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Thursday 29 April 2010

Goldstone Resources: So how much is a JORC worth?

Goldstone Resources announced its maiden JORC at Homase last week (click here to view) and Mining Maven gave Exploration Director Hendrik Schloemann the opportunity to expand on the news with a brief Q&A session for investors (click here to view).

The exploration update confirmed a JORC compliant resource totalling 282,608 ounces, though judging from the initial market response this may have been less than some had hoped for. Perhaps, as often happens with speculation in the run up to significant news, the market may have got ahead of itself, and that old adage, “buy on rumour, sell on fact” came in to play. The share price has since recovered which would suggest this was indeed merely a knee jerk reaction.

However, we were rather impressed by the JORC figures. Why were we impressed?

Once again it’s down to the relative value of those ounces, and the fact that a big slug of the resource - 81% - came up in the measured and indicated category – so those ounces in the ground have a significantly greater value than inferred ounces.

For some reason the market currently seems fixated on quantity rather than quality, and this valuation anomaly is certainly not unique to Goldstone Resources. So coming from a value perspective - as we do – what value would we attribute to Homase?

Edison’s recent Gold Report, which provides global average values for Inferred, Indicated and Measured resources and extrapolating their values for the three JORC categories, ($340 per measured ounce, $159 per indicated ounce and $34 per inferred ounce) it would provide the following figures:

Measured – 157,298 ounces @$340 = $53,481,320 
Indicated – 72,531 ounces @$159 = $11,532,429
Inferred - 52,779 ounces @ $34 = $1,794,486

Total - $66,808,235

This is rather crude metric and is used merely to attribute some sort of value on the JORC ounces at Homase. It should also be noted that Goldstone Resources is currently still earning in to the project and subject to successful fulfilment of all the stages in the JV agreement (click here to view) they will eventually achieve an 85% interest.

That said, based on:

- the hugely significant JORC;
- the ability to increase the JORC resource;
- the prospectivity of the region;
- the fact that Homase was previously mined by Anglogold Ashanti and;
- that Goldstone has itself confirmed negotiations with a strategic partner are underway;

we look optimistically on the company’s ability to take this project forward expeditiously, raising working capital when needed.

Having mentioned a number of (non-JORC) factors above it is worth expanding a little here.

Resource Expansion:

The company have confirmed in their announcement last week and in Mining Maven’s follow up Q&A session, that the resource holds the potential for further expansion down at depth and along strike. The resource as identified appears to be only a proportion of what Homase could actually hold and that is always a specific point of interest for investors.

In a world where million plus ounce resources are becoming increasingly attractive to mid tier and major gold producers desperate for new gold finds, Goldstone have found themselves holding some very prospective ground and it comes as no surprise that third parties have expressed an interest (see below re Strategic Partners).

Region Prospectivity:

The Ghanaian projects, of which Homase is the most advanced, is some of the most highly prospective territory in the world. Homase is situated, for example, on the same structure that includes Anglogold’s Obuasi mine which has (including that produced to date) some 42 million ounces of gold. Also nearby are half a dozen million plus ounce projects which can be viewed by visiting the Homase page on the company website.

Historic Mining:

Anglogold Ashanti owned and operated a mine at Homase in 2002/2003, the ore generated was used to provide supplementary feed ore for their Obuasi operation at a reported operating cost per ounce of $220 – 280. This production was undertaken at a time when gold was priced at $320 – 380 per ounce.

Obviously in a time of extremely low gold prices, operation of the mine was marginal with regard to profitability but even factoring in increased operational costs we would expect Homase to be substantially more profitable in today’s $1100 plus ounce gold environment.

Strategic Partners:

In their 9th April STATEMENT RE. SHARE PRICE MOVEMENT (click here to view), the company confirmed “In addition, as announced on 22 February 2010 the Company is in discussions with an industry participant regarding a potential strategic alliance which could include an equity subscription into Goldstone”.

They have a number of prospective licences, one of which has now yielded a maiden JORC resource. Going forward, short-term exploration costs appear to be controlled and central overheads moderate, putting them in a strong position with regard to strategic partnership negotiations and any future fund raising as required.

One other thing....

It is important to remember that the above relates to just the one project in Ghana (Homase) and the company has another Ghanaian gold project (Manso Amenfi), a Senegalese gold project (Sangola) and applications pending for additional permits in Gabon. So what upside should we add for those elements?

In reality......

Now of course, it would be a bit optimistic to expect an AIM listed explorer to simply leap up to much higher valuations immediately, but the potential and value is now clearly defined. And, recognising all the above factors, from a value investor’s perspective, we feel that 5p a share or a £6.5 million market cap should offer considerable upside potential.

We will be following Goldstone Resources very closely over the coming months and expect to report on developments as the story develops. In the interim we trust the Q&A session with Dr Hendrik Schloemann and this brief assessment have proved useful. If you have any comments or feedback please email us at info@miningmaven.com

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed are those of the author and unless otherwise stated, should not be construed as being made on behalf of any featured Company. From time to time Mining Maven principals may or may not take an equity position in the said companies. Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate. All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Mining Maven content, is expressly prohibited without the prior written consent of Mining Maven. However, linking directly to the Mining Maven blog is permitted and encouraged.

