Kruger2Canyons.com

JOHANNESBERG- Shares in Palabora Mining, South Africa’s biggest copper producer located in the middle of the K2C Biosphere in Phalaborwa, gained by a quarter after the company hosted an analyst visit at which it detailed output trends and a possible R3.2bn expansion.



Palabora, controlled by Rio Tinto Group, could start a study next year into the viability of extending the mine’s life beyond 2015, according to a presentation posted on its website after the visit. The company also plans to increase sales of magnetite, a type of iron ore, and to process stocks of copper ore that were previously unprofitable to treat, the presentation said.

It’s too early to say whether Palabora will borrow money to finance the project, which could start as early as 2008 and take eight years to complete, Chief Financial Officer Charles Asubonten said yesterday from his office in Phalaborwa.

The stock gained on improved production, the weaker rand and high copper prices, said Nick van Rensburg, who attended the visit and helps manage a $300m fund at Peregrine Capital.

Shares of Palabora, which operates South Africa’s largest copper mine, jumped 25% to R44,50 since the October 6 visit. The stock climbed 8,7% on October 9, the first day of trading after the visit.

Investment in increasing the life of the mine could take place over a decade, Nick Cobban, a spokesman for London-based Rio, said in a telephone interview on Tuesday from its London headquarters. He gave no further details.

Palabora plans to mine about 11m tons of copper-bearing ore this year, and 12m in 2007/8, compared with 10m tons in 2005, according to the presentation.

An increase in production will help offset the affect of agreements the company made last year to sell a portion of its production at less than half the current market price for seven years. The contracts cut Palabora’s exposure to copper prices, which quadrupled in the last five years, spurred by Chinese demand for materials to fuel its booming economy.

Labels: mining, Palabora Mining, Phalaborwa

JOHANNESBURG- Palabora Mining (Palamin) [JSE:PAM] which operates South Africa's largest copper mine in Limpopo said yesterday it had produced less refined new copper in the first half of this year than in the previous first half last year because of a planned 35-day smelter shutdown in February and March.

This occurred as the copper price reached fresh peaks. The copper price more than doubled to R58,035 ($8,084) a metric tonne at the end of last month from R23,535 ($3,278) a year ago on a combination of rand weakness and strong global commodities prices.

The company said yesterday daily production from under ground operations averaged 29,392 metric tonnes in the June quarter despite two four-day stoppages in the production hoists.

Palamin MD Keith Marshall said in the group's latest annual report, released last month, that the target was 30,000 metric tonnes a day. Palamin hoisted a total of 2.64 million metric tonnes of ore in the June quarter at a grade of 0.70%, slightly lower than the grade in the March quarter. Total mill throughput was similar to the March quarter's.

Palabora mine produced 28,500 (29,700) metric tonnes of copper in concentrates in the first half of the year, while the Palabora smelter produced 34,000 (39,300) of new copper anodes and 36,200 (37,700) metric tonnes of new refined copper. Vermiculite production also fell, in line with plan, because of a decline in the plant feed grade, while magnetite production rose.

Palamin took steps in its past financial year to become a more sustainable operation.

Marshall said in the annual report this year, that management would address one of the major constraints to under ground production - which was the age of the underground loader fleet.

Last year Palamin had to reduce its underground reserves by about 60-million metric tonnes, or five years' production, to 142 million metric tonnes because of subsidence on the northwest wall of the open pit, which made it impossible to reach some of the ore.

Palamin also said today it expects first-half headline earnings to rise to between R312 million ($43 million) and R260 million ($36 million) from the previous period’s R209 million loss ($29 million), it said today.

The company said it expects basic earnings to rise to between R300 million ($42 million) and R250 million ($35 million) and that the difference between basic and headline earnings is due to an impairment charge of one of its plants and profit on sale of fixed assets.

Headline earnings exclude capital, non-trading and some extraordinary items and is a key measure of profit in South Africa.

Palamin is 49% owned by Rio Tinto Group [NYSE:RTP] and 28.5% by Anglo American [LSE:AAL].

Labels: annual report, mining, Palabora Mining, Phalaborwa

Rio Tinto, the world’s third-largest mining company, plans to sell stakes in its South African mines, including the world’s biggest titanium operation, to comply with targets for black investment. It had appointed SA’s second-biggest financial services company, Rand Merchant Bank, to advise on the sale of a stake in Richards Bay Minerals, spokesman Nick Cobban said on Friday.

Rio Tinto, based in London, jointly owns the titanium mine with BHP Billiton and is the biggest shareholder in Palabora Mining, SA’s largest copper producer.

“The process is under way on both of those,” Cobban said by phone from London, without naming the companies that have bid. “We should have something definitive on Palabora by the end of this year, while Richards Bay Minerals may run into next year.”

SA’s government in 2004 passed a law forcing miners to sell 26% of their mines to black investors by 2014. The law aims to provide some redress to black South Africans for the discrimination suffered under apartheid.

Richards Bay Minerals, where Rio Tinto and BHP Billiton have for three decades dredged beach sand for so-called heavy minerals, yields 1,9-million tonnes of titania, rutile, pig iron and zircon each year.

It produces the raw material for about a quarter of the global market for titanium dioxide, a white pigment used in paint and dyes, according to the company’s website.

The $9bn a year titanium dioxide market is bigger than the global nickel market, according to the website of Randsburg International Gold Corporation, a Vancouver-based heavy minerals deposits prospector.

The pigment, for sale in North America, traded at $1,12 a pound on Friday.

Glenda Gerber, a spokeswoman for BHP Billiton in Johannesburg, referred all queries to Rio Tinto.

George Deyzel, the managing director of Richards Bay Minerals, was not immediately available for comment.

Palabora, in which Anglo American owns a 27% stake and Rio Tinto a 49% holding, produced 80000 tons of copper last year from operations in Limpopo province. It also produces vermiculite.

Rio Tinto has already sold a stake in its Chapudi coal deposit, which it plans to develop into a mine in Limpopo province, to Kwezi Mining, a closely held company controlled by black investors.

Labels: BEE, Palabora Mining, Phalaborwa