Atalaya Mining Regulatory News (ATYM)

RNS Number : 4110G

EMED Mining Public Limited

01 February 2010

 

 

EMED MINING QUARTERLY REPORT

1 February 2010

 

EMED Mining Public Limited ("EMED Mining" or "the Company"), the European-based minerals development and exploration company, is pleased to provide shareholders with a summary of the Company's activities for the three month period ending 31 December 2009.

Key Points

Rio Tinto Mine ("Proyecto Rio Tinto" or "PRT") - Copper in Spain

> The Junta de (Government of) Andalucia confirmed the process for permitting the start-up;

> Public expressions of support for the Company restarting the mine were given by the government, local municipalities and the key labour union;

> The copper price outlook appears positive, with spot and average 10-year forward prices continuing to exceed US$3/lb or US$6,600/tonne (€2.10/lb or €4,620/tonne). At this copper price, projected net operating cash flow is estimated to average €67 million or £57 million per year under the current development plan;

> The Company's target of starting production in 2011 is based on the following timetable:

o Q1-2010 and Q2-2010: submission of detailed responses to regulatory requests;

o Q2-2010 to Q4-2010: public information and consultation; further regulatory reviews in Andalucia and in Madrid; administrative approvals to allow start-up activities;

o Q3-2010 and Q4-2010: shareholder approval; commencement of start-up activities;

o 2011: production, exact timing dependant on permit timing and conditions attached.

Detva Gold Project - Gold in Slovakia

> The Company triggered project refinement and development permitting, following the completion of a positive Scoping Study on the 1.1 million ounce Biely Vrch gold resource, and as a prelude to infill-drilling and detailed engineering;

> The Company prioritised exploration targets in Central Slovakia for testing in 2010 including high-grade vein-style targets with potential for both underground and open-cut mining.

Corporate

> The Company completed a placing of 27.7 million ordinary shares at 11 pence per share, to existing shareholders including Resource Capital Funds, RMB Australia and Standard Life. Together with an option exercise by Directors this provided £3.3 million working capital;

> Share market capitalisation at 12 pence per share is £40 million (£67 million fully-diluted).

Harry Anagnostaras Adams, Managing Director of EMED Mining, commented:

"In Spain we continue to work with the authorities to enable the restart of production at the Rio Tinto Mine in 2011, the development of which would make a significant contribution to employment and the economy in Andalucia.

The support of the Government and of the communities is much appreciated and we are pleased to have moved to the next stage in the regulatory framework. We are now diligently working through the information and process requirements set out by the Junta de Andalucia.

"In Slovakia we have commenced preparing and submitting permit applications for development of the Biely Vrch Gold Deposit. We have been welcomed in both Spain and Slovakia and work well within the communities and with regulatory authorities.

"2010 promises to be a transformative year for EMED Mining as we progress towards commencing copper production at the Rio Tinto Mine and gold development at Biely Vrch."

EMED Mining is led by international mining industry specialists with corporate headquarters in the European financial centre Cyprus, geographically central to the Company's areas of interest and a member of the European Union and British Commonwealth. EMED Mining is committed to responsible development of metal production in Europe, with an initial focus on copper and gold.

The strategy is to evaluate and prioritise metal production opportunities in several jurisdictions throughout the well-known belts of base and precious metal mineralisation.

Over the longer term, it is the Company's goal to develop a group of production units across several jurisdictions from the operations base in Spain. 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. This was an acquisition of a large copper mine on care and maintenance with a view to organisational restructuring, project improvement, start-up and expansion; and

> Detva Gold Project in Slovakia with a JORC-compliant Mineral Resource of 1.1 million ounces of gold at the Biely Vrch Deposit. EMED Mining discovered this substantial gold deposit by applying the latest exploration techniques in a prolific mining district. Further work towards developing this project is being undertaken following completion of a positive Scoping Study.

The Company has earlier-stage activities in Cyprus and Georgia, as well as via associate KEFI Minerals which operates exploration joint ventures in Turkey and the Kingdom of Saudi Arabia.

