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City to make pitch for chromite plant on Monday UPDATED
Updated 7 hours ago
The fact Sudbury is a global mining centre is one of the compelling reasons Cliffs Natural Resources should build a chromite processing plant and the 400 to 500 jobs it would create in the city.
That's the pitch Mayor Marianne Matichuk and city staff will make when they meet with Cliffs officials on Monday.
"Cliffs is looking at places to establish its smelting operation," Matichuk said in a release Friday. "To me, there is only one place; here in Greater Sudbury.
"If Cliffs decides to build in Ontario, we want Greater Sudbury to be the only choice for them."
Earlier this year, Cliffs, a Cleveland-based mining company, looked at different places for the ferrochrome production facility and announced a Sudbury location, Moose Mountain, north of Capreol, as the benchmark site.
It doesn't mean the facility will be built there, Cliffs said. Instead, it would use the Moose Mountain location to test the feasibility of a chromite plant.
The smelter would refine ore and concentrate into ferrochrome metal in enclosed electric arc furnaces. At full capacity, the ferrochrome production facility would produce 1,500 tonnes of ferrochrome per day.
It would also create up to 500 jobs.
According to media reports, in all, Cliffs expects to employ as many as 950 people during construction and 1,300 once the operation is in full gear - 300 to 500 at the mine; 200 to 300 for the transportation system needed to move people, ore, machinery and supplies; and 400 to 500 at a plant where chromite will be processed into ferrochrome, used for shiny components of cars and appliances, and for lining steel-making furnaces.
Cliffs, however, has warned the Ontario's high electricity prices could make building a plant anywhere in Ontario a problem.
In 2010, Cliffs acquired the largest known chromite deposit in North America, located in so-called Ring of Fire area of northwestern Ontario. Ore would be shipped from the chromite deposit to the plant.
City of Greater Sudbury officials said their goal is to focus on Greater Sudbury's competitive advantages as a global mining centre.
Over the past year, city officials said they have been meeting with decision-makers from all major companies involved in the Ring of Fire development, as well as the provincial government.
A report has been drafted to show Cliffs the benefits in bringing this important project to the Greater Sudbury area, the city said in its release.
"Greater Sudbury is committed to pursuing every available opportunity to demonstrate that it is the best location for processing ores mined in the Ring of Fire area," the city said in its release. "City officials have sought advice from some of the top experts in the field and appreciate the strong support and co-operation received from the local mining industry."
Scott Lund, chair of Greater Sudbury Development Corporation, echoed that statement.
"We are aggressively marketing Sudbury as an economic engine and as the world's expert in the mining and supply industry," Lund said.
"Attracting Ring of Fire businesses such as Cliffs will allow us to become a more competitive, commercial and industrial rallying point in northeastern Ontario."
Changes to OLG will cost city $73K: mayor
By STAR STAFF
Posted 9 hours ago
Greater Sudbury is among 18 municipalities fighting changes to the Ontario Lottery and Gaming Association's accounting system.
The changes will cost them money, the municipalities said in a statement issued Wednesday.
"This change will impact the City of Greater Sudbury," said Mayor Matichuk. "We can expect a loss of approximately $73,000 each year.
"It is important that we work with the OLG and other affected municipalities to find creative solutions to recover this loss."
Led by Sarnia Mayor Mike Bradley, municipal officials met with the Ontario Lottery and Gaming Association to discuss the changes to the agency's accounting system.
What this means for Greater Sudbury is that the city will be losing a significant amount of revenue that is received through the Sudbury Downs Slot Machine Program.
Since 1999, the agreement between the City of Greater Sudbury and the OLG has gar-n ered annual revenue that started at about $1.9 million and has since increased to $2.5 million.
The money has been spent on city projects, such as the widening of Municipal Road 35 in Rayside Balfour.
The contributions from the OLG have also played a significant role in relieving the tax burden incurred by Greater Sudbury residents, the city said.
Also this week in London, during the annual meeting of the Association of Municipalities of Ontario, Matichuk and councillors David Kilgour, Fabio Belli and Andre Rivest met with provincial politicians.
They talked about the need for infrastructure money, financial support for the Maley Drive project and the importance of keeping our energy costs low to attract businesses to Greater Sudbury.
"I'm encouraged by the positive responses we have received from elected officials, including (Sudbury Liberal MPP) Rick Bartolucci," Matichuk said.
" The promise to ensure increased and sustainable funding for our crumbling infrastructure is a positive step to help us deliver better services to our citizens."
Ontario will go to the polls in October to election a new provincial government. The AMO conference has allowed the government and opposition parties a chance to hear from municipal leaders and share their policy platforms in a large forum.
