Last checked at 30 Jul 2009 07:00
EMED MINING QUARTERLY REPORT
30 July 2009
EMED Mining Public Limited ("EMED Mining" or "the Company"), the European-based minerals exploration and development company, is pleased to provide shareholders with a summary of the Company's activities for the three month period ending 30 June 2009. Quarterly Reports are not an AIM requirement but are provided as an aid to shareholders.
Key Points
Rio Tinto Mine - Copper in Spain:
The principal permit application required to restart the 100%-owned Rio Tinto Mine has been submitted to the relevant authorities in Spain as has the Environmental Impact Assessment.
Copper prices have doubled since the beginning of the year to US$2.50/lb (€1.76/lb). At this level, projected net operating cash flow is estimated to average €50 million (£39 million) pa.
Laboratory facilities at the Rio Tinto Mine have been handed over to ALS Environmental Services in a ceremony attended by Mr. Noel Campbell, Australia's Ambassador to Spain.
Detva Gold Project - Gold in Slovakia
A Scoping Study to assess the economics of developing the 1.1 million ounces gold resource at Biely Vrch is being prepared by AMC Consultants (UK) Ltd.
Drilling of several highly-prospective porphyry prospects is now underway.
KEFI Minerals (29%-owned) - Separately listed on AIM
KEFI Minerals has expanded its activities from Turkey by forming a new minerals exploration joint venture in the Kingdom of Saudi Arabia.
EMED Mining participated in a £0.6 million placing of ordinary shares by KEFI Minerals.
Corporate
Placing raised £2.7 million net after expenses via the issuance of 38.2 million new ordinary shares at 7.5p each. This facilitates the repayment of a loan otherwise convertible at 4.1p and provides cash resources to fund expanded permitting activities in Spain in accordance with the requirements and suggestions of the regulatory authorities.
Placing and options issued to advisers have increased fully-diluted share capital by only 1% to 520.8 million shares (shares, convertibles and options) and Standard Life is now a shareholder.
EMED Mining ownership structure remains dominated by a core group of international mining industry specialists in mine development, financing, operations and marketing.
Harry Anagnostaras Adams, Managing Director of EMED Mining, commented:
"During the past six months two major base-metal mines have started up in Andalucia and we aim to start production at the Rio Tinto Mine in 2010. Our excellent team that is working on site integrates local expertise at this and other mines with international experience, and by working very closely with the regulatory authorities, EMED Mining ensures a 21st century operation. The hand-over of our laboratory facilities to ALS Environmental Services demonstrates our commitment to creating sustainable enterprises that will continue long after the Rio Tinto orebody is mined out more than 20 years from now.
"We continue to progress our Biely Vrch gold deposit in Slovakia towards development whilst at the same time actively exploring other prospects within our licences. Those prospects together have historically yielded over 120 million ounces of silver and 3 million ounces of gold.
"Commodity markets have recovered strongly which augurs well for the projected profitability of our operations. Our Company is well supported by mining industry specialists."
OVERVIEW OF STRATEGY
EMED Mining is led by international mining industry specialists with corporate headquarters in Cyprus, the site of the Group's first project. Cyprus is geographically central to the Company's areas of interest and is a member of both the European Union and the British Commonwealth. EMED Mining has a strong commitment to responsible development of metal production operations in Europe, with an initial focus on copper and gold.
The strategy is to evaluate and prioritise exploration and development opportunities in several jurisdictions throughout the well-known belts of base and precious metal mineralisation.
Please click link at the end of the release to access diagram - Map of EMED Mining Projects
Since becoming a publicly listed company in 2005, EMED Mining has achieved 100%-ownership of two major projects:
Rio Tinto Mine in Spain with substantial processing infrastructure in place and a JORC-compliant Mineral Resource containing 940,000 tonnes of copper; and
Detva Gold Project in Slovakia with a large tenement position in a prolific mining district and a JORC-compliant Mineral Resource containing 1.1 million ounces of gold.