EMED Mining is managed by a multi-cultural team drawn initially from Australia and the Americas and now mainly comprised of Spanish citizens. The main priority for the short term is to safely and efficiently start copper production at the Rio Tinto Mine once EMED Mining has completed the regulatory approval process, financed the start-up and obtained shareholder approval.

Multi-lingual introductory videos are available on www.emed.tv for the information of interested parties. Also, notable media articles are available on www.emed-mining.com.

 

 

EMED Mining, via its wholly-owned subsidiary EMED Tartessus SL, owns 100% of PRT.

The photo shown below in the full version of this announcement found on the Company's website shows the Rio Tinto Mine tailings facility, copper concentrator and the mine in the foreground.

 

The established open-pit mine, copper-concentrator plant and other infrastructure at the Rio Tinto Mine provide an excellent opportunity to bring a large copper mine into production at a relatively low total cost at a time of global copper shortage and high local unemployment.

Government Support and Permitting Roadmap

In December 2009, the Junta de (or "Government of") Andalucia confirmed the permitting process, or "roadmap" to facilitate the start-up of the Rio Tinto Mine, as follows:

> Preparation and lodgement for approval of all remaining detailed plans for starting, operating and rehabilitating the mine, plant and waste disposal infrastructure;

> Concurrent consideration of the administrative transmission of the Company's mineral rights, the environmental impact assessment and the operating permits, in compliance with changed environmental regulations introduced in mid-2009.

> The Company's target of starting production in 2011 is based on the following timetable:

o Q1-2010 and Q2-2010: submission of detailed responses to regulatory requests;

o Q2-2010 to Q4-2010: public information and consultation; further regulatory reviews in Andalucia and in Madrid; administrative approvals to allow start-up activities;

o Q3-2010 and Q4-2010: shareholder approval; commencement of start-up activities;

o 2011: production, exact timing dependant on permit timing and conditions attached.

The restart of the Rio Tinto Mine is considered to be relatively straightforward from an operational perspective, with an established infrastructure and processing facility that can be readily restarted. Aspects of the operation will be updated to incorporate industry improvements that have been developed over the past 20 years.

Widespread Support for the Start-Up

In November 2009, PRT was featured at a forum on the Mining Industry conducted in Rio Tinto. The forum was entitled "Mining as the Engine for Development" and was hosted by Unión General de Trabajadores (UGT) - the labour union associated with the ruling socialist party and which represents personnel at PRT and at the nearby base metal mine Aguas Tenidas.

Attendees included officers of local, provincial, state and federal governments along with union leaders and representatives of the mining industry. A number of important statements were made regarding the mining industry's revival in Andalucia and specifically of EMED Mining's interests. Some of these are reported below along with other recent statements:

> Mayor of Rio Tinto (Nuria Hernández) on 27 November 2009: "We know EMED Tartessus and its project and we have always supported and will support their efforts to reopen this mine in compliance with all regulatory requirements";

> Head of UGT (Luciano Gomez) on 27 November 2009: "(the government) needs to move faster on bringing a mining project into operation. EMED is demonstrating seriousness and social responsibility (…...) I request the local administrations give a significant and definitive boost (…..)";

> Head of Provincial Government (Manuel Alfonso Jimenez) on 24 November 2009: "If the Company (EMED Tartessus) complies with all that is necessary to start-up the mine, we would be delighted to have this carried out and that the Rio Tinto Mine starts up."; and

> Provincial Heads of Government (Manuel Alfonso Jimenez) and ruling Socialist Party (Mario Jimenez) on 30 September 2009: "The Junta de Andalucia encourages and supports the plans of EMED Tartessus (a wholly-owned subsidiary of the Company) to start up production at PRT subject to full due diligence and regulatory compliance in all respects".

Independent Certification Reports for Regulatory Approvals

Independent experts have commenced the due diligence investigations for certifying the Company's operating and rehabilitation plans as part of the regulatory approval process.

Drilling commenced to check the integrity of the tailings dam wall under the supervision of EPTISA which is also certifying tailings dam capacity. Other mandates include those issued to EYGEMA for the rehabilitation plans, ECA for the tailings dam inspections, AMC Consultants for detailed mine plans and APPLUS+ for the Occupational Health and Safety Systems.

