuine mid-tier gap" in Australia's gold sector.

After Newcrest Mining's $10 billion takeover of Lihir Gold, the gold sector has been one of the busiest for dealmaking, along with coal, as local and international miners scramble to grow through acquisition to increase production and market value amid the soaring gold price.
The spot price of gold this morning touched a fresh high of $US1911.54 as continued global jitters push investors into the safety of the precious metal.
After the Lihir deal, US major Goldcorp swooped on Andean Resources - at the time Australia's second-biggest goldminer - in a $C3.6 billion ($3.49bn) deal, followed by Canada's Anatolia Minerals move on Perth-based Avoca Resources, which created Alacer Gold.

But after Adamus became the latest yesterday as it merged with Canada's Endeavour Mining to form a $US600 million West African-focused gold play listed in Sydney and Toronto, Goldman Sachs analysed other small-cap producers that could be targets.
Analyst Ian Preston said the key reason for the wave of gold activity was driven by a need to diversify operational risk, reduce gold hedge-book commitments and increase both production and market capitalisation.
He said the Adamus deal provided continued evidence West Africa remained one of the most "exciting global postcodes" for resource growth and corporate activity in the gold space, and cited Teranga as a potential target and the larger Perseus as potential suitor.
"It is clear that the market is happy to afford a premium to those companies which have potential, but have not yet disappointed the market through capital blowouts of production disruptions," he said. "Teranga's share price is well below what we think is an appropriate value. Trading at these levels, we would view Teranga as susceptible to takeover."
In contrast to Teranga's market value of about $350m, Perseus is valued at about $1.4bn as investors bet on a smooth ramp-up to full production at its Central Ashanti project in Ghana, which Mr Preston said could make its scrip come under favourable viewing.
"With scrip priced as such, we argue that Perseus is well placed to acquire additional production using paper," he said.
Adamus and Endeavour sold their deal, which is subject to shareholder approval, on synergies of their West African assets, and wider production profile and market value to gain more market recognition and grow through acquisitions.
By 2013, Endeavour intends to grow production from existing assets to 250,000oz from 172,000oz, which could more than double with acquisitions and as exploration projects come online.
The deal, which will see Adamus shareholders receive 0.285 Endeavour shares for each share, also enabled Adamus to use Endeavour's much greater cashpile to pay down $US160m of debt at its Nzema project in Ghana.
Mr Preston said reducing the project debt and lowering its hedged gold position, which is typical of project finance, allowed it to put the cash towards the development of its next project.
"We view the deal as a positive for Adamus shareholders with the combined entity having a strong balance sheet, two producing assets, an additional development project providing production growth and a significant landholding...in West Africa with substantial exploration upside," said UBS analyst Jo Battershill.
Other analysts have suggested Kingsgate Consolidated, Medusa Mining and Saracen Mineral Holdings could also be targets.
By late morning, Adamus shares continued yesterday's rise, up 3.5 per cent to 73.5 cents, while Teranga was up 0.87 per cent to $2.32 and Perseus rose 2.45 per cent to $3.34. The broader market was up 1.16 per cent.

Marengo featured in RRS

2011-08-15T20:01:00.002+10:00

Quintessential Resources Ltd - IPO

2011-08-13T22:06:00.000+10:00

A New IPO
This is also a gold play IPO in PNG.
Managing director is Paige Mcneil, which is Peter Mcneil's wife (Frontier resources limited)
Successfully raised $6m in the past week.
Might be an interesting company to watch in terms of its future development.
http://www.quintessentialresources.com.au/quintessentialresourceslimited-home.html

Another Copper Mining company being taken over

2011-04-18T17:03:00.007+10:00

KORES, Capstone Reach Joint Deal to Acquire Canadian Copper Mining Company

The Korea Resources Corp. formed a consortium to acquire Canadian copper mining firm Far West for US$700 million on Sunday.

KORES, which will manage the company, invested $400 million and Capstone Mining of Canada the rest. It is the first time that KORES has acquired a business specializing in overseas resource development.

Far West has three mines in Chile and Australia. It recently completed exploration of Chile's Santo Domingo mine with estimated deposits of 540 million tons of copper and is taking legal procedures to start mining operations there.

KORES hopes to produce some 75,000 tons of copper a year from the Chilean mine starting in 2015 and holds the rights to sell half the output.

(http://english.chosun.com/site/data/html_dir/2011/04/18/2011041800701.html)

__________________________________________________________________

Another takeover offer has been launched for a copper-iron miner in Canada yesterday by a Korean company! As I mentioned in my earlier post, all these takeovers where Copper is above US$4/lb are helping to build the case that future copper demand is robust. This takeover also provides us with some interesting reference point for value comparison.

(Note: I have been using MGO as a ruler to measure all the other copper mining companies so we can have a reference case for comparison.)

Some characteristics of FarWest Mining's copper/iron project with comparison to MGO:

1. Low-grade copper: 0.32% for the Indicated Category and 0.19% for the Inferred Category. (similar to MGO)

(refer to: http://www.farwestmining.com/i/pdf/2010-07-12_NR.pdf)

2. Total resource at 0.2 CuEq% cut-off:

Indicated Category: 3522M lbs of Copper (worth US$14.1B) ; 138Mt of Iron (worth US$15.9B)

Inferred Category: 268M lbs of Copper (worth US$1.1B); 17Mt of Iron (worth US$1.95B)

A total resource value of approx US$33B based on iron ore price of $115/tonne and $4/lb copper price. FarWest Mining's resource is less compared to MGO's ~US$40B worth of resource value at 0.2 CuEq% cut-off).

Note that Citigroup Inc. of New York this month raised its 2014 iron- ore price forecast by 15 percent to $115 a metric ton and the 2015 estimate by 38 percent to $110 a metric ton.

3. Production rate at 60% of the initial rate of MGO (MGO's initial production rate at 125ktpa).

4. First Production Timing: 2015 (later than MGO).

Note that MGO's market cap is A$330M at today's price. FarWest Mining has been taken over for US$700M market cap. In my opinion, MGO is still considered cheap by comparison with FarWest Mining.

By: Peter Koay

Marengo Mining (MGO): A Future Takeover Target?

2011-04-08T18:15:00.015+10:00

By: Peter Koay

With the news of the US$6.5B bid for Equinox from MinMetals hitting the markets a few days ago, timed at a point where copper price is still hovering above $4, this helps provide confidence to the markets that there is a brighter future to copper beyond the immediate future. This suggests that copper price may well be set to be above $4 in the years to come (this confirms my earlier assumption of $4/lb average copper price for the years to come). Demand for copper is forecasted to be outstripping the supply for this year and the following year, and it seems that this scene won’t be changing in the near-term as it does take quite some time to prove and bring out copper resource from the ground.

I’ve done some comparisons of Equinox and Marengo considering that Equinox is a pure-copper play.

A summary of the comparison:

§ MGO’s M&I copper resource is about 50% of Equinox’ Lumwana Project

§ MGO’s capital cost is twice the capital cost of Lumwana (this may be due to cheaper construction costs in Africa compared to PNG).

§ MGO has the potential to become the top 15 largest copper producer in the world when it ramps up to 50Mt (at ~0.5% Cu), i.e. production rate of 250ktpa, making it to be in the league of Equinox.

§ MGO and EQN’s operating costs are similar.

§ Note the ratios (highlighted in green) to compare Yandera Project with Equinox’ Lumwana or Jabal Sayid projects. This indicates that MGO in 2-3 years time shall at least be 8-10 times the market price of today.

§ Note the comparison of Jabal Sayid’s project with Yandera project: This shows the potential that MGO has to become at least a $1B mkt cap company (even before achieving production). My thoughts is that it’ll reach $1B market cap when DFS is released, EPC Lump Sum contract signed, project financing completed(targeted for Nov’11) and offtake arrangement contracts signed. So, $1/share for MGO by end of this year is not an unrealistic target.

Note that MGO share price has been hovering between $0.30-$0.32 over the past week, with a breakout today to finish at $0.335. The share price was consistently capped by ~1M shares buying at $0.31 and 1M shares selling at $0.32. It is believed that some big funds are accumulating MGO shares to force out weak holders of the share in anticipation that the share price shall go up when the DFS is released.

These two caps have been removed today, with dad & mum investors to provide the next push to $0.40. The share has recently been also reported on the HeraldSun newspapers, promoting public awareness of this share. Refer to:

http://www.heraldsun.com.au/business/in-the-black/another-twist-on-copper-story/story-e6frfinf-1226034986286

ASX: Marengo Mining Ltd (MGO) - The BEST buy of 2011

2011-03-25T15:33:00.006+11:00

The results of my research are getting much more interesting and exciting than I had envisioned earlier! I decided to compare Rex Minerals (RXM) with Marengo Mining (MGO) after reading an article in Eureka Report that compared SFR and RXM in Oct’10.

