31st Oct 2008 07:18
DWYKA RESOURCES LIMITED (ASX:DWY.AX; AIM:DWY.L)
QUARTERLY REPORT 30 SEPTEMBER 2008
Highlights during the Quarter
Muremera Nickel Project in Burundi
Philippines Coal Project
Commencement of 5,000m core drilling program. The first drill holes both intersected three coal seams S1, S2 and S3. In both cases Seam S3 is thickest, having vertical thicknesses of 10.35m and 14.0m in the first two holes respectively. In both cases, the S3 coal occurs as one discrete robust seam with no waste content.
Construction of the Daguma camp and core shed completed
SwaziGold Project in Swaziland
Kimcor Diamonds Plc
MUREMERA PROJECT
Following completion of the Phase One programme of exploration at the Muremera Nickel Project ("Project"), which identified 24 priority targets warranting further drilling and downhole EM geophysical surveys, Dwyka's partner, BHP Billiton, commenced Phase Two drilling in at the Project during the Quarter. To date a total of 6 holes have been drilled as part of Phase Two, resulting in one target, producing two intersections of massive sulphide of 4.27m and 6.99m at depths between 132.61m to 136.88m and 144.8m to 151.79m, respectively, returning an average weighted composite grade of approximately 1 per cent Nickel equivalent.
Detailed results of those intersections are set out in the table below.
|
Drill Hole |
Depth |
Depth |
Intersection |
Ni |
Cu |
Co |
|
(No) |
From (m) |
To (m) |
(m) |
(% wt avg) |
(% wt avg) |
(% wt avg) |
|
RUJA D001 |
132.61 |
136.88 |
4.27 |
0.68 |
0.3 |
0.11 |
|
RUJA D001 |
144.8 |
151.79 |
6.99 |
0.73 |
0.33 |
0.11 |
|
RUJA D001 |
132.61 |
153.8 |
21.19 |
0.49 |
0.21 |
0.08 |
As announced by the Company on 27 October 2008, the 6 targets drilled to date, together with the remaining targets, will also be tested using downhole EM geophysics. The EM survey will enable the exploration team to generate 3D models and more accurately pinpoint potential new conductors that can subsequently be drilled with a much higher degree of confidence. The BHP Billiton geophysical survey crew is provisionally scheduled to commence the survey within the next month.
The geological environment at Muremera is similar to that at the nearby Kabanga deposit, which is currently estimated to contain a resource of 48.1 Mt @ 2.72% Ni, 0.38% Cu, 0.51 g/t PGM (3.05% Ni eq.).
BHP Billiton has the option to spend a minimum of US$5.2 million on the Project, to earn up to a 50% interest in Danyland Limited, the Dwyka subsidiary which holds the exploration rights for the nickel and associated minerals within the Project area. As reported in Dwyka's Quarterly Report announced on 29 July 2008, BHP Billiton spent a total of approximately US$4.2 million n relation to the Project during Phase One.
PHILIPPINES COAL PROJECT
Exercise of Daguma Coal Project Option
Following the passing by Dwyka shareholders of all resolutions at the Extraordinary General Meeting of shareholders held on 30 June 2008, on 17 July 2008 Dwyka exercised its option ("ACRL Option") to acquire all of the issued shares in Asian Coal Resources Limited ("ACRL"). In turn, ACRL and its local Philippine partner, MANA Resources Development Corporation ("MRDC"), exercised the options permitting those companies to acquire an initial collective interest of 30% by 18th January 2009 in each of Daguma Agro-Minerals, Inc. ("DAMI") and Bonanza Energy Resources, Inc., ("BERI") with the possibility of thereafter increasing that to a maximum of 100%. DAMI and BERI are the holders of the Daguma and Bonanza coal deposits which constitute the Daguma Coal Project ("Project").
ACRL is a 40% shareholder in MRDC and has options to increase this to a 100% interest in MRDC. ACRL and the MRDC shareholders have entered into a shareholders' agreement between them to ensure that the two entities act with a common purpose in relation to the Project.
As a result of the exercise of the ACRL Option, Dwyka paid US$1.25M to Tomori Enterprises Limited ("Tomori") and issued a total of 17,494,071 new ordinary shares to Tomori at a deemed price of £0.26 per share, by way of option payments and as consideration for the ongoing provision by Tomori of certain Project-related services pursuant to the services agreement announced by the Company on 20 May 2008. A further US$1.25M was paid to the Project vendors during the Quarter in connection with the acquisition by Dwyka of an initial indirect Project interest of 8%.
Drilling
During the Quarter, diamond drilling commenced on schedule, with the intention of enabling Dwyka to verify historic results and further define and delineate a JORC-compliant resource. The programme was to comprise an initial 5,000 metres of drilling (consisting of 25 large diameter drill holes with an estimated depth of 200m) and associated coal quality analysis of approximately 500 samples.
Drilling commenced on 12th August and the first hole was completed on 20th August and drilled to a depth of 75.8 metres. The first drill hole (Hole no DDH-1 in Figure 2) intersected 3 coal seams with 10.35m of coal intersected in discrete robust seam. The top of the main seam was intersected at a depth of 36.6m. The hole is situated approximately 550m from the outcrop position of the main seam. The core from the first completed hole was logged and sampled according to JORC guidelines. Subsequent analysis showed the coal to be of medium calorific value, in line with Dwyka's expectations.
