Exploration Insights by Robert Tyerman

Aussie-based Cape Lambert Iron Ore expects to show more than £80 million from December’s float of the Lady Annie Copper Mine Down Under. Cape Lambert bought Lady Annie’s parent company, CopperCo, then merged with the distressed Minsec group in a £66 million deal last year.

Apart from Lady Annie, CopperCo has several other holdings, including gold in Greece, and boss Tony Sage says Cape Lambert could realise more than £220 million altogether from disposals, including zinc production in Queensland and stakes in several AIM companies.

Cape Lambert, which has significant iron ore interests in Sierra Leone, also expresses enthusiasm for gold prospects in Western Australia, where its 46 per cent-owned Corvette concern has been finding high-grade deposits around the spectacular Tropicana.

The shares, now delisted from AIM but quoted Down Under, fell from 42.5p to 6.75p last year, but, since Growth Company Investor recommended them at 11.75p in February, have more than doubled to the equivalent of 28p. If you are happy with risk, there should be more to go for.

More cheer from Volga
Volga Gas has warmed its followers by progressing drilling on the Grafovskaya No. 1 well in its Karpinskiy licence area ahead of schedule. The AIM-quoted company, which is boosting production and moving fast towards profitability, says the well is targeting two gas/condensate-bearing prospects in the Yuzhny Ershovskoye structure in the Volga region of European Russia.

After raising £17 million in June at a fiercely discounted 61.4p, Volga now boasts of ‘generating more cash than we can consume’. Highlighted on these pages at 90p a year ago and again at 177p in September, the shares have now reached 233p.

Partial profit taking might be prudent, though there should still be more to come.  

Resource hike at Cluff  
Cluff Gold has increased estimated resources at its flagship Baomahun project in Sierra Leone 40 per cent to two million oz. The AIM and Toronto-quoted company says the new resource comprises 1.1 million oz in the measured and indicated category and 957,000 oz in the inferred category. The grades for both categories are modest – 2.9 grammes of gold per tonne of ore for the measured and indicated and 3.2 grammes for the inferred.

Cluff has begun a scoping study to determine how much gold is accessible by cheaper open-pit methods and how much by underground mining. Floated five years ago at 55p, Cluff Gold shares fell to 10.5p in the past year, but have rallied to 77.5p, valuing the company at £90.5 million and nearly twice this magazine’s 42.25p March recommendation.

Hold on.

Dana expands its scope
Dana Petroleum has taken steps towards acquiring a sizeable slice of an 80,000 sq km concession offshore Guinea in West Africa. The fully listed company has signed an exclusive letter of intent with Hyperdynamics Corporation of Texas to take a 23 per cent working interest in its concession, encompassing the entire area of offshore Guinea.

The letter of intent gives Dana the option to increase its stake in the concession to 50 per cent if Hyperdynamics does not sign a letter of intent with a third participant by 30 November. If the letter becomes a firm agreement by the end of December, Dana will pay $5 million (£3.1 million) to Hyperdynamics, which is now about to embark on a new 3D seismic survey of the concession at a likely cost of £10 million.

After that, Dana will pay the Texan company $15 million in cash or shares, whichever Dana decides, when a new production sharing contract is signed with the Guinea authorities.

Highlighted by Growth Company Investor at £10.65 in February, Dana’s shares at £13.71 may mark time before advancing further.

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