MINING UPDATE

Canadian gold producer Great Basin Gold Ltd (GBG.TO) said it entered into a $47 million export finance facility with Credit Suisse (CSGN.VX), to fund the starting up of its Burnstone gold mine in South Africa, sending its shares up 5 percent.

The credit facility has a maximum term of four years, with interest and capital repayment commencing a year after draw down, Great Basin said in a statement.

The company also said the credit facility bears interest at a margin of 4 percent over the U.S. dollar London Interbank Offered Rates (Libor). It will also have the option to retire the loan a year after draw down at no additional cost.

Great Basin's Burnstone project is the primary security for the credit facility, it said.

West Africa Iron Ore Race Intensifies

The rush into West Africa's iron ore, centering on Guinea, continues, with London-listed Bellzone Mining recently announcing that Hong Kong-based China International Fund (CIF), noted for its investment to date in Angola, is to invest USD 2.7bn in 286km rail and port facilities for Bellzone's Kalia iron ore project.

Bellzone would eventually hold 10% of the infrastructure company. CIF has the right to purchase 100% of the off‐take from Kalia, where Bellzone previously said it "is committed to the development of a USD 4.45bn, 50m tonnes a year iron ore facility with supporting rail and port infrastructure for the export of iron ore in the Republic of Guinea, West Africa, by 2014".

While the Bellzone stock price soared on Monday, by around 50%, its market value of nearly USD 400m leaves it with stiff challenges on financing the building of the Kalia mine as such.

The news from Bellzone follows the announcement on 30 April that Brazilian supergroup Vale, the world's No 1 name in seaborne iron ore, had agreed to pay USD 2.5bn for a 51% stake in BSG Resources Guinea, which apparently holds rights to blocks 1 and 2 in the Simandou iron ore system, Guinea. This meant that the three names dominating about 75% of global seaborne iron ore, Vale, Rio Tinto, and BHP Billiton, are full force involved in West African iron ore.

Rio Tinto, which discovered Simandou in 2004, had claimed a 95% stake in all four Simandou blocks, seemingly until December 2008, when soldiers took Guinea over. A general election in the country is anticipated next month. On 19 March 2010 Rio Tinto announced a non-binding MOU with China's Chinalco to establish a Simandou joint venture, where the new partner would acquire a 47% interest by providing a USD 1.35bn earn-in over the next two to three years.

On 19 January ArcelorMittal, an integrated global steelmaker, announced it had entered into initial discussions with BHP Billiton to potentially combine its respective iron ore mining and infrastructure interests in Liberia and Guinea within a joint venture.

Among smaller players, London-listed African Minerals is advertising that "the success of the geophysics and reconnaissance drilling over the 20km strike length of Kasafoni has propelled the Tonkolili Iron Ore Deposit to the top of the list for largest JORC compliant magnetite reserves in the world". Tonkolili is to be found in Sierra Leone.

The most direct routes from Simandou to the Atlantic coast are either through Sierra Leone, or Liberia.

Across the Atlantic, Anglo American, which holds a controlling stake in South Africa's Kumba Iron Ore, is busy with Minas Rio in Brazil. During cyclical highs in the iron ore market, during 2007 and 2008, Anglo American spent USD 6.7bn on iron ore assets in Brazil, including 100% of Minas Rio, and 49% of LLX Minas Rio (port of Açu).

The build at Minas Rio is set to absorb around USD 4bn for phase I, which proposes first production in 2012, with full ramp-up to 26.5m tonnes a year of iron ore in 2013. Bellzone's market value of close to USD 400m can be compared to Anglo American's USD 48.4bn. Bellzone wants Kalia to start out with production at about twice the levels planned for Phase I at Minas Rio.

Little-known Core Mining, a private Isle of Man company, which appears to be based in Australia, recently announced a deal with integrated Russian steelmaker Severstal, which in return for 16.5% of Core can invest up to USD 55m into Core Mining up to the end of 2012. Core claims exploration licences for the Avima iron ore deposit in Congo-Brazzaville, and the Kango iron ore deposit in Gabon.

Big Gold Strike for Harmony & Newcrest

Harmony, one of three Tier I global gold miners based in South Africa, has announced further significant strikes in Papua New Guinea, at Golpu, which, according to Harmony "could develop into one of the most significant copper-gold projects" in the country. The news will come as a lift to Harmony shareholders, which have seen the stock price relatively underperform its international peer group, on continued issues at its ageing South African mines, where most of its production is currently sourced.

Golpu is situated within the prolific Morobe property, of more than 3,000 square kilometers, in PNG, a 50:50 partnership involving Harmony and Australian gold major Newcrest. The highly prospective property already hosts the Hidden Valley mine, which reached full production in December 2009, and which, at full production, is set to produce on a 100% basis, 255,000 ounces of gold and 4m ounces of silver a year. Gold resources at Hidden Valley are around 5.4m ounces.