RXM & MGO Comparison Table:

	MGO	RXM
Copper Resource:
Measured	1 Billion pounds	Nil
Indicated	1.9 Billion pounds	Nil
Inferred	3.6 Billion pounds	2.64 billion pounds
Other resources:	Molybdenum	Gold
Measured	45 M lbs ($540M)	Nil
Indicated	68 M lbs ($816M)	Nil
Inferred	91 M lbs ($1.09B)	1.1 Moz ($1.5B)
Capital Cost:	US$1.6B	Not determined yet
Financing Strategy:	NFC offering to arrange financing of at least 70% of the capital cost of project	Unknown (No clear financing strategy so far identified from presentations.)
Market Cap:	$300M	~$430M
First Production:	2014	Unknown
Completion of DFS:	1Q 2011	Unknown (starting in 2012, but could last for more than a year)
Cash at Bank:	$70M	$103.7M
Exploration Upside:	Project covers +100km of the highly prospective Bundi Fault Zone. Less than 5% of structural corridor drilled to date.	Multiple large scale and shallow targets on the Yorke Peninsula near Hillside.
Operating Cost:	$0.90-$1.00/lb of copper	Unknown

If comparing JUST the inferred category of resource, MGO has $15.5B and RXM has $12.06B worth of resources (based on $4/lb for copper and $12/lb for Mo and $1350/oz for gold). This means that MGO should be at $550M market cap purely on an inferred resource comparison basis, i.e. a share price of $0.56!! We haven’t even factored the resource that MGO has in the measured or indicated category!!

In my opinion, MGO should experience a significant re-rating soon (if not NOW!!). It’s either SFR, RXM and OZL share prices that need to drop to the level of MGO, or alternatively, MGO rising up to the level of SFR & RXM.

In any case, if one is to buy MGO shares now and hold them for 3 years, one will have a stake in a $300M market cap company that will be producing US$600M cashflow per year in 2014! This will be a very attractive takeover target!!

By: Peter Koay

ASX Marengo Mining Ltd (MGO): A better value proposition than Sandfire Resources (SFR)

2011-03-25T12:42:00.004+11:00

If one has to understand the value of MGO, one has to compare it with all the other copper producing companies. Based on the most recent SFR reported resource statement and its pre-feasibility report, the following comparison is made.

Resource comparison:

	MGO (Cu)	SFR (Au)	SFR (Ag)	SFR (Cu)
Measured	1000M lbs ($4B)	47k oz ($63.4M)	-	52.8M lbs ($211.2M)
Indicated	1900M lbs ($7.6B)	491k oz ($662.8M)	3750k oz ($112.5M)	1078M lbs ($4.31B)
Inferred	3600M lbs ($14.4B)	186k oz ($251.1M)	1305k oz ($39.1M)	286M lbs ($1.14B)
Total	6500M lbs ($26B)	724k oz ($977.3M)	5055k oz ($151.6M)	1416.8M lbs ($5.67B)

*Conversion using copper price of US$4/lb, silver price of $30/oz, and gold price of US$1350/oz.

	MGO Resource Value	SFR Resource Value
Measured	$4B	$274M
Indicated	$7.6B	$5.08B
Inferred	$14.4B	$1.43B
Total	$26B	$6.78B

Capital Cost comparison:

MGO: US$1.6B

SFR: A$400M (refer to: http://asx.com.au/asxpdf/20110304/pdf/41x7hft3k0lzyg.pdf)

The capital cost of MGO is 4 times SFR’s. In the right ball park considering that MGO’s resource is approx 4 times of SFR.

Operating Cost comparison:

MGO and SFR’s operating cost is almost the same, i.e. ~$0.90-$1.00 per lb.

Production Timing:

MGO 1^st ore concentrate produced: 2014

SFR 1^st ore concentrate produced: Q3, 2012

Note also that DFS completion for SFR is 2Q 2011 whereas MGO’s DFS report is targeted to be released to the market by 1Q 2011.

NPV Analysis:

Basic NPV analysis of SFR project gives us a price of $7.80/share with the following assumptions:

70kt/Cu and 45koz of Gold production/year.
Mine life of 7 years (as per PFS report)
1^st Production in 3Q 2012.
Net Cash Flow: Gross Cash Flow ratio: 0.56
Cost of capital: 10%
Capital cost: $400M
150M issued shares
$4/lb copper price and $1350/oz gold price

Based on NPV analysis, it seems that the value of SFR’s project is almost fully factored into the share price.

Based on market cap comparison,

Current market cap of SFR is $1.02B (@$6.90/share) with 148.3M shares issued.

Current Market Cap of MGO is $300M (@$0.30/share) with 994M shares issued.

Based on “Net Profit before tax, depreciation and interest” comparison, SFR is saying that it’ll have $330M-$350M cash flow. MGO will have ~ $600M cashflow per year. Almost doubling SFR’s cashflow!!

Basically, this comparison between MGO and SFR tells us that MGO should have at least $1B market cap NOW, which means that it’s share price should be about $1/share NOW. And in 2-3 years time, it should be ~$3/share when it’s producing copper at a similar rate of OZ Minerals.

Note: This comparison is done assuming that SFR has no value factored into the share price from all its other projects/investments.

SFR’s most recent upgraded Resource report:

Frontier Resources Ltd (FNT) – Moving into the next Frontier soon!

2011-03-17T23:44:00.008+11:00

Equity Analyst: Peter Koay

Target Price: ~$0.50 (Current price: $0.25/share)
Current Mkt Cap: $51.3M

Frontier Resources Ltd (FNT) –
Moving into the next Frontier soon!

I think that this article is long overdue, considering that I had my eyes on this company for a period of time. Imagine with me for a while the following scene:

“A river watering the garden flowed from Eden; from there it was separated into four headwaters. The name of the first is the Pishon; it winds through the entire land of Havilah, where there is gold. (The gold of that land is good)”

(emphasis mine) [Genesis 2:10-11]

“The gold of that land is good!!”

Although PNG may not be the land of Havilah (it could very well be though!), the words above aptly describe the few pieces of land that FNT is exploring now.

FNT has exploration permits for the following lands in PNG:

Andewa
Bulago
Leonard Schultz
Likuruanga
Central New Britain
East New Britain

I usually use a few key characteristics to determine which junior mining explorers I would invest in (and FNT seems to meet the few criteria that I have):

A potential resource in the ground that has a ‘WOW’ factor –

Typically, we see a lot of 3 to 5g/t of gold results from many gold exploration companies. These grades are usually sufficient to justify a world-class mine (provided that it’s a huge land with similar grades). However, some of the FNT’s exploration results are showing in the order of 10-100g/t of gold! Look at their Bulago results!! WOWW!! “The gold of that land is good!!”

If the contained resource is only in the few hundred thousand ounces of gold range, this usually doesn’t cause sufficient excitement among ASX investors that is necessary to send its shares skyrocketing. With high-grade gold mineralization implied from high gold concentrations, FNT has a much greater potential to have a mouth-dropping effect on the investors.

A mixture of outcrop channel samples and drilling results from FNT’s initial exploration lend a lot of weight to expectations that they will eventually be gigantic economical mines:

1. Andewa – 7.9m of 10.01g/t gold, 10.8m of 7.4g/t gold, 3m of 10.97g/t gold, 5m of 18.5g/t gold, 3m of 14.26g/t gold, 15.6m of 5.12g/t gold. (Potential Gold Mine)

2. Bulago – 27m of 66.8g/t of gold, 4m of 135.6g/t gold, 9m of 64.0g/t gold, 16m of 36.5g/t gold, 18m of 40.3g/t gold, 7.5m of 67.0g/t gold and 9m of 24.0g/t gold. (Potential Gold Mine)

3. Leonard Schultz – 16m of 18.60g/t gold within 76m of 5.35g/t gold, 22m of 2.71g/t gold and 36m of 1.15g/t gold. (Potential Nickel Gold Mine)

4. Likuruanga – 55m of 5.8g/t gold, 10m of 5.1g/t gold, 70m of 1.7g/t gold, 27m of 0.71% Copper & 66m of 0.42% Copper. (Potential Copper-Gold Mine)

5. Central New Britain – 7km x 2.5km Porphyry Cu/Mo (No results yet, but a potential Cu-Mo mine, similar to Marengo’s Yandera Project)

6. East New Britain – 10.9m of 26.9g/t gold, 2m of 16.9g/t gold, 4m of 9.84g/t gold. (Potential Gold Mine)

Have a successful track record in exploration and project development experience

FNT has been around the mining picture for a long time in PNG. In fact, they were very close to start developing a world-class project back in 2008…until the Australian Govt interfered by influencing PNG Govt to not renew FNT’s exploration lease as their deposit is very close to the Kokoda Track. Their indicated & inferred resource at that time was proven to be 213.6MT @ 0.51% Cu Equivalent (1.08Mt Cu Eq).

