31st Oct 2007 07:01
Dwyka Resources Limited31 October 2007 Dwyka Resources Limited (the 'Company') Quarterly Report 30 September 2007 NICKEL Muremera Nickel Project Recent activities During the quarter, detailed logging and sampling of the UNDP core wasundertaken. Twelve drillholes were logged, sampled and petrographicallyanalysed. Geostatistical analyses revealed a high correlation coefficientbetween the UNDP results and the new results allowing for the combined use ofthe two data sets in geochemical studies of the deposit. The petrographicanalysis has found that pentlandite and chalcopyrite (the minerals of Ni and Curespectively) are present in most cases, though often fine grained. Thedirectors of Dwyka believe that based on these early observations there existsimilarities between Kabanga and Muremera. A 5,000 metre diamond drilling contract was signed with Major Drilling Tanzania,with a view to undertaking stratigraphic drilling aimed at further defininganomalies identified through previous core drilling and geophysical work and theanalysis outlined above. The drilling programme commenced in late September andis expected to continue until November, with the subsequent analysis of resultstaking place in November and December 2007. Geochemical data interpretationwill be conducted on an ongoing basis, with a final report expected prior to theend of January 2008. A heliborne VTEM survey has also been commenced on the licence area and isexpected to be completed towards the end of October. Data accumulated fromthose surveys will be interpreted during November and December 2007, with a viewto establishing drill targets by January 2008. VTEM target drilling willcommence shortly thereafter. About the project The Muremera licence, owned by the Company's wholly-owned subsidiary DanylandLimited ("Danyland"), 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. Shareholders and Earn-in Agreement with BHP Billiton On 23 February 2007, the Company signed a Shareholders and Earn-in Agreementwith BHP Billiton ("BHPB Agreement"), pursuant to which BHP Billiton has agreedto spend at least US$5,200,000 in undertaking certain activities to develop theMuremera Nickel Project, in order to earn a shareholding of up to 50% inDanyland. 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 target testingin 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. GOLD Swazigold Project Recent activities Soil geochemistry, structural mapping, rock chip and channel sampling andassaying commenced on the properties at the beginning of the quarter. This workwill further define the known targets in preparation for the first phase ofdrilling set to commence in the next quarter. About the project The Swazigold Project is located in Swaziland, in the highly prospectiveArchaean Barberton Greenstone Belt that straddles the border between MpumalangaProvince, South Africa and Swaziland. Such Greenstone Belts host many major golddeposits in 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. The Project area is a large 425 sq km 'greenfields' exploration play with manytargets 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 cumulative 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. Shareholders and Earn-in Agreement in relation to Swazigold Project On 16 July 2007, Dwyka's wholly-owned subsidiary Karrinyup Holdings Limited ("Karrinyup") entered into a Shareholders and Earn-in Agreement ("Swazi Agreement") in relation to 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. Under the terms of the Swazi Agreement, Karrinyup has the right to acquire thefollowing percentage shareholdings in SGV on the following basis: Payment of US$200,000 plus Dwyka shares to the value of US$1,500,000 (at marketprice) - Karrinyup 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) -Karrinyup earns a further 20% interest (total 70%); Payment of US$400,000 plus Dwyka shares to the value of US$1,000,000 (at 80% ofmarket price) by 30 June 2009; project expenditure to reach bankable feasibilitystage by 30 June 2011 - Karrinyup earns a further 15% interest (total 85%); 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 within 12 monthsafter the date on which a bankable feasibility study is completed in relation tothe Swazigold Project - Karrinyup acquires remaining 15% interest (total 100%). Under the terms of the Swazi Agreement, Karrinyup will be the manager of theSwazigold Project, which will be overseen by a