Harmony says that Golpu now indicates a possible size potential of, on a 100% basis, 13m ounces of gold and 6.5m tonnes of copper, "putting it on a scale similar to other major copper-gold projects like OK Tedi and the historic mine in Bougainville". Prior to today, the resource at Golpu had been estimated at 2.9m ounces of gold, and 1.7m tonnes of copper.

To put Golpu in some context, in gold mining parlance, a deposit of 1m ounces is regarded as "world class". Work at Golpu continues. Newcrest today announced that "deep drilling undertaken in recent quarters demonstrates that the Golpu porphyry deposit may be significantly larger than the reported resource".

At Wafi, in the vicinity of Golpu, more than 6m ounces of gold have been separately outlined, and drilling continues. Further to the north west in PNG, Harmony holds 100% of the Mount Hagen project, and 100% of the Amanab project.

After years of declining production, Harmony's output is once again on the increase.

The fiscal year to 30 June 2009 saw Harmony reverse five years of accumulated losses, its move to zero net debt, the restoration of strong cash flows, the establishment of Rand Uranium, in which Harmony owns 40%, and creation of the 50:50 partnership with Newcrest.

There has also been the start of production at all five of Harmony's major projects - Phakisa, Doornkop South Reef, Elandsrand and Tshepong in South Africa and Hidden Valley in PNG, and stepping up exploration, with a focus on the Wafi-Golpu copper-gold tenements in PNG, South Africa's Evander South project, the St Helena tailings project, and several underground areas associated with existing operations in South Africa.

Junior Explorer African Eagle Finds $8.8 billion of Nickel and Counting

Over the course of the rest of this year, metals explorer African Eagle expects to deliver data that will help reduce the disconnection between its present £11.5 million market value and its claimed $8.8 billion of nickel in northern Tanzania.

Like many AIM metals explorers, African Eagle has flattered to deceive in its time on the market. However, while it has stumbled in its attempts to advance projects, it has built up a not-insignificant brood of nickel, gold and copper exploration projects. Due to the company's small size, management last year felt forced to choose between their babies. Although the glistering gold price might seem to make those projects attractive, African Eagle has decided to plump for its nickel assets, because of their sheer size and low cost of evaluation.

Managing director Mark Parker, one of the founders of the company with former chairman John Park, also explained to Proactive Investors that ‘the exploration risk is very low' at its Dutwa nickel project and that the exceptional metallurgy of the site will allow for good recovery rates and low-cost extraction.

Located 100km east of the well connected mining city of Mwanza and close to the main Mwanza-Nairobi trunk road, Dutwa is a nickel laterite deposit. Laterites - near-surface deposits where over many years the weather has leached away more soluble elements to leave mineable concentrations of nickel and other less soluble elements such as iron and magnesium - can be extracted with acid leaching. They have been less favoured than the vein-style nickel sulphides that traditionally were the deposit of choice, due to some expensive ‘miss-steps' such as BHP's Ravensthorpe laterite project, which was eventually sold for a song after US$2.1 billion of investment. But more than two thirds of nickel now comes from laterites and Parker is confident that, due to the low iron content of the Dutwa deposit, the project is definitely economic. ‘We can do it for maybe a tenth of the usual capital cost,' he assures. ‘If Ambatovy [in Madagascar] cost $4 billion, our capital cost, even using the slightly more expensive options like tank leaching, will be $350-$500 million.'

In 2008 African Eagle announced an initial Inferred Mineral Resource estimate for Dutwa of 31 million tonnes at an average grade of 1.1% nickel and 0.034% cobalt, with a contained metal endowment of some 340,000 tonnes of nickel and 11,000 tonnes of cobalt. The company believes the resource will increase following current step-out drilling and the delineation of the nearby Ngasamo deposit, also underway. A pre-feasibility study (PFS) for Dutwa is due at the end of calendar 2010 or in early 2011.

The metallurgy is key, though, explains Parker. ‘What we have is an average nickel content of about 1%-1.5%. But whereas some other companies' more expensive projects have huge iron content of 30-40-50% and require high temperatures and high pressures to leach out the nickel, at our deposit nature has already done a lot of that work for us - so we have less than 10% iron and are low in magnesium and low in aluminium. So, yes, it's not the highest grade but the metallurgy means that the extraction process is straightforward. We can process very straightforwardly with tank leaching or even cheaper heap leaching.'

Column leach tests at Dutwa gave 60% to 70% nickel extraction after just 16 days, rising to 90% after four months. This compares well against rival projects, where 540 days of leaching was required to extract 80% of the nickel at one trial heap elsewhere. African Eagle's tank leach tests also showed very fast reaction rates. The fast leaching reaction, low acid consumption and good nickel extraction shown by these tests are good indicators for the viability and profitability of the project. The transport cost of sulphur, likely from Dar es Salaam, ‘will be a constraint,' admits Parker, though the scoping study showed the project is viable and future developments such as planned upgrades to railways and a potential oil refinery in neighbouring Uganda would ease this.

