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  2010-03-10 11:12

LME Inventory:

Copper -700,

Aluminum -5150,

Nickel -210,

Zinc -625,

Lead +125,

Tin +185.

Perth, Australia, Mar 10, 2010  - The merger of Vulcan Resources Limited with Universal Resources Limited (ASX: URL.AX) became effective on 19 February 2010. The new company has been focussed on development studies at the Outokumpu copper project. This release provides an update on this exciting project.

The Outokumpu copper project is located in eastern Finland and comprises the Luikonlahti processing plant and some 15.6 million tonnes of copper resources in 7 deposits within 45km of the plant with significant cobalt, gold, nickel and zinc credits*.

The Kylylahti copper deposit is the largest deposit in the area and will be the first mine to be developed. The company is finalising engineering studies and intends to make a decision on commencement of operations in the second quarter of 2010. Both Luikonlahti and Kylylahti are permitted, are on granted mining leases and both have been the subject of feasibility studies.

Preparations for a potential start to operations at the Outokumpu project are well advanced and we are pleased to report substantial progress in a number of areas:

Securing Key Land

The company has purchased the freehold land underlying the planned site for the Kylylahti decline portal and for the location of other key mine infrastructure. The majority of other infrastructure will be located on land owned by the Municipality of Polvijarvi who are supportive of the mine development and will be compensated for the use of land under the legislative formula applied to the granted mining leases.

Plant Refurbishment

A number of mill and crusher parts have been secured for the refurbishment of the Luikonlahti mill.

To return capacity to 550,000-600,000tpa the plant requires the re-instalment of a third mill that was removed some years ago. A suitable used mill shell has been found and secured via an option to purchase.

An engineering review of previous cost estimates for the refurbishment and upgrade of the Luikonlahti plant are well advanced and no material differences from the prior owners cost estimate of EUR7m have been found to date. Processing Kylylahti ore may require additional concentrate filtration capacity, temporary concentrate storage facilities and other minor adjustments to processing equipment, however these will not result in any material increases to the total cost of refurbishment.

Testwork

Metallurgical testwork to confirm amendments required to the flowsheet adopted in the Kylylahti Definitive Feasibility Study (”DFS”) is nearing completion. Copper and gold recoveries have been confirmed and at the likely production grades recoveries are expected to be higher than those reported in the Kylylahti DFS largely due to an increase in the grade of production. Zinc recovery testwork is incomplete but indications are that a saleable product can be achieved. The company is also investigating making a sulphur (pyrite) concentrate for sale and will defer further testwork on optimising cobalt-nickel concentrates pending a decision to proceed with mine development based on copper-gold-zinc revenues alone.

Mine Design

Mine design studies are being undertaken to increase mine production head grade above the DFS reserve grade and to match the mine production rate to the Luikonlahti mill capacity of 550,000-600,000tpa. These studies indicate that higher grades are achievable with a modified mining method of longitudinal longhole open stoping with cemented rock fill.

Mine development requirements have been materially reduced through removing the need for primary and secondary stopes as envisaged in the DFS. The mining process has been simplified through a simpler stoping schedule and the replacement of costly paste backfill with cemented rock fill. Mine design is now moving to detailed scheduling and stope design.

Mine design studies have assumed that the project receives revenue from sale of copper-gold concentrates only and mine economics, i.e. break-even grades and profitability, are based on a ‘copper only’ approach. Additional revenue may be achieved through sales of other products (Zn, Co, Ni, S).

Financing

Application has been made to a Finnish Government Agency (Centre for Economic Development, Transport and the Environment) for financial assistance (grant) of up to EUR2m (A$3.2m) to support infrastructure development and other costs at both the Luikonlahti and Kylylahti sites. A response is expected in Q2 2010.

The financing requirement for the development of the Outokumpu project will be finalised in Q2 2010. The Luikonlahti plant delivers significant capital cost savings and it is clear that the costs will be materially below the estimate made in the Kylylahti DFS. The company expects to fund the development through its existing cash resources and a modest loan facility. Discussions are advancing with a number of parties interested in providing a mix of debt and equity funding in exchange for securing the right to copper concentrate marketing and sales. These parties include funds, traders and smelters. Kylylahti concentrate is a high quality product which is produced close to Nordic and European markets.

The company expects to complete the update and integration of the Kylylahti and Luikonlahti studies in Q2 2010 and will announce all technical outcomes together with financial and production metrics at that time.

BEIJING, March 10 – China’s Xiangguang Copper plans to buy 15 percent of a mine owned by Australian gold and copper miner CuDeco Ltd (CDU.AX) to bolster its raw material supplies, China Daily quoted the head of the Chinese firm as saying on Wednesday.

“We are interested in purchasing overseas resources to secure our material supplies and CuDeco could be a good option,” Xiangguang Copper President Liu Zhiguang told the paper.

It said the company wanted to buy 15 percent of the Rocklands mine in Queensland. CuDeco’s Chairman Wayne McCrae was quoted as saying the mine would have a 10-year exploration timeframe, annual production capacity of 3 million tonnes and annual revenue of about $960 million.

