Proactive Investors Chinese RSS feed

Liberty Resources secures prize Bowen Basin coal tenement near BHP Billiton

Wed, 19 Jun 2013 23:14:24 +0800

Liberty Resources (ASX: LBY) has been awarded a prized coal tenement in the Bowen Basin, Queensland, that is located in close proximity to the world's largest coking coal producers and rail infrastructure.

Liberty Resources’ newly awarded EPC 1949 is located close to BHP, Rio Tinto and Peabody' existing open cut coal mines, deposits and infrastructure, offering good, low cost, commercialisation potential. An exploration drilling program is set to commence within the month.

Notably, EPC 1949 is expected to host the productive Rangal and Fort Cooper Coal Measures with any coal likely to be of the same high quality as that being mined in nearby mines.

EPC 1949 is located:

-    About 10 kilometres southeast of BHP Billiton (ASX: BHP)/Mitsui’s Poitrel coking coal mine;
-    About 700 metres south of BHP/Misubishi’s Daunia project Mining Lease boundary;
-    Immediately west of Peabody Australia’s (NYSE: BTU) Olive Downs North Mining Lease; and
-    Approximately 6 kilometres east of Vale/Aquila’s Eagle Downs deposit.

EPC 1949

Liberty has received formal notification of the grant of EPC 1949, which covers about 30 square kilometres, from the Queensland Department of Natural Resources and Mines.

Besides the mines and deposits it is close to, the tenement is also in close proximity to an existing rail system that connects to two major coal export ports.

Analysis

The award of EPC 1949 grants Liberty Resources a highly prospective coal tenement located within a prolific coal basin.

Its proximity to major mines and infrastructure significantly de-risks exploration and development while paving the way for rapid progress in the event of successful exploration.

For Liberty, the tenement also gives it a pure coal play, diversifying from its coal gasification operations.

Securing the prize EPC surrounded by some of the the world’s major coal companies (BHP/RioTinto/Peabody/Vale) is a coup.

This provides significant potential for value accretion with nearby operating mines, rail (~2km away) and coal infrastructure offering good, low cost, commercialisation potential.

With an an exploration drilling programme set to commence within the month this offers near term news flow and opportunity for uplift in share price in the near term and medium term.

Stratum Metals identifies large, strong conductor at East Menzies

Wed, 19 Jun 2013 17:40:29 +0800

Stratum Metals (ASX: SXT) has identified what it believes to be a very large massive sulphide conductor at its East Menzies Goldfields Project in Western Australia that it considers to be a highly prospective drilling target

Managing director Martin Holland told Proactive Investors this conductor – located close to the Goodenough Mine – was “as strong as it gets”.

He said this interpretation was based on the final processed data from the HeliTEM survey flown in March, results from initial drilling, downhole electromagnetic work as well as complying the historic information.

“While a lot of conductors found by electromagnetic work are big long bands, this is different on the basis that the body is an odd shape, making it less likely to be a simple geological horizon.”

Holland added the company was now compiling a plan of works and will commence exploration over the conductor once this is completed and the required government approvals are received.

Independent geophysical consultant Core Geophysics had noted that hole TRIB01 intersected sulphidic carbonaceous shale (47 metres to 51 metres at 35.2 grams per tonne gold) that was likely to be the source of the strong conductor to its west.

This implied that the non-magnetic conductor could easily represent a larger body of sulphidic carbonaceous shale that should be viewed as a priority exploration target.

It added that open file reports show a history of localised geophysical exploration around the mine, which is being reviewed as part of the current Stratum exploration program.

Sample assays from a recent hole at the GV-C3 conductor, one of three conductors originally identified by MLTEM, returned anomalous gold associated with stringer sulphides, similar to what was observed in the high grade mineralisation of 9 metres at 16.63 grams per tonne gold and 9 metres at 19.37g/t silver encountered in the drilling at the Goodenough area.

This association of high grade gold and silver with sulphides in the Goodenough makes the untested very strong conductors highly prospective targets for mineralisation.

B-Field ch30 conductors around GV-C3

HeliTEM Survey

Final processed data from the HeliTEM survey flown in March that was assessed with previous data has resulted in the identification of a number of strong conductors that could be massive sulphide related.

It also shows that recent drilling, while well targeted based on available information, has not yet tested the highest strength conductors in the area.

Notably, the bonanza grade mineralisation reported from recent drilling at Goodenough, which returned a peak result of 9 metres at 16.63 grams per tonne gold from 44 metres including 4 metres at 36.54g/t gold that in turn hosts a 1 metre at 121g/t gold interval, is associated with a 30% stringer pyrite and carbonaceous shale which gives relevance to the nearby very strong conductor as potentially part of a larger mineralised system.

Core Geophysics added the HeliTEM survey is characterised by a complex conductivity regime with a minimal presence of conductive overburden and that the observed responses indicate the conductors are located at shallow depths.

It also noted a band of highly conductive, weakly magnetic bodies south of Goodenough that trends for about 3,800 metres that correlate with mapped ferruginous interflow sediments.

Previous explorers have targeted this feature from a geological perspective without the benefit of having the current geophysical data.

Strong surficial conductivity features are observed in the southeast and northeast of the survey. While these are thought to be related to conductive overburden, subtle anomalies occur within the data which could be bedrock responses.

The far south of the survey area is characterised by a complex set of narrow conductors that vary between a strike extensive nature to discrete, localised bodies. There is little correlation with magnetic data which further adds to their complexity.

Data from the survey also uncovered numerous other anomalies that will require extensive and careful analysis to prioritise their exploration significance.

Analysis

Stratum Metals’ clear interest in drilling the strongest conductor identified by the HeliTEM survey and other data at its East Menzies project is understandable given the bonanza drilling result from the Goodenough Mine.

While still early days, the results considerably de-risk the proposed work on the conductor and the hint that exploration success would bring a very substantial reward to Stratum.

Allied Healthcare to start landmark clinical trial for genital herpes vaccine

Wed, 19 Jun 2013 17:38:00 +0800

Allied Healthcare Group (ASX: AHZ) has reached a major milestone with its receipt of ethical approval to begin a Phase 1, dose ranging clinical trial for its Herpes Simplex Virus (HSV-2) vaccine.

The company’s vaccine technology uses a patented optimisation technology that could potentially act as both a preventative and therapeutic vaccine for HSV-2 genital herpes.

The vaccine is being developed by Professor Ian Frazer's Coridon group in which Allied has 46.8% interest.

HSV-2 genital herpes affects up to 1 in 6 Americans and currently has no curative treatment.

“This clinical trial approval represents a further significant milestone in Allied’s commercialisation of next generation vaccines that are designed to have the power to both prevent and treat infectious diseases and cancers,” chief executive officer Lee Rodne said.

“We are delighted to be working with Professor Frazer and his team on taking this vaccine forward. The clinical trial will also prove the value of this technology in humans for use in a wide range of vaccines.”

The Phase I study will vaccinate twenty healthy volunteers via intradermal injection into the forearms with a goal to examine the safety of the vaccine, as well as detect if an antibody and T-cell response can be generated by people.

Along with safety data, the results will indicate if the vaccine can stimulate an antibody (protective) response as well as T-cell response (therapeutic). The importance of the T-cell response is it indicates the potential for the vaccine to be used as a treatment against herpes.

“This is the beginning of an exciting period for our herpes vaccine. We have seen very encouraging results from animal studies and we expect pivotal data showing that our vaccine, which incorporates our patented optimisation technology, to produce similar immune responses in the clinic,” said Professor Frazer.

The outcomes of the Phase I trial will demonstrate the vaccine’s safety and how well tolerated it is, as well as determining the effective dose and showing that the vaccine generates a robust immune response.

HSV-2 genital herpes

Genital herpes affects more than 1 in 6 Americans between ages 14 and 49 according to the Centers for Disease Control in the U.S.

WHO estimates the number of people aged 15–49 years who are living with HSV-2 worldwide exceeds half a billion.

Most individuals infected with HSV-2 experience either no symptoms or have very mild symptoms that go unnoticed or are mistaken for another skin condition and as a result are often unaware of their infection until an outbreak occurs.

The high infection rates make for a large market, which is estimated to be worth up to $6 billion.

Analysis

The approval to start clinical trials is key to confirming the efficacy of Allied Healthcare’s HSV-2 genital herpes, which has returned encouraging results from animal studies.

Doing so opens up a massive market for the company that has not previously being tapped, considering that no curative treatment currently exists for the infection.

Prof Frazer has already developed next generation DNA vaccines. His groundbreaking research led to Merck & Co.’s highly successful cervical cancer vaccine, Gardasil® and Cervarix, marketed by GlaxoSmithKline.

Current HSV treatment involves the use of antiviral drugs which can reduce, but not eliminate, outbreaks and shedding and therefore does not prevent spread of the disease.

Coridon’s herpes vaccine program has shown very positive animal data in clearing the virus, with longer term follow up data showing continued persistence of the immune response.

Results of the trial are due approximately in 1QCY14.

Based on success to date, an effective vaccine for herpes looks to be within grasp, providing a grand prize for Allied Healthcare in potential revenue.

AHZ is in a sound financial position with over A$3m in cash, after a placement and share purchase plan was successfully completed earlier this year.

We believe there is significant upside left in the Allied share price. Our target based on our estimate of valuation is $0.07.

Toro Energy clears environmental appeal period for Wiluna Uranium Mine

Tue, 18 Jun 2013 20:23:22 +0800

Toro Energy (ASX: TOE) can now progress its goal of becoming Western Australia’s first uranium producer after the Federal environmental approval for its Wiluna Mine passed without challenge during the 28 day appeal period.

The appeal period had applied from 17 May 2013 when Minister for Sustainability, Environment, Water, Population and Communities Tony Burke published his Statement of Reasons for environmental approvals for the Project.