African Eagle has also identified a pair of other nickel deposits close to Dutwa that could be extracted with the same processing plant. At Ngasamo, 5km to the west, the company has an agreement with its Czech and local owners to acquire 35% once it has completed a drilling programme currently under way, and up to 50% or 75% on further exploration, evaluation and feasibility work. African Eagle recently completed the first phase of this drilling programme, which will establish a JORC inferred resource and provide material for metallurgical testing. March's drilling update showed good nickel grades at Ngasamo over a greater thickness than Dutwa, with 36m at 1.63% nickel including 15m at 2.37%, 51m at 1.18% nickel, 57m at 0.92% nickel including 42m at 1.04%, and 78m at 0.86% nickel including 27m at 1.1%, as well as 9m at 0.27% cobalt including 3m at 0.48% and 12m at 0.17% cobalt.

More assay results announced this week continued along the same lines, showing 75m at 1.42% nickel, 84m at 1.07% nickel including 30m at 1.64%, 63m at 1.41% nickel including 45m at 1.71% and 57m at 1.25% nickel including 12m at 2.48%. Cobalt intercepts included 18m at 0.47% cobalt, 54m at 0.13%, 9m at 0.43% and 9m at 0.27% including 3m at 0.48%.

Furthermore, African Eagle holds the Zanzui nickel project, only 60km from Dutwa and ‘possibly twice as large'. Preliminary metallurgical tests showed that it shares the same low-acid leaching characteristics, with, adds Parker, ‘a little lower average nickel but good cobalt grades - so perhaps the value per tonne wouldn't be so different from Dutwa. But we have to do more drilling there first.'

Seymour Pierce analyst Asa Bridle expects to add the new Ngasamo resource into his valuation metrics for the project shortly. Nevertheless, even at current levels he believes that the project is being underappreciated by the market: ‘with US$8.8 billion worth of nickel (340,000 tonnes at US$25,695 per tonne) already identified at Dutwa, there is clearly a disconnect between the project's value and AFE's market cap.'

The valuation should also include the rest of the portfolio that Parker has ‘backburnered'. This includes the Irugubi gold project in Tanzania, which has just been swapped with Aussie-listed Peak Resources for shares (around £2.6 million worth at the time), and a good half a dozen of Zambian projects that Parker says ‘are under negotiation' and he ‘would consider any reasonable offer' for.

Last August an African Eagle placing and an open offer together raised £3.4 million. To fund further developments past the pre-feasibility stage, more will be needed. To this end, Parker says he and industry guru chairman Euan Worthington are ‘talking to a number of potential strategic partners, some in the industry and others not', adding that the company is proud of its record of being ‘s fair as possible to its existing shareholders'.

These investors have seen the shares fall from a year's high of 11.32p to the present 4p, despite the strengthening of the nickel price. The forthcoming months should see ample news flow in the run-up to the PFS, promises Parker, two sets of new drill results and further metallurgical results from Dutwa, a resource estimate at Ngasamo, an upgrade of Dutwa's resource estimate from inferred to indicated in a month or so and he hopes to a recalculation of the economics of the project to bring break-even costs down from their present $6.50per lb to nearer $5.50. Furthermore, Parker advises that the composition of the board is likely to change over coming years from explorers to miners as it moves closer towards development.

More Great Uranium Assays from Rossing South

Uranium and copper explorer Kalahari Minerals (AIM: KAH) said Extract Resources (TSX, ASX: EXT) reported further exceptional assay results from the Rossing South uranium deposit at Extract's world-class Husab uranium project in Namibia, which "underlined its enormous potential," with infill drilling returning grades of 2,243 ppm (parts per million) uranium over 73 metres.

Kalahari's subsidiary Kalahari Uranium Limited holds a 40.6% interest in Extract Resources, which owns the rights to the project. Previous estimates have suggested the Rossing South uranium mine could support production of nearly 6,700 tonnes of uranium per annum, which would more than double Namibia's entire annual output and would be significantly larger than the nearby Rossing Mine, currently the third largest uranium in the world, and 68.6% owned by Rio Tinto (LSE:RIO, ASX:RIO).

The ongoing drilling on zones 1 and 2 is aimed at proving up Extract's current resource from the inferred to indicated category. In addition to the results from infill drilling, Kalahari said that exploratory drilling on the western limb of the Rössing South anteform was yielding "extremely encouraging results" and demonstrated the potential of the entire Husab project, which the company said could develop into one of the world's largest economic uranium deposits.

The drilling programmed conducted at Rossing South is already one of the largest in Africa with 19 rigs operating in the area. The pilot testwork which has been reported to have delivered encouraging results is expected to be concluded in June, while an updated resource estimate for Rossing is scheduled for Q3 2010.

This will be followed by the release of the definitive feasibility study for Rossing South, currently set for Q4 2010 and expected to confirm the findings of last year's scoping study, which said the project had the potential to have a mine life of more than 20 years with an annual production rate of 15 million pounds (Mlbs) of uranium. The scoping study was conducted using an average grade of 487ppm, which is lower than the grades produced by drilling at Zones 1 and 2.

