Aztec Res. Share Discussion Threads

[red ninja] 02/5/2006 15:55

Iron ore to stay strong :-

Boom in iron ore brings Australian miner to AIM
By Peter Klinger



THE global iron ore boom shows no sign of abating, as an Australian company that wants to develop its own mine is set to list in London this week with a £70 million price tag.
Shares in Cape Lambert Iron Ore, which is listed already on the Australian stock exchange, are due to start trading on AIM on Thursday.



Cape Lambert, which has signed up Collins Stewart as nominated adviser and broker, is not raising new funds, but expects the City's appetite for stocks with exposure to China's economic boom to trigger strong interest in its shares.

The company wants to develop an iron ore project in the Pilbara region of Western Australia. The project contains 2.5 billion tonnes of ore, with a 30 per cent iron content, and Cape Lambert expects to be producing 7.5 million tonnes a year from 2009.

Cape Lambert's listing on AIM is timely. The world's three dominant iron ore miners - CVRD, of Brazil, and the Anglo-Australian rivals Rio Tinto and BHP Billiton - are engaged in their annual round of price negotiations with key steel mill customers in China and Japan.

Iron ore is the key ingredient for steelmaking. Global steel demand has soared because of the huge economic growth in China and India, two of the world's biggest economies. China imports 200 million tonnes of iron ore a year.

The protracted negotiations, which are taking longer than expected, will set the price under which the three miners, which control about 70 per cent of world supply, will sell most of their iron ore over the next 12 months. The price is a yardstick for other iron ore miners.

Last year the iron ore troika managed to force through an unprecedented 72 per cent rise in price. The rise shocked the steel mills, in particular those in China, which in the past had let their Japanese peers lead the negotiations, and they are resisting the troika's demand for a 20 per cent rise this year.

Cape Lambert will not be in a position to benefit from the soaring iron ore prices for at least another four years. However, independent analysts are confident that iron ore industry conditions will stay buoyant. The confidence is underwritten by the long time that it takes to develop new iron ore projects, which often require billions of dollars of investment in infrastructure such as railways.

Rio Tinto has just begun construction of its US$1 billion (£547 million) Hope Downs project in Western Australia, which holds 644 million tonnes of ore, graded 61 per cent iron. Rio Tinto will produce 30 million tonnes a year from 2008.

PROSPERITY

The buoyant conditions for iron ore are part of the reason why Prosperity Minerals, a Chinese company advised by Evolution Securities, is seeking to raise about £100 million as part of its £200 million AIM flotation.

Prosperity's two assets are a huge cement business in the Guangdong region and an iron ore trading business.

[red ninja] 01/5/2006 14:22

See the August 2005 minsite article mentions some figures.

Aztec Resources Publishes Greatly Improved Bankable Feasibility Study For Koolan Island Iron Ore Project


Good timing by AIM listed Cambrian Mining in May when it agreed to swap 60 million shares in AIM and Aussie listed Aztec Resources for a million shares in Asia Energy with RAB Special Situations (Master) Fund. Just to clarify the position this deal increases Cambrian's holding in Aztec to 18.7 per cent, while reducing its shareholding in Asia Energy to 22.7 per cent. At the time Cambrian rationalised this share exchange as assisting Cambrian to achieve its objective of being a diverse mining house primarily servicing the steel industry. Fair enough, Ian Burston, the executive chairman, learned all about the mining and transportation of iron ore when managing director of Portman, another leading Australian iron ore producer, so Aztec is in experienced hands.

Now Aztec has come out with its bankable feasibility study on the Koolan Island iron ore project which is located in the Yampi Sound 130 kms north west of Derby in Western Australia. BHP produced 68 million tonnes of iron ore from the island between 1965 and 1993, but left as the project was no longer considered core to the major and the price of iron ore was a lot lower than it is now. It left behind it plenty of iron ore as the bankable feasibility shows and Aztec expects to delineate more resources from continuing exploration. The study took no account of this additional potential, but it is worth noting that resource estimation has started at Acacia East following a drilling programme; three holes at Mangrove prospect have identified similar high grade hematite over a strike length of 650 metres with widths of up to 15 metres; and there are additional targets yet to be tested.

Actual ore reserves total 22.16 million tonnes at 64.6% Fe spread over three deposits and there is a significant quantity of inferred resources in the optimised pit designs, particularly at Main Pit. This will be upgraded as in-fill drilling of the inferred resources at Main Pit confirms the continuity, width and grade of this high grade hematite and it is a safe quess that the same will be true for the other deposits. The feasibility study was based on a progressive ramp-up of production with a mix of 70 per cent fines and 30 per cent lump. 2 million tonnes is expected in the first year from mid 2006 onwards, 2.5 million tonnes in the second and thereafter it should settle at 4 million tonnes/annum. The prices used in the study were based on 2005 rates with reductions of 15 per cent forecast in 2008/9 and a further decrease of 10 per cent the following year. Presumably this reflects the MOU's reached with Chinese and Japanese customers for an offtake of 3.4 million tonnes of iron ore/year."

