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INTERNATIONAL COAL HOLDINGS LIMITED

ASX: ICL

The data on Australian Shares.com is intended as a guide only and is compiled from information in the public domain. Data on this website should not be used to make an investment or trading decision.

Description

International Coal Holdings Ltd was formed through the de-merger of the metal assets from diversified resource company. The company is a mining and exploration company focussed on copper and gold in Australia and Asia.

ICL controls and operates the Tritton Copper Mine in NSW and the Mt Muro Gold mine in Indonesia and has an exciting exploration portfolio focussing on projects in NSW (through Goldminco) and South Australia. Straits also owns Magontec, a European based specialty metals business.

Tritton Copper Mine

The Tritton copper mine, located near Nyngan in NSW is 100% owned and operated by ICL. Mining within the Tritton lease areas first commenced in 1992 at the Murrawombie open pit as part of the Girilambone copper mine and involved the mining of several copper oxide ore deposits by open pit mining methods and SX/EW processing. Open pit mining at Girilambone terminated in 1999, although copper production continued for two more years.

The 12 months to June 2010 was a period of significant consolidation and preparation for the future of Tritton Mines. The primary objective has been the prepare the operation to be processing at least 1.4Mtpa and produce a minimum 25,000tonnes of copper metal annually. This strategy has included:

* preparing the North East Mine to recommence production in July 2010 at a sustainable 300,000tpa. Mine development and capitalisation has been completed and the operation is on track to produce 25,000tpm from the 1st July 2010.
* changing to a transverse stoping mining method at Tritton Mine to more efficiently produce from an ore body that is flattening in depth. This mining method will delivery significant improvements in productivity and cost-effectiveness.
* introducing pastefill to increase the overall recovery of ore from approximately 55% to 94% which significantly increases reserves and extends the mine life. Construction of the pastefill plant has commenced and is expected to be commissioned and operational by December 2010.

Total production from Tritton in the 12 months to June 2010 was 21,057 tonnes of copper. ICL considers the region as having significant geological potential, and continues to be positive concerning the long term growth potential of Tritton operations.

There has been a strong focus on near-mine exploration to prove up additional copper resources. Utilising deep looking electromagnetic surveys and geophysical techniques, a number of significant new targets have been identified. An intensive drilling programme has been initiated to evaluate those targets. This exploration programme is ongoing.

Mt Munro Gold Mine

The Mt Muro Gold mine is located in the northern part of the Province of Central Kalimantan, Indonesia. Owned by PT Indo Muro Kencana, a 100% subsidiary of ICL Metals Limited, the mine lies 300km due west of Balikpapan and 40’ south of the Equator. The mine is operated under a third generation Contract of Work (“CoW”) which covers some 47,940ha of the central Kalimantan magmatic arc which hosts the Kelian, Mt Muro and Mirah gold deposits among others.

Mt Muro produced 45,521 ounces of gold and 143,496 ounces of silver for the year ended June 2010, treating 615,544 tonnes at 2.55 g/tonne Au and 12.4 g/tonne Ag. The operational performance of Mt Muro for the September 2010 quarter was down on the prior quarter, producing 10,563 oz Ag relative to 12,720 oz Au and 21,300 oz Ag in the June 2010 quarter.

This reduction was primarily due to an unexpected suspension of operations at the Serujan open pit during the quarter due to landowner access issues. Following extended negotiations with these groups and local government, operations recommenced in August within a reduced mining footprint. The delay at Serujan was compounded by exceptionally heavy unseasonal rainfall which affected significant parts of East Kalimantan in July and early August.

The Tasat-Rabu open pit continued production through the period, however this mine is due to be completed during October 2010. Following the completion of this mine, some 22 kilometres from the processing plant, substantial demobilising of the mining and trucking fleet associated with this operation will occur, along with the demobilising of the chain ferry operation which transfers haul trucks over the Barito River.

Decline development at Soan continued during the month, however, advancement was hampered by worse than expected geotechnical conditions. That decline intersected an intense shear zone which required the repositioning of the decline. A decision was taken in October to suspend decline operations while further geotechnical investigations are undertaken.

Although the delays were largely outside control, the impact of the delay has been to forestall the opportunity to bring on line new ore sources within time to counteract the increase in site cash costs resulting from the declining production profile of the existing operations as the Tasat-Rabu open pit reaches the end of its planned life.

