While market sentiment oscillates between the positive economic data coming out of the US and Europe on the one hand, and the ramifications of the Fed's tapering and its effects on the economies of the Fragile Five on the other, companies have still been able to raise capital and directors still have an appetite to buy shares in their companies, as this week's brief shows. Our stock of the week is AIM quoted Sable Mining which offers early stage exposure to a high grade, high tonnage and low capital intensive iron ore development asset, that is already the second largest on- or near-rail DSO deposit held outside of the majors in West Africa.
In the brief this week, on the mining side: Mariana Resources: (AIM: MARL) announced more positive drilling results at its Condor de Oro copper-gold-molybdenum project; North River (AIM: NRRP) raised ?1,025,000 to complete a DFS later this quarter on its Namib Lead & Zinc Project in Namibia; Ariana Resources (AIM: AAU) also raised ?770,000 to fast track its exploration programme on the wider Kiziltepe area of the Red Rabbit Gold Project; Paragon Diamonds (AIM: PRG) saw three directors purchase a total of ?30,000 of shares in the Company, and Beacon Hill Resources (AIM: BHR) and Nyota Minerals (AIM: NYO) issued positive quarterly updates. In the oil and gas sector: Europa Oil and Gas' (AIM: EOG) CEO bought ?45,000 worth of shares in the market, making it ?100,000 in the past 10 days; Magnolia Petroleum (AIM: MAGP) announced production rates for two new wells bringing the total number of producing wells in which it has an interest to 142; while ASX listed Zeta Petroleum (ASX: ZTA) released its quarterly update to shareholders.
If you want a chat with, or information on, any of the mentioned, please email and we will arrange.
The Brief:
Mariana Resources: (AIM: ) the South American focused miner maintained its run of positive drill results at its 102 sq km Condor de Oro copper-gold-molybdenum project, with the latest holes yielding the strongest porphyry-style copper-molybdenum mineralisation to date. The results confirm the size and intensity of the multi-phase mineralised system, which has an excellent address being located along the prolific Cordillera del Condor gold-copper belt in Northern Peru. Mariana has taken up its option to continue to hold Condor de Oro into the second anniversary period, a decision made easier by these latest results!
After lodging the relevant environmental permit applications with the Namibian government last week, North River (AIM: NRRP) continues to keep the pedal to the metal as it focuses on restarting production at the Namib Lead & Zinc Project in Namibia. This week, the Company raised ?1,025,000 via a placing at 0.6p to complete a DFS later this quarter. At the same time, North River has secured a drill-for-equity agreement with the owner of the drilling and mining contractor operating at Namib.
Further proof that investor appetite is returning to the junior resource space was provided after Turkish gold explorer, Ariana Resources (AIM: AAU), raised ?770,000 gross to fast track its exploration programme on the wider Kiziltepe area of the Red Rabbit Gold Project, where recent results have highlighted the potential to double its current mineable Resource. The Kiziltepe Sector is now at the pre-production phase with mine construction due to commencing once final local permitting and project funding received. With revenues being generated in the near term from its initial mine, these funds will be directed towards a high impact exploration campaign which has the potential to enhance the overall economics of the Kiziltepe Sector, extend the mine life and increase the value of the asset.
Three executive directors at Paragon Diamonds (AIM: PRG) bought ?10,000 of the Company's stock. They clearly liked what they read in a production update issued by the operator of the Letseng Kimberlite mine in Lesotho which lies next door to Paragon's flagship Lemphane project. Lemphane is due to commence production in Q3 2014 and exploration to date has resulted in the recovery of a number of large high value stones of a similar size to those recovered at Letseng.
Hugh Mackay CEO of Europa Oil and Gas (AIM: EOG) has also been in the market snapping up shares. Hugh purchased ?45,000 of stock at 8.2p a share this week, a third higher than the ?55,000 of stock he purchased at 6p a share as part of the recent Open Offer. Hugh now holds 1.14% of Europa - a clear vote of confidence in the upcoming drill and exploration programmes. These include two UK onshore wells; a well targeting the 416bcf shallow gas prospect onshore France in late 2014/early 2015; and results of the recently acquired 3D seismic over the billion barrel prospectivity offshore Ireland, ahead of a possible playmaker well in 2015 alongside Kosmos Energy.