“Wiluna is the first new Australian mine since mid-2009 to receive Federal government approval and the first in Western Australia since the government lifted the ban on uranium mining in 2008,” managing director Dr Vanessa Guthrie said.

“With no appeal lodged, Toro is now able to fully focus on bringing Wiluna – WA’s first uranium mine - to market.

“Toro’s commitment to the approvals process over the past four years has positioned the Wiluna Project well against its peers to deliver potential new supply sources in the second half of this decade.

Wiluna Update

Toro expects to complete a revised Resources estimate during the September 2013 quarter after completing infill drilling designed to convert Inferred Resources to the higher certainty Indicated category.

Guthrie said these results will assist in the ongoing mine optimization and scheduling work that are key workstreams within the Wiluna Project Definitive Feasibility Study.

Phase 1 engineering work for the DFS estimated a capital cost for the project at $269 million with C1 cash cost of about US$37 (A$38.75)

Completion of the DFS is expected in 2014 after the company elected to defer the start of engineering and design work for the proposed plant and infrastructure until after the completion of mine optimisation, planning and scheduling.

Analysis

With no federal court appeals made during the appeal period for the Wiluna Uranium Mine, Toro Energy is now free to progress the project towards development.

Catalysts going forward include the completion of a Resource upgrade, securing a strategic partner and completion of the Definitive Feasibility Study.

China house prices continue to rise in May

Tue, 18 Jun 2013 17:14:30 +0800

China average new house prices rose 6 per cent in May across 70 major Chinese cities from a year earlier, although the growth month to month was at a slower pace.

As opined before, this highlights the dilemna that the central bank in China has attempting to re-ignite the economy while holding down the inflationary spiral in houses.

While a delicate balance the growth does show that the propensity to buy new homes would only occur with strength in incomes.

China’s home prices rose 10.7 percent in the first quarter of 2013 from the previous three months, the biggest gain among 55 global real-estate markets, according to Knight Frank.

The gain also most likely reflects the low base last year.

Moves like Beijing has made, requiring non-residential projects and residential developments larger than an 140 square metres (1,506 square feet) meet requirements on construction progress before applying for presale permits, are likely to increase.

China requires developers to obtain presale permits from local housing authorities before they can sell apartments under construction.

All Ords bounces off lows on bank bargain-hunting

Tue, 18 Jun 2013 17:13:10 +0800

Bargain hunters snapped up blue chip stocks today after an early sell-off which had the All Ordinaries off by more than one per cent, and by the close the benchmark index was only down 10 points at 4795.

Investors bought back into the high-yielding bank sector, with the Tier 2 banks outperforming their big four cousins.

However, there was also pause for some concern as investors fretted as the Reserve Bank of Australia indicated in the minutes that there was scope to lower interest rates, which was interpreted to mean economic growth was sluggish.

The local market had some positive leads overnight, with the Dow up over 100 points and Europe generally trading higher - but all investors around the world are waiting for news from the Federal Reserve chairman Ben Bernanke this Wednesday (U.S. time) to speak after the two-day FOMC meeting.

Investors are waiting for clues from Bernanke as to the next moves on stimulus programs, with a special emphasis on when the bond buying program will begin to be tapered.

The Asian markets have been quiet today, with the Nikkei 225 easing just one-fifth of a per cent to 13,007, while in Shanghai stocks are flat at 2157.

Blue-chip market movers; Tier 2 banks outperform

The big four banks were relatively steady - with Commonwealth Bank (ASX: CBA) leading the way with a 0.1% gain to $68.44.

Commonwealth's peers thought didn't receive as much investor support but did bounce off their lows of the day, with National Australia Bank (ASX: NAB) falling 0.7% to $29.72. Also feeling the negative vibe was ANZ Bank (ASX: ANZ) with a 0.4% decline to $28.41, while Westpac (ASX: WBC) eased 0.2% to $29.42. bucked the trend and added

The positive action was in the tier 2 Australian banking sector which outperformed its larger cousins.

Suncorp (ASX: SUN) rallied 0.8% to $12.28, while Bank of Queensland (ASX: BOQ) added 0.5% to $8.46 and Bendigo and Adelaide Bank (ASX: BEN) gained 0.2% to $9.97.

Other financial stocks didn't perform so well, with investment bank Macquarie Group (ASX: MQG) falling 1.4% to $42.18, while AMP Limited (ASX: AMP) gave up 0.6% to $5.02, with yield-play Telstra (ASX: TLS) easing 0.2% to $4.64.

The retailers were also in the red, with Woolworths (ASX: WOW) heading south 1% to $32.03, while Wesfarmers (ASX: WES) gave back 0.5% to $38.46.

The major miners were mixed, with Fortescue Metals Group (ASX: FMG) leading the way with a 1.5% jump to $3.30, as BHP Billiton (ASX: BHP) was down 0.3% to $32.69, while Rio Tonto (ASX: RIO) eased 0.2% to $53.55.

Newcrest (ASX: NCM) continued its downward spiral and lost another 1.8% to $11.15, with the company's value halving in just the past three-months.

MZI Resources gains Bunbury port access for Keysbrook mineral sands project

Mon, 17 Jun 2013 23:09:57 +0800

MZI Resources (ASX: MZI) has reached a key milestone with the execution of a Port Services Agreement with the Bunbury Port Authority in Western Australia.

Signing the Port Services Agreement with the Bunbury Port Authority places MZI Resources another step closer towards bringing its Keysbrook mineral sands project into production. The company is now working towards finalising finance arrangements.

Importantly, the seven year contract, which covers the export of both Leucoxene and Zircon, provides sufficient capacity to export all products that will be produced from its Keysbrook mineral sands project.

MZI plans to export Keysbrook’s average annual production of approximately 91,000 tonnes of leucoxene and zircon concentrate products through the port to key Chinese and world markets.

Ticking off the milestones

The company has been progressing development of the Keysbrook project in recent months.

It had in April signed a crucial sales agreement with DuPont Titanium Technologies that covered all of the leucoxene 70% titanium dioxide production and had also reached a mineral sands toll treatment deal with Doral.

The agreement with DuPont Titanium Technologies is for an initial term of five years with options to extend the contract and represents almost 30% of the planned annual production by volume from the project.

Having world’s largest titanium dioxide pigment producer and a blue-chip company as a customer also highlights the value of the Keysbrook Project and its products.

MZI’s agreement with Doral covers the life of the Keysbrook Project and de-risks the secondary processing of its planned products.

Analysis

With the Port Services Agreement with the Bunbury Port Authority now in place, MZI Resources is well placed to proceed with development of Keysbrook with just financing waiting to be finalised.

This is likely to be achieved soon as the company has already achieved several major milestones while the current slow down in construction activity in WA’s resources sector could result in a more favourable development contract, which in turn will provide greater certainty in respect to development costs and schedules and more desirable security arrangements.

PanTerra Gold expects increase in recoveries at Las Lagunas gold silver project

Mon, 17 Jun 2013 16:58:37 +0800

PanTerra Gold (ASX: PGI) is already producing gold and silver from the Las Lagunas project in the Dominican Republic, with the Albion oxidation plant upgrade near completion.

PanTerra has advised that installation of larger agitators to the Albion oxidation tanks is proceeding, with two out of the five rectifications complete. Chemical reactions in these two tanks have increased significantly with raised temperatures and improved oxidation levels.

The importance of the upgrade is that PanTerra expects a positive step change in gold and silver recoveries from the downstream CIL circuit, once the upgrade of the oxidation process is completed around the end of this month.

Last month PanTerra advised that production for the June quarter 2013 is on target to achieve US$13 to US$14 million of gold and silver shipments to refiners. Half-way through the period production valued at US$6.5 million had been, or was ready, to be shipped.

September quarter revenue set to rise

PanTerra has forecast revenue for the September quarter will be in the order of US$18 to US$20 million, followed by further increases for the December quarter with continuing process optimisation.

Blackthorn Resources on track for Kitumba Pre-Feasibility Study

Mon, 17 Jun 2013 16:53:46 +0800

Blackthorn Resources (ASX: BTR) remains on target to complete the Pre-Feasibility Study for its 100% owned Kitumba project in Zambia by end July 2013 and continues to intersect high grade copper from its ongoing infill drilling.

Assays from the drilling are due in August.

The company said the key PFS deliverable will be a report assessing the economic potential at Kitumba of a project based on design and cost estimation with a ±25% level of accuracy.

Initial infill drilling has intersected wide intercepts of high-grade copper mineralisation, consistent with previous drill results from the Kitumba deposit.

“The PFS is an important step in assessing the economic potential of the Kitumba Project on the path to production and we look forward to publishing the results of the study in due course,” managing director Scott Lowe said.

“Meanwhile the core observed in the infill drilling is showing very promising mineralisation consistent with the February 2013 Mineral Resource model.”

Kitumba is part of Blackthorn’s wholly-owned Mumbwa Project in west central Zambia that covers 250 square kilometres and is being explored for Iron Oxide Copper Gold style mineralisation.

Mumbwa has an Indicated Resource of 87 million tonnes at 1.17% copper.

Operations

Infill drilling, which is focused on converting a portion of the Indicated Resource at Kitumba to Measured Resource, is continuing with four holes totalling 2,200 metres out of an initial 5,000 metres completed to date.

Work to prepare samples for assay has commenced and first assay results are expected to be received by August 2013.

The infill drilling is being carried out by three rigs.

Prefeasibility Study

The prefeasibility study (PFS) for the Kitumba Project is making good progress and is on target to release the findings to the market around the end of July 2013.

Besides assessing the economic potential of the project, an integral part of the PFS has been the evaluation of both underground and open pit mining methods, as well as alternative mineral processing scenarios.

Progress has been made in a number of areas including the mining method, metallurgy and process plant design and environmental studies.

