#Official Mining Thread

[rhino]

And another one:

Stellar Resources sharpens SA focus
VALERINA CHANGARATHIL
November 11, 2009 01:30pm

MELBOURNE-based Stellar Resources is stepping up activity at its uranium projects in the state.
The company will undertake an aerial electromagnetic survey over its Pirie Basin Uranium project located north of Cowell in South Australia's Eyre Peninsula.
The survey will help more closely define early drill targets in January, chief executive Peter Blight said.
``The drilling program is planned for early next year,'' he added.
In the December quarter, the company will also complete a review of previous drilling results and determine resource potential at its Warrior project in the Gawler Craton province.
Other projects to be undertaken in the December quarter will include ground magnetic and gravity surveys and a drilling program for Hicks Hill at its iron ore project in Tarcoola.
All three projects have been identified as exploration targets in the company's quarterly update to shareholders.
The company was ``undecided'' joint venture offers, Mr Blight said.
"At this stage, we have received approaches from local explorers and are considering them,'' he added.

[Wayno]

Another Uranium mine on the way

2011 start expected, probably sooner though...

http://www.theajmonline.com.au/mining_n ... start-date

SA uranium developer sets 2011 start date

A uranium developer in South Australia is aiming for maiden production from one of the State’s most recent uranium discoveries by the end of 2011.

Adelaide-based UraniumSA Limited announced it anticipated commencing by mid next year the expected 12-month regulatory process to approve a Field Leach Trial at the Company’s Blackbush Prospect at the wholly owned Mullaquana project, 20-kilometres southwest of Whyalla on Eyre Peninsula.

Subject to normal progression through the regulatory process, that would allow the trial to commence by mid-2011 and if successful, transition towards the end of 2011 into early 2012 into maiden commercial production from Blackbush.
Detailing the schedule at the company’s annual general meeting in Adelaide, UraniumSA’s managing director, Russel Bluck, said a scoping study on Blackbush’s development had commenced in recent days to lead into the field trial regulatory process schedule by mid next year.

“We have effectively commenced the transition from pure exploration to exploration and development, one of the few of the crop of uranium IPOs to achieve this benchmark,” Bluck said.

“Blackbush, since its discovery by UraniumSA in December 2007, has evolved as a real project, and we have commenced a scoping study with real contracts and real objectives and real timelines to deliver South Australia a viable new uranium mine.
“Given that South Australia has the best track record of any uranium jurisdiction in Australia, we expect to be able to stay close to our development and maiden production timelines.”

UraniumSA has defined a JORC Inferred Resource of 2,700 tonnes (equivalent to ~5.4 million pound) of contained U3O8 at the Blackbush Prospect, its first discovery within the Mullaquana project area.

The resource comprises an estimated 12 million tonnes of mineralisation at an average grade of 224 parts per million (ppm) eU3O8. Blackbush’s potential ore grade mineralisation extends for 1.6km along strike with a width of 1.3km and average thickness of 5.6m.

Pattern drilling has commenced on site at Blackbush to achieve an upgrade of the resource estimate through improved definition and mineral characterisation.

Bluck said a resource upgrade at Blackbush was expected to be developed in the opening half of next year.

[Briggzy_03]

There seems to be a lot of mines being planned for the near future, more than ever before no?

Will this effect the state's income significantly Wayno? Or are these mines more on the smaller scale?

[Wayno]

There seems to be a lot of mines being planned for the near future, more than ever before no?

Will this effect the state's income significantly Wayno? Or are these mines more on the smaller scale?

put it this way - $$$$$$$$$$$$$$$$$$$

Lots of extra jobs, taxes, royalties, blah. The next State Govt will not only get more income but will be able to borrow more cash to fund sexy projects (cough ahem "required" projects) without losing the states AAA rating.

[Wayno]

A large SA mine starts production...

Get used to hearing news like this across the next few years...

From PIRSA website:

Minister for Mineral Resource Development Paul Holloway today congratulated Iluka Resources on the first production of heavy mineral concentrate from its Jacinth-Ambrosia project, located in the Eucla Basin.

Iluka Resources today announced the Jacinth Ambrosia project has been completed ahead of schedule, with capital spending expected to be less than $390 million, compared with an approved budget of $420 million.

Mr Holloway says the five years taken from discovery to production at Jacinth Ambrosia is a record for South Australia, breaking the previous mark of eight years set by the Prominent Hill project.

“The record pace of five years from discovery to production is an extraordinary effort by Iluka Resources,” Mr Holloway says.

“This landmark in the project’s development hopefully marks the beginning of a pipeline of potential new mining projects for the far west coast region.”

Mr Holloway says Iluka Resources expects Jacinth-Ambrosia production will begin to replace output from the company’s Western Australian operations, which was reduced materially in 2009.

“I’d also like to acknowledge the support of Primary Industries and Resources S.A., the Department of Environment and Heritage, the Department of Transport, Energy and Infrastructure and the local community that has enabled Iluka Resources to develop this project in such a quick time frame,” he says.

