Economics, Commerce and Trade Management: An International Journal (ECTIJ)
Oz Metals 20150816
1. Oz Metals
42nd
Edition – 16th
August 2015
DISCLAIMER
This report is provided in good faith from sources believed to be accurate and reliable. Terra Studio Pty Ltd directors and employees do not accept
liability for the results of any action taken on the basis of the information provided or for any errors or omissions contained therein. Readers should
seek investment advice from their professional advisors before acting upon information contained herein.
Page 1 / 4
TerraStudio
CHINA’s TROUBLES CAUSE COMMODITIES’ PAIN
Base Metals & Precious Metals Fundamentals
Source: COMEX, LME, Metal Prices, RBA, SHFE, Terra Studio
$50
$55
$60
$65
$70
$75
$80
Oct-14 Jan-15 Apr-15
CIFPriceofChineseImports
Bauxite
$A/t
US$/t
$2.0
$2.3
$2.6
$2.9
$3.2
$3.5
$3.8
$4.1
0
100
200
300
400
500
600
700
Oct-14 Jan-15 Apr-15 Jul-15
ThousandTonnes
Copper
SHFE COMEX
LME US$/lb
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
$1,600
$1,700
Oct-14 Jan-15 Apr-15 Jul-15
Gold
A$/oz
US$/oz
$4
$5
$6
$7
$8
$9
$10
0
100
200
300
400
500
600
Oct-14 Jan-15 Apr-15 Jul-15
$/lb
ThousandTonnes
Nickel
LME US$ A$
$5
$6
$7
$8
$9
$10
$11
$12
0
2
4
6
8
10
12
14
Oct-14 Jan-15 Apr-15 Jul-15
ThousandTonnes
Tin
Inventory
US$
A$
$0.80
$0.90
$1.00
$1.10
$1.20
$1.30
$1.40
0
200
400
600
800
1,000
1,200
Oct-14 Jan-15 Apr-15 Jul-15
$/lb
ThousandTonnes
Zinc
SHFE (kt) LME (kt)
US$/lb A$/lb
2. Oz Metals
42nd
Edition – 16th
August 2015
DISCLAIMER
This report is provided in good faith from sources believed to be accurate and reliable. Terra Studio Pty Ltd directors and employees do not accept
liability for the results of any action taken on the basis of the information provided or for any errors or omissions contained therein. Readers should
seek investment advice from their professional advisors before acting upon information contained herein.
Page 2 / 4
TerraStudio
Markets & Majors
Guinea has renewed a 25-year agreement with the
government of Iran to allow it to start producing
bauxite, according to official sources and
documents seen by Reuters. Iran will hold a 51%
stake in the project, the Société des Bauxites de
Dabola-Tougué, which permits production over
5,684 km2 once a fresh feasibility study has been
conducted. Guinea holds the minority stake,
according to the contract, first signed in 1992.
Reuters - Copper output in Chile in the first six
months of 2015 increased 2.6% year over year to
2.9 million tonnes, according to State-run statistics
agency Cochilco.
Mining Journal - Freeport-McMoRan has filed a
prospectus for a US$1 billion share sale without
giving too much away in terms of timing.
Thomson Reuters - Gold demand hit a six-year low
in the second quarter, a World Gold Council report
showed on Thursday, as sluggish price movement
and the prospect of better returns in equities curbed
interest in the metal. Demand fell 12% to 914.9
tonnes, with declines in China and India accounting
for nearly half of the drop, the WGC said. Globally,
jewellery buying fell 14%, investment slid 11%, and
central bank buying was 13% lower.
SNL - Moody's has downgraded global gold leader
Barrick Gold from Baa2 to Baa3 over concerns that
its asset sales will not be able to cover debt
requirements in the next few years. Barrick is on
track to repay US$3 billion in debt by the end of this
year — and has already achieved US$2.7 billion to
date — but Moody's remains concerned that Barrick
won't be able to pay off debt in the long-term.
Glencore second-quarter production increased year
over year 2% for copper to 380,200 tonnes, 9% for
zinc to 374,100 tonnes, 1% for lead to 70,400
tonnes, 4% for silver to 8.2 million ounces, 8% for
cobalt to 5,600 tonnes, 17% for ferrochrome to
371,000 tonnes, 14% for platinum to 25,000 ounces,
and 10% for vanadium pentoxide to 4,600 pounds.