The PFS is currently comparing the advantages and disadvantages of open pit and underground mining methods, taking account of increased pre-strip costs evident from the revised resource model.

It noted that a smaller scale underground mine targeting the high-grade core of the deposit (Indicated Resource of 29.8 million tonnes at 2.1% copper using a 1% cut-off) has the potential to provide a better return on investment when compared with a larger scale open pit with higher capital cost for plant and pre-strip.

An underground scenario with sub-level open stoping is now being evaluated.

Metallurgical work is continuing with interim results indicating that the best results may be achieved from a plant design that involves a combination of flotation, leaching and Solvent Extraction and Electro Winning (SXEW) processes.

A number of alternative flow sheets based on these elements are being evaluated with a view to optimisation. In all cases being considered the majority of the metal by volume is produced in the form of cathode.

The final process design will take account of capital and operating costs as well as metal production volumes.

SXEW plants have the advantage of greatly reducing downstream logistic costs, offsetting increased site power and processing cost requirements. Producing cathode also has marketing advantages.

In addition to the PFS metallurgical testing, samples are being collected in the current phase of drilling for further test work in future feasibility phases, the focus of which will be the high-grade core.

Last, but not least, the environmental impact study is well advanced and is scheduled to be completed in the timeframe of the PFS.

Analysis

The ongoing intersections of high grade mineralisation continues to add further value to Blackthorn Resources’ Kitumba Project.

Its expectation that an underground development could be more attractive than an open pit also bodes well, given the Scoping Study had concluded the project had positive economic potential.

With Blackthorn currently trading at close to 67% cash backing with cash of $28.6 million, or $0.174 per share, as of 31 March 2013 and a market capitalisation of $42.71 million and share price of $0.375, Proactive Investors considers the company to be undervalued considering the scale of its Mumbwa Project as well as the prospects of imminent zinc production from its 27.3% owned Perkoa project (Glencore 62.7%) in Burkina Faso.

The Perkoa project is expected to become operating cash flow positive during the fourth quarter of 2013.

With upcoming newsflow there are catalysts for re-rating.

Hastings Rare Metals and ANSTO find further technical success

Fri, 14 Jun 2013 22:21:00 +0800

Hastings Rare Metals (ASX: HAS) and the Australian Nuclear Science and Technology Organisation (ANSTO) have teamed together for a joint technical paper, which was presented at the AUSIMM Industry Conference.

HAS wholly-owns the Hastings project, which is the largest heavy rare earth project in Australia, and the fourth largest globally.

The project hosts resources for +25 years at 1mtpa to produce over 10,000tpa, including: 140tpa dysprosium oxide; 830tpa yttrium oxide; 590tpa mixed rare earth oxide; 2,630tpa niobium oxide; and 6,170tpa zirconium oxide.

The defining factor for the project is that the Hastings deposit contains predominantly heavy rare earths (85%), such as dysprosium and yttrium, which are substantially more valuable than the more common light rare earths.

Highlighting the future need of dysprosium, there are over twenty global firms requiring a long term secure supply for their electric/hybrid vehicles, wind turbines or rail production.

Hastings Project Process Development – Past and Present

The paper was co-authored by Steve Mackowski, technical director for Hastings Rare Metals, along with Doug Collier, Karin Soldenhoff and Chris Griffith, the leading rare earth oxides research team of ANSTO.

The work builds on the extensive test work undertaken by the previous developers, and focusses on obtaining superior recoveries of the valuable components into solution

"This is particularly pleasing, since the Hastings mineralogy is unique, and requires a different approach to processing compared to the more typical light REO circuits," said Mackowski.

"This work, which commenced in 2011, builds on the extensive test work undertaken by the previous developers, and focusses on obtaining superior recoveries of the valuable components into solution.

“2012 saw the development of a much improved primary solvent extraction (SX) circuit, when compared with the previous single extraction stage results."

A two stage approach, of extracting the Niobium/Zirconium and then separately extracting the REO has significantly improved recovery and enhanced the selectivity.

Mackowski added, "Continuous operations at a mini-pilot scale provides the confidence that we have the right circuit configuration to achieve high value component recoveries and excellent rejection of the non-valuable material.

"The Hastings Project is now poised to progress development to tailor the final quality and form to meet the requirements of the end users."

MacPhersons Resources discovers new gold-silver-zinc zones close to Nimbus Discovery Pit

Fri, 14 Jun 2013 18:04:25 +0800

MacPhersons Resources (ASX: MRP) has found new zones of mineralisation from extensional drilling within 500 metres of the Nimbus Discovery Pit.

The new gold-silver and zinc mineralisation zones included these significant intersections:

- 1m at 10.6g/t gold, 4.4g/t Ag, 12.0g/t Hg from 88m;
- 1m at 3.9g/t gold from 39m;
- 4m at 1.6g/t Au from 95m;
- 2m at 18.7g/t Ag, 15.0g/t Hg from 108m;

Strategically, the new zones of mineralisation are adjacent to, and form strike extensions along from their Nimbus silver-zinc-gold operations.

The new zinc zone and gold-silver zone have had no previous record of drilling and have potential for more extensions to the existing project resources.

The gold-silver zone 200 metres south of the Nimbus mill represents an extension of an earlier drilling result of 8 metres at 13.2 g/t silver.

MacPhersons Resources managing director Morrie Goodz said:

“These are preliminary results of the first pass aircore program over new geochemical anomalies.

“We are pleased that our early soil and saprolite exploration programs are proving to be successful at identifying buried deeper mineralisation so close to our existing facilities.

“The new zinc mineralisation has been intersected between 30 metres and 70 metres below surface in the oxide depleted zone, and could reflect a deeper primary zinc VHMS lens similar to Discovery Lens located only 200m to the south – very exciting.”

Increase in Nimbus resource in March quarter

The Nimbus Resource saw an over 46% increase to 4.4 million tonnes at 129g/t for 18.3 million ounces Silver-Eq, includes:

- >16% increase to 11.7 million ounces silver;
- >43% increase to 49,000 tonnes zinc; and
- >220% increase to 33,000 ounces gold.

100% of the Mineral Resource from July 2012 was converted to Measured and Indicated JORC categories.

Baraka Energy & Resources: Statoil steps up as operator in Georgina Basin

Fri, 14 Jun 2013 18:01:00 +0800

Baraka Energy & Resources (ASX: BKP) has welcomed the appointment of Norwegian state oil company Statoil as the operator of the Southern Georgina Basin tenements in the Northern Territory that it is farming into.

Notably, Baraka believes that Statoil will see the benefits of amending the Joint Operating Agreement for EP 127 and EP 128 to allow it to pursue Hagen Member conventional targets either on its own or with an appropriate new partner.

Baraka has a 25% interest in both EP 127 and EP 128 as well as a 75% undivided working interest in the 75 square kilometre around the Elkedra-7 well on EP128.

Independent petroleum consultants Ryder Scott had previously reported that conventional carbonate zones updip from 11 vintage wells in EP 127 have the potential to host oil.

The company said that while Statoil’s primary objective is the shale oil and gas areas in the Southern Georgina Basin, this does not conflict with its initiative to pursue the conventional areas.

It also expressed its belief that the Norwegian company would assist other junior companies as a good corporate citizen in Australia going forward and that it would also find support from the Northern Territory Government as well as Native Title Holders due to the prospect of early royalty streams.

As part of its conventional push, Baraka has recently appointed an exploration manager Peter Philipchuk, who has over 45 years of oil and gas experience.

Philipchuk has worked for Texaco, Mobil Oil and formed several junior oil companies active in Alberta Foothills belt and was the vice president exploration and co-founder of Baraka joint venture partner PetroFrontier (CVE: PFC).

Statoil taking the reins

Statoil is taking over as operator of EP 103, EP 104, EP 127 and EP 128 as well as the exploration permit applications EPA 213 and EPA 252 under amendments to its farm-in agreement with PetroFrontier.

The Norwegian major will now spend the next US$160 million to fully fund exploration over three phases to the end of 2016, in return for 80% of PetroFrontier’s working interest.

This adds to the US$30 million that PetroFrontier and Statoil had jointly spent since the farm-in agreement was reached mid last year and the first half of 2013 and will give Statoil a 80% interest in EP 103 and EP 104, 60% in EP 127 and EP 128 (excluding the Elkedra-7 area) and 80% in exploration permit applications EPA 213 and EPA 252.

Under Phase 1 and 2A, Statoil will spend US$50 million throughout the remainder of 2013 and 2014 to fully fund to a 385 kilometres 2D seismic program as well as drill and stimulate between four to six vertical test wells.

It can then proceed to Phase 2B, where it can spend US$30 million on exploration before moving on to Phase 3, which will require it spend US$80 million.

"We believe the Southern Georgina Basin asset to be potentially very prospective and we are happy to assume operatorship for this 14 million acre area,” Statoil onshore exploration unit vice president Vidar Skjæveland said.

“This deal is in line with our exploration strategy where we pursue access early and at scale to de-risk the plays and grow organically through exploration activities. We will continue the good work done by PetroFrontier with the aim of clarifying the prospectivity.”

Baraka will remain responsible for funding its share of costs in EP 127 and EP 128.

Analysis

Statoil’s assumption of operatorship and increased stake over its Southern Georgina Basin farm-in tenements highlights its belief in the prospectivity in the region.

This is good news for Baraka and and paves the way for exploration to really take off with a well funded operator.

The Norwegian major is a highly regarded international explorer and producer and has in the last year taken a growing interest in Australian oil and gas, having in March 2013 acquired a 30% stake in four exploration licenses held by BP in the Ceduna sub-basin within the Great Australian Bight, off South Australia.

This increased interest is likely to be mirrored by greater exploration spend and should the prospectivity of the Southern Georgina be proven, there is nothing stopping Statoil from expanding its activities in the area.