To read about their Feasibility Study on Kodu Deposit:

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=00784598

To read about the PNG Govt’s decision not to renew their exploration license, see:

http://www.asx.com.au/asxpdf/20081031/pdf/31dc2clxcrgdhq.pdf

Also, Peter McNeil had been managing director of FNT since he listed it in 2003. In words extracted from an interview with him (refer to http://www.topstocks.com.au/stock_discussion_forum.php?action=show_thread&threadid=600357),

“I have a masters degree in geochemistry from the university of Houston and started work in PNG in 1985, but I have also worked in Arizona, Newfoundland [Canada], the Eastern Goldfields and the Kimberley of Western Australia. I was a consulting supervisory geologist when the discovery holes were drilled for both the Nimary and Sunrise Dam deposits in 1992 and 1993, and also worked at Lihir. After Nimary, I then stepped straight into Macmin, which was listed by my father [Robert] and Denis O’Neil in December 1993. Frontier [formerly called TasGold] we [Peter and his wife Paige] listed in April 2003 and it was formed as a JV with Macmin. Gold has been my primary career focus, but more recently I have worked with porphyry coppers and massive sulfide deposits. I guess you could say I am a bit of an epithermal, come porphyry person.”

Reliable drilling equipment with good (and cheap) crews

FNT owns all the rigs that are being used for drilling. FNT also operates the drill rigs by themselves. This is a cheaper way of drilling, considering that they can side-step all the troubles and higher premium that come with contracting others to perform drilling for them. That being said, for them to test deeper targets (up to 800m), they may have to either modify their existing rigs or to charter some other rigs to get the job done.

Good cash position for continuous exploration and drilling to prove up new reserves and does not have to significantly dilute existing shareholders to raise money for exploration

In most recent announcement, FNT spent ~$1.55M cash over past half-year ending 31 Dec’10 with ~$2M. Spending at this rate, this means that FNT has enough cash to last them to about Jun’11. Considering that they’ll be drilling at Andewa, they’ll need cash injection (via capital raising) to continue on with their operations. By releasing the 5000 rock chip samples from Andewa (promised to be done by end Feb’11 but not released yet), assuming that they will be good results, they will provide a lift to the current share price, and hence be able to raise capital with less dilution to existing shareholders.

Also, FNT had secured a very good deal with Ok Tedi in that Ok Tedi has the option to earn 58% of Bulago and Leonard Schultz JVs and up to 80.1% of Likuruanga, Central & East New Britian JVs by spending US$12 million in each of the project within 6 years. This means that the drilling costs can easily be covered by Ok Tedi without the need to raise capital to drill these target areas. The only drilling costs that FNT would need to raise is for Andewa project and for the other suite of projects in Tasmania, Australia.

Have good local engagement and relationship

FNT’s boss, Peter McNeil had spent his past 27 years in PNG. Some of the PNG national crews he currently has had been with him from the beginning of this company. With someone who’s been inside for past 27 years, I would think he’s got quite some insights as to how to best operate within PNG. In addition, the JV with Ok Tedi will allow it to have access to many influential people within PNG as Ok Tedi is mostly owned by the PNG people.

Other reasons contributing to why FNT may be quite a good bet:

Peter McNeil has recently quit his chairmanship in CopperMoly Ltd to focus more on FNT

If FNT’s prospects were not good, why would the MD quit his other involvement to spend more time on it? Seems that he’s keen to move faster with the development of FNT, which he has a huge stake in it.

FNT has recently submitted to obtain an exploration license for Mt Schrader

This new license is a license that covers the area that surrounds Mt Andewa. This new area shall be 2477sq km, compared to Mt Andewa’s license which covers only a 21 sq km area. Now, why did FNT make this move? If the results coming from Mt Andewa are not good, why would FNT grab more of the land surrounding Mt Andewa? Seems like they've got some real stuff coming out from Mt Andewa. You can see the land size comparison below:

OK Tedi’s involvement as a JV Partner

Ok Tedi hosts a world-class copper mine, directly employs 2000 people, and had been producing for 20+ years. OTML's shareholders are PNG Sustainable Development Program Limited, (52 per cent), Inmet Mining Ltd (18 per cent) and the PNG Government (30 per cent). The PNG Government holds equity directly (15 per cent) and on behalf of the Western Province (12.5 per cent) and landowners from the mine area (2.5 per cent).

Considering that Ok Tedi’s mine is going to be shut in 2013 (with a potential for mine-life extension to 2022 that’s still in feasibility phase), they would be quite desperate to find another world-class mine to keep them in business.

So far, Ok Tedi has only FNT as its JV Partner in prospecting for more resources. In one sense, Ok Tedi has all its eggs in one basket (i.e. FNT)!! Now, why would a world-class producer who had been operating for ~25 years, when facing an ‘extinction’ threat, bet the future of their company on one company, i.e. FNT?

They must have very strong reasons to do so. And considering the results they’ve got in Bulago so far, it’s not a surprise that they have a higher priority to drill it in Apr’11 (5000m drilling program planned).

Share Price Analysis:

The share price of FNT had gone up from $0.07 back in Nov’10 to a high of $0.42 in Feb’11 (due to speculation that very good results shall be released from the Andewa’s 5000 rock chip samples). This is a highly active and volatile stock with speculators watching with eagle’s eyes, keen to exploit its potential. It is not a share for the faint-hearted!

With drilling upcoming in April on both Andewa and Bulago projects, I believe that there will be huge upside to the share price as the drilling results are released in 2Q’11. If speculation on Andewa’s results was sufficient to push the share price to $0.42, with the definitive drilling results coming from both upcoming Andewa and Bulago drilling campaigns (which I’m quite confident that they’ll bode well), $0.50 is not an impossible target to reach.

With Peter McNeil giving a presentation next Wed in Melbourne (23 March), it’s quite likely that he’ll be talking about the plans for the drilling programme in Apr’11. And quite likely, he may release results from Andewa’s rock chip samples prior to his presentation, this will cause excitement amongst the investors and will push the share price up.

Conclusion:

FNT is a highly prospective junior explorer, a quite stable company from the perspective of having a very good world-class JV Partner who’s offered to pay for drilling costs for up to 5 of the JV areas and providing their own drilling rig + sample results analysis, having a good Managing Director who has a lot of experience in PNG, owns its drilling rigs with low-cost drilling crews, and having a diversified portfolio that have high-grade gold mineralization.

If FNT manages to prove 1 out of the 3 potential world-class mines (Bulago, Andewa and Leonard Schultz), this will transform FNT to become a stakeholder in a potential world-class gold mine. Its shares won’t be worth 25 cents anymore. FNT is moving to the next Frontier soon as the drilling program starts in Apr'11.

Of course, if it manages to prove that it's got 3 world-class mines, this share would certainly be worth a few dollars. This can be a potential Lihir Gold in the making (taken over by NewCrest for $9.5B)!

Note: The projects within Australia have not been mentioned so far as I see them as peripheral projects that FNT owns. The main flagship projects for FNT shall be the PNG projects, which will bring much more significant cashflows to FNT. However, if FNT manages to discover more resources in Tasmania, that will be a bonus to the share price.

Disclosure: The analyst does have an interest in FNT. This share analysis does not represent an investment advisory service as no subscription or management fees are charged. The contents of the article are provided as general information only and should not be taken as investment advice or as a recommendation to buy or sell any security or financial instrument. Any investment decisions carried out based on information, analysis, or commentary provided here is solely your responsibility. You should consult your investment adviser before making any investment decisions.

Go Go Go - MGO - Marengo!

2011-03-11T19:09:00.009+11:00

Equity Analyst: Peter Koay

Date: 16 March 2011

Target Price: ~A$1.00/share (18-24 months investment horizon)

MARENGO MINING LTD (MGO)
The next OZ Minerals in the making

PNG can be considered to be the upcoming rising star as a mining destination of the 21^st century. It is a resources rich nation, soon to be able to get into the ranks of Australia and Chile.

Now, how do we get exposure to this upcoming mining giant country? Sifting through a number of PNG mining companies that are listed on ASX over a weekend, a very interesting stock had been discovered to have the potential to become the next OZ Minerals, i.e. MARENGO MINING LIMITED. (By the way, OZ Minerals had recently been a darling stock in ASX as it’s generating a huge pile of cash from its Prominent Hill copper and gold mine.)

OZ Mineral’s Prominent Hill mine has a remaining 8 year mine-life from now, with latest reserves (as at Jun 2010) of 5.5 billion pounds of copper (1.135 billion pounds Measured, 2.43 billion pounds Indicated, 1.88 billion pounds Inferred) and 3.1 million ounces of gold (0.5Moz Measured, 1.4Moz Indicated, 1.2Moz inferred). Refer to http://www.asx.com.au/asxpdf/20101109/pdf/31trr9pnqgpjlc.pdf .

