Atalaya Mining Regulatory News (ATYM)

13 Feb 2008 07:00

EMED Mining Public Limited13 February 2008 EMED MINING QUARTERLY REPORT SUMMARY OF ACTVITIES FOR THE THREE MONTHS TO DECEMBER 2007 13 February 2008 Key Points Slovakia - District containing a cluster of porphyry gold deposits confirmed O Biely Vrch porphyry gold deposit is estimated to contain approximately1.2 million ounces of gold. Further work is required to define a JORC-compliantMineral Resource. O The first drillhole at the Slatinske Lazy Prospect intercepted goldmineralisation geologically similar to the discoveries at the nearby Biely Vrchand Kralova Prospects. O Several identified prospects are yet to be drill tested within theCompany's large (1,107km2) 100%-owned licences in central Slovakia. O Drilling has recommenced at the Slatinske Lazy prospect and the Company'sdrilling rig will shortly be sent to Slovakia to expand work in the Slovakiantenement areas in 2008. Spain - PRT copper project due diligence at an advanced stage O Progress has been made on the due diligence work and EMED Mining's seniormanagement team is now focused principally on preparations for start up. O The management team has been expanded and strengthened after the recentappointments of Mr. William Enrico as Group Chief Operating Officer and Mr LakisKatsamas as Chief Financial Officer. Further appointments will be made in duecourse. O The Company plans to seek shareholder approval to exercise the PRT optionat the Annual General Meeting, subject to a number of conditions precedentincluding government approval of all formal applications which have now beensubmitted. O Government and shareholder approval would potentially clear the way forthe acquisition and project restart targeted for Q4 2008. Project ExecutionPlans are being assembled. Other Projects: Cyprus - Review of copper-zinc project worthy of further work O An independent review of the Company's internal study confirmed thatwhile the project is worthy of further work, development should not beconsidered unless resources are expanded through successful exploration. Georgia - First-pass review of prospects identified several worthy of follow-up O The Company will conduct further early stage prospecting of prioritizedtargets. KEFI Minerals (34%-owned) - Separately listed with an exploration portfolio inTurkey O KEFI Minerals was admitted to AIM in December 2006, has quicklyestablished an exploration portfolio in Turkey and continually examinesopportunities. Shareholders and Financing O The Annual Report will be issued in March and the Annual General Meetingwill be held on 4 June 2008 at Rio Tinto in Andalucia, Spain. O Significant shareholders include the Board and Management, Oxiana,GoldFields, RMB Australia, Resource Capital Funds and Fidelity International. O Financing arrangements for PRT are being discussed with potentialfinanciers.-------------------------------------------------------------------------------- About EMED Mining Public Limited EMED Mining Public Limited ("EMED Mining") was admitted to AIM, the London StockExchange market for high-growth international companies in May 2005 (AIM Code:EMED). The Company's market capitalisation has since increased fromapproximately £4 million to approximately £27 million and its share price from£0.08 per share to the current share price of £0.18 per share. EMED Mining is based in Cyprus and has a strong commitment to responsibledevelopment of metal production operations in Europe, with an initial focus oncopper and gold. EMED Mining also owns 32% of KEFI Minerals Plc (AIM Code: KEFI) which wasadmitted to AIM in December 2006 and is focused on exploring Turkey for gold andcopper deposits. Further information is available at www.kefi-minerals.com. EMED Mining continued to rapidly progress several projects in the Group's region of interest spanning Europe to the Middle East during the quarter. (IMAGE: EMED Mining project map) The Company's strategy is to evaluate exploration and development opportunitiesin several jurisdictions throughout this quality mineral belt and to promotesustainable development practices through implementation of European Union andother leading-edge international standards. EMED Mining is focused on two potentially company transforming projects during2008: O The mine development potential of the Company's porphyry gold discoveriesin central Slovakia by further drilling and undertaking appropriate studies; and O The PRT agreements, which provide an opportunity to potentially re-starta significant copper mine and generate significant cash flows. These projects have necessitated the new appointments to the Company's seniormanagement team and re-location of existing senior management. During the quarter, the Company appointed Mr William Enrico as Group ChiefOperating Officer and Mr Lakis Katsamas as Chief