mii - in play by march according to high grade

http://www.highgrade.net/article/2010-11-17/Parties_line_up_either_side_of_Meridian


MERIDIAN Minerals confirmed its receipt of $A6.5 million in cash this week from major Indian zinc company Binani Zinc, in the process adding significant fortifications for what could prove a battle royale for its hand in 2011.

Binani will now hold over 17.1% of Meridian assuming major shareholder, Chinese zinc business North West Mining and Geology Group (NWME), stumps up with the $A4.6 million it has promised (before the end of the month), to maintain its' 41.3% stake.

Whether Binani will seek to further increase its holding to just shy of the takeover threshold of 20% in the months ahead remains to be seen, though the overriding point is that with the Indian company previously holding a little over 5%, the latest equity raising means Meridian now has two major shareholders and a competitive tension scenario that seems to ensure the company has the opportunity to receive the best possible bid should a takeover situation eventuate.

In 2008 NWME was involved in the acquisition of Canadian company Yukon Zinc Corp for $C100 million.

As with its corporate manoeuvrings, Meridian has been doing everything right to give itself the best possible chance of being a zinc miner and confirmation should be forthcoming next March or April when results of an internal feasibility study are completed.

After that the company will likely be needing in the order of $A170 million to get the resources of the Emanuel Range project (within the greater Lennard Shelf
project) into production, and some might see that as a potential catalyst for corporate activity.

However, possibly impinging (or enhancing depending on your geopolitical
perspective) any corporate takeover scenarios involving Meridian's big two shareholders are the offtake arrangements already in place.

NWME has the right of first refusal to acquire up to 35% of any mineral concentrates which are produced on international benchmark terms, while Binani has first right on 65% of the zinc concentrate produced.

So from a strictly commercial perspective, the bulk of production is spoken for.    

Emanuel Range is set to produce concentrates containing 49,000t of zinc and 68,000t of lead annually, with the concentrates are claimed to be "world renowned" for their quality.

Based on historical mining results, Meridian is looking at a zinc concentrate grade of 61% (and a zinc recovery of 93%), and a lead concentrate grade of 77% (and recovery of 96%).

The quality is such that zinc powerhouse Teck bought the relatively small Lennard Shelf project so that it had a clean zinc concentrate to blend with its output from the world scale Red Dog mine, while the other part-owner of the project during that era, Xstrata, used to truck its share of the lead concentrate thousands of kilometres across Australia to its Mount Isa smelter.

"You don't see these sorts of numbers very often," managing director Jeremy Read told the Mining 2010 Resources Convention last month.

Meridian's absolute focus is to get into production as soon as possible so as to maximise profitability.

The company points out that zinc spent about 18 months above $US1.50/lb during zinc's last strong spell earlier this decade, and it want to be producing when next the metal is enjoying such pricing.

Based on its preliminary numbers, Meridian believes the company would repay all its capital in 18 months during a similar such period of pricing.

Again, Meridian's timing looks impeccable given zinc mine closures and a lack of new supply looks like it should start impacting pricing positively from 2012 onwards - with production at Lennard Shelf flagged to begin in the second quarter of 2012. It also highlights Meridian's ballsy move to buy the $A10 million Galmoy plant in Ireland back in 2009 was a wise move. Shipping of the plant from Cork to Darwin is near to occurring, and arrival on site is pegged for March/April 2010.

The internal feasibility study set to be completed at about the same time is to bankable quality aside from sufficient drilling being completed to bringing the resources to reserve status - a strategy that saves the company about $A10 million and 6-12 months in time.

It is understood that that work will be subsequently undertaken, but that Meridian and its major shareholders are keen to see the project's bona fides revealed and continue expediting development.

The company is in no doubt as to the resources and potential reserves at the project, with exploration manager Dr Quinton Hills describing the geology as "really quite basic ... nothing complicated", and requiring little more than the drill rig following the faults of the region.

Validation to that assessment can be seen in a 200% increase in resources within the past 11 months, and Hills says there are 18 areas within the Emanuel Range area warranting immediate drilling. That doesn't include Fossil Downs to the north, where a high grade resource could develop into a standalone option with further work.  

Again though, the prime focus is production, meaning most drilling is targeting areas in the vicinity where mining is planned.

Still the company certainly isn't standing completely still on other opportunities outside of Lennard Shelf.

Indeed far from. Projects elsewhere in Australia, the Philippines, South America and unspecified countries in the Stans are amongst areas where Meridian has been, or is, looking for other projects, with base metals and gold, including porphyry style deposits, in consideration.

Advanced projects such as Lennard Shelf was, are the key criteria, with the Casposo project in Argentina, where the South American-focused Troy Resources outbid Meridian, another case in point.

Meridian's search for other projects is understood to be very much encouraged by NWME, and given Read and his team's previous form in identifying both the Boseto project being development by Discovery Metals and Lennard Shelf, this is a team standout form.

Meanwhile, the cashed-up company is about to undertake a six hole drilling program in the Thomson Fold Belt of New South Wales, considered a possible extension of the world class Lachlan Fold Belt.

Watching all these goings on from their headquarters in China and India are two very interested parties.