management committee in which thevendor shareholder in SGV and Karrinyup will each have equal representation.Voting will be in accordance with the parties' shareholding percentages in SGV,provided that the manager will have a casting vote in the event of a deadlock. Karrinyup may withdraw from the Swazigold Project at any time, in which case itwill dilute to a 49.9% shareholding in SGV and will relinquish managementcontrol. In addition, if such withdrawal occurs after the bankable feasibilitystage, Karrinyup will have a 2% royalty with respect to all minerals producedfrom the Swazigold Project area. DIAMONDS Sale of diamond and industrial assets to KimCor On 24 September 2007, the Company completed the sale of its portfolio of diamondand industrial assets to AIM listed KimCor Diamonds Plc ("KimCor"). The neteffect of this transaction was that Dwyka sold its investments in, and loanreceivables with respect to, various subsidiaries with a book value of$16,820,000 in consideration of the issue to Dwyka of 134,383,718 ordinaryshares in KimCor. Shareholder approval for this transaction was obtained fromboth Dwyka and KimCor shareholders. Dwyka now owns 50.09% of the enlarged KimCor. As part of and contemporaneouslywith completion of this transaction, KimCor completed a capital raising ofapproximately GBP4.2 million (AUD10.1 million) at an issue price of GBP0.065 perKimCor share. These funds will primarily be used to finance capital developmentof the enlarged entity's South African assets. CORPORATE Issue of Shares During the quarter the following shares were issued by the Company: 2,777,778 fully paid ordinary shares were issued pursuant to the conversion ofconvertible loan notes with a face value of GBP1 million. The series of loan notes which have now been wholly converted were issued on 22June 2006, were unsecured and attracted a yield of 8% payable quarterly inarrears from the date of issue until a maturity date of 22 June 2010. The loannotes were able to be converted into Shares at any time until 22 June 2010, at aconversion price of GBP0.36 per Share. 3,962,757 shares were issued to Savinara Company SA pursuant to the SwaziAgreement, as announced on 18 July 2007. 2,349,400 shares were issued in total to Acorn Mining (Pty) Limited, AcornFinancial Instruments (Pty) Limited and Capital Frontiers LLC at an issue priceof GBP0.35 ($A0.84), releasing Dwyka from outstanding commitments and ongoingobligations relating to the acquisition of Bellsbank Mining Number One(Proprietary) Limited and Kophia Diamonds (Proprietary) Limited. Thesecompanies hold the Blaauwbosch, Newlands and New Elands Mines and were acquiredin August 2005. The settlement facilitated the negotiation process in relation to the sale ofthe Company's diamond interests to KimCor, which was completed on 24 September2007. 1,000,000 shares were issued at a price of A$1.00 per share, pursuant to theexercise of options by certain South African personnel under the terms of theCompany's employee Option Plan; and 825,000 shares were issued at a price ofA$0.52 per share, pursuant to the exercise by certain South African personnel ofoptions granted to them on 17 March 2007. As at the end of the quarter, Dwyka had 130,494,206 Shares in issue. 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. Appendix 5B Mining exploration entity quarterly report Name of entityDWYKA RESOURCES LIMITED ACN or ARBN Quarter ended ("current quarter")098 060 938 552 30 September 2007 Consolidated statement of cash flows Current quarter Year to date Cash flows related to operating activities $A'000 (3 months) $A'0001.1 Receipts from product sales and related 2,582 2,582 debtors 1.2 Payments for (a) exploration and evaluation (274) (274) (b) development (183) (183) (c) production (3,035) (3,035) (d) administration (978) (978)1.3 Dividends received1.4 Interest and other items of a similar 43 43 nature received1.5 Interest and other costs of finance paid (193) (193)1.6 Income taxes paid1.7 Other FOREX (10) (10) Net Operating Cash Flows (2,048) (2,048) Cash flows related to investing activities1.8 Payment for purchases of: (a)prospects (227) (227) (b)equity investments (c) other fixed assets (3) (3)1.9 Proceeds from sale of: (a)prospects (b)equity investments (c)other fixed assets1.10 Loans to other entities1.11 Loans repaid by other entities1.12 Other cash acquired upon subsidiary 7,662 7,662 acquisition Net investing cash flows 7,432 7,4321.13 Total