Mining Breaks

A spate of profit warnings from Australian mining services companies suggests the country's once-in-a-century resources spending boom may have peaked sooner than companies, economists and policymakers expected.
"The extent of the slowdown and just how fast the turnaround has been is a surprise," says Savanth Sebastian, an economist at Commsec, noting the potential for more projects to be pushed back or mothballed. "It seems to have taken place in a very narrow window."
The pain that first hit mining and engineering firms late last year has intensified more than expected, judging by the slew of negative revisions to profit forecasts from such as WorleyParsons, Boart Longyear, Transfield, UGL, Fleetwood Corp and Coffey International. Reuters
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A dispute over a claimed $A250,000 debt between Blina Minerals and its second largest shareholder has escalated, with Kimberley Diamonds announcing a move to dismiss all three members of the Blina board.
Kimberley Diamonds, which holds 8% of Blina shares, served notice of its intention to remove chairman Brett Fraser and non-executive directors Julia Beckett and Peter Webse.
The company said it would nominate replacement directors for the company “in due course”.
Blina has denied claims by Kimberley Diamonds that it’s owed $256,230 left over from a 2008 diamond forward sales deal with Kimberley’s holding company, GEM Diamonds. Then a diamond dealer, Blina claims it’s actually owed a larger amount by Kimberley Diamonds’ subsidiary, Ellendale mine operator Kimberley Diamond Company.

Workers at Newcastle port, the world's largest thermal coal export facility on the east coast of Australia, plan to stop work for 8 hours on Friday to protest proposed changes to their work contract they fear could hit working conditions and jobs.
The strike by about 220 unionised workers follows a 4-hour stoppage last week and is part of a 2-week campaign during which workers plan to stage similar such halts, ranging from 8 to 24 hours. Reuters
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African-focused explorer Waratah Resources has begun talks with potential partners for the development of its Belinga iron ore deposit in Gabon.
With the boost of its recent $A1.7M fund-raising, Waratah says its African iron division is working to complete metallurgical tests and a maiden inferred JORC resource at Belinga in the next quarter.
As part of a streamlining of operations, the company is aiming to divest its Youkou and Okanabora iron ore projects in the Republic of Congo.
Meanwhile, a separate Australian commodities division will be set up to focus on developing assets, targeting iron ore, thermal and coking coal, copper, nickel and cobalt. Waratah expects the new  division to produce revenue by the end of the next quarter.

Mid-tier Australian miner Norton Gold Fields expects to increase gold production and lower costs at its Paddington operations after the official opening of the $A110M Enterprise openpit near Kalgoorlie, Western Australia.
Enterprise, 38km from the Paddington plant, has an indicated and inferred mineral resource of 1.22Moz (22.5Mt at 1.69g/t), including a deeper portion of 319,000oz (3.3Mt at 3.04g/t), that is expected to supply five years of base-load ore feed to the 3.3Mtpa capacity plant.
The mine is expected to reach full production at 110,000oz pa gold in the last quarter of 2013.
MD/CEO Dianmin Chen says Enterprise’s higher grade ore than the previous base-load operation at Navajo Chief will enable Norton to reduce unit production costs while boosting gold output.
The opencut mine is being worked by Norton’s owner-operator fleet and existing infrastructure while Norton continues its definitive feasibility study on underground mining of the deeper portion of the orebody.

International miner Cleveland Resources has ended a frustrating 18 months by winning a court order directing the Mines Department to gazette its exploration licences at O Capitao gold concessions In Goias state, Brazil.
Cleveland says it will be able to produce an initial JORC resource at O Capitao within weeks and proceed with permitting to allow mining to start.
O Capitao is just 10km from Cleveland’s Premier mine and has a potential significant gold resource that would supplement expansion at Premier.
Cleveland produced good drilling results at O Capitao in mid-2011 but was stopped from further work by a federal government moratorium on gazetting of concessions.
The Goias Federal Court order will allow work to resume. Cleveland says it can complete a resource figure from work already done and resume studies into the economics and logistics of processing O Capitao ore at Premier.

Australia-listed copper miner Discovery Metals has opened its books to spurned private equity suitor Cathay Fortune Corp and others in an effort to attract a new takeover offer.
Discovery, which is ramping up output at its flagship Botswana project, rejected an $A824M or $1.70ps bid from Chinese company Cathay Fortune, its top shareholder with 13.7%, in Nov.
After running into problems at its Boseto Copper project and failing to secure Cathay's support for a $75M capital raising, Discovery says it’s decided to put itself up for sale. The company says it’s in talks with a number of interested parties and is seeking binding proposals by June 10, 2013. Reuters
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Australian mining services company Transfield Services’ shares have fallen as much as 16% after it reduced its 2013 profit outlook and announced plans to cut 113 jobs.
Transfield blames the weakening outlook on ongoing uncertainty in commodity markets, which has delayed a number of resources and infrastructure projects.
The company now expects a net profit of between $A62M ($US60.71M) and $65M, down from its previous forecast range of $85M-$90M. Reuters

