31st Jan 2007 09:04
Albidon Limited31 January 2007 Level 1 62 Colin St West Perth 6005 Western AustraliaALBIDON LIMITED ARBN 107 288 755 Tel: +61 8 9221 4600 Fax: +61 8 9211 4699 Email: [email protected] ASX Code: ALB AIM Code: ALD www.albidon.com 31 January 2007 Market release via electronic lodgement Paste the following link into your web browser to download the PDF document related to this announcement: http://www.rns-pdf.londonstockexchange.com/rns/4297q_-2007-1-31.pdf QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 31 DECEMBER 2006 HIGHLIGHTS Munali Nickel Project • A life of mine Offtake Agreement has been signed with Jinchuan Group Limited ("Jinchuan"), China's largest Nickel refining company. • The European Investment Bank ("EIB") and Barclays Capital ("Barclays") have been mandated to act as joint Lead Arrangers in providing finance of up to US$60 million for the Munali Nickel Project ("Munali"). • Site works have increased with roadworks and the excavation of the box-cut for the underground decline. • US$35 million was raised in a placement to provide the equity component of project funding. • Recruitment of key members of the Munali development team is well advanced. • Development of the Enterprise Deposit at Munali will involve nickel mining and processing at a rate of 900,000 tpa over an initial 10-year project life. • Munali will have a highly competitive cost structure due to efficient and low-cost mining methods, excellent existing infrastructure and a simple metallurgical flowsheet. Munali District Exploration • Reconnaissance mapping at Chikani West, one of the two new regional-scale Ni-Cu-Co-Cr targets 25km south of Munali, has identified copper-bearing gossan fragments. • Geological mapping and an extension of existing geochemical soil sampling surveys commenced at the Chikani South Prospect. Joint Venture Activity • An Option and Earn-In Letter Agreement signed with Zinifex Limited for exploration and development of Albidon's zinc-lead projects in Tunisia. • A regional airborne radiometric survey was funded by Albidon's joint venture partner African Energy Resources Ltd ("African Energy") over selected regional uranium targets in the Kariba Valley and Luano Valley projects. • African Energy nominated two uranium project areas for earn-in after passing the initial expenditure commitment. • Diamond drilling to provide samples for metallurgical processing variability test-work was completed by African Energy at the Njame North uranium deposit in Zambia. • Drilling and motorised auger sampling continues to demonstrate widespread PGM mineralisation at the Luwumbu Project in Tanzania, operated by Goldstream/Lonmin. Corporate • 39,500,000 new ordinary shares were issued during October to institutional investors to raise USD$35 million (AUD$46.6 million) before expenses. The funds will be used to finance the Munali Project, ongoing drilling at Munali and exploration activities throughout Africa. • The cash position at 31 December 2006 was AUD$49.5 million. • 150,000 Unlisted Options were exercised during the period at an exercise price of AUD 60 cents to raise AUD$90,000. Outlook • Complete excavation of the boxcut and commence underground development. • Ongoing recruitment of senior technical and commercial management for Munali. • Finalise detailed engineering design for the concentrator and associated infrastructure. • Invitation of tenders for construction of the Munali Project. • Lodgement of purchase orders for key items of plant and equipment. • Continued discussions with banks regarding debt funding for Munali. • Ongoing step-out drilling at Enterprise and Voyager aimed at expanding the resource base at Munali. • Commencement of a hydro-geological study to determine the characteristics of the aquifers at Munali. • Grade control drilling of the early stoping areas to ensure location, grade and metallurgical characteristics of the early ore is clearly understood. • Continued exploration at Chikani to evaluate base metal potential in the area. • Commencement of metallurgical test-work on uranium mineralisation at Njame North. • Prioritisation of uranium targets for drill testing from recently completed airborne radiometric survey. • Logistical planning for the drill testing of geophysical targets at the Mpemba Hill nickel prospect in Malawi. 