Proactive Investors continues to regard the farm-in as being very bullish for Baraka,

Besides underwriting a significant portion of any wells in EP 127 and EP 128, any exploration carried out in the other tenements will also serve to derisk Baraka Energy & Resources’ acreage position.

Phoenix Gold to transition Blue Funnel into a cash generating mine

Thu, 13 Jun 2013 21:47:02 +0800

Phoenix Gold (ASX: PXG) is well-funded with over $20 million in cash at the end of March 2013, with the company now entering a deal to boost near term cash flows with the monetisation of the non-core Blue Funnel Gold Mine asset in Western Australia.

Stage 1 of Blue Funnel provides some positive metrics such as delivering near term total net cash flow of over A$3 million, based on a gold price of A$1,350/oz.

Compellingly, the project would require little by way of start up capital expenditure.

Providing a potential boost to the economics at Blue Funnel, the recent fall in the Australian dollar is currently pricing gold at A$1,465/oz.

Stage 1 delivers 86,000 tonnes at 3.5g/t gold at a total cash cost of A$980 per ounce, with toll milling at FMR’s Greenfield's Mill to produce 9,000 ounces at a 93% recovery.

Phoenix will commence mining in July with ore processing scheduled for August, with Blue Funnel to be the next cash flow generating asset within the company's portfolio.

The ore will be hauled south-west along the existing road network to FMR Investment’s Greenfield’s toll treatment facility near Coolgardie for milling over a 6-8 week period.

Jon Price, managing director for Phoenix, said that the development of Blue Funnel and other small scale mining projects to generate cash flow for the business has always been a core part of Phoenix’s strategy.

"It now delivers an even greater benefit given the tough financial markets currently facing the junior resources and gold sectors.

“The cost of doing business in the Goldfields is improving and we are evaluating a number of our smaller projects for development in addition to completing our larger scale projects as part of the Definitive Feasibility Study, due in December this year."

Aphrodite Gold plans new gold processing hub in Kalgoorlie region

Thu, 13 Jun 2013 19:41:00 +0800

Aphrodite Gold (ASX: AQQ) is planning to build a oxide and refractory gold plant capable of processing an initial 1 million tonnes of ore per annum, the first in the Kalgoorlie region for the past 20 years.

Besides processing ore from its Aphrodite Gold Deposit, the plant is also anticipated to process third party ore, substantially improving project economics and extending the project life.

The plant, which can be expanded to process up to 1.5Mt of ore per annum, include a pressure oxidation circuit – a first in the region – that will enable treatment of refractory ore which is common in the region.

Recoveries based on tests on Aphrodite material are projected at around 95% for oxide ore and 90% for refractory ore.

“The history of the Eastern Goldfields bodes well for building a much needed new refractory ore processing plant. Such development will lift the prospects of regional miners and explorers and would be a bonus for the City of Kalgoorlie,” chairman Peter Buttigieg said.

“The Company’s plan is underpinned by a multiple financing strategy. In addition to its channel to large China-based investors, the company will complement this with existing funding partners and advanced gold hedging strategies being developed by its financial advisors.”

Aphrodite is in negotiation with China-based investors to buy into the Aphrodite Gold Project. It had previously appointed three specialist funding advisors including Noah’s Rule and Australian National Merchant Capital Investments an intermediary for the China-based investors.

Aphrodite Deposit

The self-named Aphrodite Deposit will be the cornerstone for initial production at the project.

This is expected to start in late 2015 at an initial rate of about 30,000 ounces per annum from oxide material. This will increase to more than 100,000 ounces per annum.

The Aphrodite Gold mine and processing plant prefeasibility study is at an advanced stage with no significant technical obstacles identified to date. Infrastructure in the region is well developed including ready access to power supply, road transport and labour.

Aphrodite had just yesterday increased the gold resource at the Aphrodite Project by 35% to 1.4 million ounces of contained gold.

This is based on a cut off of 0.5 g/t gold applied to potential open pit mineable resources (0 to 150m (240mRL) below surface) and 3.0 g/t for the underground mineable (primary) resources.

Mine operating life is currently projected at near 10 years, although there is strong potential for expansion from additional exploration.

The plant and its components are being designed by project engineers Tetra Tech, and consultants METS. Tetra Tech is one of the world’s largest engineering companies with more than 350 offices and 14,000 staff worldwide. METS (Mineral Engineering Technical Services) is an Australian-owned leading consultant to the global mining industry.

Importantly, the plant’s economic operating life is likely to be significantly increased by unlocking the neighbouring resources.

Aphrodite has already begun negotiations with a number of more advanced regional gold companies for off take agreements or to sell their ore to the company.

2 Million Ounce Resource - potential to treat lower grade gold

Interestingly, with this week's recent resource upgrade to 1.4 million ounces of gold, if the cut off grade is varied to 0.3g/t gold for the open pit resource and 2.0g/t gold for the underground resource, the total resource increases to 1,974,000 ounces.

We believe Aphrodite could be investigating with another Australian company the potential of a bio heap leach operation that could process the lower grade ore, further enhancing project economics depending on the U.S. dollar gold price or Australian dollar at the time. This could also find favour with other regional or satellite gold deposits.

Analysis

There is wind at Aphrodite's sails, we wouldn't be surprised to see investment from the recently announced discussions and negotiations with Chinese and local groups. The fact no "red flags" have been encountered on the Pre-Feasibility Study, which is at an advanced stage is significant.

Any news on the financing front or bio heap leach initiative or regional processing hub could be expected to add accretion to the market valuation of Aphrodite.

Apollo Minerals intercepts more IOCG mineralisation at Titan Project

Thu, 13 Jun 2013 19:40:00 +0800

Apollo Minerals (ASX: AON) has intersected further evidence of a potentially large iron oxide copper gold signature within its Titan Base-Precious Metals Project in South Australia.

All holes from Phase 1 cored drilling at the Acacia East Prospect had intersected sulphide bearing zones including pyrite, pyrrhotite and chalcopyrite.

This included an intersection of 8 metres at 26.6% iron, 770ppm copper, 0.1 grams per tonne gold, 0.9g/t silver and 109ppm cobalt.

“Apollo is highly encouraged by these initial drilling results from our Acacia East IOCG Prospect,” chief operating officer Dominic Tisdell said.

“These results are significant not only to Acacia East but other high priority targets at Titan, including Bundi and Wirrida, in that they demonstrate elements of the required geology and enrichment of the metals needed to define a world-class IOCG, most importantly copper.

“As drilling during the discovery of the Prominent Hill IOCG showed, discoveries can occur in very close proximity to the site of encouraging initial drilling.”

Acacia East Drilling

The drilling program at the Acacia East Prospect intersected significant intervals of disseminated, stringer and massive sulphides while targeting a coincident high-density gravity anomaly and highly conductive electromagnetic anomaly within a demagnetised zone.

The observation of pervasive hydrothermal alteration, magnetite destruction and sulphide mineralisation from Apollo’s drilling at Acacia East is indicative that this initial round of drilling has intersected a significant part of a large-scale mineral system.

These indications provide strong evidence and much encouragement for additional exploration in the area.

Other notable results include:

- 8 metres at 710ppm copper, 0.01g/t gold, 0.9g/t silver, 293ppm nickel and 109ppm cobalt;
- 56 metres at 124ppm nickel and 23ppm cobalt; and
- 128 metres at 105ppm nickel and 20ppm cobalt.

The assay results compare well against the pre-discovery drilling of the Prominent Hill IOCGU deposit, east of Apollo’s Titan Project, where initial drilling in 1990 returned:

- 4 metres at 0.20% copper and 0.09g/t gold, and
- 4 metres at 0.24% copper and 0.04g/t gold.

The 2001 Prominent Hill discovery hole, sited a few hundred meters from the initial drilling in 1990, returned 107 metres at 1.9% copper and 0.65g/t gold and deeper 152 metres at 1.1% copper and 0.6 g/t gold.

The Acacia East target area covers 4.2 kilometres x 1.6 kilometres x 2.2 kilometres and contains significant geophysical and geochemical anomalism that are indicative of base-precious metals mineralisation.

Further Work

Apollo plans to further evaluate the findings from the Acacia East drilling programme which has successfully demonstrated that the exploration techniques being applied on the Titan Base-Precious Metals project are suitable in identifying large, dense and conductive targets which have been confirmed as being the source of stringer and massive sulphide bodies, typical of IOCG mineralisation.

These results provide much encouragement and justify further exploration at Acacia East and other surrounding, high priority targets such as the Bundi and Wirrida prospects.

Ongoing review of the drill core from Acacia East includes petrographic studies to accompany on-going research work being conducted in collaboration with the SA Government’s Geological Survey to carry out age date determination of the rock units in the Northern Gawler Craton.

This work will provide extra validation for the IOCG-U potential of the Titan project and has the potential to further increase the IOCG exploration potential of this district of the Northern Gawler Craton.

Analysis

Apollo Mineral’s ongoing success with drilling validates its belief that the geology and metals are present to define a world class IOCG deposit

This also places it closer towards delineating a significant resource at the project.

Aphrodite Gold lifts gold resource by 35% to 1.4M ounces at WA project

Wed, 12 Jun 2013 23:30:03 +0800

Aphrodite Gold (ASX:AQQ) has significantly increased the gold resource at the Aphrodite Project, located near Kalgoorlie, Western Australia by 35 per cent to 1.4 million ounces of contained gold.

The substantial increase in contained gold to 1.4 million ounces at the Aphrodite Project, located 65 kilometres north of Kalgoorlie, follows recent news of negotiations with funding partners and the beginning of due diligence and a technical site visit by one to the Aphrodite project reported in May.

The revised JORC resource was estimated by international consultancy firm Tetra Tech.

The new resource will align with a mine plan for the Aphrodite Project Prefeasibility Study (PFS), currently underway - incorporating both open pit and bulk underground operations.

