Tuesday, April 27, 2010

What do you need for a successful mine? Los Azules, TNR.v, CZX.v, MAI.to, AND.to

With a grass roots projects developing into a resource, and advancing to pre-feasibility reports and eventual production, it's a good idea to understand what's involved in a mining project.

1. The pit (ore body open pit)
(see left image)
Congrats, you found high grade % copper, now what?

The ideal scenario involves digging a humongous hole in the ground, via a systematic earth removal process such that you create the leftover open pit as shown on the left.

2. Transport the Ore (heavy rocks)

Ore, unprocessed, is worth very little. Naturally, you'd have your precious gold or copper mixed with ordinary rocks and other byproducts.

The idea here is to minimize the distance you have to transport these to your processing belt or factory, so you can start crushing and filtering out the valuable bits!

As you can see driving heavy duty 500 tonne trucks up these large pits can be quite costly on gas!

3. Start refining your ore

Once you have the ore at your factory it's time to fire up the conveyor belt. Crushing, refining, leaching, are all typical ways to separate your high grade minerals from the low-grade rocks. Do this well enough and you should be able to retain 90%+ of your estimated resource from raw ore - that is to say you don't waste too much in the way of getting rid of minerals within the ore during the separation process!

From there it goes through several steps of refinement until you reach a sellable end product for your customers - usually in forms of molly, raw mineral products, and in some cases finished pellets for melting into final products.


4. Disposal of waste and tailings

Wait, you think the government and environmental agencies will let you leave a big hole with waste rocks lying around after you extract the valuable minerals? Not quite!

Tailings (also known as slimes, tailings pile, tails, leach residue, or slickens[1]) are the materials left over[2] after the process of separating the valuable fraction from the worthless fraction (gangue) of an ore.

To properly dispose of these tailings (often still riddled with chemicals from acid leaching and chemical separation processes), significant efforts are put in to make sure environmental impacts are minimized.
Some would argue, tailings and waste process facilities are the single biggest economic barriers to a mine being successful.

Further, you'd want to have a site nearby (ideally downhill) where you can, for a low cost, get rid of your tailings and pile them up for isolation processing later.


Hopefully that's helpful!

Back to Los Azules, it sure makes you wonder how Minera Andes (MAI.TO) will get their pre-feasibility and mine started without ownership of Escorpio IV??

Last we checked, junior miner TNR Gold Corp (TNR.V) controls that project 100%. Given how important tailings pond facility and waste disposals are to a mine, you'd think Minera Andes would want to work with TNR?


From Minera Andes's very own Prelimenary Assessment, outlining their mine plan on Los Azules, we have pulled together charts from different pages.
I think from looking at images (from Minera Andes) themselves, that Escorpio IV is clearly not in their possession...and that their engineers are optimized the mine plan so that both the tailing pond and waste management facilities lie right on Escorpio IV.

$5 million to buy 25% of a 11.2 billion pound copper mine? Yes please! TNR.v, MAI.to

One of our perennial favorites here at Mining 101 is TNR Gold, the little junior explorer that could, has successfully found $5 million necessary to back-in and buy their way back into a project they held originally - the Los Azules.

We think they have a valid claim - which means TNR's tiny market capitalization of under $35 million is grossly undervalued.


Compania Minera Solitario Argentina S.A., a wholly owned subsidiary of TNR Gold Corp., has served notice to Minera Andes Inc., exercising its back-in right for 25 per cent of certain of the properties constituting the Los Azules project in Argentina. TNR also entered into a standby credit facility in the aggregate principal amount of $5-million for a term of one year. The proceeds from the facility have been placed in a trust account to be released on closing of the exercise of the back-in right.

TNR has issued 2,272,727 common shares to the lender as partial consideration for the facility, and has agreed to issue another $500,000 of common shares with a deemed price equal to the 10-day volume-weighted-average trading price as of the day prior to the court's decision in certain circumstances where TNR is successful in its litigation, with respect to the back-in right. In addition, TNR has paid a corporate finance fee of $305,000.

The right of TNR and Solitario to exercise the back-in right for the Los Azules project is subject to a legal action commenced by Minera Andes Inc., Minera Andes S.A., Los Azules Mining Inc. and Andes Corporacion Minera S.A. (the MAI group) against TNR and Solitaro, in which the MAI group is disputing Solitario's ability to waive the production of a feasibility study and issue a back-in notice at this time. The action seeks declaratory relief that any back-in notice is invalid, void or of no force and effect, and advances a claim for costs. TNR is also in a legal dispute with MIM Argentina Exploraciones S.A. (MIM), a subsidiary of Xstrata PLC, over the language of the back-in clause of the exploration and option agreement entered into between Solitario and MIM. In the action, TNR is also seeking confirmation of its ownership in the Escorpio IV property, which is located adjacent to the Los Azules project, and a declaration that the Escorpio IV property is excluded from the exploration and option agreement. A court date has been set for the fall of 2010.

Wednesday, April 7, 2010

25% on 11 billion lbs of Copper? Yes Please! TNR.v, MAI.to

April Fools (April 1st) is a day typically filled with jokes and pranks played on unsuspecting coworkers and colleagues.