Financial Officer. Mr Enrico will shortly be based in Rio Tinto and, subject to the re-start ofproduction at PRT, will lead the production team in Spain and the establishmentthere of the group's operational headquarters. Mr Enrico has extensiveexperience as a senior executive of copper smelting, concentrating and miningoperations in South America, North America and Europe. Given the significance of PRT to EMED Mining, Managing Director HarryAnagnostaras-Adams and Head of External Relations Dr Demetrios Constantinidesbased themselves in Seville and Rio Tinto last year. Other members of theCompany's senior management are now starting to move into the significant officefacilities at the PRT site, including Chief Geologist Mr Ron Cunneen. Mr John Leach (Finance Director) and Mr Lakis Katsamas (Chief Financial Officer)have both just moved to Nicosia, Cyprus. Mr Katsamas will be responsible forexpanding the group's treasury and marketing subsidiary in preparation for thepotential re-start of copper production at PRT. In late 2006, EMED Mining discovered the Biely Vrch porphyry golddeposit in central Slovakia. Drilling to date has delineated a zone ofmineralisation containing an estimated 50 million tonnes with a grade range of0.2g/t to 1.9g/t gold (typically 0.8g/t to 1.1g/t gold), containingapproximately 1.2 million ounces of gold based on preliminary estimations. Thisestimate is conceptual in nature and is based on 15 drillholes completed atBiely Vrch. It remains uncertain if further exploration will result in thedetermination of a Mineral Resource as defined in the JORC Code. Porphyry gold deposit typically occur in clusters and are usually large (>100million tonnes), low-grade (0.7g/t to 1.8g/t gold), bulk-mineable deposits. In November 2007, EMED Mining announced the discovery of a second gold porphyrydeposit at the Kralova Prospect, located 20km southwest of Biely Vrch. Drillingat Kralova intercepted extensive low-grade gold mineralisation in the initialfive drillholes, with a best intercept of 55m at 0.80g/t gold in KVE3. Hole Total Depth From To Length Grade (m) (m) (m) (m) (g/t gold)KVE1 251 0 158 158 0.37 including 0 55 55 0.60 including 124 156 33 0.45KVE2 251 0 251 251 0.42 including 77 132 56 0.80KVE3 247 0 247 247 0.33 including 137 191 55 0.80KVE4 251 0 251 251 0.35 including 1 11 10 0.80 including 22 110 89 0.51 including 217 244 28 0.50KVE5 250 0 250 250 0.23 including 2 38 37 0.51KVE5 249 189 220 31 0.64 In January 2008, EMED Mining's initial drillhole at the Slatinske Lazy Prospectintercepted extensive anomalous gold mineralisation averaging 0.1g/t gold overthe 249m length of the hole. From visual inspection of drill core, Slatinske Lazy mineralisation is hosted ina similar suite of rocks - a quartz-vein stockwork in a potassic-alteredandesite porphyry - to that at Biely Vrch and Kralova. Further drilling is nowin progress at Slatinske Lazy. During 2008 the Company will further test the three zones discovered to datealong with several similar prospects identified from surface mapping andgeochemical sampling by the prospecting team within the Company's large(1,107km2), 100%-owned licences in central Slovakia. The Company also intends toinfill drill the Biely Vrch deposit with the objective of defining an initialJORC-compliant Mineral Resource. The Slatinske Lazy mineralisation suggests that EMED Mining has discovered acluster of porphyry gold deposits. The critical issue in determining economicviability will be grade and waste-to-ore stripping ratio, as these depositstyles tend to be large-tonnage and low-grade. The current gold price, which hasrecently exceeded the previously record prices of the 1980's, assists theeconomics of potential development scenarios. A matter of equal importance to the assessment of the technical merits of aproject is the assessment of sovereign risk and the degree of local support. Assuch, the Company places an equal emphasis on in the establishment of its sociallicence as it does on exploration. In this regard it is notable that the Companyengages in continuing consultation with the relevant local communities and thatthe Government of Slovakia is encouraging responsible exploration anddevelopment, subject to proper consultation and compliance with all regulations.As part of this consultation process, the Company recently co-hosted aninternational conference on Responsible Mining and Environmental Protection inDetva Slovakia, with the local municipalities and with the Faculty ofEnvironment of the Technical University of Zvolen. On 11 May 2007, EMED Mining announced an opportunity for theCompany to acquire 100% of the RTZ-built Proyecto de Rio Tinto ("PRT") in Spain.The main assets of PRT are an established open-pit mine and processing plantadjacent to the town of Rio Tinto 65km northwest of Seville in Andalucia, Spain.The