Regional Context

During 2009 production at two large copper mines (Las Cruces and Aguas Teñidas) in Andalucia commenced. Andalucia also hosts one of Europe's largest copper smelters (Freeport, in Huelva).

Unlike the other recent start-ups, the Rio Tinto Mine is a project which is essentially intact from an infrastructure viewpoint. The economic outlook for the Rio Tinto Mine provides an incentive to expedite implementation of the start-up, operational improvement and expansion with a view to extending planned life beyond the current 14 years and facilitating local economic diversification.

Company commitments serving to encourage local economic diversification include:

·; To develop an international laboratory service, operated by a global leader in such activities;

·; To open the historic mine, Corta Atalaya for tourism;

·; To transfer surplus rehabilitated land to alternative uses in collaboration with the Government;

·; To establish a cultural exchange program with the town of Broken Hill in Australia;

·; To set aside €300,000 per annum from profits for support of community aid programs and for seeding new small enterprises -this fund is to be administered transparently by a Board of Advisers comprising appropriate local community and business leaders.

 

Landholder Settlements

The Company must formalise its responsibilities over third party lands and settle compensation for its owners via the regulatory framework, without causing delays to the project timetable.

Project Execution Plan

The Project Execution Plan is an independently reviewed plan for operationally implementing the start-up. The project team is currently focused essentially on fulfilling regulators' requirements and already includes the functional heads for geology, planning, safety, environment, plant maintenance, plant refurbishment, legal, human resources, regulatory compliance, finance and the chief executive in Spain.

Prerequisites to Triggering Project Execution Plan

Prior to triggering the start-up, the Company must complete many tasks including permitting, finalising formal rights over 3rd party lands, contract tendering, project financing, recruitment and shareholder approvals. 

 

Biely Vrch Project

The Company has been active in Slovakia for four years and has demonstrated that its licence holdings host significant gold mineralisation. To date EMED Mining has had a significant gold discovery confirmed by a positive Scoping Study for the development of the Biely Vrch Gold Deposit.

The Scoping Study, undertaken by AMC Consultants (UK) Ltd during 2009, indicated attractive economics for the development of an open-pit, heap-leach gold project producing approximately 60,000 ounces of gold per annum over a ten-year mine life with an indicative cash cost in the range US$500 to US$600 per ounce.

The focus is on development permitting, as a prelude to infill-drilling and detailed engineering.

Other Prospects in Central Slovakia

EMED Mining currently holds six licences covering an area totalling 695 km2 in Central Slovakia. This region is a prolific mining district that has historically yielded over 120 million ounces of silver and 3 million ounces of gold.

Exploration during 2009 was focussed on the search for gold porphyry deposits similar to Biely Vrch. The porphyry search has cost effectively tested the priority targets and there are more prospects to test further afield. The valuable experience and successful techniques that the EMED Mining team has gained in exploring for porphyry gold deposits can be applied in similar geological settings and the team has started evaluating other opportunities and exploration targets in Europe.

EMED Mining's licence holdings in Central Slovakia contain numerous other mineralisation styles which will be targeted by the exploration program during 2010. These include epithermal quartz stockworks and high-sulphidation epithermal systems. The 2010 field season starts in the northern Spring and a comprehensive update will be provided before then.

 

KEFI Minerals is the operator of exploration joint ventures in Turkey with Centerra Gold Inc of Canada and in Saudi Arabia with local construction and investment group ARTAR.

 

 

Corporate Structure and Economic Environment

EMED Mining is listed on AIM, the London Stock Exchange market for international growth companies. EMED Mining owns 100% of its subsidiaries in Spain and Slovakia, which in turn own 100% of the projects in those countries.

Share market capitalisation at 12 pence per share is £40 million (£67 million fully-diluted).

Throughout the global financial crisis and its aftermath, the Company has maintained its focus on the core projects, which in the opinion of the Board, provide the maximum value-adding potential for shareholders and other stakeholders.

