28th Nov 2007 07:00
GVM Metals Ltd28 November 2007 ANNOUNCEMENT 28 November 2007-------------------------------------------------------------------------------- GVM METALS LTD ("GVM" or the "Company") PROJECT UPDATES Since the last trading update released on 10 September 2007, the Company ispleased to announce that significant progress has been made towards thedevelopment of the Company's coal projects in South Africa. An update on workin progress and of that planned on each project is set out below: Baobab (Soutpansberg Coalfield) Gemecs (Pty) Limited ("Gemecs"), the Competent Person, have completed an initialgeological evaluation of the Tanga and Fripp properties based on the dataobtained from Exxaro Limited. They have also completed a conceptual mine plan. The Competent Person has completed a Fripp & Tanga Resource Statement which isavailable on the Company's website. The results are as follows: Million TonnesMeasured 39.7Indicated 44.0Inferred 263.0Reconnaissance 366.4TOTAL 713.1 Within this total resource, the Competent Person has identified potentialopencast resources of 156 million tonnes in the following categories: Million TonnesMeasured 39.7Indicated 43.0Inferred 66.4Reconnaissance 7.3TOTAL 156.4 The Company will now lodge an amendment to the existing prospecting right toallow for bulk-sampling, mining right application, conceptual feasibility studyand infill drilling starting in early 2008. GVM will utilise additional exploration information from Exxaro to determine thepotential resources at the other properties comprising the Baobab Project wherethe boreholes have been drilled and in parallel will commence exploration of theother properties in early 2008. GVM appointed East Coast Maritime (Pty) Ltd (ECM) to undertake a pre-feasibilitystudy to determine the logistics requirements needed to transport coking coalfrom the Thuli and Baobab projects in the Limpopo Province. The intent is toultimately export 10 million tonnes per annum (Mtpa) in total from bothprojects. It is envisaged that 3 Mtpa will be exported from Thuli, and 7 Mtpafrom the various Baobab properties. The study completed by ECM encompassed the following: • Existing railway network/s and railway capacity - the study reviewedcurrent rail infrastructure and operations which included perway and signaling,train control, gradients, structures and rolling stock in terms of wagons andlocomotives. • Conceptual route determination for a new private siding/s linkingSpoornet's network with a rapid coal loading facility at the Thuli and Baobabplants - 3 proposals have been selected: o Thuli Link - 55km of new rail line up to Mussina; o Baobab Link - 15km of new rail line to link to main line; and o Mopani Balloon - 3km circular siding at the town of Mopani. The report proposes design parameters for the railway lines, and suitable yardlayouts at the plant for loading of trains. • Environmental Pre-Feasibility - The report includes a review of thelegislative setting, pre-development, project activities and environmentalissues related to the 3 selected sidings. During the next phase ofinvestigations landowner requirements, mineral rights, underground miningactivities and acceptance and approval conditions imposed by various authoritiesare to be undertaken; • Technical evaluation of alternative routes to Matola (TCM) in Maputoin Mozambique and 2 route options to Richards Bay. Rail distance, single ormultiple line, ruling gradient, axle loading, traction, operational methodologyand existing train crossing facilities were analysed to identify routes 1(1275km) and route 4 (734km) as optimal from a shortlist of 4 alternativeroutes. • Review of the port infrastructure at: o TCM - Maputo, Dry Bulk Terminal; o Richards Bay Dry Bulk Terminal; and o Richards Bay Coal Terminal. The current operations of the Ports were examined including tippler capability,stock-piling, ship loading performance, and Port, Berth and Draft restrictions. A Cooperation Agreement is being developed with Transnet Freight Rail which isin the process of finalization. The term of agreement is that Transnet FreightRail will assist GVM to acquire freight rights based on production of 1.5million tonnes in 2009, 4-5 million tonnes in 2010 and 2011, and 10 milliontonnes in 2012. Mooiplaats The infill drill program has now been completed on the Mooiplaats, Klipbank andAdrianople farms which collectively comprise approximately two thirds of thegranted mining and prospecting rights and less than one third of the total areaboth granted and under application. Competent Persons SRK have provided an interim Coal Resource and Coal ReserveEstimate as follows: GTIS*(mt) SAMREC Geological Model Loss Layout Loss MTIS** Loss (Reserves) Mooiplaats 25.7 Measured 10% 2% 15% 19.3 Klipbank 48.8 Measured 10% 2% 15% 36.6 Adrianople 28.8 Measured / 15% 3% 15% 20.2 Inferred 103.3 76.1 *GTIS - Gross Tonnes in Situ (Resources) **MTIS - Mineable Tonnes inSitu (Reserves) The first proposal has been received from potential mining contractors. Basedon this proposal, the Company is confident that mining costs will be in theprojected range of ZAR 90-100 per tonne of Run of Mine (ROM) Coal. Washing andde-stoning estimated costs remain in the range of ZAR 20-25 per tonne. The original plan was to provide principally ROM coal to Eskom, but with therapid escalation of prices at Richards Bay Coal Terminal (RBCT), it is nowplanned to wash all the coal to produce an export fraction (75%) and a domesticthermal fraction (25%). FOB cost RBCT is expected to be of the order of USD35-40 per tonne. The production plan is to commence operations in Q3 2008 with a 18-24 month rampup to final planned levels of phase 1 of 4.5 million tonnes of export and 1.5million tones of domestic thermal. Expansion of production beyond this levelwill depend on exploration results to be conducted