With this agreement under his belt Ian Burston should not find too much difficulty in raising the initial capital costs of A$108 million which includes mine development costs of A$26 million. In support is the internal rate of return of 39.7 per cent before tax, and operating costs of A$30/tonne of ore giving an EBITDA of A$20/tonne, which together should enable a significant amount of the funds to be raised by an equity placement. Ian Burston is now going on a short holiday so far away from Australia that he will not be bothered by the results of the next Ashes Test, but in the meantime his team will be beavering away with detailed engineering design of the jetty shiploader, crushing plant and ancillary infrastructure as well as the environmental review required prior to development and mining approvals. The jetty will be just under 300 metres long and the travelling ship loader will have a capacity of 4,500 tonnes/hour which is sufficient for a 200,000 tonne ship The company has A$17 million in the kitty and no debt so it does not have to hang around waiting for development finance.

You are never home and hosed in mining until product has been delivered and a cheque received, and even then a geological, plant or weather problem can put a dent in things. Aztec's operation, however, is more straightforward than most though the Sumitomo deal has still to be formalised and talks are in progress with other Japanese and Chinese buyers for the balance of production. There could be a sticking point in negotiations with the traditional owners, but this should be sorted through a Tribunal without having any significant impact on the feasibility study.

The question that now has to be answered is whether the company will still be independent when production actually starts. Fidelity Investments announced at the beginning of this month that it had sold 7 million shares to bring its holding down to below 4 per cent of the equity. This had an inevitable impact on the market capitalisation which, at around A$86 million is way below the NPV of A$217 million at a 10 per cent discount and before tax and interest. Someone must have bought these shares and may well be building up a holding prior to making a bid for what is now very clearly an excellent project. The race is now on to see whether investors take the point and climb on board to raise the ante, or watch more of Australian minerals fall into possibly foreign hands as happened with Portman when taken over by the US company Cleveland-Cliffs.

[red ninja] 01/5/2006 14:07

Despite your cynicism all the evidence is that prices will stay high for a least a year, maybe 18 months of Koolan production which should help to pay for a large proportion of the Koolan mine cost. The project offers hig grade and lower transport cost due to its island base.

Cambrian have been very keen to aquire Aztec shares so they must feel the project is going to pay well.

Anyone got the latest figure for projected iron ore tonne production cost from Koolan?

[mkh200] 27/4/2006 17:55

Looks like time to leave AZR. With increasing Chinese demand now likely to slacken AZR should be producing just as prices start to ease. $65/t has held for 2 years and we can expect a fall to a 50% premium on the $30/t level of 2003. Exploiting the remnants of the discarded BHP Woolan mine AZR will be a high cost, marginal producer, especially vulnerable to weaker ore prices.

[red ninja] 24/4/2006 10:14

AZR motoring a bit today on the granting of leases and the associated signing with the native peoples.

Aztec Resources Limited ('Aztec' or 'the Company')

24 April 2006

Mining Leases Granted - Koolan Island

Aztec Resources Limited (ASX & AIM Code: AZR) is pleased to announce that the
Minister for Resources has granted Mining Leases 04/416 and 04/417 which are
required for the construction and operation of the Koolan Iron Ore mine.

The granting of the leases is a significant milestone in the development of the
project and the Company anticipates that construction will commence on Koolan
Iron at the end of April 2006.

The Company acknowledges the assistance provided by the Department of Industry
and Resources in achieving this milestone.

[biswell] 03/4/2006 12:03

Wen must have read my post .... it pays to play tough sometimes


China to let market decide iron ore price
By Sundeep Tucker in Sydney
Published: April 3 2006 05:14 | Last updated: April 3 2006 05:14

China's premier on Monday said that Beijing would let the market decide the global price of iron ore, easing fears in Australia and Brazil that it was planning to cap the price of imports following last year's huge rises.

Wen Jiabao said "supply and demand" would dictate export prices for the mineral, but added that governments should come up with a "fair pricing mechanism". He was speaking in Canberra during the second day of his official four-day visit to Australia in which he held bilateral talks with John Howard, Australian prime minister.

China last month denied reports that its ministry of commerce had moved to cap iron ore prices at last year's negotiated level of US$54 a tonne - a 71 per cent increase from 2004's level - and was refusing import licences to steelmakers which accepted higher prices.

Many analysts viewed the ministry's stance as sabre-rattling during this year's price negotiations between Japanese and Chinese steel mills and Brazilian and Australian iron ore producers.

