27th Jul 2007 10:28
Dwyka Resources Limited27 July 2007 DWYKA RESOURCES LIMITED (ASX:DWY.AX; AIM:DWY.L) QUARTERLY REPORT 30 JUNE 2007 NICKEL Muremera Nickel Project The Muremera licence is located within 2km of the Kabanga project operated byXstrata/Barrick, the world's largest undeveloped nickel sulphide deposit. The Kabanga deposit, which is located immediately across the border in Tanzania,was discovered by geophysical prospecting, by the United Nations DevelopmentProgramme ("UNDP"), in 1976. Further UNDP surveys in 1978 resulted in thediscovery of the prospective Muremera deposits on the Burundi side of the borderin 1978. The anomalies have identical characteristics and follow-up work by theUNDP has confirmed that massive sulphide bodies, with nickel mineralisation, arethe source of the anomalies. Extensive geophysics and geochemical surveys havedelineated numerous targets, however there has been insufficient drilling todate to establish a JORC compliant resource. Acquisition of Danyland Limited As part of the company's diversified growth strategy, Dwyka announced on 17January 2007 that it had signed a share sale and purchase agreement ("DanylandAgreement") pursuant to which it acquired all of the issued shares in DanylandLimited ("Danyland"), owner of the Muremera nickel project in Burundi. The total upfront consideration payable by Dwyka in respect of this acquisitionwas US$2,000,000 (satisfied by the issue of Dwyka shares). In addition, afurther US$3,000,000 worth of Dwyka shares in total is payable subject to theachievement of certain project milestones. Earn-in and Shareholders Agreement with BHP Billiton The Company signed an Earn-in and Shareholders Agreement with BHP Billiton ("BHPB Agreement"), pursuant to which BHP Billiton has agreed to spendUS$5,200,000 on the Muremera nickel project in Burundi in order to earn ashareholding of up to 50% in Danyland. Under the BHPB Agreement, the BHP Billiton investment will be realised in 3stages as follows: - during the first stage, BHP Billiton will spend US$1,200,000 on initialexploration activities in order to earn a 10% equity in Danyland; - during the second stage, BHP Billiton will spend US$2,000,000 on targettesting in order to earn a further 20% equity (total 30%); and - during the third stage, BHP Billiton will spend a further US$2,000,000 onresource definition and the completion of a concept study in order to earn theremaining 20% equity (up to a total of 50% interest in Danyland). BHP Billiton may withdraw from the project during or after completion of any ofthe stages, but if it withdraws during a particular stage it retains only theequity earned by virtue of having completed the previous stage. The projectwill be managed by the Danyland board of directors on which Dwyka and BHPBilliton will have equal representation. Once BHP Billiton has fully satisfied its earn-in obligations, the parties willcontribute to further development of the project in proportion to theirpercentage shareholdings in Danyland. Normal default and dilution provisionsapply where a party fails to meet its share of project funding. As previously announced on 7 March 2007 Dwyka has issued 3,237,671 shares toAllerton Horizon Limited, the nominee of the vendor under the DanylandAgreement, in satisfaction of a milestone payment due under the DanylandAgreement as a result of the signing of the BHPB Agreement. GOLD Swazigold Project The Project is located in Swaziland, in the highly prospective ArchaeanBarberton Greenstone Belt that straddles the border between Mpumalanga Province,South Africa and Swaziland. Such Greenstone Belts host many major gold depositsin South Africa, Canada, and Australia, including the giant Kalgoorliegoldfield. The Barberton Greenstone Belt was the location of the first golddiscovery in South Africa, and subsequent gold rush in 1884. Since that time,the belt has produced 11.5 million ounces of gold. Current underground minesinclude the Fairview, Sheba and Consort mines of Barberton Mines Limited. SwaziGold's project area is a large 425km2 'greenfields' exploration play withmany targets ranging from 'walk up' advanced drilling targets to promisinggeochemical anomalies. The prospective licence area comprises more than 40km ofstrike length containing multiple mineralised structures and more than 40 goldshowings. Historic detailed drilling has been restricted to the Wyldsdale,Lomati and Daisy prospects where cumulate drilling by previous owners is inexcess of 13,000 metres. Dwyka's initial conclusion from a review of the geology and of this historicwork is that the potential exists for several million tonnes of high grade goldmineralisation. Memorandum of Understanding in relation to Swazigold