The Company also has earlier-stage activities in Spain, Cyprus and, via associate KEFI Minerals, in Turkey and the Kingdom of Saudi Arabia. EMED Mining is managed by a multi-cultural team drawn initially from Australia and now comprised mainly of Spanish citizens; and its ownership is dominated by international mining industry specialists. The main priority for the short term is to safely and efficiently start up the Rio Tinto Mine once EMED Mining has completed the regulatory approval process, finance the start-up and obtain shareholder approval. Rio Tinto will then become the operational headquarters for the group and the base from which other opportunities can be pursued both in Andalucia and elsewhere.
SPAIN - RIO TINTO MINE
The established open-pit mine, copper-concentrator plant and other infrastructure at the Company's Rio Tinto Mine provide an excellent opportunity to bring a large copper mine into production at a relatively low total cost. EMED Mining has accomplished much since acquiring an option over the project in May 2007 and the move to full ownership in October 2008.
Rio Tinto Mine's JORC Code-compliant Ore Reserve is estimated to total 123 million tonnes at 0.48% copper, containing 585,000 tonnes of copper.
EMED Mining has completed extensive technical work that is aimed at re-establishing Rio Tinto as a major, profitable copper mine producing approximately 37,000 tonnes per annum of copper-in-concentrate. Many improvements are planned to avoid the project's historical weaknesses, to add value to the project and to test further potential.
Detailed preparations have been made to enable commissioning of the Rio Tinto Mine and processing plant only six months after receipt of all necessary permits.
Status and Progress of Permitting
EMED Mining's wholly-owned subsidiary is the 100% owner of the mining property and processing infrastructure at the Rio Tinto Mine. The regulatory authorities are required to formally consider the adequacy of our plans and our competencies in that regard. The Company has therefore submitted formal requests for that to occur and the process is at the stage of detailed discussion with the authorities.
Support for the Company and the plan to restart production at the mine is now evident. Expressions of public support were made during the quarter by the ruling political party, the civil service and the relevant labor union.
As part of the European Union unified environmental permitting process, a new Environmental Impact Assessment has also been submitted. This new documentation examined the technology to be used by the Company in mining and processing the ore. The identification and evaluation of potential impacts of the project were more detailed than ever before and these assessments were updated to current European Union standards. The documentation also detailed the positive impact of the project on the current environmental condition of the site, the human resources of the local communities and the economic impact in this economically distressed region.
The Company now awaits approval in-principle of our plans and competencies. The translated name of that approval is "the administrative approval for the transmission of mineral rights".
Subject to receiving this in-principle approval, EMED Mining will then need to obtain/renew the full set of normal operating licences and permits on the various aspects of operation such as dust emission, noise control, safety policies and procedures and blasting practices. As the mine previously operated for many years, the regulatory authorities and the Company's personnel have extensive familiarity with the specific issues and realities of the situation at the mine site. Therefore, these aspects of permitting should be more straightforward than would be the case for a new mining operation. Nevertheless full details will be provided and considered in every respect.
One aspect that will also be dealt with in due course is the setting of compensation due to certain third party landholders. Some complexity exists due to past dealings by former controllers/managers who have been banned from the project by both the Company and the authorities and some of whom are now being prosecuted for criminal offences. The regulatory process provides a framework to facilitate a proper resolution.
Independent Economic Appraisal of Rio Tinto Application
During the quarter, a research team from the Department of Economics and Statistics at the University of Huelva completed an economic review of the application to restart the Rio Tinto Mine.
Their report concluded that:
The available copper reserves, the experience of EMED Mining's team and the intended funding provide strong reasons to approve the proposed mining operation;
Restarting copper production from the Rio Tinto Mine is a viable economic development opportunity for the communities surrounding the operation; and
Creating more than 300 stable jobs is a factor that must be given due importance as the mine is located in a region of high unemployment.
In the first 10 years of operation, the Rio Tinto Mine is projected to generate GDP of more than €1 billion for the region.