"We heard directly from all three parties that they are committed to keeping the Ring of Fire refinery jobs in Northern Ontario," said Kilgour. "This is welcoming news as these jobs are imperative for the growth of our community."
Nothing....I am in 2 other plays right now and it is all the same thing.Everyone complains about management and Shitney is always dumping into the bids.It is the same everywhere.
I have gained sanity since i have been out...up $3200 back.Hope to be back soon.
Good luck
IAMS
http://www.wallstreetreporter.com/2010/08/cgx-energy-tsx-v-oyl-ceo-interview/
TRANSCRIPT:
WSR: Good day from Wall Street. This is Juan Costello, Senior Analyst with The Wall Street Reporter. Joining us today is Kerry Sully, CEO of CGX Energy. The company trades on TSX Venture, and their ticker symbol is OYL, and they are a Canadian-based oil and gas exploration company focused on exploration for oil in Guyana. Thanks for joining us today, Kerry.
Kerry Sully: Thank you very much, Juan. It’s great to be here.
WSR: Starting off, talk to us about the completion of the $20 million financing.
Kerry Sully: We just announced that we’ve raised $20 million at $0.50 per share. And, we certainly appreciate the support from our new and existing shareholders. What I’d like to do is cover three major points today. The first is the regional activity in the Guyana-Suriname basin where there is going to be extensive drilling starting in October. The second area I’d like to cover is the first well that this $20 million will allow us to participate in where we’re targeting a billion barrel resource potential. And the third area I’d like to cover is the additional opportunity that we see in the basin and we have identified 16 targets all with world-class potential that I like to tell your listeners about.
WSR: Sure.
Kerry Sully: So, the first point is with respect to the region. The Guyana-Suriname basin has a proven hydrocarbon system. There is a billion barrels onshore Suriname. The oil has been sourced from the offshore but there has never been an oil discovery in the offshore. People ask why? The reason is that there has been very little drilling; there has only been 22 wells drilled beyond the near-shore of these three countries, including French Guiana, over a 50-year period. Now, the thinking about this basin is changing rapidly. It has now become one of the most attractive new basins in the world and we’re surrounded by majors. Those majors including ourselves (we’re not a major, we’re a junior!) have spent $125 million in 3D-seismic in the basin over the last two years. There is one more seismic program to come and that’s going to be shot by Exxon and Shell in a very large license they hold adjacent to ours in Guyana. The other operators have completed their seismic programs and there are now four wells going to be drilled by others starting very quickly. Murphy is going to be drilling in Suriname. They are going to start in October with a shallow Paleocene test where they’ve identified a 200 million barrel potential resource. And, in December they are drilling a deeper Turonian test where they’ve also identified 200 million barrels. That well is going to be followed by Inpex, a Japanese company in the first quarter of 2011 and a large consortium including Tullow, Shell and Total are going to be drilling in French Guiana in February targeting the Turonian with an estimate of 700 million barrels. So, those four wells by others leads us up to CGX’s first well.
WSR: I think the next point was the Georgetown and the other licenses.
Kerry Sully: Yes. Basically our first well is going to be drilled on Georgetown, its called Jaguar. Our partners in that well are Repsol, YPF and Tullow. Tullow has been very successful exploring in West Africa, specifically in Ghana. We’re targeting a Turonian at 22,000 feet that is going to be drilled in the second quarter of next year and it is a mirror image to the discoveries that have been made in Ghana where the Jubilee field now has about 1.8 billion barrels; and that reservoir was only discovered three years ago by Tullow, Anadarko, and Kosmos. They did an amazing job on that field — it’s about to go on stream this fall. Now with respect to our side of the Atlantic, Tullow’s estimate for the Jaguar is a billion barrel potential, of which our share would be roughly 250 million barrels. Probability of success on this is one in six or one in five. And, success in either Jaguar or drilling by the other operators I’ve discussed significantly improves our probability of success in the additional opportunities we’ve identified on our acreage.
WSR: Bring us up to speed on the other operations.
Kerry Sully: Basically, in the two licenses, the Georgetown license and the Corentyne, we’ve identified 16 prospects and leads. The prospects are basically drillable, we have sufficient seismic on those already. The leads would require some additional seismic. Each of these 16 prospects and leads have resource estimate greater than 300 million barrels, this is a big number. Through the period 2006 to 2008, a three-year period, there were only 18 fields found worldwide that had greater than 300 million barrels. So, these are truly world-class targets we’re pursuing. And, if the Jaguar Turonian is successful — on our Corentyne license we have a twin called Eagle that also has in excess of a billion barrel potential. We plan on drilling a shallow well comparable to Murphy’s well and that will cost us about $35 million — it will be drilled after the Jaguar well.
