22nd Dec 2005 11:01
GVM Metals Ltd22 December 2005 For immediate release22 December 2005 GVM METALS LIMITED ("GVM" or "the Company") HOLFONTEIN SCOPING STUDY GVM ( Ticker : GVM), the mineral processing and coal mining company announcestoday the results of the Holfontein Scoping Study. HIGHLIGHTS • Holfontein Coal Project contains an indicated gross in situ coalresource of 56 million tons • The Scoping Study was based on mining of 140,000 tons per month yielding870,000 tons of steaming coal and 420,000 tons of coking coal per annum. Attoday's prices this equates to an annual revenue of approximately 200 millionRand or AUS$40 million • The Project shows an IRR of 41% and GVM's 49% interest has a NPV ofAUS$19million using a 10% discount rate and a Rand/AUS$ exchange rate of5 to 1 GVM appointed BRSW Mining Consultants to carry out a Scoping Study of theHolfontein Coal Project in the Evander District of Mpumalanga, South Africa. Thescope of work included selecting the seams to be mined using the mostappropriate mining methods and designing a fit for purpose infrastructure It is planned to mine 140,000 tons of coal per month, employing approximately250 people to carry out the task. The run of mine number 4 Seam coal will beroad hauled to an Eskom power station and the number 5 Seam coal will bebeneficiated on site and dispatched to inland and export markets. Commenting today, Simon Farrell, Managing Director of GVM Metals said:"The Board is very encouraged by the results of the study and intendsprogressing the Bankable Feasibility Study as soon as the new mining titles areissued. The Board has been advised by our partners Motjoli Pty Ltd that theyexpect to receive the new titles in either January or February of 2006." Access to the mine will be by way of twin downcast 9degrees decline shafts. Oneshaft 4m x 3m for equipment and material with another 3m x 3m for a conveyorbelt and personnel access. These two declines will be placed 10m apart toimmediately comply with second outlet requirements. Twin vertical shafts will be drop raised to meet ventilation requirements, onedowncast and one upcast twin silos will be developed, each with a capacity of +/- 1,500 tons, to separately handle the coal from 4 Seam and 5 Seam. An interlevel incline shaft at 15degrees will be raised between the two seams to allowthe 4 Seam coal to be placed into the silo. The nature of the 4 Seam dictates that a continuous miner should be thepreferred method of mining the thicker areas (2.4 metres). A drill and blastsection has been included as standby to handle any remnants, dykes and otherareas that are lower than 2.4 metres in height. From the above combination itis anticipated to mine 70,000 tons per month. Most of the 5 Seam in the surrounding area has been mined by using conventionaldrill and blast equipment in a bord and pillar mining formation. Three completesets of equipment would be required to mine 70,000 tons per month. FINANCIAL RESULTS OF STUDY :CAPITAL EXPENDITURE (Rand) - CLIENT WASH PLANT CONTRACTOR MINING CONTRACTOR 73,515,000 40,000,000 150,000,000 OPERATING COSTS- Operating costs have been determined to be: 4 Seam mining: R70.00 / ROM ton. 5 Seam mining: R81.00 / ROM ton. MAJOR ASSUMPTIONS FOR THE BASE CASE SCOPING STUDY : Commercial Production from mid 2007 Starting ValueAnnual ROM Production tons 1,680,000Mining Split - Seam 4 ROM 50%Mining Split - Seam 5 ROM 50%Yield - Seam 4 95%Yield - Seam 5 50%Seam 5 Discard Sales 20%Cost Per ROM Ton (Seam 4)(1) R 57.00Cost Per ROM Ton (Seam 5)(1) R 81.00Crushing Cost (Seam 4) R 2.00Washing Cost (Seam 5) R 12.00Discard Re-treatment R 5.00Environmental ROM Cost R 2.00Site Management & H/O Costs R 5.00Parallel Royalty (Vendor) R 3.92Local Price Rand/t Seam 5 R 50.00Local Price Rand/t Seam 4 R 75.00RBCT Export Price US$/t US$45.00Exchange rate Rand/US$ 6.50Exchange rate Rand/AU$ 5.00Local Sales % Seam 5 60%RBCT Export Sales % Seam 5 40%Income Tax 30%Secondary Tax 12.50%Owners Capex Mine (Access & Ventilation Shafts)(2) R 85,000.00Owners Capex Plant (Infrastructure)(2) R 29,000.00 (1)Mining, Washing & Crushing will be contracted out. These costs generated byBRSW Mining Consultants are on this basis.