Sustainable Enterprises Being Developed at Rio Tinto
In June 2009, the Company's laboratory facilities at the Rio Tinto Mine were handed over to ALS Environmental Services. Local authorities and the Australian Ambassador to Spain, Mr. Noel Campbell, were present marking the transition.
ALS Laboratory Group, through its Minerals Division, plans to:
refurbish and expand the existing laboratory facilities;
develop the facilities to accredited ISO 17025 level by working with ENAC, the Spanish national accreditation body; and
establish a new Mine Environmental Control Laboratory.
ALS will provide services to the growing mining industry in Andalucia and elsewhere.
EMED Mining played a significant role in decision of ALS to establish a laboratory at Rio Tinto. This is part of a broader EMED Mining initiative to create sustainable industries at Rio Tinto.
EMED Mining is committed to creating further long term employment in the area by:
making Rio Tinto the site of the Group's operational headquarters; and
encouraging the formation of sustainable enterprises which will leverage off the economic activity of the mine. This includes a bias to local suppliers, an industrial park and tourism.
Corporate social responsibility is at the heart of current consultations and planning activities. The Company is advised on these matters by a number of specialists with extensive experience in government, academic institutions and private enterprise.
New Advisers and Changes to the Board of Spanish Subsidiaries
The former General Director of Industry, Energy and Mines in Andalucia, Salvador Durban, became an adviser to EMED Group management for corporate social responsibility and relationship management with governments and government agencies in Spain. We also welcomed Fernando Fernandez, former Managing Director of Las Cruces Project and Managing Director and senior executive of various companies in Rio Tinto Corporation Group. The roles of Messrs Durban and Fernandez are alongside those of Guillermo Guiterrez, former Minister of Industry in Andalucia and Guillermo de la Dehesa former Secretary of State of Economy and Secretary General of Commerce in Spain (via his role at Goldman Sachs, the lead-arranger of project finance, guarantees and copper-price-protection).
The Board of Directors of the now wholly-owned EMED Group in Spain (EMED Spain and EMED Tartessus) has been prepared for its large financial and operational commitments with the position of Chairman being assumed by the Group Managing Director Harry Anagnostaras and Group Chief Geologist Ron Cunneen joining as a Director of the Spanish subsidiaries. Messrs Anagnostaras and Cunneen plan to move their family base to near the mine so as to better support, with the rest of the team, the start-up activities under Managing Director-Spain, Bill Enrico.
Identification of Potential to Increase Mine Life at Rio Tinto
The Rio Tinto Mine's JORC Code-compliant Mineral Resource is estimated to total 205 million tonnes at 0.46% copper, containing 940,000 tonnes of copper and the current mine plan schedules a 14 year base-case mine life.
EMED Mining has compiled much of the vast historical drilling and mining data into a modern database. Analysis of this data has identifed the potential for increasing the current resources in a number of locations on the mine property and on nearby exploration licences.
Further drilling of five different areas in and around the currently planned Cerro Colorado open pit is considered to have the exploration potential to increase the resources potentially accessed via open-pit mining by up to 50% to over 300 million tonnes and subsequently for reserves to double.
In addition, there are underground mines on the same mining property that were previously mined and which contain significant unmined mineralisation that is being evaluated by the geological team. These areas are considered to have good potential to add mineable reserves that may be accessed via underground mining methods.
Exploration success would enable the mine life to be extended and/or enable a substantial increase in annual production. Detailed exploration programs have already been planned and include 60,000 metres of drilling in the first three years to be included within EMED Mining's initial operational plans.
SLOVAKIA - DETVA GOLD PROJECT
EMED Mining is exploring large, 100%-owned tenement holdings in the Central Slovakian Volcanic Field.
The licence holdings were upgraded during the last six months by replacing one licence (Badin) with applications for the Krupina and Prochot licence areas which are considered more prospective. The Hodrusa-Banska Stiavnica licence has received a four-year extension. The surface area of licences and applications now total 1,189 km2.
