MINING UPDATE

Vale, the second largest diversified metals and mining company in the world and the world’s largest producer of iron ore, states on its website its investment budget for 2010 includes expenditure of US$ 12.9 billion, based on US GAAP principles, dedicated to sustaining existing operations and promoting growth through research and development (R&D) and project implementation.

2010’s budget represents an increase of 29.3% on the US$ 10 billion invested over the twelve months to 30 June 2009 (this figure does not include the US$ 1.5 billion spent on acquiring copper, coal, potassium and iron ore assets). The investment plan continues to reflect concern with organic growth as the focal point of growth strategy: 76.6% of the budget is allocated to financing R&D, Greenfield projects (unexplored mineral deposits) and e brownfield projects (near to existing operations), compared with a figure of 71.1% over the last five years.

Taking account of existing assets and those that will come on line in the future, the company expects production to continue increasing at a fast pace. Their production index, which includes operational performance for all minerals and metals produced by Vale, is projected to grow at an annual average rate of 12.6% over the 2010-2014 period.

Although iron ore and nickel will remain at the top of the company’s business interests, Vale plans to boost production capacity for copper, coal and fertilizers, creating a more diverse portfolio of world class assets. Based on their future projects pipeline, they expect to reach the following production levels in 2014: 450 million metric tons of iron ore, 380,000 metric tons of nickel, 650,000 metric tons of copper, 30 million metric tons of coal, 3.1 million metric tons of potassium and 6.6 million metric tons phosphate rock.

Vale will continue to invest heavily in railways, seaport terminals, shipping and energy generation.

Rio Tinto Announces Earnings of $6.3 billion

· Controllable operating cost savings of $2.6 billion in 2009, exceeding target one year in advance

· Recapitalisation of the balance sheet; net debt reduced from $38.7 billion to $18.9 billion at 31 December 2009; gearing improved to 29 per cent

· Return to profitability for the Aluminium product group in the second half following a $0.8 billion half on half improvement in its underlying earnings

· $7.2 billion of divestments announced during 2009 of which $5.7 billion has since completed. Since February 2008, Rio Tinto has announced asset sales of $10.3 billion.

· Strong volume gains, primarily from record iron ore sales and a significant increase in copper and gold production, boosted earnings by $652 million year on year.

· Further progress towards the formation of the Western Australia iron ore production joint venture with BHP Billiton

Top 10 Mining Company Cash Flow

Over the latest three calendar years, ten of the world's biggest miners produced an aggregate USD 195bn in operating cash flows, used USD 115bn of that for capital expenditure, and ended 2009 with USD 83bn in net debt, including cash, Mineweb reports.

Company Summaries ($million)
	2009	2008	2007	Total
BHP Billiton
Operating cash flow	11,485	23,383	16,439	51,307
Capital expenditure	-8,753	-9,150	-7,791	-25,694
Free cash flow	2,732	14,233	8,648	25,613
Net debt	-7,915	-4,168	-12,004	-7,915

Vale
Operating cash flow	7,136	17,114	11,012	35,262
Capital expenditure	-8,096	-8,972	-6,651	-23,719
Free cash flow	-960	8,142	4,361	11,543
Net debt	-11,840	-5,606	-17,978	-11,840

Rio Tinto
Operating cash flow	9,212	14,883	8,491	32,586
Capital expenditure	-5,388	-8,574	-5,000	-18,962
Free cash flow	3,824	6,309	3,491	13,624
Net debt	-18,769	-38,577	-45,224	-18,769

Freeport-McMoRan
Operating cash flow	4,397	3,370	6,225	13,992
Capital expenditure	-1,587	-2,708	-1,755	-6,050
Free cash flow	2,810	662	4,470	7,942
Net debt	-3,690	-6,479	-5,585	-3,690

Anglo American
Operating cash flow	4,087	8,065	7,264	19,416
Capital expenditure	-4,607	-5,146	-3,931	-13,684
Free cash flow	-520	2,919	3,333	5,732
Net debt	-11,046	-11,224	-5,170	-11,046

Xstrata
Operating cash flow	4,131	6,585	7,414	18,130
Capital expenditure	-3,568	-4,796	-2,848	-11,212
Free cash flow	563	1,789	4,566	6,918
Net debt	-12,616	-16,306	-11,624	-12,616

