7th May 2008 07:22
Dwyka Resources Limited07 May 2008 Dwyka Resources Limited ('Dwyka' or the 'Company') OPTION TO ACQUIRE INTEREST IN PHILIPPINES COAL PROJECT Dwyka is pleased to announce that it has entered into an option giving it theability to acquire an interest in the Daguma and Bonanza coal deposits locatedon the Philippines island of Mindanao (collectively, the "Project"). Highlights: - From historical drilling, Dwyka estimates an initial overall Project resourceof in excess of 200 million tonnes of medium calorific value coal, suitable forthe export and domestic power markets - Aggressive drilling programme to be pursued with the aim of increasing theProject resource significantly - Project is ideally located close to the coast (approximately 45 kilometresaway), making it suitable to supply the export markets or in-country powerstations - Options allow Dwyka, subject to shareholder approval, to acquire an initial30% interest in the Project, with the possibility of increasing this interest toa maximum of 100% - Option fees payable by Dwyka only on exercise. Dwyka has today signed an option agreement ("ACRL Option Agreement") which willenable it, subject to shareholder approval, to acquire an initial 30% interestin the Project. The Project is located to the south of the island of Mindanao, The Republic ofThe Philippines and comprises 10 coal Blocks, each having an area ofapproximately 10 square kilometres (giving a total Project area of approximately100 square kilometres). Two of the Blocks have been the subject of significanthistorical drilling (32 holes) and other work, including the completion of ascoping study. The scoping study and various other evaluations of the twoBlocks have estimated an in situ resource in excess of 200 million (non-JORCcompliant) tonnes of coal. Dwyka considers that there is the potential to drillup a measured, defined resource of at least 150 million tonnes of coal within 24months with the intention of bringing the Project into production. Theremaining 8 Blocks are also located within the same geological coal basin,termed the Cotabato Basin, and have recently been proven to be coal bearingthrough a combination of drilling, pitting and trenching. Dwyka considers theseBlocks to be highly prospective, with the potential to be of similar size oreven exceeding the two main Blocks. The Company is also planning to initiate anextensive grid drilling programme on the remaining 8 Blocks, which will enableresource estimation and classification to occur within the next 12 months. Historical analysis of the coal present at the Project suggests that it is ofmedium calorific value, approximately 5,300 Kcal/kg, making it suitable for boththe export market to India and China and for in-country power stations andindustrial (cement) purposes. The Philippines has ready demand for coal forpower stations. Other coal miners in The Philippines are already exportingsimilar calorific value coal to India, China and Hong Kong. Pursuant to the ACRL Option Agreement, the Company has an option ("ACRL Option")to acquire 100% of the issued shares in Asian Coal Resources Limited ("ACRL").In turn, ACRL and its local partner, MANA Resources Development Corporation ("MRDC"), collectively hold options ("Project Options") which, if exercised,would enable them to acquire an initial 30% interest in the Project, with thepossibility of increasing that to a maximum of 100%. In addition, ACRL iscurrently a 40% shareholder in MRDC and has an option to increase this to a 100%interest in MRDC. ACRL and MRDC are finalizing a shareholders' agreementbetween them to ensure that the two entities act with a common purpose inrelation to the Project. The exercise of the ACRL Option (which would trigger the subsequent exercise byACRL and MRDC of the Project Options, enabling an initial 30% interest in theProject to be acquired) is subject to the approval of Dwyka shareholders ingeneral meeting under the ASX Listing Rules. In this regard, Dwyka will releasea shareholder circular/notice of meeting in due course which will convene thatmeeting and will provide shareholders with detailed information about theproposed transaction and its effects. It is anticipated that the Project costs through to January 2009, includinginitial option exercise expenses as well as costs related to further explorationand drilling, equipment purchases and staffing will be in the order of GBP10m.Dwyka will be responsible for funding those costs and it is proposed that thiswill occur primarily via a placement to institutional shareholders. Furtherstaged payments, the first of which would occur