This is based on a cut off of 0.5 g/t gold applied to potential open pit mineable resources (0 to 150m (240mRL) below surface) and 3.0 g/t for the underground mineable (primary) resources.

The revised resource has been estimated to a vertical depth of about 540 metres and over a combined strike length of 1.8 kilometres incorporating the Phi and Alpha Lodes, as well as the Epsilon and Gamma lodes adjacent to these two principal lodes.

Resource open at depth - High grade historic drill intersections

Of significance, the resource is open at depth with strong mineralisation evident from limited drilling below 440 metres to a depth of at least 600 metres.

Historic core drill intersections below 440 metres have included 24 metres at 7.12g/t gold and 18 metres at 5.59 g/t gold.

In detail

The resource estimation methodology has been updated from a Recovered Fraction Model to an Ordinary Kriged Model to enable development of the mine plan.

This, together with an updated interpretation of the mineralised wireframes, has increased the average width of potentially mineable material, increased the tonnes, reduced the grade and increased the overall ounces estimated.

The increased width should allow for increased production rates and lower operating costs to support the conversion from resource to reserve.

Analysis

The resource upgrade is a very tidy increase to contained gold at the Project, providing a strong base for negotiations with potential funding partners.

ABM Resources commences site works on time at Old Pirate for trial mining

Wed, 12 Jun 2013 14:51:00 +0800

ABM Resources (ASX:ABU) is on-time and on-budget with commencencement of site works for trial mining and processing at its Old Pirate high grade project in the Northern Territory.

Old Pirate consists of a series of gold-bearing quartz veins over a 1.8 kilometre strike length, and three distinct vein clusters of mineralisation named Old Pirate, Old Glory and Golden Hind deposits.

Gold mineralisation is hosted primarily within narrow quartz veins of between 20 centimetres and 6 metres in width.

The Old Pirate Gold Deposit is particularly high grade with resources of 723,800 ounces at 11.96g/t gold.

Stage One, conducted under an exploration license, involves the extraction and processing of 10,000 tonnes of gold bearing material to test the system for grade reconciliation, recovery, and dilution management

Extraction of the ore is on schedule and commencing at once.

Darren Holden, managing director of ABM Resources said, “The commencement of site works for the Old Pirate High-Grade Trial Mining and Processing is yet another major milestone delivered by ABM Resources on time and on budget. We look forward to bringing regular updates throughout this process."

Trial mining strategy

Now Old Pirate is known to possess a number of key advantages compared to other projects in Australia. Firstly, metallurgical test work indicates that up to 97% of gold can be recovered from low cost / low capital expenditure gravity processing methods.

Secondly, there is abundant high-grade gold observed in multiple quartz veins extending from surface to depths of greater than 200 metres.

The project has a high coarse-gold content (statistical nugget effect) resulting in a high variability of grade between samples. By trialling multiple techniques, ABM has established that the collection of larger sample sizes results in a generally higher grade assay. This sampling effect is typical in coarse gold systems where drilling generally under-calls the overall grade .

As a result, ABM is not undertaking the standard feasibility study process involving detailed desktop studies and drilling, but is instead conducting a staged approach to development where the trial mining (bulk sampling) forms a key part of determining the costs and feasibility of a full-scale mine.

This will also allow for ongoing ‘in-mine’ exploration. The trial mining involves installation of a gravity gold plant that will be used and expanded in the subsequent stages.

Advantages

The staged process takes advantage of the low engineering risk at Old Pirate and allows ABM to keep up-front capital expenditure to a minimum.

The objective is for each stage of development is to be profitable with quick payback periods, and to provide the capital required for the subsequent stages from cash flow.

In detail

ABM has appointed MLG Oz Pty Ltd (MLG), a Kalgoorlie based specialist mining contractor, for the earthworks and trial mining. MLG has mobilised an excavator, grader, loader and dump truck to site for this work.

In the first days on site MLG has focused on clearing and levelling of the area for the pilot processing facility.

Accommodation units for the mining camp have recently arrived on site and have been installed.

Offsite construction of the pilot plant is continuing with Consep Pty Ltd in Sydney and Amtas Pty Ltd in Perth constructing the main gold extraction circuit, and Index Industrial Brokers in Brisbane refurbishing the second hand multi-stage crushing circuit and ball mill.

All work is on budget and scheduled for early July delivery with the anticipation of processing material by mid-July.

Analysis

There is much to like about ABM's multi-tiered approach to exploration and development with with minimal CAPEX and a combination of high-grade potentially short-term production scenarios such as Old Pirate and the Golden Hind, large scale discoveries such as Buccaneer. This de-risks each stage as well as add near term production scenarios.

Millennium Minerals intersects up to 37g/t gold at All Nations deposit

Wed, 12 Jun 2013 14:49:00 +0800

Millennium Minerals (ASX: MOY) has intersected new multiple thick and high grade intersections of up to 37 grams per tonne gold at the All Nations deposit of its Nullagine Gold Project in Western Australia.

This highlights the deposit’s potential for large shoots at moderate depths and at surface along strike to the north that could add to current Resources and Reserves.

The All Nations deposit is currently the fifth largest within the Nullagine Gold Project and the present pit design incorporates 574,000 Proved & Probable Ore Reserve tonnes at 1.4 g/t gold for 26,000 ounces.

Notable assay results from the 2013 reverse circulation drilling program of 30 holes for 1,256 metres at All Nations include:

- 19 metres at 5.75g/t gold from 57 metres including 3 metres at 31g/t gold;
- 20 metres at 2.22 g/t gold from 44 metres including 3 metres at 8.335g/t gold from 54 metres;
- 2 metres at 19.58g/t gold from 33 metres including 1 metre at 37g/t gold; and
- 7 metres at 2.75g/t gold from 11 metres including 1 metre at 9.03g/t gold.

Millennium has planned a further 1,200 metres of further drilling later this year on targets that have excellent potential to deepen and extend the current All Nations pit design.

Drilling Results

In the southern area of All Nations, the results confirm and emphasise the significance of a substantial, high‐grade, south‐plunging shoot.

This has a plunge of about 60 degrees to 70 degrees to the south, and has a core grading from half to one ounce of gold per tonne, surrounded by substantial thicknesses of 1g/t to 5g/t gold material.

The upper zone lies only 2 metres below the current pit design floor and the high grade core lies up to 22 metres deeper.

This could lead to a rapid addition of ounces to the deposit, especially in the area immediately beneath the currently designed pit floor.

The distribution of higher ore grades also suggests the possibility of additional high grade shoots, but further work is required to confirm this interpretation.

Results also confirm a further substantial gold zone immediately beneath the current proposed pit design floor within the central area of All Nations while drilling within the northern margins of the pit show new shallow and thick zones of mineralisation that are open along strike.

Adjacent sections to the north of the sigmoidal zone in the central part of the deposit suggest that a flatter lying, higher‐grade portion of the lode may develop to the west of hole ANX054. This area is still open and will also be targeted in follow up holes.

Millennium added that while there is currently insufficient drilling to date to fully resolve the geometry of the northern zones, results do indicate that repeats of the north‐south trending, offset pattern of northwest‐stepping mineralisation at All Nations are likely continue to the north outside the current ore reserve pit design.

These suggest that infill drilling will extend the northern margin of the pit when new Resources and Ore Reserves are completed.

The follow up reverse circulation drilling program will focus at the thick plunging shoot, central sigmoidal and northern en‐echelon zones of mineralisation.

These results are very likely to impact positively on new Mineral Resource and Ore Reserve estimates planned for later in 2013. The estimates will be completed once follow up drilling has been completed, and assays have been compiled.

Nullagine Gold Project

The Nullagine Gold Project has a current gold Resource of 1.3 million ounces and Ore Reserve of 712,800 ounces contained within seven deposits.

The largest deposit is Golden Eagle located about 10 kilometres south of the township of Nullagine and contains 62% of the total Mineral Resource inventory.

The now fully operational gold process plant has a capacity of 1.5 million tonnes per annum and at forecast head grade of 1.7g/t gold will produce 78,000 ounces gold annually.

Millennium has been studying various production scale options.

These options relate to assessing the feasibility of higher throughput rates, in the order of 1.7Mtpa to 2.5 Mtpa, to achieve minimum annual production rates of 90,000 ounces and possibly above 100,000 ounces gold over the current life of mine at a slightly lower head grade.

Analysis

Millennium Minerals’ latest assay results point to a likely upgrade in the current Resource and Reserves at the All Nations Deposit.

Should a higher grade be confirmed at All Nations, this could also improve the economics of any option to improve throughput by potentially allowing the company to ramp up ore processing rates while maintaining head grades.

GBM Resources targets early gold production at Malaysian gold mine

Wed, 12 Jun 2013 00:36:46 +0800

GBM Resources (ASX: GBZ) has signed a binding term sheet to acquire an interest in a Malaysian gold mine and has received firm commitments from international sophisticated investors to raise $1 million.

The potential for early gold production from the Lubuk Mandi Gold Mine has received the backing of GBM’s major Singaporean shareholders. Its $1 million placement also provides additional funds for onging exploration and development of the company’s exploration assets.
The company will take up a 40% stake in Malaysian company Angka Alamjaya Sendirian Berhad (AASB), which holds the Lubuk Mandi Gold Mine in Terengganu, in return for a 15% stake in GBM.

Lubuk Mandi, previously owned and operated by government body Terengganu State Economic Development, produced 108,000 ounces of gold from two shallow pits in the mid 1990s and has been on care and maintenance since 2000.

“We are delighted with having the opportunity to develop and explore the Lubuk Mandi Gold Mine with AASB,” GBM managing director Peter Thompson said.

“Our strategy is well supported by our major Singaporean shareholders and is in line with our business objective of delivering shareholder value via project generation.”

The Share Swap is subject to shareholder approval.