Assuming copper price of US$4/lb and gold of US$1300/oz, that means OZ Minerals has $22B of copper and $4B of gold, a total of US$26B of resources (Measured+Indicated+Inferred).

Comparing MGO’s resources with OZL’s resources (refer to http://asx.com.au/asxpdf/20110228/pdf/41x36stqj3wspq.pdf) , MGO currently has 6.5 billion pounds of copper (1 billion pounds measured, 1.9 billion pounds indicated, 3.6 billion pounds Inferred). Assume same copper price of US$4/lb, it has a whopping US$26B worth of COPPER!!

In addition, MGO has a total of 204M pounds of Molydenum (45M pounds Measured, 68M pounds Indicated, 91M pounds Inferred). Molydenum is a material used to manufacture high corrosion-resistance stainless steel (e.g. super duplex steel). Assume price of Molydenum of US$20/lb, this means MGO has US$4B worth of Molydenum!!

This brings it to a total of US$30B worth of resource!!! MGO’s resource can be even bigger than OZL!! Doing a sensitivity analysis, you may say that that’s just a lot of inferred category stuff in MGO’s resource statement. If the inferred category is taken out and a comparison is made, OZL should have US$14.3B of copper and US$2.47B of gold, which brings to a total of $16.8B. MGO should have US$11.6B of copper and $2.26B of Molydenum, that brings it to US$13.8B. Basically, the message is, MGO would be in the comparable league of OZL category of companies!

Now, current market capital of OZL is A$4.81B with 3.24B shares issued. However, MGO’s current market capital is only A$273.36M. OZL’s mkt cap is now 17 times greater than MGO. However, both companies have almost the same amount of resources.

The following are a few reasons on why you may want to buy Marengo Mining Ltd at its current level (i.e. $0.27-$0.30/share):

Comparison Category	OZ Minerals (OZL)	Marengo Mining Ltd (MGO)
Resource (Measured+Indicated+Inferred)	US$30B	US$26B
Market Capital	A$4790M (at $1.48/share)	A$274M (at $0.275/share)
# of issued shares (M)	3240	994

Risk is proportionate to returns: the higher the risk, the bigger the returns. But the higher the risks, the bigger the discount to the share price too. If there’s a huge discount to the share price due to inherent risks of the share, then, we ought to ask: What are the risks that MGO have?

A few of MGO’s risks can be outlined and summarized as follows:

Management Risk: Low – Les Emery used to be the managing director for Lynas Corporation. Lynas is doing very well now, all thanks to Emery, who helped guided Lynas to get the lease for the mines that they now own. Do you think he has the capability to repeat a success story with MGO? Quite likely...

Capital Funding Risk:

Risk of getting the money to fund the capital cost to build the plant is low with China NonFerrous Metal Industry’s Foreign Engineering and Construction Co. Ltd (“NFC”) offering to provide at least 70% of the capital cost or help MGO connect with Chinese banks to lend their capital. If 70% of the funding is obtained via a Chinese bank debt, that means NFC has to fund it by equity issue of US$480M. With current share price, it needs to issue up to 1.8 billion shares – making it similar to OZL’s # of issued shares. But of course, the better option is to fund it all entirely with debt and pay it off. However, it is quite likely that NFC would try as much as possible to negotiate a higher % of equity stake in MGO.

Yandera Project Risks:

Risk of cost blow-out: Low, due to the arrangement of a lump sum EPC Project with NFC. In a lump-sum project environment, the real exposure is to claims lodged by the EPC Contractor against the company. However, with the partnering arrangement in place, this risk is minimized. The Chinese would not want to risk a backlash by Australian company when they are the ones needing the resource, and they wouldn't want to sink a company which they themselves have a huge stake in (when they participate in the equity offering and arrangement of bank debt). US$1.6B capital cost is needed to get the plant to 25M tonnes/year production.

Geological Risk: Low. PNG is a geologically active area (lots of earthquakes). However, this risk is low considering that there are so many major companies which are already investing into PNG on the same main island, e.g. ExxonMobil. If ExxonMobil (very conservative oil company) is comfortable with the risk, I think we should be quite comfortable with it too.

Environmental Risk: Medium. This is the only risk that could be a bigger challenge for the company. The possible ways for MGO to manage the mining tailings is to build a dam, use DSTP (Deep Sea Tailings Placement) similar to Ramu Cobalt-Nickel Mine and Lihir Projects, or to build a processing plant to treat the wastes. The PNG govt is quite likely not to have a huge appetite to build a dam to contain the mining waste as OK Tedi’s dam was damaged in an earthquake back in 1984, which was a factor contributing to OK Tedi dumping mining wastes straight into the river systems leading to a huge environmental disaster. Having a potential damage by earthquake of a dam, and end up releasing tonnes and tonnes of toxic wastes into the environment would be quite unacceptable. Possibly, the DSTP method may work for MGO.

Product Sales Risk : Low. NFC has already offered to off-take a portion of the product from the Yandera project as part of the MOU signed with NFC. MGO has already secured a big customer!! And with the rising world demand for copper (China being a big driver of this demand), there shouldn't be any concerns on whether they could sell the product.

Political/Sovereign Risk: Low. MGO has very good political connections. It has the former PNG Mining Minister (Samuel Akoitai) and the former PNG PRIME MINISTER (Sir Rabbie Namaliu) within its board of directors!! These men would be able to help MGO in navigating to get the mining licenses/leases renewed and to assist in getting the environmental approvals required.

Construction Risk: Low. With NFC successfully constructing the nearby Ramu Cobalt-Nickel mine, NFC should have the capability to construct and deliver the project in PNG on time for a early 2014 start-up.

Resource Upgrade Likelihood: High. MGO still has $71M in cash as of 31 Dec 2010. This money is enough for it to continue its drilling program around the resource and prove more of the inferred resource into the indicated category. As drilling continues, the company shall keep on adding value to the company. When good news is released on any upgrade in the resource, this will drive the share price even higher.
Production Costs Risk: Low. See graph as per Note 2 below. The forecasted production cost is about $0.90/lb. This means that the copper price can drop even up to $2/lb (almost 50% drop from today's prices), and MGO can still keep the plant operating. The cost can be kept quite low due to lower wages of PNG nationals being hired.

NPV Analysis:

A basic Yandera project NPV analysis based on available information shows us how much the share price should be. Based on a 10% discounting factor (i.e. 10% cost of capital), this will give it a current NPV of $2.67/share based on the following assumptions:

1. 0.57% grade copper equivalent (including Mo)
2. Copper/Mo recovery factor: 0.8

3. 20 year mine life (with startup in 2014)

4. 25M tonnes of ore per year

5. Net profit margin of 56% (as per OK Tedi most recent net profit margin)

6. 10% discounting factor

7. US$1.6B capital cost

8. AUD to US$ conversion ratio = 1:1
9. Copper price: US$4.30/lb

Sensitivity analysis:

Even if the capital cost of that plant is US$2.5B (assuming another extra US$900M to deal with the mining tailings), the NPV for the project will lead us to $1.76/share. This is not taking into account that the company will find and prove more reserves with its continuous drilling program.

Even if copper price drops to US$2/lb (2008 GFC levels), the NPV for this project based on current resources level and 25MT/annum production is still $0.38/share (higher than current share price)!!

Share Price Risk Analysis:

§ MGO has recently issued 110M shares (fully subscribed) at a price of C$0.25/share (which is about A$0.255/share) to institutional investors. This helps set a floor price. Major institutional investors will generally not allow the share price to go below the price for which they’ve obtained the shares.

§ Share price has a huge potential to spike up as soon as Definitive Feasibility Study (DFS) is released (targeted for 1Q’11). It’s now getting to mid-March, so the DFS report is not far away (in the next 2 weeks).

§ Strong institutional shareholders participating in recent offerings, implying low risk of share price falling any further than current levels:

Biggest shareholder: Sentient - 22.2%

Sentient has proven themselves to be very astute stock-picker of stocks that have potential to be a takeover target. MGO can be one soon! Refer to the following article on the track record of Sentient Equity fund: http://www.theglobeandmail.com/globe-investor/investment-ideas/private-equity-fund-shines-in-spotting-takeover-deals/article1918226/

2^nd biggest shareholder: Quantum Partners – 18.9%

Quantum Partners is a fund owned by George Soros. George Soros is a man who knows how to profit from financial crises. He still managed to earn $1.1 billion while the rest of the investment companies were reeling from the recent 2007/08 GFC.

3^rd biggest shareholder: OMERS (Ontario Municipal Employees Retirement System) – 6.1%.