Other assay results included mineralization over 17 metres at 2,745 ppm uranium, 37 metres grading 2,001 ppm uranium, 10 metres grading 1,665 ppm uranium, 12 metres grading 1,522 ppm uranium, 18 metres grading 1,419 ppm uranium and 53 metres grading 1,265, ppm uranium.

Freeport's DRC High Grade Copper/Cobalt Mine to Exceed 2010 Target

Freeport-McMoRan's (FCX.N) copper and cobalt mine in Congo has reached production capacity and will exceed targets for 2010, the U.S.-listed miner told Reuters.

"We will exceed our plan and we have reached our capacity," Richard Robinson, Social Programmes Manager at the Tenke Fungurume Mining (TFM) project told Reuters on the margins of a mining conference in Congo.

Freeport-McMoRan has a 57.75 percent share of the project, which has cost $2 billion to set up and is Congo's largest private investment. State mining company Gecamines has 17.5 percent and Lundin Mining (LUN.TO) the remaining 24.75 percent.

Robinson earlier told the conference Tenke produced 29,000 tonnes of copper and 2,300 tonnes of cobalt in the first quarter of 2010, on track to break a year-end target of 115,000 tonnes of copper and 8,000 tonnes of cobalt.

The project, estimated to have reserves of 119 million tonnes with average ore grades of 2.6 percent copper and 0.4 percent cobalt, produced 70,000 tonnes of copper and 2,600 tonnes of cobalt in 2009. It reached full production in October last year after testing began in March.

Robinson said the project paid $234 million in taxes to the government since construction started in 2006 to the end of March 2010, including $29 million for the first quarter of 2010, and $80 million in royalty payments since production began.

Tenke, which employs 2,300 staff and 1,400 sub-contractors, 98 percent of whom are Congolese, is holding negotiations with the government after a mining review found fault with its agreement in a sector-wide review of contracts.

Russia to Spend $1bn on Namibian Uranium Exploration

Russia is ready to invest $1 billion in uranium exploration in Namibia, Sergei Kiriyenko, head of Russia's state nuclear corporation Rosatom said recently.

"We're ready to start investing already this year," Kiriyenko told journalists on the sidelines of the visit of Namibian President Hifikepunye Pohamba to Moscow.

He said the uranium will be used for the nuclear power plant Russia is building in Turkey.

Russia's President Dmitry Medvedev discussed the idea when visiting Namibia last year as part of his trip to promote Moscow's interests in Africa, where it faces competition with China and the West for resources.

Namibia, the world's fourth-largest uranium producer, is home to the Rossing mine operated by Rio Tinto, which together with Paladin Energy's Langer Heinrich mine accounts for about 10 percent of global output.

AMERICAS

Gold Fields, Buenaventura Hit Gold Paydirt in Peru

Global Tier I gold miner, Johannesburg-based Gold Fields, has announced a major gold strike at the Chucapaca joint venture, in Peru, where the 49% partner is Lima-based Buenaventura, also a member of the elite global Tier I gold group. The companies have defined a mineral resource at the Canahuire deposit, within Chucapaca, estimated at 5.6m gold ounces, equivalent, including credits from copper and silver, which are also found on the deposit.

Last year, Gold Fields exercised its back-in right to hold 51% of the joint venture, "triggered on the back of the Canahuire discovery on the Chucapaca tenements where drilling intersected significant gold and copper mineralisation associated with the margins of a diatreme breccia".

Operatorship of the project was transferred to Minera Gold Fields Peru S.A., and an aggressive drill campaign commenced to delineate the extent of mineralisation of the Canahuire deposit, and to test several other prospective targets in the area. Results have confirmed and expanded the potential of the deposit and work is progressing to complete a scoping study towards the end of the year.

In a joint statement Nick Holland, CEO of Gold Fields, and Roque Benavides, his counterpart at Buenaventura, said: "Canahuire is a highly promising gold discovery in an emerging gold district in South America. Geological indications are that there is significant upside at the Canahuire deposit, as well as at other targets within the project area". The Canahuire deposit, taken rapidly to a resource estimate, within 18 months of the first drill hole, appears to be amenable to open cut mining.

The Canahuire announcement follows the 22 April 2009 news from Tier I gold miners, Johannesburg-based Harmony, and Australia's Newcrest, that work at the Golpu strike, in Papua New Guinea, indicates a possible size potential of, on a 100% basis, 13m ounces of gold and 6.5m tonnes of copper, "putting it on a scale similar to other major copper-gold projects like OK Tedi and the historic mine in Bougainville". Golpu is within the Morobe exploration property, where Harmony and Newcrest are in a 50:50 joint venture.