Geological mapping and interpretative desk studies have indicated that the main coal seam may reach a thickness of up to 18m in the central parts of the Daguma deposit.
The construction of a 15-man camp and core shed at Daguma was also completed on schedule and within budget.
Prefeasibility Study
During the Quarter, Sedgman Limited ("Sedgman") was appointed to conduct a prefeasibility study in relation to the Project ("Prefeasibility Study"), intended to cover the coal handling & processing plant (CHPP), coal transport, stockpiling & blending, port & ship-loading facilities, and infrastructure requirements in relation to the Project. Sedgman visited the project site during the Quarter for an inspection of the project areas and for meetings with local construction companies and haulage contractors. Preliminary locations for the mine site, haulage road route and port area were inspected, with the conclusion that the terrain was suitable for the establishment of necessary facilities.
The Feasibility Study considered the most likely options for the progressive ramp up in production to 5 Million tonnes of coal per annum (Mtpa) with minimisation of capital costs in the early stages of the project. Capital and operating cost estimates for production rates of 1.0, 3.0 and 5.0 Mtpa are tabulated below.
|
Coal Output (Mtpa) |
Capital Cost (A$ Millions) |
Operating Cost (A$ per t of Coal - Panamax Ship Loaded) |
|
1.0 |
45.5 |
37.06 |
|
3.0 |
129.4 |
38.59 |
|
5.0 |
280.2 |
32.16 |
Project Withdrawal
As announced on 29 October, 2008 the directors have decided that in order to halt the cash expenditure associated with the Philippines-based Daguma/Bonanza Coal Project, the Company, via ACRL, has now ceased work. The vendors have been advised that Dwyka does not intend to make further payments for the acquisition of equity in the project. Continuing with the current work programme and acquisition timetable would deplete Dwyka's cash reserves to approximately GBP2.4m by the end of January 2009 with the requirement for a further acquisition payment to be made at that stage. Further, recent movements in the AUD:USD exchange rates have meant that the cost of making such acquisition payments has increased by approximately 25% since funds were raised for the project in May 2008.
Dwyka's current beneficially earned equity position in the Daguma/Bonanza Projects is 8%.
SWAZIGOLD PROJECT
During the Quarter Dwyka announced that it had successfully negotiated a three month extension to the current phase of the Shareholders and Earn-In Agreement ("Agreement") relating to the SwaziGold project ("Project"), taking the deadline for completion of that phase to 30 September 2008. Subsequently, in response to the catastrophic downturn in the global financial markets and other pertinent factors, the deadline for completion of the current Project phase was further extended to 28 February 2009. As at 30 September 2008, Dwyka had spent US$728,273 under the current phase of the Agreement. It now has approximately 4 months in which to spend a further US$21,727, bringing the total expenditure to the required level of US$750,000 and enabling Dwyka (through its wholly-owned subsidiary Karrinyup Holdings Limited), to increase its interest in Swazi Gold Ventures (Pty) Ltd, the holder of a 90% interest in the Project company, from 50% to 70%.
KIMCOR DIAMONDS PLC
During the Quarter, Kimcor Diamonds Plc ("KimCor"), in which Dwyka has a shareholding of 48%, reported on the company's recent diamond sales as follows:
10,023.55 carats of diamonds recovered and sold for a total of US$708,181.95 representing an average sales value of US$70.65 per carat;
SMI4 production totaling 7,868.71 carats sold for US$558,874 representing an average sales value of US$71 per carat;
SMI4 production included a number of larger stones recording excellent prices including individual stones weighing 24.45ct, 10.16ct, 9.65ct, 9.57ct, 7.91ct and 6.63ct returning sales values of US$166,260, US$10,363, US$12,303, US$10,981, US$8,068 and US$14,088 respectively;
Newlands production totaling 1,278.45 carats sold for US$104,857 representing an average sales value of US$82 per carat;
Newlands production included a number of larger stones including individual stones weighing 4.25ct, 3.14ct and 2.80ct returning sales values of US$4,826, US$2,620 and US$2,270 respectively;
Blaauwbosch tailings processing produced a total of 876.39 carats sold for US$44,449 at an average sales value of US$50.70 per carat;
As at 31 July 2008 a further 4,330 carats remain in inventory, which will be held for future tender.
MELISSA STURGESS
Chief Executive Officer
The technical exploration and mining information contained in the above announcement has been reviewed and
approved by Ed Nealon, who has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is qualified as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr. Nealon is a Dwyka Resources Limited Director and meets the criteria of a qualified person under the AIM guidance note for mining, oil and gas companies.
Ed Nealon consents to the inclusion in this announcement of such information in the form and context in which it appears.
Enquiries:
Melissa Sturgess
Dwyka Resources Limited
(+618) 9324 2955 or [email protected]
In the United Kingdom
Richard Brown
Ambrian Partners Limited
+44 (0)20 7634 4700
Press enquiries
Charlie Geller/Leesa Peters
Conduit PR
(+44) 20 7429 6604 or (+44) 7970 067 320
or visit http://www.dwyresources.com
Related Shares:
Nyota Minerals