Engineering & Mining Journal

Iamgold Corp. reported in mid-December that it was planning to acquire, through a plan of arrangement, all of the outstanding common shares of Orezone in an all-share transaction valued at approximately $139 million.

“This transaction represents excellent value and takes us a large step toward our stated goal of 1.8 million ounces annual gold production by 2012, while lowering our average cash cost by $40 to $50 per ounce,” said Joseph Conway, president and CEO of Toronto, Canada-based Iamgold.

Under the terms of the transaction, Iamgold will acquire and finance development of the Essakane project, one of West Africa’s largest undeveloped gold reserves. Orezone exploration assets will be distributed pro rata to Orezone shareholders to create an entity known as “New Orezone.” Each Orezone shareholder will receive 0.08 of an Iamgold share and a pro rata share of New Orezone for each Orezone share held. Upon completion of the transaction, Iamgold will become a 16.6% shareholder of New Orezone.

In addition, Iamgold will provide Orezone with immediate C$20 million equity financing at C$0.28/share, subject to regulatory approvals. Iamgold also will open a corporate African operations office based in Dakar, Senegal.

Orezone’s main asset is the 4-million-oz Essakane gold project, located in Burkina Faso, West Africa. Construction commenced in September 2008 on the mine, which is expected to produce more than 300,000 oz/y over a minimum nine-year mine life at an average cash operating cost of $358/oz, using a $600/oz gold price and $85/bbl oil price. Full production is anticipated in late 2010, requiring a remaining capital expenditure of approximately $350 million.

Ron Little, CEO of Orezone said, “New Orezone will be well financed through this transaction and [will] host three advanced gold projects including Bombore, the second largest gold resource in Burkina Faso with 1.7 million ounces of measured and indicated resources.”

Assuming Orezone shareholders approve the transaction at the special meeting, and final court approvals are obtained, the transaction is expected to close by the end of February 2009.

When in production in late 2010, Essakane will contribute more than 25% of Iamgold’s gold production, bringing the company’s annual production to more than 1 million oz/y. “With this transaction, we are able to achieve a significant production increase in the near-term, a cost reduction of $40 to $50 per ounce and a 32% increase in reserves, with modest share dilution,” said Conway.

Iamgold currently has interests in two gold mines in Mali, two in Ghana, and one in Botswana. In 2008, about half of the company’s global gold production was from these African operations.

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Rio Tinto has further strengthened its presence in South Africa with the discovery of a open-pittable coal resource of more than 1 billion metric tons in the Limpopo Province. The coal is bituminous, and is suitable for generating electricity. The discovery at Chapudi came through Rio Tinto’s coal exploration program in the Limpopo (Soutpansberg) coal basin of South Africa. The exploration work has been conducted in conjunction with Rio Tinto’s BEE partner, Kwezi Mining. Exploration rights over the resource are held by two JV companies; Chapudi Coal PTY Ltd. (Rio Tinto 70%) and Kwezi Mining Exploration Pty Ltd. (Rio Tinto 49%). Rio Tinto and Kwezi are continuing with exploration activities for thermal and coking coal east of the Chapudi project.

"This is a significant find in an area that has previously been viewed as having little geological potential," said Chief Executive of Energy & Minerals, Preston Chiaro. "The project’s potential to produce thermal coal for electricity generation comes at a time when South Africa needs to rapidly increase its generating capacity. In addition, the basin offers the opportunity to produce a range of products, from thermal to hard coking coal for the export markets. We are currently planning the next phase of the project by beginning our pre-feasibility studies."

The newly discovered Chapudi Resource lies within the Limpopo coal basin, in the northern part of South Africa. The coal is hosted in sediments of the Karoo Group, similar to other coalfields in Southern Africa. The coal seams at Chapudi occur in mudstones that can be correlated to the Upper Ecca formations of the Main Karoo basin.

Rio Tinto and Kwezi Mining began exploring for coal in the area in 2003, when the first borehole was drilled on the farm Chapudi. This borehole intersected significant thicknesses of coal. Since then, the Rio Tinto-Kwezi JV has drilled about 90 boreholes in the project area, and conducted geophysical surveys to aid the geological interpretation. A total of 12,400 m have been drilled to date. The central part of the project now has sufficient drilling coverage to define a measured and indicated resource. The rest of the project area has been drilled to inferred resource status.

The coal has been demonstrated through test work to be suitable for combustion to generate electricity. Rio Tinto and Kwezi Mining are currently investigating the feasibility and economics of establishing a mining operation to feed coal into a power station. They are currently engaging with Eskom, and a number of Independent power providers to this effect.

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Aker has decided to build what is likely to become the world’s first and largest CO2 capture facility of its kind, designed to capture 100,000 tons of CO2 from the gas powered energy plant and the Kaarstoe gas processing plant, The Norway Post reported. The facility could be in operation as early as 2009. Aker said that in recent years the company has worked intensively on developing new CO2 capture technology. It says the primary purpose of the new facility is not primarily further technology development; the objective is the development of construction methods and effective execution models that make carbon sequestration so inexpensive that it becomes cheaper to clean emissions than to pollute.

Posted by djones at 02:22 PM | Permalink | Comments (0)

Hwange Colliery Co. Ltd. has resumed mining at its underground mine a week after it had closed down due to flooding. According to The Herald, the banks of Kamandama River, adjacent to the mine burst following heavy rains and poured into the mine prompting the coal mining giant to suspend production. Open-cast has been affected although production has been going but at reduced levels. On average, the underground mine produces about 2,000 metric tons per day. Water from the underground mine was drained and production was ready to resume.

Posted by djones at 02:21 PM | Permalink | Comments (0)

PSG International will build an €200 million (about Kc5 billion) coal-fired power plant near Kurgan, Russia, and it will be one of the largest construction deals of the Czech company in the Russian Federation, Czech News Agencyreported. As a general contractor, PSG supervises the construction as well as supplies and installation of boilers and equipment made by the companies Turbomach, Siemens, Alstom and Bresson.

Posted by djones at 02:20 PM | Permalink | Comments (0)