1. Munali Nickel Project, Zambia Albidon Limited 100% Munali Project update: • A life of Project Offtake Agreement was reached with the Jinchuan Group. • During the quarter preliminary site works continued with excavation of the boxcut (see picture 1 below) and road works. • The infrastructure required for the Project development has been upgraded to accommodate the expanded workforce required for the Project. • Building of new houses for the displaced villagers is ongoing, with relocations continuing through next quarter. • Exploration continued around the Munali intrusion, including additional infill drilling at the Enterprise Deposit adding additional confidence to the early mining areas. • Drilling of additional holes for metallurgical testwork was also completed during the quarter. (see Picture 1: Enterprise Box Cut at Munali in the hyperlink above) Offtake Negotiations During the quarter a life of mine Offtake Agreement was signed with the JinchuanGroup, China's largest Nickel refining company. The agreement is a Mine Gate offtake which removes the risks associated with thetransport of the concentrate from Munali to a smelter. This agreement alsoincludes the placement of US$5 million worth of shares to Jinchuan and asubordinated debit facility for a further US$20 million, the details of thisfinance package are currently being finalised. Project Funding EIB and Barclays were mandated to act as joint Lead Arrangers in providingfinance of up to US$60 million for the Munali Project. The financing is subject to completion of due diligence and detaileddocumentation which is expected to be finalised by mid 2007. The financing will provide the remaining funding required for development ofMunali, including construction costs and working capital requirements. The debtwill ensure Albidon retains sufficient funds to continue the Company'sexploration and business development activities. Project Implementation Activities During the quarter activities on site increased with upgrades to the existinginfrastructure required for the construction period of the development. Thisincluded: • building of roads; • clearing of portions of the concentrator site; • construction of an explosive magazine; and • completion of water diversion levies to protect the boxcut and other key infrastructure from rainfall expected during the wet season. Additional water bores have also been completed and are expected to provide asignificant boost to the water supply on site. These bores will be pump testedearly in the next quarter and will assist in the dewatering of portions of thedeposit as required as well as providing process water supply. The building of new houses and the clearing of new farming plots for relocationsalso progressed well during the quarter. In total seven new farm plots werecleared and cropped to assist the villagers during the first cropping season atthe relocation area. Additional Enterprise Drilling • As announced on 8th of November, additional drilling intersected grades and widths better than or at least consistent with the resource model including: MAD217: 6.50m @ 2.50 % Ni, 0.45 % Cu, 0.14 % Co & 1.52 g/t Pt + Pd, MAD222: 7.75m @ 1.97 % Ni, 0.20 % Cu, 0.10 % Co & 1.12 g/t Pt + Pd, MAD224: 8.24m @ 1.84 % Ni, 0.24 % Cu, 0.11 % Co & 0.59 g/t Pt + Pd, MAD229: 10.0m @ 2.54 % Ni, 0.34 % Cu, 0.13 % Co & 1.22 g/t Pt + Pd. • In addition drilling between Enterprise and Voyager intersected the same mineralised horizon that hosts Enterprise including: MAD332: 4.0m @ 1.38 % Ni, 0.17 % Cu, 0.07 % Co & 1.35 g/t Pt + Pd, MAD318: 4.0m @ 0.82 % Ni, 0.17 % Cu, 0.06 % Co & 0.73 g/t Pt + Pd. These additional intersections highlight the potential for additional resourcesin the area. Voyager Prospect and Munali Intrusion Drill Programme A programme of advanced 3-dimensional modeling of the geology and geophysicalproperties of the Munali intrusion commenced during the quarter. This programmeis expected to provide further insight into the Munali mineralised system andwill be used to develop and evaluate new targets for additional drill testing atMunali. Munali District Exploration Assay results from geochemical stream sediment sampling completed in previousquarters have identified two regional targets approximately 25km south-east ofthe Munali deposit. These targets are characterised by the presence of anomalouslevels of Ni, Cu, Cr and Co in the stream sediment samples. Follow upreconnaissance geological mapping was undertaken over these targets during thequarter. At the Chikani West prospect, 25km south-east of the Munali deposit,fragments of gossan containing secondary copper minerals (mainly malachite) wereidentified during the reconnaissance mapping. The significance of thesegossanous fragments will be evaluated with more detailed geological mapping,geochemical soil sampling and a programme of ground-based geophysical surveying.These programmes will commence when the seasonal rains have ceased and groundaccess has improved. Three diamond drillholes have been completed as an initial test of confirmedtargets at Chikani North and Chikani South. Assay results for these drillsamples are expected in the next quarter. A follow-up programme of detailedmapping and geochemical soil sampling has also commenced at Chikani South, andwill be completed in the next quarter with the objective of defining furtherdrill targets. Additional ground geophysical surveying is also being consideredfor these areas in the next quarter. 