“The Xiangguang deal will help improve our finances, while the Chinese firm will get access to copper supplies,” McCrae said.

CuDeco’s shares were up 4.57 percent at A$4.35 by 0141 GMT.

CuDeco also said the company was in talks with Chinese iron ore trader Sinosteel for project financing estimated at around $100 million, the China Daily report said.

Xiangguang Copper is part of China’s Shandong Fengxiang Group, which mainly supplies chicken to global fast food chains.

LME Inventories Update:

Copper -2700

Lead -175

Zinc -575

Nickel -312

Alu -5925

Tin -775

March 8  - Copper prices fell on speculation that demand will stagnate in China, the world’s biggest metals user.

A global recovery “isn’t solid” and the Asian country should be “very cautious” in exiting stimulus policies, Chinese central bank Governor Zhou Xiaochuan said on March 6. Copper prices more than doubled in 2009 as shipments to the world’s fastest-growing major economy climbed to a record.

“China may not be the commodity-price driver it was last year,” Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said today in a report. “The fundamentals for metals remain uninspiring.”

Copper futures for May delivery dropped 0.7 cent, or 0.2 percent, to $3.4105 a pound on the New York Mercantile Exchange’s Comex unit.

The metal fluctuated earlier between gains and losses, tracking movements in the dollar and U.S. equities markets, said Donald Selkin, the chief market strategist at National Securities Corp. in New York.

The dollar was little changed against a basket of six currencies at 2 p.m. New York time. Earlier, it lost as much as 0.4 percent. Some traders buy commodities as the greenback weakens to preserve purchasing power.

“Copper is tracking the dollar,” Selkin said. “Without a big move lower in the currency or a rally in the equities, prices will have trouble breaking $3.50” a pound, he said.

On the London Metal Exchange, copper for three-month delivery fell 1 percent to $7,470 a metric ton ($3.40 a pound).

Aluminum, lead and zinc prices rose. Nickel and tin fell.

TORONTO- Vancouver-based Quadra Mining is the latest Canadian company to partner up with a Chinese consumer of its products, in this case utility State Grid Corporation.

The companies plan to create a “strategic joint venture” that will develop and operate Quadra’s Sierra Gorda project and Franke mine, both in Chile, and the Chinese firm will also take a stake of just under 10% in Quadra.

“The strategic joint venture brings together a unique and powerful combination, with State Grid’s financial capacity and position as a major end user of copper in China and Quadra’s skills in acquiring, developing and operating copper producing assets,” Quadra CEO Paul Blythe said.

The transaction, announced to coincide with the Prospectors and Developers Association of Canada annual convention, represents the latest in a growing list of investments by Chinese firms in Canadian-owned mining assets.

Quadra will contribute its two Chilean projects, worth $900-million, and State Grid will contribute capital to earn a 50% interest in the JV.

The partners will each be entitled to their proportionate share of the copper produced by the JV on arm’s length terms.

Quadra will run the day-to-day operations of the joint venture, while State Grid will take the lead in efforts to arrange the necessary project financing for the Sierra Gorda copper/molybdenum project.

The two companies have also agreed that State Grid will buy shares equal to about 9,9% of Quadra, at C$13,91 apiece.

“Quadra’s agreement with State Grid resolves the funding issue for the Sierra Gorda project and allows for development to proceed rapidly once we have the feasibility study and permits in place,” said Blythe.

The construction schedule for Sierra Gorda is currently under development as part of a feasibility study which is due for completion in December, he said.

Construction will likely take around two years.

According to a July scoping study, Sierra Gorda could produce between 250-million and 400-million pounds of copper a year over a 25-year mine life.

Average cash costs were estimated at $0,79/lb, and the project also contains molybdenum, with moly output estimated at some 33-million pounds a year for the first eight years, and declining thereafter.

State Grid Corporation of China is the largest public utility in the world.

The announcement on Monday was of a non-binding memorandum of understanding, but the companies expect to conclude definitive agreements by mid-year, Quadra said.