Supposedly, a retirement fund usually should be quite risk-averse. This gives us another comfort factor that the risk of investing in this company is low.

Conclusion:

From market capitalization comparison, MGO will soon become another OZL with market cap in the order of $3B. This would mean that MGO will have to be $3/share to be a $3B market cap company with current # of shares issued. Assuming that 3B shares have been issued then, it has to be at least $1/share for it to be a $3B Market Cap company.

From DCF analysis, MGO will also be $1.76-$2.67/share provided that all risks mentioned above are managed properly.

From PE Ratio analysis, at 25M tonnes/year production, MGO will generate a net profit in the order of US$600M per year! Assuming a 3 billion issued shares (similar to OZL now), and at the price of $2.00/share for MGO, the PE ratio will just be 10. When it ramps up to 50M tonnes/year production, the PE ratio will just be 5!

Hence, MGO share price will be able to go up to at least to $1.00/share in 1.5-2 years time (very conservative estimate). This is not taking into account all the upsides that MGO has by its continuous drilling program in the 1900km2 tenement that it has in PNG.

Do you want to be a part of the exciting story of Yandera Project in PNG? It's your choice...

Note: Marengo is Napolean’s favourite horse who had faithfully served him for 35 years. MGO is hoping to faithfully serve all who’re willing to buy a stake into it.

Note 2: Additional Chart from http://www.asx.com.au/asxpdf/20100901/pdf/31s8g5wswdv31j.pdf
Marengo is forecasted to be one of the lowest cost producers of copper (on a per lb basis), almost next to OZ Minerals.

Disclosure: The analyst is a long-term shareholder of MGO. This share analysis does not represent an investment advisory service as no subscription or management fees are charged. The contents of the article are provided as general information only and should not be taken as investment advice or as a recommendation to buy or sell any security or financial instrument. Any investment decisions carried out based on information, analysis, or commentary provided here is solely your responsibility. You should consult your investment adviser before making any investment decisions.

Global Gold Mining Production

2011-03-10T22:06:00.001+11:00

This link is pretty interesting :)

Global Gold Mining Production

Global Gold Mining Production

An Interactive Map

Where Does the Gold Come From?

Gold-producing countries are found on all continents, and represent the gamut of economies from developed super-powers to small, emerging market countries. With gold’s spectacular rise in price and related demand, it’s worth your time to know a little bit about where all the gold comes from.

While some believe that all of the major gold deposits in the world have already been discovered, others counter that much of the world is unexplored, leaving open the possibility of deposits yet to be found. The possibility also still remains that gold may be found in more familiar areas.

Click on the map to learn more about the top-ten gold-producing countries of 2009.

Minemakers Limited (ASX) – Worth investing???? Not sure.....

2011-03-09T09:43:00.002+11:00

Two main projects which they claim as world-class deposit.

Current Mkt Cap = $123M with 227M shares issued.

1. Namibia Project - 49% ownership by MAK (indirect & direct ownership). Namibia is in Africa and this project is an offshore project, which basically means that they're mining from the seabed. MAK plans to use dredging boats to get the job done. They claim to have Indicated resource of 73.9M tonnes @ 20.57% P2O5 (worth US$2.28B based on price of US$150/tonne) and Inferred Category of 1507M tonnes at 18.7% (worth US$42.2B).

2. Wonarah Project - 100% ownership.

So far, it is hard to find a comparable company to evaluate how much MAK's price would go up to.

Phosphate producers in Australia are listed as follows( http://www.australian-phosphate.com/phosphate-stocks.html ) However, there are not any companies in ASX that's actually producing phosphate rock only. Incitec Pivot is the only company that's producing phosphate, but they are an integrated producer (upstream & downstream), i.e. they mine the rock phosphate at Phosphate Hill (producing 2M tonnes/year) and then use sulphuric acid from nearby manufacturing facilities to manufacture fertiliser directly and sell fertilisers directly into the market. Incitec Pivot's mkt cap is A$7.52B with 1.63B share issued. Phosphate Hill has 89.9MTonnes (@24.3% P2O5) back in 2003. They mine 2M tonnes/year, so that means their proved and probable reserves now is probably 74M tonnes now.

Seabed rock phosphate mining is not a common practice, in fact, there's no company that can be found to have done it. Someone however, has thought of doing it in New Zealand:

http://rockphosphate.co.nz/news/archives/2010/05/25/chatham-seabed-phosphate-worth-67-billion/

http://www.stuff.co.nz/business/industries/4508172/Mining-the-depths-more-than-pie-in-the-sky

This seems to be a new way of applying existing technology of dredging. Hence, the Namibia project seems to be still quite innovative and fairly new method of producing phosphate rocks. The environmental application process could be a torturous path as this process involves the release of water back into the sea as the boat dredges the seabed. (If you've watched the dredging methodology shared by the company in a recent presentation, you'll be able to see how much water is pumped straight into the sea as the dredging continues).

MAK seems to have a lot of appetite for new technology. They've bought a stake of 6.67% in FDC, which is a USA Florida-based company that's developing a dry kiln technology and filed for a patent. This technology will allow conversion of rock phosphate to phosphoric acid without much use of sulfuric acid. MAK is keen to get further downstream into processing their rock phosphate into fertilizer just as what Incitec Pivot is doing now. However, due to the unavailability of a sulfuric acid plant nearby to provide feedstock to MAK plant, they've got to import sulfuric acid or to manufacture it themselves by importing sulfur. If FDC's patent works, then MAK will be the 1st plant to be built in this world that's using the newly patented fertilizer production process.

If MAK just sell their ore as DSO (Direct Shipping Ore), then, they'll need to build a 260km railway to link to the Adelaide-Darwin railway. This option is not one that's adopted by the company now as it's not that economical.

Until now, it's not easily verified how much Indicated and how much Inferred resource MAK actually has. They're not releasing reports on "upgrade on resource" kind of statements. There's a statement in the Dec 2010 quarterly activities that say: "Only about 15% has been drilled sufficient densely as yet to enable JORC & NI43-101 resource estimations, but those sub-areas contain an estimated 620Mt @ 18%P2O5 using a 10% cut-off, totalling the Indicated (289Mt @18.5%) and the Inferred categories (331Mt @17% P2O5)." Based on this, it seems that they don't have any JORC-compliant categorization of their resource yet.

Also, MAK seems quite scattered in their focus-area on minerals. They're trying to mine for tin, tungsten & fluorospar in Tasmania through TNT Mines Ltd, gold in Tasmania through BCD, and another project in Namibia which they haven't done any work on it so far. The company ought to focus on a FLAGSHIP project, and it's possible that Namibia is further down the track than the Wonarah Project. This is because the Wonarah Project may need more time to prove the usability of the new dry kiln technology.

Nevertheless, phosphate rocks are something that is really worth looking at. The world is running low on fertilizers soon as population grows and need more food. If you can find another company mining for rock phosphate, please let us know. J

By: Peter Koay
Equity Analyst

Harmony Gold

2011-03-04T17:43:00.000+11:00

Just some updates on PNG in general - Harmony
http://www.har.co.za/businessreview_exploration_png.htm
The New Guinea mobile belt stands out amongst the world's most prospective geological terrains for porphyry copper-gold and epithermal gold mineralisation, with world class deposits including Grasberg-Ertzberg (copper-gold), Porgera (gold), and Ok Tedi (copper-gold). Importantly, the belt is under-explored.
Harmony has built a quality project portfolio comprising over 12 000 square kilometres of exploration and mining tenure in some of the most prospective mineral provinces and emerging gold and copper districts of the New Guinea mobile belt.
In the Morobe Province, Harmony has been active in exploration for the last seven years and the resource base has grown from 7.0Moz to over 45Moz (gold equivalent – refer to the resource growth profile below). Harmony owns 50% of this inventory, and the discovery cost for Harmony's equity ounces is less than $10/oz.

Friday, 4 March 2011
JOINT venture partners Newcrest Mining and Harmony Gold have reported a high-grade hit from the massive Wafi-Golpu copper-gold project in Papua New Guinea which is outside the boundaries of the current resource of 16 million ounces of gold and 4.9 million tonnes of copper.
Drilling intersected 883 metres grading 2.15% copper and 2.23 grams per tonne gold, or 5.33gpt gold equivalent, from 913m, including 628m at 2.82% copper and 3.06gpt gold, or 7.13gpt gold equivalent, from 1043m, using a 1% copper cut-off grade.
The hole represents the highest grade intersection at Golpu to date and extends the known mineralisation by a further 70m north.

Frontier Resources in the news and new maps of New Britain

2011-02-28T14:17:00.002+11:00

There is an announcement today from FNT. Basic points include:

Multiple, areally extensive and strong copper and gold anomalous soil zones have been demonstrated in grid based soil sampling

which leads to

Joint Venture partner OTML have indicated they intend to move to 'Advanced Stage Exploration' on the Bulago EL and a 5,000m drilling program with 2 rigs from about mid-April.