project On 7 March 2007, the Company signed a legally-binding Memorandum ofUnderstanding ("MOU") with the shareholder of Swazi Gold Ventures (Pty) Ltd ("SGV"), the holder of 90% of the issued shares in Swaziland Gold (Pty) Ltd ("SwaziGold"), which in turn owns the Swazigold project in Swaziland (the "Project"). Under the terms of the MOU, Dwyka has the right to acquire the followingpercentage shareholding in SGV on the following basis: - Payment of US$200,000 plus Dwyka shares to the value of US$1,500,000 (atmarket price) - Dwyka earns a 50% interest; - US$750,000 worth of Project expenditure by 30 June 2008; payment of US$200,000plus Dwyka shares to the value of US$1,000,000 (at 80% of market price) - Dwykaearns a further 20% interest (total 70%); - Payment of US$400,000 plus Dwyka shares to the value of US$1,000,000 (at 80%of market price) by 30 June 2009; Project expenditure to reach bankablefeasibility stage by 30 June 2011 - Dwyka earns a further 15% interest (total85%); and - Issue of Dwyka shares to the value of US$3,000,000 (at 80% of market price)pursuant to the exercise of an option exercisable at any time between 30 June2009 and 30 June 2011 - Dwyka acquires remaining 15% interest (total 100%). Under the terms of the MOU, Dwyka will be the manager of the Project, which willbe overseen by a management committee in which the vendor shareholder and Dwykawill each have equal representation. Voting will be in accordance with theparties' shareholding percentages in SGV, provided that the manager will have acasting vote in the event of a deadlock. Dwyka may withdraw from the Project at any time, in which case it will dilute toa 49.9% shareholding in SGV and will relinquish management control. In addition,if such withdrawal occurs after the bankable feasibility stage, Dwyka will havea 2% royalty with respect to all minerals produced from the Project area. It was announced on 18 July 2007 that a formal Shareholders and Earn-inAgreement containing the terms and conditions usual for such an agreement hasbeen signed which replaces the MOU. DIAMONDS The Company is currently considering a number of corporate transactions at asubsidiary level, including a merger with a third party. In effecting anyproposed change, Dwyka would seek to ensure that its local South Africanmanagement team and corporate structure would remain intact, enabling the localsubsidiaries to continue to realise their operational objectives withouteffecting any change of control of projects or assets. De Beers Diamond Tailings Retreatment Project - RSA Operation Restructure The company operates a diamond tailings re-treatment plant in Kimberley, SouthAfrica, through its 70% owned South African subsidiary Superkolong (Pty) Ltd ("Superkolong"). The remaining 30% of Superkolong is owned by Kolong InvestmentHoldings (Pty) Ltd, Dwyka's Black Economic Empowerment ("BEE") partner. The tailings treated through Superkolong's plant are supplied by De Beers fromnearby tailings dumps which have resulted from historic operations of De Beersin the Kimberley area. Until the June quarter, De Beers had been paying Superkolong in accordance withits contractual toll treating arrangements, however the recovered grades werelower than expected and De Beers notified Superkolong of their intention to sellthe dumps which supply feed to the Superkolong plant. Superkolong, together withother similar operators on those dumps, were invited to submit a tender topurchase the dumps. A joint bid to purchase the dumps has been submitted to DeBeers. Subsequent to this submission, several meetings have been held with DeBeers to negotiate terms on outstanding issues. The Company does not controltiming of the process and has no guarantee of a positive outcome, however is ofthe opinion that the outcome of the bid will be known in the near future. As an interim arrangement, De Beers have implemented certain amendments to theexisting contract which will result in the following changes: - removal of the initial contract supply limit of 50,000 tonnes per month - DeBeers will now supply to Superkolong as many tonnes of tailings feed material asthe plant can process in a particular month; and - Superkolong will now bear all operating costs (including ore reclamation anddelivery), but will be entitled to 100% of revenue from the sales of diamondsproduced by the Superkolong plant. The revised contract will operate for the period during which the purchase ofthe dumps is negotiated. 