PROACTIVE NEWS SUMMARY: London Mining, Shanta Gold, Atlantic Coal, Range Resources, Tissue RegenixReported by Proactive Investors on Monday, 30 July 2012 (on July 30, 2012)
*London Mining’s (LON:LOND)* US$110 million royalty financing deal with BlackRock drew positive comments from broker Credit Suisse, which called it a major positive for the iron ore miner.
The deal will see BlackRock’s World Mining Trust (LON:BRWM) pay London Mining $110m in return for 2% revenue related royalty calculated on all future iron ore sales from the Marampa mine in Sierra Leone. Receipt of proceeds is expected by 3 August.
The broker says the deal should significantly reduce balance sheet concerns and provides a value uplift well beyond that implied by the current share price.
Credit Suisse adds that concerns over funding and falling iron ore prices have completely obscured the growth and value case London Mining.
Even if spot prices were to fall to $100/t (spot $118/t) for the next 12 months, this deal provides adequate cash buffer to see through the Phase one, 5 mtpa expansion due to complete by mid-2013.
Using a 12 per discount, which only includes the planned expansion up to 9 mtpa and the tailings and weathered ore resource of 190 mt, the post-tax value loss of the royalties is $55m.
This gives an implied value uplift for London Mining of about US $55m or 26 pence per share in addition to the reduced financing risk.
The broker has a current share price target of £4.3 reducing to £3.1 if iron ore spot prices were to persist for the next three years.
Two other in-depth stories by Proactive Investors were dedicated to mining groups* Shanta Gold (LON:SHG)* and *Atlantic Coal (LON:ATC)*, which both had positive news to report to investors today.
Shanta shares rose nearly seven per cent this morning after the company unveiled an 80 per cent increase in indicated resources at its New Luika gold mine in Tanzania.
The upgrade has confirmed the firm's plan to concentrate development and investment in this area.
The indicated resources at the site now stand at 0.83 million ounces of gold at an average grade of 3.87 grammes per tonne (g/t) with a 1 g/t cut-off, the firm said.
Meanwhile, the total in-situ resource for New Luika is now 1.48 million ounces of the yellow metal with a grade of 3.22 g/t - an increase of 52 per cent.
The increase in resources is based on exploration and infill drilling at nine deposits at the New Luika mine.
All nine remain open at depth, which shows the potential for further increases in the resource, said the firm.
Shanta chairman Walton Imrie said: "With the production facilities nearly complete and our first gold pour on target for mid-Q3 2012, these are exciting times for Shanta Gold.
"The coming months will see us further develop our mining plan at New Luika as well as transition from a junior developer to an emerging gold producer".
Today’s quarterly production report from Atlantic Coal showed that the group, which mines anthracite from an open pit in Pennsylvania, increased production by 18.8 per cent in the three months to June to 37,686 tonnes of clean coal.
The diversion of the Norfolk Southern Railroad diversion in April 2012 has enabled it to access around one million tonnes of previously unworkable reserves and run more efficiently, Atlantic said.
The prices the group is receiving are also holding up, with the average per tonne rising slightly over the second quarter to US$166.85.
Output is expected to to increase further over the remainder of 2012, with the group targeting 155,000 tonnes total clean coal production over the year.
This is in line with an independent mining report produced by Mine Engineers Inc, which predicted of 160,000 tonnes of clean coal was achievable for the year. Ouput in 2011 totalled 106,400 tonnes.
The group added that its 208,730 tonnes run-of-mine ("ROM") production by the end July equalled 2011’s entire output.
Steve Best, Atlantic’s managing director, said that the diversion of the railroad in April had transformed the production profile at its Stockton operation.
He added he was confident this production increase will accelerate further over the coming months as the company focuses on reserves contained within the prime Mammoth Seam.
Away from the mining sector, another article by Proactive covered *Range Resources’ (LON:RRL) *second investor Q&A. The company told investors that a production sharing agreement is currently being finalised for offshore Puntland and it was aiming to have the PSA, including an agreed work programme, delivered by both parties by the end of this quarter.
The offshore block is an extension of the onshore Nugaal region and covers more than 10,000 sq km.
In a wide-ranging update spanning its operations, the firm also confirmed that Rig 8 will be spudding in coming weeks in Trinidad & Tobago.
Last week, the company revealed that production from its acreage in Trinidad had passed the milestone of 1,000 bopd.
When asked whether the company would still be producing over 1,000 barrels a day once flow rates from the two wells have stabilised and before any other wells come on stream, Range said:
"Daily production in Trinidad can swing approximately +/- 5 per cent depending on scheduled swabbing, planned perforations/well completions, operational issues, etc accompanied by also natural decline.
"Given the number of wells and horizons coming on line on a monthly basis, the milestone was announced as a genuine increase representing sustained growth, with production as of July 27 being 1,052 bopd."
In answer to a query about whether Range was increasing its well programme in T&T, the firm told investors it was concentrating on having all six rigs up and running in the coming months and once they are all fully operational and performing efficiently, the company may assess whether or not they require further rigs.
But it noted that, with all six rigs up and running, Range will have the most rigs dedicated to their own acreage in all of Trinidad.
"The current development program to get to 4,000 bopd by June 2013 (without waterflood) is based on the existing rig inventory," it highlighted.
Elsewhere, *Tissue Regenix (LON:TRX)* is to unveil data from a pre-clinical trial for the treatment of torn meniscus cartilage in knees later this year, chief executive Antony Odell told Bloomberg.
The regenerative tissue firm, which has pioneered a technology to swap worn out or damaged body tissue with replacements from a human donor or animal, added that a trial in humans will kick off in 2013.
Odell said that the company may file for approval for commercial launch as early as 2014.
The meniscus refers to either of the two parts of the knee’s cartilage, which provide structural support to the knee when it is put under pressure.
An injury to one of the ‘menisci’ is common, especially in sport, where it is often referred to as “torn cartilage”.
Tissue Regenix hopes its dCell treatment can revolutionise the recovery process for such injuries.
The dCell technology removes cellular material from animal tissue so that the recipient does not reject the implant.
The company is also working on replacement heart valves, skin and vascular patches using dCell in addition to cartilage and ligaments.
Links: Full news story
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