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 December 2005 Extract Resources Limited ABN 61 057 337 952 Ground Floor 1 / 47 Kishorn Rd. Applecross WA 6153 PO Box 1246 Canning Bridge Western Australia 6153 Telephone: 61 8 9316 1214 www.extres.com.au OVERVIEW Burnakura Project First gold poured at Burnakura Gold Project in late November Company remains unhedged, delivering into spot gold market NOA2 mine development well advanced Burnakura processing plant commissioning nearing completion Namibian Uranium Strategy Targets established for 5,000m diamond drilling program planned to commence this quarter Sampling of fluorspar dumps assayed significant grades of fluorspar, uranium, copper and lead Corporate $1.5m convertible note established $3.0m placement to UK institutions Extract Resources Limited Quarterly Report for the Period Ended 31 December 2005 2 Burnakura Gold Project NOA2 Development At the end of the quarter, decline development had reached 501m, or 80% complete for Phase 1 of mining which constitutes the current mine plan. Mining beyond Phase 1 requires further exploration, however the current position is that the mineralisation remains open down-plunge. Overall, a total of 383m of jumbo development was achieved for the quarter, mostly associated with developing various ore headings. Ore recovered from development was 16,411 tonnes @ 5.3 g/t. Ore mined and stockpiled adjacent to the gold plant, totals 36,151 tonnes @ 6.15 g/t, containing 7,100 ounces of gold. Ore processing commenced during the quarter. Further delineation of the NOA2 ore body continued based on ongoing geological interpretation. With development well advanced, the emphasis shifted to mine design and scheduling of the various stope areas. Both airleg and mechanical stope production will now commence in the current quarter, while development will be scheduled to maintain the planned production rates. A geotechnical review of the mine in December confirmed good ground conditions. The technical information as it relates to NOA2 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. Burnakura Gold Plant The first gold was poured late in November, with production for the quarter of 1,693 ounces. Commissioning of the Burnakura Gold Plant commenced during the quarter on low-grade ore previously stockpiled from the mine development. Gold production associated with the commissioning incorporated numerous adjustments and modifications, however has yet to reach normal operating standards. Quarterly Production: Tonnes milled 17,773 Calc. Head Grade 4.69 g/t Mill Recovery 63.2% Gold Produced 1,693 ounces Gold Poured 1,167 ounces Mill recovery reflects the commissioning phase, and had increased to +85% by the end of the quarter. Final modifications to the leaching circuit and commissioning of the gravity circuit in the current quarter will increase overall recovery to the expected 93%, with average monthly throughput designed for 15,000 tonnes. Plant commissioning has been slower than planned, although no major issues have been encountered. Both the crushing circuit and the milling circuit have run at optimum levels for limited periods of time. The main outstanding issues include upgrading the leach agitation and introducing oxygen to the circuit. The gravity circuit is expected to be completed in early February. Loaded carbon is being stripped and returned to Perth for processing while the on-site elution circuit is being completed. This will be completed in the current quarter. Namibian Uranium Exploration Extract shareholders approved the exploration joint venture with West Africa Gold Exploration (Namibia) P/L (WAGE), the registered holder of the Husab license. The Namibian Ministry of Mines and Energy has also given approval for the Joint Venture to proceed. Extract has commenced activities and will earn 51% of the project by spending A$400,000. Extract Resources Limited Quarterly Report for the Period Ended 31 December 2005 3 Husab Fluorspar Dumps The following exploration activities have been completed on EPL 3138 (Husab)during the quarter: • Samples of fluorspar (CaF2) from the previously operated Husab Mine have been sent to ChemQuest in South Africa for preliminary flotation testwork. Some 60 kilograms of material was hand collected from the dumps, sorted and crushed to form three representative samples of clean, moderately contaminated, and contaminated fluorspar. Prior to the commencement of flotation testwork, the samples were sent to Lakefield Research for analysis. Average analytical values of the samples were: CaF2 30%, U3O8 888 ppm (0.89 kg/t), Cu 0.61%, Pb 1.36%, SiO2 60.7%. The Husab fluorspar also contains minor levels of gold, silver and zinc. Approximately 40,000 tonnes of hand sorted fluorspar are presently contained within the mine dumps. In addition, numerous un-mined veins are present over a strike distance of over 4 kilometres. The veins average 1-3 metres in width and generally dip steeply to the south west. The sampling/assays should not be considered as being representative of the stockpiles or unmined veins. Further work will be required to report these resources to an acceptable standard. Results from the flotation testwork are not yet to hand. • High resolution Ikonos satellite imagery covering approximately 160 square kilometres over the Husab-Ida trend has been ordered, and ground control points have been surveyed in place prior to data capture. The data have subsequently been captured and are currently being processed. The final product will include base plans and a digital elevation model. • The joint venture has been authorised by the Namibian Ministry of Environment and Tourism to establish field camps in the Namib Park. Arrangements are currently being made to establish an exploration camp in a suitable location. • An initial campaign of up to 5000 metres of diamond drilling has been proposed to test uranium targets outlined by previous ground spectrometer surveying over the Ida trend, and other target areas. It is expected that drilling will commence by the end of February. The information on Husab as it relates to geology, geochemistry and geophysics, has been prepared by Mr. M Spivey who is a competent person as described in Appendix 5A to the ASX Listing Rules. Extract Resources Limited Quarterly Report for the Period Ended 31 December 2005 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...