mine was placed on care and maintenance in 2000 due to prevailing low copperprices below $US1.00/lb at that time. The Company intends to mail a circular to all shareholders containing detailedinformation on PRT, in time for consideration at the Annual General Meeting on 4June 2008. Assuming that a formal decision is made in Q2 2008 to go forward with theacquisition and potential re-start of production at PRT, and that regulatory andshareholder approval are in place, the Company currently plans to initiate there-start of production at PRT in Q4 2008. EMED Mining has begun work on theplanning, documentation and financing required to affect a re-start in order tominimize potential delays once a decision is made and shareholder approvalgranted. As part of its planning process, the Company has made key managerialappointments as previously mentioned, and has also marshaled its advisers andappointed independent consultants to prepare a Competent Person's Report on theproject. Activities at PRT Mine Site Since EMED Mining acquired its option over PRT, staff numbers on the PRT sitehave increased from approximately 20 to approximately 40 personnel, includingconsultants and other technical specialists involved with preparing for thepotential re-start. Recruitment of the permanent workforce of approximately 250personnel is planned to commence once regulatory approvals are received. Furtherappointments would follow as production is raised towards plant capacity overthe first two production years. Over the past 6 months EMED Mining has undertaken various activities in order toboth maintain and prepare the PRT facilities for the potential re-start. TheCompany is currently scheduling various repairs and preparations to theproduction plant including: • Reconnection of mains electricity, initially only for plant testing; • Procurement of critical spares; • Replacement of worn or missing parts; and • Re-commissioning. Testing has commenced on certain parts of the plant where diesel power sufficesand submissions have been invited from Andalucian construction contractors toremove and replace the asbestos sections of the roofs of buildings at the sitein compliance with safety standards. EMED Mining has to January 2008 spent approximately €5 million in evaluating andmaintaining PRT. Expenditure continues on PRT at approximately €300,000 permonth while the restart decision is pending. Conditions Precedent It is necessary that all conditions precedent be satisfied in order for theCompany's shareholders to be asked to fully approve the exercise of the optionand to re-start of production at PRT at the Annual General Meeting. Theseconditions include receipt of all regulatory permits and the arrangement offinance set out previously, and in summary are: • Regulatory approvals of the Restart Plan by the Provincial Government (Junta de Andalucia), support of the local community and approvals by the relevant statutory authorities in respect of ancillary applications and performance bonds; • Settlement satisfactory to EMED Mining of the disputes and liabilities of PRT's vendor, including liens and contractual arrangements where required with a number of third parties including landholders; and • Completion of all due diligence to EMED Mining's satisfaction including environmental considerations and infrastructure requirements. EMED Mining will report further progress on satisfying the conditions precedentas appropriate. Key Project Parameters The Company's due diligence (independently reviewed by AMC Consultants)indicates that the potential restart of operations, based on the Company'scurrent redevelopment plan for the project, would achieve the following: O Production of approximately 40,000 tonnes of copper-in-concentrate basedon processing 7.5 million tonnes of ore per annum from 2010. This represents 83%of historical maximum capacity through the existing treatment plant at PRT.Planning in progress to further expand the project; O An average waste-to-ore ratio for the life of mine of approximately 1.3to 1.0; O Total costs of US$1.20/lb including capital and operating expenditure,which is below the average for major new copper projects; O Annual average EBITDA (Earnings Before Interest, Tax, Depreciation andAmortisation) of approximately £40 million per annum for 100% of PRT based on anaverage copper selling price of US$2.08/lb over 10 years (current spot marketUS$3.40/lb). The Company currently intends to arrange price-protection viahedging during the initial years, although this will depend on the financingarrangements that it ultimately enters into. Price forecasts have been based ontracking the London Metal Exchange forward price curve down to US$2.70/lb at theend of year 5 and thereafter assuming US$1.50/lb flat; and O Employment of approximately 400 to 450 employees and contractors at