BHP Billiton will spend nearly $US10 billion ($9.89 billion) to expand iron ore operations and energy and metallurgical coal projects in Western Australia.

The world’s biggest resource company will spend $US6.6 billion in an iron ore project expansion in Western Australia, $US2.5 billion to expand three metallurgical coal projects in Queensland and $400 million on an energy coal project in NSW.

BHP shares initially rose 0.5 per cent on the news, but slipped in morning trade and were recently down 0.5 per cent at $44.51. Rival Rio Tinto rose 0.6 per cent.

The company said it and its partners would spend $US7.4 billion to develop the Jimblebar mine and rail links, to further develop Port Hedland and to build ore blending facilities, taking the annual iron ore capacity to 220 million tonnes.

BHP Billiton’s president of iron ore, Ian Ashby, said the intention was to develop the port capacity so that the company could fill its 240 million tonne per annum allocation in Port Hedland’s inner harbour.

‘‘We have intentionally overbuilt the ore handling facilities at Jimblebar and expect to incrementally grow mine production to ensure that our port and rail systems are operated at full capacity during this debottlenecking program,’’ he said in a statement.

BHP Billiton said first production from the Jimblebar mine was expected in early calendar 2014.

A total of $US3.4 billion will be spent on the Jimblebar mine, including buying rolling stock, with initial capacity of 35 million tonnes per annum, with embedded options to expand to 55 mtpa.

A further $US2.3 billion, including BHP Billiton’s share of $US1.9 billion, will be spent on Port Hedland, adding two berths and shiploaders and other works.BHP Billiton and its partners will spend $US1.7 billion on the port blending facilities and rail yards.

The Melbourne-based company also approved spending $US2.5 billion ($A2.47 billion) on three coking coal projects in the Bowen Basin in central Queensland. BHP’s share is half of the total $US5 billion to be spent on the expansion.

BHP Billiton metallurgical coal president Hubie van Dalsen said the company had a deep pipeline of expansion projects to develop its large reserves of metallurgical coal.

‘‘Our strategy is to rapidly progress development of these projects to capture the increasing demand we see for hard coking coal,’’ he said.

BHP Billiton said the projects would add 4.9 million tonnes of annual mine capacity to the Daunia operation and a new mining area at Broadmeadow.

In a third statement, BHP Billiton said it would spend $US400 million to expand Hunter Valley Energy Coal in NSW, to increase coal production by four million tonnes per annum to about 24 million tonnes per annum.

‘‘The emergence of demand for coal in the key growth markets allows us to get product to market quickly, ahead of further coal preparation plant expansions,’’ BHP Billiton Energy Coal President Jimmy Wilson said.

BHP Billiton is cashed up after reporting a new Australian record first half net profit in February of $US10.524 billion ($A10.41 billion) for the six months to December 31.

BHP Billiton stocks rose 51 cents to close at $44.71 on the ASX yesterday.

Sourced & published by Henry Sapiecha

WA’s mining boom is raking in the money for the state government.

Western Australia’s burgeoning mining royalties have continued to strengthen the state’s economy, with the government sector recording a $1.1 billion surplus for the first half of the financial year.

The operating surplus of $1.1 billion for the first six months of 2010/11 is a huge turnaround from the $259 million operating deficit for the first half of 2009/10.

Treasurer Christian Porter said the WA Quarterly Financial Results report showed the state reaped nearly $12.3 billion worth of revenue for the first half of 2010/11.

That is up by $2.1 billion on the same period last financial year.

“The main driver of this increase was a rise of $964 million in mining royalties, partly due to the state government’s successful negotiations to remove the royalty concession on iron ore production,” Mr Porter said.

Increased taxes added an extra $509 million to revenue as well as the one-off payment of $350 million by BHP Billiton and Rio Tinto resulting from changes to the State Agreement Acts.

The report revealed that the property and retail sectors remained subdued in the first half of 2010/11, resulting in lower stamp and other transfer duties, which were down $89 million.

General government sector expenditure was also up $761 million, blowing out by 7.3 per cent because of higher grants spending and the government’s one-off payroll tax rebate.

However, Mr Porter said the December result showed that public sector salaries grew by only 4.9 per cent and reflected the government’s effort to rein in spending.

Public sector net debt also rose by $446 million in the first six months of 2010/11, in line with planned spending on major infrastructure.

Spending on public infrastructure was up $338 million from the same period in 2009/10 due to construction on the Southern Seawater desalination plant, Fiona Stanley Hospital and other health infrastructure projects.

Sourced & published by Henry Sapiecha

All punters are predicting that the copper market will be in (supply) deficit in 2011. So for the time being at least, the much used metal is what you might call scarce, giving it a ”store of value” hue usually reserved for gold.

It’s no wonder then that the price of the stuff marched to record levels earlier this month, to $US4.63 a pound. It’s backed off a little since, settling back at $US4.47 a pound on Friday.

So there has never been a better time to be a copper producer than now. As luck would have it, ASX-listed Tiger Resources (ASX: TGS) is but a couple of months off becoming a producer from its Kipoi project in the Democratic Republic of Congo (DRC).

Now the DRC is not everyone’s first choice as an investment destination. But it is fast recapturing its status as one of the major copper producers and unlike much of Africa, it has got a fair dinkum democratically elected government.

Kipoi’s economics are also proving hard for investors to ignore in the lead-up to its first production in April, and this has been reflected in the run-up in Tiger’s share price, from 25¢ five months ago, to 53.5¢ on Friday.

