Padre Duster Brings Truth Home To Novus

Sydney Morning Herald

Monday July 22, 2002

Jane Counsel

A big Texas acreage was supposed to bring untold millions to the Aussie oil company.

Talk about voting with their feet.

That's just what Novus Petroleum shareholders did last week following disappointing news on the company's Dunn-Murdock-1 well in the US.

Novus shares slumped more than 9 per cent to $1.66, a six-month low, after the company revealed that initial tests on the deep section of the Dunn-Murdock-1 well failed to flow gas in ``commercial or sustainable quantities".

Much has been made by the company of the promise of its Padre Island acreage in the US but a stronger initial result at Dunn-Murdock-1 was needed to boost the market's confidence.

After running up to a near four-year high of $2.39 in late April, Novus shares have been on the slide, which is bound to further irritate chief Bob Williams.

Williams already believes Novus is in the sights of several acquirers and is concerned about being bought too cheaply.

Novus spudded Dunn-Murdock on March 23 to target the Tomato and the deeper Murdock Deep structures.

Before last week's news Novus was claiming that its Padre Island acreage could be worth another $1.50 a share to the company.

The company can only hope that Dunn-Murdock-1 is an unusual blip in its US gas strategy, otherwise the Murdock structure might be renamed Stinker.

Jubilee talks div

Break out the champagne, because Kerry Harmanis is about to share some of that mountain of cash that his Jubilee Mines has been generating from the Cosmos nickel mine in WA.

Harmanis told shareholders last week that the company was on track to pay a maiden dividend in October.

And the word around stockbroking desks is that the dividend could be at the high end of expectations.

Jubilee said last week that production from the high-grade Cosmos mine actually exceeded forecasts by 12 per cent during the June quarter.

This has only further boosted confidence in the Cosmos mine as Jubilee continues efforts to develop the Deeps underground orebody which is due produce first ore early next year.

Jubilee has already posted a first half net profit of $9.96 million and at the end of the June quarter had $21 million cash on hand, plenty enough for the shareholders at about 17c per share.

But with its share price sitting at $1.68, down 2c last week, Jubilee shareholders won't be buying Krug.

Getting set in desert

The big boys are continuing to muscle in on the Tanami desert, fast shaping up as Australia's hottest exploration area.

Tanami Gold, which has long seen the potential in the region, near the WA and NT border, announced yet another joint venture with two majors last week.

BHP Billiton and Teck Cominco have added their names to the list of big brother partners Tanami has in the region, signing up for a slice of the company's Central Australian project area.

While other mini-miners were chasing the dot com dollar several years back, Tanami firmed up its 63,000 square kilometres of ground in the Tanami-Arunta province and it's now paying off.

BHP Billiton and Teck have been given an option to earn 51 per cent in six exploration licences in Tanami base metals prospects.

In return for that, the pair have to spend $2 million on exploration and then may elect to continue sole-funding through to a bankable feasibility study.

The alliance with BHP Billiton and Teck covers a ground area of 4000sqkms. But Tanami is still free to explore the area for gold and has said it may consider other joint venture arrangements for other parts of its Central Australian project area.

Flinders Diamonds' nearby Strangeways project was also deemed attractive by the two majors which formed a similar agreement to look for base metals deposits.

Flinders's focus on that ground had been primarily diamonds but the joint venture deal gave its share price a much-needed boost, up 1.5c to 12c, it's biggest rise in three weeks.

Tanami's share price, on the other hand, was less enthusiastically bid, ending last week 1c lower at 23.5c. And that's despite the fact the BHP Billiton-Teck deal adds to the company's other joint venture arrangements with Barrick, Newmont and Troy Resources.

Awfully sorry

In terms of grovelling apologies, Perth mining type Roderick Smith was forced to make one last week that was up there with the best of them.

As part of a $2.15 million settlement to end a legal stoush with colourful Perth millionaire Danny Hill, Smith was forced to offer his ``genuine, sincere and unreserved" apologies.

It was a humiliating blow for Smith, who in his spare time is the shire president of Perth's most expensive municipality Peppermint Grove.

It also comes two months after Smith was discredited as a witness in an unfair dismissal claim heard in a West Australian industrial court.

The stoush is all to do with Hill's decision two years ago to invest $2.85 million in Precious Metals Australia, then Smith's flagship company and attempting to become Australia's largest vanadium producer.

Hill's Westgold sued Precious Metals and Smith in the WA Supreme Court after his investment in Precious Metals almost immediately lost 90 per cent of its value after the company's $120 million Windimurra vanadium project ran into operational problems.

Hill alleged misleading and deceptive conductive by Smith: Hill put his money into the company on the strength of bullish reports by Smith and others.

As part of his written apology to Hill, Smith said: `` I unreservedly apologise not only for my conduct in relation to Mr Hill but also for the comments I have made of and concerning Mr Hill during the course of our dispute."

And if that wasn't enough, Smith also has to pay Westgold $1.2 million, which we understand has been raised by a mortgage on his Perth mansion.jcounsel@smh.com.au