US onshore focused Magnolia Petroleum (AIM: MAGP) reported two more wells in Oklahoma have commenced production bringing the total number of producing wells to 142. A further 60 are under development providing significant scope for near term production and associated revenue growth. As well as generating revenues for new drilling to prove up its reserves across its 13,000 net acres onshore US, having an average interest of 3% in 202 wells goes a long way to diversifying the risks associated with the oil and gas sector - and not many oil and gas companies on AIM can claim to be relatively low risk.
Beacon Hill Resources (AIM: BHR), which until recently maintained a dual listing on the ASX, issued a quarterly update to shareholders. BHR achieved a number of milestones towards achieving its goal to build an economically robust coking coal project at the Minas Moatize Mine, Mozambique including the successful commissioning of the Phase 2A Expansion and wash plant upgrade, and the production of good quality hard coking coal. Beacon's primary focus for 2014 is to secure a senior debt facility and further expand the wash plant which is expected to see Minas Moatize become a tier 1 asset in cost terms enabling it to deliver attractive financial returns during downturns in the commodity cycle and offer considerable upside as coking coal prices recover.
A number of other companies with an ASX or dual listing issued quarterly updates this week:
East African focused gold explorer, Nyota Minerals (ASX/AIM: NYO) had a busy quarter which saw the sale of a 75% stake in its Tulu Kapi gold project in Ethiopia to KEFI Minerals plc for a mixture of cash and shares. Following the sale Nyota's focus has switched back to exploration, starting with its 100% owned Northern Block tenements in Ethiopia. A full field work programme is in place for the near drill-ready Boka West target and the Bar and Cloen targets, the results of which will be evaluated by a Competent Person. The fieldwork is due to commence in February.
Zeta Petroleum (ASX: ZTA) set out what promises to be an exciting year for the Romanian focused oil & gas explorer and producer, one that will see a significant jump in production on the Suceava concession as the Dornesti Sud-1, the first of two stranded gas discoveries, is brought into production in early H2 2014. In addition, Zeta, alongside the operator, a division of Gazprom, has lodged a 2014 work programme with the Romanian authorities focused on monetising the Jimbolia 100 discovery.
STOCK OF WEEK
A recent investor site visit to AIM quoted Sable Mining Africa Limited's (AIM: SBLM) Nimba Iron Ore Project in south-east Guine? has highlighted its potential to offer investors a rare opportunity for early stage exposure to a high grade, high tonnage and low capital intensity iron ore development asset.
Nimba is a significant new iron ore discovery, which, with a current mineral resource of 178.4Mt at an in-situ grade of 59% iron and a total exploration target of 200Mt, already makes it the second largest on- or near-rail DSO deposit held outside of the majors in West Africa.
With a Mining Licence, export decree and infrastructure development MOU in place, the Company has made significant important advancements towards commencing commercial production in 2015. The Company is confident that the near surface nature of the mineralisation and proximity of infrastructure sets Nimba apart from many of its peers resulting in the potential to fast track the project to production with relatively low capital expenditure. Significant resource upside potential remains at Nimba, as the initial resource covers only Plateau 2 and a portion of Plateau 3; the 11 km sq Plateau 1 is larger than Plateau 2 in aerial extent and has yet to be drilled.
Broker GMP states: "Our site visit to Nimba reassured us not just on the quality of the iron ore as drilling continues, but that the project can be delivered in line with our previously forecast capex of US$250-300m, driving best-in-class capital intensity of under US$100/t for the first 3Mtpa operation. We also retain our view that not only is our forecast FOB opex of US$41/t achievable, but this could improved as operations scale up - both should be finalised in the PFS scheduled to complete in February. Finally, we were pleased to hear management reiterate their belief that the final definitive rail and port agreements can be concluded in the coming three months, which has been qualitatively supported by recent public comments from Liberian ministers, who spoke supportively regarding multi-user rail access."
Felicity Edwards
St Brides Media & Finance Ltd
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