Please click link at the end of the release to access diagram - Slovakia Tenements 2009
Biely Vrch Deposit
EMED Mining discovered the Biely Vrch porphyry gold deposit, which now has an initial Mineral Resource (JORC Code compliant) of 41.7 million tonnes at 0.79g/t gold, containing 1.1 million ounces of gold and is open at depth.
In order to better assess the economics of developing Biely Vrch, a Scoping Study was initiated.
Metallurgical recoveries and geotechnical ground conditions are key drivers in determining the resource estimate. Further work is planned to be undertaken in order to better define the metallurgical response of the Biely Vrch mineralisation and to collect more geotechnical information.
A permitting plan has been developed that sets out the work required to obtain the necessary permits to develop a gold mine at Biely Vrch.
Further low-cost evaluation work is planned to be undertaken at Biely Vrch in order to progress the deposit towards potential mine development. The current strong gold price assists the economics of potential development scenarios being examined with AMC Consultants (UK) Ltd.
Other Prospects
The Company's exploration team based in Central Slovakia is systematically progressing exploration of prioritised prospects via mapping, geochemistry and scout drilling. The team has now extended exploration into other styles of mineralisation known to be historically mined in this prolific district such as high-grade, epithermal gold deposits.
First-pass diamond drilling at the Zlatno Prospect has recently been completed and assays are awaited. Drilling has commenced at the Sementlov Prospect and the Beluj Prospect is next.
EMED Mining has renewed an exploration alliance with Slovenska Banska sro, a local company that owns the Rozalia Gold Mine, a small, high-grade (approximately 10g/t gold) mine operating on a mining lease within our exploration licences.
Exploration to date in Slovakia has been successful not only from a discovery viewpoint, but has also been very cost effective. EMED Mining plans to continue this approach during the rest of 2009 and drilling of selected targets will be undertaken by EMED Mining's drilling team utilising the multi-purpose drilling rig owned by the Company.
CYPRUS - COPPER-ZINC
EMED Mining's 95%-owned copper project in Cyprus holds the island's largest portfolio of exploration licences. The Company also owns the largest geological database including coverage of the large mines operated by once-multinational Cyprus Mines Corporation which stopped production in 1974 due to the military and political division of the island at that time.
Discussions are taking place with stakeholders over the entire island with a view to optimizing the future exploration and development potential for the benefit of all stakeholders. The Company works carefully to ensure its efforts assist re-unification efforts.
COPPER AND GOLD PRICES
Copper has rebounded sharply from the low prices in early 2009 and is currently trading at approximately US$2.50/lb.
The gold price has recently built a strong base above US$900/ounce.
Please click link at the end of the release to access diagram - 5 Year Copper Spot & 5 Year Gold Spot
The outlook for copper remains strong due to growing demand from emerging countries (particularly China) and growth in copper supply is very constrained.
CORPORATE
Major Shareholders
The EMED Mining ownership structure remains dominated by a core group of international mining industry specialists in mine development, operation and marketing as follows:
Resource Capital Funds ("RCF") 13% (fully-diluted 29%). A large mining private equity fund based in the USA and Australia. RCF invests exclusively in the mining industry;
RMB Holdings 4% (fully-diluted 9%). A specialist mining financier based in South Africa, Australia, UK and USA;
MRI Group 10% (fully-diluted 6%). One of the world's largest metal trading groups based in Switzerland and China;
OZ Minerals 8% (fully-diluted 5%). The leading Australian mining company that introduced EMED Mining to the Rio Tinto Mine opportunity;
Board of Directors and Management 6% (fully-diluted 13%). Specialists who moved to Europe in order to establish EMED Mining and its projects;
Other shareholders include global financial institutions Fidelity International, Goldman Sachs and Standard Life. The Company's shareholders and Goldman Sachs, lead-arranger for the Rio Tinto Mine project finance and guarantees, remain ready to support EMED Mining in the start of production at Rio Tinto subject principally to regulatory consent and to the recent copper price recovery remaining steady notwithstanding the global financial crisis.
