The year 2012 is nearing the end. Reason enough for Deutsche Rohstoff AG (WKN A0XYG7) to give a review of the year and an outlook on 2013. And he reads very interesting.
This article is from Björn Junker >> to the original article <
For 2012 / 2013, the company had set itself various goals, which it says they have already achieved for the most part. On the one hand, the DRAG wanted to streamline its portfolio significantly, which was realized through the - profitable - sale of the Georgetown gold mine and the partial sale of Rhein Petroleum. In the coming year, further transactions are in the pipeline in this regard.
In addition, the DRAG had decided to use its capital more focused. This means that the funds are now being invested almost exclusively in the subsidiaries Tekton Energy and Wolfram Camp Mining, which are already in production. The other activities, on the other hand, are financed by the partners at the respective subsidiaries.
And last but not least, Deutsche Rohstoff AG set itself the goal of increasing its cash and cash equivalents. This was achieved through the aforementioned sales as well as further equity and debt financing. At the end of November, cash and cash equivalents in the Group thus amounted to 13,3 million, despite investments in the meantime at Wolfram Camp.
In the coming year, the company from Heidelberg now wants to focus on further rebuilding the portfolio and increasing production in the oil / gas and tungsten sectors. DRAG will continue to pay dividends for 2012, but it is also possible to invest in new projects. Corresponding offers are already being examined. Thanks to the solid financing situation, DRAG sees itself well positioned in the market environment, which is currently very difficult for young resource companies, and has the advantage over many of its competitors.
But now to the individual projects:
At Tekton Energy, which owns 63% of Deutsche Rohstoff, 2012 made good progress. During the year, the Company drilled nine vertical holes in the Windsor area in the Wattenberg field north of Denver, Colorado. All holes were drilled with oil and all drilled holes could be brought cleanly and safely into stable production.
In this way, by the end of last month, Tekton was producing slightly more than 40.000 barrel of oil equivalent - about 90% oil and 10% gas - and was pretty much on schedule. Now, Tekton is focusing on the preparation of horizontal wells in the project area. Data from horizontal wells in the Niobrara and Codell layers, published by two large companies operating in the Wattenberg field, indicate that there is a very attractive economic potential here. Sector sizes achieved initial production rates from 250 to 800 barrels of oil equivalent per day with their horizontal wells, while vertical wells, according to the DRAG, provide only 20 to 60 barrels per day. The average calculated total reserve per horizontal hole is between 325.000 and 350.000 Barrel. On average, the investments were earned within a year.
In addition, it has become clear in recent months that the optimal distances between the horizontal wells Wattenberg-Feld are significantly lower than initially assumed. Taking into account the results of the large companies, Tekton therefore has the potential for 60 to 80 drilling in its own license area and possible reserves of 20 million barrels of oil equivalent! In addition, Tecton's summer 3D seismic survey revealed no significant geological disruption that would call into question the drill program. Tekton has already prepared detailed planning for more than 70 drilling, and all local approvals are already in place. The necessary approvals from the Colorado Oil and Gas Conservation Commission are expected to be complete by the end of January, 2013.
Tekton now wants to carry out all drilling within a period of a maximum of three years, unlike previously planned. One is convinced that in this way one can reach the greatest value-adders. Tekton sees 2013 in February as soon as possible. Of course, this also depends on the financing of the work, but negotiations are already underway with various possible financing partners. The company estimates total revenue expected to be approximately $ 2015 million by the end of 180, of which 2013 will account for $ 20 million.
Due to the potential and the unexpectedly favorable technical and economic conditions for horizontal drilling, it is not surprising that the DRAG 2013 focuses on expanding this project.
Also in the German oil and gas business 2013 are the first drilling done. Rhein Petroleum, in which Deutsche Rohstoff AG still holds 10%, had completed its only recent 3D seismic survey in the Heidelberg-Weinheim license area in mid-October. Altogether, 750 km2 has been investigated for oil and gas carrying structures in the Rhine Graben and in the Bavarian Alpine foothills. This is the largest land 3D seismic survey in Europe over the past decade, according to the DRAG. At present, intensive work is being done on seismic evaluations and has already generated initial drilling targets. From the second quarter of next year, Rhein Petroleum 2013 wants to drill several holes. In doing so, some holes will be made together with partners.