……. Company Secretary Issued Capital: At the end December 2005, quoted issued capital is 599,002,494 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 Corporate Finance The Company placed $1.5m in convertible note, which have a 15 month term and can be converted into ordinary shares at 3.4 cents each. The funds are to be applied to facilitate the Company’s growth strategy. With the establishment of the Burnakura processing plant and the development of the NOA2 mine, the intention is to now accelerate both the Burnakura regional (gold) exploration, as well as the Husab uranium exploration, given the strong market in both these commodities. Note: ASX release 27th January 2006 Due to strong support from UK-based institutional investors, the Company placed 69.7m shares at 4.3 cents each, to raise A$3.0m. The Company considers the benefits of this support extend to the future growth plans of its business. At the end of December, gold inventories in the form of mined ore stockpiles at surface amounted to approximately $5.3m, of which Extract is entitled to 50%. Appendix 5B Mining exploration entity quarterly report + See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 1 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 DECEMBER 2005 Consolidated statement of cash flows Cash flows related to operating activities Current quarter $A’000 Year to date (6 months) $A’000 1.1 Receipts from product sales and related debtors 104 104 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration (78) (1,127) - (178) (160) (2,342) - (336) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature received 3 9 1.5 Interest and other costs of finance paid (36) (46) 1.6 Income taxes paid - - 1.7 Other (provide details if material) - Receipt of JV Cost Reimbursement - Net GST - Recharged costs recd from associates - Foreign Exchange Movement - 4 33 1 51 (11) 86 1 Net Operating Cash Flows (1,274) (2,644) Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects (b)equity investments (c)other fixed assets - - (1,247) - - (2,085) 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) - - Net investing cash flows (1,247) (2,085) 1.13 Total operating and investing cash flows (carried forward) (2,521) (4,729) Appendix 5B Mining exploration entity quarterly report + See chapter 19 for defined terms. Appendix 5B Page 2 30/9/2001 1.13 Total operating and investing cash flows (brought forward) (2,521) (4,729) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 113 1,086 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from borrowings - Convertible Notes - Other Loans 1,500 1,000 2,000 1,500 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other (provide details if material) Net financing cash flows 2,613 4,586 Net increase (decrease) in cash held 92 (143) 1.20 Cash at beginning of quarter/year to date 722 957 1.21 Exchange rate adjustments to item 1.20 - - 1.22 Cash at end of quarter 814 814 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 quarter $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. 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 1,500 1,500 Appendix 5B Mining exploration entity quarterly report + See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 3 3.2 Credit standby arrangements - - Estimated cash outflows for next quarter $A’000 4.1 Exploration and evaluation 300 4.2 Development 250 Total 550 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 814 722 5.2 Deposits at call - - 5.3 Bank overdraft - - 5.4 Other (provide details) - - Total: cash at end of quarter (item 1.22) 814 722 Changes in interests in mining tenements Tenement reference Nature of interest (note (2)) Interest at beginning of quarter Interest at end of quarter 6.1 Interests in mining tenements relinquished, reduced or lapsed No Changes 6.2 Interests in mining tenements acquired or increased No Changes Appendix 5B Mining exploration entity quarterly report + See chapter 19 for defined terms. Appendix 5B Page 4 30/9/2001 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 699,002,494 599,002,494 7.4 Changes during quarter (a) Increases - Exercise of options - Exercise of options - Conversion from Class B (b) Decreases 2,000,000 3,000,000 50,000,000 2,000,000 3,000,000 50,000,000 1.8 Cents 2.6 Cents Nil 1.8 Cents 2.6 Cents Nil 7.5 +Convertible debt securities Convertible Notes - 2.2c Conversion - 3.4c Conversion 90,909,091 44,117,647 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 - Issued $1.5M of Convertible Notes (Conditionally Convertible @ 3.4c and issued for a period of up to 15 months) (b) Decreases 44,117,647 0 Current conversion price 3.4 Cents Final conversion date 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 - 31 December 2005 options exercised @ 1.8c each - 14 March 2008 options exercised @ 2.6c each 2,000,000 3,000,000 0 0 Exercise price 1.8 Cents 2.6 Cents Expiry date 31 December 2005 14 March 2008 7.10 Expired during quarter 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only) Appendix 5B Mining exploration entity quarterly report + See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 5 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: 31 January 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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