Mr Wen said: "I believe that this is a matter to be decided by the market. It is a commercial act. The responsibility for the governments ... is to put in place a fair, open and reasonable market order as well as to come up with a pricing mechanism that is in accordance with international practices."

Iron ore prices have doubled since 2003, greatly benefiting Australia's mining giants such as BHP Billiton and Rio Tinto and Brazil's CVRD. China's steel consumption is forecast to increase in 2006 by 10 per cent to 390m tonnes.

[biswell] 23/3/2006 16:15

Don't give em any for a couple of months ..... see how they like that

Time to play hardball

Suppliers should stand tough and form a iron ring

B

[red ninja] 22/3/2006 22:10

Interesting Dogdays, to get an updated time table.

[dogdays] 21/3/2006 22:35

This is the latest postion from Aztec as of yesterday in response to my questions on construction times.
-------------------------------------------------

Subject to receiving final government approvals, we are planning to start construction in late April. On this basis it is feasible that construction will be essentially complete by the end of December this year allowing the first shipment of iron ore to be exported.

The building the seawall and dewatering the lake in the old main pit is not planned to be completed for 2 years. In the meantime iron ore will be obtained from the other pits at Eastern and Mullet.

[biswell] 18/3/2006 11:08

You could be right

I guess the Chinese outfit thought for a 9% stake they could get 9% of the ore on the cheap. Can't blame them for trying.

AZR management should learn from the experience for the next MOU .

B

[red ninja] 18/3/2006 10:53

I guess this :-

"Sinom held a 9% stake in Aztec at the time the MOU was signed, but has since diluted its stake in the iron ore junior to less than 3%"

explains the weakness in AZR share price as its looking good for AZR with production looming and sales agreements progressing.

[Abuse team] 17/3/2006 20:27

Post removed by ADVFN

[gardenboy] 17/3/2006 20:24

courtesy of MiningNews


Aztec confident despite offtake loss


Friday, March 17, 2006

AZTEC Resources has lost one buyer for its Koolan Island iron ore but the company still expects to sell all 4 million tonnes of iron ore planned to be produced annually at the project off the Western Australian coast, with one off-take partner expected to formally sign on in April.



Aztec said since signing a memorandum of understanding in January last year with China's Sinom for a minimum of 10.5Mt of iron ore over a 15-year period, the two parties have been unable to agree on terms and conditions. As such, the MOU has been terminated.

Sinom held a 9% stake in Aztec at the time the MOU was signed, but has since diluted its stake in the iron ore junior to less than 3%.

MiningNews.net was unable to contact Aztec managing director Peter Bilbe for comment.

In better news for Aztec, the company says it expects to sign a formal sales contract with China MinMetals for 1Mtpa of iron ore after a visit by MinMetals executives to Koolan Island next month.

Japan's Marubeni signed a letter of intent with Aztec in January this year for 1-1.5Mtpa of iron ore over the life of the mine, and Aztec also has MOUs in place with four other companies.

Aztec said it expects to finalise contracts with the majority of the five companies once they have had a chance to make sure the Koolan Island product meets their quality requirements.

With MinMetals' commitment, Aztec said it now has sales arrangements covering Koolan Island's anticipated annual production of 4Mt.

[pbracken] 16/3/2006 10:58

A positive statement out from AZR, confirming that it has commitments for the full 4m ton annual production.

[red ninja] 10/3/2006 14:26

Australia Raises Concern Over China's New Iron-Ore Price Cap

By Randy Jensen and Erik Dahl
09 Mar 2006 at 10:09 AM EST


SHANGHAI/BEIJING (Interfax-China) -- The Australian government is expressing concern over documents that may reveal the Chinese government's intentions to pressure international ore markets though a secret price-cap policy. The central government responded by ordering domestic newspapers not to report on the price-cap story, insiders told Interfax.

"We are aware of the existence of these documents and concerned about these documents and the intent behind these documents," an Australian official, who wished to remain anonymous, told Interfax.



The Ministry of Commerce (MOC) denied the existence of the price-cap documents during a meeting with Australian officials on Wednesday. Following media reports to the contrary, the Australians are now seeking clarification with senior Ministry officials, the Australian official said.

Yesterday the MOC asked several key newspapers to "put down" the report that the central government capped the price of imported iron ore, journalist sources said.

"The notice says newspapers under Beijing's direct supervision are not allowed to report any stories about the iron ore price cap, nor to mention or speculate on the affair," an senior editorial source in the Chinese media told Interfax yesterday.

Despite the official news blackout there are unconfirmed reports that China may already be taking action against ore shipments.

An Australian iron ore cargo ship has met trouble entering Qingdao Port, an official with a Beijing-based Japanese mineral and metals trader told Interfax. Interfax has not yet been able to verify the situation with government and port authorities.