 Creative Commons License

mining maven content by mining maven is licensed under a Creative Commons Attribution-Non-Commercial-No Derivative Works 2.0 UK: England & Wales License. Permissions beyond the scope of this license may be available at http://www.miningmaven.com.
Copyright © miningmaven 2010

Tuesday 27 April 2010

Red Rock Resources: Migori Economics!

Red Rock updated the market yesteday with new sample results from the Migori gold project in Kenya (click here to view).

It seems that good progress in being made on the ground; quoting one line from the announcement, which should encourage investors:

"The results confirm the economic potential of the tailings, and the existence of further exploration targets suitable for early follow-up in the eastern license and at Nyarongi"

We asked Chairman Andrew Bell if  he could expand on the news for the benefit of investors. Here's what he had to say:

MM:. Can you give our readers a brief overview of the significance of this update from Migori?

AB: In 1982 a Kenya-based company conducted sampling and metallurgical testwork at the old Macalder tailings. Some work was said to be carried out in Kenya, some in Australia, and some at Imperial College. In 1985 Mackay and Schellman quoted these results in some work they produced, but had not been able to source the original data. That was three years later, and they couldn’t track down the details. So in 2010 it is impossible.

We ran some numbers on the conclusions as to volume, grades, and recoverability, using today’s metal prices, and hypothesized just under $200,000,000 of recoverable metal.

But this was as we recognized quite unreliable. There was no alternative to going back and redrilling, resampling, doing cross and long sections, doing metallurgy, and coming up with figures that could be relied on and a process path that would enable us to implement the recovery of the metals. This is what we have done.

So far the figures for base metals agree quite well with the old figures. The copper grades reported by previous work in the calcine dumps looked unrealistically high, and our figures are lower, but still good. The sulphide copper figures agree well, our cobalt readings are a bit lower grade, especially in the sulphides. Also our zinc is a bit lower, which is an artifact of the upper detection limit of 1% in our ICP test: this factor means our calcine tailings copper grade is slightly low too. Overall there is good agreement, which increases slightly our confidence in the rest of the work done at that time.

The other results, which are encouraging, show that we are already identifying areas outside those already explored where we think we can identify and prove up mineralization to add to the resource base.

MM: Can you also comment on the significance of the results for the Hand-grab samples collected at new BIF-related targets in the Eastern license?

AB:The results as we say are positive, and the Eastern license has been underexplored and the old mines there only mined to a certain depth because of the higher water table. The potential around the very old mines, in a couple of places, is clearly very good. The BIF model and our excitement at finding our hypotheses confirmed is something we shall enlarge on in our next announcement which is coming shortly.

MM:Investors would hope that at some stage that the company may be able to generate revenues from the extraction and sale of the base metal content identified. Would you say the results indicate there may be content of economic significance in this respect and if so, what would the extraction and sale procedure involve and what timescales would you envisage?

AB:We are impatient and are looking actively into installing simple gold production plant and into tailings treatment. How soon? As fast as we can possible do it: this is our priority. We have to await metallurgical testwork on the tails, and are sampling the gossan and some surface areas. I anticipate that we shall extract gold and silver as well as the other metals from the tailings, but the optimal process route is actually what our metallurgists will be working out.

MM:We note that the results for the gold and silver content from the tailings are still awaited, will you be reporting them them separately to the market and if so when do you expect this would be?

AB:This is a different set of tests. It should not be long. We expect them to be good so of course we want to announce the moment we can.

MM: How do today's results add to your confidence in the overall economic viability of the Migori project going forward?

AB:I would be a little surprised and disappointed if we could not make an economic project out of treating the tailings, and do so within a short space. That creates the prospect of cash flow, and cash flow will help exploration and development proceed faster. I would hope that the tailings treatment, and, separately, a small gravity plant to treat surface gold, would themselves make a very viable project. But their development would not detract from, but assist, the continuing effort to build up a major resource by exploration along the length of the belt.


This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed are those of the author and unless otherwise stated, should not be construed as being made on behalf of any featured Company. From time to time Mining Maven principals may or may not take an equity position in the said companies. Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate. All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Mining Maven content, is expressly prohibited without the prior written consent of Mining Maven. However, linking directly to the Mining Maven blog is permitted and encouraged.

 Creative Commons License

mining maven content by mining maven is licensed under a Creative Commons Attribution-Non-Commercial-No Derivative Works 2.0 UK: England & Wales License. Permissions beyond the scope of this license may be available at http://www.miningmaven.com. Copyright © miningmaven 2010

Thursday 22 April 2010

Goldstone Resources: Q&A with Exploration Director, Dr Hendrik Schloemann

We have been monitoring Goldstone Resources (AIM:GRL) very closely in recent weeks. After emerging from a difficult few years the company has recently morphed into a pure gold exploration company with some territory in the most highly prospective areas of the world.

By highly prospective we are talking about Goldstone’s two projects in Ghana and a project in Senegal. In all three cases the projects are in known gold exploration and mining zones and, notably, all three are located close to a number of multi-million ounce gold projects.

