Atalaya Mining Regulatory News (ATYM)

RNS Number : 3647K

EMED Mining Public Limited

19 April 2010

 

 

EMED MINING QUARTERLY REPORT

19 April 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 March 2010.

Key Points

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

> Relevant authorities of the Junta de (Government of) Andalucía all confirmed permitting process requirements following from preliminary reviews of the Rio Tinto Mine restart plans.

> Independent experts are now completing the detailed engineering studies to support the restart plans and the consequential reports have begun to be submitted.

> The local Planning Commission for Employment has advised that it is actively seeking ways for the government to accelerate the reopening process of PRT and create employment.

> Based on the agreed permitting process and the feedback received from the authorities, the Company's target of starting production in 2011 remains based on the following timetable:

o Q1 to Q2 2010: submission of reports and responses to regulatory queries and requests.

o Q2 2010 to Q4 2010: public information and consultation; regulatory reviews in Andalucia and in Madrid; administrative approval of mineral rights; permits to allow start-up activities.

o Q4 2010: commencement of start-up activities.

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

> 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 "base case" development plan.

> During the recent 1 in 100 year rainfall event at PRT, the Company maintained public safety across the entire industrial complex.

 

Detva Gold Project - Gold in Slovakia

> AMC Consultants is refining the Scoping Study for the 1.1 million ounce Biely Vrch gold resource. The Preliminary Environmental Impact Study has also been commissioned.

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

Corporate

> On 15 April 2010, the Company announced a £8.8 million placing of 84 million shares at 10.5 pence per share. Placees included a wide range of existing and new institutional investors principally in the UK and Canada. Many of EMED Mining's shareholders are the same companies that funded the start-up of Portugal's Neves Corvo and Andalucia's Aguablanca, Aguas Tenidas and Las Cruces, recently permitted base metal mine start-ups near the Rio Tinto Mine within the world class Iberian Pyrite Belt.

> Some parties have expressed interest in providing financial support for the restart of PRT in exchange for securing product offtake (copper in concentrate).

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

"Progress this Quarter has been as planned across the range of our development activities.

"Recent meetings in Australia and Canada have been positive and we look forward to a listing on one of these main mining stock exchanges in the second half of 2010".

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 with significant resource bases:

> Rio Tinto Mine in Spainwith substantial processing and other minesite infrastructure in place and a JORC-compliant Mineral Resource containing 940,000 tonnes of copper (205 million tonnes at 0.46% copper). Rio Tinto is a large copper mine acquired by EMED Mining with a view to organisational restructuring, project optimisation, 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 - a discovery achieved 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 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.

Portions of the land integral to PRT's industrial complex were bought by third parties during the liquidation proceedings five years ago, including parts of tailings dams and waste dump areas. During the quarter the area experienced 1-in-100 year rainfall. The Company nevertheless maintained the safety of property and the public at its own cost via its water management infrastructure which span the whole of the industrial complex, including third party landholdings.

The Company and its major shareholders have met senior Provincial and State Government leaders and reciprocated appropriate assurances of support.

Two nearby mines (Las Cruces and Aguas Teñidas) commenced copper production during 2009. One of Europe's largest copper smelters (Atlantic Copper) is located in Huelva, Andalucía. Major copper producer Antofagasta has this year farmed into a local exploration joint venture.

Responses Received from Provincial Government

During the quarter, responses were received from the authorities of the Junta de (Government of) Andalucia that confirmed their conclusions from preliminary review of the Company's plans for the restart of the Rio Tinto Mine.

These authorities are the Provincial Delegations of the Ministries of Innovation, Science and Companies ("Industry") and of Environment ("Environment"), the Department of Culture and Heritage ("Culture & Heritage") and the "Water Authority". Responses are summarised as follows:

> Culture & Heritage has issued a positive evaluation, subject to the Company conserving or cataloguing, as the case may be, heritage items that depict the mining history at the site;

> The Water Authority has requested detailed documentation to ensure that the Company's plans for PRT, when it is in operation, properly maintain it as a closed system with managed levels in each dam, controlled filtration ponds, emergency water control systems, corrective measures for run-off waters from waste dumps and treatment of waters contaminated by hydrocarbons in the operations;

> Environment has accepted the Unified Environmental Authorisation ("AAU", which includes the Environmental Impact Assessment or "EIA") submission which caters for regulatory changes, subject to it being consistent with all reports now in progress; and

> Industry has requested supplementary reports which are well progressed and a rectification of one legal document incorrectly executed by a past vendor of the property. 

These regulatory agencies continue to engage constructively with the Company's technical experts, who are supported by Spanish and international independent experts such as:

1. EPTISA and ECA in relation to the tailings dams;

2. CGS in relation to the waste dumps;

3. EYGEMA for the rehabilitation plans;

4. AMC Consultants for detailed mine plans; and

5. APPLUS+ for the Occupational Health and Safety Systems.

Support from Planning Commission

In March 2010, the following members of the Planning Commission for Employment met with the Company:

> Association of Municipal Councils (Mancomunidad)

> Provincial Business Association (F.O.E.)

> Labour Unions (U.G.T. and CC.OO)

Prior to the meeting, the members of the Planning Commission released a statement that they would actively seek ways for the government to accelerate the reopening process of PRT in order to reduce the high levels of unemployment in the area.