Transaction details

The Lubuk Mandi project covers 221 hectares and includes over a million tonne of tailings which has the potential for early gold production and provides development funding options.

The associated processing plant is rated at 300,000 tonnes per annum and involves single stage crushing to a stockpile and mill.

GBM and AASB plan to develop the Lubuk Mandi Gold Mine and recommence mining operations.

Initial focus of the development will be on retreatment of the tailings dam followed by recommencement of hard rock mining.

Analysis

With existing tailings offering a ready source of material and a processing plant, the Lubuk Mandi Gold Mine offers GBM the potential to become a gold producer in the short term. We expect the transaction to be value accretive for GBM in the short to medium term.

The commitment for $1 million in funding also offers GBM funding to proceed with its exploration and development assets.

Blackham Resources' new gold hits extend Matilda lodes

Tue, 11 Jun 2013 15:11:00 +0800

Blackham Resources (ASX: BLK) has used reverse circulation drilling to extend the M1 Central Lode at the Matilda Gold Project in Western Australia, with the results providing positive implications for open-pit economics.

Blackham has undertaken a large drilling campaign at the Matilda Mining Centre to extend and increase the confidence of the existing resource, with the latest highlights:

- 13 metres at 3.20g/t gold from 119 metres, including 6 metres at 4.38g/t;
- 10 metres at 2.40g/t gold from 176 metres, including 3 metres at 4.76g/t; and
- 7 metres at 2.93g/t gold from 131 metres.

These results support the previous broad high grade intersection of: 35 metres at 5.05g/t gold.

This result was from the hinge of the Central Lode anticline which characteristically is the highest grade portion of the lode, with subsequent new results from the limbs of the anticline which is a broad mineralised zone with a higher grade core.

Also a new Hanging Wall Zone was found at M4, containing near-surface gold such as; 4 metres at 7.51g/t gold from 56 metres; and 3 metres at 6.24g/t gold from 51 metres. These are the best results from the lode so far.

This drilling has defined the “Iceberg Zone” beneath the existing pit which has also identified a continuous hanging wall lode.

A positive for the latest results is with their near surface nature, Blackham said that it is expected to have a positive effect on open pit economics by reducing the amount of overburden previously thought to be waste.

The Matilda Mining Centre has a Measured, Indicated and Inferred Resource of 13.8 million tonnes at 1.8g/t gold for 784,000 ounces.

Blackham well-funded

Last week Blackham shareholders approved resolutions to secure a funding package from Great Central Gold Pty Ltd.

Earlier in the year, a $13 million funding was secured for the wholly-owned Matilda Gold Project with Great Central Gold Pty Ltd.

Blackham announced that Great Central had agreed to subscribe for 15.79 million fully paid ordinary shares at $0.21 per share to raise $3.32 million.

In addition to the Placement, Great Central has agreed to subscribe for 40 million Convertible Notes in Blackham at $0.25 each having a total face value of $10 million.

Kimberley Diamonds finds diamond grades higher than expected from samples from Ellendale Mine

Tue, 11 Jun 2013 15:09:55 +0800

Kimberley Diamonds (ASX:KDL) has recovered bulk samples from the Ellendale Mine that have averaged 3.6 carats per hundred tonnes, greater than previous grade of 2.55 cpht.

Two bulk samples from the Far East Pit have recovered 1,060 carats at an average grade of 3.57 cpht.

The samples were treated through the E9 East production process plant and independent valuations were carried out by Independent Diamond Valuers Pty Ltd.

The current plan, based on available information at the end of 2012, is to mine 875,000 tonnes of ore containing an estimated 22,900 carats from FEP this calendar year.

The two bulk samples indicate an increase in expected grades, which may potentially lead to an increase in the ore that can viably be mined from FEP.

Two further bulk samples are planned for the coming months.

Diamond prices

For five consecutive months rough diamond prices have risen and they are now at the highest level for almost two years.

It is predicted by some analysts that polished diamond prices will soon show a similar recovery as consumer confidence returns to the 'high end' luxury market.

Nevada Iron report delivers low operating costs for Buena Vista

Fri, 07 Jun 2013 19:24:23 +0800

Nevada Iron (ASX: NVI) has released its key NI 43-101 Technical Report that assigns its Buena Vista Iron Project in Nevada a pre-tax NPV at 7.5% of US$263 million on undiscounted cash flows of US$697 million.

The Pre Tax NPV of US$263 million is driven by the very low waste to ore ratio for Buena Vista, among the lowest of new iron ore projects. This translates into relatively low mining costs per tonne of concentrate, with FOB operating costs of just US$64/dry metric tonne which drives the operating margin and positive project economics.

Other key takeaways from the report, which was completed to Pre-Feasibility Study levels, include FOB operating costs of just US$64/dry metric tonne an estimated operating margin of US$41 per dmt concentrate (39%) and a four-year payback period.

The report is required for obtaining a listing on a North American stock exchange and incorporates all work undertaken at Buena Vista over the past 12 months.

NI 43-101 Technical Report

The NI 43-101 uses a simple open pit operation as the basis for the mine, with pits at Section 5, West and East Deposits.

Mining will be via conventional mining methods, with drilling and blasting and using a 100 tonne truck fleet for ore and waste haulage. This will commence at the West Deposit, then move to Section 5 and then to the East Deposit.

Ore production is estimated to average 8.8 million tonnes per annum over the life of mine, with a peak of 11.5Mtpa in year 5 of the project. Iron grades are estimated to average 19%.

Waste to ore ratio is estimated to be 0.46:1, which is among the lowest of the new iron ore developments globally. Almost all the material within the designed pits is mineralised.

Analysis

The technical report highlights the economics of Nevada Iron’s Buena Vista Iron Project, notably the pre-tax NPV at 7.5% of US$263 million, four-year payback period and low projected OPEX costs which lead to relatively high operating margins.

Initial capital costs of US$259 million may be reduced if the company choses to lease it mining fleet rather than owning it outright.
The increased plant size will enable the company to take advantage of additional ore sources that may be found on either its own claims or from within the broader Buena Vista area.

Blackham Resources' shareholders approve funding package for 1.5moz Matilda Gold Project

Fri, 07 Jun 2013 16:09:00 +0800

Blackham Resources (ASX: BLK) shareholders have approved resolutions to secure a funding package from Great Central Gold Pty Ltd.

Earlier in the year, a $13 million funding was secured for the wholly-owned Matilda Gold Project with Great Central Gold Pty Ltd.

Blackham announced that Great Central had agreed to subscribe for 15.79 million fully paid ordinary shares at $0.21 per share to raise $3.32 million.

The first tranche of this placement, being for Shares having a value of $2.31 million, has previously been completed. The second tranche of the Placement, consisting of the issue and allotment of 4,808,000 Shares (having a value of $1.01 million), will be completed within two weeks.

Upon completion of the Placement Great Central will have a voting power in the Blackham of 19.5%.

Matilda already hosts 1.5 million ounces of gold, and is strategically located with 50 kilometres of strike in a major Western Australian gold belt.

Blackham has the largest landholding (>500km2) in the Wiluna goldfield, one of Western Australia’s major Archaean greenstone belts, and is targeting a multi-million ounce gold resource, with converted
resources to reserves in the near term.

Convertible notes

In addition to the Placement, Great Central has agreed to subscribe for 40 million Convertible Notes in Blackham at $0.25 each having a total face value of $10 million.

The Note conversion price of $0.25 per Note was set at 63% premium to the 5 day volume weighted average price for Shares trading on ASX prior to the initial announcement.

The Notes have a maturity date that is five years from the date of their issue. Interest is payable on the Notes at the rate of 8% (paid half yearly).

Timetable for the drawdown

Blackham said that following the general meeting Blackham and Great Central have agreed to amend the timetable for the drawdown and subscription of the Notes.

Under the amended timetable Great Central has agreed to a monthly drawdown of 4,000,000 Notes
(having a face value of $1 million) per month from July 2013 through to April 2014.

The revised drawdown is subject to Blackham receiving any further Shareholder or regulatory approvals that may be required including any ASX Listing Rule waivers required to permit the issue of the first 20,000,000 Notes to Great Central in accordance with the revised timetable rather than within the one month period ordinarily required by Listing Rule 10.13.3.

Great Central has agreed that once all of the 40 million Notes have been drawn down, the Notes will automatically convert into Shares.

Blackham said that it will benefit from the certainty of the amended drawdown timetable as it will result in less interest being payable by the company whilst also removing the requirement for the repayment of the Notes by an agreed conversion date when drawdown is completed.

Empire Oil and Gas to produce gas from Red Gully

Fri, 07 Jun 2013 16:07:00 +0800

Empire Oil and Gas (ASX: EGO) will today start gas production from its Red Gully Gas and Condensate Processing Facility within Exploration Permit EP389 in the Onshore Perth Basin near Gingin, Western Australia.

Both the Red Gully-1 and Gingin West-1 wells are now online and ready for production operations to commence with first gas into the Dampier to Bunbury Natural Gas Pipeline (DBNGP).

Red Gully Gas and Condensate Processing Facility

Several Facility start-ups and periods of operation had been conducted to verify the Process
Control System and Safety Integrated Systems, which control the overall functioning of the Red Gully Gas and Condensate Processing Facility.

Gas has been processed through the gas processing section of the Facility to verify “on specification” gas quality for entry into the DBNGP.

The Export Compressor has been “cranked over” in preparation for start-up. This is being undertaken by Enerflex and the operational crew from Oceaneering. Once the Export Compressor is fully operational, sales gas can be exported into the DBNGP.

Metering instruments have been commissioned and accepted for use by third party representatives including the DBP and also the Department of Mines and Petroleum.

The entry road into the site has also been sealed in preparation for the arrival of Condensate Road Tankers for transport of condensate to the BP Refinery in Kwinana.