NEW YORK, March 8  - Thompson Creek Metals Co Inc looks for pent-up demand or the “rebound effect” to cause global demand for molybdenum to grow faster in 2010 than the usual 4 to 5 percent pace.
Speaking to Reuters Mining and Steel Summit on Monday, Chief Executive Kevin Loughrey said, the molybdenum market “has been growing at a 4 to 5 percent rate historically, and it could grow faster than that this year, because there is some rebound effect.”
Though actual numbers are hard to come by for the global molybdenum market, Thompson Creek estimates 2009 demand declined to about 420 million pounds.
“It’s a little easier to get that growth if demand comes back. A rough estimate would be a 450 million lb market, but no one really knows,” he said.
Citing a steady, though modest, pick-up in demand from all areas, both geographic and industry sector, the CEO added that the molybdenum price had surged to $18 per lb as of last Friday, compared with $12 a lb in recent weeks.
“The trend line seems to be gently upward, albeit with significant ups and downs. But the overall (price) trend is escalating upwards. And we think that is consistent with supply and demand fundamentals,” said Loughrey.
The price for molybdenum, used primarily in steel for its hardening properties in oil pipeline and drilling and as an anti-corrosive in specialty steels, fell from a high of around $35 a lb during the metals boom to a low in 2009 of around $9.
“Because we’re in the spot market every day, we do have a good feel for what the price ought to be,” said Loughrey.
He said the latest price increase was coming from increased demand amid a lack of ready material.
“Over the past several weeks, as demand is growing, not hugely, but on a regular basis, there is not a lot of moly to answer to that demand. That’s caused the price to move up fairly substantially in the last few weeks.”
Asked about Thompson Creek’s orders, Loughrey said the company was sold out with no material currently on hand.
“We’re pretty much sold out. Not as much as 6 months out, but we would have a hard time filling an order today.”
The CEO said Denver-based Thompson Creek, whose stock trades both on the New York and Toronto stock exchanges, remains optimistic about the balance of 2010, adding that improvement in 2011 could be even greater, coming from all geographic regions and industry sectors.
“Whether we’re selling to a North American or European or Indian customer it’s overall, worldwide supply/demand that is driving the market,” the CEO said.
But some areas have are growing more quickly than others, like Western Europe, where demand has been slow.
“We still haven’t seen, in my opinion, anything like a complete rebound of the basic economy. We’ve seen improvement, but we’re not up to anything like the utilization rates in the steel industry, or some of our other customers, as in 2008.”
“The sense we get from our customers is that growth is going to continue on, but continue at a modest pace.”

* Says company’s preference is to sell Carmacks project

* Expects to get about C$100 mln for Carmacks project

By Euan Rocha

TORONTO, March 8- Canadian exploration company Western Copper Corp (WRN.TO) is looking to sell its Carmacks copper project in Canada’s northern Yukon territory, and focus on further exploration at its Casino project, a top company executive said on Monday.

“We are really at an end game here. Are we going to build this (Carmacks), or are we going to sell it? It is a board decision and we will be addressing this quite soon,” said Paul West-Sells, the company’s head of corporate development.

“Certainly the preference for us is to sell this project and monetize it and use that money for other projects,” while speaking at the PDAC mining convention in Toronto.

The PDAC convention, organized by the Prospectors and Developers Association of Canada, is the largest industry gathering of its kind, drawing more than 20,000 participants this year as global metals demand promises to hold steady and the world emerges from economic crisis.

The Carmacks project is expected to produce about 32 million pounds of copper per year for its mine life of over 6 years.

West-Sells said the company has completed all necessary studies and licensing and that it can be put into production within 20 months.
“Right now we have a market cap of about C$120 million. We’ve got C$13 million in cash and we think we can get C$100 million for this project,” said West-Sells.

Copper was trading at about $3.40 per pound in New York on Monday.

CASINO PROJECT

The Casino Project, which is also located in the Yukon territory, is Western Copper’s flagship asset. The project contains 8 million ounces of gold, 4.4 billion pounds of copper and 475 million pounds of molybdenum in proven and probable reserves.

The company plans to complete its exploration program at Casino this year and update its reserves.

Western Copper generated about C$5.4 million from a financing that closed in December.

The proceeds will be used to complete the exploration program, which is expected to raise the reserves estimate at Casino by about 20 percent, said West-Sells.

The report will extend the projected 30-year mine life, he said, adding that the updated study will form the basis of its permitting application for the project.

Western Copper shares closed at C$1.65 on the Toronto Stock Exchange.

LME Inventories Update:

Copper -1575

Lead +550

Zinc -200

Nickel -660

Alu -6225

Tin +75.

Mining giant Anglo American on Wednesday said its operations lost less than 1 500 tons of copper during the stoppage of its Chilean operations after Saturday’s earthquake.Scaw’s site near Santiago has been less impacted, while a third site in the north of Chile near Antofagasta is unaffected.

Both affected plants will reopen once complete safety, operational inspections and remedial work is concluded.

Production will be increased at other Scaw facilities globally accordingly.

Scaw’s operations are part of Anglo American’s Other Mining and Industrial Business Unit.

“I am pleased to confirm that none of our employees and contractors working at the time of the earthquake was injured,” said Anglo American CEO Cynthia Carroll.

“Anglo American teams on the ground are in contact with local authorities and the central government to express our willingness to support affected communities.”

“We are committed to the reconstruction of areas impacted by this tragedy by ensuring that we can partner with in government in providing relief,” Carroll added.

Production was halted at the group’s operations due to power failures when the earthquake occurred.

Affected copper mining operations – Los Bronces, El Soldado and Mantoverde – were able to resume full and safe production during Sunday when power was returned to all operations.

And the group said it is expected that the Chagres smelter will resume full production by Wednesday following the resumption of full power supply.

“Lost copper production during the stoppage was limited to less than 1 500 tons.”

“Minor damage was reported at Anglo American’s copper mining operations,” the group said.

But at its Scaw Metals’ plant near Concepcion, considerable damage has been caused preventing the resumption of operations until further notice.

Power and other infrastructure in the Concepcion area is also affected.

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  • LME Copper Inventory 10 Mar 2010
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