Download Supplement PDF - Mining Journal

NEW SKILLS ON BOARD
EMED recently announced three new non-executive directors; Jose Sierra Lopez, Robert Francis and Jasper
Bertisen. Based in Madrid, Dr Sierra (73) brings extensive mining experience in the business and government
sectors, formerly as Spain’s national director general of mines and construction industries, and as the EU’s
director for fossil fuels.
Based in Canada, Mr Francis (66) is a retired senior partner of the Toronto office of Deloitte & Touche LLP,
having enjoyed an extensive career in public accounting in Canada. He provided a complete range of services to
the metals/mining sector and advised extensively on corporate regulatory compliance matters.
Based in the US, Mr Bertisen (31), who replaced Ross Bhappu on February 8, is a principal with RCF
Management LLC, the manager of Resource Capital Funds. The latter owns 167.0 million EMED shares (see box).
proved and probable ore reserves of 123.0Mt at 0.49%
Cu (0.61Mt contained copper). Both calculated at a
cut-off grade of 0.20% Cu.
Key anticipated production parameters for the Rio
Tinto mine are production of approximately 37,000t/y
copper-in-concentrate, based on processing 9.0Mt/y of
ore. The average waste-to-ore ratio, for the life of mine,
is around 1.1, with a total cost of US$1.57/lb (including
all operating and all capital costs).
Employment is expected to be 400-450 employees
and contractors at full production. There is a potential
to extend the 14-year mine life through conversion of
more resources to reserves.
Discussions continue with the regulatory authorities
in Andalucia on the various permits required to start
project works at the Rio Tinto copper mine by the end
of 2012 (and for production to start in 2013).
The regional Spanish government (Junta de
Andalucia) has made public policy statements that
clearly confirm support for EMED’s plans to restart the
Rio Tinto mine as soon as possible. Indeed, the
government has stated that it wants the project to be
triggered in the third quarter this year (elections are
due on March 25, and the opposition has called for an
even earlier target).
At stake are the 1,200 jobs that the mine construction
would bring by the end of this year if the project
gets an early go-ahead. This is particularly important
because of the 50% local unemployment.
Mr Adams noted that the government has taken
initial steps to demonstrate its commitment to
administer permitting and access to third-party lands,
whilst ensuring proper handling of third parties’ rights
and full regulatory compliance. He added that the
judiciary has “dismissed all legal challenges filed by the
former project operator and adjoining landowners
against the company’s plans”.
Mr Adams described the outstanding challenges as
“frivolous”, and he expects them to be dismissed by the
judiciary, and anyway “have no bearing on the project”.
EMED recently reached an agreement with Yanggu
Xiangguang Copper Co (XGC) for funding of US$30
million (half in the form of share capital and half in the
form of a standby debt facility). In exchange, XGC
gained a 10% equity stake in EMED (on a fully-diluted
basis) and limited off-take rights over the copper
production from the Rio Tinto mine.
Under the agreement, XGC is to provide US$15
million by way of a subscription for new ordinary shares
in the company (at £0.09/share) and will provide, or
arrange, a US$15 million subordinated debt facility. In
exchange, EMED’s subsidiary, EMED Marketing Ltd, has
granted XGC off-take rights over 25% of current
reported copper reserves, at market prices.
Meanwhile, EMED is in “advanced discussions” with
potential project financiers with a view to finalising a
mandate in respect of the provision of project debt of
US$175 million for the Rio Tinto mine.
Slovak potential
EMED’s gold exploration in eastern Europe is focussed
on the company’s 100%-owned Detva and Stiavnica-
Hodrusa licences in central Slovakia.
The Detva licence area is 25km east of the Stiavnica-
Hodrusa district. The geology consists of a calderagraben
complex in the centre of a large stratovolcano.
Widespread propylitic and localised advanced argillic
alteration in the application area indicate substantial
hydrothermal activity. This setting is considered to be a
classic geological setting for the formation of large
porphyry and epithermal gold orebodies.
The Biely Vrch gold deposit within the Detva licence
was discovered by EMED in October 2006, and drilling
was undertaken during 2007 and 2008.