“This was achieved while still subjecting the project to comprehensive environmental management planning controls and carrying out extensive community consultation including a Native Title Agreement with the Far West Coast people.”

Iluka Resources discovered the Jacinth and Ambrosia mineral sands deposits were discovered in 2004.

The unique characteristic of Jacinth-Ambrosia is its combination of size and high zircon assemblage making it the richest known zircon deposit in the world.

About 250 new jobs have been created in the initial construction stage of the Jacinth-Ambrosia mine with 110 full-time jobs expected during the 10-15 year life of the project.

[Wayno]

Another deal edges closer with our Chinese friends

This will be HUGE when it proceeds. Starting soon with a $50m feasibility study.

AdelaideNow:

$3bn Arckaringa coal deal sealed

A $3.2 billion energy project, creating 1500 jobs in the state's north, is a step closer to reality following a deal secured by Adelaide's Altona Energy.

Signed with the China National Offshore Oil Corporation, the joint venture agreement will give the Chinese oil explorer a 51 per cent stake in Altona's Arckaringa project, which contains an estimated 7.8 billion tonnes of coal.

If fully developed, the project will involve a coal mine producing three times more coal a year than Leigh Creek, a petrochemical complex with the footprint of Moomba and a 560 megawatt power plant.

The company will pursue coal-to-liquid and coal-to-synthetic gas technology for fuel production and low cost power production.

Altona, which is listed on the London Alternative Investment Market, says the project is "one of the world's largest undeveloped energy banks''.

"This could be one of the great energy hubs - in the first instance for South Australia, but also for Australia,'' Altona Energy managing director Chris Schrape said.

"We have got a very large, accessible energy resource and all the work we have done suggests it can be turned into high value products that this state needs - that is power, fuel and potentially water as well.''

Under the agreement, CNOOC, through its subsidiary New Energy Investment, will fund a bankable feasibility study for Arckaringa, estimated at $50 million, with the aim of eventually developing the multi billion-dollar project.

[rhino]

Sounds good. Arkaringa is about 100km north of Coober Pedy. I hope 1500 jobs means a new town up there!

[Will]

My family originally comes from Latin America, a land where foreign corporations own the natural resources of the country and hence export back the profits to the USA.

As such I am not totally enthusiastic about foreign ownership of our natural resources. I would appreaciate it, if someone could explain to me whether the profits of such a venture will go back to China? Why are we permitting foreign ownership of our natural resources? What are the benefits of foreign ownership of our natural resources? Would the people of SA and Australia reap more benefits if such ventures were Australian owned? Will Australia become a banana republic?

[rhino]

As I understand it, the Australian company that discovered the resource wants to mine it, but can not afford to do so. So they go looking for a partner. This time, that partner is a Chinese company. They are going to put up 51% of the capital to mine the ore, but this does not mean they will reap 51% of the benefits, as they may not be the operators of the mine, and they didn't discover and prove the resource. The benefit to South Australia is that we get a royalty and taxes that we would not have got otherwise, we get employment, and we get infrastructure built. With a Chinese company owning 51%, I would say that well over 50% of the money is goping to go to Australians, split between the Government (royalties and taxes), the Australian company putting up the rest of the funds, and the workers, via wages.

[Wayno]

Hey Will, Rhino is correct.

From China's perspective, they must adhere to very tight australian govt imposed corporate controls. I'd bet they are much stricter than those we've historically seen in latin america. As an example, the Boards & Execs of these china-funded mining companies must mostly contain long-term australian citizens, have proven business abilities, have australian based HQ operations, and be audited by one of our reputable australian accountancies. There are also many anti-competitive and anti-corruption measures in place. I wish such strict measures existed for all our domestic companies!

Sure the chinese get a reasonable slice of the underlying business profits, but that's more of an arbritrage play against a future increase in resource prices. So while the chinese get some immediate $$$ benefits, this is not their primary goal. Their goal is to get a guaranteed flow of resources into china for the foreseeable future. Hence, South Australia receives a more reliable cash flow as the chinese typically pre-purchase much of the resource. A huge win-win for both sides.

Would it be better if we 100% funded our own mines? yes it would, but Australia is quite an equity poor and risk averse society - even our big4 banks rely heavily on overseas funding. With the exception of ODX (which is a 100+year mining operation) the mines in question here typically run for 10-20yrs only, and when expired the tie with china also lapses.

Also, i'm expecting the Henry Tax Review to move us from 3-10% royalty based payments to a '% of overall company profit' based taxation (similar to how you pay income tax on your salary). The point being the tax grab from mining should double or even triple under this new regime. This presents as a significant win for Australia, and actually moves us closer to being able to self-fund future mining ventures with less reliance on overseas countries.

Bottom line: It's an appropriate means to a long-term end.

