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Zambia focus of new local float
February 26, 2007
LOCAL investors will get an opportunity to take exposure to exploration in Zambia with the news that London-listed Zambezi Resources is to launch an initial public offering here ahead of a listing on the ASX. Zambezi Resources has always been based in Perth but until now has been listed (since 2004) only on London's Alternative Investment Market. Its flagship project is the Cheowa deposit, a joint venture with Swiss-based Glencore International and which has an initial resource estimate of 1.7 million tonnes at 1.5 per cent copper and 0.5 grams/tonne gold (or 26,000 tonnes of copper and 29,000oz of gold). Its other headliners are the Kangaluwi-Chisawa copper project and some greenfields uranium prospects (which, the company says, may be spun off into a separately listed Australian vehicle).
Zambezi says it wants to broaden its shareholder base by bringing in Australian institutions and retail investors, a move that will allow it to increase liquidity in its stock, improve analyst coverage and raise additional exploration money. Zambezi said the resource at Cheowa results from work on 700m of strike length but the deposit remained open beyond the deepest drilling to 200m and the strike length could be as great as 8km in length. Glencore can earn a 51 per cent interest in the project by spending $US10 million on exploration. Drilling at Kangaluwi-Chisawa has returned coppetr grades up to 1.95 per cent copper.
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GATEWAY FINDS COPPER BUT BARRICK SAYS GOODBYE
A VIRGIN copper discovery has been reported from the Gidgee deposit in Western Australia. Junior explorer Gateway Mining (GML) said a hole at The Cup prospect had intersected 30m at 1 per cent copper. That was Gateway's good news - the bad news was that US major Barrick Gold has withdrawn from the nearby Victory Creek farm-in with Gateway after the failure of two 500m holes to intersect any gold. That sobering news outweighed the copper find, with Gateway shares falling 1.5c to 18.5c by early afternoon. The junior said it was weighing up its options for Victory Creek. Back on the copper front, another hole at The Cup returned 15m at 0.23 per cent copper. The assays were based on five metre sections being analysed and individual one-metre sections have been returned to the lab for re-assaying. The company said a more extensive drilling program would be needed to extend the known mineralisation to both north and south.
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IN OTHER DEVELOPMENTS
* Redfork Energy (RFE) has placed $5 million in new shares to Asian and Australian institutional and professional investors. The money will be used to fast-track work at the company's Osage County oil project in Oklahoma.
* Stonehenge Metals (SHE) has reported zinc assays up to 33 per cent from its Sunshine project near Zeehan, Tasmania. The assays came from 26 rock chip samples with an average of 9.4 per cent zinc. The company said the deposit could extend 400m north to the historic Colonel North mine. It added that the area contains several other historical lead-zinc-silver underground mines that had the potential to host mineralisation that could be extracted by open pit mining.
* Copper production outstripped demand by 277,000 tonnes in 2006, while other base metals recorded deficits, the World Bureau of Metal Statistics said. A report filed by Reuters said, however, that the red metal may have been in deficit in December as the surplus for the first 11 months of 2006 was 353,000 tonnes. Chinese trade data showed that copper imports were down during most of 2006, but they rose sharply in December and were expected to be higher in January.
* SXR Uranium One, the Canadian company which is developing the Honeymoon mine in South Australia and is merging with another Canadian player UrAsia Energy, will now become even bigger. The company has agreed to pay $US142 million for a processing mill and exploration licences in Utah. After paying $US3.1 billion for UrAsia, SXR Uranium will be the world's number two uranium producer after Cameco.
* Perth-based Resolute Mining (RSG) said costs of developing the Syama gold mine in Mali have increased by 22 per cent to $US118 million. One of the main contributors to the increased costing is electrical work and the need for more cabling than previously expected but labour costs had also contributed. It was announced today that Perth's GRD Minproc has won the contract for initial engineering work at Syama.
* A new iron ore mine is to be developed in Senegal to supply European steelmakers. Luxembourg-based Arcelor Mittal will spend $US2.2 billion to develop deposits in the West African country with the aim of producing 25 million tonnes a year from 2011. The company also has a deal with the Liberian Government to develop iron ore mines in that country.
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ON THE WILD SIDE
IN a new occasional feature on the Daily Assay, here are some excepts from the fast blossoming world of financial commentary on the internet. We'll leave the chat rooms to their own unaccountable devices, but instead comb through the thoughts of commentators who have attracted a following and established some credibility - if not always for the accuracy of their forecasts, for at least for knowing which side is up.
* Clive Maund, an English technical analyst, who now lives in Chile from where runs a subscription website, comments on the latest surge in the gold price: Gold has gone and done it - after first breaking out upside from its 3-arc Fan Correction in January, a major positive technical development ... last week it smashed through the ceiling of resistance at and towards $US680, with subsequent solid action confirming that this was a genuine breakout. The prospect now is for the uptrend to gather pace. The first stop will be the resistance at last year's high, which it is worth noting is nowhere near as significant as the resistance level that has just fallen. Thus, although gold is likely to pause/react when it gets to $US730, it shouldn't be held in check for too long before the uptrend reasserts itself and it breaks out and advances to substantially higher levels.
* Emanuel Balarie is the Senior Market Strategist at Wisdom Financial based in Los Angeles. He sees China as a growing market for gold. Whether it is wine consumption, food consumption, gold jewelry consumption or the purchase of a new BMW, the central theme is simply that the Chinese are getting richer by the minute. Indeed, the growth of the Chinese consumer is an often overlooked aspect of this commodity bull market. While the first stage of this bull market was unequivocally pushed higher by the demand for industrial materials, like copper, zinc, oil, cement, etc., the second stage will be categorized by the growth and impact of the emerging consumer ... 2007 is the year of the Gold Pig. Children born in the year of the gold pig, which only comes every 60 years, are supposedly (according to Chinese zodiac signs) going to lead a charmed life and will bring great luck to the couple. Not surprisingly, Chinese hospitals are bracing themselves for a baby boom in 2007. But what does this mean for gold and gold demand? Well, the first thing is that jewelers in China are already experiencing an increased demand for jewelry and gold pig jewelry. This of course, is to be expected. But beyond this increased demand for gold in 2007, Chinese consumption of gold is also on the rise as citizens are now making more money.
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