Also, it is featured in a small write-up in The Australian newspaper as follows:
PNG copper belts
ANOTHER reader sent some interesting maps of New Britain island in Papua New Guinea, which show three major copper belts crossing the island. There are several Australian players active on New Britain, and two of them had news during the week.
Frontier Resources (FNT) has lodged applications for another 2477sq km around its Andewa project. Drilling there has produced intersections up to 7.9m at 10.01 grams/tonne gold, and Frontier has other projects on New Britain, including a 7km-long copper-molybdenum target, copper-gold at Likuruanga and trenching samples of gold up to 26.9g/t at its East New Britain project.
Coppermoly (COY) says the latest drill holes at Nakru demonstrate copper-gold mineralisation over a 500m strike length. Barrick Gold is spending $20 million to earn a 72 per cent stake in three of Coppermoly's New Britain prospects. New Britain is not at the top of the PNG priority list at MIL Resources (MGK) but it has projects located within two of the three copper belts.
The stock last traded at 3.5c
http://www.theaustralian.com.au/business/mining-energy/a-follow-up-on-copper-minnow-venturex-resources-and-other-stocks/story-e6frg9ex-1226013129247

Books I am Reading regarding mining investment

2011-02-23T21:41:00.002+11:00

Hey Guys/Girls:
Sidetrack a bit here......what I wanted to write of is something that people keep on asking me time and time again.
Questions like
'Where do you get your info?'
'Why do you know so much about this company?'
'How do you know how to calculate the share value?'
'Where do we start if we know nothing about mining or investing?'
etc etc etc....you get the picture :)
I will give you some books that I think are good guidelines....but before that, let me just assert my point that Knowledge is Power.
I have seen many people get burnt in share trading/investing(probably i should call gambling hehe) in the past....and when you ask them, why they bought a certain share...their answer will be 'Because I heard rumours that.....' or 'My uncle/friend/brother told me that it is a good buy' etc. When you ask them whether they know who is the CEO, what is the history of the company etc, they don't even have a clue.
My point is - even SOPHISTICATED investors lose money sometimes in the market, so what hope do you have when you don't know anything about the company you are putting your money in?!
The more you know, the more confident you get and the less you are affected by daily ups and downs of the share market (unless you are a day trader, which i am not)
Basic questions you should know about companies are:
1. What does the company mine? (i know, it is a very simple question, but ask some people that have tens of thousands in the market, and they might not know!)
2. What country does the company mine in? What kind of political history does that country have, for example ghana, papua new guinea, canada etc? Is the government stable?
3. What is the demand of the commodity that they are mining?
4. Which stage of mining are they in? Are they just exploring? Or they have already started to prove reserves? Are they at the BFS (Bankable Feasibility Study) yet? Have they start to produce the minerals yet? This will determine which stage the company is in and to allow us to compare with other companies in the same stage.
5. Who else is mining in the same area? What is their market capitalisation as compared to the company that you want to invest in?
6. Who is the management? Do they have proven experience?
7. What is the history of the company? When did it start and what did they acheive so far?
8. Is the area that they mine fertile? Have there been any proven reserves surrounding that area?

Most of these questions you will be able to get the answer by simple googling it, or going to wikipedia or the company website, or asx announcements....there is plenty of info online.....just whether we want to find it :)

This will give you a good indication of what industry and background this company is operating in.

Few books that I am reading is
http://www.amazon.com/Junior-Mining-Investor-Profitably-Exploration/dp/0979533503/ref=sr_1_1?ie=UTF8&s=books&qid=1298455225&sr=8-1
http://www.amazon.com/Investing-Resources-Profit-Outsized-Potential/dp/0470613262/ref=pd_sim_b_8
http://www.amazon.com/Mining-Valuation-Handbook-Investors-Management/dp/0731409833/ref=pd_bxgy_b_img_b

So far, the books are proving to be a gem in helping me to understand the industry better, as i am not a geologist or miner etc......

Have a good day!

FNT - flying!!!!!! Frontier Resources......0.42 high today

2011-02-18T16:21:00.000+11:00

http://www.hotcopper.com.au/post_threadview.asp?fid=1&tid=1383618&msgno=6339494#6339494

basically what this guy wrote which i have cut and paste below is a very good summary of FNT.......have a look and let me know what you think.
Happy Investing! :)

ANother typical end to the day, with people rushing to jump on board.

Interesting thread and opinions.

1) I had a look at GOR as they were mentioned as a model. The main difference is their drill results while acceptable were lower than FNT previous drilling at Andewa; Which Ubid supplied for connivence.

7.9M of 10.01 g/t Gold Drill
10.8M of 7.40 g/t Gold Drill
3.0M of 10.97 g/t Gold Drill
5.0M of 18.05 g/t Gold Trench
3.0M of 14.26 g/t Gold Trench
15.6M of 5.12 g/t Gold Trench

2) The drill/trenching work above was outside the anomalies detected in the IP report. Basically previously drilling was in the halo or low grade outskirts of the deposit so it seems from the IP report. That is what makes Andewa so interesting (Exciting)

3) If you had seen Peter face when he talked about the report it was the face of someone who had won lotto and was bursting to talk about it...That is from a experienced geologist but couldn't. I think he knows he's found the deposit to mark the future of FNT. Remember he has been in this position before before politics got involved.

His actions is resigning his other directorships supports this. His focus is now on FNT and Andewa. His family has large holdings in FNT so when he benefits so do we. WIN-WIN.

4) FNT has multiple projects going on at present.
a) Andewa - total focus of the current SP rise. IMHO
b) Tasmania - really forgotten I think by the market in general
c) Ok Tedi - Lots of resources looking at the joint leases, from a huge company desperate for more resources.

5) Drilling has also been announced for April for Andewa. This is a big reason in my opinion for the rise. The drill is king and the company using the supporting evidence feels confident and have set a firm timetable for the exploration. The market likes this. Too many small cap companies never into the drilling.

6) On the market itself. VERY FEW SELLERS. This is a major factor in the rise of the SP. To be honest I'm loving it but I am surprised by recent movement. BUt the market is never wrong. There is simply now too much potential in FNT and long term holders like many here are not selling. So anyone who wants in is having to force the price up to get their share. Simple supply and demand. In comparison to GOR, if you look at their turnover during their rise, much much higher on average therefore more shares on the market, maybe more speculators or people taking profits? This has not happened with FNT. People are holding.

There is my essay.

7) Retrace - It happened on Tuesday/Wednesday and bounced back today strongly. Same pattern for the last few weeks. Each retrace has found good support and bounced nicely. So with the news getting closer, will there bit another big player come in a grab the next big comp like on Monday?? Remember big players like institutions move billions of dollars around, so while making us small fish happy, it's not a huge % of their business.

8) SPP could cause some decline in the SP depending on its price etc. But the higher the SP less the dilution and less impact on the SP overall. As its only going to be offered to existing holder it wont be the case of sophisticated investors getting a free ride then dumping.

I believe on what FNT has to offer the SP will continue to climb until at least the first drill assay's are out of Andewa. When those assay's come out, if they are good it will move hard, if not there may be some big dumpings?

I believe it will go up, simply because I've been holding for around 5 years and have faith in management with the resources now are about to bear fruit.

I'm sure there is more to say but enough to now :)

No is there going to be a Friday close of business rush tomorrow as the Sell side is looking really thin now.

FNT - flying!!!!!! Frontier Resources on the GO!

2011-02-14T11:49:00.001+11:00

Wow - look at the market depth of FNT today!!!!!!
32 cents highest.........
wow.........
that's all i can say :)

Frontier Resources - Rushing to the next Frontier!!!!

2011-02-11T16:27:00.000+11:00

Happy CNY to those who are chinese!
To celebrate the arrival of the rabbit year, FNT's stream of good news has arrived on 07/02/2011 :)
http://www.asx.com.au/asxpdf/20110207/pdf/41wmgfxb8s85zc.pdf
Basically, chargeability anomalies doubled in Andewa - and they will start drilling in April on this site.
As i type this - FNT is already 21 cents - doubled in less than 2 months.
More to come i reckon as more soil/rock samples come. :)
Happy investing!

Tin - Tasmania

2011-01-30T16:55:00.000+11:00

Did some brief research about tin in Tasmania

this is a very good website about mining in australia

http://www.miningtechnologyaustralia.com.au/tas

Also, Renison Mine in Tasmania - have a look at its size in google maps - http://maps.google.co.uk/maps?t=h&hl=en&ie=UTF8&ll=-41.782481,145.43963&spn=0.024929,0.043302&z=15

More to explore, discover and develop in Tasmania

We look at Tasmania where almost half of the State's export income comes from mining.

