10 AIM commodities players update investors

There was plenty of commodities action on the Alternative Investment Market on Monday, as 10 companies provided updates. Read about it in our news round-up...

Jubilant Energy

Jubilant Energy (JUB) announced that it spudded appraisal well DDE-A-2 on 9 February.

DDE-A-2 is being drilled in a water depth of 99 metres utilising the Deep Driller-1 rig from Aban Offshore Limited.

This is the third appraisal well in the Deen Dayal East (DDE) area of the KG-OSN-2001/3 block. The target depth of the well is 5,300 metres true vertical depth with the objective of appraising the lower Cretaceous Early Rift fill sands that were shown to be hydrocarbon bearing by the KG-16 discovery well.

It is the 18th well to be drilled by the consortium in the block. The last 13 wells drilled all flowed gas and condensates.

Tower Resources

Namibia and Uganda-focused Tower Resources (TRP) spudded the Mvule-1 exploration well on 12 February.

The well is being drilled to an estimated depth of 620 metres. Operations are expected to take two to three weeks and a further announcement will be made once drill results have been determined.

African Minerals

Shandong Iron and Steel Group (SISG) has notified African Minerals (AMI) that it has approval from the China National Development and Reform Committee for its $1.5 billion investment in the Tonkolili iron ore project.

SISG has also confirmed that testing of the trial shipment was successful and that Tonkilili iron ore is of sufficient quality to satisfy the condition precedent to closure of the transaction. The off-take agreement described in the announcement of 1 August 2011 has also now been finalised.

African Minerals also confirmed receipt of funds following settlement of the $350 million (c£220 million) convertible bond issue announced on 31 January.

The settlement of the convertible bond proceeds and the drawdown of the $417.7 million Standard Bank facility to repay the previous secured loan facility completes the $868 million financing package announced on 31 January.

Ferrex

Africa-focused iron ore and manganese explorer Ferrex (FRX) has been granted a prospecting right over Tweed Farm - the last of 10 farms to be granted within the Leinster manganese project in South Africa.

Ferrex currently has a 49% interest in the greater Leinster project through its interest in Umbono Minerals Holdings (Proprietary).

This will increase to 74% once ministerial approval has been granted.

Providence Resources

Providence Resources (PVR) has confirmed the forward programme for Frontier Exploration Licence 3/04, which contains the Dunquin exploration prospect.

Following a recent meeting, the 2012 budget was approved by all partners which includes the provision for well design activities and procurement of long-lead items as part of the ramp-up to the drilling of an exploration well on the Dunquin prospect next year. The current plan is to spud the exploration well in the second quarter of 2013.

Faroe Petroleum

Shares in Faroe Petroleum (FPM) fell slightly as it confirmed that no hydrocarbons were encountered on the Kalvklumpen prospect in Norway.

The Kalvklumpen prospect, in which Faroe has a 20% interest, was spudded on 10 January and reached its target depth of 2,738 metres within the Dunlin Formation.

"Whilst the results for the Kavlklumpen well are disappointing, the extensive data acquired will be now be applied to evaluate and de-risk further prospects within this and the adjacent licences held by the company in this prospective area," reassured chief executive Graham Stewart.

Leila Reddy, analyst at Panmure Gordon, reiterated her 'buy' recommendation on the stock. "The shares are trading at a 5% discount to our core net asset value of 177p and offer a potential upside of 38% on our 233p target price," she said.

Ormonde Mining

Ormonde Mining (ORM) updated investors with its progress on its various projects in Spain.

The definitive feasibility study for the Barruecopardo tungsten project was "substantially complete". Results will be announced by late February,

Following "very encouraging initial drilling results" on the El Facho gold structure, drilling is continuing, with a focus on testing and expanding the structure. The company confirmed that core samples from the first holes in the current drilling programme had been forwarded for assay.

Finally, Ormonde revealed that drilling on the La Zarza copper project, which is fully funded by its joint venture partner Antofagasta (ANTO), commenced in January on "several targets [which] will be tested by drilling, with a priority on those where the geology is interpreted to be similar to that for the existing La Zarza deposit," said the company.

Strategic Minerals

Strategic Minerals (SML) boasted its first contracted revenues from its Cobre Stockpile Project in New Mexico to customers in North America.

The initial delivery of the 1,200 tonnes contracted is currently being trucked off the site. This comes ahead of a rail-spur upgrade on schedule for completion in late March 2012.

"The rail-spur will allow up to 40,000 to 60,000 tonnes a month to be freighted from the site," confirmed the company.

Under Phase 1 of the Cobre Stockpile Project, Strategic Minerals holds the production rights to 1.5 million metric tonnes of shipment ready magnetite at the site.

Circle Oil

Circle Oil (COP) confirmed that its Rharb pipeline in Morocco had been "successfully pressure tested, certified and commissioned".

The total delivery through the new pipeline, which is currently approximately 1.27 million standard cubic feet per day (mmscf/d), is expected to rise to approximately 3.18 mmscf/d by the start of March. The company stressed that further increases in production were expected through the year with fourth-quarter production anticipated to be in the order of between 8.13 and 8.48 mmscf/d.

The increase in gas supply levels will result in net revenues to Circle, on an annualised basis, increasing to approximately $14 million per annum.

Pathfinder Minerals

The High Court has extended the interim injunction granted to Pathfinder Minerals (PFP) until 19 March.

The interim injunction relates to former Pathfinder's director and director Companhia Mineira de Naburi Jacinto (CMDN) Soares Veloso, his company Consultores Internacionais, and CMDN directors Diogo Jose Henriques Cavaco.

Will investment in oil and gas continue to rise? George Godber of Matterley Asset Management shares his views on this and highlights regions that should show strength during the year in: Oil and gas investment outlook.