operating and investing cash flows 5,384 5,384 (carried forward) 1.13 Total operating and investing cash flows 5,384 5,384 (brought forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1,446 1,4461.15 Proceeds from sale of forfeited shares1.16 Proceeds from borrowings1.17 Repayment of borrowings (75) (75)1.18 Dividends paid1.19 Other - capital raising costs Net financing cash flows 1,371 1,371 Net increase (decrease) in cash held 6,755 6,755 1.20 Cash at beginning of quarter/year to date 4,265 4,2651.21 Exchange rate adjustments to item 1.20 (36) (36)1.22 Cash at end of quarter 10,984 10,984 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 83 1.2 1.24 Aggregate amount of loans to the parties included in item 1.10 - 1.25 Explanation necessary for an understanding of the transactions During the quarter the Company completed a reverse takeover of AIM listed KimCor Diamonds plc by way of selling its diamond and industrial assets to KimCor in consideration for 50.1% of Kimcor. 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 - During the quarter the company issued the following fully paid ordinary shares: 2,777,778 shares were issued at GBP0.36 pursuant to the conversion of GBP1 million convertible loan notes. - 3,962,757 shares for the acquisition of an initial 50% interest in the Swazigold project - 2,349,400 shares at $A0.84 releasing Dwyka from outstanding commitments and ongoing obligations relating to the acquisition of Bellsbank Mining Number One (Proprietary) Limited and Kophia Diamonds (Proprietary) Limited. 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 7,779 4515.2 Deposits at call 3,205 3,8145.3 Bank overdraft5.4 Other (provide details) Total: cash at end of quarter (item 10,984 4,265 1.22) 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 Swazigold project 50% shareholding in holding 0% 50% tenements acquired company 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 7.3 +Ordinary 130,494,206 130,494,206 N/A N/A securities 7.4 Changes during quarter (a) Increases through issues 825,000 825,000 $0.52 $0.52 1,000,000 750,000 $1.00 $1.00 2,777,778 2,777,778 GBP0.36 GBP0.36 2,349,400 2,349,400 $0.84 $0.84 (b) Decreases 3,962,757 3,962,757 $0.434 $0.434 through returns of capital, buy-backs 7.5 +Convertible - debt securities (description)7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities 1,000 GBP1000 - 1000 GBP 1000 GBP matured, notes convertible converted at GBP0.36 on or before 22 June 20107.7 Options Exercise price Expiry date (description and conversion 125,000 - $0.52 30/6/2010 factor) 7.8 Issued during quarter7.9 Exercised Exercise price Expiry date during quarter 825,000 - $0.52 30/6/2010 1,000,000 - $1.00 30/6/20097.10 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 which comply withaccounting standards as defined in the Corporations Law or other standardsacceptable to ASX (see note 4). 2. This statement does give a true and fair view of the matters disclosed. Company Secretary Michael Langoulant Notes 1. This quarterly report provides a basis for informing the market how theentity's activities have been financed for the past quarter and the effect onits 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 in respect ofinterests in mining tenements acquired, exercised or lapsed during the reportingperiod. If the entity is involved in a joint venture agreement and there areconditions precedent which will change its percentage interest in a miningtenement, it should disclose the change of percentage interest and conditionsprecedent in the list required for items 6.1 and 6.2. 3. Issued and quoted securities The issue price and amount paid up is notrequired in items 7.1 and 7.3 for fully paid securities. 4. The definitions in, and provisions of, AASB 1022: Accounting for ExtractiveIndustries and AASB 1026: Statement of Cash Flows apply to this report. 5. Accounting Standards ASX will accept, for example, the use of InternationalAccounting Standards for foreign entities. If the standards used do not addressa topic, the Australian standard on that topic (if any) must be complied with. For further information please contact: Melissa Sturgess Dwyka Resources Limited +61 (0) 8 9324 2955 Richard Brown Ambrian Partners Limited +44 (0) 20 7776 6417 Charlie Geller/ Leesa Peters Conduit PR +44 (0) 20 7429 6604/ +44 (0) 79 7006 7320 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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