The Company's focus on copper and gold has so far proved appropriate. The copper price outlook appears positive for the medium and longer term, with spot and average 10-year forward prices continuing to exceed US$3/lb or US$6,600/tonne (€2.10/lb or €4,600/tonne). At this price, projected net operating cash flow is estimated to average €67 million or £57 million per year under the current development plan. Gold prices exceed $1,000/ oz in spot and forward markets and also have a positive outlook vis a vis projected costs at the Company's project in Slovakia.

Major Shareholders

The EMED Mining ownership structure is dominated by a group of international mining industry specialists in mine development, operation and marketing. The following parties hold, between them, 65% of the fully-diluted capital:

> Resource Capital Funds ("RCF") - a large development equity fund based in Australia and the USA which invests exclusively in the mining industry;

> RMB Holdings - a mining financier and banker based in Australia, South Africa, UK and USA;

> MRI Group - an international metal trading group based in Switzerland and China;

> OZ Minerals - a leading Australian copper and gold mining company which introduced EMED Mining to the Rio Tinto Mine opportunity; and

> Directors and Management - specialists who moved to Europe from Australia and the Americas in order to establish EMED Mining and its projects.

Other significant shareholders include institutions Fidelity, Goldman Sachs and Standard Life.

Funding

During the quarter, the Company completed a placing of 27.7 million ordinary shares at 11 pence per share, to existing shareholders including Resource Capital Funds, RMB Australia and Standard Life. Together with option exercise by Directors this provided £3.3 million working capital.

The funding required to start the Rio Tinto Mine aggregates to approximately £55 million including project acquisition costs, the discharge of relevant pre-existing liens, capital expenditure and working capital. In addition the Company will arrange insurances and guarantees as required by the authorities for protecting personnel entitlements and environmental obligations. Planned sources are, for the most part, debt-finance facilities from product-customers and from mining-project-banks. Goldman Sachs International is lead-arranger for finance and hedging of revenues and currencies.

 

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.

 

The principal due diligence experts for the Rio Tinto Mine are listed below:

> AMC Consultants UK Ltd ("AMC") - mining operational and project economics;

> GBM Minerals Engineering Consultants Ltd - plant inspections and assessment;

> United Research Services España S.L. - tailings dam classification;

> EPTISA - tailings dam capacity and integrity;

> LN Metals International Ltd - product marketing;

> Oakvale Capital Ltd - hedging and currency advice;

> Baker McKenzie - Spanish legal - Madrid;

> León y Olarte - Spanish legal - Seville;

> Field Fisher Waterhouse LLP- UK legal;

> Chrysostomides & Co - Cyprus legal;

> Anglo Latin Partners - financial modeling; and

> Moore Stephens - auditors.

In addition to due diligence processes, for the Company's own planning, the following is notable:

> relevant specialists in Andalucia certify aspects for the regulatory process; and

> the Company's principal financiers conduct their own legal and other due diligence.

As an aide for investors, the Company occasionally arranges independent research organisations to inspect the projects, question any personnel and specialist consultants and publish reports which are upload to the Company website. These reports are available on the Company website (http://emed-mining.com/site/research-reports.html).

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)
Broker	Fox-Davies Capital Limited - Daniel Fox-Davies (+44 207 936 5230)
Public Relations	Bishopsgate Communications-Michael Kinirons (+44 207 5623350)
Share Registrar	Computershare Investor Services Plc
Issued Capital	340.3 million shares on issue 67.5 million options on issue, with exercise prices ranging from 4.1p to 22p per share. 561.4 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)	> 145% Management and Board (mainly Australian citizens) > 29% Resource Capital Funds, (Australia and USA) > 9% RMB Australia Holdings Limited (Australia and elsewhere) > 6% MRI Group (Switzerland) > 5% OZ Minerals (Australia)

EMED Mining Share Price - 12 pence

EMED Mining is listed on AIM (Code: EMED)

Share turnover currently averages approximately 750,000 shares per day.

 

Enquiries:

Investors/Media: Harry Anagnostaras-Adams +357 99457843

General: Cyprus office: +357 2244 2705, Email: info@emed-mining.com

This information is provided by RNS

The company news service from the London Stock Exchange