To address the potential for sustained higher cash costs across a smaller production profile, the capital investment programme to develop the Soan underground mine has been halted and the Mine business plan has been modified to concentrate on the development of the new ore sources from the Serujan open pit and a plan initiated to significantly reduce cash site costs. The revised plan is to stabilise costs around the Serujan development and production with the result that gold production is expected to contract further in the December 2010 quarter, and then gradually ramp up to a steady state production level of approximately 45,000 ounces of gold equivalent per annum by the end of the 2011 financial year. Towards the end of that period the business case to recommence the development of the Soan underground mine will be reconsidered. This will also allow a restaging of mine development capital with an added focus on the cut back at the Serujan open pit.

The reduced production forecast for Mt Muro in FY 2011 means that Mt Muro will have cash outflow after investment for the pre-strip at Serujan and other Capital of approximately A$22 million for the remainder of FY 2011. The cost reduction programme commenced at Mt Muro is focussed particularly on the removal of surplus equipment, re-positioning of major contracts and an increase in the productivity of the remaining fleet. This cost reduction programme will continue throughout the December 2010 quarter. Due to the lower production, cash costs are expected to remain high until the June 2011 quarter.

Mt Muro retains a strategic presence in one of the most prospective gold magmatic arcs in Asia, with a significant installed capital base and remains a resource with significant upside exploration potential. Recent drilling under the Serujan and Batman pits shows promise of both extending the mine life and meeting ICL's expectation of ramping progressively to 80,000 ounces equivalent per year and beyond.

Hillgrove Antimony/Gold Mine

The Hillgrove Antimony/Gold Mine, located near Armidale, New South Wales, was purchased by ICL in March 2004. Since that time ICL has been pursuing an aggressive development plan, encompassing additional resource definition, metallurgical testwork and design and mine planning, which culminated in June 2006 with the Board giving approval to develop Stage 1 of the project.

In 2007 ICL commenced construction of a demonstration process plant to produce antimony metal, gold billon and tungsten concentrate as a by-product. The process flow sheet comprised gravity gold recovery, flash flotation to a bulk concentrate, sequential leaching of gold and antimony to solution and conventional electrowinning of both gold and antinomy to metal.

Between September 2008 and August 2009 the plant produced saleable antimony to LME specifications, however the quantities produced were significantly below design levels due to a number of issues in the processing plant. Whilst some rectifications to the plant were made, issues relating to effective waster water treatment, the flotation configuration and the interface between leaching and electrowinning continued. As a result in August 2009 it was decided to suspend operations to investigate the technical issues, the cost, and the time required to implement the required plant modifications to achieve commercially viable production levels.

Technical evaluations and preliminary engineering have now been completed to confirm an optimum processing route for Hillgrove operations going forward. These see Hillgrove successfully treating on site water stores and producing antimony and gold concentrates for sale. The antimony price is currently very strong and initial feedback from the market is very positive in terms of securing high payment terms for these concentrates.

Exploration has identified extensions of near mine antimony and gold resources, as well as generating many prospective targets throughout the field. This has been combined into a profitable mine plan for a restarted operation. ICL are discussing restart options with potential investors as we consider whether the size of the project warrants future participation.

Magontec

Magontec is a leading global supplier of magnesium alloys offering a wide spectrum of Mg alloys for the automotive industry, including recycling with highly efficient plants in Europe and China. Magontec offers, as well, globally innovative cathodic corrosion protection solutions for the water heater industry with Mg- and impressed current anodes. In both areas Magontec helps customers to create safe, future oriented and competitive products and services.

Magontec was formed in 1953 with its head office in Bottrop, Germany. Magontec operates three plants, one in Bottrop Germany and two in Xian and Suzhou, China with a total magnesium alloy annual capacity of 36,000 tonnes.

The Mg alloy market has recovered partly since the second half of 2009 but is still 30-40% behind the volumes in 2007 and 2008. Efficiency improvements and cost cutting programs were implemented and have shown positive effects on the results. Magontec’s metal sales volumes increased 2009/2010 by 90% compared to the same period 2008/2009. The global recovery in the automotive industry is ongoing but with different speed in the regions.

Magontec has set up a five year strategic plan with growth potentials in all markets. The speed of future performance improvements will be highly contingent on general economic development globally; particular from the automotive sector, but as well from the stabilization of the Euro. At the date of this report there were signs of a better recovery of the automotive market in the US, whereas the development of the economy in Europe is somewhat uncertain. China is expected to see good growth.

