In the 2013 annual report ABU quoted that they would undertake...

In the 2013 annual report ABU quoted that they would undertake “a staged approach to mining of the Old Pirate mine”. The staged approach to mining focused on using the ABU owned on-site gravity processing plant located at the Old Pirate (OP) mine site; the staged approach to mining was aimed at minimising risk to shareholders as stated in the 2013 Ann report.

ABU made many ASX announcements about this staged approach to mining and sold the idea to shareholders in the 2013 annual report right up in till the last ASX announcement about the idea on the 25/6/2014.

However on the 7/7/2014 and just 2 weeks after the last staged approach to mining announcement was made on the 25/6/2014, ABU suddenly entered into an agreement with Tanami gold (TAM) to truck ore from the Old Pirate mine 77km down a dirt corrugated road to the Tanami (TAM) owned processing plant. The operating costs to lease the Tanami owned processing plant was $2M per year; refurbishment of the plant was also advised as $2M; the costs of trucking the ore 77KM down a corrugated dirt road was not advised by ABU on the 7/7/2014 nor was there a revised indicated ore resource statement for the Old Pirate mine offered to shareholders for review. In fact the TAM deal was not announced till after the deal was signed; ABU tried to put a positive spin whilst having full knowledge that they flaunted every aspect of the 2013 Ann report detailing the OP mining plan.  The deal with Tanami gold IMO at face value was a deal that benefited TAM only as the processing plant was idle for some time and the plant was to be upgraded and refurbished by ABU shareholder funds.

How can a company advertise a mining plan via the ASX for 11 months (including a detailed mining plan in the 2013 Ann Report) and then in less then 2 weeks completely throw this mining plan out the window?

ABU put out an indicated resource statement for OP of 234,100 oz at a grade of 8.19g/T in the 2013 annual report (see page 22). The JORC 2012 code section 22 states that an indicated resource is a statement with sufficient confidence to allow for modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit; note the wording economic viability & mine planning!





I put forward an argument that mine planning was established using the on-site gravity feed processing plant as carried out in stage 1 development  for OP (in early 2013), there were no modifying factors evident in stage 1 and results exceeded reported grades as reported via the ASX in 2013. There was sufficient evidence from trial mining results to support mine planning and the evaluation of the economic viability of the deposit using the on-site gravity feed processing plant as detailed extensively in the 2013 annual report.

Clause 22 of JORC code above also references clause 40 in regards to a feasibility study;





I put forward an argument that ABU reported the OP deposit as an indicated resource in the 2013 Ann report and therefore they must comply with section 22 & 40 of the 2012 JORC code. Yet ABU did not revise the OP indicated resource statement when they decided to use the TAM processing plant located 77km away with an operating cost of $2M per year and refurbishment cost of $2M. In other words they did not do a comprehensive feasibility study as required in section 40  of the JORC 2012 code and they did not take into account modifying factors and any other relevant operational or financial factors.

It is my opinion only that ABU was obligated to revise the indicated resource statement for OP when they made the announcement to use the TAM owned processing plant on the 7/7/2014  due JORC code requirements in regards to modifying factors (mining of the ore methods), operational factors (not using the on-site gravity feed plant at OP and trucking the ore to the TAM plant costing $2M per year + $2M refurbishment), financial factors (operational factors significantly changed to impact financial risk).

In short this saga has shown that;
1. An ASX financial annual report (2013) cannot be trusted by shareholders or followed by BOD members.
2. That the JORC Code 2012 cannot be followed by the BOD's.
3. The BOD's did not revise the OP indicated ore resource statement on the 7/7/2014 as required
4. Directors can walk away from a company whilst decimating shareholders & the company