EMED Mining Public Ltd poised to woo back investors by 24hgold

Good Morning, Please see below a recent article from HighGrade regarding EMED Mining's project Rio Tinto. EMED poised to woo back investors AFTER years of back and forth, the Andalusia Government finally passed the approval process for the Proyecto Rio Tinto copper project over to the people last month, with the release of the restart’s environmental impact statement for public comment. If a chronically unemployed public continues its longstanding support, this 30-day process should help smooth the way forward for EMED Mining to receive its final approvals in September. The government will table any queries for EMED to address but given the public is behind the project and the incumbent socialist party was only re-elected after promising to permit PRT by the end of the current quarter, it is difficult to envisage any serious roadblocks. PRT has been a political football in the Spanish province of Andalusia and barely crawled toward production during EMED’s first four years of ownership (since 2007). But economic hardship culminating in a local unemployment figure of more than 30% reversed the company’s fortunes last year, as public pressure forced the government to actively support the project. Then, in the lead up to elections in March, demand for the restart saw the two leading candidates fighting over who was more ‘Pro-PRT’. “The Environmental Impact Statement is a document that has been going back and forth between the company and the local authorities,” Fairfax analyst Carole Ferguson told HighGrade. “There’s been a huge meal made out of a whole load of things. “The company has set a timeline to get this whole thing approved but that has always had a tendency to slip, which has been frustrating for them and the market. But I think if they can get public approval for the environmental permits they should start getting the other approvals into place.” Technical approval is progressing in parallel with the environmental permitting and will come from a handful of national review agencies. Technical assessment centres on the geotechnical stability of the tailings facility and controls on acid drainage. There is a third piece of paper called the Administrative Standing, which is essentially a mining licence, also being processed. “The government has said it will approve all three things at the same time so they’ll get their AAU (Environmental Impact Statement), technical review and Administrative Standing approvals in one presentation,” Fox Davies analyst Peter Rose told HighGrade. “Investors will know that the project is for real at that point and, assuming the copper price is still half decent, that’s when they press the GO button.” Ferguson agreed that final approvals would reignite investor interest, adding that EMED would provide the market with one of the few copper options at the junior end of town. She also speculated that there was plenty of blue sky in the resource that was being overlooked while the permitting was ongoing. “There’s no doubt about the quality of the project and of the resource,” she said. “Our view is that there’s more potential for the resource than is in the public domain.” PRT will be a 15 million tonnes per annum open pit copper operation based on current resources and reserves of 205Mt and 120Mt, respectively. Plans are in place to increase these to more than 300Mt and 200Mt within a year of project approval. “They haven’t had the opportunity to do any drilling as yet and these deposits have a habit of being quite large so that’s one of the reasons we’re enthusiastic,” Ferguson said. “The important thing is that there’s little value being given to current resource.” Once permits are granted, the upgrade of existing processing equipment and the preparation of the open pit can start with the goal of producing concentrate late next year. The only potential blockage for EMED is the negotiation over land procurement for the tailings facility. Rose said this issue could bring the project forward by six months if it goes smoothly or push it back by six months if it proves impassable and the company is forced to invoke an expropriation facility available under the Administrative Standing. The project is fully funded through to production and has enough working capital to cope with a further delay but those funds are not infinite. EMED is in talks with landowners at the moment and it is believed that the amount being offered for the land in question is well above the price that will be paid if expropriation is needed but well short of what it will cost the company if the project suffers further setbacks. Logic would therefore suggest that an agreement will be reached without the need for intervention. Nobody who has spent any time with EMED managing director Harry Anagnostaras-Adams would suggest for a moment that he will be doing anything apart from ploughing all his energies into the permitting, landowner negotiations and generally preparing for the restart. But once PRT is up and running and Anagnostaras-Adams gets a chance to peek over the parapet, it’s likely he’ll like the look of his new company. Besides graduating from a development story plagued by disappointment to one of the market’s only junior copper producers, EMED will have the time and money to explore its options at its Biely Vrch project in Slovakia where it has been taking measured steps towards development of a 60,000 ounce per annum gold mine. The two obvious options in front of the company will be to keep that project within the group or release it through either a separate listing when markets become more cooperative or a straight sale. There are arguments for both retention and release. Rose said he understood the logic behind a separate listing of the gold asset but personally would like to see it kept in the group to spread the risk. He said the premium that usually applied to gold stocks seemed to have vanished into thin air of late and until it returned it would be difficult to recommend a spin-off. Rose also said that copper and gold complemented each other well and several of the major gold mining groups had moved to include greater quantities of copper in their production profiles. Ferguson was slightly more bullish on the idea of a separate listing or sale once PRT was operational, reasoning that any other asset in the portfolio was likely to be completely overshadowed. However, she said any deal would have to be offered on the “right” terms because Biely Vrch was, after all, a solid gold prospect and currently costs EMED very little to maintain. For Agnostaras-Adams, who has spent five years battling socialists and markets, how best to configure his copper and gold assets will be a Hollywood problem.

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