Barrick
Operating cash flow	2,899	2,254	1,732	6,885
Capital expenditure	-2,351	-1,749	-1,046	-5,146
Free cash flow	548	505	686	1,739
Net debt	-3,771	-3,119	-941	-3,771

Anglo Platinum
Operating cash flow	558	2,087	1,964	4,609
Capital expenditure	-1,343	-1,740	-1,511	-4,594
Free cash flow	-785	347	453	15
Net debt	-2,609	-1,392	-526	-2,609

PotashCorp
Operating cash flow	924	3,013	1,689	5,626
Capital expenditure	-1,764	-1,198	-607	-3,569
Free cash flow	-840	1,815	1,082	2,057
Net debt	-3,663	-2,787	-710	-3,663

Teck (CAD m)*
Operating cash flow	2,983	2,109	1,719	6,811
Capital expenditure	-590	-928	-571	-2,089
Free cash flow	2,393	1,181	1,148	4,722
Net debt	-6,584	-12,024	-115	-6,584

*Teck may not rank as one of the top ten mining companies by value, but it turned in one of the most impressive performances of 2007- 2009.

AFRICA

First Uranium Shares Jump Up on Mine Reinstatement News

Shares of First Uranium jumped 35 percent after South African authorities reinstated permits for a mine-waste storage facility, allowing the company to go ahead with a planned production increase.

Shares of Gold Wheaton, which owns a royalty on First Uranium's production, rose 11.7 percent on the news.

Authorities withdrew environmental authorization for the facility in January, disrupting financing discussions and prompted the company to warn of a delay in construction.

"Now that we have the environmental authorization reinstated we can concentrate on the process of securing the necessary financing for the construction (of the facility).. and ramping up our production," Chief Executive Gordon Miller said in a statement.

The facility is key to an expansion of First Uranium's Mine Waste Solutions project, which extracts gold and uranium from tailings -- or waste from previously mined ore -- left over from three gold and uranium mines that operated for 50 years.

First Uranium had originally targeted annual gold production of about 140,000 ounces from the project in fiscal 2011, but chopped that by more than 50 percent after the permit was revoked.

Macquarie Equities analyst Duncan McKeen raised his price target on First Uranium to C$3.25 from C$3.10 on the news.

He said the permit should improve First Uranium's ability to obtain the estimated $200 million in financing needed to complete the project.

Great Basin Gold, which is currently bringing two gold mines to production, announced a loss of C$0.03 per share for the fourth quarter of 2009, an improvement on the C$0.05 per share loss it reported in the third quarter.

The group which is currently developing the Burnstone project in South Africa and the Hollister project in Nevada, also announced a reduced net loss for the year from C$0.40 per share in 2008 to C$0.16 in 2009.

Speaking on a conference call to investors recently, CFO, Lou Van Vuuren, said the improvement was "partly due to the development cost of Burnstone being capitalized since November 2008 and more pleasing is the positive result of the cost reduction programme initiated in October 2008 - this programme resulted in a decreased expenditure for exploration predevelopment as well as administration."

The group currently has C$92m in working capital of which C$89m is in cash or cash equivalents.

The group says it is happy with the progress made at the group's two projects, Hollister and Burnstone, although the number of gold equivalent ounces (GEO) extracted at Hollister came in lower than expected, largely due to a two week suspension of trial mining to examine the causes of an accident in November. Efforts at the recently purchased Esmeralda mill, which is already processing Hollister ore, are being made to further improve gold recoveries, currently 83%, now the initial refurbishing and commissioning phase is complete.

According to CEO Ferdi Dippenaar, "The number of gold equivalent ounces extracted through trial mining from our Hollister Mine project in the December quarter was somewhat lower than planned due to several factors; however I am pleased to report that the pace has picked up significantly in early 2010."

According to the group, cash costs at Hollister were US$423 per ton, up 12% on the year ago figure but, were higher than forecast as a result of the lower-than-planned tonnage.

During the quarter a total of 16,785 tons of ore containing 20,660 GEO were mined , a 15% improvement over the third quarter of 2009.

Burnstone, which Mineweb got the chance to visit recently, is also progressing well according to Dippenaar who says "Burnstone, in particular, is entering an extremely exciting phase of its development, with vertical shaft, mills and metallurgical plant converging on completion over the next several months."

According to the group, at the end of 2009 2,528 m of decline development had been completed and a total of 880 m of on-reef development was completed during the quarter.