More importantly, in the case of the Homase licence in Ghana, the company also has a project previously drilled extensively a few years ago, the data for which the company was able to acquire with the project. This has enabled Goldstone to develop a JORC compliant resource which it announced to the market yesterday (click here to view).

We contacted the Exploration Director, Dr Hendrik Schloemann with a few questions and give him  the opportunity to expand on todays news for the benefit of investors.

Here's what he had to say:

MM: Can you expand a little on the significance of today's JORC announcement?

HS:We have been pleasantly surprised by the fact that 81% of the resource is in the indicated and measured categories. The higher valuation and measure of confidence ascribed to such a resource as opposed to a majority inferred resource is not something we expected at this early stage. What’s interesting is that it appears that the market does not understand the different values ascribed to the categories and the measure of confidence one can assume for a measured resource as opposed to an inferred resource.

MM: What do these results contribute to your understanding of the resource?

HS:The fact that 81% of the resource was classified in the indicated and measured categories and that the ore is within 200 meters of the surface indicates that an enlarged resource can potentially be exploited by open pit mining methods. Before we however start to think of scoping studies we would have to upgrade the resource to at least 600,000 ounces or more. Given the obvious exploration targets below the present resource and along strike, this is a realistic aim. Under the pit high grade ore shoots were identified and, following the geological Obuasi model where present day mining activities have reached a depth of close to 2000m, these shoots are likely to extend to larger depths. The continuation of the mineralisation along strike is indicated by a gold in soil anomaly. Both targets will be the focus of future exploration.

MM: What does the planned Homase exploration programme entail and what is the broad timetable for completion?

HS:The first exploration step will an airborne geophysical survey (subject to board approval) which is suitable to survey zones of higher conductivity in the rocks below far below the surface. One has to understand that the mineralised rocks at Homase are more conductive then than other rocks in the area. Therefore the survey will allow us to see to what extent and where the high grade ore shoots continue to depth. Drilling will be targeted at higher conductivity zones which connect to known high grade ore shoots close to surface and will comence this year.

MM. Is Homase the priority for Goldstone Resources and to what extent are you planning to conduct exploration at Manso Amenfi (Ghana) and Sangola (Senegal)?

HS:Homase currently is our flag ship project and we’d concentrate a lot of attention to it but at the same time we believe that Manso Amenfi and Sangola are extremely exciting prospects that beg to be worked on. Both these projects would require, comparatively speaking, less funds for exploration but could yield early indications of prospectivity.

END

To download the latest analyst research note on Goldstone Resources, click here

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed are those of the author and unless otheriwise stated, should not be construed as being made on behalf of any featured Company. From time to time Mining Maven principals may or may not take an equity position in the said companies.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.

All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of Miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.
Creative Commons License

Mining Maven content by mining maven is licensed under a Creative Commons Attribution-Non-Commercial-No Derivative Works 2.0 UK: England & Wales License. Permissions beyond the scope of this license may be available at http://www.miningmaven.com.

Copyright © miningmaven 2010

Friday 9 April 2010

Range Resources PLC: Q&A follow up


Mining Maven notes the latest update from Range Resources (click here to view). Oil and Gas exploration is not, as they say, for widows and orphans; but as the story unfolds we continue to see a strong business model developing.

We recently conducted an open Q&A session with Range Resources (AIM:RRL, ASX:RRS) where readers were invited to put their questions to the Company. (click here to view). The session generated a high level of interest and helped provide investors with some useful information regarding the company’s activities.

With so much expected to be happening at Range Resources, investors are no doubt keen to seek a more in-depth understanding on the progress being made. In this respect, there have recently been a number of material developments.

The Texan discovery is now generating sales through the company’s 25% stake in the project, thus the progression to oil and gas producer status continues. The successfully completed rights issue, combined with existing funds will enable the company to progress its Georgian oil and gas projects and its flagship Puntland interests, which is targeting multi billion barrel targets in Puntland, Northern Somalia.

Lots to talk about, and to assist investor discussions, we felt it would be a good time to fire across a few quick questions to Pete Landau, Executive Director of Range Resources. It appears we timed our enquiries well, coinciding as they do with yesterdays update.

So here are the questions Mining Maven sent to Range Resources, together with their answers. Thanks to Pete Landau for participating once again!

Note: You will come across some technical terminology in this and other related articles. If you would like to research technical terms further, a good starting point is http://oilgasglossary.com/

Texas:

MM: With regard to the existing Smith1 well can you explain why you are proposing to fracture stimulate and comingle the two zones and what this process entails? Will fracturing and comingling help improve the flow rates? Do you have any ultimate flow rate targets, in this regard, from Smith1 well?

PL: Yes - ultimate target is between 9-11mmcf per day and 650 - 950 bbls per day - fracing and opening up zones are pretty standard procedures.

MM: You are planning to drill additional wells within the licence area. How likely is it that additional wells be situated in areas with gas and oil?

PL: The second well will be an appraisal well located approximately 700m from the Smith #1. The well is expected to add reserves and production while helping to delineate the overall size of the reservoir.

Georgia:

MM: Could you briefly explain how drill targets are identified from the seismic data? Is this a desktop exercise or is this combined with on-site work in the field?

