#Official Mining Thread

[Wayno]

Similar challenges here lads as with ODX. From what i can gather the shale oil 'body' appears to be way way underground. I doubt Linc Energy would have deep enough pockets to fund into production so we should expect to partner with large overseas conglomerates.

Another challenge is water requirements. Significant quantities will be required so we'll hear more about desal plants and their impact on cuttlefish, etc.

That being said, if i owned an oil mining company i'd prefer to be extracting from outback SA rather than Australia's other major shale reserves near Gladstone, Mackay & Proserpine in QLD where you're in mortal combat with farmers who have concerns about polluting water tables, and who vote.

[Maximus]

Now we hear from Fairfax. A very different spin on the story...

$20 trillion ... not: reality check for Linc oil find
Date January 24, 2013 - 2:34PM
Paddy Manning

Linc Energy is distancing itself from estimates in today’s media that it may be sitting on a $20 trillion worth of oil in South Australia’s Arckaringa Basin.

Linc’s shares rocketed more than 30 per cent to an 18-month high of $2.82 today after it told the stock exchange yesterday that two independent consultants estimated there was an ‘‘unrisked prospective resource’’ of up to 223 billion barrels of oil equivalent in three shale formations within its 100 per cent-held Arckaringa exploration permits.

Media outlets including the Adelaide Advertiser appear to have multiplied the resource estimate by the prevailing oil price - above $US95 a barrel - to arrive at the $20 trillion figure.

But Linc chief executive Peter Bond told BusinessDay: ‘‘That’s not our valution. I don’t know who did that but someone’s got a calculator out and come up with that number ... but we wouldn’t put a valuation on it at this stage. It’s too hard.

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Quick tangent... I absolutely hate this 'Adelaide Advertiser' bullsh*t. Whatever you think of the standard of the newspaper, the fact remains that its name is 'The Advertiser', or, if you really feel the need to distinguish it from other Advertisers around Australia, 'Adelaide's The Advertiser'. Aargh!

[skyliner]

Saw news about this on SBS TV tonight - not on other channels - strange! The SBS report did co incide with the one posted by DAshyfreak today. God news all round, but as Wayno points out, very deep and requiring much investment to get it operating.

[sydneysider]

I read it in the MX as well. I imagine this is brilliant news for SA, the last time I was home it was all doom and gloom after BHP had announced they weren't going ahead with the Roxby Downs expansion (after a lot of state government hype about SA getting its share of the mining boom).

[rev]

Saw news about this on SBS TV tonight - not on other channels - strange! The SBS report did co incide with the one posted by DAshyfreak today. God news all round, but as Wayno points out, very deep and requiring much investment to get it operating.

It was on ABC News 24, and this morning it was also on the Today program on 9.
They had a guy from the company involved talking. They've been drilling out there for four years, and sent their data to the US. The estimation they got back was at least 3.5 billion, possibly as much as 233 billion.
Naturally the media will latch on to the big numbers, because it will sell more copies of their paper.
3.5 billion or 233 billion barrels...either way it's big and good news.

And that Fairfax article seems to be more about bashing their rivals in the newspaper game then actually reporting on the subject.

[SRW]

Two fairly insightful articles from the ABC (of course):
*http://www.abc.net.au/news/2013-01-24/m ... section=sa
*http://www.abc.net.au/unleashed/4484142.html
The first also bandied the $20 trillion figure, but is far more in depth, while the second adds some perspective about the prospect.

[Wayno]

BHP has cut ODX staff by 60 people. A small cut in the scheme of things (60 out of 3500 staff).

[rhino]

Iron ore export plan advances

Changes by IronClad Mining to its planned iron ore export facilities at Lucky Bay, near Cowell on Eyre Peninsula, have been endorsed by the South Australian Government.

They include the addition of a bulk container storage site.

Iron ore is to be transported from the company's Wilcherry Hill mine, north of Kimba.

Managing director Robert Mencel is expecting to get final approvals by about May.

"The next step is for IronClad to put in the documents as part of the normal development approval," he said.

"We've committed a lot of the information, it's drafted already and we believe most of the state agencies have already seen the documents and we expect have already provided advice to the Government.

"Once we have that approval, it's subject to funding and board approval. We expect construction to take some five months and to be shipping within six months."

[Shahkar]

Mineral hunt pushes toward 1000 sites
Christopher Russell

A RECORD number of mineral exploration licences are active in South Australia as the resources industry builds momentum.

There are 988 exploration licences, Mineral Resources and Energy Minister Tom Koutsantonis told the SA Chamber of Mines and Energy.

"This is higher than the heights set before the global financial crisis," Mr Koutsantonis said.

"By all measures, growth in mineral and energy exploration has surpassed targets previously unimaginable.

"I truly believe that the nation-building investments going on in this state are building the foundations for a golden era for SA."

Since 2011, private sector new capital spending in the resources sector had exceeded $1 billion.

Minerals now made up about 35 per cent of SA's merchandise exports, up from 13 per cent seven years ago.

SA Chamber of Mines and Energy chief executive Jason Kuchel welcomed the number of exploration licences reaching a record as a "good indicator" for the sector.

However, money was a more important marker. "For us, it's really all about the dollars being spent," he said.

Lack of infrastructure remained as a major barrier to mining reaching its full potential, he said.

"If the government had got behind a port (in upper Spencer Gulf) we would have three or four additional mines today," he said.

"Spending on iron ore exploration would more than double because people would know they had a multi-user, bulk commodities port through which they could export their product."

Mr Koutsantonis acknowledged explorers faced the "chicken-and-egg" dilemma of needing a port to make the economics of a mine work but ports needing guaranteed tonnage from mines to underpin a port.

"(However), this Government's position is that market forces should be facilitated so that private investment can meet the demands of exporters," he said.