Notably, the Crude Oil Sales Agreement terms and the Safety Procedures have been settled with BP Australia Pty Ltd and the BP Refinery (Kwinana) Pty Ltd for entry and refining.

From the commencement of trucking the condensate to the refinery, there is provision in the terms for the condensate to be independently assayed by specialist oil and gas analytical company, Intertec within two months

The Red Gully Gas and Condensate Processing Facility will produce gas and condensate from the Red Gully-1 and Gingin West-1 wells, both of which produced high levels of condensate during initial testing.

Gingin West-1 flowed 7.5 million cubic feet (MMcf) of gas and 375 barrels of condensate per day during testing while Red Gully-1 flowed 12MMcf of gas and 832 barrels of condensate during testing.

The EP389 Joint Venture has a Gas Sales Agreement with Alcoa of Australia, which consists of two tranches.

The first tranche contains the Forward Gas Sales component under which Alcoa agreed to pay $25 million for the costs of constructing the Red Gully Facility.

The second tranche, which makes up the majority of the agreement, is a separate and normal Gas Sales Agreement. Empire will sell an overall total of 15,000 terajoules of gas to Alcoa in the two tranches.

Empire has a 76.39% interest in the Red Gully joint venture while ERM Gas, a subsidiary of EPM Power (ASX: EPW), holds 23.61%.

Wannamal 3D Seismic Survey

Empire added that it has completed the data acquisition phase of the Wannamal 3D Heliseismic Survey in EP 389 yesterday with the detonation of the final shot point.

The current operations being conducted consist of field crews recovering the receiver and recording equipment in the field and collecting and collating the raw data from approximately 6,000 nodes.

The crew will now pack and prepare for demobilisation.

The seismic data is now to be processed by a specialist seismic processing company. This 3D data will be interpreted by Empire’s geophysicists and geologists.

Managing director said Empire was very pleased with the way in which the contractors Terrex Seismic, Webster Drilling and Precision Helicopters had conducted the survey together with its seismic manager Terry Grocke.

The survey is designed to delineate the Gingin 4 Deep, Gingin 5 Downthrown and Wannamal and Wannamal Deep drilling prospects along or near to the Gingin Gas Field Area.

Analysis

The flow of gas from Empire Oil and Gas’ Red Gully facility into the Dampier to Bunbury Natural Gas Pipeline marks a major milestone for the company, giving it a significant source of cash flow.

In addition, the Wannamal 3D survey is expected to further de-risk prospects near the Gingin gas field area.

Exploration successes at these prospects can be quickly tied into the Red Gully facility, which is designed to allow to be “twinned” doubling its processing capacity.

Quest Petroleum finalises acquisition of Indonesian oil and gas well site

Thu, 06 Jun 2013 23:47:32 +0800

Quest Petroleum (ASX: QPN) is now poised to kick off drilling of its Prabu-1 exploration well in South Sumatra, Indonesia, after finalising the Land Purchase Agreement to acquire the property for the well site.

The purchase of property containing the upcoming Prabu-1 well site allows Quest Petroleum to proceed with drilling of the well while offering the flexibility to carry out further exploration or install production infrastructure as needed.
Notably, the outright purchase of the land enables the company to use the land for multiple purposes including seismic surveys, exploration wells, development wells and production infrastructure.

“We are pleased to have secured the ownership of the land and while it has taken some time to do so, we now hold strategic, multi-purpose ground in this highly prospective location.” Quest Petroleum managing director Anthony Milewski said.

Separately, Quest advised that non-executive director Brett Mitchell has agreed to step down from the board following its appointment of experienced petroleum executive Jeffrey Mitchell as a non-executive director in March this year.

Land Purchase

The land purchase agreement was executed by Indonesian oil and gas regulator SKKMigas with the owner of land situated at Way Kanan, which is in the south east portion of the Ranau production sharing contract, about 140 kilometres northwest of Lampung.

This follows the completion of extensive legal due diligence to confirm tenure of the site. Title is held in the name of SKKMigas, as required under Indonesian law.

The proposed Prabu-1 drill site is located about 10km south of the town of Baradatu in the Way Kanan jurisdiction of Lampung Province, South Sumatra.

It is situated on well drained, elevated land adjacent to a paved asphalt road which allows good access for drilling and completion operations.

Analysis

With the acquisition of land for the Prabu-1 well, Quest Petroleum is now on the verge of unlocking the petroleum prospectivity of its Ranau Production Sharing Contract.

Importantly, the outright acquisition of the land rather than entering into a land access or use agreement, affords the company greater towards future operations on the site, be it further exploration or installing production facilities.

China stock investors wait for release of key economic data

Thu, 06 Jun 2013 16:53:00 +0800

The Shanghai Composite Index was trading lower in afternoon trade on Thursday, losing 17.33 points, or 0.76% to 2,253.60.

China officials will release key trade, inflation and industrial output data this weekend that are keenly awaited.

For the year to date, the Shanghai Composite Index is almost even, while the Index is up 10.9% for the six months to date.

Trading volumes in the Shanghai index were also lower as was volatility measured by the volatility index.

Which demonstrates that investors are on the sidelines until a better sense of the mixed messages in recent economic data is gained.

New loan growth

China's largest four banks extended the lowest amount of new loans in five months in May amid weak credit demand, indicating that uncertainty is still prevalent.

A possible explanation is that the economic recovery is on track but delayed. The growth in the first half is weak, but economic data released to date indicates a recovery, albeit tepid is likely underway in the second half of the year.

Highfield Resources accelerates progress at Spanish potash projects

Thu, 06 Jun 2013 16:52:08 +0800

Highfield Resources (ASX:HFR) has stepped up the pace following a recent $10 million investment by EMR Capital, accelerating development at its three 100% owned Spanish potash projects.

A first tranche of $5,126,688 was received in May from the recent placement to EMR, struck at a price of $0.30 per share - a premium to the share price at the time.

Given the advanced nature of the Spanish assets, there are near term production prospects.

Key points of progression of potash project:-

- A five hole validation drilling campaign on Sierra del Perdon project is due to commence in June 2013.

- Significantly, at the Javier project historical core has been re-assayed with a maiden JORC Resource estimate expected in July 2013.

- A ten hole drilling campaign on Javier project is set to commence in July 2013.

- Metallurgical testwork commenced on historic Javier core samples.

- A second Pintano project permit has been issued.

- Three additional key Spanish appointments have been made.

- The Pamplona office is now operational.

In detail

Sierra Del Perdon Potash project

A 3D model of the Sierra del Perdon evaporite basin has been created that details the infrastructure from the two former operating mines.

This 3D model has been used to prepare a confirmatory drilling campaign of five holes. Each hole is relatively shallow with depths ranging between 250 metres and 400 metres below surface.

The five hole drill campaign will test the company’s hypothesis with its primary aim:

- Provide sufficient data for a JORC Resource estimate;
- Test whether it is possible to re-enter the historic mine areas via a decline to mine unmined areas of mineralisation; and
- Provide core samples for mineralogical and metallurgical testwork to determine the optimum process plant design and the mass balance.

The drilling campaign is expected to be completed in Q3 with results expected in Q4 2013.

Javier Potash project update

The Javier project historical core has been re-assayed, a JORC Resource estimate is expected for the Javier project in July 2013.

A ten hole drilling campaign has been designed to test the extents of the Javier evaporite basin.

The drilling campaign will test the potash potential historically intersected at relatively shallow depths ranging between 300 metres and 530 metres below surface.

In addition, core samples from three drill holes have been re-assayed by North Rim with the results presented below.

The analytical results were prepared by the Saskatchewan Research Council (SRC) in Saskatoon, Canada.

Assays were analysed for potash exploration geochemistry using the analytical ICP-OES method. SRC included lab blanks and standards and follows stringent QA/QC protocol. North Rim inserted independent standards as an additional quality check.

The deposit geology is defined by a hanging wall salt, an upper potash seam (sylvinite), an interbed salt, a lower potash seam (sylvinite) and a footwall salt.

The NGR drill hole appears to be the most promising recording a lower potash seam intersect of 1.36m at 25.2% KCl within a 4.39 metre intersection with an overall weighted KCl average of 19.15% (KCl values due to sylvite).

The depth of this intersection occurs in the interval between 300.30 metres to 304.69 metres below surface.

Pintano Potash project update

On 27 May 2013 the second and final Pintano project permit was issued by the Aragon Administration.

Puntarron is a significant permit and ensures the company preserves potential resource upside if the mineralisation extends into deeper sections of the Pintano evaporite basin.

A drilling campaign for Pintano is expected in Q4 of the current Calendar Year. This drilling campaign has been designed to complement the four existing drill holes that show mineralisation within the project area.

Corporate

The company’s office in Pamplona is now operational and houses all of the company’s Spanish based team.

During the past month three additional key appointments have been made by Highfield’s 100% owned Spanish subsidiary.

An environmental scientist has been appointed to drive the environmental approvals process; a qualified lawyer with deep planning experience has been appointed to drive the community engagement and planning process; and an additional project geologist has been appointed to work on the second concurrent drilling campaign planned to commence in Javier in July 2013.

Comparative advantages of Highfield's potash projects - "enhanced profit margin"

- Ability to sell waste by product – sodium chloride (likely to be +$150 / tonne of potash sold)
- Because the salt will not have the environmental issues of what to do with it once extracted (a lot of projects are looking at reinjecting it) (likely to be +$20 / tonne)
- Ability to sell into Spanish market (likely to be +$40 / tonne – based on most potash being sold FOB Vancouver – we avoid shipping and internal transport costs)
- No royalties (likely to be around +$40 / tonne based on a global average)
- Tax incentives (likely to be +$10 / tonne)

The enhanced profit margin is the reason why Highfield is likely to have one of the most commercially viable projects of any non producing potash junior and no doubt a reason for EMR's investment.

