Extract Resources Limited (ABN 61 057 337 952) Ground Floor, 47 Kishorn Road, Applecross, WA • PO Box 1246, Canning Bridge, WA, 6153 Telephone (08) 9316 1214 • Facsimile (08) 9316 1270 • [email protected] QUARTERLY REPORT For the Quarter Ending 31 March 2006 Extract Resources Limited ABN 61 057 337 952 Ground Floor 47 Kishorn Rd. Applecross WA 6153 PO Box 1246 Canning Bridge Western Australia 6153 Telephone: 61 8 9316 1214 www.extres.com.au Enquiries regarding this report may be directed to: Peter Ironside COMPANY SECRETARY or Rance Dorrington JOINT COMPANY SECRETARY OVERVIEW Burnakura Project First quarter of production reporting of 7,086 ounces Average gold sale price for the quarter – A$760/oz Current gold price delivery at A$850/oz Positive mine to mill grade reconciliation Review of mining reserves underway Namibian Uranium Strategy Drilling commenced on Ida Uranium target. Additional drill targets established over Husab Project Corporate $1,525,000 of notes converted to 60.5m shares Extract Resources Limited Quarterly Report for the Period Ended 31 March 2006 2 Burnakura Gold Project Production The Burnakura region encountered severe rainfall occurrences during the quarter, as a result of various cyclonic events. The town of Meekatharra, 50km to the north of Burnakura, recorded over 300 mm of rain in the March Quarter. The first major rainfall in early January resulted in run-off flooding the bottom half of the mine, which disrupted operations. Subsequent major rainfalls result in a suspension of both mining and milling operations as a precautionary measure. The main issue is the 30 kilometres of gravel road to access the mine-site, which becomes nearly impassable through the low-lying flood-plains. The associated inefficiencies from extended travel times for personnel, has prompted the JV to commit to constructing an on-site accommodation camp, which should be completed this quarter. The camp decision is also a reflection on the long-term potential that the Burnakura Project has, particularly in the current robust gold environment. Overall the quarter represented a ramping-up of production activities following commissioning of the Burnakura Gold Plant. The following table reports the first quarter of reporting production statistics, although the operation is yet to be fully optimised. March Quarter Ore Milled tonnes 30,536 Head Grade g/t 8.05 Recovery % 88.6 Gold Produced ounces 7,062 Cash Operating Costs A$/oz 691 Ave Sale Price A$/oz 760 Extract’s share of production is 50%. Cash operating costs will improve as the mine becomes fully optimised. Mining Mined ore has almost been entirely from ore development and, as a result, the mine is now nearly 12 months ahead with its development. Preparation for stope production was advanced during the quarter, and the first air-leg stope had commenced. The emphasis will now shift to stope production which will result in an increase in overall mine production, at a lower unit cost. In line with the expanding knowledge base being gained through exposure of the various ore surfaces through the mine a series of new surfaces previously viewed as least prospective are now being developed with good ore widths and high grades being encountered. A review of the mines’ reserve position will be carried out over the forthcoming quarter with a positive outcome anticipated. Ongoing reconciliation of geological mined grades versus milling grades is indicating that mill head grades have been 6% better than the predicted mine grades since production commenced in November. In the last 3 months, however, as production has been ramping up, the mill to mine reconciliations has increased to a positive 9%. Milling Milling throughput has also been affected by the heavy rainfalls over the last 3 months. The wet ore has a tendency to hang-up at the various transfer points, necessitating ongoing stoppages to clear the blockages Mill recoveries have recently been as high as 96% through leaching alone, significantly higher than the planned 93%. This has been achieved through a finer grind, albeit at a reduced throughput rate. Optimising the mills performance over the next quarter is a priority, once the parameters associated with throughput and mill recovery have been established. Due to the higher leach recoveries, the proposed installation of a gravity circuit has been deferred. The technical information as it relates to NOA2t is based on information compiled by Andrew Czerw (Geologist). Mr Czerw is a Corporate Member of the Australasian Institute of Mining and Metallurgy, and has more than 5 years of experience in estimation, assessment of, and evaluation of Mineral Resources and Ore Reserves which are relevant to the style of mineralisation under consideration. Extract Resources Limited Quarterly Report for the Period Ended 31 March 2006 3 Husab Project – Ida Region Namibian Uranium