For its size, Tasmania is one of the most mineral-rich areas in the world. It has a remarkable diversity of minerals and even with the global financial crisis its mining sector has experienced strong rates of production in the past year.
Tasmania's mining and mineral processing sector was a pillar of the state's economy during 2008-09. Mineral products worth $1.56 billion, representing 44.8 per cent of the state's export income, were exported. These consisted of aluminium, copper, gold, lead, magnetite, nickel, scheelite, silver, tin, zinc and ferro-alloys, as well as metallurgical grade limestone, ultra-high purity silica flour, dolomite, construction aggregate and minor amounts of coal.
Exploration activity continues to find new deposits of all previously known minerals as well as deposits of previously undiscovered mineral associations.

Major mining and smelting operations

There are seven substantial operating mines in Tasmania, including long-term producers Mount Lyell (copper, gold, silver), Rosebery (zinc, lead, gold, copper and silver) and Savage River (magnetite), which also converts magnetite into iron ore pellets at Port Latta.
The Henty and Beaconsfield gold mines began producing in the 1990s, the latter after a hiatus of 85 years, and the Mt Bischoff and Renison Bell tin mines reopened during 2008.
Smaller mines at Kara (magnetite, scheelite) and at Hellyer-Que River (zinc, lead, gold, copper and silver) are in expansion phases. However, a new mine for nickel, at Avebury, is on care and maintenance.
Ultra-high purity silica flour, used mostly in the manufacture of LCD panels, is mined at Corinna, coal is produced from three localities near Fingal, limestone is mined and cement manufactured at Railton and metallurgical grade limestone is quarried near Beaconsfield and at Mole Creek. Dolomite is mined at Smithton.
Nyrstar operates a zinc smelter at Hobart, while at Bell Bay Rio Tinto Alcan operates an aluminium smelter and TEMCO operates an electro-metallurgical smelter to produce ferro-manganese and silicon-manganese.

Mining developments

Bendigo Mining has announced completion of the purchase of the Henty mine from Barrick Gold Corp. Bendigo will increase exploration and aim to extend the life of the mine beyond the closure at the end of 2009 planned by Barrick. Barrick now owns 2.2 per cent of Bendigo.
The Chinese-owned Minerals and Metals Group (MMG) has announced that development of the $25 million raise bore at the Rosebery mine will proceed and a $1.6 million in-mine exploration project will resume. The company is buoyed by recent successes, with an increase in resources announced recently indicating the potential to extend mine life beyond 15 years.
MMG also recently acquired the Avebury nickel mine, west of Zeehan, which is on care and maintenance but is intended to produce 7500 to 8500 tonnes of nickel in concentrate from 900,000 tonnes of ore a year. The company has an off-take agreement with the Jinchuan Nickel Group.
A merger of Grange Resources and Australian Bulk Minerals was completed in January 2009. The new company is now Australia's largest producer and exporter of high-value magnetite iron products.
Shagang Mining Australia, which is owned by the Chinese Shagang Group, along with the other shareholders in ABM hold 73.9 per cent of the shares in the merged group. This merger has paved the way for a $150 million project to extend the open cut mine and upgrade production equipment and the concentrate plant.
Options are being investigated for increasing the production rate of iron ore from 2.5 million tonnes to 3 million tonnes a year and eventually 3.5 million tonnes a year. Bass Metals has started open-cut mining of high-grade zinc-lead-silver-gold ore at Que River as the initial phase of a five-year project.
Metals X (MLX) has signed a heads of agreement with the Yunnan Tin Group (Holding) Company (YTG) to sell up to 60 per cent of the Bluestone Mines Tasmania Renison Bell tin mine. MLX will form an unincorporated joint venture with YTG to continue to develop its Tasmanian tin projects.
MLX has reopened both the Mount Bischoff and Renison Bell tin mines. For the first time copper will be a significant co-product from Renison Bell. MLX expects to complete an engineering and feasibility study into constructing a plant to treat the Renison Bell tailings to recover tin and copper in the near future. This project will open up the possibility of treatment of the complex stannite-bearing cassiterite-sulfide ores that are known in western Tasmania and open up further exploration opportunities.
King Island Scheelite (KIS) has announced a financing and partial off-take agreement with the Hunan Nonferrous Metals Corp. KIS has a resource of 13.4 million tonnes of 0.64 per cent tungsten trioxide in the Dolphin ore body at Grassy and has completed a feasibility study for an initial 10-year project in which 6.8 million tonnes of ore would be mined to produce an average of 3000 tonnes of tungsten trioxide a year. It has all approvals in place for the start of mining.
Promising results from investigations of scheelite recovery using whole ore flotation have been reported and the company is also investigating the potential recovery of tungsten from old tailings.
Gladstone Tin is planning to resume alluvial tin production at two centres, Scotia and Endurance, in North East Tasmania, with possible recovery of gem sapphire and spinel as significant co-products.
Proto Resources and Investments has signed a joint venture with Metals Finance Corp with a view to producing 4000 tonnes of contained nickel a year in a high-grade salt from the Beaconsfield laterite.
Maydena Sands is investigating a silica mining project at Maydena in southeast Tasmania.

Exploration

Mineral exploration in Tasmania slowed during 2008-09 as a result of the global downturn but has started to recover. A number of factors are contributing to this growth, including:

an increase in commodity prices, especially for commodities such as copper, tungsten and tin, with which Tasmania is well endowed;
production of high-quality, globally competitive geoscientific data including the 3-D geological model and prospectivity analysis of Tasmania;
a clear and consistent regulatory regime for both exploration and mining;
a strong promotional program; and
no native title issues.

A trend over the past five years is the number of new companies achieving public listing on the ASX or AIM, largely or totally on the basis on Tasmanian exploration assets. This, together with a good mix of other mid-sized and junior companies exploring in the state, provides a new dynamic environment to the Tasmanian exploration scene.
Metals X has announced that in-mine exploration at Renison Bell continues to yield good results, including intersections of 9.43m at 3.7 per cent tin and 9.73m at 3.82 per cent tin in the Federal zone. During the 2008-09 year, total resources of tin ore increased from 4.4 million tonnes at 2.01 per cent tin to 7.2 million tonnes at 1.82 per cent tin.
There was a 65 per cent increase in total resources in the Renison Bell mine in 2008-09 to 7.234 million tonnes and a 49 per cent increase in contained tin to 131 660 tonnes, reflecting the success of the in-mine exploration program.
Bass Metals has reported an updated combined mineral resource (indicated and inferred) for the Fossey Zone at Hellyer of 800,000 tonnes grading 9.9 per cent zinc, 5.8 per cent lead, 0.4 per cent copper, 137g/t silver and 2.5g/t gold. Metal recoveries in test work are 93 per cent for zinc and 87 per cent for lead. Bass has identified five targets near Hellyer for exploration drilling. The company has also announced a new resource figure for the Que River deposits and inferred and indicated resources at Mount Charter.
Venture Minerals is drilling the Mount Lindsay magnetite-tin skarn deposit near Renison Bell and has established Inferred Resource of 30 million tonnes of 33 per cent iron ore as magnetite, 23 million tonnes of 0.2 per cent tin and 5.7 million tonnes of 0.3 per cent tungsten trioxide as scheelite, with the tin and tungsten resources within or immediately adjacent to, the magnetite resource.
Venture has also released results of a scoping study conducted on mining magnetite, tin and tungsten at the deposit. At a mining rate of 4.4Mtpa, the project would have a life of more than seven years. The company has recently announced assays of 66 per cent iron ore from each of two rock chip samples from the Rocky River South prospect, 9km west of the Stanley River deposit, which is being investigated as a source of direct shipping iron ore.
Frontier Resources has announced an inferred resource at the Stormont deposit at Moina of 91,400t at 4.57g/t Au, 0.30 per cent Bi and 3.52g/t Ag. Resources at the nearby Narrawa prospect have been upgraded to 209,330t at 2.1g/t Au, 19.5g/t Ag, 1.32 per cent Pb and 1.12 per cent Zn of which 78 per cent is in the Indicated category at similar grade. Resource extensions are possible at both deposits.
Stellar Resources has intersected potentially high tonnage, low grade, copper mineralisation in 10 holes at the Alpine prospect, 10 kilometres south of Corinna, and Stonehenge Metals has defined a silver-lead-zinc lode at the Sunshine prospect near Zeehan.
Numerous other drilling programs are in progress and major exploration projects are underway at operating mines.

Tin - A Brief Summary

2011-01-30T15:32:00.000+11:00

Uses

There are many important uses for tin. Most is used to produce tinplate, or steel coated with tin which is used for food packaging. Tin and tin alloys are used also for solder, especially in the electronics industry. It is commonly used as an alloy for bearing metal and as an alloy in metallic coatings.
Inorganic compounds of tin are used in ceramics and glazes. Organic compounds of tin are used in plastics, wood preservatives, pesticides and in fire retardants.