The 100% DRAG subsidiary Wolfram Camp has been producing 2012 regularly since May, tungsten and, more recently, molybdenum concentrates. However, it turned out that the reduction had to be adjusted and that it was necessary to increase the throughput of the processing plant by 40% in order to achieve the desired production target even at lower ore contents.
For example, by changing the mining concept, the ratio of overburden to mined ore - the so-called "strip ratio" - has improved significantly to about 6: 1. The cost of mining will be around some 40 AUD per ton of ore after implementing some other optimizations, which is comparable to medium-sized open pit mines worldwide.
Another important factor is the throughput of the processing plant, which can currently process a maximum of 29 tons of ore per hour. The upgrading of the plant, due to be completed by January / February, is expected to result in a throughput of 49 tonnes per hour while simultaneously increasing the recovery rate to about 75% of the metal in the ore. The reprocessing cost per tonne processed will be around 20 AUD / ton after conversion and will therefore also be competitive.
Based on the above key data, the DRAG said, Wolfram Camp 2013 will be profitable even at average system investment levels of 0,3% WO3 and an APT price of USD 350 / mtu. If one uses these data Wolfram Camp should be able to achieve a turnover of approximately 30 million AUD in the coming year according to the enterprise.
However, the significant price of tungsten APT in Europe has dropped to around USD 300 / mtu in recent weeks due to the difficult economic environment. However, according to the DRAG, most market observers believe that the price will rise towards the beginning of next year in the direction of the average price of 2012, which is at about 400 USD / mtu. Wolfram Camp Mining expects an average price of USD 350 / mtu in its plans.
For the recently produced molybdenum concentrate the company wants to find a customer as fast as possible. Negotiations with smelters on the conclusion of a molybdenum purchase agreement have already been initiated.
The originally planned for 2012 initial public offering of Tin International (TI), the Deutsche Rohstoff AG has been postponed. Roadshows among investors in Europe, Asia and Australia showed that potential investors viewed the Gottesberg and Geyer projects as very interesting, but recommended a postponing to 2013 due to weakness in the markets for initial public offerings in Australia and Canada. However, the preparations have progressed so far that you can react very quickly in the coming year, when market conditions improve.
For the time being, Tin International will focus on the development of its projects, in particular investigations on the metallurgy of Gottesberg. The first results are hoped to be presented in the coming weeks. Currently, the company's geologists are also revising the deposit model to generate drill targets that can be used to define areas of higher grade within the deposit. TI still has nearly $ 3 million of the capital increase in April.
Seltenerden Storkwitz AG (SES) is also making progress, even though the JORC report (Joint Ore Reserces Committee) on the existing resource has not yet been received. However, the data available so far show a high degree of agreement with the historical data from GDR times. It is expected to receive the final report in the coming weeks, but it depends on the Australian reviewer.
In addition, a capital increase is currently being carried out at SES. It aims to finance various collaborations that help SES develop new processes for processing and processing rare earths. The company is holding firm on the IPO planned for next year.
Regarding the Canadian Wrigley Project, Deutsche Rohstoff AG announces that 2012 has continued its exploration work under the Farm-In Agreement between Devonian and Glencore. Among other things, metallurgical work was carried out, surface sampling was carried out and old cores re-analyzed. A final report is still pending. Based on the results, Devonian and Glencore will then be advised on how to proceed. The total investment of Glencore reached the threshold of 6,5 million CAD defined in the farm-in in November. Glencore now owns 51% of the joint venture Alapa Resources and Devonian 2011%, which was founded in December 49. Devonian will continue to operate as the operations manager for the joint venture.
The gold mine Georgetown has successfully repelled Deutsche Rohstoff AG. The conditions specified in the contract were for 22. October 2012 met, the company announced. The buyer has apparently immediately paid the first part of the purchase price of 10 million AUD as contracted. The remaining four purchase price payments of 1,5 million AUD will be due at the end of December 2012 and at the end of the first three quarters 2013.
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