PL: A combination of everything we have data wise to date - historical work (wells, geochem etc) and now the processed and interpreted seismic (when available Q2) - no more "on-site" work is required.

MM: How attractive is Georgia as a location for investment and, if this was an option you chose, how would you go about identifying suitable farm-in partners? Would this be primarily through existing connections or would you consider other means such as opening a data-room for third parties to consider?

PL: Already at least 5 other oil and gas companies operating in Georgia (producing). If the oil potential is demonstrated through the seismic process - farm in partners will be available mostly on the basis on how good the oil potential is (as opposed to Georgia as an attractive investment location). PSA terms are very reasonable and the country holds multi billion dollar pipeline infrastructure already.

Puntland:

MM: We note that the first Puntland well is due to be drilled in Summer 2010. We understand there are various preparatory stages leading up to spudding a well. Could you briefly summarise the key stages? Will you be able to provide updates to market during the preparatory process and also after spudding, on a similar basis to that provided by the company for Smith1 drilling?

PL: Stages will include:
- confirmation of drilling contractor and tying up of associated logistical support;
- rig mobilisation;
- delivery of equipment into Puntland;
- site / camp establishment;
- spudding of well etc .

We will try and provide as comprehensive updates as possible, but with Africa Oil as operator we will have to take our lead from them.

MM: Could you briefly explain the process you are following to secure partners for the Puntland offshore programme?

PL: First and foremost get agreement from the government on offshore psa terms and conditions. Once in place can then move to a list of potential partners (many already briefed and have expressed interest) with terms sheet and programme regarding stage 1 seismic program on targeted areas


We would be most interested to receive feedback from readers, including any aspects you feel it would be good to cover in future articles etc. Please send these to info@miningmaven.com

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.

All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.

The author holds shares in Range Resources
Copyright © miningmaven 2009

Wednesday 7 April 2010

Regency Mines: Chairman's comments on Lake Johnstone update


Regency Mines (AIM:RGM) announced to the market an exploration update on its Lake Johnstone Greenstone Belt project (click here to view). We took this opportunity to ask Chairman Andrew Bell to expand on this for investors. Here's what he had to say:

MM: Could you expand a little on the significance of today's update on the exploration program at the Lake Johnstone Greenstone Belt.

AB: As can be seen from the aerial photographs showing the planned drill locations, these are working farms. There is cover over the whole area, with no rock exposure. It is therefore very different from a lot of the places we are used to exploring. Here, geophysics is the first tool, followed by geochemistry.

But that only gets you so far. Then you have to drill, and only then do you discover whether there is anything there or whether your geophysics has given you false positives – anomalies that are meaningless from our point of view, because they could come for example, in the case of our drilling, from salinity or siltstones.

So you don’t initially do a full drill programme, but drill short holes to find out how much cover there is over the rocks, and what rocks they are, as well as, naturally, what they contain.

In this case we wanted to test the hypothesis in the south at target 1 that we had the jerdacuttup fault system, trending east-west, on which the Tropicana gold lies, and so the boundary between the yilgarn granites and the Albany-Fraser metamorphics to the south. In the north at targets 3 and (as an afterthought) 2 we wanted to test the hypothesis that the anomaly was in greenstone and potentially associated with nickel mineralisation.

At target 1 we encountered the geological boundary as hoped and in ten holes encountered sulphides associated with the Albany-Fraser migmatites, schists and shales.

At target 3 we encountered 1 km of greenstones under 30m of cover with some sulphides. The recent airborne geophysics that had hypothesised the extension of the greenstone belt under cover southward to this area seems validated.

So now we see what the samples tell us, and then we drill, we expect, more and deeper. Will there be something exceptional from these first phase 1 samples? Odds against. Will there be something worth pursuing? Reasonable odds. So far it looks promising and our geophysics and geology team can feel quite satisfied.

MM: You noted that the exploration programme successfully completed its objectives, encountering the geologies sought. Could you explain, in simple terms, what geologies were targeted, how these were encountered and how this helps demonstrate the potential mineralisation in the areas targeted?

AB: As stated above, Target 1 was an EM anomaly on a NE-SW strike, which is across elevation and the N-S strike of the greenstone belt. Tropicana 570k to the NE along the Yilgarn Craton margin has SE dipping mineralisation along a gneissic/schist contact. schists can provide this kind of moderately conductive and broad EM target, so as long as we were not picking up a paleaochannel or a siltstone stratigraphy, we were in with a chance. Anglogold to our east has a continuation of our anomaly.

The drill lines were designed to drill across any SE dipping structure. Target 3 was on a non-conductive magnetic ultramafic anomaly 7 km long. This all needs to be drilled to crystalline basement, but initial drilling was to test regolith for near surface disseminated cobalt/nickel mineralisation and to test margins for gold/copper.

Our geologist commented after conclusion of the drilling: “ if the assay results come back with strong mineralisation a new frontier will be opened up……………...

If mineralisation is weak, the geology remains robust and points to a new frontier with a mineralising system carrying sulphides otherwise not expected and that would put the discovery into the realms of jv consideration with a major”. Either way, i call this progress.

MM: How much has this work increased your confidence that the license area may host a gold deposit, particularly since referencing the similarities to the nearby Tropicana JV project, which appears to share a similar structural system?

