FAT-MIN-21617 Mar 10

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    BHP Billiton

    BHP’s deal on coking coal in Japan for a 55% hike in price bodes well for a big increase in the price of iron ore. Vale is seeking a 90% increase and has reportedly quit annual pricing talks with China, and like BHP is seeking quarterly contracts. Unfortunately for steel mills around the world the spot price is the arbitrageur, and spot prices for iron ore and coking coal have risen strongly over recent months. The math is simple – at this point in time demand is very strong and supply is restrained.

      Cape Lambert Resources Limited

      We were not surprised that the company’s management decided to sell Lady Annie for $A135M as a trade sale rather than struggle through a second attempt to float the asset. China Sci-Tech has completed its due diligence and paid a $A5M deposit with another $A125M due on completion of the sales agreement. The remaining $A5M will be paid in two tranches upon Lady Annie achieving certain milestones. After the $A125M is received, the company will make a capital return to shareholders of $A0.08 to $A0.10.

        Coeur d'Alene

        The days when Coeur’s operational updates were a source of disappointment are receding further and further into the past. The miner’s latest production report revealed all-time highs for both silver production and reserves. The outlook is for more of the same in the year ahead, with the company’s third major development project on track to begin production in the third quarter of 2010. The ban on mining above 4400 metres at the San Bartolome has been lifted bring back interest in the company.

          Hannans Reward Limited

          The company is waiting for approvals to start drilling at Forrestania. The plan is to drill approximately 20 RC holes for 5,000 metres starting in March 2010. This program will probe high priority targets within the interpreted northern extension of the western ultramafic unit that hosts the high grade Flying Fox nickel mine 7km to the south. The market seems to be preoccupied with the company’s investment in Atlas Iron.

            Oil Search Limited

            The participants in the PNG LNG Project took a sigh of relief following the completion of the final Sales and Purchase Agreement and Financial Close. Now the project can proceed at a pace introducing new key risks for the US$14 billion project that include cost overruns, construction delays and gas prices. Such is the perceived future demand for LNG that project financing was completed in one of the most difficult financial markets for many decades.