fullproduction. PRT Resources and Reserves The Company's Competent Person and AMC Consultants (UK) Limited have previouslyreported the following JORC-compliant estimates for PRT: • Mineral Resources totalling 255 million tonnes at 0.57% copper, containing 1.44 million tonnes copper; and • Ore Reserves totalling 69 million tonnes at 0.65% copper, containing 0.45 million tonnes copper. It is notable that only 40% of resources are currently converted to reserves.Further drilling and other evaluation work is expected to significantly increasereserves by converting an increased percentage of resources to reserves. The mineral concession also includes additional significant resources which willnot be published until EMED Mining undertakes further exploration to enable aJORC-compliant estimate to be made. Further information on the PRT Ore Reserve and Mineral Resource estimates arecontained in EMED Mining's announcement dated 2 August 2007. EMED Mining's exploration areas in Cyprus are centred on theTroodos ophiolite complex. The targeted mineralisation style is volcanic-hostedmassive sulphide ("VHMS") copper deposits, similar to the larger past Cypruscopper mines - three of which exceeded 10 million tonnes of ore running atgrades between 1% and 4% copper. Rising metal prices have materially improved the economics of certain knownmineralisation systems in Cyprus. This prompted EMED Mining to re-evaluate theCyprus prospects in the context of exploration insights developed internally.JORC-compliant Inferred Mineral Resources for the Klirou Copper-Zinc Projecttotal 6.6 million tonnes at 0.41% copper and 0.81% zinc, for contained metal of18,500 tonnes copper and 53,600 tonnes zinc. The Klirou resource extends from the surface to approximately 200 metres belowsurface and is potentially mineable by open-pit methods. Potential remains toincrease these resources by infill drilling and step-out drilling. EMED Mining has reached agreement in principle to utilise the nearby Mitseroprocessing plant owned by its 5% partner Hellenic Mining Company to treat oreand produce saleable concentrates. During the quarter, AMC Consultants (UK) Limited completed their independentreview of the Klirou Copper-Zinc Project internal study. This review confirmedand built on many of the key conclusions. Financial modelling based on theavailable information and work completed to date continues to indicate that theproject is worthy of further work and potential development utilising theMitsero processing plant. This review highlighted the following key areas for further work beforejustifying the commencement of a full feasibility study for the KlirouCopper-Zinc Project: •Expansion of resources through successful exploration. •Diamond core drilling to verify and upgrade categorisation of known resources, as well as collecting samples for further metallurgical testwork. •Further assessment of the refurbishment of the nearby Mitsero processing plant, as well as preparation of a metallurgical plan for the resources and a processing strategy. •Collection and collation of firm cost estimates. The verification drilling has commenced using the Company's recently purchasedmultipurpose drilling rig which has redressed the historical lack of reliablediamond drilling capacity in Cyprus. EMED Mining's new drilling operation is beginning to perform well, achievingmetreage and core recovery not previously recorded in the difficult groundconditions (for diamond drilling) in Cyprus. The Company's drilling team willmove to Slovakia in the first half of 2008 to increase the Company's commitmentthere, while the Cyprus drilling results are reviewed. A full feasibility study would in due course form an integral part of theEnvironmental Impact Study ("EIS"), which is the key permitting document forpublic and community input. EMED Mining has continued to build relationshipswith the Government of Cyprus and local community as part of its ongoingconsultation process. Following the potential re-start of the Company's PRT copper project in Spain inthe Q4 2008, EMED Mining will consider focusing more effort on the project inCyprus with a view to justifying a full feasibility study on the KlirouCopper-Zinc Project. In the interim, low-cost evaluation work will continue onvarious opportunities in Cyprus and related business opportunities elsewhere. EMED Mining's main prospects in Georgia are within the UpperRacha Licence in northern Georgia, the country's largest minerals licence withmany untested prospects. The Company has confirmed and previously reported Russian Resources of 1.0million ounces gold at the Zopkhito Prospect and discovered gold mineralisationat surface at other prospects which are being systematically sampled for thefirst time. Field programs during 2007 have primarily comprised geological mapping andsample collection