chinese opinion

to publish the complete article because of its importance:
THR one of the newest tungsten producers
(+ molybdenum + uranium + rare earths)


Wednesday, December 12, 2007
Beijing reserves its resources
Posted by Sam Xu at 5:14 PM
While we keep happily digging up our metals and shipping them out, the
Chinese are taking a slightly longer term view. The Ministry of
Commerce and the National Development Reform Commission have
reclassified China's tungsten, molybdenum, tin, antimony and fluorite
as being in the "prohibited category".
What this means is that no foreign company can get involved in mining
these metals. Add this to earlier moves to raise export taxes on
metals and the message from Beijing is clear: you westerners can
exhaust your deposits and in 50 years we'll still have ours.

So, a company like King Island Scheelite can no longer use its
expertise in tungsten to enter a joint venture in China, but Hunan
Nonferrous Corp is welcomed here with open arms to take a 50-50 joint
venture with KIS on King Island. Who are the suckers?

What China's move means for these metals is that prices, let alone
demand, are not going to collapse. KIS is expecting to start tungsten
production early next year, probably being beaten across the line by
Queensland Ores and running neck and neck with Thor Mining. Paradigm
Metals and Vital Metals are still exploring, the latter recently
reporting a test concentrate of 78.4 per cent tungsten, well ahead of
the saleable grade threshold of 65 per cent.

Over in Spain, Heemskirk Consolidated is working its Los Santos
tungsten mine seven days a week instead of five and expects to be
producing by March.
The China syndrome

There is no question Asian investors are alive to any opening for
specialty metals. Republic Gold has just made a $5.73 million
placement, much of which went to Malaysian Chinese investors. They are
very interested in Republic's Mt Carbine tungsten project in
Queensland, just 40km from Vital's Watershed deposit.

There is no question that Mt Carbine has tungsten – it was mined for
that metal from the 1970s until 1986 until the Chinese (them again!)
flooded the world market with tungsten, putting mines in other
countries out of business as the price plummeted.

Republic has antimony also at one of its Queensland gold deposits.

This metal is fetching a strong $US5300/tonne, so Republic is planning
to pin its ears back on that project, too.

While on Chinese doings, there has been a development at YTC
Resources, which is controlled by the world's largest producer of tin
Yunnan Tin. On Friday, the Hong Kong-listed Poly Investments Holdings
did a deal with its fellow Chinese operation to take a 19.9 per cent
stake in the Australian listed arm. No explanation was given.

YTC has been reporting good grades from its Doradilla project in NSW
with significant tin assays, along with zinc, copper and indium.
Doradilla was a tin producer until 1990, when metal prices had
collapsed. Poly is in the business of metals trading and operating
power stations in Henan province.
DIY blue-chip investment

Foster Stockbroking has had a novel idea for its clients: don't buy
BHP Billiton, build your own.

The brokerage says that, when the Global Australian was sitting at a
P/E of eight, earlier in the year, the stock screamed "buy me". Now it
looked fairly valued. So investors could seek to build their own
diversified portfolios from picking up undervalued miners covering
BHP's component parts.

* Coal: Aquila Resources, which would start producing coking coal next
year at its Isaac Plains mine in the Bowen Basin. Foster says the
market is not factoring in Aquila's iron ore prospects in the Pilbara
and South Africa. An alternative is would be Resource Pacific
Holdings.

* Iron ore: Mount Gibson Iron offered full leverage to direct shipping
ore and would benefit from the expected large leap in iron ore prices
for 2008. Alternatives: Australasian Resources or Strike Resources.

* Zinc: Terramin Australia, which starts mining at Angas in eight
months. Alternative: Zibifex.

* Copper: Equinox Minerals with its 37-year mine life in Zambia.
Alternative: Anvil Mining.

* Nickel: Mirabela Nickel. The obvious choice might have been Salay
Malay Mining, but its shares have run hard on the coat tails of
Xstrata's bid for Jubilee Mines. Mirabela is about to start building
its Santa Rita sulphide mine in Brazil. Alternative: Sally Malay.

* Gold: Centamin Egypt with gold expected to be produced next year.
Alternative: Lihir Gold.

* Platinum: Platinum Australia. Mining is due to begin at Smokey Hills
in January. The metal's price recently hit a new record. Alternative:
Aquarius Platinum.

* Uranium: Energy Resources of Australia. The worst flooding at Ranger
has occurred but the spot price is recovering, now at $US90/lb.
Alternative: Bannerman Resources.

* Oil and gas: Santos, which provided significant leverage to the oil
price and is pursuing coal-seam gas and LNG projects. Alternative:
Energy World Corp.

Meanwhile, Pure Speculation is always keen to encourage consolidation
and co-operation in the resources sector. So we will watch with
interest the attempt by four juniors, which have land around
Ravensthorpe, looking for a variety of metals, including nickel and
lithium.

Traka Resources, Tectonic Resources, Galaxy Resources and Pioneer
Nickel have tenements holdings covering 30km of prospective iron-ore
deposits. The companies have agreed to share iron-ore information and
co-ordinate work for that metal.
Investor update

WE reported admiringly last week on the, as yet, unrealised $40
million gain made by African Lion on its investment in Mauritanian
iron-ore play Sphere Investments.

No sooner were copies of that day's newspaper being slid under
hotel-room doors and read in trains, trams and buses, than African
Lion, part of the Lion Selection Group operation, reported it had sold
its stake in Pretoria-based Platmin.

African Lion had invested $US9.8 million ($10.7 million) in Platmin
and sold at $US101.6 million, a 1037 per cent profit. As Mr Micawber
would say, result happiness.

Meanwhile, Bell Potter, Stripe Capital and Tolhurst have ended up
adding more shares than expected to their holdings in Aurora Oil & Gas
after taking up the shortfall in the one-for-10 rights issue. Only
15.2 per cent of the rights issue was subscribed, leaving 15.42
million shares to be placed by the underwriters. Aurora has separately
raised an additional $10.6 million from "professional and
sophisticated" investors at 53c a share.

Aurora, which closed on Friday at 48c, thought it had left itself
enough time since announcing the rights issue in July. The idea was
that results would be in from the Sugarloaf-1 well in Texas, of which
it has 20 per cent, and these would encourage shareholders to take up
the issue.

But delays of various sorts put paid to that plan, and those results
are still awaited (as they are at Adelphi Energy and Eureka Energy,
which also have stakes in Sugarloaf).

But the words is that the underwriters aren't sweating, given the goal
at Sugarloaf is several trillion cubic feet of gas along with
condensate.
Tailenders

* WE have often bemoaned the fact that most gold stocks fail to follow
the gold price when it goes up, but do when it falls. So it was
cheering to see shares in Kalgoorlie-Boulder Resources get a huge
boost as its Norseman project resource was raised 36 per cent to
630,000oz. That gnashing of teeth you hear probably comes from
Canadian Kinross Gold, which spent $7 million drilling there but
thought it too small, and from Joseph Gutnick's sister Pnina Feldman,
who tried but failed to get her float away based on the property. KAL
bought out Feldman.

* We love coincidences, such as China lending the Congo $US5 billion
in September and then suddenly that country starts to talk about
confiscating projects owned by western companies. But the Congo
problems will soon be but a distant memory to shareholders of New
World Alloys, which is flicking its copper smelter into a London
vehicle and will be looking for new projects.

* Hudson Resources has been a low-key company, but watch out for
announcements in coming months as it puts into place its new bauxite
and zinc strategy. Its Tiaro coal project, near Bundaberg and a
railway line, is likely to be moved into a separate IPO.