Home' InDaily : March 12th 2010 Contents www.independentweekly.com.au
March 12 - 18, 2010
Australian production of crude oil
during 2009 dropped to its lowest
level in four decades, according to a
leading industry report card.
The report -- by energy economics
group, EnergyQuest -- shows oil
production throughout the country
fell 17 per cent last year from 120.6
million barrels to 99.5 million
This is the lowest level since 1970.
The slump in oil production
reflects the maturity of Australia s
major producing oil fields, together
with disruptions due to mainte-
nance and weather.
"The recent start-up of BHP
Billiton s Pyrenees oil field and
Apache s Van Gogh field -- both
situated off Western Australia s
north-west coast -- will provide a
boost in the short-term, however the
long-term trend is for production
to keep falling," EnergyQuest
chief executive officer, Dr Graeme
Natural gas production grew
strongly during the year. Total
Australian natural gas production
increased 10.1 per cent in the 12
months to December 2009, reaching
a record 1897 petajolues.
The growth was primarily due
to increased exports of Liquefied
Natural Gas (LNG) from the North
West Shelf in Western Australia.
"Australian LNG exports grew
strongly in 2009, even though
demand in Asia, Australia s major
market, was down 7 per cent," Dr
"Australia gained market share
at the expense of suppliers from
the Atlantic Basin such as Algeria,
Egypt and Nigeria."
"The major two issues in the oil
and gas sector a year ago were the
impact of the global recession and
climate change," Dr Bethune said.
"As it turned out, it is not even
clear whether Australia had a reces-
sion, and upstream gas investment
continued at record rates.
"Twelve months on, policy direc-
tions on climate change are more
uncertain. What is clear is that the
role of gas in reducing emissions is
being marginalised by the desire to
Centrex Metals and Wuhan Iron &
Steel Corporation (WISCO) have
agreed to the terms of a sup-
plementary agreement to provide
a resolution to outstanding issues
between the companies.
The agreement also includes a
clear timeline for completion of the
Centrex/WISCO joint venture in
which WISCO will acquire a 60 per
cent interest in the iron ore rights
of five of Centrex s iron mineral
tenements on South Australia s
southern Eyre Peninsula.
Key terms include a new end date
to fulfil all conditions precedent of
March 30, 2010 with completion of
transactions to occur three weeks
The terms also contain a new
condition precedent to provide
resolution to WISCO s concerns
over non-ferrous mineral rights
holders on the tenements. Centrex
will provide indemnification to
WISCO for losses suffered by the
joint venture directly related to the
non-ferrous mineral rights, and
WISCO to warrant that all Chinese
Government approvals have been
The Adelaide iron ore developer s
half yearly report lodged Wednesday
shows the company s half year
balance in the black with $15.05
million in the bank and liabilities of
just $1.16 million.
The report stated the company
spent $1.5 million on its exploration
tenements on the Eyre Peninsula
during the period, down from $4.5
million the previous year.
Centrex projects on Eyre
Peninsula include its wholly-owned
Wilgerup project near Lock, a $271
million joint venture with WISCO,
and a $40 million joint venture with
Chinese company Baotou Iron and
According to its interim report,
the company expects a Centrex
delegation to visit China towards
the end of March to finalise the
OZ Minerals has a problem:
what to do with all that cash
-- a little more than a $1 billion
at last count.
It s been searching the world for a
new project to add to its Prominent
Hill copper/gold mine on the
Woomera rocket range in South
Australia s far north, having been
stripped of its four other mines in
last year s drastic refinancing.
But maybe it won t need to go
much further than SA s Yorke
Peninsula where Rex Minerals is
well in to outlining a big copper/
gold resource at its wholly-owned
Hillside project. Just how big it
is won t be known to be about
mid-year when a maiden resource
estimate is expected.
What is known is that the latest
exploration results, released
recently, have done no harm to the
expectations of the brokers that
have been backing the stock that
something like 100 million tonnes
around 1 per cent copper and
associated gold is on the cards.
And as Rex has dozens of nearby
and regional targets yet to test,
there is an expectation that once
it gets started, modern-day copper
mining on the Yorke Peninsula will
be around for a long time.
That said, Hillside is not the
highest grade resource around,
but it doesn t have to be, given the
property is an easy two-hour drive
from Adelaide Airport. It s on the
power grid and there is a port about
10km down the road. So infrastruc-
ture costs will be nothing like those
OZ faced when it plonked down $1.2
billion to build Prominent Hill.
So you can bet that the boys at OZ
charged with finding a new project
will be having a good look at this
week s exploration update from
Significantly, Rex has included
for the first time a cross section
representation of the three fault
structures that have been getting
a lot of attention from the drill
bit (Zanoni, Parsee, Songvaar).
That will allow those interested to
do their own maths on potential
resources for an open pit.
The 12 holes at 100m spacing
across the "epicentre" of a 2km line
of strike suggests the potential for
bulk tonnages in an open pit of say
400m by 600m wide along a strike
length of 600 - 800m.
Rex is not a particularly big bite
for OZ, or anyone else in the copper
game for that matter. At its last
closing price of $1.59 a share, it was
valued by the market at about $180
million. It doesn t need to be taken
over as it is fully funded to keep
up the cracking pace it has set at
Hillside. At last count, it had about
$48 million in the bank after having
had no problems pulling in $42
million last year from a rights issue
at $1.70 a share.
Meanwhile OZ Minerals
announced earlier this week a
joint venture with junior precious
and base metals explorer Azure
Minerals in Mexico.
Under the deal OZ Minerals
can earn a 70 per cent interest in
Azure s San Eduardo project in
Sonora by spending $14.3 million on
The project is considered prospec-
tive for copper with associated lead
and zinc mineralisation.
OZ Minerals will spend $3.3
million over the next three years
to earn a 51 per cent stake in the
project and can earn an additional
19 per cent interest by spending a
further $11 million.
The deal will provide a much-
needed financial boost to Azure,
which had only $1.2 million in cash
and cash equivalents at the end of
December and posted a first half
loss of $1.25 million.
"This joint venture will
enable Azure to accelerate our
exploration programs and develop
our projects," Azure executive
chairman Tony Rovira said in a
Field work at the San Eduardo
project will start soon, Azure said.
OZ Minerals had a large portfolio
of diversified assets at one stage but
was hampered by debt refinancing
problems amid the global financial
As a result, it offloaded all its
assets excluding its Prominent
Hill mine to China Minmetals
Non-Ferrous Metals for $1.48 billion
-- Fairfax and AAP
OZMin's Prominent Hill mine in SA; is there more nearby?
for OZ may be local
Centrex/WISCO move towards resolution
As it turned out,
it is not even clear
had a recession,
and upstream gas
at record rates.
-- Energy Quest's Dr Graeme Bethune
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