Harmony and Newcrest are already sourcing gold ounces from the built Hidden Valley, within Morobe property. Hidden Valley reached full production in December 2009, and in a full year, is expected to produce (on a 100% basis) 255,000 ounces of gold and 4m ounces of silver. Gold resources at Hidden Valley are around 5.4m ounces. Wafi, also on Morobe, holds a resource of 6m ounces of gold. All told, Morobe holds, on a 100% basis, close to 25m ounces of gold, with lots of silver and copper byproduct.

Cerrejon Mining to Grow Coal Exports to 32m tonnes

Colombia's Cerrejon mining company will seek to increase coal exports to 32 million tonnes with more focus on shipments to Asia as demand in Europe slips, the company president said recently.

Cerrejon, Colombia's biggest exporter, is a joint venture owned equally by BHP Billiton, Anglo American and Xstrata.

Cerrejon mine, in La Guajira state in northeast Colombia, is the world's biggest opencast coal mine.

"This year, we're trying to export our mine's capacity, which is 32 million tonnes, and so far we're looking good," Cerrejon President Leon Teicher told reporters at an international mining and energy conference in Cartagena.

Colombia is ranked No. 5 in global coal exports, behind Indonesia and Australia, and ranked almost equally with Russia and South Africa.

Cerrejon last year exported 30.5 million tonnes.

Teicher said the company suffered losses in coal sales to Europe, representing 60 percent of total exports, due to a low demand during the global economic crisis.

Production shipped to Europe now makes up 40 percent of the miner's total exports, he said.

The company has sold more than 3 million tonnes to China, India, Thailand and South Korea, this year, Teicher said.

"We hope to sell the most to China," he said.

Colombian coal sales to China have slowed due to a rally in freight rates but are likely to continue strongly in the second half of the year, keeping European supply tight when utilities resume buying.

Peru Conga Gold Mine to Open By 2015

Newmont expects to open its Conga gold mine in Peru in late 2014 or late 2015, the company's Executive Vice President Guy Lansdown said recently at an industry conference.

To bring the project into production, Newmont and its partner, Peru's precious metals miner Buenaventura, would need between $2.5 billion and $3.5 billion in investments, Lansdown said.

"We look at going into production in late 2014 to late 2015," he told mining executives meeting in Lima for a biannual summit.

He said Conga has reserves of about 12 million ounces of gold and some 3 billion pounds of copper. In the first five years of operation, the mine should produce between 650,000 and 750,000 ounces of gold, and between 160 million and 210 million pounds of copper per year.

Lansdown said that Newmont and Buenaventura are exploring for gold around the Conga project, where they have found several prospective targets. He sees Conga as being a low-cost operation.

The mining executive said Newmont is bullish on gold prices and sees the yellow metal ranging between $900 and $1,300 an ounce in the short-term and even medium-term.

Earlier, Buenaventura said it and Newmont were considering tying up with Chinese firms Minmetals and Jiangxi for projects in Peru, the world's No. 6 gold producer.

Minmetals and Jiangxi Copper are developing the Galeno copper project near Conga.

Newmont and Buenaventura also control the Yanacocha mine in southern Peru, one of Latin America's largest gold mines.

Volcan Plans $250m Expansion and Exploration Programme

Peruvian miner Volcan, the world's No. 4 producer of zinc and silver, plans to invest up to $250 million for expansion and exploration, company officials said at an industry conference recently.

Volcan sees its 2010 zinc output at 700,000 tonnes of concentrate and silver production stable at 21 million ounces.

"We see investment in 2010 at between $200 million and $250 million ... to upgrade the (Cerro de Pasco zinc-silver) mine, explore, and to become more efficient," Volcan's General Manager Jose Herrera told reporters on the sidelines of a biannual gold summit in Lima.

He said Volcan plans to start the expansion of Cerro de Pasco late this year or next year and that the company's Trapiche nickel project in central Peru should start work in the second half of 2010, with daily output at 150 tonnes of mineral ore.

Meanwhile, Jose Picasso, who heads the company's board of directors, told Reuters that Volcan expects to lift its silver output by 4 million to 5 million ounces after opening a new processing plant this year or next year.

"We would like to see a double digit increase in annual production, if we can, especially the silver output," he said.

North America's 1st Major Chromite Deposit Target of Cliffs' Potential Hostile Bid

The original search for a range of minerals by two small junior explorers in the so-called "Ring-of-Fire" in the James Bay Lowlands in northern Ontario has evolved into a potential hostile takeover bid by U.S. miner Cliffs Natural Resources for what may become North America's first chromite mine.

Junior explorationists KWG Resources (TSX-V KWG) and Spider Resources (TSX-V: SPQ) announced recently they had entered into a binding letter agreement regarding a proposed merger after U.S. iron ore and coal miner Cliffs Natural Resources (NYSE: CLF) announced it intended to buy the junior companies to gain total control of the Big Daddy Chromite Deposit in the McFaulds Lake area of Northern Ontario.