	Leading Tin Companies: provisional 2010 data
	Production, tonnes refined tin)
	Company	2009	2010	% change
1	Yunnan Tin (China)	55,898	59,180	5.9%
2	PT Timah (Indonesia)	45,086	39,100	-13.3%
3	Malaysia Smelting Corp (Malaysia)	36,407	38,737	6.4%
4	Minsur (Peru)	33,920	36,052	6.3%
5	Thaisarco (Thailand)	19,300	21,900	13.5%
6	Liuzhou China Tin (China)	10,500	14,300	36.2%
7	Yunnan Chengfeng (China)	14,947	14,155	-5.3%
8	EM Vinto (Bolivia)	11,805	11,600	-1.7%
9	Metallo Chimique (Belgium)	8,690	11,000	26.6%
10	Gejiu Zi-Li (China)	5,600	9,000	60.7%
11	PT Koba Tin (Indonesia)	7,455	6,644	-10.9%
12	Jiangxi Nanshan Tin (China)	3,000	6,000	100.0%
13	OMSA (Bolivia)	3,205	3,400	6.1%
	Data: ITRI. Estimated 2010 data in italics

Papua New Guinea summary 2 :)

2011-01-11T23:03:00.000+11:00

For those who missed Frontier Resources Announcement today (FNT.AX), here it is.....
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01140811

Basically survey completed in Bulago by OK Tedi......

Alright let me summarise just some gold mining companies in PNG by their resources :)

Company Name	Resources	Operator	Website
Lihir	48,530,358	Newcrest Mining	http://www.newcrest.com.au//operations.asp?category=8
Frieda river	13,387,248	Xstrata	http://www.xstrata.com/media/news/2010/01/21/2321CET/pdf
Bougainville	12,739,411	Bougainville Copper	www.bougainvillecopper.com.pg
Porgera	11,231,631	Barrick Gold	http://www.barrick.com/GlobalOperations/AustraliaPacific/PorgeraJV/default.aspx
Ok Tedi	4,745,450	PNG Sustainable Dev	http://www.oktedi.com/about-us/otml-at-a-glance
Yandera	3,326,959	Marengo Mining	http://www.marengomining.com/projects.html
Kodu	2,669,316	Koiara LLG
Simberi	2,354,656	Allied Gold	http://www.alliedgold.com.au/
Morobe	2,198,764	Harmony Gold	http://www.harmony.co.za/b/ops_png.asp
Woodlark Island	1,750,672	Kula Gold	http://www.kulagold.com.au/index.php?option=com_content&view=article&id=44&Itemid=26

Also, another mention today in the Australian Business section as follows:
Gold action in PNG

GLOBAL major Barrick Gold has teamed up with a little known junior to expand its gold exploration in Papua New Guinea.

The news made scant impact this morning in market terms - but then, last Thursday, stock in Sierra Mining had risen 13.2 per cent on no news, and then fell 9.2 per cent on Monday (again on no news).

Barrick has done a deal to earn an 80 per cent interest in Sierra’s Salumei and Magarava projects. Salumei is located in East Sepik province while Magarava is situation in rugged hinterland in Milne Bay province and has been the scene of artisanal alluvial mining.

However, the key to Barrick’s involvement may be one of the directors of Sierra Mining, Peter Macnab. Sierra last year put PNG on the backburner while it concentrated on its Philippines. Sierra, which is one of the group of explorers headed by well known Perth mine investor Ian Middlmas, includes on its board Mr Macnab who worked for Australia’s Bureau of Mineral Resources in the years before PNG independence and did much of the exploratory mapping of the territory. Subsequently, as principle geologist for Kennecott New Guinea, Mr Macnab was involved in the discovery of Lihir. He is regarded as one of the most knowledgeable people on the subject of PNG mineralisation and now lives at Buka, the administrative centre for Bougainville.

Barrick’s main involvement in PNG has been as a partner in the Porgera gold mine joint venture, although it has also been assessing projects owned by Coppermoly.

PNG has seen increasing interest in recent years from explorers, both big and small. Newcrest Mining has its 50/50 joint venture at Hidden Valley with South Africa’s Harmony Gold and also recently took a 60 per cent stake in a gold project on Manus Island.

In other PNG gold news today, Frontier Resources announced the completion of aeromagnetic surveying of the Bulago joint venture in Southern Highlands province. Not especially significant news in itself; rather, it is the potential of this ground that looks exciting given that trench sampling produced such assays as 27m at 66.8 grams/tonne gold, 7m at 67g/t plus - and this is a big plus - one sample that returned 5.59g/t gold, 2555g/t silver, 2.17 per cent copper and 3.16 per cent zinc.

brombyr@theaustralian.com.au

Papua New Guinea summary

2011-01-09T01:07:00.001+11:00

Found a really good summary of PNG as a country economically, in terms of mining history etc!
Enjoy!
http://www.coppermoly.com.au/papua-new-guinea/png.htm

Portfolio Tracking (2)

2011-01-07T16:54:00.000+11:00

Since the last time I posted the portfolio tracking, I thought i’ll update this blog again with where I have been investing.

NMG I sold because of uncertainties in some creditor related stuff – I decided that having a peaceful rest at night is more important and realised it for a 42% return, not too bad but i was hoping to hold it for longer....oh well, the lesson i learnt in investing is that we have to adapt to new news and always do your research....be ready to change when the situation change, i.e. political situation, economic situation, financial situation etc.

HGO i also sold as it was hovering around 31 cents, didn’t have the patience to wait – as things i thought were progressing quite slowly for them.......this netted me a 20% gain.

With the proceeds i have bought more VMS and FNT......therefore you will realise that my cost price for FNT has increased whereas VMS has decreased as VMS’s price was depressed.....mainly i reckon due to the share placement

By Stock	Current Price	Cost Price	Profit	Date First Invested
PRU	$3.11	$2.12	46.91%	Jun-10
CFE	$0.50	$0.40	25.48%	Oct-10
FNT	$0.15	$0.09	72.90%	Oct-10
VMS	$0.51	$0.60	-15.33%	Oct-10

Frontier Resources - I'm overjoyed!!

2011-01-07T16:31:00.000+11:00

Those that have been following my blog for a while know that i’m pretty fond of this share called Frontier Resources.

Noticed it when it was 7.5 and today it closed at 15 cents in less than 3 months! And the news have not really been released yet about a lot of other drilling results......

Wow – might be the darling stock in 2011 – another potential sanfire!!!! Fingers crossed.

Happy investing in 2011!

Tungsten in 2011 metal spotlight
TAKE your pick for the resource flyers of 2011 -- but tungsten is shaping up to be one of them.
Tungsten has a range of uses from light bulb filaments to strengthening steel for such things as mining drill bits. Its main attribute is high strength at high temperatures – its melting point is 3420C.
Australia’s -- and the western world’s -- tungsten industry is only just getting back on its feet after being king-hit more than 20 years ago when the Chinese flooded the world market at low prices. Tungsten mines all over the world closed and even today China controls 76 per cent of world production but has recently restricted exports.
Prices keep rising as world demand outstrips supply.
One of the more advanced tungsten plays here is Hazelwood Resources (HAZ) which is planning to produce up to 3 per cent of world needs when its West Australian mine comes into operation.
Several tungsten projects are well advanced in Tasmania and this week Frontier Resources (FNT) completed a soil sampling program at its Cethana-Narrawa project in the north of the island state. A diamond drilling program is planned for the June quarter and will target gold and base metals as well as tungsten. The project area contains at 55 historic workings -- shafts, adits and open pits -- which illustrates the level of mineralisation.
And it seems that tungsten hopeful Icon Resources (III) is about to make some further progress on its Mt Carbine project now that new MD Ian Sheffield-Parker has taken the reins. The company is planning to focus all its attention on getting the
Queensland project into operation and plans to start building a plant to treat the tailings left from historic mining. Construction should begin about the middle of the year. Overall, Icon expects Mt Carbine to have a 15-year mine life.
There are now suspicions that China is about to embark on building a strategic reserve of certain key minerals, tungsten being one. That could add an addition strain on world supplies this year.

From PNG to Tasmania ! Frontier Resources advances development of tungsten and gold projects in Tasmania

2011-01-05T13:57:00.000+11:00

Frontier Resources advances development of tungsten and gold projects in Tasmania

Noble Minerals - Update on Bibiani

2010-12-15T22:50:00.000+11:00

http://asx.com.au/asx/statistics/announcements.do?by=asxCode&asxCode=NMG&timeframe=D&period=W

Impressive drill results - have a look