quarterly report

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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