Cliffs acquired a 47% stake in Big Daddy when it bought Freewest Resources last December. KWG and Spider each own 26.5% stakes in Big Daddy.

The two juniors say their brand-new merger would give the combined company a 53% stake in Big Daddy with the option to earn another 7% to hold a 60% interest in the project. In a news release, Neil Novak, president of Spider, declared, "After 18 years of exploring the James Bay Lowlands area of Northern Ontario as co-venturers, this merger places all of our exploration successes into one corporation; a corporation which will be poised to the development of its main asset, the Big Daddy Deposit, while maintaining an enviable portfolio of exploration projects covering a range of minerals."

Appropriately, one common share of Spider outstanding would be changed for one common share of KWG.

The break fee for the proposed merger is Cdn$2.3 million.

However, Cliffs would prefer to take over all of the issued shares of both companies for a cash consideration of 13-cents per share. Cliffs already owns 3% of Spider's shares and 20% of KWG's share. Cliff's offer for KWG is valued at C$100 million (US$93mn), while the major miner's offer for Spider is valued at C$86 million (US$80.3mn).

The Big Daddy joint venture and Cliffs' Black Thor and Black Label chromite deposits lie along a 12 km to 14 km northeast-south-west trend. Along with the neighboring Noront's Blackbird 1 and 2 deposits, these five chromite deposits "collectively form the most significant chromite discovery in North America," according to KWG Resources.

KWG claims that Big Daddy alone has the "potential to supply the whole North American steel making industry."

In a news release, Williams Boor, president of Cliffs' Ferroalloys business unit, said, "While we intend to provide each company's shareholders the opportunity to receive a significant cash premium, we only need to acquire either KWG or Spider in order to satisfy our strategic objectives with respect to the Big Daddy Deposit."

Cliffs noted that obtaining control of Big Daddy, and then combining it with Cliffs' Black Thor and Black Label deposits "would enable Cliffs to develop the most appropriate integrated long-term mine plan for moving this new mining district forward."

Copper Mountain Signs $322m in Financing Agreements

Copper Mountain Mining Corp (CUM.TO) said recently it has signed debt financing agreements worth $322 million for the development of its flagship Copper Mountain project in southern British Columbia.

Financing for the project was arranged by Japan's Mitsubishi Materials Corp (5711.T), which owns a 25 percent stake in the Copper Mountain project.

Mitsubishi, one of the world's largest diversified materials companies, also owns a stake in BHP Billiton's (BHP.AX) (BLT.L) Escondida, the world's largest copper mine, which is located in northern Chile.

Mitsubishi bought its stake in the Copper Mountain project in October 2008. At the time, it also agreed to arrange about $250 million in debt financing for the construction of the mine.

The mine, which is expected to begin full production in June 2011, will produce about 105 million pounds of copper annually. It will also produce gold and silver as byproducts.

The financing consists of two tranches; with $162 million being provided by a consortium of senior lenders comprising Bank of Tokyo-Mitsubishi UFJ Ltd and Mizuho Corporate Bank along with a term loan of $160 million provided by Japan Bank for International Cooperation, the international arm of Japan Finance Corp.

Silver Wheaton Invests in Ventana Gold

Silver Wheaton has agreed to purchase 1.8 million units of Vancouver's Ventana Gold for Cdn$20.7 million (US $20.02 million) private placement financing at a price of C$11.50 per unit.

As part of the agreement, Silver Wheaton has the right of first refusal over any silver stream that Ventana may choose to sell from Ventana's La Bodega and Cal-Vetas gold projects or any future property within a five kilometer area of interest in the California-Vetas Mining District in the Department of Santander in Columbia.

Mining entrepreneur Ross Beaty owns 16.9% of Ventana, while Brazil's richest man Eike Batista is Ventana's largest shareholder with a 17.5% stake.

Earlier this month Ventana signed agreements to pay US$48 million to acquire the assets of two privately-held Colombian companies, Minera La Bodega and Minera Del La Baja, for all minerals rights, key surface rights, easements, equipment and facilities, and related intangible assets of both the La Bodega and La Baja properties.

Orr said the agreements "give us unencumbered access to an expanded land package for continued exploration and development of this prolific gold district."

Originally, Ventana was to finance the transaction with a portion of its current cash and a loan for US$20 million from "related parties of Ventana."

ASIA

Qatar Sets Up $1bn Indonesia Fund for Natural Resources and Infrastructure

Qatar Holding, the investment arm of Qatar's sovereign wealth fund, has set up a $1 billion Indonesian fund to invest in infrastructure and natural resources in Southeast Asia's biggest economy, officials said recently.

The new investment fund is a sign of increasing interest in Indonesia among Middle East and other international investors thanks to the country's abundant resources and desperate need for financing for infrastructure projects ranging from power plants to roads, railways, and bridges.

Qatar's existing interests in Indonesia include Qatar Telecommunication Co.'s 65 percent stake in Indonesia's second-biggest telecom company, PT Indosat.

