drbubb Posted February 3, 2007 Report Share Posted February 3, 2007 I made some great profits a few years ago on Celtic (CER.L), and exited before its various legal dramas. With the stock back down to 150p, I'm thinking it may be time to look at getting babck in. Let's discuss that here. And I'll kick off with an article and an Advfn link Weekly Chart ... update // Daily chart = = = = = = = Celtic Deserves To Be Reassessed In The Light Of The Eureka Acquisition. Not a lot has been heard from Celtic Resources since it managed to extract US$80 million for its 20 per cent stake in South Verkhoyansk Mining Company, the holder of the license for the Nezhdaninskoye gold mine in Yakutia, Russia. Polyus, the gold mining arm of Russia’s metals giant Norilsk Nickel which produces a quarter of the country’s gold, was determined to get hold of Nezhdaninskoye as it is one of Russia's biggest gold deposits with a resource base of about 900 tonnes of gold in total reserves under Russian accounting standards. The way it went about it was an object lesson for any western company intent on developing a large Russian gold reserve without a powerful local partner at its elbow as AngloGold Ashanti has been finding out since it acquired Trans-Siberian Gold. Anyway US$80 million is quite some ammunition for a junior mining company so Celtic has been spending its time this summer sieving other mining opportunities in the FSU and particularly in Kazakhstan where it already operates the Suzdal mine. Here commissioning of the sulphide treatment plant had had a fairly dramatic impact on gold production which rose by 180 per cent to 24,793 ozs in the first half of the year. The plant treated 123, 857 tonnes grading an average of 9.2 g/t gold and there is clearly room for growth in production as the annual capacity of the plant is 300,000 tonnes. Indeed in July 5,141 ozs was produced so the target for the year as a whole was originally pushed up to 60,000 ounces , but has since been reduced to 50,000 ounces due to lower than expected grades. The sulphide plant incorporates BIOX® bacterial oxidation technology which came into operation in May last year. Since then various teething problems have been identified and overcome, though Kevin Foo, managing director, reckons that there are still some improvement to be made in throughput and gold recovery.It is the first time BIOX has been used successfully in the FSU and he points out that it had to cope with temperatures ranging from -40°C to +40°C during the year. Of the tonnage treated in the first half, 63,455 tonnes at a grade of 15.7 g/t came from the underground mine currently being developed and some more from open pits and stockpiles so the technology proved to be flexible. Now a decision has to be made as to whether to expand the capacity of the plant as there are mines in the area with refractory ore who could contribute concentrate. First, however, the cash operating cost will have to be reduced from the US$483/oz in the first six months. The plant problems played a part in this, as did the pre-stripping of open pits, but higher fuel costs look like being a permanent problem. Kevin Foo reckons that improved economics may also involve a switch from using a contractor to having its own fleet of trucks. He also thinks that the mine is overstaffed and that its procurement activities could be run more efficiently. Whatever, he is on the case the costs should fall. The 75 per cent owned Zherek open pit heap leach operation is only 28 kms from Suzdal and it had a disappointing first half as winter dragged on and transitional opres were encountered which do not leach as well as oxides. The result was a reduced production of 3,571 ounces compared with 4,611 in the first half of 2005. Things are now on the up, however, and production is expected to reach 12,000 ounces this year. The oxide ore, on the other hand is running out and Celtic has been carrying out technical and economic studies to see if it is worth trucking the ore to Suzdal. The latest opinion is that this should be possible and profitable and an increase in plant capacity to 400,000 tonnes is definitely on the cards now that SRK has confirmed a new JORC compliant resource estimate of 2 million ounces for the company’s gold assets.. In the meantime Kevin Foo is popping in and out of meetings as Celtic moves to buy back Eureka Mining which it spun off in 2004. A paper deal of 5 Celtic shares for every 16 Eureka is envisaged and it makes sense as Celtic has cash and Eureka needs some. It brings with it the Shorskoye molybdenum mine which is a joint venture with Kazatomprom in the same region of Kazakhstan as Celtic’s gold mines.. In September the partners announced that contracts had been signed for the sale of molybdenum concentrate and Eureka had just received its first cash payment of US$1.25 million so cash flow was underway. Kevin reckons that by spending between US$6 and US$10 million production could be cranked up to an annual rate of 3 million lbs of molybdenum by next year. “It doesn’t take a brain of Britain to see that 3 million lbs times at least US$20/lb adds up to quite a lot of money, “he says, “ but investors do not seem to have caught on.” He can be forgiven for being a bit sour about the investment world after the extraordinary treatment meted out to Eureka a couple of months ago by its Nomad which was written abut on Minesite at the time. Eureka’s other main asset, the Chelyabinsk copper gold project in Russia, is significantly larger Back in July a pre-feasibility study was completed on the Miheevskoye copper deposit, which is just part of the project. A new JORC compliant resource estimate was announced with a total indicated resource amounting to 373.5 million tonnes grading 0.38% copper and 0.10 g/t gold to contain 1.42 million tonnes of copper and 1.20 million ounces of gold with more to come as the deposit remains open to the south and west. Again investors seem to have overlooked the fact that this is not the only deposit which will be delineated. Another one, Tominskoye, has a resource of 250 million tonnes at higher grades of copper and gold and more will be discovered in the future as the project is a big one running down from Russia into Kazakhstan. An open pit is planned for the first five years at Miheevskoye , but the total mine life is expected to be twelve years with average annual production running at 81,000 tonnes copper and 55,000 ozs gold. A definitive feasibility study should be completed before the middle of next year and commissioning is expected to start in the third quarter of 2009. The enlarged Celtic now has plenty of potential and a lot of work to do. Acquisitions are mentioned as a possibility, but they need to be very good and very cheap as the current portfolio deserves priority when the money is being spent. http://www.minesite.com/storyFull5.php?storySeq=3922 = = Company Web Site.....: http://www.celticresources.com/ Advfn thread w/ chart: http://www.advfn.com/cmn/fbb/thread.php3?id=13121096 Link to comment Share on other sites More sharing options...
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