AEL Zimbabwe Gears Up For Ngezi Platinum Mine Expansion

AEL Zimbabwe, a member of the international AEL Mining Services group, has partnered with Zimplats at its Ngezi Mining Division to provide an explosives solution for the expansion project for the development and production at three portals, Ngwarati, Rukodzi and Bimha underground mines.

The premature closure of the open pit mine at Ngezi Mining Division due to the worldwide economic recession in 2008 shifted the ore demand to the underground operations with annual production ramping up from 2.1Mt to an expected 4.2Mt by 2010.

When the second concentrator started operating in July 2009, AEL Zimbabwe was well-prepared to meet the increase in underground bulk emulsion supply to support each of the mine's portals. This included the restructuring of its site personnel and equipment to support each of the three portals, managing stock and shafthead deliveries, and providing additional technical back-up to service charging units. Upskilling its on-site personnel was also critical to support the change.

AEL's UBS technology in conjunction with Tunnelmaster shock tube system was accepted as the blasting system for Ngezi Mining Division's room and pillar mining after extensive trials at the start of underground mining in 2003.

Langton Nyandoro, Business Manager of AEL Zimbabwe, comments, "Up until July 2009, AEL R100G was the main product used for underground operations. After reviewing the product and its use at Ngezi Mining Division and other similar operations in the region, AEL developed SDD emulsion as a cost effective alternative to R100G".

"The bulk emulsion is supplied from AEL's central manufacturing plant at its head office in Johannesburg and is transported to site by a fleet of dedicated road tankers into AEL storage silos erected on site at Ngezi Mining Division."

Through the application of the ‘Mine to Mill' concept, Ngezi Open Pit Mine became the first mine in Zimbabwe to use electronic delay detonator technology, called SmartDets, supplied by AEL's sister company, DetNet to optimise the mining-processing value chain. The SmartDet electronic delay system was upgraded by the development of the synchronised blaster, which increased blasting capability from 800 to 1600 detonators.

AEL's 34 member site-based team that serviced the Ngezi Open Pit mine consisted primarily of local citizens with various levels of mining and explosives engineering experience and one expatriate.

AEL Blast Consult continually provides training to the AEL team on site, as well as customer personnel in order to keep up with technological advancements. To meet the future requirements of Ngezi Mining Division, AEL Zimbabwe has embarked on a skills development strategy through an intensive explosives engineering course for its field personnel. Four mining engineers are now at an advanced stage of the course.

Expectations are high that Phase Two expansion of the Ngezi project will commence in the next few years. The volumes of explosives consumption is forecast to increase from the current 4,500 tons per year to 8,000 tons per year. At present, six emulsion charging units have been commissioned for the three portals and an additional three will be deployed as production ramps up at Bimha Mine (Portal 4).

Langton concludes, "As the mine expands and the volume of emulsion increases, AEL will continuously monitor and assess the viability of site based emulsion manufacture, which can be rapidly mobilised in the form of modular plants. AEL's automated shock tube manufacturing plant at Modderfontein (ISAP) has the capacity and capability to meet Ngezi Mining Division's future demands."

Ngezi Mining Division is situated 160km by road to the south west of Harare, the capital of Zimbabwe. The mine started as an open pit mine in 2001 and then underground mining commenced in 2003. Initially, all the ore mined at Ngezi Mining Division was trucked 86km to the north for processing at the Selous Metallurgical Complex, but a second concentrator has since been commissioned at Ngezi Mining Division to double annual production by 2010 from 2.1Mt to 4.2Mt.

Ngezi Open Pit Mine was the first open pit Platinum Group Metals' (PGM) mine on the Great Dyke of Zimbabwe.

AMERICAS

Flsmidth Wins Big Voisey's Bay Nickel Contracts

Danish headquartered mineral processing giant, FL Smidth, which numbers some major names in the sector among its subsidiaries, has made a major sale of comminution and sedimentation equipment to Vale Inco's Voisey's Bay operation.

FLSmidth has been awarded contracts from Vale Inco for the supply of comminution and sedimentation equipment for the Voisey's Bay (now known as Vale Inco Newfoundland and Labrador) processing plant project in Long Harbour, Newfoundland, Canada. Currently concentrate from Vale Inco Newfoundland and Labrador is being shipped to Vale Inco's Ontario Operations in Sudbury and Manitoba Operations in Thompson, Manitoba for processing. A commercial processing plant is scheduled to commence operation in Newfoundland in 2013.