Tiger has not updated the economic indicators on Kipoi since November. Back then it said that after capital expenditure of $31.5 million and assuming a copper price of $US3.50 a pound, Kipoi would pay back its capital inside about four months.

With copper at near-on $US4.50 a pound, payback will be shorter still. All that means is that over the expected three-year life of ”Stage 1” mining at Kipoi (three years at 35,000 tonnes of contained copper annually from material grading a magical 7 per cent copper), Tiger is going to pull in one big chunk of cash.

The extra  free cash will support the push for a much longer mining life from a solvent extraction and electro-winning (SX-EW) operation that brings into play the rest of the (lower grade) resource that Tiger is outlining at Kipoi and its Sase prospect.

Tiger’s story in the DRC is very similar to that of Anvil Mining (ASX: AVM), now a $1 billion company. Anvil has been a DRC copper producer since 2002 and is now spending $US400 million on its Kinsevere project, a 60,000-tonne-a-year SX-EW operation.

Interesting thing is that both companies have commodities trader Trafigura as their major shareholder. In Tiger, Trafigura holds 28 per cent (fully diluted) and in Anvil, it sits at 35 per cent.

There have been whispers that it would make sense to bring Tiger and Anvil together. No action to report on that front just yet, but it could be a space worth watching as Tiger gets into production and as Anvil beds down the Kinsevere projects.

VICTORIA’S Ballarat-Bendigo gold corridor has yielded more than 33 million ounces of gold over time, making it one of the most prolific & consistant gold regions anywhere in the world.

But all that is old news, very old. To recapture its status as the place to be for gold as it was in gold rush days of yesteryear, the ”corridor” needs a modern-day discovery to fire up the imagination of investors. Only problem is, much of the corridor’s prospective rocks are hidden beneath thick sequences of Murray Basin sediments.

So there has been little, if any, in the way of new deposits being uncovered since Australia’s third gold production boom got going in the early 1980s. But there have been some promising finds, including the Lockington find by South Africa’s Gold Fields Ltd on the northern end of the Ballarat-Bendigo corridor.

The experts will tell you that it is the first significant discovery of gold mineralisation under the thick Murray Basin sediments. Significant all right, but not yet in the category of a discovery to maintain Gold Fields’ full attention after spending some $6 million on exploration.

That task is being handed to a new $10 million gold float called Timpetra Resources, using the model that Gold Fields has used previously of striking a strategic alliance with a focused junior explorer to pick up the running, while keeping its foot on the potential upside.

Timpetra is picking up Lockington in return for shares, enough to give Gold Fields a 22 per cent interest on Timpetra listing.

It has also an anti-dilution right under which it can maintain its cornerstone shareholding.

On listing, Timpetra will have 68.75 million shares on issue.

Of that, new shares from the float will account for an impressive 72.8 per cent. That’s compared with the usual 50 per cent that goes to the public after vendors and promoters have their fill from a float.

At the float price of 20¢ a share, Timpetra will have a market cap of $13.75 million.

Its board is filled by well-known mining types, including Tony Grey as chairman.

Grey is the Canadian lawyer who arrived in Australia in 1969 and got bitten by the mining bug after watching the craziness of the Poseidon nickel boom.

He went on to make his own fame and fortune when a company he founded, Pancontinental Mining, found one of the world’s biggest uranium deposits, Jabiluka.

It’s now owned by Rio Tinto’s listed uranium subsidiary Energy Resources of Australia.

Lockington lies some 50 kilometres north of Northgate’s Fosterville gold mine, currently Victoria’s biggest mine, with annual production of more than 100,000 ounces from a gold endowment of some 2.5 million ounces.

Mineralisation discovered by Gold Fields at Lockington is of the fine-grained type found at Fosterville, rather than the coarse (nuggety) stuff that makes grade estimation and reserve definition so difficult at places like Bendigo and Ballarat.

Work by Gold Fields since 2003 at the project has outlined eight separate mineralised trends, with strike lengths of up to 10 kilometres. Best drill results included 7.7 metres grading 4.2 grams of gold a tonne from a 166 metres depth and 4.1 metres grading 6.3 gram/tonne from 231 metres.

Timpetra’s future drilling will be attempting to zone in on the fault system where the gold activity lies. It could start in April. The share offer is fully underwritten by Ord Minnett.

Sourced & published by Henry Sapiecha

Mining giant Rio Tinto has announced that it will invest more than $US1 billion ($988.88 million) at the group’s existing iron ore operations in Australia and Canada.

“Rio Tinto has approved a $US933 million ($A922.62 million) investment to extend the life of the Marandoo iron ore mine by 16 years to 2030,” the London-based resources giant said in a statement.

The Marandoo mine is part of the Anglo-Australian miner’s large operations in Western Australia’s Pilbara region.

At the same time, Rio Tinto said it has agreed to invest more cash in its Canadian iron ore joint venture.

“Rio Tinto has given the go-ahead to a further $US277 million ($273.92 million) investment (Rio Tinto share $US163 million ($161.19 million)) in the next phase of a project that will ultimately raise the Iron Ore Company of Canada’s concentrate production capacity by 40 per cent to 26 million tonnes per year.”

The Iron Ore Company of Canada is the nation’s biggest iron ore producer and is 58.7-per cent owned by Rio Tinto.

AFP

Sourced & published by Henry Sapiecha