Year over year, they dropped 6% for nickel to
25,100 tonnes and 5% for gold to 211,000 ounces.
In the same release, the mining major trimmed its
full year industrial capex to US$6 billion, compared
to between US$6.5 billion and US$6.8 billion
previously. Capex for the first half was US$3 billion.
Bloomberg News - Gunvor Group has engaged
metals traders in Geneva and Singapore as the
global commodity trading firm expands its operations
beyond crude and petroleum products.
According to Business News Americas, five mining-
related projects worth US$2.82 billion were
approved by Chile's environmental evaluation
service SEA in July.
Base Metals
Altona Mining said a pit optimization study into the
integration of the recently discovered Turkey Creek
deposit in Queensland to the Little Eva project would
add up to 2.5 years of mine life. The Turkey Creek
deposit is estimated to host an oxide and sulphide
mineral resource of 17.3 million tonnes grading 0.51%
copper to yield 87,000 tonnes of contained copper. If
only sulphide ore is considered, the mineral
resource is at 10.6 million tonnes grading 0.47%
copper to yield 50,000 tonnes of contained copper.
Buxton Resources discovered significant nickel and
copper sulphide mineralization with visible
pentlandite and chalcopyrite at its wholly owned
Double Magic nickel-copper project in Western
Australia as part of its ongoing reverse circulation
drilling program.
Precious Metals
Emmerson Resources and partner Evolution Mining
entered into a tribute mining agreement with Edna
Beryl Mining Co, or EBMC. The deal permits EBMC
to begin permitting activity, and if successful,
recommence underground mine production at the
high-grade Edna Beryl gold deposit, which forms
part of the Tennant Creek Mineral Field, and located
within Emmerson's exploration and joint venture
portfolio.
3. Oz Metals
42nd
Edition – 16th
August 2015
DISCLAIMER
This report is provided in good faith from sources believed to be accurate and reliable. Terra Studio Pty Ltd directors and employees do not accept
liability for the results of any action taken on the basis of the information provided or for any errors or omissions contained therein. Readers should
seek investment advice from their professional advisors before acting upon information contained herein.
Page 3 / 4
TerraStudio
Southern Gold started mining at its Cannon gold
project in Western Australia. Operations have begun
on the stage one open pit, which would see about
152,000 tonnes of ore mined at an average grade of
3.1 g/t of gold. The stage one open pit is expected to
recover 13,500 ounces of gold at an all-in sustaining
cost of A$1,084 per ounce.
Specialty Metals
Australian explorer Lanka Graphite began trading on
the ASX following the successful merger of Viculus
Ltd and Euro Petroleum Ltd. The company received
subscriptions for 19,240,000 shares at 20 Australian
cents each, raising A$3.8m.
Industrial Minerals - High-tech rare earth utilisation is
still, broadly speaking, a Japanese, European and
North American game. The Chinese government
and the Baotou regional government is hoping that a
large investment in the industry will allow the local
regions to compete with the high end products in the
rest of the world, in addition to providing higher
profits and better-skilled jobs.
Industrial Minerals - The closure of part of its rail
transport system will make it difficult for SQM to
meet order deadlines. The company, which
produces lithium, iodine, potash and nitrates,
maintains, however, that shipments will not be
impacted.
Pilbara Minerals inked an exclusive distribution
agreement for the future sale of low-iron spodumene
concentrate into China from the company's
Pilgangoora lithium-tantalum project in Western
Australia. The distribution agreement and a
nonbinding memorandum of understanding inked
with Chinese industrial group Shantou Fancy Mining
Industry Co. Ltd. will account for about 25% of the
planned output capacity from Pilgangoora.
Xinhua News Agency - Xin Guobin, China's vice
minister of industry and information technology,
vowed to accelerate efforts to stop illegal output and
sales of rare earth elements in the country, saying
that the illegal mining of rare earth causes
oversupply and suppresses the market price.
Funding, Mergers & Acquisitions
A British investment fund will buy the Chilean copper
assets being sold by global miner Anglo America, a
Chilean newspaper reported on, without naming its
source or identifying the fund. The Mantoverde and
Mantos Blancos copper mines are expected to fetch
between $500 million and $1 billion. Mining and
trading company Glencore, former Xstrata Chief
Executive Officer Mick Davis' X2, and British
investment firm Audley Capital were among the first
round of bidders, sources told Reuters in June.