Fully-diluted Share Capital
The Company announced on 27 July 2009 a placing of new ordinary shares raising a net £2.7 million after expenses. Subject to shareholder approval at the General Meeting called for 12 August 2009 the Company's fully diluted share capital will remain relatively unchanged at approximately 520.8 million shares, comprised as follows after the placing is completed:
307.6 million ordinary shares on issue
153.0 million ordinary shares upon conversion of Convertible Loan (RCF and RMB); and
60.3 million ordinary shares upon exercise of all existing incentive options
Finance Strategy
The Company plans to finance the start-up at Rio Tinto Mine by a project finance package to be arranged by lead-arranger Goldman Sachs.
In the meantime the Company has cash resources and has an unused £10 million SEDA (Standby Equity Distribution Agreement) which provides flexibility to draw down amounts of £250,000 at prevailing share market prices at the sole discretion of the Directors.
COMPETENT PERSONS FOR REPORTING OF RESOURCES AND RESERVES
Information in this report as regards the Rio Tinto Mine that relates to Mineral Resource estimates is based on information compiled by Mr. Pat Stephenson, BSc (Geology) and Mr. Ron Cunneen, BSc (Geology), Mr. Stephenson taking responsibility for the Mineral Resource estimates and Mr. Cunneen taking responsibility for the data on which the estimates are based. Mr Stephenson is Regional Manager, Vancouver and Principal Geologist with AMC Mining Consultants (Canada) Ltd and a full-time employee of that company. He is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr. Cunneen is Head of Exploration for EMED Mining and a full-time employee of that company. He is a Member of The Australian Institute of Geoscientists. Mr. Stephenson and Mr Cunneen have sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activities which they are undertaking to qualify as Competent Persons as defined in the JORC Code.
Information in this report as regards the Rio Tinto Mine that relates to Ore Reserve estimates is based on information compiled by Mr. Andy Robb, BSc (Mining Engineering). Mr. Robb is Principal Mining Consultant with AMC Consultants and a full-time employee of that company. He is a Member of the Australasian Institute of Mining and Metallurgy and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code.
References in this report as regards the Mineral Resources or exploration results and potential in Slovakia, Cyprus or elsewhere have been approved for release by Mr. Ron Cunneen.
CORPORATE DIRECTORY
| Directors | Non-Executive Chairman - Ronnie Beevor Managing Director - Harry Anagnostaras-Adams Finance Director - John Leach Non-Executive Directors - Ross Bhappu, Ashwath Mehra, Gordon Toll | |
| Nominated Adviser | RFC Corporate Finance - Stuart Laing (+61 8 9480 2500) | |
| Brokers | Fox-Davies Capital Limited - Jason Bahnsen (+44 207 936 5230) Lewis Charles Securities Ltd - Kealan Doyle (+44 (0) 207 456 9111) | |
| Public Relations | Bishopsgate Communications - Nick Rome (+44 207 562 3350) | |
| Share Registrar | Computershare Investor Services Plc | |
| Issued Capital | 307.6 million shares on issue 60.3 million options on issue, with exercise prices ranging from 4.1p to 22p per share. 520.8 million shares on issue on a fully-diluted based on the assumption that convertible loans principal and interest paid with the issuance of shares. | |
| Significant Shareholders (fully diluted) | 13% Management and Board (mainly Australian citizens) 29% Resource Capital Funds, (Australia and USA) 9% RMB Australia Holdings Limited 6% MRI Group (Switzerland) 6% OZ Minerals (Australia) | |
Please click link below to access diagram - EMED Mining Share Price (pence)
http://www.rns-pdf.londonstockexchange.com/rns/5006W_-2009-7-29.pdf
EMED Mining is listed on AIM (Code: EMED)
Share turnover currently averages approximately 1 million shares per day.
Enquiries:
Investors/Media: Harry Anagnostaras-Adams +357 99457843 or +61 412 369 710
General: Cyprus office: +357 2244 2705, Email: info@emed-mining.com