Quarterly Report December 2012 DEVELOPING A NEW RARE EARTH DISCOVERY Peak Resources Limited Level 2, 46 Ord Street, West Perth, Western Australia 6005. PO Box 603, West Perth, Western Australia 6872. ASX: PEK OTCQX: PKRLY ACN 112 546 700 Telephone: +61 8 9200 5360 info@peakresources.com.au www.peakresources.com.au Non-Executive Chairman: Alastair Hunter Managing Director: Richard Beazley Technical Director: Dave Hammond Non-Executive Director: Jonathan Murray Company Secretary: Jeff Dawkins Highlights Peak Resources Limited (Peak; ASX: PEK; OTCQX: PKRLY), is fast tracking the development of its large Ngualla Rare Earth Project discovery in Tanzania. Ngualla has several fundamental natural advantages over other projects and is on schedule to be a new, low cost, long term producer of rare earths. Activity highlights this Quarter include: Confirmation of strong project economics with the completion of the scoping study and preliminary economic assessment. Key indicators from the scoping study include: • Pre-tax NPV of US$1.571 billion • IRR of 53% • Modest capital cost of US$400 million • Low operating cost of US$10.09 / kg REO • Annual revenues of US$361 million • Payback inside 3 years Other factors that distinguish Ngualla from other rare earth projects and de-risk the development include: • Proven beneficiation and simple metallurgical processes • Mineralisation is not radioactive and has the lowest uranium and thorium of any major rare earth deposit • Simple open pit mining with low strip ratio • No requirement for acid baking • Significant opportunity to up scale production Breakthrough in the identification of a beneficiation process that significantly reduces the plant size and reagent consumption (capital and operating costs). Commissioning of a solvent extraction (SX) pilot plant (after Quarter end) to produce purified, high value rare earth products. Completion of 2012 Ngualla drilling program. A series of intersections received from surface shows the potential to increase the amount of high grade mineralisation amenable to simple acid leach, further improving project economics, and also to extend the overall Mineral Resource to the south and west. Commencement of the Ngualla Rare Earth Project pre-feasibility study. Appointment of advisors (after Quarter end) to source strategic partners to assist with financing the development of the project and off take agreements. Acquisition of four prospective new gold properties in the Lake Victoria Gold Fields region of northern Tanzania. The Company had $4.23 million cash on hand at the end of the Quarter.
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Quarterly ReportDecember 2012
DEVELOPING A NEW RARE EARTH DISCOVERY
Peak Resources Limited Level 2, 46 Ord Street, West Perth, Western Australia 6005. PO Box 603, West Perth, Western Australia 6872. ASX: PEK OTCQX: PKRLY ACN 112 546 700 Telephone: +61 8 9200 5360 [email protected] www.peakresources.com.au
Non-Executive Chairman: Alastair Hunter Managing Director: Richard Beazley Technical Director: Dave Hammond Non-Executive Director: Jonathan Murray Company Secretary: Jeff Dawkins
HighlightsPeak Resources Limited (Peak; ASX: PEK; OTCQX: PKRLY), is fast tracking the development of its large Ngualla Rare
Earth Project discovery in Tanzania. Ngualla has several fundamental natural advantages over other projects and is on
schedule to be a new, low cost, long term producer of rare earths.
Activity highlights this Quarter include:
Confirmation of strong project economics with the completion of the scoping study and preliminary economic assessment. Key indicators from the scoping study include:
• Pre-taxNPVofUS$1.571billion
• IRRof53%
• ModestcapitalcostofUS$400million
• LowoperatingcostofUS$10.09/kgREO
• AnnualrevenuesofUS$361million
• Paybackinside3years
Other factors that distinguish Ngualla from other rare earth projects and de-risk the development include:
Breakthrough in the identification of a beneficiation process that significantly reduces the plant size and reagent consumption (capital and operating costs).
Commissioning of a solvent extraction (SX) pilot plant (after Quarter end) to produce purified, high value rare earth products.
Completion of 2012 Ngualla drilling program. A series of intersections received from surface shows the potential to increase the amount of high grade mineralisation amenable to simple acid leach, further improving project economics, and also to extend the overall Mineral Resource to the south and west.
Commencement of the Ngualla Rare Earth Project pre-feasibility study.
Appointment of advisors (after Quarter end) to source strategic partners to assist with financing the development of the project and off take agreements.