in July 2009, would be payableshould Dwyka elect to increase its Project interest above 30%. Should shareholders vote in favour of the transaction, Dwyka intends toaggressively pursue development of the Project to bankable feasibility, with aview to commencing production as soon as possible. Speaking today in relation to the signing of the ACRL Option Agreement, MelissaSturgess, Chief Executive Officer of the Company said: "We are very excited about the prospect of acquiring an interest in a projectwith the potential for near-term production, which is located in what we believeis the most significant recently discovered coal province in the Philippines.The Project will complement Dwyka's existing assets and further our stated aimof diversifying into key commodities with a view to generating maximum value forshareholders. Given the strong global demand for coal and record pricesexperienced recently, the timing of this acquisition is excellent. We lookforward to bringing the Project into production as quickly as possible tocapitalise on these factors". The technical exploration and mining information contained in the aboveannouncement has been reviewed and approved by Ed Nealon, who has sufficientexperience which is relevant to the style of mineralisation and type of depositunder consideration and to the activity which he is qualified as a CompetentPerson as defined in the 2004 Edition of the 'Australasian Code for Reporting ofExploration Results, Mineral Resources and Ore Reserves'. Mr Nealon is a DwykaResources Limited Director and meets the criteria of a qualified person underthe AIM Guidance Note for Mining, Oil and Gas Companies. Mr Nealon is a memberof the Australasian Institute of Mining and Metallurgy. Ed Nealon consents to the inclusion in this announcement of such information inthe form and context in which it appears. For further information please contact: Melissa SturgessDwyka Resources Limited(+44) 7825 555 1397 or [email protected] United KingdomRichard BrownAmbrian Partners Limited(+44) (0)20 7634 4700 Press enquiriesCharlie Geller or Leesa PetersConduit PR+44 (0)20 7429 6604/ +44 (0)79 7006 7320 Or visit: http://www.dwyresources.com Notes to editors: Dwyka is focusing on the diversified minerals sector in order to achieve maximumvalue for shareholders during the ongoing resource boom. In addition to the coal opportunity the subject of this announcement, Dwyka'sfocus is primarily on nickel and gold. Nickel To that end, Dwyka has a major nickel exploration project underway in Burundi,as well as an exciting gold exploration programme in Swaziland. Dwyka acquiredall of the shares in Danyland Limited ('Danyland'), the owner of the MuremeraNickel Project in Burundi, Africa, in January 2007. The Muremera project islocated within one of the world's principal nickel provinces, only 2 kilometresfrom, almost adjacent to and in the same geological sequence as, the giantXstrata/Barrick Kabanga deposit in Tanzania. The Kabanga deposit is thought to be the world's largest undeveloped nickelsulphide deposit and has similar geophysical anomalies to those at Muremera. Anexploration permit has been granted in relation to Muremera and access forexploration activities is good. The project's prospectivity has led to acommitment from BHP Billiton to spend at least US$5.2 million as part of solefunding arrangements to earn up to a 50% interest in Danyland. Gold Pursuant to a Shareholders and Earn-in Agreement dated 16 July 2007, Dwyka hasthe right to earn up to a 90% interest in Swaziland Gold (Pty) Ltd ('SwaziGold'), which in turn owns the Swazigold Project in Swaziland, Africa. The project is a large (435 square kilometre) gold exploration play in thehighly prospective Archaean Barberton Greenstone Belt in Swaziland, historicallya producer of 11.5 million ounces of gold. In the Barberton Greenstone Belt, extensive, shallow, historic workings, plus alack of modern exploration, have presented Dwyka with an ideal opportunity.Previous owners drilled some 13,500 metres of the project area, providing theCompany with a drill database that includes numerous gold intersections. Thesehave allowed Dwyka to establish immediate targets for both infill drilling andthe development of extensions to established zones of mineralization. In thecurrent favourable resources climate, it is believed that Dwyka's goldexploration activities will accelerate. Diamonds Dwyka has a shareholding of 48.2% in KimCor Diamonds Plc, an AIM-listed diamondexplorer and producer with a portfolio of projects in Southern Africa. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Nyota Minerals