over the large Upper Racha Licence area. Follow-up sampling ofgold mineralisation discovered at the Ipari Prospect in 2006 has not providedfurther encouragement. EMED Mining currently has cash at bank of £2 million (€3 million) andhas yet to fully draw on its Standby Equity Facilities with YA Associates.During the quarter, a new £2.5 million (US$5 million) loan (repayable in cashor, at the Company's election, with Company shares issued at future marketprices) was put in place and drawn down to support group activities pending theadditional fund raising that would be needed if the PRT option is exercised. Based on current engineering and financial analysis the estimated fundspotentially required for the restart, acquisition and other group activitiestotal approximately £60 million (€90 million or US$120 million) rather than theoriginal estimate of £79 million, due to refined scheduling of expenditure andrevenues. There is scope for further rescheduling. The latest projections showthat the earliest that the PRT production restart could occur would be towardsthe end of Q4 2008 and annual average EBITDA in the order of £40 million. EMED Mining will continue refining operating plans and verifying cost and otheranalyses in consultation with its advisers and independent consultants. This mayresult in changes to the above figures. The Company is actively pursuing discussions on potential financing arrangementsfor the restart and full acquisition of PRT with potential providers of financewho have commenced site visits and are conducting detailed technical andfinancial due diligence on PRT. Mr Ron Cunneen, B.Sc. (Honours) has approved for release the references in this announcement relating to: • exploration results and potential in Slovakia; • JORC-Compliant mineral resources in Cyprus; and • Russian resources in Georgia. Mr Cunneen is Chief Geologist and Head of Exploration for EMED Mining and hasmore than 20 years' relevant experience in the field of activity concerned. Heis a member of The Australian Institute of Geoscientists. The specific information in respect of PRT in this and the previous announcementthat relates to JORC-Compliant mineral resource and ore reserves is based oninformation compiled by Ms Sonia Konopa (Senior Geologist), MSc (Economic &Mining Geology), BAppSc (Honours Geology) with 20 years relevant experience inthe mining industry, and Mr Andy Robb (Principal Mining Consultant), BSc (MiningEngineering), with 30 years relevant experience in the mining industry, who areboth employees of AMC Consultants (UK) Limited. Ms Konopa is a Member of the Australasian Institute of Mining and Metallurgy andhas sufficient experience relevant to the style of mineralisation and type ofdeposit under consideration to qualify as Competent Person as defined in the2004 Edition of the JORC Code. Ms Konopa is responsible for the reporting of themineral resource estimate. Mr Robb is a Member of the Australasian Institute of Mining and Metallurgy andhas sufficient experience relevant to the style of mineralisation and type ofdeposit under consideration to qualify as Competent Person as defined in the2004 Edition of the JORC Code. Mr Robb is responsible for the reporting of theore reserve estimate. Ms Konopa and Messrs Cunneen and Robb consented to theinclusion in the announcement of the material in the form and context in whichit appears in this announcement. EnquiriesEMED Mining RFC Corporate Fox-Davies Parkgreen Finance Capital Communications Harry Stuart Laing Richard Hail Justine HowarthAnagnostaras-Adams+357 9945 7843 +61 8 9480 2500 +44 207 936 +44 20 7851 7480 5220--------------------------------------------------------------------------------Directors Ronald (Ronnie) Hugh Beevor (Non-Executive Chairman) Aristidis (Harry) Anagnostaras-Adams (Managing Director) John Edward Leach (Finance Director) Dr Michael Price (Non-Executive Director) Gordon Leonard Toll (Non-Executive Director) Nominated Adviser RFC Corporate Finance Brokers Fox-Davies Capital Limited GMP Securities Europe LLP Lewis Charles Securities Ltd Public Relations Parkgreen Communications Share Registrar Computershare Investor Services Plc Issued Capital 149.6 million shares on issue 36.0 million options on issue, with exercise prices ranging from 8.0p to 22p per share. Significant Management and Board (16%)Shareholders(before dilution for Oxiana Limited (12%)options) Gold Fields Limited (9%) RMB Australia Holdings Limited (5%) Fidelity International (4%) Resource Capital Funds (4%) EMED Mining Share Price (pence) (IMAGE: EMED Mining share price graph) EMED Mining is listed on AIM (Code: EMED) To view the report with images in PDF, please click here: http://www.rns-pdf.londonstockexchange.com/rns/8693n_-2008-2-12.pdf This information is provided by RNS The company news service from the London Stock Exchange