WSR: Talk to us a little bit about some of the trends right now in your sector and how well positioned you believe CGX is to capitalize on them?
Kerry Sully: The biggest trend is we’ve had fairly stable oil price environment now for several years in the $70 to $80 range, so we can make good long range plans. However, in the general financing sector there has been a downturn and it has created an awful lot of opportunity. So, as a result I think that we can probably drill significantly cheaper than we could have three years ago and certainly the situation in the Gulf with the moratorium means that there are operators looking for new basins, there is surplus equipment and there are service companies available to assist us with our drilling.
WSR: What would you say are some of the factors that make the company unique from some of the other players in the sector?
Kerry Sully: A lot of companies have got a development side of their company plus exploration. Ours is pure exploration, and we’re unique in the basin. We’re also the only junior that’s there. But, we have been a leader with respect to what has happened in the Guyana-Suriname basin. We shot the first solid 2D seismic in 1998. Then when we were set up to drill in June 2000, gunboats arrived from Suriname, claiming the territory as theirs, and it took seven years to resolve the maritime border between Guyana and Suriname. CGX assisted the Government of Guyana by paying $9.8 million of their legal expenses. Through that period, we’ve done a lot of seismic interpretation and we’ve identified a number of shallow fans. I think we’re one of the first to identify the deeper Cretaceous plays.
WSR: Perhaps you could walk us through your background and experience, Kerry, and talk a little bit about the management team over at CGX Energy for some of our listeners here that are new to the story.
Kerry Sully: I’m a Reservoir Engineer and I have over 40 years experience. I worked briefly for Texaco. But in the early ’70s, I was involved with a consulting firm in the US that did the reserve determinations for the OPEC nations and my group specifically did the reserves in Iran. So, it’s kind of fun now to be back looking at major prospects. In between I ran a Canadian junior oil company called Ranchmen’s Resources for 20 years which was focused mainly on Alberta exploration and development. One of my key players is Warren Workman, our VP of Exploration — he is both a geologist and geophysicist. He worked for an extended period with Unocal in the Gulf of Mexico identifying turbidite fans and screening their global opportunity. When he had a chance to look at this play offshore Guyana, he said, it was one of the biggest plays he had ever seen. And, the other key player would be the founder of our company, who is Dr. Edris Dookie. He is Guyanese; lives in New York, but he probably spends six months in a year in Guyana and provides us a very strong interrelationship with the Guyanese business community and also the politicians and the bureaucrats.
WSR: Talk to us about what are some of the milestones and objectives that the company is hoping to accomplish over the course of the next year.
Kerry Sully: This whole process took longer than we hoped with the border incident. But now through the drilling of two wells, we believe it’s time to prove the theories that we’ve been working on for the last 12 years.
WSR: When it comes to investors and the financial community, Kerry, do you believe that the CGX story and the company’s message and upside potential are completely understood and appreciated? And, if not, what do you think investors are missing from the story?
Kerry Sully: We’ve had a core group of investors through these 12 years, but it’s a story that going forward, with the drilling we’re going to be doing with others, will attract a whole new investment community. And, I think that group has to understand that this is a story that has got very high risk but it also has incredible leverage and we’re allowing the shareholder to diversify their own portfolio. Putting this to numbers — if we take Tullow’s estimate of a billion barrels in the Jaguar well, our share would be 250 million barrels. And, this opportunity would value oil at $10 per barrel post-discovery creating a potential market cap of 2.5 billion dollars. Our current market cap is $84 million. So, on this one well alone we’re looking at a 30 bagger.
WSR: And so once again joining us today is Kerry Sully, the Chief Executive Officer for CGX Energy, which trades on the TSX Venture, ticker symbol OYL, currently trading at $0.50 a share. We were just discussing the completion of the $20 million financing as well as some of the trends in the oil sector. And so before we conclude Kerry, just to recap some of your key points, why do you believe that investors should consider OYL, CGX Energy as a good long-term investment opportunity?
Kerry Sully: Please recall my three points. One, the first is the region, the majors have come to drill. There are going to be four wells drilled before ours, which makes us an area play. The second is our first well in the second quarter of next year. It is going to be one of the biggest wells drilled during 2011. And, the third point is additional opportunity if either we or others are successful – there are lot of targets in the sandbox.
WSR: We certainly look forward to continuing to track the company’s growth as well as report on your upcoming progress, and I like to thank you for taking the time to join us today Kerry and update our investors on CGX. Great having you on.
Kerry Sully: Thanks very much for this opportunity
Was there not suppose to be an announcement of some sort when drilling started?
Anyone know the status?
IAMS