Newcrest Mining tunes into tungsten metal

IAN Smith has been showered with plaudits at reviving the largest Australian-owned gold miner, and rightly so.

It's not usual for Pure Speculation to concern itself with the big boys like Newcrest Mining (NCM) but, bear with us, we'll get back to the cheapie end.

Memories are fading as to the state of Newcrest before Smith took over (and, critically, the former banking boss Don Mercer moved in as chairman). Between 1996 and 2006, Newcrest went through a succession of MDs. John Quinn departed after a disastrous takeover tilt at Normandy Mining, Russell Barwick was out after clashing with the board. Tony Palmer, the MD immediately before Smith, also had disagreements with Mercer's predecessor, and then there was Gordon Galt, who left suddenly in 2000.

However, our interest in NCM at the moment is the O'Callaghans project, lying just south of the Telfer mine. A report from the British Geological Survey on tungsten is predicting that O'Callaghans could, in 2013, become the world's largest tungsten mine -- and here we remind you of the strategic nature of this metal with China still dominating the sector with an 81 per cent market share.

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The prices of ammonium paratungstate -- the form in which tungsten is traded -- rose about 80 per cent in the past year. The European Union has designated tungsten as one of 14 critical metals of which Europe must ensure it has reliable supplies.

Newcrest expects to produce 4800 tonnes of tungsten concentrate a year. That might not seem much, but world output in 2009 totalled just 62,000 tonnes. As the BGS points out, Newcrest's output would be twice the size of the Xianglushan mine in Jiangxi province. Apart from tungsten, O'Callaghans contains copper, zinc and lead.

The deposit is shaping up as another money-spinner for Newcrest, and the company has signed a preliminary agreement with Mitsubishi for the tungsten concentrate. However, this is not the biggest tungsten deposit owned by an Australian-listed company. O'Callaghans is listed in the British report as having 135,000 contained tonnes, but in fourth place in the world is Hemerdon in England, with 309,000 contained tonnes.

Hemerdon is owned by Wolf Minerals (WLF), which has received planning permission from Devon county to start mining at the tungsten-tin project. The definitive feasibility study will be ready in the present quarter.

Where are they?

FOR those who like a bit of the old where-are-they-now, some of Smith's predecessors in the Newcrest hot seat are still busy on the Australian resources scene.

Gordon Galt is the chairman of Discovery Metals (DML), which has a Botswana copper project, and on the board at Aquila Resources (AQA). Russell Barwick is chairman at multi-metal explorer Red Metal (RDM).

But the most interesting move is John Quinn's in taking the chairmanship at King Solomon Mines (KSO), which is one of the lesser-loved stocks, closing on Friday at 7.5c and hardly ever attracting attention -- which is why it is on our under-10c stock watch-list.

The lack of attention is surprising given that KSO is looking for copper, molybdenum and gold in Inner Mongolia; given all the frenzy over Mongolia stories, one would have thought that interest would have flowed over the border into China's section of the Gobi Desert. Quinn, before he was one of the driving forces that launched Newcrest, was involved in the discovery and development of big deposits for Newmont Mining.

It is still early days for KSO, but we were wondering if part of the reason for investor lack of interest may be due to the company being seen as a New Zealand outfit.

It is listed here, but its mailing address is the beach town of Paekakariki just north of Wellington. If it was based in Perth with the goal of finding large porphyry deposits in a mineral belt shared with Mongolia itself, would there be more excitement?

Exploration areas

CAMBODIA and Colombia are not on Pure Speculation's list of destinations for our twilight years, but they are emerging as alluring exploration areas, a history of mass murder and drug cartels (respectively) notwithstanding.

OZ Minerals (OZL) is in Cambodia and is clearly looking for something big. Southern Gold (SAU) has been drilling with assay results due soon.

Two newcomers may bear watching.

Indochine Mining (IDC) listed in December and is planning its first Cambodian drilling in the June quarter. The company is headed by Stephen Promnitz, who was most recently in the No 2 spot at Thai miner Kingsgate Consolidated (KCN). IDC's largest shareholder is New York hedge fund Och-Ziff, which has $US28.4 billion under management.

Promnitz sees IDC as a first-mover in Cambodia, just as Kingsgate was in Thailand and Pan Aust (PNA) and the former Oxiana were in Laos. Indochine plans to spend $5m on Cambodia exploration this year and may soon be announcing more acquisitions in the region.

Another new player on this exploration frontier is Brighton Mining Group (BTN), which listed a month before Indochine. It has now reported what it describes as exciting soil samples for gold.

Meanwhile, it was with some surprise that we learned that Colombia was once the world's leading supplier of platinum. It was overtaken by Russia from the 1880s, and then by the discoveries in South Africa's Bushveld in the 1930s. Colombia came back into its own in World War I once platinum exports were curtailed from Russia after the 1917 revolution.

Which is all by way of a long-winded explanation as to why Platina Resources (PGM) has applied for 1000sq km of tenements in the South American country. No hard rock exploration, nor modern techniques, have been used on Colombian platinum. PGM wants to make it clear, though, that its main focus is still on the Greenland palladium-gold project (which has some impressive resource numbers).

Transit Holdings (TRH) is, meanwhile, working to get a slice of the Colombian coal action. AngloGold Ashanti (AGG) is also spending big on gold exploration there. Colombia has been a big gold producer since Spanish Empire days right through to the late 1900s, and now its gold revival seems well under way.

brombyr@theaustralian.com.au

The writer implies no investment recommendation and this report contains material that is speculative in nature. Investors should seek professional investment advice. The writer does not own shares in any company mentioned.