MGO 0.00% 14.0¢ marengo mining limited

latest article from minesite

  1. 165 Posts.
    Exciting article especially the quote "To put Yandera into perspective, output at that rate (100,000 tonnes of copper) would make it one of the world’s biggest copper mines, not just one of the biggest in Australia or PNG.

    Still extremely undervalued - bring on the rest of the week.

    Marengo Mining Gets Set To Unveil Its Yandera Feasibility


    By Our Man In Oz



    Les Emery is the first admit that he has got a tiger by the tail. But, he’s also in no doubt that he can tame the tiger which is the potentially giant Yandera copper project in Papua New Guinea. If all goes to plan, Marengo Mining, the small Australian-based company which Emery runs, will convert Yandera from a concept in the remote and rugged highlands of PNG into a mine producing 100,000 tonnes of copper a year. To put Yandera into perspective, output at that rate would make it one of the world’s biggest copper mines, not just one of the biggest in Australia or PNG. In about a week, Marengo will be saying a lot more about its plans for Yandera with the release of a keenly-awaited pre-feasibility study.
    When Minesite caught up with Emery in his Perth office earlier this week he was quietly confident, but also very frank in discussing that challenge which lies ahead. “We know it’s a big project,” he said. “And we know what people mean they say it’s too big for Marengo. But our answer to that is that it might be too big for the Marengo you see today, but not too big for the one we’re growing.”

    Investors, who had been cautious in their treatment of Marengo over the past year are slowly returning to the stock. Between late April and late May Marengo was a star, more than doubling in price from A26 cents on April 26 to A52.5 cents on May 23. Since hitting that 12-month price high Marengo has eased back but at A40 cents the company is only capitalised at an unchallenging A$50 million.

    The next test, will come in the third week of July, the time nominated by Emery as the release date of the pre-feasibility study. With the big event so close he was naturally hesitant to give too much away to Minesite. However, he did say that all of the numbers were in, and the job at hand now was “writing up” the document. “The numbers look good,” he said. “And we’ve been pretty rigorous with our copper and molybdenum price assumptions. Copper has been factored in at US$1.50 a pounds (versus the current price of around US$3.60). We’ve made a similar cut in the price of moly which is shaping as a very valuable by-product for the development.”

    Questions such as the likely capital cost are taken on notice by Emery, but it’s unlikely that a mine based on a Joint Ore Reserves Committee (JORC) resource of a whopping 660 million tonnes assaying 0.48 per cent of copper equivalent (copper and moly) is going to be developed for less than US$1 billion. To hit the production target of 100,000 tonnes of copper a year implies a massive mining and processing operation of low-grade material. All that Emery is prepared to say ahead of the release of the study is that Marengo has been busy recruiting staff, and that the earliest likely production start-up is 2011, or 2012. “It will be a big development, but we are talking about a project which will have a start-up life of at least 10 years, and more than likely last 20-to-30 years,” he said.

    While the numbers are crunched in Emery’s office work at site is accelerating, and plans laid for future fund raising, most probably in North America rather than London – continuing a trend by Australian miners to by-pass the U.K. “We’ve got two rigs on site now, a third on the way, and perhaps one more to come,” he said. “The results we’re obtaining continue to justify our enthusiasm for the project.” Just how big Yandera is already (and remember it’s virtually certain to continue growing) is shown in the 660 million tonnes of 0.48 per cent material but, more importantly, in the fact that when boiled down all that dirt contains 2.9 million tonnes, or 6.3 billion pounds, of copper – a 78 per cent boost on the previous resource estimate.

    As no-one doubts that Yandera contains a big pile of copper the next step for Marengo will be funding, and that almost certainly means Emery will be spending much of the rest of 2007 in Canada and the U.S. “The level of interest in London has waned,” he said. “There is a small group of active institutional investors, and you can raise the money you need in London, but you really don’t create a new market for the stock. Certainly, there’s no retail component, whereas in Canada you’ve got the best of both worlds. Very deep institutional pockets and a broad retail market.”

    Emery’s view is that London hasn’t gone cold on mining, just going through a cool patch. “They’ve had few problems with questionable companies working in Eastern Europe and other difficult places,” he said. “The other problem is that there really aren’t many analysts following the sector. You can probably count the number of mining analysts in London on one hand, whereas in Toronto alone I’m told there are 65 resource analysts, which is more than the whole of Australia.”
 
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