AB: Anglogold, who own Tropicana, have pegged most of the geological boundary along the fault. The new understanding that comes from the Tropicana discovery has led to much excitement and a new exploration paradigm. All the ground is pegged, either by Anglogold, or by Teck, or by the Newmont JV. Except for what we have. We had it for the North-South greenstone belt not for the Tropicana-style potential, but in fact the boundaries of cratons are often fertile exploration ground. This is at the south of the yilgarn; for example, at the north boundary of the yilgarn there is another new exploration model, following Sandfire’s copper discovery at Degrussa.

We like also that our position is just west of the western junction of the two major East-West faults that bound the Albany-Fraser metamorphic zone – which mirrors the position of the Tropicana discovery, to the East of the eastern junction of these faults. Perhaps this is a coincidence, of course. But establishing that we have exactly the right rocks, and exactly the right geological boundary, running through our license is a great positive.

MM: Could you also expand a little on the significance of references to the proximity to Ravensthorpe site.

AB: The area is one known to host significant nickel deposits, of more than one type.

MM: Could you outline the next steps in the exploration program at Lake Johnstone.

AB: We will continue, we expect, with phase 2 drilling. If something exceptional appears, it may speed things up. We will also be looking to explore our very prospective area at Kambalda, an important nickel mining centre where we picked up an old mining license next to a producing mine.

MM: The price of nickel appears to be gaining strength. Do you see this as a continuing trend and if so how could this impact the economics of Regency's nickel projects going forward?

AB: Nickel is one of the most sensitive metals. It seems to over-correct in both directions. A year ago people were negative about platinum: the auto industry was on its knees, recovery would be slow, etc. Now people could hardly be more bullish, short and long-term.

Similarly a few months ago with nickel. No recovery in 2010; maybe a small recovery in 2011. How wrong they were. Chinese stainless steel demand is rising. Two thirds of nickel goes to stainless steel, which i call the middle class metal, because you use it in fridges and aircons and motorbikes and cars: everything an urban dweller uses. China will continue to see up to 25m new people joining the urban economy each year, and people continuing to save and buy consumer products in a highly aspirational society. Nor should the other highly populous developing societies of Asia and South America be ignored: they are following the same path.

Nickel will be a continuing bull market: I am convinced of it. The basic supply and demand situation is favourable, and we like this metal particularly and fashion will find us. When it comes to laterites and Mambare, we want to steal a march over other people by focussing on technology, so that we can be a leader. But shareholders already know what we are doing there. We will speak more of this soon, but we wanted shareholders to focus for a moment on what else we have. soon we will be encouraging them to focus on our nickel at Kambalda too.

MM: Finally how do you view the development potential of Lake Johnstone when compared with the company's lateritic nickel project at Mambare?

AB: The problem with sulphides is a different one: finding them! With laterites, like Mambare, we know they are there, and the problem is delineating, measuring, selecting the best zones, looking at the cobalt levels for potential credits, and finding suitable metallurgy. If we find nickel at Lake Johnstone, or quite possibly gold, it will be time to think of development potential.

Perhaps the issue will be overtaken by a gold discovery, and we will all be talking about the development potential of that.

Meanwhile, yes, the potential of Mambare is so large that it cannot easily be compared with anything else. We have to do more drilling to extend resource, and find the really high-grade pockets, and we have to advance on the corporate front.

Project Area and Structural Map graphics

  


http://www.rns-pdf.londonstockexchange.com/rns/7438J_2-2010-4-6.pdf


Maps of Magnetic Image

Target 1

http://www.rns-pdf.londonstockexchange.com/rns/7438J_3-2010-4-6.pdf

Target 2

http://www.rns-pdf.londonstockexchange.com/rns/7438J_4-2010-4-6.pdf

Target 3

http://www.rns-pdf.londonstockexchange.com/rns/7438J_5-2010-4-6.pdf



This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.

All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.

Copyright © miningmaven 2010

Wednesday 31 March 2010

Red Rock Resources: Half Year Results


Red Rock Resources has released its eagerly anticipated interim statement and accounts for the period ending 31st December 2009 (click here to view).

We expected them to be good, so what were we looking for? Specifically, enhanced valuations in the investment portfolio and a positive forward-looking statement from the Chairman – Andrew Bell did not disappoint on either count! In fact he even produced a nice cherry for the cake, with the expectation of a maiden dividend, subject to all going to plan between now and the Company's year end, in June 2010.

Shareholders will know that Red Rock Resources is growing its business by developing raw ground into potentially valuable exploration assets, generally farmed out into new listed vehicles in which the company then retains a material stake. These holdings are in quoted companies and therefore have a readily quantifiable market value.

As value investors, we will always keep a keen eye on the value of such holdings and at this stage in the game, that is what’s driving value.

But as impressive as the accounts were, they only reflect valuations on investments at the half year stage, as of 31st December 2009. Yes, that’s just three months ago, but at the pace this business is growing, three months might as well be three years. So what about those (rather significant) events that occurred after the balance sheet date?