Diversified Australian explorer Zenith Minerals is continuing its search for a strategic partner after lifting resources by 36% at its 100%-owned Mount Alexander magnetite project 120km from Onslow in the West Pilbara region.
The inferred resource estimate by CSA Global at Mount Alexander is now 535Mt @ 30% Fe, 48% SiO2 2.2% Al2O3, 0.1% P and 0.5% S, based on drill testing of about 50% of the target banded iron formation.
In addition, Zenith has set a revised exploration target outside the resource estimate area of 570-680Mt at 35% Fe.
Testing indicates it can produce a magnetite concentrate containing 69.9% iron with <3% silica and low phosphorus.
Zenith is holding preliminary commercial discussions with potential development partners for a large, capital-intensive magnetite project.
The 2011 scoping study envisaged an 8Mtpa operation over 20-plus years with a slurry pipeline transporting concentrate to Onslow for barge transfer to offshore moorings.

South Australian explorer Investigator Resources aims to deliver a maiden resource estimate in the September quarter on its Paris silver project in the southern Gawler Craton, 350km north of Adelaide.
MD John Anderson told the Australia China Minerals Investment Summit in Darwin the Paris discovery, in a favourable location for development, confirms its exploration model focused on the Moonta Corridor and innovative use of regional-level modern geochemistry to map high-potential silver and copper targets.
He said silver intersections up to 11.6m at 3,464g/t are generally at 40-120m from surface, within potential openpit range.
The silver is interpreted to occur as flat-lying sheets in geology similar to settings for major silver mines in Latin America.
Investigator, backed by cornerstone investor Citic Australia, will also prioritise large silver targets at Alexander and Hector, near Paris, and test the concept of a porphry copper gold target in the Peterlumbo Field.

Australian-based Pacific Niugini is closing in on a decision to mine its Caldera gold project in Sonora, Mexico on the back of highly encouraging initial results from bulk sampling.
In its first project outside Papua New Guinea, Pacific Niugini designed and built a 10tph plant to test material from 150ha of the 6,900ha project area prospective for gold in colluvium, zero-strip ratio openpit mining and gravity gold concentration.
It says initial programs revealed coarse and fine gold in concentrates and the company expects to make a development decision in 2-3 months after comprehensive testing with grid-based pitting.
Pacific Niugini expects mining and processing costs to be $US2.10-2.80/t utilising the company’s 8-10Mtpa production plant.
The company says the project benefits from good logistics and the support of project vendor/partner Minera Global del Pitic.

Katanga Copperbelt specialist Tiger Resources is on the prowl again for a new funding source for its 60%-owned Kipoi copper project in DR Congo after South Africa’s Nedbank Capital withdrew.
Nedbank and Rand Merchant Bank were mandated in January for the $US80M debt financing facility for the Stage 2 SXEW development at Kipoi.
MD Brad Marwood says the number of major financial institutions who maintained a continued interest in financing the development will enable Tiger to replace Nedbank Capital with little or no disruption to the funding timetable.
The term facility will be supported by South Africa’s Export Credit Insurance Corporation.
Rand Merchant Bank, a division of FirstRand Bank, has credit approval to provide a $15M bridging facility.
The project has also received offers of standby credit lines totalling $20M from Rawbank and BCDC, which operate extensively in the DRC.

Freeport-McMoRan Copper & Gold took a big step in its plan to expand into energy when Plains Exploration & Production shareholders approved the miner's $US6B takeover deal, sweetened by two special dividends.
The world's largest listed copper producer's bid to buy the oil and gas company overcame opposition from prominent investors and proxy advisory firms by announcing the dividends hours before shareholders were set to vote.
The payouts will provide Plains shareholders with about $470M in cash and stock on top of the $6B deal already on the table.
Freeport shocked the market late last year when it said it would buy Plains and McMoRan Exploration to diversify as copper's prospects wane.
Although it plans to boost copper sales by expanding existing mines, Freeport says there are few good copper assets on the market.
McMoRan's shareholders are scheduled to vote on the McMoRan Exploration deal on June 3. Reuters

Australian-based professional services consultancy Coffey International has been forced to reassure a nervous market that it’s not in trouble with its bankers after slashing its profit forecasts a week ago.
MD John Douglas says Coffey met all its banking covenants in March and has a very high level of conviction it will meet them again in June and for the foreseeable future.
He predicts the restructure announced last week will contribute to strong cashflow in FY2014 despite the postponement or cancellation of projects that would have generated fees of $A13-14M over several years.
Coffey’s banking facilities were recently renewed to February 2016, and Douglas says its bank is strongly supportive of the company.
Douglas says Coffey's covenants are related to financial performance, but the banking covenants are not linked to the market value of the shares.