Exploration The Company is earning a 51% interest in the Husab Project in Namibia. As previously reported, diamond drilling has commenced on the first target selected for drilling on the Ida trend following the completion of environmental permitting and the construction of a water well within the bed of the Swakop River. Initial drilling is planned to take place on 160 metre section spacing over a period of several months. A field camp has been established to support the drilling operation. At the time of reporting the first hole has been completed, and the second hole commenced, and geological logging and sampling is underway. Assays are unlikely to be available for some time because of world wide delays in the provision of analytical services to the mining industry, however results will be reported as they are returned. The Ida Central target is located north of the Swakop River, and extends to the Ida Copper Mine Main Shaft. Spectrometer assays peaking at 665 ppm equivalent uranium (eU) have been returned from this zone. It is anticipated that a second rig will commence drilling on this target during the following quarter. Ground checking of a discrete airborne radiometric anomaly located north west of the Husab Fluorite Mine has revealed a small exposure of carnotite (potassium uranium vanadate) mineralization of a similar style to that outcropping at Langer Heinrich. The carnotite is contained within carbonate cemented grits where incised by contemporary drainages. The secondary uranium mineralization is exposed over an area of approximately 200 by 5 metres. Spectrometer readings of up to 100 ppm eU have been returned from the mineralized zone. The area generally is covered by extensive sheet wash which may potentially contain palaeochannels of significant dimensions. Further investigations are required in this locality. Ground based radiometric surveying of selected airborne anomalies has continued during the quarter, and this work continues to provide encouragement as to the well mineralized nature of the Husab project area. High resolution Ikonos satellite imagery and Digital Elevation Model (DEM) has been supplied to the Company, and has already had a positive impact on project exploration, especially within the high relief areas associated with the Swakop River Gorge. The information on Husab as it relates to geology, geochemistry and geophysics, has been prepared by Mr. M Spivey. Mr Spivey is a Corporate Member of the Australasian Institute of Mining and Metallurgy, and has more than 5 years of experience in estimation, assessment of, and evaluation of Mineral Resources and Ore Reserves which are relevant to the style of mineralisation under consideration. Corporate Finance The Company completed a placement of 69.7m shares at 4.3 cents per share (raising $3m) with three UK based institutional investors. The main use of the funds will be applied to expedite the exploration program on the Husab uranium project in Namibia. Some of the funds have also been applied to retire debt. The presence of the UK based institutional investors on its register of shareholders also provides an improved platform from which it can pursue further development of current and possible future projects. Debt of $1,525,000 was also retired through the conversion of convertible notes on the following basis: • $975,000 at 2.2 cents for 44,318,181 shares. • $550,000 at 3.4 cents for 16,176,470 shares. Extract Resources Limited Quarterly Report for the Period Ended 31 March 2006 4 EXTRACT RESOURCES LIMITED – ASX Code: EXT Directors and Management: Peter Meagher ……………………Chairman Peter McIntyre …………Managing Director Steve Sikirich …..… Non-executive Director Peter Ironside …………. Company Secretary Rance Dorrington ….Jnt. Company Secretary Issued Capital: At the end March 2006, quoted issued capital is 829,252,959 ordinary shares. Shareholder Enquiries: All matters relating to shareholdings, including changes in address, TFN’s, etc., should be directed to: Computershare Investor Services Pty Ltd GPO Box D182 Perth Western Australia 6840 Australia Phone (within Australia): 1300 557 010 Phone (outside Australia): 61 3 9415 4000 Email: [email protected] Company Website: The Company updates its website frequently. This and other reports may be easier to read in colour, and are stored on the website. www.extres.com.au Rule 5.3 Appendix 5B Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001. Name of entity EXTRACT RESOURCES LTD ABN Quarter ended (“current quarter”) 61 057 337 952 31 MARCH 2006 Consolidated statement of cash flows Cash flows related to operating activities Current quarter $A’000 Year to date (9 months) $A’000 1.1 Receipts from product sales and related debtors 2,385 2,489 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration (76) - (2,114) (282) (236) (2,342) (2,114) (618) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature received 15 24 1.5 Interest and other costs of finance paid (55) (101) 1.6 Income taxes paid - - 1.7 Other (provide details if material) - Receipt of JV Cost Reimbursement - Net GST - Net recharged costs recd from associates - Foreign Exchange Movement - 11 30 (3) 51 - 116 (2) Net Operating Cash Flows (89) (2,733) Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects (b)equity investments (c)other fixed assets - - (994) - - (3,079) 1.9 Proceeds from sale of: (a)prospects (b)equity investments (c)other fixed assets - - - - - - 1.10 Loans to other entities - - 1.11 Loans repaid by other entities - - 1.12 Other (provide details if material) (3) (3) Net investing cash flows (997) (3,082) 1.13 Total operating and investing cash flows (carried forward) (1,086) (5,815) 1.13 Total operating and investing cash flows (brought forward) (1,086) (5,815) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 3,000 4,086 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from borrowings - Convertible Notes - Other Loans - - 2,000 1,500 1.17 Repayment of borrowings (700) (700) 1.18 Dividends paid - - 1.19 Other (provide details if material) Net financing cash flows 2,300 6,886 Net increase (decrease) in cash held 1,214 1,071 1.20 Cash at beginning of quarter/year to date 814 957 1.21 Exchange rate adjustments to item 1.20 - - 1.22 Cash at end of quarter 2,028 2,028 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current qua rter $A'000 1.23 Aggregate amount of payments to the parties included in item 1.2 55 1.24 Aggregate amount of loans to the parties included in item 1.10 - 1.25 Explanation necessary for an understanding of the transactions Salaries, fees and superannuation paid to Directors $55K. 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 Tectonic Resources NL (ASX code :-TTR) has provided funding for the first $1.5M of project costs related to the NOA2 operation within the Burnakura JV area. In February 2006 Convertible Note Holders holding $1,525,000 of notes converted amounts due under the notes to ordinary shares in the Company. 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 Nil Financing facilities available Add notes as necessary for an understanding of the position. Amount available $A’000 Amount used $A’000 3.1 Loan facilities 800 800 3.2 Credit standby arrangements - - Estimated cash outflows for next quarter $A’000 4.1 Exploration and evaluation 495 4.2 Development - Total 495 Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Current quarter $A’000 Previous quarter $A’000 5.1 Cash on hand and at bank 2,028 814 5.2 Deposits at call - - 5.3 Bank overdraft - - 5.4 Other (provide details) - - Total: cash at end of quarter (item 1.22) 2,028 814 Changes in interests in mining tenements Tenement reference Nature of interest (note Interest at beginning of quarter Interest at end of quarter (2)) 6.1 Interests in mining tenements relinquished, reduced or lapsed No Changes 6.2 Interests in mining tenements acquired or increased No Changes Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates. Total number Number quoted Issue price per security (see note 3) (cents) Amount paid up per security (see note 3) (cents) 7.1 Preference +securities 7.2 Changes during quarter (a) Increases (b) Decreases 7.3 +Ordinary securities 829,252,959 729,252,959 7.4 Changes during quarter (a) Increases - Placement of Shares - Conversion of 2.2c convertible notes - Conversion of 3.4c Convertible notes (b) Decreases 69,755,814 44,318,181 16,176,470 69,755,814 44,318,181 16,176,470 4.3 Cents 2.2 Cents 3.4 Cents 4.3 Cents 2.2 Cents 3.4 Cents 7.5 +Convertible debt securities Convertible Notes - 2.2c Conversion - 3.4c Conversion 46,590,909 27,941,176 0 0 Current conversion price 2.2 Cents 3.4 Cents Final conversion date 20 November 2006 28 February 2007 7.6 Changes during quarter (a) Increases (b) Decreases Convertible Notes - 2.2c Notes – Conversion of $975K of Notes - 3.4c Notes – Conversion of $550K of Notes (44,318,181) (16,176,470) 0 0 Current conversion price 2.2 Cents 3.4 Cents Final conversion date 20 November 2006 28 February 2007 7.7 Options 7.8 Employee Share Option Plan – Exercisable by 14 March 2008 @ 2.6c each 4,000,000 0 Exercise price 2.6 Cents Expiry date 14 March 2008 7.9 Exercised during quarter Exercise price Expiry date 7.10 Expired during quarter 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only) Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the matters disclosed. Sign here: .. ................................................ Date: 24 April 2006 (Director) Print name: Peter McIntyre Notes 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged 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 of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2. 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. == == == == ==
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