In his statement Andrew Bell makes reference to post balance sheet events and the marked improvement in valuations. So we decided to take a closer look at the status of “available for sale financial asset’s” at the start and end of the period, and then lined them up against the current state of play. Here’s how it looks:

 
 
Red Rock’s main tradable holding consists of some 93 million shares in Jupiter Mines (ASX:JMS).

With its recently announced transformational deal to acquire 49.9% of the Tshipi Kalahari Manganese project, Jupiter has impressed the markets. As noted, in the interim report, the share price has risen from 19.5 cents at the end of December 2009 to 28.5 cents as of today – a rise of some 46%, worth an additional £5.1 million on Red Rock’s Net Assets Value

Can this rate of growth continue? The company would not rule out further rises, as Jupiter bulks up to become a major player in the steel feed business. Quoting from the Chairman’s statement:

“We support the transaction, which has the potential to make Jupiter one of the world's dominant manganese producers and though it is the first substantial transaction by Jupiter, we believe and hope that it will not be the last."

So back to valuations and although we can’t be absolutely precise here, (as we don’t have access to the detailed balance sheet analysis), at today’s quoted prices we can extrapolate an approximate value for ‘available for sale financial assets’ totalling some £17.4 million, worth around 3p per Red Rock share. So the value of the tradeable assets underpin the current share price and then some.

Any uplift in the Jupiter share price would feed through to Red Rock’s NAV at the rate of AU$930k per point, Resource Star at a more modest AU$136k and Cue Resources at CA$98.9k.

So as value investors we are really quite comfortable with the investment case as it stands, and lets not forget that at current prices, you also get a stake in the 1.2m ounce gold resource at Migori for free!

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.


All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.



Copyright © miningmaven 2010

Thursday 25 March 2010

Ariana Resources: New Exploration Targets

This morning, Ariana announced  geophysical  test results from their Kisiltepe project in Turkey (click here to view). We took the opportunity to put a few quick questions to MD Kerim Sener. Here's what he had to say: 

MM: Can you expand a little on the significance of today's news?

KS:This news represents an expansion of our geoscientific knowledge at the Kiziltepe prospect. In particular it has confirmed that there is potential for the discovery of new vein systems in a region of the prospect that was hitherto underexplored. This particular area had no veins outcropping but hosted a region of extensive quartz float, that could not be explained by surface erosion and transport. There was no other indication in this area for buried vein systems, partly due to extensive ignimbrite cover in the northwest and thin alluvial cover in the southeast, concealing any existing veins. The only way to test the geophysical results is by drilling, which is starting with immediate effect.

MM:What do these results contribute to your understanding of the resource and what do they mean in the context of the proposed JV.

KS:The results have confirmed that the Kiziltepe prospect potentially comprises a much more extensive vein network than considered at the time of its acquisition. Obviously drilling must be completed before we know the extent of any potential resource increase through the identification of new vein systems. With regards the JV it was important to complete this geophysical survey before the feasibility-level planning for the siting of mine infrastructure such as the processing plant, tailings dam and waste rock dump. We certainly wouldn't want to site the plant over a potential buried vein!

MM.Have the results added to the potential scale of the exploration area?

KS:Absolutely, we have to wait on our drilling results but the potential is now there for the further exploration of other anomalous zones in the region in addition to those visible in outcrop.

MM:What does this drill programme entail and what is the broad timetable for completion?

KS:We intend to drill a fenceline of short holes in the area of coincident anomalous rock chip geochemistry (up to 21.1 g/t Au) and high resistivity. This fenceline is designed to identify in-situ quartz veins and/or their related alteration, to confirm the presence of a vein system at depth. At a later stage, and assuming the results of this first phase are positive, we would need to follow up with deeper exploratory holes. Another area which will be drill tested now is the point at which the Arzu and Derya structures disappear through ignimbrite cover rocks. This area shows coincident resistivity and intermittent chargeability anomalies in geophysics and other geological evidence suggests the presence of a buried vein system.

MM.How does this additional information add to your confidence in the viability for Kiziltepe to be a source for production, going forward?

KS:Within the margins of error acceptable in a scoping study we are already confident in the viability of the resource. The scoping study was undertaken independently of Ariana by a reputable international firm with prior experience in mining projects in Turkey and it yielded positive results. The new geophysics adds an element of further belief that the Kiziltepe resource will only continue to grow with further drill testing.


To subscribe to Ariana Resources company updates, click here

To view the latest 2010 presentation from Ariana , click here

To view Kerim Sener's Mining Journal feature on mining in Turkey, click here

Previous Miningmaven articles on Ariana Resources

27th February A Piece of Turkey in the heart of Mayfair!

3 January 2010 Ariana Resources: Buy me a Gold Mine in Turkey!

30 January 2010 Ariana Resources: Going for Gold in "Turnkey" Turkey

10 February 2010 Ariana Resources: Lets get this show on the road!

18 February 2010 Ariana Resources: Limbering up for the Main Event!!

This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.


All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.


Copyright © miningmaven 2010

Tuesday 23 March 2010

Webcast: "The Global Infrastructure Opportunity"


Thursday 25th March 4.00pm UK time

US Global Investors, the progressive investment firm headed up by acclaimed fund  manager Frank E Holmes, is holding a free to access web event on Thursday 25th March dubbed "The Global Infrastructure Opportunity".