The scope of supply includes two FLSmidth ball mills (one concentrate, and one limestone grinding system), and 13 Eimco thickeners and clarifiers which will be used as part of the hydrometallurgical flowsheet for recovering nickel, copper and cobalt.

In June 2002, Vale Inco, through its wholly-owned subsidiary Vale Inco Newfoundland and Labrador, and the Province of Newfoundland and Labrador jointly announced an agreement in principle on a $1.9 billion plan to develop the Vale Inco Newfoundland and Labrador deposit (Voisey's Bay). The negotiated agreements entered into in early October 2002 consisted of a Development Agreement and an Industrial and Employment Benefits Agreement. Three years later, in the fall of 2005, operations in Labrador came onstream some eight months ahead of schedule.

FLSmidth's Salt Lake City and Bethlehem offices in the US are working closely with the engineering and construction company Fluor in Canada, to provide the engineering, design and supply of all key components as well as pre-assembly for shipment to site, erection supervision and commissioning. This project highlights FLSmidth's extensive experience in providing very large, innovative, pre-assembled process technology that will reduce construction time and installation costs.

Lundin Mining Reports 44% Increase in Copper Resources

Toronto and London-based Lundin Mining Monday reported a 44% increase in measured and indicated copper resources at the end of 2009 that will yield 160,000 tonnes of contained copper or the equivalent of two years of production.

The company also reported that three new deposits have been added to the mineral reserves of the Tenke Fungurume joint venture in the Democratic Republic of the Congo, resulting in an increase in Lundin's share of proven and probable reserves of 1.1 million tonnes of contained copper for a total of 4.2 million tonnes.

Lundin owns 24.75% of Tenke, which is operated by Freeport-McMoRan Copper & Gold. Lundin's share of Tenke cobalt reserves were reported to be 444,000 tonnes.

Phil Wright, CEO of Lundin said, "Our goal this past year was to increase copper resources at Neves-Corvo and the increases we have seen continue to justify this on-going investment, and our belief that Neves-Corvo remains under-explored."

Neves-Corvo is an operating underground copper and zinc mine in Portugal. At the end of 2008, the mine produced 89,206 tonnes of copper, 22,567 tonnes of zinc, and 926,740 ounces of silver.

Proven and probable reserves at Neves-Corvo were reported to be 753,000 tonnes of copper, 190,000 tonnes of zinc, 68,000 tonnes of lead and 29 million ounces of silver

"Equally pleasing is the growth of the mineral reserves at Tenke and the significant increase in the contained copper and cobalt in reserves," Wright said.

Company-wide Lundin reported proven and probable reserves of 2.1 million tonnes of copper, 4.9 million tonnes of zinc, 1.4 million tonnes of lead, 169 million ounces of silver, 48,000 tonnes of nickel and 110 tonnes of cobalt.

Total Lundin measured and indicated mineral resources were reported at 3.9 million tonnes of copper, 6.9 million tonnes of zinc, 2 million tonnes of lead, 261 million ounces of silver, 75 tonnes of nickel, and 231 million tonnes of cobalt.

New Peruvian Gold Project for Minera IRL

Minera IRL Limited (AIM: MIRL) has signed an option to purchase the Quilavira gold exploration project in the Tacna district of southern Peru from Ingerieria y Tecnologia Minero-Metalurgica SA (ITMM). The tenements were previously explored by Newcrest Mining (ASX: NCM). The proposed US$50,000 deal is subject to approvals in Peru.

"Quilavira represents a strategic, longer term exploration opportunity in a highly prospective area. We are already well established in southern Peru, where our Ollachea Project is located, and Quilavira is consistent with building our business interests in selected districts", Minera IRL Executive Chairman, Courtney Chamberlain said.

ITMM previously acquired the Quilavira property from Newcrest in a competitive tendering process. On the 5,100 hectare tenement package, the main exploration target is an alteration area approximately 1,200x300m. Newcrest's previous exploration work identified a 200x200m zone of anomalous gold mineralization, sampling on the western part of the zone returned more than 1 gram per tonne gold.

Under the terms of the deal, Minera IRL has the option to purchase 100% with a US$50,000 payment, the acquisition is also subject to the grant of the required supreme decree by the Peruvian government. Additionally, a surface rights agreement will be negotiated with the local community before exploration activities can commence.