2. Uranium Exploration Agreement, Zambia Albidon Limited 100%, currently funded and operated by Energy Ventures Limitedunder an Exploration Agreement African Energy Resources Ltd (majority owned by Energy Ventures Limited) fundedan airborne radiometric survey over uranium targets in the Kariba Valley andLuano Valley in Zambia during the quarter. Approximately 4,900 line-kilometresof data was collected, including a detailed orientation survey of the NjameProspect. This survey is designed to provide uranium drill targets within highpriority zones of interest in the Kariba Valley and Luano Valley project areas.Results are expected in the next quarter and these will be used to plan andprioritise uranium exploration drilling programmes that are anticipated tocommence immediately after the seasonal rains. A small programme of diamond drilling was completed by African Energy at theNjame North Prospect to provide samples for metallurgical test-work. Thesesamples will be used in a programme of processing and metallurgical variabilitytest studies that is expected to commence in the next quarter. Expenditure to date on the tenements subject to the Exploration Agreement hasexceeded the amount required for African Energy to earn the right to earn a 30%interest on nominated project areas. African Energy has nominated two suchproject areas for farm-in joint ventures, Chirundu and Kariba Valley, both insouthern Zambia. Formal agreements for these projects are expected to beexecuted in the next quarter. African Energy can earn a 30% interest in each ofthese projects by expending a further AUD1.0 million on each area. The remainderof the tenements under the Exploration Agreement will undergo additionalexploration, by African Energy, prior to a decision on whether to nominatefurther project areas. 3. Luwumbu Platinum Joint Venture Goldstream Mining NL 90%, Albidon Limited 10% with Lonmin currently earning 70% During the quarter Lonmin continued the step-out reconnaissance drilling atNkenja East and along strike in the Northern Arc, taking the final total for2006 to 28 holes completed for 10,146m. Assay results for the holes drilled in2006 have confirmed the widespread nature and broad continuity of platinummineralisation at the Nkenja East PGM discovery and in the continuation of theultramafic host rocks along the Northern Arc. A motorised auger programme has also been undertaken to provide bedrock samplesfor geochemical analysis from below recent cover. The results from thisprogramme have identified two new areas of Pt+Pd+Au anomalism in the NorthernArc and one in the Nkenja area. Lonmin plan to continue the auger programmeduring the wet season. The Luwumbu Joint Venture is currently in the process of recruiting a ProjectManager. 4. Songea Nickel-Platinum Project, Tanzania Albidon Limited 100%, currently funded and operated by BHP Billiton under theExploration Co-operation Agreement. Under the Exploration Co-operation Agreement, BHP Billiton has elected to form ajoint venture over five Prospecting Licences in the Songea Project in southwestTanzania. This decision reflects favourable rock, soil and stream sedimentgeochemical results, in addition to a geological interpretation by the Company'sgeologist's that the Songea area has geological similarities to the setting ofthe Voisey's Bay nickel deposit in Canada. BHP Billiton will continue to fund and operate the ongoing exploration programmeat Songea, commencing with an extensive helicopter-borne electromagnetic surveyover the three main nickel-copper targets. This programme is expected tocommence in the second quarter of 2007 once the seasonal rains have abated. 5. Selebi-Phikwe and Tati Nickel-Platinum Projects, Botswana Selebi-Phikwe Project Albidon Limited 100% The Company continued an evaluation of the results obtained by WMC and BHPBilliton through 2005 and 2006 at Selebi-Phikwe with the aim of designing theforward programme. This review incorporates an assessment of the extensivetenement areas south of Selebi-Phikwe that have not yet received any explorationcoverage under the Co-operation Agreement, including the Lipadi Hill Ni-Cuprospect area. The review also includes an evaluation of all open file datarelevant to base metal exploration completed in the 1970's through to the1990's. Results of this desktop review will be used in the next quarter to planthe 2007 field exploration programme. Tati Project Joint Venture with Iamgold (formerly Gallery Gold Limited) Albidon has exercised the option to enter four farm-in agreements in respect ofproject areas within the Tati Regional tenements, in addition to the existingTekwane farm-in joint venture and the Borolong joint venture. During thequarter, exploration programmes were completed for the Borolong target. At Borolong, a programme of infill geochemical stream sediment sampling wascompleted to evaluate a series of mafic and ultramafic intrusive rocks. Assayresults have indicated that the area previously identified with elevated Cu, Ni,Cr and Co values is small and that the anomaly is unlikely to represent asignificant mineralised system. The Company is currently reviewing its exploration strategy for the Tati Projectand is expected to finalise this strategy in the next quarter. 