Information that the Chinese government may be trying to cap prices began filtering through the industry late Tuesday night. Provincial MOCs were calling steel mills and reading them the content of the notification, an industry insider told Interfax.

A MOC official denied it has implemented an iron ore import price-cap policy when contacted by Interfax, saying here had been lots of rumors and inaccurate information about the topic since China joint in international iron ore price negotiations last year, which had actually had a largely negative affect on China's status in the negotiation.

"I suggest the over-reacting media stop reporting inaccurate information about the topic," she said.

China still insists on a price reduction in this year's iron ore negotiation, Ai Baojun, president of Baoshan Iron and Steel Corp. said yesterday.

Ai made the comment in Beijing during the National People's Congress, the state-owned Shanghai Securities Journal reported.

China's request on price reduction "is still under negotiation," said Ai. He pointed out that the iron ore negotiation should target sustainable development between iron mines and steel mills, rather than the function of supply and demand.

Currently, Baosteel is representing Chinese steel makers during the iron ore price negotiations with the major iron ore suppliers, who called for a 10% to 20% price increase on iron ore starting April.

After Interfax received a copy of a government document it became obvious that Beijing intends to politicize the company-to-company talks.

The tough secret directive, issued to key ports, expressed the intention of protecting the country's domestic steel industry by refusing shipments of ore priced above a price cap, and specifically ore from the three main iron ore suppliers - BHP Billiton [NYSE:BHP; LSE:BLT] and Rio Tinto [NYSE:RTP; LSE:RIO], and Brazil's CVRD.

The Ministry of Commerce intention in blocking iron ore imports above the price cap is in order to put pressure on overseas suppliers during the annual benchmark price negotiations.

© InterFax-China 2006. For more intelligence on Chinese metals and mining, click here or call Alison Crawford in London on [phone].

[borderriever] 09/3/2006 16:08

Looks like this ones needing the heart massage to bring it back too life.

[plast] 25/2/2006 12:04

hectorp, ill get my gun.

[gardenboy] 23/2/2006 14:42

not been seen here ! - anyway we have a borderriever on board :~)

[hectorp] 23/2/2006 14:38

Watch out for the lesser white-spotted biswell: The company must create an environmental security for the endangered...
Nature's Hellcat.....
The Northern Quoll is a beautiful but deadly marsupial creature also know locally as 'biswell's'.
A close cousin of the Chuditch, it is found throughout the state's north.

It belongs to a group of native marsupial predators known as the native cats or quolls. They are all well equipped with razor sharp teeth and claws. The Northern Quoll is particularly aggressive and noted for its "pugnacious disposition".

[red ninja] 23/2/2006 09:54

Aztec Resources Limited ('Aztec' or 'the Company')

23 February 2006

WA Environment Minister Approves Koolan Island Iron Ore Project

West Australian Minister for the Environment, Hon. Mark McGowan, has given the
go ahead for Aztec Resources Limited ('Aztec' ASX/AIM:AZR) to restart iron ore
mining operations on Koolan Island, subject to a number of conditions.

Following the environmental approval and the agreement reached with the
traditional owners (see ASX/AIM release dated 21 February 2006), Aztec is
confident the necessary Mining Leases and initial Works Approvals will be
granted by April 2006.

Aztec expects to commence development work on Koolan Island in April 2006, with
the first shipment of iron ore taking place in December 2006.

The approval conditions ensure that the waters and resulting ecosystems
surrounding Koolan Island are protected throughout mining and groundwater
aquifers, fauna and flora are appropriately managed. Aztec is finalising
environmental management plans to ensure the conditions imposed will be adhered
to.

Aztec has been advised by the Commonwealth Department of Environment and
Heritage ('DEH') that approval to proceed with certain components of the project
will be required under the Environmental Protection and Biodiversity Act 1999
('EPBC Act'). This decision by the DEH reflects its focus on protecting the
Northern Quoll, a small marsupial that has recently been listed as a threatened
species under the EPBC Act.

The DEH assessment will need to consider measures necessary to monitor, protect
and conserve the island's population of Northern Quoll.

Aztec will work with the DEH to implement a management plan in-line with the
guidelines provided by the Commonwealth. The company does not foresee major
disruptions to operations as a result of the DEH's review and remains committed
to mining in a responsible manner to protect the Northern Quoll.

Consequently, Aztec is developing a staged approach to the construction and
development of the project to ensure that Aztec meets both is obligations under
the EPBC Act and its planned construction timetable.

Development and construction activities, that will not impact the DEH assessment
and approval process, will commence immediately, following the granting of the
Mining Leases and Works Approvals.

For Further Information contact:

Australia
Peter Bilbe, Managing Director: [phone]

UK
Fiona Owen, Grant Thornton: [phone]