Analysis

On April 17, with the Highfield share price at $0.17, Proactive Investors wrote "the placement to EMR Capital represents an inflexion point in the company’s evolution, providing catalysts and milestones for value accretion and should see growth in the company's valuation in the medium term.

"We estimate the market valuation and share price of Highfield Resources in the $0.40-$0.50 range in the next 12 months." We see nothing to change our minds on this range, today's progress validates our model.

Horseshoe Metals notches 40% increase in copper resources at Horseshoe Lights

Wed, 05 Jun 2013 17:34:00 +0800

Horseshoe Metals (ASX: HOR) has delivered a 40% increase in the high grade copper resource for the wholly-owned Horseshoe Lights Project in Western Australia, which covers 80 square kilometres.

Successful drilling campaigns by Horseshoe Metals over the past 15 months have culminated in a 40% jump in the Horseshoe Lights resource, which now contains 128,600 tonnes of copper and 36,000 gold ounces - with close to a third in the higher confidence Measured and Indicated categories. Targeted drilling could substantially expand the resource base.

The upgrade is the result of successful drilling programs in 2012 and 2013, and includes results such as the peak intercept of 10% copper last month.

The project now hosts a resource of 12.85 million tonnes at 1.00% copper, and 0.1g/t gold for 128,600 tonnes of contained copper and 36,000 gold ounces, using a 0.5% copper cut-off grade, which was conducted by CSA Global Pty Ltd.

An important factor is that 30% of the resource is contained in the higher confidence Measured and Indicated categories. The project is located 75 kilometres west-northwest of Sandfire Resources (ASX: SFR) DeGrussa Copper/Gold mine.

Neil Marston, managing director for Horseshoe Metals, spoke exclusively to Proactive Investors and said that the company's plan is to now add tonnes.

"We have target areas at Horseshoe Lights with little drilling, and we will step-out on the eastern side to follow-up historical plus 1% copper intercepts."

With the continued drilling, Horseshoe Metals is well-positioned to substantially expand the resource in the copper rich region.

Highlighting the prospectivity of Horseshoe Lights, historical production from the Horseshoe Lights copper-gold mine was 313,000 gold ounces and 54,800 tonnes of copper.

Analysis

Horseshoe Metals is well placed to boost copper resources even further at Horseshoe Lights with targeted drilling.

When combined with Kumarina project, total copper metal inventory for Horseshoe Metals now stands at 148,000 tonnes of contained copper. On an Ev/tonnes basis, Horseshoe Metals is undervalued.

Adding sparkle and a pipeline of news flow, Horseshoe is planning to undertake a Down Hole Electromagnetic survey ahead of the next phase of drilling at Horseshoe Lights, this will test for off-hole conductors which may represent massive sulphide copper/gold mineralisation.

ASF Group to tap Significant Investor Visa program through AFSL

Wed, 05 Jun 2013 17:31:54 +0800

ASF Group (ASX:AFA) has been granted a modified Australian Financial Service Licence to enable it to cater to Chinese entrepreneurs and high net worth individuals under the Significant Investor Visa programme announced by the Australian Government.

The program lets foreigners settle in Australia for up to four years, then seek permanent residency.

The visa program was launched in November 2012 and is understood to have attracted over 150 applicants to date in exchange for a minimum A$5 million investment during their stay.

The money can be placed in federal or state bonds, managed funds, Australian companies, or in a combination of those assets.

In Australia, successful applicants are allowed later to apply for permanent visas. There is no upper limit on the number of special visas the government can grant.

Consultants at Deloitte expect the total to climb to around 700 a year, potentially at least A$3.5 billion in fresh foreign investment.

PricewaterhouseCoopers estimates China has more than a million millionaires and about 60,000 "super rich," or people with a worth of A$15 million.

The special Australian investor visa has a unique identifier number "188," making it distinct from the traditional "457" visa given to most temporary foreign workers.

The Australian government has created a new subclass of permanent visa to go along with the program, "888," a number many Chinese associate with wealth.

In detail

ASF Capital has formed an investment fund known as The ASF Capital Investment Fund.

The Fund will seek to make direct and indirect investments in infrastructure and real estate in Australia and otherwise only invest in assets permitted under the Significant Investor Visa programme.

ASF Capital will create a number of new investment vehicles including the recently created Fund.

In addition, ASF Capital will build on its investment banking activities by assisting Australian companies to access capital from China and advising Chinese businesses with proposals to make acquisitions in Australia or list on the ASX.

It will grow its Funds Management relationships with Asian investment funds which have an emphasis on China, as well as institutional and sophisticated investors in Australia.

In this process ASF Capital will access ASF’s substantial database of Chinese entrepreneurs and investors that has partnered and co-invested with ASF since its inception 7 years ago.

Analysis

ASF Group is unique among ASX-listed public companies in Australia as a creator and facilitator of two-way cross-border investments, trade and technology transfers between China and Australia.

As such it is ideally placed to benefit from the Significant Investor Visa programme to tap Chinese demand for Australian visas announced by the Australian Government.

Although early days for the program, it has the hallmarks of becoming a significant earner for ASF Group in future years.

Sun Resources: Lower Woodbine oil play de-risked by third party wells

Wed, 05 Jun 2013 17:30:32 +0800

Sun Resources (ASX: SUR) believes its Lower Woodbine acreage in Texas has been significantly de-risked from a financing and investment perspective after four other operators reported positive oil flow results from their horizontal wells.

These 10 wells achieved 30 day initial flow rates of at least 609 barrels of oil equivalent per day (boe/d) and up to 835boe/d from the Lower Woodbine interval.

Notably, the seven wells owned by Halcón Resources Corporation (NYSE: HK) are located in Brazos County southwest along strike of Sun’s Seale-1H and T.Keeling-1H wells in the Amerril Oil Project.

These wells had average cumulative production of 40,000 Bo per well over the first 90 days of oil flow with Halcón’s reported type curve showing an estimated gross estimated ultimate recoveries (EUR) per well of 371,000Boe and IRRs exceeding 50% at current oil pricing.

It also noted that lease activity, prices of acres containing the play and drilling of Lower Woodbine horizontal wells have rapidly accelerated over the last eight weeks as these horizontal well results become more widely known and understood.

Impacts

The results from the Halcón, Clayton Williams Energy (NASDAQ: CWEI), EOG Resources (NYSE:EOG) and Silver Oak Energy wells clearly demonstrate that oil flow results from later horizontal wells are materially superior to earlier wells as more appropriate frac designs are used and superior frac completions occur.

This is in line with discussions with frac design consultants and various frac completion contractors that determined that frac design and frac completion are critical to successful exploitation of the Lower Woodbine.

A consensus view as to the “recipe” of an optimal frac design for a Lower Woodbine horizontal well is rapidly taking shape, though much work remains to be done before a settled set of frac design parameters is firmly established.

This progression in the final frac design is also what occurred in the Eagle Ford Shale in locations such as Karnes, Live Oak and Atascosa counties in Texas.

Continuing Oil Production

Sun Resources continues to flow oil from its projects in the Amerril and Richland projects.

At the Amerril project (Sun 50%), the Seale-1H horizontal well has now been flowing back for about 26 days including a period of natural flow to reduce well bore pressure, followed by a further period of flow back after the installation of a down-hole jet pump.

The oil cut to date has varied but recently peaked at about 8 barrels of oil per hour on an intermittent basis.

This is believed to be caused by some frac water passing the fish in the hole as a pressure differential builds up during flow back.

Flow rates had increased with the recent installation of a jet pump and the total amount of frac fluid recovered to date is about 9% of that pumped into the formation during the fraccing process.

However, more recently the flow rates have reduced again, for reasons thought to be related to the broken drill bit still lodged downhole.

The operator intends to continue to flow the Seale-1H well but plans to re-enter the well within 10 days to attempt to remove the broken drill bit and plug debris obstructing the well-bore below the first seven frac stages.

If this is successful, the remaining frac plugs can be drilled out and the full well flowed back to remove frac water and allow oil production across all 23 frac stages.

Until the status of the Seale-1H well is known and enough data is accumulated, the joint venture will not frac the T. Keeling-1H well.

Once more technical information is known, this data will influence the final design of its frac to maximise its success.

Richland Oil Project

The Ellis-1H well continues to flow oil with a very gentle decline rate.

Oil flow rates continue to be in excess of 170bpd some three months after initial flow back occurred.

Flow back of frac water is continuing with about 30% of frac water recovered and oil cut is currently averaging 39% of total fluid extraction rates.

Flow back of frac water is continuing on the John Beeler-1H well.

Oil flow rate is currently averaging 75bpd. Oil cut is currently averaging 42% of total fluid extraction rate.

Flow back of frac water is also continuing on the Beeler-1H, which is flowing about 50bpd of oil with oil cut averaging 33% of the total fluid extraction rate.

Sun has a 13.5417% working interestin Beeler-1H and 16.67% working interest in the other wells.

Analysis

The horizontal well results reported by Halcón and others validates Sun Resources’ long standing belief in the prospectivity of the Lower Woodbine interval and also de-risking the play.

Halcon, a nearly US$2 billion market cap, in particular has been bullish about the Lower Woodbine play with plans to keep three to five rigs operating in the play to spud 60 to 65 gross wells throughout 2013.

Notably, the interest in the play and rising price of the acreage bodes well for the company’s wholly-owned Delta Oil Project by increasing the likelihood that the company can secure an attractive farm-in should it choose to do so.

While no wells have been drilled yet at Delta, the company has been carrying out early stage evaluations of a number of well locations for ‘proof-of-concept’ horizontal drilling.

Further adding to the prospectivity of the acreage is the fact that while the focus has been on the Lower Woodbine, there remain at least four other pay zones that have the potential to be productive.

Sun had $5.3 million in cash as of 31 March 2013.