Resouces wrap: Stocks to start higher

BETTER than expected jobs data from the US on Friday and a glimmer of optimism that Greece is closer to agreeing to a bailout deal should signal a good start for the local stock market.

News from the resources industry last week included BG Group deciding to exercise options to buy a stake in Drillsearch Energy.

BG subsidiary QGC will take up the option to subscribe to just over 31.5 million Drillsearch shares at A62c per share, raising $19.6 million to finance Drillsearch’s shale gas and wet gas exploration program.

Once the shares are issued, expected on February 15, QGC will have a 9.4% stake in the Cooper basin producer.

“The exercise of these options further supports our belief in the prospectivity of our shale gas acreage at ATP 940P and also reaffirms QGC’s commitment to Drillsearch and its activities in the Cooper Basin,” Drillsearch managing director Brad Lingo said.

Midweek, UK investors snapped up a 9.4% stake in Cape Lambert Resources for $36.4 million in a deal facilitated by the company.

The 65 million shares were sold to a small number of prominent UK institutions as part of an on-market transaction at 56c per share. The shares were previously held by vendors of the Pinnacle Group assets acquired by Cape Lambert in September last year in a scrip deal.

Also in mining, December was a stellar quarter for gold producer Kingsgate Consolidated with production jumping 62% and costs dropping 25%. Group gold production totalled 53,320 ounces of gold at cash costs of $US608 per ounce.

Output at Chatree in Thailand jumped 80% to 26,035oz from 14,428oz in the September quarter, while costs were steady at $603/oz. Grade was 0.82 grams per tonne, as monsoonal rainfall restricted mining to lower grade areas. The mine’s expansion is in optimisation mode after first gold was poured at the end of October.

Finally, Excelsior Gold is investigating underground and open pit options for its Zoroastrian deposit and has widened the feasibility study for its potential Kalgoorlie North project development.

It follows a jump in resources at Zoroastrian to 926,000 tonnes grading 4.4gpt gold for a contained 129,600oz based on historical drilling data and new results from reverse circulation and diamond drilling programs carried out last year. Broken down, this includes higher grade numbers of 454,000t at 6.9gpt gold for 101,000oz and near-surface resources (to 80m depth) of 472,000t at 1.9gpt gold for 28,600oz.

The company plans to assess the viability of establishing an exploration decline at the southern end of the Zoroastrian pit to evaluate the underground potential of the vein system in the immediate vicinity of the pit.