[Prince George]

I don't mean to be a wet blanket, but I am concerned with the effect that mining has on practically every other part of the Australian economy. The value of our mining exports are so high that they drive up the value of the dollar (*), which raises the cost of doing business for other sectors - the higher dollar makes our exports more expensive and increases the pressure to substitute imports in the place of local production. Manufacturing industries are an obvious victim, as are a whole host of service industries in the face of off-shoring.

And the value of the projects seem out of proportion with the jobs created. Look at this latest project - $3.2billion project, possibly 7 billion tons of coal (at $50/ton, that's $350 billion), creates 1500 jobs. Even if it generates another 1500 indirect jobs, that total is still dwarfed by the value of the project. So we take taxes from these operations, what do we do to convert that income into economic activity elsewhere? How do we avoid becoming mining welfare dependent? That's essentially the situation in the Middle East, where the non-petroleum industries rely on low low cost labour.

(*) Of course there are many other factors, especially the interest rate policies set by the RBA, but mining exports are an enormous driver for this

[Wayno]

I don't mean to be a wet blanket, but I am concerned with the effect that mining has on practically every other part of the Australian economy. The value of our mining exports are so high that they drive up the value of the dollar (*), which raises the cost of doing business for other sectors - the higher dollar makes our exports more expensive and increases the pressure to substitute imports in the place of local production. Manufacturing industries are an obvious victim, as are a whole host of service industries in the face of off-shoring.

And the value of the projects seem out of proportion with the jobs created. Look at this latest project - $3.2billion project, possibly 7 billion tons of coal (at $50/ton, that's $350 billion), creates 1500 jobs. Even if it generates another 1500 indirect jobs, that total is still dwarfed by the value of the project. So we take taxes from these operations, what do we do to convert that income into economic activity elsewhere? How do we avoid becoming mining welfare dependent? That's essentially the situation in the Middle East, where the non-petroleum industries rely on low low cost labour.

(*) Of course there are many other factors, especially the interest rate policies set by the RBA, but mining exports are an enormous driver for this

a wet blanket might help keep the dust down i'll get the local crochet club onto it!

[edit: we *should* be receiving much more mining-related taxes post-Henry, and *hopefully* this is used to boost other areas of industry and society]

All good points PG. Definitely a topic of discission for the Economic News Thread (http://www.sensational-adelaide.com/for ... &start=120)

We really can't blame the mining industry for non-conversion of income into other economic activities (i know you're not saying that). The owners of mines just dig holes and sell the dirt. The govt is supposed to manage the country and our long-term welfare - right? There's already discussion (on both sides of politics) about using a percentage of mining taxes to support other parts of society. Here's two high-profile examples (and yes it's election time):

* Isobel to give 25% of royalties to country: http://www.saliberal.org.au/index.php/h ... to-country
* Rann contemplates Mining Royalties Fund to benefit regionals: http://www.abc.net.au/news/stories/2008 ... 353899.htm

[Will]

Thanks for the explanations Rhino and Wayno. They have answered many of my questions. If I may indulge, I have another question. Can foreign companies own outright a mine in Australia or do they have to enter into a partnership with an Australian company?

[Wayno]

Thanks for the explanations Rhino and Wayno. They have answered many of my questions. If I may indulge, I have another question. Can foreign companies own outright a mine in Australia or do they have to enter into a partnership with an Australian company?

Plenty of WA & Queensland mines are fully foreign owned - mainly by US, South African, Swiss, UK & Japanese investors. There are reasonable operating restrictions in place for these mines, but not as onerous as those we have with the chinese.

Here's some mining (and non-mining) foreign investment examples:
* Rio Tinto (foreign owned & listed in ASX) owns at least 16 mines
* Xstrata (foreign owned) owns 15+ mines
* Mitsui owns ~$20b worth of investments in mining and other areas
* Shell owns $20b+ in mining and other areas
* Exxon-Mobil, Mitsubishi, Hutchison owns heaps of mines and port facilities
* The arab states own more than half our stevedoring duopoly
* The singapore govt owns more australian assets than our own govt! optus, power utilities, etc

Australia is built upon foreign capital. Is it a concern? well yes and no - our governance is very strong and most foreign company's play by the rules because they know we are a good long-term bet. We'd definitely be a 'piss-ant' country if we did not leverage the financial strengths of others.

[AtD]

Australia is built upon foreign capital. Is it a concern? well yes and no - our governance is very strong and most foreign company's play by the rules because they know we are a good long-term bet. We'd definitely be a 'piss-ant' country if we did not leverage the financial strengths of others.

Australia's net foreign debt & equity is roughly 70% of GDP and all of it bar a minuscule amount is private sector investment. It's the national equivalent of having a mortgage that's only 70% your annual salary. It's not a problem at all.

I also don't understand the paranoia over having a Chinese company as the owner of an Australian mine. The subsidiary is still an Australian registered company acting on Australian soil under Australian laws and paying tax to the Australian Government. The Corporations Act and Trade Practices Act will apply to them like anyone else. It's no different to General Motors Holden.