If you are serious about investing in the resource sector, you wont want to miss this event. Research can be time consuming,  but this accesible webcast will fast track you to some of the smartest minds in the sector. We therefore urge all our readers to take advantage of this opportunity. It starts at 12.pm Eastern Time (4pm UK time), but you will need to sign up in advance (to go to the sign up page click here)



"There are 6.7 billion people living on the planet today, and the population is growing. Growth in emerging markets and the shift of population to urban centres is creating greater demand for resources, services and infrastructure.The estimated needs for infrastructure spending are staggering—trillions of dollars across the world to develop water, energy, transportation and telecommunication infrastructure.

How can you take advantage of these infrastructure investment opportunities?
U.S. Global Investors invites you to participate in this engaging free webcast discussion with members of the portfolio management team for our infrastructure fund, the Global MegaTrends Fund. Also joining the webcast will be special guests from Macquarie North America, a firm that specializes in infrastructure advisory services."

 
This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.

All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.



Copyright © miningmaven 2010

Friday 19 March 2010

Jupiter Mines: CNBC speculative buy - the cheapest way in!!

Jupiter Mines was tipped today as a speculative buy on CNBC today. Red Rock Resources holds 93 million shares in Jupiter Mines, worth AU$28m (£16.8m). Red Rock's entire market cap is currently £12.7m. As our American friends would say - do the math!




This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this weblog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.


All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.


Copyright © miningmaven 2009

Monday 15 March 2010

Red Rock Resources: Migori Update


We took the opportunity to put a few quick questions to Andrew Bell regarding todays update (click here to view). Here is what he had to say.

Drilling Campaign Update:

MM.Can you give our readers a brief overview of today’s update on Migori?

AB. The update is about unfinished business from the old drilling, and some work in progress. This just says steady as she goes, and the tailings info is coming.

MM. Were the Kansai Drilling (2007) assay results in line with your expectations and what will this information contribute to your understanding of the resource?

AB.We need the re-analysis of the old work to begin incorporating this data in a go-forward plan. An experienced ex-Newmont gold geo who knows the project will be available after Easter – we can easily spend money going off at half cock but the more time on analysis, the better, and the more expert the analysts, the better. These holes and other post-2004 holes are not incorporated in the resource yet. So there is built-in upside.

MM. You have noted that the data is being reviewed and analysed with the intention of generating a revised NI43-101 compliant resource estimate. How is this going to proceed now.

AB.We need to keep tight control of this project. The original 43-101 writer has died – we want the new gold geo to assist the new person at the same firm. But we are starting talking. The key is to reassemble carefully all the backing information so we can build on what we have.

MM. Your regional prospecting seems to have identified some interesting targets. Could you elaborate on the prospective value of the new targets?

AB.There is huge potential especially in the east. We find so much old info on this and we have over 60km here so we need good people to control the follow up. We cannot charge full speed at every prospect, but we think we have isolated 2 priorities. If we can just show BIF ‘potential’ that is enough for now.

MM.Would you say the latest results add to your confidence in the case for production at Migori ?

AB.Yes. We need to get a handle on the open pittable resource and on the trade-off between more work on the existing areas and work on prospective new resource areas. We need to make sure we conduct exploration in such a way that we never ‘disappoint’ with a set of bad results. Our new geo joining us who has written on the area before is quite confident.

To view Migori simplified geology map click  here

To see latest Value Proposition click here

Go to Videos to see the recent interview with Andrew Bell


This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All opinions expressed in this blog are those of the author and should not be construed as being made on behalf of any featured Company.
Readers are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of their investment adviser or stockbroker, as they deem appropriate.

All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.

The Author holds shares in Red Rock Resources PLC

Copyright © miningmaven 2010

Saturday 13 March 2010

May We Recommend??

In the wake of the Global Financial Crisis, a plethora of books have hit the market. In time, some may well turn out to be seminal pieces, though most would argue that it is still too soon to tell.

One book which has certainly recieved much critical acclaim is This Time is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart & Kenneth Rogoff. We have now included it in The Miningmaven Book Store at Amazon,  and they are running a special price promotion on it, so well worth a look!

Here's how the sleeve reads:

Throughout history, rich and poor countries alike have been lending, borrowing, crashing--and recovering--their way through an extraordinary range of financial crises. Each time, the experts have chimed, "this time is different"--claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters. This book proves that premise wrong. Covering sixty-six countries across five continents, This Time Is Different presents a comprehensive look at the varieties of financial crises, and guides us through eight astonishing centuries of government defaults, banking panics, and inflationary spikes--from medieval currency debasements to today's subprime catastrophe.

Carmen Reinhart and Kenneth Rogoff, leading economists whose work has been influential in the policy debate concerning the current financial crisis, provocatively argue that financial combustions are universal rites of passage for emerging and established market nations. The authors draw important lessons from history to show us how much--or how little--we have learned.

Using clear, sharp analysis and comprehensive data, Reinhart and Rogoff document that financial fallouts occur in clusters and strike with surprisingly consistent frequency, duration, and ferocity. They examine the patterns of currency crashes, high and hyperinflation, and government defaults on international and domestic debts--as well as the cycles in housing and equity prices, capital flows, unemployment, and government revenues around these crises. While countries do weather their financial storms, Reinhart and Rogoff prove that short memories make it all too easy for crises to recur.

