Keaton to acquire Xceed

Keaton Energy has made a cash offer to acquire Australia listed Xceed Resources, which owns coal exploration and development projects in South Africa.

The offer is for A$0.14 per share. Pursuant to a scheme implementation deed dated 23 August 2013 between Keaton and Xceed, the Offer will be implemented by way of a scheme of arrangement (the Scheme) in accordance with Part 5.1 of the Australian Corporations Act of 2001, as amended (the Act) between Xceed and its shareholders.

Following implementation of the Scheme, Xceed will become a wholly owned subsidiary of Keaton and will be delisted from the official list of the Australian Securities Exchange (ASX).

Due to Xceed not being a company that is registered in theRepublic of South Africa (South Africa) and instead having its place of central management and control in Australia, Xceed is not subject to the provisions of the South African Companies Act of 2008 and the Takeover Regulations. Xceed is, however, subject to the provisions of the Act, the regulation of the Australian Securities and Investments Commission (ASIC) and the Australian Takeovers Panel.

The Scheme forms part of Keaton’s strategy to grow into a + 5 Mtpa producer of diversified coal products. Xceed has an interest in three coal projects.

The coal projects fit naturally within the existing Keaton portfolio of operating mines and development projects.

Moabsvelden, an open pit thermal coal project (Xceed’s key asset) being located in close proximity to Keaton’sVanggatfontein Colliery in Mpumalanga, South Africa, will create significant operational synergies and Keaton will use its experience in opencast mining and coal processing to develop and operate this asset. At the end of May 2013 Xceed received notification from the Department: Mineral Resources (the DMR) of the issue of aMining Right for Moabsvelden and has signed a project finance term sheet with Standard Bank to develop the colliery. A positive for Moabsvelden is that it will be entirely open castable, with a low stripping ratio and a mine life in excess of 15 years.

Pursuant to the Scheme, Keaton will acquire the entire issued share capital of Xceed (being 140,500,435 fully paid ordinary shares) via a cash offer of A$0.14 per share held by the Xceed shareholders as at the record date, with the maximum purchase consideration therefore equating to A$19,670,060.90.

The Offer Consideration represents a premium of:

–    27% to the last close of Xceed’s ordinary shares on the ASX (as at 23 August 2013);

–    35% to the 30-day volume weighted average price (VWAP) of Xceed’s ordinary shares on the ASX (over the 30 trading days prior to today’s announcement); and

–    66% to the 30-day VWAP to 19 June 2013, being the last trading day prior to the announcement by Xceed that it was in discussions about a potential corporate transaction.

Keaton has entered into an agreement with Gunvor Group Ltd (Gunvor), which holds a 23.9% stake in Keaton through its wholly owned subsidiary Plusbay Limited (Plusbay), in terms of which Gunvor will fund a maximum of US$18 million, and a minimum of US$10 million, of the Purchase Consideration via a combination of factors.

Xceed and Keaton have agreed to cooperate with each other to implement the Scheme and Xceed has given certain undertakings regarding the conduct of the Xceed business, on the terms set out in the Scheme Implementation Deed.

Xceed intends to send a scheme booklet to shareholders in late October 2013 containing full details of the Scheme. The scheme booklet will include, among other things, the reason for the Board’s unanimous recommendation and a copy of the Independent Expert’s Report.

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Auroch expands gold resource in Mozambique through new JV

joint venture (JV) has been entered into between Auroch Minerals NL (ASX:AOU) and AIM-listed Baobab Resources. The deal see Auroch successfully expand its gold resource in Mozamibique.

Auroch managing director Dean Cunningham comments, “The announcement of the Baobab JV represents the company’s first step in its aim to establish itself as the major gold camp in theManica Province. Auroch’s “Near Term Route to Production” announced on 3 July 2013, sees an immediate focus on near term production with future material exploration expenditure coming from cash-flows. Gaining access to further potential resources at the JV prospecting licence is important to bolster Auroch’s first mover advantage in what is already a significant gold camp. With a resource upgrade forthcoming from the company’s drilling to date, this JV is intended to provide the company with flexibility and critical mass for the future.”