In January, the company reported that its Corihuarmi gold mine in Peru achieved its best production in 2009 in the final quarter,the Peruvian operation also achieved significant cost cuts and benefited from all time record gold prices.

The company said total gold production for the year reached 33,012 ounces at a cash cost of US$341 per ounce, while Q4 production amounted to 10,259oz exceeding targets by 18%. Quarterly cash operating costs were 23% below budget at US$248/oz compared to the average sales price of US$1,107/oz during the quarter.

At Corihuarmi, mining blocks in the Susan Pit that were originally defined as waste were found to be mineralized, and no waste was mined, which led to lower operating costs. The company intends to use the resulting cash flow to advance the development of its other projects.

BHP Considering Reviving Major Investments into Chile

Top global miner BHP Billiton said recently it could revive billions of dollars worth of projects in world No. 1 copper producer Chile that it froze during the worst of the global crisis.

BHP's spokesman in Chile, Mauro Valdes, said the company would likely resume its Phase V project at its Escondida deposit, the world's biggest copper mine, and may also build a desalinization plant and an electricity plant.

However, while the projects had initially been estimated to cost a total of $7.6 billion, they still pend approval and the outlay could be lower.

"The projects have not yet been decided upon and their values are under review," Valdes said.

Daily El Mercurio reported earlier on Thursday that BHP planned to revive the projects from 2011 at a cost of $7.6 billion.

The Phase V project at BHP's majority-owned Escondida, which produces 8 percent of the world's mined copper, would replace an existing concentrator if approved, Valdes said. That project aims to maintain output levels at the mine.

Escondida's other stake-holders include Rio Tinto (RIO.AX: Quote) (RIO.L: Quote), which holds 30 percent, and Mitsubishi Corp (8058.T:Quote) with 10 percent.

BHP this week gave its most upbeat outlook for commodities since the global downturn, reporting record iron ore shipments and setting the stage for higher metal prices in 2010.

The company's copper output fell 11 percent in the second quarter ending Dec. 31, as expected, after an accident at BHP's Olympic Dam mine in Australia. Some analysts are projecting a supply deficit later in 2010, aggravated by production shortfalls in Australia and Chile and only partially offset by higher output from Escondida.

Escondida's copper output in the January-September period fell 21 percent from a year earlier to 788,126 tonnes due to lower ore grades and repairs to its SAG mill.

Escondida avoided a strike after reaching an early agreement with its union workers in October. However the generous collective deal has increased demands from workers at other mines in Chile and raised the threat of strikes in future negotiations.

Workers at state miner Codelco's massive Chuquicamata strike went on a two-day strike to demand more benefits from the world top copper miner.

Codelco will face its next major contract negotiation at its Radomiro Tomic deposit, which produces around 300,000 tonnes of copper per year.

ASIA

Rio Tinto to Acquire 15 Million Shares in Ivanhoe Mines

Rio Tinto has agreed to acquire 15 million shares in Ivanhoe Mines Ltd at a subscription price of Cdn$16.31 per share, increasing its ownership in Ivanhoe Mines by 2.7 per cent to 22.4 per cent. The total consideration for this acquisition is Cdn$244.7 million.

Andrew Harding, chief executive, Copper, Rio Tinto said “Our further investment in Ivanhoe Mines underlines our confidence in the quality of the world class Oyu Tolgoi deposit and its priority in our project portfolio. We are working with Ivanhoe Mines on finalising the conditions precedent for completion of the Investment Agreement with the Government of Mongolia and are looking forward to moving into the development phase of the project.”

The shares are being issued to Rio Tinto in satisfaction of an arrangement with Ivanhoe Mines in 2008 to finance equipment for the Oyu Tolgoi copper-gold complex in Mongolia’s South Gobi region. By financing the equipment at that time, Rio Tinto provided Ivanhoe Mines with the funds necessary for the ongoing development of the Oyu Tolgoi project and maintained the critical long lead manufacturing time for the equipment.

Rio Tinto and Ivanhoe Mines are development partners for the Oyu Tolgoi project. Production is expected to commence in 2013, with a five year ramp up to full expected production of 450,000 tonnes of copper per year and 330,000 ounces of gold.

After the completion of the acquisition, Rio Tinto will own 98.6 million shares of Ivanhoe Mines. If Rio Tinto were to exercise all of its share purchase warrants and convert its US$350 million loan into shares it would own approximately 267.6 million shares of Ivanhoe Mines representing 44.0 per cent of Ivanhoe Mines.

