Gulf starts at Sheikh Adi-2 25/05/2012
Iraq-focused oil explorer Gulf Keystone Petroleum (GKP) has begun drilling at the Sheikh Adi-2 well in the Sheikh Adi block.
Tri-Star in UAE expansion
In a bid to rival the Chinese, ambitious antimony explorer Tri-Star (TSTR) has unveiled plans to develop a major 20,000 tonne per annum facility in the UAE.
The new antimony metal and tri-oxide finishing plant is likely to cost up to $50 million, however this will largely be debt funded and is likely to be highly cash generative - indeed payback could be in just a year. AIM listed Tri-Star has decided to locate the operation in the Al Ghail Industrial Zone, which is owned by the hugely wealthy sovereign fund: Ras Al Khaimah Investment Authority.
The memorandum of understanding has been signed with Union Group (a trading conglomerate) to develop the new 'Tri-Star Union Minerals' project, which will be owned 90 per cent by Tri-Star and the balance by Union. By basing the facility in the UAE it provides an excellent logistics route, secure energy supply, tax benefits, modern infrastructure and a skilled workforce.
To put the site into context, at 20,000 tonnes it will represent 12 per cent of average world antimony production. It is expected to take 18 months to complete, which will be split 50:50 between engineering and construction. At the current antimony price of $14,800 per tonne, the expectation is that up to $9,000 per tonne will be retained as margin. China accounts for 90 per cent of antimony production, it also takes concentrate and turns it into ingots and trioxide.
Drilling for antimony is successfully underway in Turkey, so this will provide a source of raw material but Tri-Star is confident it can source sufficient material to fully utilise the plant. A company spokesman says 'we want to build a very significant company'.
With drilling results due in late September the expectation is that this will coincide with a further push to demonstrate the cash flow that could be produced both out of Turkey, Canada (where it has good exposure) and now in the UAE. The shares have risen above their last placing price of 1p to 1.02p, but as investors start to realise the potential there is likely to be significant upside from here.
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