I stole this from NightWatchman in the HFR thread. A great write...

I stole this from NightWatchman in the HFR thread. A great write up on Reward once again LMAO what a joke!


TWO months is a long time in the potash market, it seems.
Back in March the chief executive of Germany’s K+S, Europe’s leading potash producer and now developing a large potash mine in Saskatchewan, described the market as uncertain and fragile. Last week, announcing the company’s quarterly results (which were better than expected), Norbert Steiner was talking about the potash market being “robust” and opined that prices had bottomed out.

Not before time. The breakup of the Russian-Belarus cartel took a terrible toll of the industry worldwide, sending prices into severe decline. In early 2013, contracts were settled at about $US430 a tonne for muriate of potash (the market-dominating but lower-priced of the two types). Last month the Russian company Uralkali signed a deal to sell 800,000 tonnes to India for $US322/tonne. So it seems the very real fears of prices ending up sub-$US300 have not been realised.

So we might see a little colour back in the cheeks of local potash hopefuls. On Friday,Highfield Resources (HFR) upgraded the resource at its Javier project in Spain to 268 million tonnes at 11.2 per cent, up more than 100 million tonnes. The company said it was now able to complete its pre-feasibility study and release that to the market.
Foster Stockbroking has a spec buy on the stock, its latest note finding the drill results impressive. HFR has three potash projects in Spain’s Ebro Basin, which have hosted now-closed underground mines. Javier is expected to begin production in 2016.

Foster thinks being in Spain is a big plus. It is a first-world country with infrastructure advantages (rail and ports) close to markets in both Europe and Brazil (the latter being a global agriculture powerhouse that still imports 90 per cent of its potash). Foster estimates Highfield will have a transport cost advantage into Brazil over the big Canadian suppliers of about $US80/tonne.
One of the key issues for junior resource stories of late has been the difficulty getting access to additional cash. Highfield’s largest shareholder is Owen Hegarty’s EMR Capital, which is very supportive of the explorer.
Hegarty built Oxiana from a junior explorer to a producer worth several billion before merging it with base metals giant Zinifex.

From London, Whitman Howard’s mining analyst Roger Bade is a little less enthusiastic about Spain. While the regulatory process is improving, getting permits is still difficult, he says.

Bade has a warning for Highfield regarding its pre-feasibility study. “If they follow the usual Australian practice of saying the project is positive without giving internal rate of return and net present values, with the pricing assumptions included, one will throw one’s toys out of the pram,” he told clients on Friday.
Meanwhile, in Africa, two potash hopefuls have picked themselves up, dusted themselves off, and started all over again. Elemental Metals (ELM) was knocked off balance by the failure of a Chinese takeover due to Hong Kong stock exchange problems. But it recently announced work was getting under way again at its Sintoukola project in Republic of Congo with drilling of the Dougou prospect targeting a huge amount of potash-bearing ore.
Now it has gained access to seismic data compiled at Sintoukola in the 1980s when it was being explored for oil but came up with potash results instead. ELM would be targeting Brazil as a main market.

In Eritrea, there’s South Boulder Mines (STB) whose shares once went through $4.50 but last traded at 19c. STB had to give the Eritrean government a far larger free ride than shareholders had expected or liked. It was planning to mine just the sylvinite but has decided to look at mining all three types of potash, opening up the possibility of producing sulphate of potash, which commands a substantial premium over Mop.

Other potash plays to keep an eye on are FYI Resources (FYI) with its projects in Thailand (and a large market on its doorstep) along with the brine lake plays here in Australia.
Rum Jungle Resources (RUM) has Karinga Creek and Reward Minerals (RWD)its Lake Disappointment project in Western Australia. These brine projects are much cheaper to process than mining underground and contain sulphate of potash.
RWD has doubled in price of late as its more excitable shareholders worked themselves up into chat room frenzies.
Rush to find more gold

ACCORDING to Japan’s Nikkei news service, if gold production continues at the present rate all the known reserves of the yellow one will be exhausted within 17 years. By then most of the rest of the gold already extracted over the past 4000 years will presumably be in the Bank of China or around the arms and wrists of Chinese middle class women, while by 2031 Australia will be conducting its foreign trade in the gold-backed yuan, the new international reserve currency.

True or not, the Japanese calculations point to a severe squeeze on gold supplies. Last year a gold study out of Liechtenstein showed the average grade now being mined globally is 0.8 grams/tonne, which suggests some slim margins and high mining costs. SNL Metals & Mining during the week released a study of reserves for five majors —AngloGold Ashanti (AGG) and the four largest North Americans — which show their average grade was just 1.1g/t.
So we’d better find some more. To that end, Primary Gold (PGO) has begun drilling at Tom’s Gully south of Darwin to increase its potential mine life.

Tom’s Gully was once a great earner for the former MIM, then in 1999 it was reported that the former Sirocco Resources was about to begin producing gold. In 2006 your correspondent was excited that Renison Consolidated Mines was close to getting the mine in production. Instead, in 2007 it was sold off to Canadians. Fingers crossed this time, then.

Crusader Resources (CAS) has bought a high-grade (one hole drilled in the 1990s returned $47m at 64.35g/tonne) gold project in Brazil. WPG Resources (WPG) is taking two gold projects in South Australia off the hands of Mungana Goldmines (MUX), the deposits having already had more than $20m spent on them. And Peter Cook adds another project to the bulging West Australian gold portfolio of his Metals X (MLX) by spending $7.7m to buy the Meekatharra gold operations from Reed Resources (RDR), the outlay netting not only a 3.5 million ounce inventory but a refurbished treatment plant and 200-man camp.