BRAZIL is a big player on the world mining scene and its iron ore giant CVRD is up there on the global stage with Rio Tinto and Anglo American. But, for all that, the country derives only 1 per cent of its GDP from extracting minerals.
Large parts of the vast nation remain lightly explored, especially for gold, but also across many mineral types. That is the lure that has drawn so many Australian companies in recent times.
Carnavale Resources has been talking up its molybdenum project there; Crusader Holdings has picked up the Posse iron ore target and is also returning good tin and indium samples from Brazil; Troy Resources is producing gold; Elkedra Diamonds is another producer; and Mirabela Nickel has completed the feasibility study on its Santa Rita nickel project. Then there's Mundo Minerals, which last week raised $18 million to complete financing for its Engenho gold development in Minas Gerais state.
Now there's Gold Aura. Although its main priority is its Croydon base metals discovery in northern Queensland, and it is concurrently exploring in Papua New Guinea (where, while wide, the gold intersections are so far on the low side in terms of grade), Gold Aura can move to 60per cent of the Sao Chico property in the Amazon region.
Grab sampling from a small shaft has returned some pretty mouth-watering grades: 304 grams/tonne gold, 283g/t silver, 52.8 per cent lead, 15.9 per cent zinc and 1.81 per cent copper. Sao Chico lies within what is known as the Tapajos gold province where, between 1958 and 1993, an estimated 18 million ounces of gold were extracted.
Rail makes a difference
APOLOGIES in advance for banging on about railways for the second week in a row, but their presence -- or the promise of presence -- can make the world of difference to the economics of a mineral deposit.
Thus, the announcement from Giralia Resources might seem just another early drilling result, and worth no more attention than any other such news. But it followed by just a few weeks the revelation that WestNet Rail -- the operator of Western Australia's railway network -- wants to build a new line through the Mid West region of the state to serve all the new or proposed iron ore mines, feeding into the existing port of Geraldton and the new planned shipping terminal at Oakajee.
That new line would pass by the front door of Giralia's Beebyn-Weld Range project where the first drilling results have included holes that hit 36m at 60.8 per cent iron ore and 30m at 60.3 per cent. This is much sought-after haematite ore and drilling shows that the main zone is between 25m and 45m thick with most of the ore encountered so far lying less than 100m from the surface.
Giralia's ground is right next to the higher-grade parts of the Mt Weld project now being worked on by Midwest Corp and its deep-pocketed Chinese partner, Sinosteel. Giralia has also found out-cropping iron ore 10km to the south of where it is now drilling.
Vitale news is good
COULD it be that Gino Vitale is about to confound his critics? Not that there will be any rush to judgment here but, given our previous interest in his stewardship of Redbank Mines, Pure Speculation feels duty bound to report some encouraging news.
The previously struggling junior formerly known as Burdekin Pacific is now looking at an open-pit operation producing somewhere between 6000 and 10,000 tonnes of copper a year and has just released a 20 per cent increase in resource to 71,000 tonnes of contained metal.
We don't have any up-to-date figures, as Vitale tends to be among those leaving their quarterly reports to the last possible moment, but Redbank in the March quarter produced just 146 tonnes of copper. It also had a 240,000oz gold resource at the Mt Kasi project in Fiji.
Vitale survived a couple of shareholder uprisings in the Burdekin days, the dissidents annoyed by the imbalance between heavy administrative outlays and light exploration spending. And the share price performance has been pretty woeful.
Survival was made possible partly by Macquarie Bank handing over a $2.5million loan; the bank's out-of-the-money 2010 options, if converted, would give it 6per cent of Redbank. Glencore International underwrote an issue last year and its options converted would hand the Swiss outfit a 3.5 per cent stake.
HSBC Custody Services holds 7.5 per cent and Vitale is now talking to another institution about getting on the register, one that will apparently give Redbank some more cred in the market. If Redbank makes it with the copper mine, Vitale will be very thankful he added some extra technical capacity to the company by bringing on board the project's manager James Searle, who as MD built Dragon Mining and got its Svartliden gold project in Sweden into production.
Madagascar bound
MICHAEL Kiernan is not the only mining figure intent on building a new diversified mining heavyweight. Kiernan is using Territory Resources as his new base, fighting for control of Consolidated Minerals and now heading the board at vanadium player Precious Metals Australia, but David Archer is taking a different tack at Hillgrove Resources.