Auroch, a Mozambique-focused gold exploration and development company,  has the ability to earn up to 100% of an area of interest within Prospecting Licence 1022L (JV Prospecting Licence), located in the Manica Province by spending US$1.5m over a period of four years.

The company is confident that the prospective regional shear zones that are present on its 100% owned Mining Concession continue into the proposed JV area, having been offset to the south by a regional NNE trending fault.

The proposed JV area covers approximately 18 km² and extends the company’s Northern Shear by 1.6 km and theSouthern Shear by 2.2km. Auroch believes there may be an additional 4.1km of regional prospective shears based on the interpretation of satellite imagery.  The proposed JV area increases the Manica Gold Project’s existing prospective strike length from 27km to 34.9km.

Highlights

  • Joint Venture Agreement entered into with Baobab Resources
  • 7.9 km of additional strike length added to Auroch’s existing 27 km of prospective strike
  • Auroch to earn up to 100% of contiguous greenstone ground at the 3 Moz Manica gold project with the expenditure of $1.5 million over four years
  • Consolidation and first mover advantage in a significant gold camp

Miner Kazakhmys writes another £500m off ENRC stake

The writedown took the group to a pre-tax loss of $193m for the half, down from a profit of $81m last year, even though revenues rose to $1.6bn from $1.5bn.

The move came after a previous $2.2bn writedown of the value of its ENRC stake at its full-year results in March.

The latest hit to its value on the books reflected the takeover offer made for the ENRC by a consortium made up of its trio of oligarch founders and the Kazakh government, all major shareholders.

While ENRC’s independent directors have called it an offer that “materially undervalues” the company, the deal is expected to go ahead due to an absence of other options for the company.

ENRC’s share price has plunged in past months as the board infighting and a Serious Fraud Office investigation into its activities have coincided with a wider sell-off in commodities, which has hurt the mining sector as a whole.

Management at Kazakhmys said they anticipated that their part in the deal – selling the ENRC stake – would complete by the end of the year, bringing the company $875m and also involving it repurchasing 77m shares.

“We had ambitions to work with ENRC, but the strategies of our companies became different,” Oleg Novachuk, Kazakhmys’ chief executive, said. “Our target now is to generate cash for shareholders, optimise cash cost and deliver our projects. Life without ENRC will also be bright.”

ENRC aside, Kazakhyms said costs rose more slowly than it anticipated over the period – 5pc rather than the expected 8pc to 12pc – which cheered the market. However it did not announce an interim dividend, as it looks to preserve cash.

Louise Collinge, an analyst at Investec, called it a “mixed” result. “The ENRC impairment looks unflattering but should have been expected,” she said. “The lack of interim dividend is the right decision by the company for cash conservation but may disappoint the market.”

The shares rose 7.2 or 3.1pc to 308.7p.

Kazakhmys also said that Philip Aiken was retiring as a non-executive director, with his replacement to be announced.

Ex-Barrick CEO Regent’s Firm Said to Mull Bid for Glencore Mine

Magris Resources Inc., the investment company founded by former Barrick Gold Corp. Chief Executive Officer Aaron Regent, is considering a bid for Glencore Xstrata Plc’s Las Bambas copper-mining project in Peru, according to a person with knowledge of the matter.

Las Bambas is among mining assets that Toronto-based Magris is evaluating, said the person, who asked not to be named because the information hasn’t been made public.

Jiangxi Copper Co., China’s largest producer of the metal, said today it’s interested in Las Bambas. MMG Ltd., a unit of state-controlled commodity trader China Minmetals Corp., and Chinalco Mining Corp. International are considering bidding, people with knowledge of the matter said earlier this month.

Las Bambas could fetch more than $6 billion for Glencore, Liberum Capital Ltd. analyst Ash Lazenby said in a note this week. If Magris bids and is successful, it would be the Toronto- based firm’s first acquisition. Regent, 47, was fired in June 2012 by Barrick after the board said it was disappointed with the gold company’s share-price performance. Before Barrick, he was a senior managing partner of Brookfield Asset Management Inc., which he joined after being CEO of nickel miner Falconbridge Ltd.