in 2008. Thuli (Limpopo Coal Field) GVM have commenced with the exploration activities at the Thuli project toconfirm the potential qualities resource and structure with intention ofdeveloping an indicated resource early in the third quarter of 2008. This willbe followed by a mining right application, conceptual feasibility study andinfill drilling. Currently Thuli has a JORC compliant inferred resource of 352million tonnes and it is expected that this will be significantly expanded. Holfontein & Wilderbeesfontein The Mining Right Application is underway with approval expected from theDepartment of Mineral and Energy (DME) by the third quarter of 2008. Subject topermitting from the DME, the Company expects mine development / production tocommence in late 2008. The Environmental Impact Assessment (EIA) /Environmental Management Plan (EMP) is also in progress with completion expectedin the 1st Quarter of 2008 for submittal to the DME. The Company intends to develop Holfontein and the adjacent Wilderbeesfontein asa single bloc. Drilling to bring the latter into a measured resource willcommence during the first quarter 2008. To ensure contiguity withWilderbeesfontein, it is also expected that further exploration drilling onHolfontein will commence early in 2008. This is to re-confirm the major dykesand sills and ensure that structural interpretation on both properties isconsistent. The formal agreement enabling GVM to commence prospecting work on theWildebeesfontein prospect consisting of 550 ha contiguous with GVM's Holfonteincoal project has been signed. Dependent on the availability of drill rigs, GVM management expect drilling onthis project to commence towards the end of the first quarter of 2008. Theproject acquisition price will be based on the mineable coal in terms of JORC/SAMREC codes. The project acquisition price of US$0.50 per ton In-Situ coal willbe determined for seam 4 and seam 5 coal with widths greater than 1.4 metres andseam 4 coal with a Calorific Value exceeding 23MJ/kg. Tshikunda Project The Heads of Agreement for the acquisition of the 32,000 ha prospect in thePafuri coal field in Limpopo has been converted into formal agreements which GVMmanagement expect to complete by the end of November 2007. The Section 11application to the Department of Minerals and Energy for GVM's acquisition of60% of Tshikunda Mining (Pty) Ltd, the company owning the Tshikunda ProspectingRights, was submitted during the third quarter. Exploration on the project in the form of an Aeromagnetic study is expected tocommence in the fourth quarter of the 2008 financial year. Sekoko Project GVM have agreed to acquire an additional 7,000 ha in the Soutpansberg coal fieldpending the satisfaction of suspensive conditions. The six farms constitutingthe Sekoko project are located in the vicinity of GVM's Baobab coal project inthe Makhado district of the Limpopo province. The acquisition of 74% of theSekoko coal project for R55 million will be formalised in the second quarter ofthe current financial year, with the Section 11 application following soonthereafter. Exploration on the project will commence once the Section 11approval for the transaction from the Department of Minerals and Energy has beengranted. The Salaita and Telema properties lie on the same coal body as that at Fripp andTanga and it is believed that the resources identified on Fripp and Tanga willbe replicated. Managing Director, Simon Farrell, said "clearly we are building up a verysubstantial resource base and following recent capital raisings of some AUD 120million we are well placed to fast track development of our Baobab andMooiplaats projects. We are confident of resolving the various infrastructureissues in the near future and with rapidly increasing coal prices, the Company'sprospects are very, very exciting." Authorised by SIMON J FARRELL Managing Director For more information contact: Simon Farrell, Managing Director GVM +61 417 985 383 or +61 8 9322 6776 Nonkqubela Mazwai, Deputy Managing Director, GVM +27 83 690 9079 Petronella Gorrie The Event Shop +27 82 827 8815 Leesa Peters / Jos Simson Conduit PR +44(0) 20 7429 6606 Olly Cairns / Romil Patel Blue Oar Securities Plc +61 8 6430 1631 +44(0) 20 7448 4400 www.gvm.com.au Notes: The information in this report as it relates to the geology,geochemistry and geophysics, regarding Mooiplaats, has been prepared by Grantvan Heerden. Grant van Heerden has more than five years of experience inestimation, assessment of, and evaluation of Mineral Resources and Ore Reserveswhich are relevant to the style of mineralization under consideration. Grant vanHeerden is a Senior Coal Geologist with SRK Consulting. Grant van Heerden hassufficient experience which is relevant to the style of mineralisation and typeof deposit under consideration and activities herein reported, to qualify as aCompetent Person as defined in the 2004 edition of the 'Australasian Code forReporting of Exploration Results, Mineral Resources and Ore Reserves' and Parttwo of the AIM Guidance Notes for Mining, Oil and Gas Companies. Grant vanHeerden consents to the inclusion in this report of such information in the formand context in which it appears. The information in this report as it relates to geology of the Baobab Projectwas overseen by J C Sparrow a Director of Gemecs (Pty) Ltd. Mr Sparrow is amember of the South African Council for Natural Scientific Professions (400109/03), with a BSc (Univ. of Natal), BSc Hons Geology. (Univ. of Johannesburg) anda Chamber of Mines certificate in Rock Mechanics and qualifies as a competentperson in the field of activity being reported on and consents to the inclusionof this information in the form and context in which it appears in this report. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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