Gita Wirjawan, head of Indonesia's investment coordinating board, said that the local investment vehicle, PT Qatar Holding Indonesia, was set up a few days ago.

"The main focus area will be on mineral resources and infrastructure projects," Wirjawan added.

Hilmi Gasim, an assistant to Alwi Shihab, the President Susilo Bambang Yudhoyono's special envoy for the Middle East, said that originally Qatar and Indonesia had planned to set up a jointly owned fund with Qatar holding an 85 percent stake, but that Qatar eventually opted for a wholly owned fund.

Indonesia's huge coal and other mineral reserves have attracted keen interest from India and China, which want to secure steady supplies.

But Indonesia has also been aggressively pitching to Middle Eastern investors for several big resources and infrastructure projects.

It has opened a new marketing office in Dubai, United Arab Emirates, and is slowly developing its Islamic financial markets to provide a wider array of Shariah-compliant investments.

Last year, Indonesia's government attracted total investment of $7.2 billion from Middle East investors, including a $5.2 billion investment in an integrated mineral-resources project in East Kalimantan with UAE's MEC Holdings.

Qatar Holding, which just last week bought the famous London department store Harrods, is estimated to control about $70 billion in assets and has interests in many leading companies in Europe and Unites States.

It has set up an office in India and plans to set up another office in China.

Temasek Buys Freeport-McMoRan Stake for $32m

Singapore state investor Temasek has bought a stake in Freeport-McMoRan Copper & Gold Inc. for nearly $32 million, according to a regulatory filing seen by Reuters.

The stake purchase is its latest investment in the resources sector in which it has poured more than $1 billion in the last two months.

Temasek bought 382,000 shares in the New York-listed Freeport, it said in a quarterly filing dated May 11 with the U.S. Securities and Exchange Commission.

The stake is now valued around $27 million based on Freeport's last traded price of $69.72. Freeport is valued at $32.8 billion, according to Reuters data.

Temasek declined comment on its investment in Freeport.

Temasek, which had high exposure to banks at the start of the credit crisis, has been diversifying its portfolio with investments in miners and energy companies.

Last week, it agreed to buy $500 million worth of non-voting convertible preferred shares in Chesapeake Energy Corp. It has an option to buy more shares with Chinese private equity firm Hopu.

The sovereign fund also bought securities worth C$500 million ($483 million) in Inmet Mining and $50 million in Platmin Ltd over the past two months.

In March, the Singapore investment firm said it wants to increase its exposure to mining in Mongolia and is looking for opportunities to invest in the mining sector in Africa.

Antam Expects to Produce 3 Tonnes of Gold in 2010

Indonesia's state miner PT Aneka Aneka Tambang Tbk expects to produce 3 tonnes of gold in 2010 from 2.6 tonnes last year, following the operation of its new gold mine, an official said recently.

Antam's Cibaliung underground gold mine in Banten on Java island started commercial operations on May 25 and is expected to produce 500 kg in 2010, said the website of the firm, which is 65 percent-owned by the government.

"For gold, with the presence of Cibaliung mine, we expect 3 tonnes per year, up from 2.6 tonnes last year," said President Director Alwin Syah Loebis.

Loebis also said the firm expects a gold refining deal with Hong-Kong listed gold firm G-Resources Ltd to be reached before a gold mine operated by G-Resources starts operations in 2011.

G-Resources, which has the Martabe gold and silver mine in Indonesia's Sumatra island, has said it is in talks to send its gold ore to Antam's precious metal refinery PT Logam Mulia for processing.

For ferronickel, Loebis said the firm maintained its target to produce 19,500 tonnes of the metal this year, up from 12,000 tonnes in 2009.

Antam has been discussing with PT International Nickel Indonesia for the purchase of one million tonnes of nickel, which Loebis expected to be resolved soon this year.

NMDC Finalises Iron Ore Contracts at Double FY2010 Prices

India's largest iron ore producer, NMDC Ltd, has finalised quarterly contracts with Japanese and South Korean steelmakers at prices up to double the 2009/10 benchmark, a top official of the company said recently.

The price jumps for the April-to-June quarter are between 93 percent and 100 percent over the 2009/10 benchmark and the actual prices at which the company will sell the iron ore would range between $120 and $140 a tonne FOB, Rana Som, chairman of the state-run NMDC told reporters on the sidelines of a conference. "It will be a price for three months only. After that there will be further negotiations," Som said, adding that it would be with retrospective effect.

The new pricing system was based on average prices from several indices.

NMDC aims to export 3 million tonnes of iron one in the current fiscal year that started on April 1, slightly higher than what it exported in 2009/10, Som said.

NMDC supplies iron ore to Japan's Nippon Steel (5401.T), Kobe Steel (5406.T), Mitsubishi Steel (5632.T), JFE and South Korea's POSCO (005490.KS).

The company aims to produce 30 million tonnes of iron ore this fiscal year, up from its 2009/10 output of 24 million tonnes.

