6th Jun 2007 13:24
GVM Metals Ltd06 June 2007 GVM METALS LTD ("GVM" or the "Company") RESULTS OF SHAREHOLDERS MEETING AND TRADING UPDATE The Directors of GVM (AIM/ASX/JSE) are pleased to advise that all resolutionsconsidered at the General Meeting held 5 June 2007 were passed by shareholders. The outcome of the meeting resulted interalia in the Company satisfying all theconditions precedent necessary to complete the acquisition of a 100% interest inthe Baobab JV. and the Holfontein Project. This is a critical step forward inthe Company's progress to becoming a significant coal producer. The Company has placed 34,868,283 new ordinary shares in GVM ("Shares") toacquire the remaining a 51% interest in Holfontein, the remaining 50% interestin the Baobab Joint venture and 100% interest in additional Limpopo prospectingrights, with the respective vendors. Application will be made for the 34,868,283 Shares to be admitted to trading onAIM. Following the admission of the Shares the number of Ordinary Shares onissue will be 196,518,703. In addition, a resolution was passed to issue 2,000,000 options exercisable at$1.25 each on or before 30 September 2012 to Richard Linnell and 5,000,000options exercisable at $1.25 each on or before 30 September 2012 to SimonFarrell. The current status of the Company's coal projects is set out below: MOOIPLAATS • An infill drilling program is underway to convert a portion of the current inferred resources to a minimum of 60 million tonnes in the measured and indicated category • The inferred resource drilling program at Mooiplaats to date has covered approximately 7,000 Ha of the 20,000 Ha of the total property. Completion of this program has been suspended to conduct the above infill drilling as detailed above • Indicative quotes from potential contractors have been received on the basis of supplying an initial six million tonnes per annum of domestic thermal coal to Camden power station • The planned second phase of development is to produce approximately two million tonnes of anthracitic and export thermal coal per annum • Production expected to commence Q3 2008 LIMPOPO COAL PROJECT (Tuli Coalfield) • Work set to commence Q3 2007 to upgrade and expand the inferred resource of 352 million tonnes to indicated and/or measured • Bankable feasibility study to commence before the end of Q4 2007 BAOBAB COAL PROJECT (Soutpansberg Coal Field) • Work set to revalidate the previous drilling by Iscor/Kumba and bring the resources into JORC standard HOLFONTEIN • The measured resource statement and geological model is expected to be completed by the end of June 2007 • Production expected to commence Q3 2008 NiMag • EBIT for the year to 30 June 2007 is expected to be in the range of Zar 42 /45 million ($A7-8 million) Simon Farrell, Managing Director, GVM Metals commented, "I am pleased to providethis positive update from the meeting. It is clear from the progress made at ourprojects that GVM is rapidly progressing towards our goal of becoming a majorcoal producer in South Africa." For more information contact: Simon Farrell, Managing Director GVM +61 417 985 383 Nonkqubela Mazwai, Deputy Managing Director GVM +27 11 803 8247 Olly Cairns Blue Oar Securities Plc +44(0) 20 7448 4400 Peter Krens Mirabaud Securities Ltd +44(0) 20 7878 3362 Leesa Peters / Jos Simson Conduit PR +44(0) 20 7429 6603 +44(0) 7899 870 450 www.gvm.com.au TRADING UPDATE MOOIPLAATS Subject to satisfaction of various conditions as announced on 7 February 2007,GVM has contracted to buy 70% of the shares in Coal of Africa Ltd ("CoAL") whichhas the new order rights to various adjoining properties in the Ermelo districtof South Africa adjacent to the Camden Power Station. Under the originaltransaction, GVM was to acquire CoAL via the acquisition of Kelso Mining. Inaddition to the CoAL rights, Kelso Mining had a ferronickel project in thePhilippines, which subject to certain conditions was also to be acquired as partof the transaction. It became apparent that the complexity of the transactionwas jeopardizing settlement of the CoAL transaction. There was thereforeagreement amongst the parties that GVM deal directly with the original partiesand Kelso would be removed from the transaction on the basis it was reimbursedits costs in relation to the original due diligence and legal costs up to amaximum of GBP500,000 to be satisfied by the issue of GVM shares at 40p. The result of the transaction is that the cost of acquiring the CoAL shares isincreased from the original price of GBP 30 million in cash and GBP 7 million inshares at 30p per share by the reimbursement described above. A cash deposit ofGBP 3 million has already been paid. GBP 17 million of the cash component willbe paid 90 days after receipt of all necessary Government consents with theremaining GBP 10 million to be paid 12 months after that date. The sharecomponent will be made in two payments, GBP 3 million immediately and theremaining balance on completion of all conditions precedent. Following recent placements the Company has cash reserves in excess of GBP 25million (AUD 60 million) and no debt other than working capital facilities forthe NiMag business. Since the end of