ord - a turnaround story

I'm getting goose bumps, I havn't felt this way since 1st researching GMR. Thanks PLM for the tip for both GMR and ORD.

CHAIRMAN’S LETTER
Dear Shareholders,
I am pleased to present you the 2009 Annual Report of Ord River Resources Limited (“Ord”).
The last financial year was a downturn for many mining and exploration companies, including Ord, which have been
seriously affected by the global financial crisis. Our Board experienced major changes in the process. In the face of
challenges, I accepted the Chair in April 2009 with the willingness to grow Ord and to achieve sustainable long term
value, which had been the focus since I joined the Board in September 2005 as Deputy Chairman.
We have three fine exploration projects: Bolaven Plateau Bauxite in Laos, Copper Flats in East Kimberley and Suplejack
Gold in the Tanami province. On the bauxite project we proved up very significant JORC compliant resource which has
brought global industry attention to the Bolaven Plateau. And on the Copper Flats project we have recently completed an
airborne geophysical survey which is targeting a series of prospective copper anomalies.
We will continue to direct resources to these projects to take them into the next stage of development in order to
generate higher shareholder value. In terms of developing Ord faster, we have extended our attention to acquire new
projects which can be brought to production in the near future. To succeed, we require technical expertise and capital.
Our new Managing Director Mr. Peter Shou is implementing our strategy of taking ORD to the next stage of development,
and the Board has placed confidence in his ability to deliver. Mr Peter Shou and his management team have cut some
unnecessary costs and endeavored to have closer communication with you with roadshow presentation, radio broadcast
and improved website, etc. so that you are informed on progress of the Company’s operations. His Managing Director’s
Review provides more details on his work.
Currently, as President of China Nonferrous Metals Mining (Group) Co. Ltd. (CNMC), Chairman of China Nonferrous
Metals Foreign Engineering and Construction Co., Ltd (NFC), and Chairman of China Nonferrous Metals International
Mining Co., Ltd (CNMIM), I am encouraging those organizations to work closely with Ord to assist its development. NFC
is already in joint venture with Ord for the bauxite/alumina project. CNMIM has been a shareholder of Ord since its initial
public offering in 2005 and is presently the largest shareholder.
In August 2009, CNMIM entered into a $10 million Equity Line Facility with Ord under a Subscription Agreement. With this
financing facility, Ord is motivated to seek new promising projects as it enables Ord to raise capital when required, within
a time frame allowed by regulatory approvals, for projects supported by both Ord and CNMIM .
ORD is undergoing many changes. I would like to say that the Board and the management team are working hard to
create value for all shareholders. I seek your continued support and patience while we work through the difficult economic
times.
Tao Luo
Chairman of the Board
Dear Shareholders,
It is a pleasure for me to write my first Managing Director’s Review. I became Managing Director on 5 June 2009. It
has been a few very busy months. While there are still many challenges ahead I am confident ORD has begun the new
financial year confidently. In addition to providing you with a review of our operations in 2009 financial year, I would like to
present you the following in detail:
• Major corporate changes.
• Our strategy to create shareholders’ value.
• Developments post 2009 financial year-end
• Our challenges ahead
Corporate Update
The first thing I did was to streamline the team and cost structure. The board has also been restructured. The engagement
of several high cost executives and consultants were terminated. Second thing I did was to initiate a full review of
all aspects of ORD’s operations including projects and relationships with service providers. Investor relations and
communications became a top priority. I also started negotiating with our largest shareholder China Nonferrous Metals
International Mining Co., Ltd (CNMIM) to lock in their future financial support. We announced the signed 3 year term
A$10m equity line facility agreement on 27 August 2009. We will more actively search for new opportunities for ORD now
that we have secured CNMIM’s support. This agreement is a significant boost to ORD’s turnaround strategy because
CNMIM has effectively declared to the market that it is supporting the management team and our strategy.
In August 2009 we announced the Board’s decision to change auditor from Grant Thornton to Ernst & Young. Ernst &
Young’s global network and capital market services will serve ORD well. We also formally engaged Finlaysons from
South Australia to be our legal advisor. Finlaysons operates nationally and is headquartered in Adelaide. It has 80 lawyers
and one of the largest mining practices in the country.
We have made many changes to improve the business. ORD has had a corporate image problem. We are trying hard
to change investors’ perception. We will not allow excesses that occurred in boom times. Everything we do will be in the
best interest of all shareholders.