The low output last year was due to Maoist rebels damaging a pipeline that connects NMDC's mines to steel plants in east India in May last year.

"I am planning for 30 million tonnes, expecting that at the most by six months time the pipeline should be restored," Som said.

EUROPE

Las Cruces Copper Mine to be at Full Output by Year-End

Inmet Mining said recently it expects its Las Cruces copper mine in Spain to reach commercial production by the end of June and full output by the end of the year, following a series of delays.

The high-grade mine was delayed from its original 2008 startup due to a since-resolved dispute over its water permit.

The mine began production last year and had been expected to reach commercial levels in May, before technical problems prompted the company to temporarily stop work, while torrential rains delayed its restart.

Speaking at an investor conference, Inmet Chief Executive Jochen Tilk said mining has resumed, and commercial levels are now targeted by mid-year.

"We have some confidence and some good reasons to be confident to declare commercial production towards the end of this quarter and then to be able to reach design production by the end of this year," he said.

Inmet's shares rose following the comments, and were up 2 percent at C$51.50 on the Toronto Stock Exchange.

The company had previously expected the mine to reach full production capacity by August.

Las Cruces is expected to produce 72,000 tonnes of copper when running at full capacity.

The mine is Inmet's fifth and largest producing operation.

However, the company is banking heavily on its Cobre Panama copper project in Panama, which is expected to one day produce more than 275,000 tonnes of copper a year. It is expected to begin production in 2014.

Flsmidth to Supply Process Equipment for Russian Gold Plant

Mineral processing and metallurgical equipment manufacturer, FLSmidth, has received a contract worth approximately Euros 30m from Russian Open Joint Stock Company Pervenets for the supply of equipment for its brownfield Verninskoye gold plant. Open Joint Stock Company Pervenets is wholly owned by Polyus Gold.

The plant which will have a capacity of 278 tonnes gold ore per hour will be located in the Irkutsk region in Central Russia.

The contract includes supply of all the process equipment and technology and will cover the main plant areas; classification, pumping, flotation, CIL cyanidation, thickening, filtration, carbon ADR section, electrowin and smelt house. Equipment for crushing and grinding is not included in the contract.

"Russia is a well-known market to FLSmidth and we have a strong local presence in the country. We believe that Russia holds a large future potential - and within minerals gold and copper are particularly interesting. This order for a complete gold processing plant illustrates our ability to serve as a single-source supplier to the minerals processing industries," Group CEO Jørgen Huno Rasmussen comments.

The order will contribute beneficially to FLSmidth's earnings until start-up of the plant in third quarter of 2011.

Australian Junior Aims to Enhance Ukraine's Gold Picture

Western Australian explorer Korab Resources Ltd, which has been persevering with a gold project in the eastern Ukraine, has resumed mining operations.

It will stockpile oxide ore in preparation of having a gold plant operating next year.

Korab began development of the Bobrikovo mine in mid 2008 through 74% owned subsidiary Donetsky Kryazh Ltd (DKL). Korab's equity in DKL is held by its Australian subsidiary, Lugansk Gold Ltd.

The remaining 26% interest in DKL is held by Ukrainian investors.

DKL is registered under Ukrainian laws and is subject to local corporate tax at a rate of 25%. All funding requirements for DKL's Bobrikovo gold mine are provided by Korab through Lugansk Gold.

In February, Korab announced a plan to seek separate listing for Lugansk on the Australian Securities Exchange, and executive chairman Andrej K Karpinski said Koran would call an extraordinary general meeting for this "shortly."

Initially the company will mine oxide ore from surface to 30-40 metres depth.

Karpinski said funds raised by Lugansk Gold would be used to cover the capital for construction and commissioning of the processing plant, for working capital requirements and to repay loans from Korab.

Loans provided by Lugansk to DKL will be repaid by DKL from project's pre-tax cash flows.

"Ukraine has no restrictions on repatriation of capital or profits and is a major investment destination for European Union's institutional investors. Ukraine has ambitions of becoming a member of the European Union while maintaining close working relationship with CIS," Karpinski said.

The mine is in the Lugansk region within the Nagolny Ridge which is part of a large intra-continental Phanerozoic structure that extends from southern Europe east to Central Asia. This structure hosts several world-class gold mining operations including Muruntau, Vysokovoltnoe, and Bakirchic.

Karpinski said the tenor and style of mineralisation at Bobrikovo is similar to the 170 million ounce gold deposit at Muruntau in Uzbekistan and to 57 M oz Sukhoi Log deposit in Russia.

Sulphide gold mineralisation starts at 30-40 m depth and continues to a depth of 3,200m. Veins are easily recognisable and suitable for selective extraction. The Bobrikovo structure strikes for 11 kilometres by 2.5 km.

McIlvaine Company

Northfield, IL 60093-2743

Tel: 847-784-0012; Fax: 847-784-0061

E-mail: editor@mcilvainecompany.com

Web site: www.mcilvainecompany.com