February 2007, an intensive drilling program involving up to 11drill rigs has been working on the various Mooiplaats farms. A summary of thiswork is set out below: Inferred Measured Total boreholes to date 89 40 Total Metres drilled 18,145 Samples submitted 185 83 Hardgrove Index & Grindability samples 10 The drilling program at Mooiplaats was initiated with the task of defining aninferred resource for the entire property. The program is being supervised bySRK Consulting and approximately 7,000 Ha of the 20,000 Ha property has beendrilled following the guidelines established by the JORC and SAMMREC codes. In order to bring that portion of the ore body closest to the Camden PowerStation into measured category, the drilling program was suspended and the rigsbegan the infill drilling required to upgrade the status of the resource. The aim of the program is to bring a minimum of 60 million tonnes into themeasured and indicated category. Sixty million tonnes is the coal required forten years consumption at the adjacent Camden Power Station. Once this infillprogram is completed, mine planning can commence and the current negotiationswith contract mining companies finalised. The inferred drilling will thenre-commence with approximately 250 further holes required to complete theprogramme. Indicative quotes have been received on the basis of supplyinginitially six million tonnes of domestic thermal coal annually. The plannedsecond phase of development is to produce approximately two million tones ofanthracitic and export thermal coal. To put the potential size of the mine intoperspective, Australia currently produces a total of 70 million tonnesunderground coal. Owing to the transfer of rigs to accelerate the definition of a measuredresource and the results of the inferred drilling program to date, therequirement of a 450 million tonne minimum JORC compliant resource under theCoAL agreement has been waived, leaving the only conditions precedent remainingbeing ministerial consent to the transfer and Competition Authority consent.This is expected to take place in the next three months. LIMPOPO COAL PROJECT (Tuli Coalfield) In July 2007, the Company intends to release four of the eleven rigs drilling atMooiplaats and relocate them to the Limpopo project. Work undertaken by Sphere/Utah Mining in the 1980's, delineated an inferred resource of 352 million tonnes(competent person report available at www.gvm.com.au). Following the acquisition of adjoining properties, the intention is to expandand upgrade the current resource status to indicated and/or measured. Thisprogram, incorporated with yet to be flown aero magnetic data, will form thebasis of a bankable feasibility study which is intended to commence before theend of the year. BAOBAB COAL PROJECT (Soutpansberg Coal Field) Following completion of the Data Terrain Model, two rigs released from theHolfontein infill drilling program are being transferred to the Baobab project.These rigs will commence large diameter drilling on the Fripp and Tanga farms.These farms were subject to a comprehensive drilling and testing program byIscor in the 1970's and 80's. The intention of the program is to revalidate theearlier work and bring the resources into JORC standard. HOLFONTEIN Poor performance by the drilling contractor has delayed finalising the in-filldrilling at Holfontein until this week. Initial results have confirmed that the5 Seam should produce the required quality of coal for the metallurgicalindustry. The 4 Seam will also produce suitable quality coal for domesticthermal consumption. The Measured Resource and Geological Model is expected to be completed by theend of June 2007 in time to feed into the Scoping Study and application for NewOrder Mining Rights ("NOMR"). Consultants have been appointed to complete theNOMR and the Environment Studies including the Environmental Impact Assessmentand Environmental Management Plan. In parallel with the NOMR applications, GVMwill complete a Definitive Feasibility Study including baseline capital andoperating cost estimates with an expected +/-10% accuracy. Concurrently experienced contractors will be identified and selected foralliance contracts for the outsourced Underground Mining and Coal Processing.The open book, negotiated alliance type of contract has been selected in orderto optimise production, capital and operating costs focusing on safety, healthand environment performance. NiMag • EBIT for the year to 30 June 2007 is expected to be in the range of Zar 42 /45 million ($A7-8 million) Buoyant trading conditions continue to improve this division's performance.Expected EBIT for the year to 30/6/07 is expected to be in the range of Zar 42/45 million ($A7-8 million) and the outlook for 2008 is for a modest furtherimprovement. NiMag management continues to seek further similar businesses toexpand its metal alloys and fibres division. NiMag, which was acquired for Zar 55 million some four years ago, has now repaidall its acquisition debt and provides a most valuable contribution to the costsof developing the coal business. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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