He also announced significant improvements to the operation of the Government's online portal, the South Australian Resources Information Geoserver (SARIG).

A "status widget" on exploration licences has been created so companies can track progress of projects.

[Maximus]

Wayno, any insights into what, if any, influence this might have on progress with Olympic Dam...?

BHP CEO Marius Kloppers steps down
CHRISTOPHER RUSSELL
February 20, 2013 8:06AM

BHP Billiton chief executive Marius Kloppers will retire as chief executive officer as the global resources giant posted a 58 per cent fall in first half profit to $US4.24 billion ($A4.14 billion) due to lower commodity prices and a weak US dollar.

Andrew Mackenzie, will succeed him and join the Board on that date. Marius will retire from the Group on 1 October 2013.

Mr McKenzie, 56, is BHP Billiton's Chief Executive Non-Ferrous, a role in which he is head of the Olympic Dam project.

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[Shahkar]

Wayno, any insights into what, if any, influence this might have on progress with Olympic Dam...?

AdelaideNow's analysis

New BHP chief good for Olympic Dam's prospects in South Australia
Business Editor Christopher Russell
February 20, 2013 9:19AM


Olympic Dam is a project close to new BHP chief Andrew Mackenzie's heart.

SOUTH Australians should be pleased by the appointment of Andrew Mackenzie to the position of BHP Billiton chief executive.

Mr Mr Mackenzie is now the head of the global miner's "non-ferrous" segment, a role in which he is the internal boss of the Olympic Dam project.

He was appointed to that position in 2007 and has been the lead advocate for the Olympic Dam expansion in the highest levels of BHP.

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[Wayno]

I don't believe too many BHP investors are unhappy about Kloppers departure. The legacy left for Mackenzie means he'll have to watch the pennies for a while.

Re. ODX Expansion, My guess is it will end up going ahead, but as a leaner/smarter operation. Mackenzie was the Exec responsible for the Olympic Dam operations & expansion plan, and was often onsite in Roxby during the expansion planning years. Point being he knows the strengths and complexities very well, and is close to the new technology approach (leaching) being trialed to make the whole project cost-justified.

[Wayno]

an extra note. I had breakfast this morning with a BHP mate who said their new leaching technology trials are performing well beyond expectations, with many adjustments and fine-tuning to go. This is a BIG plus in favour of expansion by 2016.

Another factor in our favour is Mackenzies historical desire for BHP have in place a series of very long dated (100+ year) resource opportunities that just keep churning away and delivering strong shareholder returns. In his previous role he could influence such decisions, but now as CEO he is holding the reigns. ODX, with a 'hopefully soon to be proven' & cost-effective extraction method, is even more firmly on the radar.

[Wayno]

A new mine, development most likely starting within 6-9 months, and in production by 2017.

WPG Resources' SA iron mine affordable at $1.58b

WPG Resources' Giffen Well iron ore mining project would cost $1.58 billion to build and would employ 550 people for as long as 30 years.

The company has completed a pre-feasibility study into the project in central South Australia which indicates it could produce a high quality iron ore concentrate for $71.48 per tonne.

The $3 million study shows the project is affordable, executive chairman Bob Duffin said, and would have the lowest capital cost of any greenfields magnetite iron ore project in Australia.

"The base case scenario for the project includes the construction of an open pit iron ore mine and magnetite concentrator at Giffen Well, an open pit coal mine and power station at Penrhyn that will supply low cost energy to the iron ore operation, local services and infrastructure, a rail spur line that will connect to the Central Australian line near the Carnes siding, and the construction of rail receival, storage and outloading facilities on the company's land at Port Pirie," the company said.

"The life of the operation from mining and treating the main lode only at Giffen Well is 30 years.

"There are two other lodes and an oxide zone at Giffen Well which represents significant upside potential from the base case studied."

The mine would produce 5 million tonnes of 68 per cent iron concentrate per year, plus 400,000 tonnes of sought-after hematite iron ore.

Mr Duffin said there was "little doubt that the project is feasible".

"The operating costs are in line with our previous estimates for Peculiar Knob, which we sold as part of a package of assets to OneSteel Limited (now Arrium) for approximately $320 million in 2011, and which is now in production," he said.

"We do not need to build an enormous mine and treatment plant in order that the cashflows will support very expensive new port developments, or new slurry pipelines.

"To our knowledge, the capital required for the development of Giffen Well is the lowest of any greenfield magnetite project in Australia, and perhaps the world."

Mr Duffin said expressions of interest had also been received from credible institutions for the provision of off balance sheet power solutions.

"The project when in production will provide 550 new, long term jobs in this remote part of South Australia," the company said.

" Up to 800 persons will be employed in the construction phase. Production is targeted to commence in 2017."

[Maximus]

I thought this was worth posting. Just stumbled across it. Written from a real estate perspective, but it's very bullish on the state of SA's resources sector.

South Australia is becoming a globally significant resources state: Terry Ryder
By Terry Ryder
Thursday, 14 March 2013

South Australia continues to be the most underrated and overlooked market in Australian real estate.

Few realise how significant South Australia is becoming as a resources state of global significance.

And few realise that it provides more opportunities to buy cheaply in growth locations than any other state or territory.

South Australia’s steady evolution as one of the key resources states took a quantum leap with the announcement of discoveries of huge resources of shale oil in the Arckaringa Basin - potentially the most significant event to date for the SA resources sector.

It follows the decision to allow mining in the Woomera Prohibited Area (WPA), which contains some of Australia’s largest mineral resources; the emergence on major iron ore mining ventures on the Eyre Peninsula; and the potential for expansion of the Olympic Dam mine, albeit delayed by BHP Billiton.

Exploration for minerals in SA is running at record levels, adding to optimism that the state will continue on its path to become a world-class resources region.

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