News & Analysis » UK

Discovery Metals, Hambledon Mining, Kenmare Resources, Noventa Limited, Orosur Mining news briefs

Contributed by Fox-Davies Capital

Discovery Metals has met with the representatives and advisors from the Cathay Fortune Corporation and China-Africa Development Fund and advised them that the A$1.70 ps unsolicited, indicative and non-binding proposal is inadequate and if they wish to put a new proposal to the Board, they will consider it on its own merits.

Hambledon Mining PLC announced its operational report for the three months from 1 July to 30 September 2012. During the quarter ended 30 September 2012, open pit mining operations extracted 185,300 tonnes of ore averaging 1.2g/t Au. The metallurgical plant processed 167,242t of open pit and underground material and produced a total of 5,875oz of gold and 7,469oz of silver; with plant recovery averaging 80.8%. Plant throughput was constrained by reduced tailings dam capacity which will improve in Q4 with the reinstatement of Tailings Dam No. 3. Trial mining from the underground delivered 15,125t of ore averaging 3.32g/t Au. Some of this ore has already been processed and the remainder will be processed in Q4. During the past quarter a strategic review of the underground operations was completed which led to a decision to temporarily suspend underground operations. The contractor is currently completing mining of accessible ore zones and will demobilise from site in late October 2012 at which point capital expenditure on the underground mine will temporarily cease.

Kenmare Resources PLC has issued an interim management statement covering the period from 1 July, 2012, to date in accordance with the Transparency Regulations 2007. Output from mining operations improved in the third quarter with 229,100 tonnes of Heavy Mineral Concentrate (HMC) produced, representing a 16% increase on the second quarter. The second dry mining operation was successfully commissioned on 9 July, 2012, and was ramping-up during the quarter, contributing to the increased mining rate. Production figures are shown in the table below. During September, disruptions to the electricity supply caused by upgrade work by EdM, the national power distribution company, hampered production. This work was successful and has resulted in a considerably less volatile supply. Further supply strengthening work will occur in December. Significant progress was made on optimising the rutile circuit and it is anticipated that the level of rutile recovery will increase during the fourth quarter.

Regarding the market, as previously advised, the favourable supply/demand conditions in the industry over the last two years led to significant price increases in both pigment and feedstock. In anticipation of further pigment price increases, feedstock supply tightness and improved pigment demand, the market over-stocked in the latter part of last year. Pigment demand in the US held up relatively well in the first half of 2012 but started to deteriorate in the second half. Demand in Europe has contracted this year, while Chinese demand growth has been subdued. The expected seasonal improvements in pigment demand in the second and third quarters did not materialise, leading to downward pressure on pigment prices. In an attempt to more closely align supply to softening demand, pigment producers started to curtail production around mid-year, leading to destocking in the supply chain. Furthermore, to manage the cost pressures of increased feedstock prices, pigment producers have revised their feedstock mixes, moving from higher to lower grade feedstocks where possible. This has placed some downward pressure on rutile prices, but slag and ilmenite prices are holding up reasonably well despite the weaker market conditions .A delivery schedule for Kenmare's remaining ilmenite volume commitments covered under second half 2012 pricing agreements has been finalised. Kenmare now negotiates ilmenite prices semi-annually and the majority of 2013 first half prices will be negotiated with our customers in the coming months. Kenmare expects the destocking process to complete in early 2013. This is likely to be followed by a period of restocking as the supply chain is replenished, as experienced in previous cycles.

Noventa Limited is unable to pay the dividend due on 10 October 2012 on its convertible redeemable £1 preference shares. The Company is in the process of finalising a Revised Secured Loan Facility in order to provide it with long term financing and hopes to provide an update on the long term financing of the Company to both ordinary and preference shareholders before the end of October.

Orosur Mining Inc. has appointed Dr. Eric Roth as Non Executive Director of the Company. Dr Roth was President, CEO and Director at Extorre Gold Mines Ltd prior to their acquisition by Yamana Gold Inc. for US$403.6 million in August 2012. Before this, he performed advisory services for various clients including Exeter Resource Corp., Kinross Gold and AngloGold Ashanti Ltd and has worked as Exploration Manager for Aur Resources Inc. Dr Roth also served as Global Head of Greenfields Exploration for AngloGold Ashanti Ltd. where he was responsible for their technical management of, and the provision of strategic direction for their greenfields exploration program. The Board of the Company now comprises: Tony Shearer, as Chairman with Bill Lindqvist (who stands down at the annual general meeting at the end of November), Roger Davey, Julio Porteiro and Eric Roth (all independent non-executive directors), Ignacio Salazar (Chief Financial Officer) and David Fowler (Chief Executive).