Research Reports
Blackgold International Holdings Limited
BGG: Set to achieve greater heights
Company Summary
Blackgold International (BGG) is a coal miner that owns and operates two productive underground thermal coal mines, the Caotang Mine and the Heiwan Mine located in the Chongqing municipality in China. For the full year 2011 the two mines are expected to reach an annual production of 1 million tonnes. The Caotang Mine and the Heiwan Mine have a combined JORC ore reserve of 5.7 Mt plus mineral resources of 16.4 Mt. The mines commenced operations in 1996 (Heiwan) and 2005 (Caotang) assisting the company to post a half year profit after tax of $12.15 million (investors should note that this period included the annual Chinese New Year holiday period which traditionally includes the company's least productive period as operations effectively close down for a 4-6 week period)
In the past six months BGG acquired the Wushan Coal Mine situated in Wushan County, Chongqing and the Qijuang Coal Mine situated in Qijiang County, Chongqing. Both mines have been subject of extensive local exploration and development in the past as evidenced by the maiden JORC at Wushan of 114.3Mt. It is expected that the new acquisition will boost BGG's 2012 bottom line.
Highlights
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+ ~700% JORC increase since the ASX debut
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Excellent infrastructure and proximity to the Yangtze River to transport coal to customers
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Aggressive growth strategy through value accretive acquisitions
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Low CAPEX producer
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Favourable peer comparison
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Cash-flow positive coal miner that is yet to be known bymarket participants
Our View
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Queensland Mining Corporation Limited
QMN: Growing and still independent
Company Summary
Queensland Mining Corporation (QMN) is a copper explorer with several advanced and exciting projects within the Cloncurry region of the prominent Mt Isa Inlier in North West Queensland. QMN’s flagship project is White Range,a game changing acquisition for the company. The project comprises of a number of deposits acquired from Matrix Metals Limited (Liquidator Appointed) in July 2010.
A Bankable Feasibility Study (BFS) was completed by Matrix in 2005 for a project development producing 15,000 tpa of cathode copper from treatment of oxide ores. At that time the copper price was US$1.50 per pound compared with the current spot market at around $4.25 per lb. QMN has recently enhanced its management team and commenced a review of the feasibility study with a view to fast-tracking the development of the project in what is Australia’s premier copper producing province.
Highlights
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White Range Project has a JORC classified resource of 36.4Mt @ 0.74% Cu, 0.03% Co and 0.17g/t Au (at 0.2% cut off), for 269,000 t of contained copper, 24m lbs of contained cobalt and 202,000 ounces of gold; based on current prices the company estimates this is equivalent to 338,000 tonnes of copper
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Maiden gold resources of 108,000 ounces have been established at Mt Freda and Gilded Rose
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The 2005 BFS concluded that the White Range Project was technically feasible and economically viable at commodity prices significantly lower than the average for the period 2005-2010. The assessment did not include Gold and Cobalt credits which could add further value to the project
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Recent corporate activity in the copper sector including Exco’s sale of its Cloncurry asset reflect in-ground valuation per tonne that applied on QMN’s assets gives a valuation considerably higher than QMN’s current market capitalisation
Our View
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