26th Oct 2007 08:00
GVM Metals Ltd26 October 2007 GVM METALS LIMITED QUARTERLY REPORT GVM Metals Limited ('GVM' or 'the Company') is pleased to announce itsoperational report for the 1st quarter ended 30 September 2007. A full copy ofthis report, as released today on the ASX, is available at the Company'swebsite, www.gvm.com.au. Highlights • Coal of Africa Limited was granted new order Mining Rights for portions 1 and 9 of the Mooiplaats Coal project. • 27,000 metres of drilling were completed during the quarter on the Mooiplaats coal project increasing the total amount drilled on the project to over 55,000 metres. The results of the drilling are in line with management expectations and will be released in the current quarter. • Exploration expenditure for the quarter was A$1.03 million. • A further payment of £7 million was made as part consideration for the Mooiplaats Coal Project. • Heads of Agreement concluded to acquire 60% of the Tshikunda coal project. Tshikunda is contiguous with Exxaro Limited's Tshikondeni coal project and consists of 32k hectares located in the Pafuri coal field in South Africa. • Nimag (Pty) Ltd's nickel magnesium alloy business experienced tougher trading conditions accompanied by increased inventories due to reduced global nickel prices and demand and generated an EBIT for the quarter of A$418k. • Cash balance at the end of the quarter was A$34 million. Commenting on the results today, Simon Farrell, Managing Director of GVM, said,'We are pleased to announce strong progress across the Company's coal projects.Drilling at Mooiplaats will be completed in the next quarter bringing theproject into the 'Measured' status and negotiations with potential off takersare at an advanced stage. The Bankable Feasibility Study at Holfontein is ontrack and the drilling data acquired from Exarro gives us the possibility ofbringing two of the Boabab farms into production 18 months earlier than wepreviously thought." DISCUSSION OF RESULTS Coal Activities Mooiplaats Coal Project (70% on completion of the Coal of Africa Limited transaction) During the September quarter, Coal of Africa Limited was granted Mining Rightsfor portions 1 and 9 in terms of Section 23 of the Mineral and PetroleumResources Development Act, encompassing some 940 hectares of the 22k hectareproject. Mining on these portions is expected to commence in the 2008 calendaryear. The infill drilling programme continued at Mooiplaats during the quarter and27,000 metres were drilled, bringing the total metres drilled on the project toover 55,000. An additional 22 holes are required to complete phases 1 and 2 ofthe project, bringing the whole of the area drilled to 'Measured' status interms of the JORC/ SAMREC codes. On completion of the drilling phases, anadditional 28 holes will be drilled to enable water monitoring. The independentconsultants' project reports on phases 1 and 2 of the drilling together with areport on mining floor and roof support requirements is expected to be finalisedduring the December quarter. During the September quarter, an Environmental Rehabilitation deposit of ZAR11million was invested in a Trust in compliance with the South African Departmentof Minerals and Energy requirements. The Trust will be managed by GVM and thefunds used for future rehabilitation expenses incurred on completion of miningon the Mooiplaats Coal Project. A further £7 million was paid as part of the £35.5 million payable to acquirethe Mooiplaats Coal Project, leaving a balance payable of £20 million in cashand 13,333,333 shares. Discussions with mining contractors and potential off take partners - includingEskom - continued during the quarter under review. As a result of the recent substantial increase in the price of export thermalcoal, the Company is now reviewing its earlier plans of supplying largelyunwashed thermal coal to the domestic market and is now focusing on thepossibility of concentrating on producing washed coals for the export market. Holfontein Coal Project (100%) During the September quarter, GVM engaged consultants to prepare the Mining WorkProgramme as well as the Social and Labour Plan. The Company also contractedindependent parties to commence the application for the New Order Mining Rightand to prepare the Pre-feasibility study for the mining of the Holfontein coalproject. Baobab Coal Project (100%) East Coast Maritime (Pty) Ltd were mandated to assess railway, road and portinfrastructure required for GVM's Baobab and Thuli coal projects. The study isapproximately 50% complete and should be finalised in November. The preliminaryreport delivered to GVM was encouraging in terms of coal transport capacity andthe timing thereof. Discussions with transport infrastructure participantscommenced during the quarter. Geomechanics have commenced drilling on the Baobab coal project, with two rigsdrilling on the farm Fripp. The drilling programme is expected to validateexploration work previously performed by Iscor (now Exxaro Limited). Thuli Coal Project (Limpopo) (74%) LudikCore (Pty) Ltd have been contracted as drilling contractor for the ThuliCoal Project and will commence in October on finalisation of the drilling workprogramme. The data collected in the data terrain model completed earlier inthe year together with drilling completed by Utah Mining in the 1980's will beused in the identification of drilling targets. Nimag Group of Companies (100%) The Nimag Group's profit before interest and tax for the first quarter of the2008 financial year was ZAR2.6 million (A$418k). The nickel magnesium businessexperienced tougher trading conditions in the form of thinner margins andincreased working capital requirements due to depressed global nickel demandtogether with a strengthening of the South African rand. Nimag Group utilisedover A$5 million in working capital during the quarter to finance increasednickel inventories. The smaller Metalloy business operated well ahead ofexpectations contributing to the Group's profitability. Authorised by Simon FarrellManaging Director26 October 2007 For more information contact:Simon Farrell, Managing Director GVM +61 417 985 383 or +61 8 9322 6776Nonkqubela Mazwai, Deputy Managing Director, GVM +27 83 690 9079Petronella Gorrie The Event Shop +27 82 827 8815Jos Simson/Leesa Peters Conduit PR +44(0) 20 7429 6603Olly Cairns / Romil Patel Blue Oar Securities Plc +61 8 6430 1631 or +44(0) 20 7448 4400 www.gvm.com.au This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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