Pursuant to certain existing contractual arrangements between Rio Tinto and Ivanhoe Mines, Rio Tinto has the right at any time to exercise its share purchase warrants and/or convert its convertible loan into shares of Ivanhoe Mines. Rio Tinto also has, among other things, the right to acquire additional securities so as to maintain its proportional equity interest in Ivanhoe Mines, and the right to acquire additional Ivanhoe Mines securities in certain other circumstances and subject to certain limits.

Depending upon its assessment of Ivanhoe Mines’ business, prospects and financial condition, the market for Ivanhoe Mines’ securities, general economic and tax conditions, and other factors, including the status of the Investment Agreement with the Government of Mongolia, Rio Tinto will consider availing itself of its rights to acquire additional securities of Ivanhoe Mines, or it may sell some or all of the securities it holds.

India Moving To Tie Up Strategic Global Minerals Supplies

India is reportedly to follow China's lead in using government entities to tie up strategic mineral supplies from around the world to help enable it to maintain economic growth.

The Indian government recognises that its usually slow movement in completing deals potentially sets it at a disadvantage to countries like China where state organisations have learnt to move quickly and decisively. This has been seen particularly in tieing up access to global mineral resources which the China sees as vital for the years ahead with its rapidly growing internal development.

India is a country which faces many of the same problems as China, but is a few years behind in terms of internal growth but, like China, its GDP is growing at an enormous rate in comparison with the West, where economies are, at best, static for the moment. To fuel this growth India too needs access to major mineral resources - metals, minerals, oil and gas - but has been much slower than China in doing the deals which can guarantee future supplies in a competitive environment, and at a time when there are doubts about the medium to long term availability of many strategically important metals and minerals.

Thus the Indian government is reportedly moving to fast track deals to secure future supplies for its ever-growing industrial base. According to a report in today's Hindustan Times The Prime Minister's Office (PMO) has decided that the country's state-owned corporations need to be supported in aggressively pursuing the acquisition of strategic mineral resources through a dedicated fund - and it has set a 30-day deadline for such plans to be in place. According to Hindustan Times, an unnamed senior government official told it "The PMO has asked the Finance Ministry and the Planning Commission to work out the size and structure of the dedicated fund in 30 days."

One of the key elements in the proposal too, is that the country's normally slow procedures will be circumvented by setting up the centralised body with rapid strategic and decision making powers.

The Indian government seems to be taking China's CIC as its model and is very conscious the Chinese fund is using a significant part of its US$200 billion of government money to acquire stakes in natural resources overseas. Oil and gas has been the prime target, but metals and minerals, have also figured high on the list among other strategic investments. Whether it will follow CIC's example in investing also in U.S. property and stocks including in the SPDR Gold Trust gold ETF is uncertain, although gold might be of interest given the country's populace's propensity to own the yellow metal. Certainly India has already followed China's lead in this respect with even the state-run Post Office and state-owned banks selling gold bars and coins to the people.

The significance of the Indian move should not be underestimated. Indian growth is currently matching that of China and with the two Asian potential megapowers with enormous populations taking ever increasing volumes of raw materials from the global supply, the pressure on resources can only increase dramatically.

According to the report, India is also beginning to try and use diplomatic pressures to help secure supplies with the External Affairs Ministry tasked with a strategy to help acquire them, particularly in Africa which is seen as key area of potential supply with resources frequently directly controlled by government.

AUSTRALIA

Rio Tinto Opens New Iron Ore Mine in the Pilbara's Robe Valley

Rio Tinto has started producing iron ore from the US$901 million Mesa A / Warramboo mine in the Pilbara region of Western Australia.

The open-cut iron ore mine, about 50 kilometres west of Pannawonica, will have an initial production of 20 million tonnes per annum, increasing to 25 million tonnes by 2011.

“Mining in the Robe Valley has been an integral part of the north-west economy for decades, and this new mine will ensure it continues to contribute to the benefit of the wider community. I am especially pleased to note that construction has been completed on time and inside budget, underlining Rio Tinto’s excellent record of project management. This outstanding effort has been echoed by the commencement of pre-strip work at the Western Turner Syncline development (near Tom Price) the same week, making it a dual milestone for Rio Tinto in the Pilbara.”