An important book that will affect policy discussions for a long time to come, This Time Is Different exposes centuries of financial missteps.

Having read Liars Poker by Michael Lewis, (which Punch regards as one of the best business books of all time!) we note he also has a new title out shortly, The Big Short: Inside the Doomsday Machine which by all acounts is set to be another classic.

Heres what they have to say.

"The Big Short" tells a story of spectacular, epic folly. It has taken the world's greatest financial meltdown to bring Michael Lewis back to the subject that made him famous. His international bestseller "Liar's Poker" exposed the greed and carnage of the City and Wall Street in the 1980s; he wrote it as a cautionary tale, but people seem to have read it as a how-to guide. Now, he wants to settle accounts. In this visceral tour to the heart of the financial system, Michael Lewis takes us around the globe and back decades to trace the origins of the current crisis. He meets the people who saw it coming, the people who were asleep at the wheel and the people who were actively driving us all of cliff. How could we have all been so deluded for quite so long? Where did it all start? Was it systemic? Was it avoidable? And who the hell can we blame? Michael Lewis has the answers. No one is better qualified to get to the heart of this labyrinthine story. And no one can make it such an enjoyable ride along the way.

Finally we thought it might be a good time to re-visit our review of Michael Coulson's An Insider's Guide to the Mining Sector: How to Make Money from Gold and Mining Shares, which was originally posted in January this year. So if you are new to Miningmaven, or the sector here it is again: 

Whilst engaged as a trainee Chartered Accountant a partner in my firm told me ‘there is no substitute for quality education and training’. How true.

But then why is it many investors buy and sell shares in Mining and Exploration Companies without really understanding the ins and outs of the commodities involved, the intricacies of exploration or the downright practical difficulty of developing a mine after that blockbuster exploration discovery.

In truth the reason is quite simple; that’s what investors generally do. For those that buy banking shares how many understand interest rate swaps, complex derivatives and collateralised loans? For those investing in pharmaceutical shares how many fully comprehend the stage I, II and III clinical trials? And for technology shares, how many investors can truly grapple with the complexities of the technology in which their companies are engaged??

So it stands to reason that a better understanding of the sector could or should place the average investor at something of an advantage to the wider market. And by wider market I include not only the private investor, but many professional investors, brokers and other market participants as well.

The Miningmaven blog is focused on the Private Investor and our mission is to make the sector more accessible to the average investor by providing common sense commentary and sources for additional research. So where would be a good place to start for all PI’s looking to bolster their knowledge of the Mining and Exploration sector?

We think we may have found the answer in this very easy to read book written by Michael Coulson .

Author:

Michael Coulson has been working with the Mining Sector for over three decades, working within banks and brokers and from 1975 to 1991, producing an annual gold review. His work in recent years has revolved around the provision of independent research for smaller broking outlets who themselves lack the particular in-house expertise.

Review:

This is our first Miningmaven book review so we have decided to look for three essential features in all the titles we identify, namely:

-Breadth of coverage;
- Ease of reading;
- Tools that investors can use in the markets.

Coulson’s book scores well in all three areas. Whilst accessible to all, it is clearly written with the novice in mind. He starts with a non-technical industry overview looking at Mining Countries, Major Industrial Metals (e.g Copper, Zinc, Lead, Nickel etc); Precious Metals; Minor Metals (e.g. Cobalt, Tungsten, Magnesium etc) and Non-Metals (i.e. coal and uranium). He explains each metals industrial usage and place in the market and a special section is given over to an analysis of Gold, which with many investors seems to be a key point of focus.

On top of the commodities and the geopolitical risk of the countries where the exploration and mining is conducted, there is the subject of markets, and Coulson deftly addresses this in a decent review of London, Jo’burg, Sydney, Toronto and New York. No mean feat in just twenty pages!!

He then moves on to a review of mining shares, covering smaller stocks through to the larger organisations. How to build a portfolio; awareness of stock market cycles; understanding company announcements and how to value mining shares.

Now that’s all well and good but many investors are aware of a few horror stories and rags-to-riches tales. Here too Coulson doesn’t disappoint where his look at the Bre-X scandal and the Poseidon Nickel bubble  make compelling reading.

Wrapping up the book with additional sources of information and a ‘take-away’ ten key points, Coulson delivers a thoroughly engaging and insightful read. Essential for those who are serious about making money from investing in the sector - not to mention the need to avoid a personal financial disaster by making the wrong decisions.

I keep my copy next to my computer and usually refer to it more than once a day. For around the cost of a one-way trade, it could prove to be one of your better investments for 2010.

Needless to say you can purchase this title and many more at The Mining Maven book store.


This summary represents the views and opinions of Miningmaven, has been prepared for information and educational purposes only and should not be considered as investment advice or a recommendation. All rights reserved. Users may print extracts of content from this blog for their own personal and non-commercial use only. Republication or redistribution of Miningmaven content, is expressly prohibited without the prior written consent of miningmaven. However, linking directly to the Miningmaven blog is permitted and encouraged.



Copyright © miningmaven 2010