A story we have been following from way back, Los Azules (11 billion lbs copper), has taken an interesting turn last week with Rob McEwan seemingly denying TNR Gold their back-in deadline of April 23, 2010.

2010-04-01 14:20 ET - News Release

Mr. Nils Engelstad reports


Minera Andes Inc. has filed a statement of claim in the Supreme Court of British Columbia against TNR Gold Corp. and its subsidiary, Solitario Argentina S.A.

In recent conversations and correspondence with Minera Andes, TNR has asserted that it has an immediate right to back into the Los Azules project.

Minera Andes rejects the ability of TNR to back into any part of the Los Azules project.

By way of background, the project was, until the fall of 2009, subject to an option agreement between Xstrata Copper and Minera Andes. In the fall of 2009, Xstrata elected not to exercise its option to back into the project and subsequently transferred all properties then held by Xstrata (and forming part of the project) to Minera Andes. Minera Andes now owns 100 per cent of the project.

Certain of the Los Azules properties formerly held by Xstrata and transferred to Minera Andes following the termination of the option agreement however remain subject to an underlying option agreement between Xstrata and TNR, whereby TNR has the right to back into up to 25 per cent of the subject properties, exercisable by TNR upon the satisfaction of certain conditions within 36 months of Xstrata exercising its option, including the completion of a feasibility study. It is important to note that the subject properties comprise the northern half of the project and do not represent 25 per cent of the Los Azules deposit by area or resources identified.

The 36-month period following the exercise of the option expires on or about April 23, 2010, and no feasibility study has been completed on the project.

The TNR agreement is the subject of a legal dispute between Xstrata and TNR, commenced by TNR against Xstrata in the Supreme Court of British Columbia. The dispute surrounds the validity of the 36-month time limit described above. In particular, TNR claims the 36-month time frame, although clearly stated in the TNR agreement, was added by Xstrata, overlooked by TNR (and its lawyers) when signed, not discovered for a number of years and in any event not the commercial intention of the parties.

According to communications between Minera and TNR, TNR seeks to waive the condition that a feasibility study be completed on the project prior to TNR being entitled to exercise its back-in right. It is Minera's view that TNR's back-in right is dependent upon the production of a feasibility study which has never been produced. Further, Minera Andes disputes the legal ability to waive this condition.

Although not party to the litigation between TNR and Xstrata, Minera Andes is seeking a declaration that any back-in notice delivered by TNR prior to April 23, 2010, will be null, void and of no force and effect.

As an additional point of clarification, Minera Andes wishes to confirm that notwithstanding references by TNR to its Los Azules project, that the project remains 100 per cent owned by Minera Andes and Minera Andes has no agreement or working relationship with TNR.

The company looks forward to informing its shareholders of TNR's response.

Minera Andes reports full year results

In other news, for the year ended Dec. 31, 2009, net income in accordance with Canadian GAAP (generally accepted accounting principles) was $4.1-million (two cents per share basic and diluted) compared with a net loss of $4.0-million (two cents per share) for the year ended Dec. 31, 2008. This increase was primarily due to an increase in the income recorded on the company's 49-per-cent-owned investment in Minera Santa Cruz SA, which owns the San Jose mine, from $4.7-million in 2008 to $9.3-million in 2009. In addition, the company recorded an income tax recovery of $1.6-million and total expenses in 2009 declined by $1.8-million compared with 2008.

For full details, please refer to the company's audited annual financial statements and management's discussion and analysis for 2009 filed on SEDAR and its Form 40-F filed on EDGAR.

Naturally, TNR Gold Corp had to respond the same day to show this is pretty serious business.

2010-04-01 20:17 ET - News Release

Mr. Gary Schellenberg reports


TNR Gold Corp. has informed Minera Andes Inc. that it proposes to waive the production of a feasibility study and exercise its right to acquire 25 per cent of the northern half of the properties for Minera Andes's Los Azules project. Minera Andes is contesting TNR's legal right to waive the production of a feasibility study and exercise its option, and has filed a statement of claim in the British Columbia Supreme Court seeking a declaration nullifying any back-in notice delivered by TNR. TNR will be filing a statement of defence and will vigorously oppose any such declaration.

The Los Azules project is an advanced exploration project currently reporting a National Instrument 43-101-compliant inferred resource. TNR has previously announced in Stockwatch that Minera Andes has commenced a diamond drill program of approximately 8,800 metres at the Los Azules project. Please refer to Minera Andes's news release in Stockwatch dated Jan. 12, 2010, for further details on the exploration program, and to its news release dated April 1, 2010, for details of its position with respect to TNR's exercise of its back-in right.

The terms of TNR's back-in right are currently the subject of a legal dispute with Xstrata. In that litigation, TNR is also seeking confirmation of its ownership of the Escorpio IV property, which is located adjacent to the Los Azules project, and a declaration that the Escorpio IV property is excluded from the exploration and option agreement.

Alot of eyes will be watching with anticipation in about 2 weeks time when TNR is expected to back-in on 25% of the highest grading portions of Los Azules. Should be very interesting, I would pick up some TNR shares on dips as we expect strong performance from TNR if/when they are able to finance the back in.

Keep in mind this project has a NPV of over $600 million dollars - even a conservative 10% of this in cash comes to $60 million - easily double the current market capitalization of TNR!