Havilah Resources secured a A$6 million loan and a
risk management facility from Investec Group to
fund the completion of a processing plant at its
Portia gold project in South Australia.
Auctus Chillagoe Pty. Ltd. is said to be preparing a
third attempt at acquiring ASX-listed junior Atherton
Resources, which recently changed its name from
Mungana Goldmines. Industry sources told The
Australian Financial Review on Aug. 11 that the new
bid will likely be 21 Australian cents, valuing
Atherton at just over A$40 million. In April, Denham
Capital-backed Auctus Chillagoe launched an initial
13.5-cent-per-share offer, which was rejected by the
Atherton board. The group countered with a higher
bid of 17 cents per share, which was also rejected
and subsequently expired. Atherton's major
shareholder Kagara Ltd. and its subsidiaries are
currently in the process of being liquidated and
needing to off-load their 72.16% stake in the
company. If Auctus Chillagoe does make the new
bid, it is unlikely that it will gain the backing of the
Atherton board and the liquidators of Karara given
that it is below the range of between 24.19 cents
and 31.69 cents that an independent expert's report
suggested the company was worth.
MinQuest is acquiring Yukon Zinc Wolverine mine in
the Yukon Territory, for C$15 million. Minquest
would also shell out C$3 million to the government
of the Yukon Territory to supplement an existing
C$7.7 million of environmental bonds.
4. Oz Metals
42nd
Edition – 16th
August 2015
DISCLAIMER
This report is provided in good faith from sources believed to be accurate and reliable. Terra Studio Pty Ltd directors and employees do not accept
liability for the results of any action taken on the basis of the information provided or for any errors or omissions contained therein. Readers should
seek investment advice from their professional advisors before acting upon information contained herein.
Page 4 / 4
TerraStudio
Renaissance Minerals has reached an agreement
with OZ Minerals to swap A$22.5 million in
outstanding deferred milestone payments for a
capped 1.5% gross smelter royalty. The payments
relate to OZ Minerals' 2012 sale of its Okvau gold
project in Cambodia to Renaissance Minerals for
A$18 million in cash plus shares and future cash
payments on milestone consisted of A$10.0 million
upon a "decision to mine" and A$12.5 million six
months after initial gold production.
A1 Consolidated Gold is acquiring Orion Gold
Walhalla gold project in Victoria, which includes the
Eureka and Tubal Cain deposits, for A$850,000.
Under the binding term sheet, A1 Gold would make
an upfront payment of A$50,000, and A$300,000 in
shares upon completion on Nov. 30. A further
A$500,000 is payable as a 2% net smelter royalty on
gold produced, with any unpaid amount becoming
payable after three years.
Talga Resources has granted Novo Resources Corp
an option to purchase three of its gold assets —
Mosquito Creek, Talga Talga and Warrawoona
projects — in Western Australia for up to A$1.0
million. The amount is payable as a A$50,000 non-
refundable deposit, A$200,000 within four months
and the balance of up to A$750,000 before the
second anniversary of the option agreement.
Source: Company March Quarterly Reports. AISC reported in A$ have been converted to US$ using an exchange rate of 0.75
For further information, please contact: J-François Bertincourt, +61 406 998 779, jf@terrastudio.biz
Cadia-Ridgeway
Gwalia
Henty
Bonikro
Syama
KingoftheHills
EdnaMay
Cowal
MtRawdon
Telfer
MountCarlton
Kundana
KanownaBelle
MoolartWell
GrannySmith
Tanami
Guanaco
Jundee
Gosowong
MtMagnet
CarosueDam
Pajingo
Ravenswood
BanHouayxai
Edikan
Agnew/Lawlers
AndyWell
Chatree
Cracow
Boddington
Higginsville
Rosemont
MountMonger
Paulsens
Nullagine
StIves
SimberiWayLinggo
Casposo
Challenger
Co-O
TucanoTorrecillas
LihirIsland
Paddington
LasLagunas
GardenWell
TomingleyAndorinhas
SuperPit
PlutonicDarlot
HiddenValley
SKO
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
0 500,000 1,000,000 1,500,000 2,000,000
AISC(US$/oz)
Production (oz)
March 2015 AISC Cost Curve for ASX-listed Gold Producers
(+ Australian operations from Majors)
First Quartile
Second Quartile
Third Quartile
Fourth Quartile