Magris is seeking mining assets mainly in the Americas with backing from institutional and private-equity investors, a person familiar with the situation said in May.

2015 Start

The sale of Las Bambas, which is under construction in the Andes, was a condition set by Chinese regulators in their approval of Glencore’s $29 billion takeover of Xstrata Plc, a deal that was completed in May. Glencore hopes to close the Las Bambas sale by year-end, Chief Executive Officer Ivan Glasenberg said on an Aug. 20 conference call. BMO Capital Markets and Credit Suisse Group AG are advising Glencore on the sale.

 

Las Bambas is scheduled to produce 400,000 metric tons of copper a year starting in 2015 for at least the first five years of operation and will cost $5.2 billion to build, Baar, Switzerland-based Glencore said in January.

–With assistance from Zijing Wu in Hong Kong, Jesse Riseborough in London and Helen Yuan in Shanghai. Editors: Simon Casey, Steven Frank

What Coal Mining Looks Like These Days

A crew of men gather at a mine in McDowell County, West Virginia. They have a quick meeting, say a prayer, and head down into the mountain, into the dark, where their mining machine waits to crush rock. It’s controlled via an industrial interface that looks like a battle-hardened large controller for a 1980s Nintendo.

After it’s ground out of the earth, the flammable rock on which the world’s power system depends gets conveyed up and out, where it’s sold, and then burned for electricity. Somewhere.

lexis Madrigal explains how energy really works in America

Read more

This is the rare peek that we get into the life of coal miners in the documentary Hollow. The snippet we see above has no narration. We follow the workers down, silently.

This is the reality that underpins about 45 percent of our electrical grid. It’s hard: physically, psychologically. It’s not typing on a MacBook Air.

And yet, burning coal is still the cheapest way to produce electricity, if you don’t factor in environmental externalities. For that reason, coal is tough to beat, especially in the developing world, where the costs of not having any kind of electricity seem higher than the costs of having dirty electricity. Energy analyst Gregor MacDonald calls coal “the ignored juggernaut,” and he points out that global coal consumption is up 50 percent over the last decade, the same timeframe in which green power came to the fore in the Germany, the US, and several other wealthy countries.

And those billions of tons of coal get pulled out machine by machine, person by person in mines a lot like this one.

Coal seam gas company says revenue boom yet to start as big projects continue to spend

QUEENSLAND’S ports are back to pre-GFC level of exports, BHP Billiton’s Queensland coal has produced a remarkable turnaround and, according to Origin, the commodities boom is only just beginning.

The most stunning event was BHP Billiton’s. After bleeding $100 million in the first six months of last year its Queensland coal mines are now profitable and its massive Caval Ridge mine, near Moranbah, is about to come on line.

But to get to that point it has shut mines, cut jobs and slashed $140 million from its costs by shedding contractors. The leaner coal division is now generating almost 20 per cent more coal.

Origin Energy’s Grant King added to the improved mood of the mining sector by claiming that the commodities boom was far from over with less than half of the capital spent so far on its $24 billion LNG project on Curtis Island, near Gladstone and the potential boost from Arrow Energy eventually approving its multi billion dollar project was yet to come.

Santos and QGC are still to finish the big spending on their LNG projects and Mr King said if Australia could get its industrial relations issues and carbon policy right there was no reason why more investment would not come.

“Everyone is saying the commodities boom is over, it’s not,” he said.

“Certainly in respect of LNG there is still half to be spent if not more across the whole industry.

“When it is spent it turns into revenue and that’s yet to come so you could say that the revenue boom hasn’t even started.”

The State Government was also boasting of a turnaround in the throughput at its ports.

Transport Minister Scott Emerson said the state was back to the pre-GFC and pre-flood levels of production.

Mr Emerson said the coal throughput for July cracked a new record for the month with 16.257 million tonnes.