By the end of 2008, EMED had completed a diamond
drilling programme of 34 holes on a 100m by 100m grid
pattern. The gold mineralisation is contained in a
broadly pipe-shaped quartz-veinlet stockwork zone
associated with an andesitic porphyry intrusion.
The mineral resource measures some 350m
north-south and 300m east-west, and extends from
surface to a depth of 250m. Initial metallurgical
testwork of Biely Vrch drill core samples indicates the
gold mineralisation is not metallurgically complex.
The work culminated in an initial JORC-standard
mineral resource comprised of 17.7Mt at 0.81g/t
(containing 461,000oz of gold) in the indicated
category, and 24.0Mt at 0.77g/t (containing 596,000oz)
in the inferred category.
This style of deposit typically occurs in clusters, and
so exploration has continued on many other porphry
gold and copper-gold prospects within the company’s
large licence areas.
Further drilling at the Biely Vrch site itself will be
undertaken after the necessary open-pit mining
licences are issued. These are expected to be granted in
the second quarter after political elections (due, like
those in Spain, in March), and Mr Adams described the
approval as “not a problem”.
It is currently envisaged that the project will produce
some 60,000oz/y at an average cash cost of around
US$530/oz, but EMED intends to optimise the pit design
further. At the moment, the other key parameters from
the Biely Vrch scoping study are for a life of over ten
years, with overall gold recovery of 81%.
The company’s Stiavnica-Hodrusa licence area covers
a substantial portion of what is a world-class mineral
district. Historical production has been sourced from
narrow, high-grade epithermal veins but EMED will be
www.emed-mining.com
LOAN CONVERTED
Resource Capital Funds and RMB Australia Holdings
have exercised their right to convert the amounts
owed to them under a loan agreement in March
2009. Accordingly, the outstanding loan of
US$8.5 million has been satisfied in full by the issue
of shares at 4.13p/share. RCF now owns 167.0 million
shares and RMB 67.5 million shares (18% and
7% of EMED’s fully diluted equity, respectively).
KEFI INVESTMENT
AIM-listed KEFI Minerals plc, which is 18%-owned
by EMED, owns carefully selected licence areas in
Saudi Arabia and Turkey, as well as an extensive
regional exploration database.
In Turkey, KEFI has a portfolio of exploration
projects at various stages of evaluation. In Saudi
Arabia, KEFI has a joint venture with leading Saudi
construction and investment group Abdul Rahman
Saad Al-Rashid & Sons Co.
the first company to test systematically for large
bulk-mineable, near-surface disseminated styles of
mineralisation in this prolific district.
Several skarn bodies occur in the northwest part of
the licence area. These skarns have been probed for
industrial magnetite, but have not been tested for gold.
Cyprus opportunities
While EMED’s highest copper-related priority is in Spain,
low-cost exploration and evaluation work will resume in
Cyprus on various targets and opportunities.
EMED’s exploration in Cyprus is centred on the
Troodos ophiolite complex. The targeted mineralisation
style is volcanic-hosted massive sulphide copper
deposits under shallow cover rocks, similar to the larger
Cyprus copper mines of the past.
The higher metal prices of recent years have
materially improved the economics of several known
base-metal deposit on EMED’s tenements in Cyprus.
This prompted an evaluation of the company’s local
assets, and identified as a high priority the Klirou
copper-zinc project, located 20km southwest of Nicosia.
A review of the project in late 2007 by AMC
highlighted several key areas for further work, including
an expansion of resources, diamond core drilling to verify
and upgrade the categorisation of known resources,
further assessment of the refurbishment of the nearby
Mitsero processing plant, and the collection and
collation of firm cost estimates.
Potential remains to increase known mineralisation
by infill drilling and step-out drilling. Some of the
deposits are likely to have faulted extensions and may
have repeats along strike within areas containing
geophysical anomalies.
CONTACT
EMED Mining
Group Operations Centre:
La Dehesa, s/n. 21660 Minas de Riotinto. Huelva.
España
Cyprus office:
3, Ayiou Demetriou St, Acropolis 2012, Nicosia, Cyprus
Tel: +357 2244 2705 Fax: +357 2242 1956
E-mail: info@emed-mining.com