(2)CAPEX for Washing Plant (R40 Million) and Mining Plant (R150 Million) fundedby the contactor. Richard Linnell, BSc. Hons (London), Chairman, is a geologist with over thirtyyears of experience. His early experience includes involvement in theestablishment of the Delta Manganese Project (now Manganese Metal Company) andthe Murray & Roberts Industrial Corporation. He was also marketing manager forthe Stainless Steel division of Middelburg Steel & Alloys and general manager ofthe Manganese Division of Samancor, a joint venture between Billiton Plc and theAnglo American Corporation. Richard was accountable for all of Billiton'sexploration and development activities in Africa and was an originator of theBakubung Initiative, a forum designed to revive the South African miningindustry which in turn led to the establishment of the New African Mining Fund.He has read and approved the technical disclosure in this regulatoryannouncement. Further information on the Scoping Study can be found on the Company's website :www.gvm.com.au Contacts : GVM METALS LIMITEDSimon Farrell, Managing Director AUS + 61 8 9322 6776 Mobile AUS + 61 417 985 383(Perth time zone)In South Africa : +27 11 803 8247 Mobile : +27 828 230 615 Beaumont Cornish Limited, Nominated Adviser and BrokerRoland Cornish/Noelle GreenawayTel: + 44 207 628 3396 Conduit PRLeesa Peters / Abigail SingletonDirect: + 44 207 429 6600/ 6606Mobiles: 0781 215 9885 / 07739 461 061Emails: [email protected] / [email protected] NOTES TO EDITORS : GVM Metals Limited is registered in Australia (ACN 008 905 388) and has beenlisted on the Australian Stock Exchange ("ASX") since 1980, with the ticker"GVM". Copies of the Company's Annual Report can be found on the Company'swebsite : www.gvm.com.au SOUTH AFRICA: South Africa is the Company's principal area of expansion for mining andminerals processing assets as illustrated by the recent acquisitions of NiMagand the JV of the Holfontein project. Traditionally, South Africa has been amajor producer and exporter of coal. The vast bulk of this coal has been sourcedfrom the Witbank coalfields which are now in their mature phase. Recentdevelopments in the demand for coal have concentrated expansion efforts towardsthe relatively underdeveloped northern coalfields, an area of great interest toGVM. Domestic demand for coking coal is also growing rapidly as a result ofexpanding steel production in the face of contracting local supply NIMAG : GVM has a 74% interest in NiMag which produces a range of metal alloys andfibres. The alloys are principally used in improving the technicalcharacteristics of cast iron and also in exotic metals used in the aeronauticalindustry. The Company can increase this interest to 100% HOLFONTEIN : As a result of increasing power demands in Southern Africa and the switch inSouth Africa from being a coking coal exporter to importer, it was felt by theCompany that it should examine local opportunities. In April 2005 GVM acquired a49% interest in a small coal mining project called 'Holfontein'. The HolfonteinCoal project is a mineable coal deposit consisting of two mineable coal seams,the No 5 seam, which is a coking coal, and the No 4 Seam, which is a low-gradesteam coal. The recent scoping study confirms the value of the Holfonteinproperty. FUTURE EXPANSION AND ACQUISITIONS : The Directors intend to grow the Company both organically and by acquisitionespecially in the coal mining sector. Largely through Chairman Richard Linnell'sconnections, several substantial coal properties have been identified andnegotiations have commenced regarding GVM's participation. Richard Linnell, BSc.Hons (London), Chairman, is a geologist with over thirty years of experience.His early experience includes involvement in the establishment of the DeltaManganese Project (now Manganese Metal Company) and the Murray & RobertsIndustrial Corporation. He was also marketing manager for the Stainless Steeldivision of Middelburg Steel & Alloys and general manager of the ManganeseDivision of Samancor, a joint venture between Billiton Plc and the AngloAmerican Corporation. Richard was accountable for all of Billiton's explorationand development activities in Africa and was an originator of the BakubungInitiative, a forum designed to revive the South African mining industry whichin turn led to the establishment of the New African Mining Fund. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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