“Last year we saw the second highest movement of coking and thermal coal in Queensland’s history – 180.165Mt in 2012-13 compared to 183.11Mt in 2009-10,” Mr Emerson said.

“That trend has continued with coal volumes through our ports last month 2 per cent higher than the previous record of 15.932Mt in July 2009.

“Since March last year the Newman Government has worked with the industry to remove floodwaters and repaired road and rail lines in record time.

“Our ports and transport infrastructure are responding to the increased volumes and this is a healthy sign for one of our major export commodities.”

Treasurer Tim Nicholls said the record July coal export totals were a further indicator that the Queensland economy was recovering from the effects of both the GFC and natural disasters.

“The consistent message that’s coming from the economic data is that Queensland is performing well and is the best place in Australia for businesses to invest and grow,” Mr Nicholls said.

“Our rural exports are also up, increasing 2.4 per cent in 2012-13 and more than a quarter of all business investment in Australia is happening in Queensland.”

Mining Sector: Hochschild shares slip after it suspends divi as revenues fall

Hochschild Mining’s (LON:HOC) shares slipped after it suspended its interim dividend as revenues fell to $308.6m – down from $354.5m last time.

Adjusted earnings before interest, tax, depreciation and amortisation fell to $90.4m from $168.4m and the interim dividend is suspended.

Executive chairman Eduardo Hochschild said: “Hochschild Mining has operated in cyclical markets for over a century and the first half of 2013 has provided ample evidence of that characteristic. 

“However, I am optimistic that the entire organisation has moved swiftly in initiating a cost cutting programme that is already delivering tangible results. 

“In the second half and into 2014, the Board is confident we will see the full effects of the measures taken as well as a further slowdown in operating cost inflation. 

“Regrettably it has also necessitated a considerable number of job losses but I firmly believe the initiatives taken combined with our ongoing investment in our Advanced Projects will result in the Company being in a significantly stronger position to capitalise on a long term precious metal price recovery and deliver value accretive growth.

“In light of the very difficult financial results caused by the precious metals price falls, the board has decided not to pay an interim dividend. The company remains committed to the long term principle of shareholder returns and the board intends to reassess the position subject to the overall full year financial results.”

Mariana Resources (LON:MARL) was the sector’s biggest faller after earlier raising £912,640 through a placing 91.3 million shares at 1p each, with one warrant offered for every two placing shares subscribed. 

The warrant would be exercisable at 2p during the period until Aug. 27, the company said.

The net proceeds of £875,265 would be applied towards anticipated exploration expenditures in Peru and Argentina and general working capital purposes. 

African Barrick Gold (LON:ABG) has appointed Bradley Gordon as chief executive officer with immediate effect.

He succeeds Greg Hawkins, who has resigned to pursue other opportunities.

Gordon is a seasoned executive with 30 years of experience in the gold mining industry, during which time he has successfully grown the value of large mining operations around the world.

The sector’s biggest riser was Oxford Advances Surfaces Group (LON:OXA) – up by more than 12% in late afternoon trading. 

At 3:51pm:
(LON:ABG) Abbot Group share price was -0.7p at 155.2p
(LON:AMI) American Investment Trust share price was -2.12p at 195.13p
(LON:AQP) Aquarius Platinum share price was -0.5p at 45.5p
(LON:BEM) share price was -0.02p at 7.18p
(LON:BKY) share price was 0p at 17.5p
(LON:CEY) Centamin Egypt Ld share price was +0.26p at 37.96p
(LON:CHL) share price was -0.13p at 18.5p
(LON:CZA) share price was +0.45p at 8.35p
(LON:FDI) Firestone Diamonds share price was 0p at 2.75p
(LON:FRES) share price was -12p at 1172p
(LON:GEMD) share price was +0.63p at 158.88p
(LON:HOC) share price was -0.05p at 225.45p
(LON:KMR) Kenmare Resources share price was -0.24p at 29.46p
(LON:MARL) share price was -0.35p at 1.08p
(LON:OXA) share price was +0.88p at 7.88p
(LON:VED) Vedanta Resources share price was -6.5p at 1166.5p