Ferret's Stock to Watch: ENERGIO LIMITED 08 Oct 2012 09:18:00 48 Views 0 comments IF THE CHAIRMAN BUYS THEN THE PUNTERS HAVE A CHANCE
Sydney - Monday - October 8: (RWE Aust Business News) - News that a director or even management has been buying a company's shares is a good omen for shareholders and investors.
Non-executive Chairman of Energio Ltd (EIO), Dr Ian Burston, has purchased 500,000 shares of the company on market.
On September 28 the company announced a maiden channel iron Inferred Mineral Resource of 488 million tonnes with an in-situ iron grade of 42.7pc at its Agbaja iron ore project, representing approximately 9.2 per cent of the company's 151 sq kms landholding prospective for channel iron deposits.
Subsequent to the announcement, the company was the subject of additional broker coverage and commentary.
The Agbaja project is a shallow, flat-lying channel iron deposit (CID) uniquely positioned with its proximity to existing, underutilised rail, and port infrastructure.
It typically comprises iron bearing nodules (ooids, 1-2mm and pisoids, 2-9mm) in an iron rich matrix. Iron mineralisation occurs predominantly as goethite, maghematite and limonite.
"This is a landmark result considering drilling commenced in late October 2011 and in less than 12 months the company has released its maiden JORC resource, which is very much due to the extraordinary efforts of our team based in Nigeria and the support and assistance of our hosts, the Nigerian government and local Agbaja community," Dr Burston said.
"With this substantial maiden JORC resource complete, and the considerable opportunity for resource growth, we will now commence a number of development studies as a foundation to preparing a preliminary feasibility study."
The estimate covers approximately 95 per cent of the 14.7 sq kms Stage 1 resource definition area in the north of Exploration Licence 12124.
This represents approximately 15 per cent of the prospective plateau area of 90 sq kms at the Agbaja project and as such the company is confident it can be increased substantially.
The mineral resource estimate is based on all assay results received to August 28, which totals 535 reverse circulation (RC) drill holes drilled on a 100m by 200m spacing, for a total advance of 13,264m completed at the Agbaja project.
The iron mineralisation was divided into two domains referred to as Zones A and B based on geological and geochemical interpretation of the drill logs and test pits.
The first domain, Zone A, comprises surficial lateritic interlayered sandstone and oolitic-pisolitic ironstone and has an average thickness of 5.7m.
Zone B underlies Zone A and comprises oolitic-pisolitic ironstone and has an average thickness of 12.5m.
Commonly Zone A adjoins Zone B, but locally the two zones can be separated by 2m to 6m of ferruginous sandstone, which typically grades 10 per cent to 30 per cent Fe.
SHARE PRICE MOVEMENTS
Shares of Energio rose 2c to 27c on Friday. Rolling high for the year is 28.5c and low 12c. Earnings per share is 6.48c while price/earnings ratio is 4.17. The company has 136.3 million shares on issue with a market cap of $36.8 million.
The first resource update is planned for June 2013 and will include assay results received after August 28 (and not included in the Maiden Resource), an additional planned 130 RC resource definition holes, seven deep RC holes to test for concealed ironstones at depth and about 30 additional diamond holes for QA/QC and bulk metallurgical samples.
The company expects this program will lead to a significant portion of the Maiden Resource being reclassified as Indicated.
Energio currently has one multipurpose drill rig located at the Agbaja project and following the end of the wet season, which is now expected to be mid-November, this rig will return to resource definition drilling, followed by step out drilling to the south.
The step out program will enable the company to determine a JORC exploration target for the Agbaja project, providing an indication of the significant potential of the Agbaja plateau.
The company holds 15 granted Nigerian Exploration Licences, which cover a total area of 448 sq kms.
Of particular interest are eight of these Exploration Licences (totalling 303 sq kms including the Agbaja project), which based on earlier reconnaissance exploration are believed analogous to the Agbaja project and are considered prospective for CID deposits.
The total plateau area prospective for CID deposits is approximately 151 sq kms, including the 90 sq kms comprising the Agbaja project.
With the exception of the 14.7 sq kms Stage 1 resource definition area at the Agbaja project, none of these regional targets has been tested by drilling.
This therefore presents substantial potential to significantly increase the CID resource inventory with further drilling.
Energio is proposing to conduct regional fieldwork to rank the prospectivity and define reconnaissance drill targets on the surrounding 13 granted Exploration Licences in the first half of 2013 with the aim of preparing a global JORC Exploration Target for its entire landholding in Nigeria.
Metallurgical Testwork: Up to the cessation of drilling for the annual wet season in August, the company had completed 11 PQ (85mm diameter) diamond holes for approximately 300m.
The PQ core was shipped to Australia and initially used to determine bulk density for the Maiden Resource.
This diamond core provides representative run-of-mine composite samples for metallurgical testwork.
The metallurgical testwork is aimed at increasing the in-situ iron grade to equal to or greater than 58 per cent Fe, and to reduce the concentrations of minor and trace elements (SiO2, Al2O3, P, etc).
Key parameters to be determined are liberation size, mass recovery (yield), product quality, product types (e.g. sinter fines and concentrate) and process flowsheet.
Initial results from the metallurgical testwork program are expected in early November.
BACKGROUND
Energio Ltd is a company focused on the exploration and development of the Agbaja iron ore project in Nigeria.
On 29 February 29 Energio completed the purchase of all the shares in Australian company KCM Mining Holdings Pty Ltd and Nigerian company KCM Mining Ltd, thereby providing it with full ownership and control of the project.
The granted licence areas for exploration total 448 sq kms and are situated in Kogi State, which is part of the central region of Nigeria.
In addition to this, the project is located two hours drive south of Nigeria's capital city, Abuja, providing the project with excellent logistical benefits including access to various equipment and service providers.
Close proximity of the project to existing rail and port infrastructure also provides potential advantages in reduced capital expenditure and project development schedule.
Energio is currently completing an intensive reverse circulation and diamond drill program at the project with the objective of providing an updated Mineral Resource in June 2013.
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EIO Price at posting:
30.5¢ Sentiment: LT Buy Disclosure: Held