Archer wants to replicate what he did at Savage Resources, which he founded in 1985. Savage's portfolio included the Ernest Henry copper-gold mine, the Liddell coal mine in the Hunter Valley and zinc mining and smelting operations in the US.
Hillgrove, his new creation, has the advanced Kanmantoo copper-gold operation near Adelaide, a strategic stake in NSW coal seam gas and is drilling for zinc in South Australia. Last week, the company revealed it was looking for prospects in Madagascar, reported to be the world's ninth-poorest country. There is not even a formal gold mining operation in the island nation, although the International Herald Tribune reports that there are about 500,000 artisanal -- and clandestine -- gold miners.
There's been a lot of recent pegging across Madagascar by foreign mining companies but, as yet, not a huge amount of actual exploration let alone mine development. Archer believes the potential is huge there -- and describes his appetite as "omnivorous" -- he's after just about anything, including copper, gold, coal or industrial minerals.
Hillgrove is not first cab off the rank there: in May, Gippsland Offshore Exploration announced it had applied for two offshore exploration permits and last month NGM Resources acquired nickel projects in Madagascar from BHP Billiton.
Wealthy by-product
WE'VE all been astonished over the past year or two by the remarkable price increases for some metals. But rhenium has been the outstanding one -- surging 700per cent over the past 18 months to $US8000/kg. It sounds somewhat more spectacular if you say that's equivalent to $US8 million ($9.1 million) a tonne.
The metal is used as a catalyst for lead-free petrol and as a super-alloy for high-temperature resisting components in aircraft engines. According to a wire report last week, additional demand for rhenium is likely to come from new technology to be used for transforming gas to liquids.
The metal is usually mined as a by-product of molybdenum processing. Kings Minerals has just reported significant rhenium values at its Kalman moly project near Mt Isa.
The grade might seem low at 0.0059 per cent, but Kings says that's worth $US540 for every tonne of rock that's pulled out for moly. Kings found the by-product while its mind was mainly on the moly, but is now planning to re-assay its resource for rhenium and other possible rare elements.
Rich cocktail
* TWO weeks ago we were slightly breathless in anticipation of an announcement from Navigator Resources regarding its rare earths drilling in the Kimberleys. Seems we were right to expect something interesting, and the company's announcement showed it seems to be on the trail of an intriguing metal cocktail. There were some encouraging grades of uranium, but that can be put to one side while Alan Carpenter is behind the Premier's desk. Drilling has shown up about 20 different metals. There's niobium at grades similar to those being mined underground in Canada and tantalum comparable in grade to that at the Wodgina and Greenbushes mines owned by the failed Sons of Gwalia. High levels of scandium, too, and iron ore over 5m at 45.2 per cent.
* GOLDSEARCH has been involved in the Musgrave since 1995. It's a fairly challenging proposition, given that this province straddles the unforgiving country that centres on the WA, NT and SA border meeting point. The WMC discovery of the Nebo and Babel nickel deposits led to comparisons with the massive Voisey's Bay find in Canada. And in they tumbled to pick up ground. West Musgrave Mining floated on the strength of it (it's now Kambalda miner Australian Mines); ReLode threw its hat in the ring (and retains ground there under its new name, Integra Mining); while Acclaim Exploration and Cobra Resources (now Resource Mining Corp) were among the other enthusiasts. BHP now owns Nebo-Babel, and plans to earn a 65 per cent interest in neighbouring ground held by Goldsearch and Independence Group by spending $25 million. The Musgrave seems to be back in favour.
* POOR old Emperor Mines. Its Fijian mine closed, its Porgera stake sold off and the money burning a hole in its pocket (it still apparently can't find the much-needed new project to buy). And what about Tolukuma, its gold mine in PNG where cash production costs in the March quarter were $US1047/oz? The more gold they mined, the more they lost. Now comes news its hydro plant had a transformer failure that cut power supply by 50 per cent. Perhaps when/if they get any good news, they might start returning Pure Speculation's phone calls.
The Australian implies no recommendations regarding any of the stocks mentioned. The author does not own shares in any of the securities mentioned.
brombyr@theaustralian.com.au
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