6. Malawi Nickel-Platinum Projects Mpemba Project Albidon Limited 100% The Mpemba Hill Project is located in southern Malawi near the major city ofBlantyre. During the quarter the Company received the final data from ahigh-resolution induced polarisation geophysical survey conducted over the mainnickel sulphide target at Mpemba Hill. Interpretation of the geophysical data has identified a number of targetsbroadly coincident with Ni and Cu soil geochemical anomalies associated with theoutcropping disseminated sulphide mineralisation at Mpemba. A decision onwhether these targets warrant drill testing will be made in the next quarter. 7. Tunisian Projects Nefza Zinc-Lead and Copper-Gold Project, Tunisia Albidon Limited 100% Albidon's Nefza tenement covers an area of 4,160 sq km that contains numerouszinc-lead and gold-copper prospects. Exploration during the quarter involved a continuation of systematic soilgeochemical sampling over priority target zones for zinc mineralisation. Assayresults are expected next quarter. Trozza Zinc Project, Tunisia Albidon Limited 100%, subject to a royalty No work was conducted during the period, pending completion of transfer of thetenement from BHP Billiton. Zinifex Option and Earn-In Agreement for Tunisia The Agreement between Albidon and Zinifex is designed to accelerate theevaluation of the Company's Tunisian projects, taking advantage of Zinifex'considerable expertise in zinc exploration and development. The key terms of the Agreement are: • Staged cash payments to Albidon of US$1 million, with an immediate initial payment of US$250,000. • Minimum commitment of US$1.3 million of expenditure by Zinifex. This exploration to be completed within 12 months. • Zinifex may earn a 51% interest in the projects by spending a total of US$6 million on exploration within 3 years, and making further cash payments of US$750,000. No interest will be earned by Zinifex in the projects until this time. The minimum initial committed expenditure of US$1.3 million is credited towards the earn-in, however the cash payments of US$1 million are not included as project expenditures. • Zinifex to spend an additional US$5 million within 2 years to earn a total interest of 70%. • Thereafter Albidon may elect to contribute to project expenditures in proportion to its 30% interest or may sell its interest for cash plus a retained royalty. Zinifex will manage the exploration programmes, taking advantage of theextensive database, local exploration infrastructure, personnel and supportnetwork established by Albidon. Signing of the Agreement marks the completion of an extensive series ofnegotiations, following receipt of a number of competitive proposals from largezinc mining companies. The arrangement with Zinifex will result in acceleratedexploration of Albidon's zinc assets and importantly it enables the Company tofocus on its prime objective of developing the Munali Nickel Project in Zambia. Dale Rogers Managing Director Full details for all projects including location maps, tenement schedules andtechnical descriptions may be found on the Albidon website at www.albidon.com The Australasian Code for Reporting of Exploration Results, Mineral Resourcesand Ore Reserves (the 'JORC Code') sets out minimum standards, recommendationsand guidelines for Public Reporting in Australasia of Exploration Results,Mineral Resources and Ore Reserves. The information contained in thisannouncement has been presented in accordance with the JORC Code and referencesto "Indicated" and "Inferred Resources" are to those terms as defined in theJORC Code. Information in this report relating to exploration results is based on datacompiled by Mike Dunbar (a full time employee of the Mitchell River Group) andFrazer Tabeart (a full time employee of Geogen Consulting), who are members ofThe Australasian Institute of Mining and Metallurgy and the Australian Instituteof Geoscientists respectively, and act as consultants to the Company. MikeDunbar and Frazer Tabeart have sufficient experience, which is relevant to thestyle of mineralisation and type of deposit under consideration and to theactivity which he is undertaking, to qualify as a Competent Person under the2004 Edition of the Australasian Code for reporting of Exploration Results,Mineral Resources and Ore Reserves. Mike Dunbar and Frazer Tabeart consent tothe inclusion of the data in the form and context in which it appears. If you have any queries please contact the Company Secretary, Nicholas Day on+61 8 9389 6300 or email [email protected] Appendix 5B Mining Exploration Entity Quarterly Report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001. Name of entity ALBIDON LTD ARBN Quarter ended ("current quarter") 107 288 755 31 December 2006 Consolidated statement of cash flows Cash flows related to operating activities Current quarter Year to date $AUD'000 $AUD'000 1.1 Receipts from product sales and related debtors 0 0 1.2 Payments for: (a) administration (631) (3,350) (b) development (1,986) (1,986) (c) production 0 0 (d) exploration and evaluation (1,709) (14,045)1.3 Dividends received 0 01.4 Interest and other items of a similar nature 447 774 received1.5 Interest and other costs of finance paid 0 01.6 Income taxes