Investing in Mining Shares

General News

Resources and mining companies dominating the headlines this past week include New Hope inviting more bidders to submit proposals, OneSteel completes its purchase of WPG's South Australian iron ore assets, Sundance backs its largest shareholder's sweetened takeover bid and the Mongolian Government backs down on wanting a bigger stake in Rio's copper and gold project.

We also speak exclusively with Mantle's Company Secretary Winton Willesee about the miner's new rights issue and the funding of priority projects.

New Hope announces it's up for sale
Queensland coal producer New Hope Corporation Limited (ASX:NHC) has invited more bidders to submit proposals after revealing that it has already received a number of preliminary takeover proposals. While New Hope has not named the bidders, speculation has emerged Swiss mining giant, Xstrata, could be a likely suitor. The company will now invite others to submit offers and then undertake a formal process to evaluate the proposals. Chairman Robert Millner says New Hope has a very large reserve and resource base and significant development pipeline, as well as being a low cost producer with access to infrastructure.

Mantle's new rights issue
Mantle Mining Corporation Limited (ASX:MNN) is aiming to raise just under $2 million via an underwritten rights issue ending this month to fund its projects including the Granite Castle gold drilling program, the Bacchus Marsh clean coal project and Charters Towers gold project. The gold and coal explorer had attempted an earlier rights issue in June, but the underwriter of that issue decided to discontinue the underwriting due to prevailing market conditions.

The Finance News Network spoke exclusively with Mantle's Company Secretary Winton Willesee and he's confident this new rights issue will proceed, and fund priority projects.

"At the moment the priority is the Granite Castle Gold drilling ... it is the next cab off the rank ... we're hoping for some positive results from the next phase of our exploration on that project. We're pretty confident we'll get some good results."

"If we can have some good results at Granite Castle and continue the development at the Bacchus Marsh clean coal project, in so far as completing the joint venture with Exergen, we should have two pretty exciting projects in the company ... Gold is at record highs, with the outlook in the world economy and the prospect for us exploiting our Granite Castle project in the near term, it's well timed for us. With regards to the Bacchus Marsh clean coal project it's a very scalable project that could be of substantial value to our shareholders and our share price," added Mr Willesee.

OneSteel acquires WPG assets
OneSteel Limited (ASX:OST) has completed its $320 million purchase of WPG Resources Limited's (ASX:WPG) South Australian iron ore assets. The final price is down from the initial estimate of $346 million, as WPG's expenditure was lower in the last quarter. WPG shareholders backed the sale after the board's recommendation. WPG Chairman, Bob Duffin, claimed the financial outcome is comparable to what the company would expect if it developed the iron ore assets itself. OneSteel will inject an extra $80 million to bring the Peculiar Knob mine into production and is aiming to start selling iron ore by the end of 2012.

Sundance backs sweetened bid
Africa-focused iron ore developer Sundance Resources Limited (ASX:SDL) is backing its largest shareholder's sweetened takeover bid. China's Hanlong Mining has improved its offer by 14 per cent, from $0.50 to $0.57 per share, valuing Sundance at $1.65 billion. Sundance directors have unanimously recommended that shareholders vote in favour of the scheme that is also still conditional on regulatory approvals. The offer price represents a 65.3 per cent premium to the company's volume-weighted average price in the month leading up to Hanlong's initial proposal in July.

Rio holds ground in Mongolia
Good news for Rio Tinto Limited (ASX:RIO) and Ivanhoe Mines Limited (IVN:TSX, NYSE:IVN, NASDAQ:IVAN), as the Mongolian Government decides to back down on wanting a bigger stake in the miners' Oyu Tolgoi copper and gold project. There had been mounting speculation that the Mongolian government was planning to boost its interest in the project from 34 per cent to 50 per cent and introduce a sliding-scale royalty scheme. The mine is the biggest project in the Mongolian economy, with the first stage alone expected to cost around $US6 billion. Rio is tipped to launch a takeover bid for Ivanhoe Mines next year.

ASX mineral reserves reporting crackdown
The resources industry is facing a crackdown on internal rules for reporting reserves, with critics saying the existing rules allow companies to mislead investors. The Australian Securities Exchange has decided to review the reporting rules, resulting in outrage from mining executives, who say there was a lack of consultation. The Joint Ore Reserves Committee has said it will co-ordinate its own review after the ASX released the consultation paper without its support. The JORC chairman says he does not accept the ASX's decision to move away from the current system and believes the proposed reforms are not the best solution.


Melissa Beaumont Lee