Strategy
ORD is an exploration company. Like any other exploration company we plan to grow into a mining company with
revenue earning projects. This is my medium to long term goal. To reach it we have put in place a simple and effective
strategy which has two components.
Firstly we will develop organically our existing projects. In Laos, SARCO our joint venture (JV) with NFC has been finalizing
the establishment of agreements with local Lao partners setting commercial terms for mining in future. We intend to build
a minimum 600,000 ton per annum alumina refinery in Laos. We need to do a full feasibility study. Once the investment
decision is made and implemented, it will be generate long term revenue for ORD. We can expand the capacity in stages
to 1,800,000 ton per annum. This remains a high priority for ORD.
In Copper Flats, we are continuing to explore for large deposits of copper. It is a remote and vast area and has transportation
challenges. The global copper supply and demand imbalance is in our favour. We believe Copper Flats has the potential
to be a sizable new copper hub which will attract large partners from around the world. We want to fund the exploration
until we are in a stronger position to negotiate partnerships and joint ventures with our potential partners and peers in the
copper sector.
Secondly we will increase our efforts in searching for new and later stage projects. This is harder than one thinks. Australia
is a large mining country but it has a limited number of good projects. We will need to work hard on our own and closely
with our partners including China Nonferrous Metal Mining Group if we want to secure new quality projects. We will focus
on gold, base metals, coal and iron ore projects. We will also look overseas for good projects.
MANAGING DIRECTOR’S REVIEW
ORD RIVER RESOURCES LIMITED ANNUAL REPORT 2009
2
Our corporate strategy will continue to focus on tight overhead management and good corporate governance. We are
looking for quality independent directors to add value to ORD’s board. We will continue to eliminate any non-essential
costs and put in place strong internal control procedures to govern all aspects of our operations.
Investor Relations Update
Investor relations in the past has been lacking. We will adopt good corporate governance practices in improving this
aspect of operations. We have made good progress in keeping you and the market informed. Frank Zhu, our Head of
Corporate Development is now responsible for investor relations. We have revamped our corporate presentations,
extended our dedicated investor distribution email list and have launched a new and improved website.
We have been briefing several media groups about ORD’s turnaround story. We met with journalists from The Australian,
Asia Miner, The Australian Financial Review and Boardroom Radio. We did not ask them to write about ORD. We are
simply establishing relationships and let them know the turnaround story of a new Ord.
We have presented to several broking houses. Given the current small size of ORD we are finding it difficult to get their
attention. We are confident that once we start to deliver results the broking houses will follow ORD and introduce us to
their clients more actively.
Our Challenges Ahead
ORD like many small exploration companies have many challenges on the road to success. Our biggest challenge is to
secure funding for our projects. The sharp declines in commodity prices and equity markets have made capital raising
difficult for everyone. We also have to deal with the issue of credibility and perception in the market. Despite many of the
positive changes that we have made over the last few months, the market still has its doubts and wants more changes
and improvements. We are listening and will ensure the market and our shareholders are satisfied.
There is increasing interest in copper exploration from investors. Due to increasing demand for copper and lack of major
new copper developments, investors view copper as a bullish commodity for the long term. We share this view and want
to explore and develop Copper Flats as soon as possible. Copper Flats is a large area. There remains a lot of work to
complete before we can prove up any reserve.
China continues to consume and demand more aluminum despite an oversupply in the developed countries. This is positive
for our Lao bauxite project. NFC, our partner and operator in Laos is working closely with ORD in finalizing a development JV
agreement with Lao partners. Negotiations are not without difficulties. Once agreed we will commence a detailed feasibility
study. If economical we will proceed to construct a minimum 600,000 ton per annum alumina refinery. This is a large scale
and complex project and NFC is very experienced in that field.
There is fierce competition for good quality projects around the world. Being a small player in a large industry has its
disadvantages. We need to be in a position of strength in negotiations. We will reach that position if we are properly
funded and have completed all the changes in the Company. We do have one big advantage in our partnership with
China Nonferrous Metal Group. We believe this will open many doors for ORD.
Conclusion
I am very excited by the opportunities ORD has and determined to meet the challenges ahead. Our journey to turn around
ORD has started. It will take some time to reach our goals. Our strategy is sound and focused. I look forward to updating
you in the future. I look forward to your feedback and suggestions.
Peter Shou
Managing Director
30 September 2009