paid 0 01.7 Other (provide details if material) 0 0 (3,879) (18,607) Net Operating Cash Flows Cash flows related to investing activities1.8 Payment for purchases of: (a) prospects 0 0 (b) equity investments 0 0 (c) other fixed assets (584) (732)1.9 Proceeds from sale of: (a) prospects 0 0 (b) equity investments 0 0 (c) other fixed assets 0 01.10 Loans to other entities 0 (40)1.11 Loans repaid by other entities 270 7351.12 Recognition of Security Deposits as Cash 0 (140) Net investing cash flows (314) (177)1.13 Total operating and investing cash flows (carried (4,193) (18,784) forward) 1.13 Total operating and investing cash flows (carried (4,193) (18,784) forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 46,654 61,3491.15 Proceeds from sale of forfeited shares 0 01.16 Proceeds from borrowings 0 01.17 Repayment of borrowings 0 01.18 Dividends paid 0 01.19 Cost of share issue (1,699) (1,804) Net financing cash flows 44,955 59,545 Net increase (decrease) in cash held 40,762 40,761 1.20 Cash at beginning of quarter/year to date 10,782 10,5981.21 Exchange rate adjustments to item 1.20 (2,018) (1,833)1.22 Cash at end of quarter 49,526 49,526 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 $AUD'000 1.23 Aggregate amount of payments to the parties included in item 1.2 1,969 1.24 Aggregate amount of loans to the parties included in item 1.10 265 1.25 Explanation necessary for an understanding of the transactions Salaries and directors fees paid to executive and non-executive directors of the company, for the period aggregated $142,500. Administrative and technical services provided by Mitchell River Group Pty Ltd, a company in which Mr A Cooke, Dr D Windrim and Mr C Burton are directors, for the period aggregated $277,285. Executive services and reimbursements of bona fide expenses provided by Hartree Pty Ltd, a company in which Mr A Cooke is a director, for the period aggregated $39,072. Reimbursements of bona fide expenses provided by Lion Manager Pty Ltd, a company in which Mr M Brook is a director, for the period aggregated $8,307. Consultancy fees and reimbursements of bona fide expenses provided by Mineral Commerce Services, a company in which Mr C De Guingand is a director, for the period aggregated $26,853. During the quarter Mr Brian Rudd (acting for the Capital Drilling Group) repaid $143,791 of a loan for the purchase of a Schramm 685 drilling rig. The aggregate total loan outstanding as of 31/12/06 is AUD264,893. The rig is owned and operated by Brian Rudd and held under trust by Albidon Zambia Limited. Mr Rudd (acting for Capital Drilling) is an experienced operator of drilling services in Africa. The rig was used at the Company's Munali site in Zambia. The loan bears an interest rate of 7% pa. Until the loan is repaid, Albidon will deduct against the loan 28% of the amounts invoiced by Rudd for rig use. Mr C Burton has a 25% equity interest in the Capital Drilling Group. Payments to Capital Drilling for the quarter totalled $1.825m. 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 Nil2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest Nil Financing facilities available Amount available Amount used $AUD $AUD 3.1 Loan facilities 0 03.2 Credit standby arrangements 0 0 Estimated cash outflows for next quarter $AUD'000 4.1 Exploration and evaluation 1,5364.2 Development 12,862 Total 14,398 Reconciliation of cash Reconciliation of cash at the end of the quarter (as Current quarter Previous quartershown in the consolidated statement of cash flows) tothe related items in the accounts is as follows. $AUD'000 $AUD'000 5.1 Cash on hand and at bank 1,147 1,0465.2 Deposits at call 48,379 9,7365.3 Bank overdraft 0 05.4 Term deposits 0 0 Total: cash at end of quarter (item 1.22) 49,526 10,782 Changes in interests in mining tenements Tenement Nature of interest Interest at Interest at reference 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 security (see note 3) 3)7.1 Preference +securities (description)7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions7.3 +Ordinary securities 148,168,000 148,168,000 7.4 Changes during quarter (a) Increases through 39,500,000 39,500,000 AUD$1.20 AUD$1.20 issues 150,000 150,000 AUD$0.60 AUS$0.60 (b) Decreases through returns of capital, buy-backs7.5 +Convertible debt securities (description)7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options (description and 5,415,000 Number Exercise Expiry conversion factor) 2.45m AUD 0.60 30/06/07 0.3m AUD 0.60 30/04/08 0.465m AUD 0.60 30/06/08 0.4m AUD 0.75 30/06/08 1.2m AUD 0.75 1/12/08 0.6m AUD1.05 30/6/097.8 Issued during quarter 600,000 Exercisable at $1.05 before 30/6/097.9 Exercised during quarter 150,000 Exercised at 60 cents each7.10 Expired 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 Act or otherstandards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the matters disclosed. Sign here: Company secretary Print name: Nicholas Day Date: 31/01/2007 Notes 1 The 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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