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 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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