Exploration Insights by Robert Tyerman

Resource shares have been centre stage of late, with oil bubbling on the risk of North African supply cuts, gold still firm and mining markets braced for the widely expected £40 billion float of commodities trader Glencore

Ex-stockbrokers Tony Hayward and Jack Pride are re-floating Nigeria-focused Sirius Petroleum as a shell after raising £3.4 million at 5p. The company, which floated on AIM seven years ago and raised £15.5 million for a 25 million-barrel project, recently had its shares suspended after hoped-for licence renewals did not come through. 
With Hayward as chief executive officer and fellow Jefferies broking luminary Pride in the chair, Sirius now intends to pick suitable interests in the oil and gas sector. Well-connected former chairman, ex-ExxonMobil player Babatunde Agboola, is now deputy chairman and the aim is to secure marginal fields in Nigeria.

Sirius has ended its previously central joint operating agreement with Nigerian concern Del Sigma to develop one field awaiting licence renewal, the Ke prospect, with a potential 25 million barrels, and take a 40 per cent share in Ke. However, Sirius retains an option to revive the agreement if renewal does eventually come through. Sirius should be worth a punt when it returns.

Buoyant Beowulf
Iron ore’s continuing popularity is helping Sweden-focused Beowulf Mining, which is now debt-free and optimistic despite a 25 per cent annual loss increase to £512,400. Following independent scoping studies and assays, the AIM-quoted company reckons its Kallak North and Kallak South deposits together hold more than 400 million tonnes of iron ore at an estimated average grade of 30 per cent.

Beowulf has established a maiden formal resource estimate of 140 million tonnes for its Routevare project and entrepreneurial executive chairman Clive Sinclair-Poulton suggests further drilling this year should increase that. The company has half of the Ballek copper and gold project, whose Lulepotten deposit is now estimated to hold 43,000 tonnes of copper, grading 0.8 per cent and 52,000 oz of gold at a low 0.3 grammes of gold per tonne of ore.

During 2010, Beowulf raised £1.4 million in two placings and investor Starvest (backed by Bruce Rowan) agreed to convert a £250,000 loan into shares, leaving the company free of debt. First recommended by Growth Company Investor at 2.38p in 2009, Beowulf shares now trade at 62p, down 6.75p today. Hold on for now.

Wisdom of Solomon
Nick Mather, boss of Solomon Gold, reckons developments in Queensland and the South Pacific amply justify the Brisbane-based company’s diverse projects.

A maiden resource estimate of 203,000 oz of gold equivalent at 1.023 grammes per tonne of ore at the Kauffmans project within Queensland’s low-grade Rannes gold and silver project, with grades and the gold proportion rising as drilling goes deeper, provides encouragement for probing Rannes’ other targets, Porcupine Pie, Shilo and Double Scoop.

Looking for earliest Rannes output of around 100,000 oz of gold equivalent in 2014 – after capital spending of up to £125 million, AIM-quoted Solomon sees bigger long-term prospects at Guadalcanal in the Solomon Islands. US mining giant Newmont is spending US$6 million ($3.75 million) for 70 per cent of this project, which bulls believe could hold 40 million oz of gold.

Solomon has some £10.6 million cash, but Mather envisages a funding before too loo long. Dogs after their 2006 50p float, the shares, highlighted by Growth Company Investor at 10.75p in September, now trade at 28.5p and should go better while gold retains its gleam. 

Not quite a blue chip
TanzaniteOne, miner of rare violet-blue tanzanite rock in Tanzania, has lost most of its former AIM lustre since floating at 42p in 2004 and surging to 265p two years later. Down as low as 6.5p during the past 12 months, the shares have perked up of late on encouraging production and sales figures, with discovery the other day of a 12,100-carat stone, the largest such stone mine in the project’s ten-year history.

Likely to be cut into several, still-large stones, this discovery has yet to be formally priced. At 12.75p, the shares remain a gamble.