Construction of the Robe River Joint Venture (Rio Tinto share 53%) mine and rail extension started in November 2007. The mine will employ about 220 people, drawn progressively from the existing workforce at Mesa J and new employees.

Total high-grade reserves across the Mesa A / Warramboo deposits are estimated at 249 million tonnes, with a total mine life of 11 years. It will sustain production of the sought-after Robe Valley pisolite ore at 32 million tonnes per annum as production from the Mesa J deposit decreases.

State Funding to Support Olympic Dam Expansion

The South Australian Government has allocated funds for a task force looking into the massive and protracted study on expanding the big Olympic Dam copper-uranium-gold mine in the State's far north.

An uranium conference recently held in Adelaide was told by the State Minister for Mineral Resources Development, Paul Holloway, that the planned transformation of the big Olympic Dam underground mine into a massive open cut operation would result in the world's largest uranium mine, third largest copper mine and a significant gold producer.

Holloway told Paydirt's Uranium Conference that the Rann State Government had allocated A$6.2 million (US$5.56 million) through to 2012/13 for the Olympic Dam Task Force to assist owner BHP Billiton in proving the viability of this project.

Holloway said that the expansion would generate A$6.9 billion (US$6.19 B) per annum in revenue when it reached full capacity and BHP's draft environmental impact study said the would create up to 7,700 construction and short term jobs during the 11 year period before full production is reached. The operation's workforce at Olympic Dam would also double to more than 8,000.

Holloway said that despite a slight drop in volume, the value of Australian uranium exports exceeded A$1 billion for the first time in 2008-09.

"In terms of exploration expenditure on uranium in South Australia we have seen A$25.2 million (US$22.6 million) recorded in the most recent September 2009 quarter," he said.

Uranium exploration activity in South Australia continues to grow with over 300 uranium focused mineral exploration licences and over 100 mineral exploration licence applications registered as at September 2009.

The growing importance of South Australia in the global uranium scene was reinforced by Access Economics back in November claiming that SA is set to become the world's next energy export powerhouse through its uranium reserves.

Recent developments included a ground breaking ceremony last April for the Honeymoon uranium project for which owner UraniumOne signed a A$104 million (US$94.35 million) joint venture with the Mitsui group for development.

"If all goes to plan for Uranium One they expect to see production from Honeymoon in the second half of this year," Holloway said.

The Minister said the Government was looking forward to resolution of commercial issues facing the joint venture of Quasar Resources and Alliance Resources Ltd (ASX: AGS) on the advanced Four Mile uranium project, only 8 kilometres from the Beverley uranium mine operated by Quasar's parent Heathgate Resources which, in turn, is owned by global giant General Atomics.

First production from the A$90 million (US$80.8 million) Four Mile uranium project in South Australia is still possible in calendar 2010, according to 25% project owner, Alliance Resources.

In a separate presentation to the conference Alliance Resources' chief executive Steve Johnston said Four Mile's said the production milestone was achievable subject only to resolution of current legal issues between the company and 75% project owner Quasar.

The two parties are in dispute over native title issues relating to the joint venture -- with a court decision currently awaited -- payments to Heathgate Resources for modifications to the Beverley processing plant to process the Four Mile ore, and budget blowouts.

The project was initially estimated to cost A$90 million (Alliance: A$22.5 million share) but has been re-estimated higher to A$112 million (Alliance: A$28 million). Alliance has contributed just over A$13 million to the mine's development to date.

"Alliance's position is that the cost blowouts are unnecessary and are an unjustified change of scope to the project," Johnson said.

"However, presuming a favourable court outcome and resolution of other matters, Four Mile can be producing this year as that mine decision was made in 2008 based on an in-situ recovery mining model," Johnson said.

"The joint venture has continued to move down that path since then as the project is low cost and low environmental impact," he said.

"We can be ready to go quickly with a resin loading plant at Four Mile, transport of resin by truck to Beverley for stripping, precipitation and drying, packing and storage of the concentrate, and then the return of the stripped resin by truck to Four Mile.

The project has an inferred and indicated resource of 9.7 million tonnes at 0.33% uranium oxide for contained concentrate of 31,700 tonnes.

10 Company Summary ($million)
	2009	2008	2007	Total
Operating cash flow	47,812	82,863	63,949	194,624
Capital expenditure	-38,047	-44,961	-31,711	-114,719
Free cash flow	9,765	37,902	32,238	79,905
Net debt	-82,503	-101,682	-99,877	-82,503