News & Analysis » UK

Max Petroleum, Dominion Petroleum, Falkland Oil & Gas, Tower Resources, Mwana Africa, Beowulf Mining, Griffin Mining news briefs

By Fox-Davies Capital

Max Petroleum announced today that the BOR-1 exploration well on the Borkyldakty prospect in Block E has reached a total measured depth of 1,755m, with electric logs indicating 38m of net oil pay over five Triassic sandstone reservoirs at true vertical depths ranging between 1,357-1,536m. The Company will run production casing in the well, which will be tested in the next few weeks using a workover rig. After setting casing in the BOR-1 well, the Sun ZJ-30 drilling rig will move on to drill the KZN-1 exploration well on the North Kyzylzhar II East Block prospect in Block E, which is expected to spud in early March 2010.

Comment: Excellent news for Max Petroleum. This result establishes proof of concept for the 12-well post-salt exploration programme and validates the extensive regional and prospect level work that was carried out by the Company. The good homework has paid off today.

Dominion Petroleum announced that agreement in principle has been signed with Les Etablissements Maurel & Prom to farm in to the Mandawa and Kisangire PSAs (Production Sharing Agreements) subject to execution of final agreements. Under the final agreements, M & P will acquire: a 40% interest in the Mandawa PSA onshore Tanzania, resulting in M & P owning 90% of the Mandawa licence and Dominion's interest being reduced to 10%; and a 35% carried interest in the Kisangire PSA onshore Tanzania (operated by Heritage Oil, who own a 55% interest), reducing Dominion's interest to 10%. In return for these additional interests being acquired by M & P, Dominion's funding requirement in respect of the Kianika-1 well on the Mandawa  licence will be  reduced  from 100%  to  20%  of the  drilling  costs and  to  10%  of associated expenses. Dominion will retain a 10% interest in all profits earned from the Mandawa licence.

Falkland Oil & Gas announced that it has reached an agreement with Desire Petroleum to contract the Ocean Guardian rig to drill the first ever exploration well in the East Falklands Basin on the Toroa prospect, which it  expects will be within the first half of 2010.

Tower Resources announced that the Avivi-1 exploration well spudded on 13 February 2010.The well is being drilled to an estimated depth of 853m. Operations are expected to take two to three weeks.

Mwana Africa announced an updated resource estimate for its 80% owned Zani-Kodo prospect in the Ituri Region of eastern DRC. The resource update follows resource modelling based on the 2,550m nine hole diamond core drilling program, completed in December 2009, on the depth extension of the Kodo Main zone, which is a portion of the 9km long Zani-Kodo Trend. Mwana has defined indicated mineral resources containing 217 277oz gold and inferred mineral resources containing 421 013oz gold. This represents an increase of 14% and 61% respectively over the previous indicated and inferred resource estimates, announced on 2nd September 2009. In addition, the overall resource grade has been increased from 2.70g/t to 2.82 g/t.

Beowulf Mining announced an updated that the Raw Materials Group ("RMG"), an independent Swedish natural resource consultancy firm, has recently provided an update of its previous October 2006 conceptual study on the Company's Ruoutevare iron ore deposit aimed at further defining the project's commerciality.
Economic forecasts, based on a simplified cash flow analysis and various price and cost assumptions for a potential open-pit mining operation, made by RMG in their updated conceptual study include: Gross revenues of approximately US$6.85 billion generated over a 15 year mine life at an extraction rate of 10 Mtpa, representing 150Mt in aggregate, at a forecast market price of US$1.39/Fe unit (where 1 Fe unit = 1% Fe/tonne). Total operating costs for 15 years of mining are estimated at US$3 billion with total capital costs of approximately US$0.8B.
Total potential net cash flow in the order of US$205M per annum, (US$13.6/tonne of ore), representing approximately US$3.07B in aggregate for a 15 year mining operation. RMG's economic model shows a pay back period on total investment of as low as 3.1 years.

Griffin Mining announced fourth quarter 2009 production of 125,379t of ore processed compared to 114,233t in the third quarter to produce 7,141t of zinc (3rd quarter 6,783t), 1,673oz of gold (3rd quarter 1,251oz), 29,695oz of silver (3rd quarter 38,019oz) and 138t of lead (3rd quarter 218t).