Acquisition of four prospective new gold properties in the Lake Victoria Gold Fields region of northern Tanzania.
The Company had $4.23 million cash on hand at the end of the Quarter.
Metallurgical Process DevelopmentThe Quarter saw a significant breakthrough in the successful beneficiation of Ngualla weathered bastnaesite rare earth
nRC283: 120m at 4.57% REO fromsurfacetoendofhole including
60m at 6.60% REO from surface*REO=TotalRareEarthOxide.SeeAppendixTable3fordrillintersectiondetailsandAppendixTable2forindividualrareearthdistributionintheSREZ.
Richard Beazley Ben KnowlesManagingDirector WalbrookInvestorRelationsT:+61(0)89205360 T:+61(0)861892230E:[email protected] M:+61426277760W:www.peakresources.com.au E:[email protected]
The information in this report that relates to Exploration Results is based on information compiled and/or reviewed by Dave Hammond who is a Member of The Australasian Institute of Mining and Metallurgy. Dave Hammond is the Technical Director of the Company. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dave Hammond consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The information in this report that relates to Mineral Resources is based on information compiled by Rob Spiers, who is a member of The Australasian Institute of Geoscientists. Rob Spiers is an employee of geological consultants H&S Consulting Pty Ltd. Rob Spiers has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Rob Spiers consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Market Cap:$39.5million(at15.5c)
Listed Options outstanding:47.7million
Unlisted Options outstanding:11.2million
Liquidity: 0.6millionsharesperday(av.over3mths**)
14
Quarterly Report December 2012
Appendix:
Table 1: Classification of Mineral Resources for the Ngualla Rare Earth Project, 1.0% and 3.0% REO cut-off grades (February 2012).
Table 2: Relative components of individual rare earth element oxides (including yttrium) as a percentage of total REO for the Ngualla Southern Rare Earth and Northern Zones (>1% REO).
Table 3: Drill hole and intersection details for intersection highlights received in December Quarter referred to in report. Southern Rare Earth Zone – rare earth RC drill intersections +1 % REO
Selectedintersections+2%REOinitalics
Hole ID East North Hole Depth (m) From (m) To (m) Interval (m) REO %
+ See chapter 19 for defined terms. Appendix 5B Page 2 30/9/2001
1.13 Total operating and investing cash flows
(brought forward) (3,930) (6,948)
Cash f lows related to f inancing activi t ies
1.14 Proceeds from issues of shares, options, etc.
-
8,102
1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) (187) (467) Net f inancing cash f lows (187) 7,635
Net increase (decrease) in cash held
(4,117)
687
1.20 Cash at beginning of quarter/year to date 8,349 3,545 1.21 Exchange rate adjustments to item 1.20
1.22 Cash at end of quarter 4,232 4,232
Payments to directors of the entity and associates of the directors Payments to related entit ies of the entity and associates of the related entit ies
Current quarter $A'000
1.23
Aggregate amount of payments to the parties included in item 1.2
213
1.24
Aggregate amount of loans to the parties included in item 1.10
1.25
Explanation necessary for an understanding of the transactions
1.23 includes gross salaries including superannuation and fees to directors and legal fees
paid to Steinepreis Paganin Lawyers & Consultants, an entity related to Jonathan Murray
Non-cash financing and investing activit ies 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
+ See chapter 19 for defined terms. Appendix 5B Page 4 30/9/2001
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
Financing facil i t ies available Add notes as necessary for an understanding of the position.
Amount available $A’000
Amount used $A’000
3.1 Loan facilities
3.2 Credit standby arrangements
Estimated cash outf lows for next quarter
$A’000 4.1 Exploration and evaluation
359
4.2 Development
1,771
4.3 Production
4.4 Administration
1,072
Total
3,202
Reconcil iat ion 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.
+ See chapter 19 for defined terms. Appendix 5B Page 6 30/9/2001
Issued and quoted securit ies 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 +securit ies (description)
7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions
7.3 +Ordinary securit ies
254,723,553 254,723,533 Fully Paid
7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs
7.5 +Convert ible debt securit ies (description)
7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
+ See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 7
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 5).
2 This statement does give a true and fair view of the matters disclosed.
Sign here: Date: 23 January 2013
(CFO/Company Secretary) Print name: Jeff Dawkins 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 securit ies 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.