Goldminco

ICL has invested in Goldminco Corporation ("Goldminco", TSX Venture Exchange, share code GCP) and currently holds approximately 71% of the company. Goldminco is a Canadian listed exploration company and holds one of the most prospective exploration packages in Eastern Australia, within the Lachlan Fold Belt of New South Wales.

The Lachlan Fold Belt hosts major porphyry and epithermal type gold and copper-gold deposits including Cadia, Ridgeway, North Parkes and Cowal. Goldminco hold properties in important mineralised centres in NSW, namely the Blayney and Temora projects. The target minerals are gold and porphyry copper-gold.

An initial resource estimate was announced to the Market by Goldminco on the 2 July 2008 for the Temora Project resources. The Temora Project resource at a 0.25% Cu equivalent cut off shows an indicated resource of 21.1 Mt at 0.35% Cu, 0.5 g/t Au & 34 ppm Mo and inferred resources of 121.1 Mt at 0.32% Cu, 0.25 g/t Au & 31 ppm Mo.

All resources are within a 30 kilometre radius of each other and are close to surface with existing road, rail, water and power infrastructure nearby.

During 2010 Goldminco continued to aggressively explore on the Temora and Blayney projects. Drilling has continued to extend the known mineralisation at the Temora project and geophysical and geochemical studies have highlighted a number of drill targets in the Blayney and Tick Hill projects.

Drilling at Yiddah has confirmed the up dip continuity of mineralisation from pervious drilling and extended the strike length of known mineralisation (exceeding 0.2% copper) to at least 1.7km. A number of targets have been identified for follow up drilling in late 2010. In late 2010 Goldminco will recalculate the resources, which will be used for a development scoping study and to assist in targeting next year's exploration at this project.

At Goldminco's Blayney project area in NSW, 15kms east of Cadia, a strong IP chargeability anomaly has been identified which is associated with a resistivity high at the Bluebird prospect. An IP survey was completed targeting structurally controlled copper-gold mineralised systems below Tertiary basalt cover, on the eastern margin of the tenement area and close to the Newmont/Alkane McPhillamy's discover. The results indicate two strong chargeability anomalies hosted within the Ordovician Blayney Volcanics. Planning is underway to drill test these anomalies later in 2010. The Tick Hill project is located within the southern portion of the Mt Isa inlier in NW Queensland, Australia. The tenements are highly prospective for a high grade Tick Hill style gold mineralisation and high grade Eloise style copper-gold deposits. In 2009 Goldminco identified a 2km x 300m copper-gold-cobalt soil geochemical anomaly at the Spring Creek prospect which remains open to the south. It is planned to test the Spring Creek soil anomaly with drilling in 2010.

Exploration

Kokomo Scandium
Kokomo Scandium is a joint venture between ICL and Nornico Pty Ltd, a wholly owned subsidiary of Metallica Minerals Ltd. ICL had the option to earn a 10 per cent interest in the project for every $200,000 expended and in mid 2008 elected to cap the interest at 20 percent.

Yandan Project, Qld
ICL is the 100 per cent holder of the tenements comprising the Yandan Project. ICL has joint ventured its interest in the Yandan Project to Drummond Gold (ASX listed gold producer). Drummond can earn a 51% stake in the Yandan gold project in Queensland by spending $A3 million over a period of up to three years, at which time either party may extend or dilute its interest in the project.

Torrens Project - IOCG, SA
ICL are exploring for iron-oxide-copper-gold (IOCG) systems in the highly prospective Stuart Shelf region of South Australia. The Torrens Project is located near the eastern margin of the Gawler Craton region of the Stuart Shelf, within 50 kilometres of Tech Cominco's Carrapateena copper-gold discovery and 75 kilometres from BHP Billiton's Olympic Dam mine.

Mine For

copper, gold, antimony, silver, nickel, iron ore, cobalt, coal, magnesite, salt

Location of operation(s)

New South Wales, Queensland, Soth Australia, Western Australia, Madagascar, Indonesia

Address

Level 1, 35 Ventnor Avenue
WEST PERTH, WA, Australia

Phone

+61 8 9480 0500

Email

Website


Last Updated

17/02/2011

 

The data on Australian Shares.com is intended as a guide only and is provided purely as an indication of what information can be found through official announcements. Data on this website should not be used to make an investment or trading decision. All information should be carefully cross-checked against official sources for accuracy. The publisher (Intaanetto Pty Ltd) will not be held liable for any loss arising from the use of this website.