South Africa's Solidarity trade union, which represents mostly skilled workers, is seeking 10% pay increases for its members from the country's gold and coal producers in upcoming wage talks.
Gideon du Plessis, the union's general secretary, said there had been a "gentlemen's agreement" that Solidarity's members would be rewarded for continuing to work last year in difficult circumstances during a wave of violent wildcat strikes led by other unions.
South Africa's National Union of Mineworkers is seeking pay rises of 15-60%. Reuters

Zimbabwe's mining chamber has warned tighter proposed state control over the sale of minerals would hit Anglo American Platinum and Impala Platinum, slow foreign investment and stunt growth in the industry.
The chamber and other stakeholders will next week debate the draft minerals policy, announced in March, which seeks to increase state participation in exploration, mining and sales of metals and minerals.
Under the proposals, gold and platinum would be sold through a state-appointed "authorised dealer". Other mineral sales would be via the state-owned Minerals Marketing Corporation of Zimbabwe, which the mining chamber says would bring inefficiency and higher costs to the industry.
In a draft response by the Chamber of Mines, mining companies said the proposed policy showed Zimbabwe was moving from market policies. Reuters

Freeport-McMoRan Copper & Gold and oil and gas company Plains Exploration & Production have sweetened their $US6B takeover transaction by around 8% by offering to pay two special dividends if shareholders approve the deal.
The dividends, announced ahead of Monday’s Plains shareholder meeting, effectively brings the cash and stock offering back in line with the original $50 per share bid in December.
The deal has encountered increasing headwinds, with large shareholders CR Intrinsic Investors and Arrowgrass Capital Partners and two prominent proxy advisory firms labelling the offer too low.
After the dividends were announced, Plains's largest shareholder Paulson & Co said it would vote its near 10% equity in favour of the deal.
Plains said it would pay a special one-time cash dividend of $3ps immediately before the Freeport deal closed, and Freeport promised a $1ps dividend on its shares immediately after. Reuters

Fijian miner Vatukoula Gold Mines has attracted oilfield services group DRK Energy as a major investor and fund-raising partner for the proposed expansion program at its Viti Levu mine.
DRK, through indirectly owned subsidiary SCD Energy, has entered a £4.5M subscription agreement for 30M shares at £0.15ps – equivalent to about 19.2% of the company.
The company can also acquire a further 24M shares and lift its holding to 29.9% in return for introducing or facilitating a $US40M debt financing package.
DRK may nominate 2 directors to Vatukoula, initially to non-executive positions. When a suitable candidate is identified, a DRK nominee will be appointed an executive director and chief operating officer.

Western Australian industrial technology firm Intellect Systems has strengthened its role in the Pilbara iron ore province with its appointment to provide electrical and control systems at the Cape Lambert port.
The Resource Development Group subsidiary will provide commissioning and engineering support services for the Rio Tinto port’s recently delivered two reclaimers, stacker and shiploader.
Intellect Systems has undertaken similar projects in the region at Cape Preston, Marandoo and Hope Downs 4.
MD Jason Monzu says the new appointment solidifies its position as a leading provider of specialist electrical and control systems services for mobile machinery.

In the aftermath of the late 2012 shut down of its Chinese lithium plant and consequent loss of a $A66M investment, Galaxy Resources has launched an ambitious $47M capital raising and instigated a wide-ranging cost cutting strategic review to address its mounting debt burden.
Part of the review will include a near $10M cut in corporate costs this year and next from 2012’s $17.6M, with M/D Iggy Tan and directors taking 20% salary cuts and executive management, 10-15% pay cuts.
Galaxy has already implemented initiatives in the past 12 months to cut costs, including putting the Mt Cattlin spodumene mine in Western Australia on care and maintenance in favour of a more cost effective off-take agreement from Talison Lithium.
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Aureus Mining’s plans for the first Liberian commercial gold mine have been boosted by optimisation work on the NI 43-101 definitive feasibility study for its 100%-owned New Liberty project.
The company says forecast gold production over the first six years increases to 119,000ozpa at 3.6gt/t and total 8-year openpit production by 1.5% to 859,000oz.
The initial capital cost reduces 2.9% to $US136M and LOM operating cash cost estimates come down 2.5% to $US668/oz using contract mining.
Proven and probable reserves have been upgraded by 1.6% to 8.5Mt at 3.4g/t for 924,000oz contained gold.
CEO David Reading says the studies improve the project’s mining and plant designs and the layout of waste and plant infrastructure. By taking planning to a greater level of detail, they have extensively de-risked the project.
Aureus remains on track for first gold pour in December 2014.