Government Support and Permitting Roadmap

In early-2007 the Company acquired an option over PRT and in late 2008 it acquired 100%. In mid-2009 the Company submitted restart applications after clarifying regulatory requirements and in late 2009, the Junta de (or "Government of") Andalucia confirmed the permitting process ("roadmap") to facilitate the start-up after taking into account regulatory changes during 2009 and the specifics of PRT.

Based on this permitting roadmap and the feedback received from the relevant authorities, the Company's target timetable remains as follows:

> Q1 to Q2 2010: submission of reports and responses to regulatory queries and requests;

> Q2 2010 to Q4 2010:

o public information and consultation;

o further regulatory reviews in Andalucia and in Madrid; and

o administrative approval of mineral rights and permits to allow start-up activities.

> Q4 2010: commencement of start-up activities;

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

> The restart is expected 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.

 

Prerequisites to Triggering 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.

> The Company continues to actively seek to expedite the resolution of remaining matters that are causing delays to the restart process. This includes formalising its rights and responsibilities over third party lands through compensation or other arrangements with landholders, and remedying issues related to the failure of the Liquidation Commission of Minas de Rio Tinto SL (in liquidation), which sold PRT five years ago, to properly execute a requisite legal document. In both cases, the Company is pursuing resolutions either by direct negotiation or via the regulatory framework.

 

Outlook

The Company has widespread support politically and administratively. The only obstruction being experienced is that of parties seeking commercial advantage. The legal and regulatory process provides solutions if required and the timetable takes these into account.

The team is expanding in line with the activities and workforce training and selection programs are being planned for the significant personnel recruitment that will be required. The collective bargain negotiating process with the labor union has also commenced.

The global shortage of copper underpins a strong long-term outlook for copper prices which have averaged over US$3/lb (€2.10/lb) in both spot and forward markets over the past two years. This compares with PRT's estimated cost to produce copper of approximately €1.10/lb including operating, capital and acquisition costs.

PRT's product sales agent MRI Trading has started assembling letters of intent from planned customers in Europe and Asia, who have reacted positively. Some parties have expressed interest in providing financial support for the restart in exchange for securing product off take.

Significant potential has been identified to expand project life or annual production or both. Drilling programs have been planned along with project engineering to maximise economic value-added.

 

Biely Vrch Project

EMED Mining is progressing towards appropriate development of its 100%-owned 1.1 million ounce gold deposit (41.7 million tonnes at 0.79g/t gold) at Biely Vrch.

The Biely Vrch Scoping Study, undertaken by AMC Consultants (UK) Ltd during 2009, indicated attractive economics for the development of an open-pit, valley-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.

AMC Consultants has been mandated to refine the Biely Vrch Scoping Study with a view to achieving the following:

1. To adjust the location of infrastructure to a layout optimised for social and economic parameters;

2. To improve project economics by refining the slopes of the planned open pit; and

3. To evaluate the potential for additional revenue to be generated by selling waste rock mined from the open pit for use in road building.

The focus of other work at Biely Vrch is on development permitting, as a prelude to infill-drilling and detailed engineering.

EMED Mining has also mandated the Preliminary Environmental Impact Assessment for submission to the regulatory authorities during 2010.

The Company is also seeking formal confirmation of support for its plans before proceeding to a full feasibility study and development planning. This is the regulatory roadmap agreed with the relevant authorities with whom EMED Mining is also discussing the royalty rate applicable to gold produced from the Biely Vrch Project.

Exploration in Central Slovakia

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.

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.

Other known mineralisation styles on these licences include:

> Epithermal quartz stockworks;

> High-sulphidation epithermal systems; and

> Rozalia (a local gold mine) style mineralisation.

2010 Drilling Program

The 2010 drilling program is planned to start in April and will focus on:

> geotechnical drilling for the revised Biely Vrch Scoping Study; and

> as time permits during the program at Biely Vrch, exploring for gold in Central Slovakia.

 

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.

 

Dual Listing on a main mining stock exchange ("ASX" or "TSX")

EMED Mining is currently listed on AIM, the London Stock Exchange market for international growth companies.

The Company is progressing a proposed dual-listing of the Company's securities on a main mining board (ASX or TSX) in the second half of 2010. The Board believes that such a listing is a natural step for the Company within the international mining investment and metal production community. The response of the Australian and Canadian mining investment communities is encouraging.

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 shareholders include institutions Goldman Sachs and Standard Life.

Funding

The estimated 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 intends to 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 debt 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 independent due diligence experts for the Rio Tinto Mine are listed below:

> AMC Consultants - mining operational and project economics;

> GBM Minerals Engineering - plant inspections and assessment;

> United Research Services España - tailings dam classification;

> EPTISA and ECA - tailings dams;

> CGS - waste dumps;

> EYGEMA - rehabilitation plans;

> APPLUS+ - Occupational Health and Safety Systems.

> 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;

> Navigator - financial modeling; and

> Moore Stephens - auditors.

In addition to due diligence processes, for the Company's own planning, 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	425 million shares on issue (adjusted for placing April 2010) 73 million options on issue, with exercise prices ranging from 4.1p to 22p per share. 651 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)	> 15% Management and Board (mainly Australian citizens) > 25% Resource Capital Funds, (Australia and USA) > 8% RMB Australia Holdings Limited (Australia and elsewhere) > 5% MRI Group (Switzerland) > 4% 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, Roger Howe +61 405 419 139

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

This information is provided by RNS

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