129,647 tonnes of kimberlite tailings were processed in the June quarter whichresulted in the recovery of 5,651 carats of diamonds. Mahene and Itanana Kimberlites - Tanzania (JV with De Beers) Revised exploration programs have been completed with a view of commencingon-site exploration activity in the September quarter. Bosele Exploration - RSA The Company commissioned a review of past exploration results. No field activitywas undertaken. New Elands Kimberlite Mine - RSA Contract tailings at New Elands recommenced. Nooitgedacht Alluvial Diamond Mine - RSA Alluvial mining operations remained on care and maintenance. Aggregate, producedby crushing oversize reject from prior mining operations was used as feed forthe brick and concrete business also operated by the Company in the Kimberleyarea thus reducing the material input cost of bricks and concrete. Underground Mining Operations - RSA The Company continued to produce from the Newlands operation. Full productionfrom Blaauwbosch was delayed due to poor ground conditions on the 145mproduction level. Production from Newlands and Blaauwbosch for the quarter islisted below. Blaauwbosch Tonnes April May JuneTOTAL UNDERGROUND 4,032 3,156 6,500TOTAL TAILINGS 139 4,539 1,973TOTAL TONNES PROCESSED 4,171 7,695 8,473 Carats April May JuneTOTAL UNDEGROUND RECOVERED 310 180 413TOTAL TAILINGS RECOVERED 5 187 48TOTAL 315 367 461 April May JunCPHT Underground 7.69 5.72 6.36CPHT Tailings 3.83 4.13 2.44CPHT 7.56 4.78 5.45 Newlands Tonnes April May JuneTOTAL UNDERGROUND 1,410 4,621 5,007TOTAL TAILINGS 1,652 3,276 665TOTAL TONNES PROCESSED 3,062 7,897 5,672 Carats April May JuneTOTAL UNDEGROUND RECOVERED 246 478 486TOTAL TAILINGS RECOVERED 121 190 43TOTAL 367 668 529 April May JuneCPHT Underground 17.48 10.35 8.74CPHT Tailings 7.34 5.80 6.58CPHT 12.01 8.46 9.34 Industrial Division - RSA Dwyka's Industrial Division (Supermix) achieved combined concrete and bricksales of R4,593,101 for the June quarter. Rising demand for bricks has resultedin the implementation of two shift operations of the brick plant subsequent tothe end of the quarter. CORPORATE Crest Enablement Since 31 May 2007, interests in the Company's ordinary shares (ISIN numberAU000000DWY1) (the 'Ordinary Shares') have been capable of being held andtransferred within CREST, pursuant to a depository interest arrangement. The Ordinary Shares have not themselves been admitted to CREST, but the Companyhas arranged for Computershare Investor Services Plc ('Computershare') to issuedepository interests in respect of the underlying Ordinary Shares (the 'Depository Interests'). The Depository Interests may be held and transferredwithin CREST. In CREST, the Depository Interests carry the same ISIN as the Ordinary Shares.It does of course remain open to shareholders, should they wish to do so, tocontinue to hold Ordinary Shares and make use of the residual settlementmechanism. If CREST members wish to avail themselves of this facility, they can now do soby inputting a stock deposit in the usual way. The Depository Interests are not be subject to SDRT. This is because theDepository Interests meet all of the criteria set out for the SDRT exemptiongranted in The Stamp Duty Reserve Tax (UK Depository Interests in ForeignSecurities) Regulations 1999 (SI 1999/2383 as amended by SI 2000/1871 and SI2001/3779). MELISSA STURGESS Chief Executive Officer The technical exploration and mining information contained in this report wascompiled by Adrian Griffin (Technical Director of the Company) and Ed Nealon(Chairman of the Company), both of whom are members of the AustralasianInstitute of Mining and Metallurgy and are considered to be Competent Persons intheir respective area of expertise pursuant to the Australasian Code forReporting of Mineral Resources and Ore Reserves. For further information please contact: Melissa SturgessDwyka Resources Limited+61 (0) 8 9324 2955 Richard BrownAmbrian Partners Limited+44 (0) 20 7776 6417 Laurence Read/ Leesa PetersConduit PR+44 (0) 20 7429 6605/+44 (0) 20 7979 955 923 Rule 5.3 Appendix 5B Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98. Name of entityDWYKA RESOURCES LIMITED ACN or ARBN Quarter ended ("current quarter")098 060 938 552 30 June 2007 Consolidated statement of cash flows Current quarter Year to date Cash flows related to operating activities $A'000 (12 months) $A'0001.1 Receipts from product sales and related 2,653 8,711 debtors 1.2 Payments for (a) exploration and (121) (542) evaluation (136) (1,885) (b) development (2,839) (10,357) (c) production (629) (2,265) (d) administration1.3 Dividends received1.4 Interest and other items of a similar nature 71 192 received1.5 Interest and other costs of finance paid (88) (310)1.6 Income taxes paid1.7 Other FOREX variance (3) 660 Net Operating Cash Flows (1,092) (5,796) Cash flows related to investing activities1.8 Payment for purchases of: (a)prospects (533) (b)equity investments (c) other fixed assets1.9 Proceeds from sale of: (a)prospects 17 (b)equity investments 159 (c)other fixed assets1.10 Loans to other entities (319)1.11 Loans repaid by other entities 11.12 Other - cash acquired upon acquisition 128 Net investing cash flows - (547)1.13 Total operating and investing cash flows (1,092) (6,343) (carried forward) 1.13 Total operating and investing cash flows (brought (1,092) (6,343) forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 5,0001.15 Proceeds from sale of forfeited shares1.16 Proceeds from borrowings 561.17 Repayment of borrowings (78) (339)1.18 Dividends paid1.19 Other - capital raising costs (300) (300) Net financing cash flows (378) 4,417 Net increase (decrease) in cash held (1,470) (1,926) 1.20 Cash at beginning of quarter/year to date 5,760 6,2861.21 Exchange rate adjustments to item 1.20 46 (24)1.22 Cash at end of quarter 4,336 4,336 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the relatedentities Current quarter $A'000 1.23 Aggregate amount of payments to the parties included in item 1.2 119 1.24 Aggregate amount of loans to the parties included in item 1.10 - 1.25 Explanation necessary for an understanding of the transactions - Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest - Financing facilities available Add notes as necessary for an understanding of the position. Amount available Amount used $A'000 $A'0003.1 Loan facilities Nil Nil 3.2 Credit standby arrangements Nil Nil Estimated cash outflows for next quarter $A'0004.1 Exploration and evaluation 2504.2 Development 150 Total 400 Reconciliation of cash Reconciliation of cash at the end of the quarter Current quarter Previous quarter(as shown in the consolidated statement of cashflows) to the related items in the accounts is as $A'000 $A'000follows.5.1 Cash on hand and at bank 522 3,2545.2 Deposits at call 3,814 2,5065.3 Bank overdraft5.4 Other (provide details) Total: cash at end of quarter (item 1.22) 4,336 5,760 Changes in interests in mining tenements Tenement reference Nature of interest Interest at Interest at beginning of end of (note (2)) quarter quarter6.1 Interests in mining tenements relinquished, reduced or lapsed6.2 Interests in mining tenements acquired or increased Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rightstogether with prices and dates. Total number Number quoted Issue price per Amount paid up per security (see note 3) security (see note 3)7.1 Preference - - +securities (description)7.2 Changes during quarter 7.3 +Ordinary 119,579,271 119,579,271 N/A N/A securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs7.5 +Convertible debt 1,000 GBP1000 - 1000 GBP 1000 GBP securities notes convertible (description) at GBP0.36 on or before 22 June 2010 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted7.7 Options Exercise price Expiry date (description and conversion factor) 950,000 - $0.52 30/6/2010 750,000 - $1.00 30/6/2009 -7.8 Issued during quarter7.9 Exercised during quarter7.10 Expired (cancelled) during quarter7.11 Debentures (totals only)7.12 Unsecured notes (totals only) Compliance statement 1 This statement has been prepared under accounting policies whichcomply with accounting standards as defined in the Corporations Law or otherstandards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the mattersdisclosed. Sign here: ............................................................ Date: 27 July 2007 Company Secretary Print name: Michael Langoulant Notes 1 This quarterly report provides a basis for informing the market howthe entity's activities have been financed for the past quarter and the effecton its cash position. An entity wanting to disclose additional information isencouraged to do so, in a note or notes attached to this report. 2 The "Nature of interest" (items 6.1 and 6.2) includes options inrespect of interests in mining tenements acquired, exercised or lapsed duringthe reporting period. If the entity is involved in a joint venture agreementand there are conditions precedent which will change its percentage interest ina mining tenement, it should disclose the change of percentage interest andconditions precedent in the list required for items 6.1 and 6.2. 3 Issued and quoted securities The issue price and amount paid up isnot required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting forExtractive Industries and AASB 1026: Statement of Cash Flows apply to thisreport. 5 Accounting Standards ASX will accept, for example, the use ofInternational Accounting Standards for foreign entities. If the standards useddo not address a topic, the Australian standard on that topic (if any) must becomplied with. == == == == == This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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