Page | 1 NSL CONSOLIDATED LTD Issued 29 July 2016 JUNE QUARTER HIGHLIGHTS IRON ORE Binding agreement for joint development of greenfield steel plant in India with Wei Hua Group Co Ltd, China’s largest heavy equipment crane building company, with revenues in excess of US$1 billion in 2015. Discussions continue with Andhra Pradesh Government around advancing the executed Memorandum of Understanding towards binding agreements for new projects. Andhra Pradesh on track for +14% growth for next 15 years as a result of building a new state. Engineers from China Huate conduct first visit to NSL’s stockyard and mines of Phase Two wet plant project. Huate equipment delivery complete, Huate focus now moves to erection and commissioning assistance. Indian site works and civils progress on schedule, leading to commissioning commencing in Q3 2016 with positive cash flow in Q4 2016. Civil foundation work commencement celebrated with Puja, attended by local dignitaries, village elders and bureaucrats, highlighting local engagement and support of the project. Offtake agreements are already in place with India’s JSW Steel and BMM Ispat for Phase Two product. QUARTERLY ACTIVITIES REPORT JUNE 2016 For personal use only
26
Embed
For personal use only - ASX · 7/29/2016 · Offtake agreements are already in place with India’s JSW Steel and BMM Ispat for Phase Two product. QUARTERLY ACTIVITIES REPORT For
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page | 1
NSL CONSOLIDATED LTD
Issued 29 July 2016
JUNE QUARTER HIGHLIGHTS
IRON ORE
Binding agreement for joint development of greenfield steel plant in India with Wei
Hua Group Co Ltd, China’s largest heavy equipment crane building company, with
revenues in excess of US$1 billion in 2015.
Discussions continue with Andhra Pradesh Government around advancing the
executed Memorandum of Understanding towards binding agreements for new
projects.
Andhra Pradesh on track for +14% growth for next 15 years as a result of building a
new state.
Engineers from China Huate conduct first visit to NSL’s stockyard and mines of Phase Two
wet plant project.
Huate equipment delivery complete, Huate focus now moves to erection and
commissioning assistance.
Indian site works and civils progress on schedule, leading to commissioning
commencing in Q3 2016 with positive cash flow in Q4 2016.
Civil foundation work commencement celebrated with Puja, attended by local
dignitaries, village elders and bureaucrats, highlighting local engagement and
support of the project.
Offtake agreements are already in place with India’s JSW Steel and BMM Ispat for
Phase Two product.
QUARTERLY ACTIVITIES REPORT
JUNE 2016
For
per
sona
l use
onl
y
Page | 2
NSL CONSOLIDATED LTD
IRON ORE - INDIA
BINDING AGREEMENT FOR JOINT DEVELOPMENT OF GREENFIELD STEEL PLANT
During the quarter, the Company signed a Memorandum of Understanding (MoU) with Wei
Hua Group Co Ltd, China’s leading heavy equipment crane building company for the
establishment of a steel making plant in Andhra Pradesh.
The MOU progressed and was then superseded by the execution of a Binding Agreement for
Joint Development as both parties consolidate their understanding and establish the
conditions precedent and other activities to be carried out until the execution of final
Shareholder and operating agreements for the proposed project.
The transition to a binding agreement further strengthens the relationship between the
Company and Wei Hua, and demonstrates Wei Hua’s commitment to investing in the Indian
economy and importantly, the progress made by the Company to date in India.
Wei Hua Group Co Ltd, with revenues in excess of US$1 billion in 2015, has already acquired
significant parts of the future steel making plant, with the remainder to be purchased as
required, based on Indian progress. Wei Hua is looking to diversify its revenue stream, both in
location and source generation (Reference http://www.weihuagrp.com/).
Wei Hua views the Indian economy as one of the most attractive up and coming investment
opportunities in the world. India is expected to become the world's second largest producer
of crude steel in the next 10 years, moving up from the third position, as its capacity is
projected to increase to about 300 MT by 2025 from 81 MT in 2013-14. Huge scope for growth
is offered by India’s comparatively low per capita steel consumption and the expected rise
in consumption due to increased infrastructure construction and the thriving automobile and
railways sectors.
In addition to this, Wei Hua also sees significant value in what NSL has been able to achieve
in India, as the only foreign company to own and operate iron ore mines and also with the
significant progress made by the Company and the Andhra Pradesh Government (GoAP) as
part of the existing joint MOU.
Blast furnace shell
As announced previously the Company has signed an MOU directly with GoAP, whereby
GoAP will facilitate the provision of necessary assistance for the Company to grow its Andhra
Pradesh mining, beneficiation and value addition activities to in excess of 8 million tonnes per
For
per
sona
l use
onl
y
Page | 3
NSL CONSOLIDATED LTD
annum of iron ore production; such assistance includes land acquisition, adequate
infrastructure development and attractive incentives as per the policies / rules and
regulations of the State Government.
In addition, the GoAP will support the Company’s participation in significant projects in
Andhra Pradesh, wherever feasible. Such participation may include providing advisory
services, setting up manufacturing facilities, Infrastructure development, R&D and
Implementation support. The Company can support the development of infrastructure in
Andhra Pradesh, considering the Government’s focus on promoting manufacturing and
industrialization in the state and facilitating a conducive investment environment.
One key enabler to the execution of the MoU was the GoAP committing to the development
of the Orvakallu Mega Industrial Hub, located in the Kurnool District some 30 km from NSL’s
existing operations. The 28,000 acre hub will include access to water, power, rail and road.
The site is also proposed for one of AP’s four greenfield airports outlined in the strategic
infrastructure plan for the State. The Company will be proposing utilising this industrial hub as
a foundation for the agreement with Wei Hua Group, and continues to leverage the GoAP
MOU, with discussions on providing the approvals for the land, power, water and other utilities
for the steel project already commenced.
The Wei Hua Group also brings strong ties into the Asia Infrastructure Investment Bank (AIIB).
The AIIB is a newly established international financial institution that aims to support the
building of infrastructure in the Asia-Pacific region. The bank has 37 member states and was
proposed as an initiative by the government of China. The capital of the bank is $100 billion,
equivalent to 2⁄3 of the capital of the Asian Development Bank and about half that of the
World Bank.
Key Terms of Agreement
The joint venture Company will be established with a 50/50 shareholding and importantly, NSL
is not required to fund any aspect of the Joint Venture.
NSL shall provide reasonable assistance to Wei Hua for the feasibility studies, including the
latest market research on the Iron and Steel industry in India which will assist in determining
the size and scale of the proposed steel plant project.
Initially, NSL shall conduct a study to understand the governmental approvals, licences,
consents, no-objections etc. required from statutory, governmental and other authorities
under the laws of India for the proposed project, setting up of the JV, and commencement
of the preliminary activities for the project. This will be undertaken in consultation with Wei
Hua and NSL shall seek reasonable assistance from Wei Hua.
Next, NSL shall commence the preliminary activities for obtaining and providing the legal and
regulatory approvals, accessing available land for the proposed project and shall take all
appropriate steps towards the supply of supplementary materials and human resources for
the proposed project
NSL shall be responsible for the operations, commercial marketing and sale of the steel
products from the proposed project, on an exclusive basis.
Wei Hua shall carry out its feasibility for the steel market in India from a technical, financial
and legal perspective, with reasonable assistance from NSL where sought by Wei Hua.
For
per
sona
l use
onl
y
Page | 4
NSL CONSOLIDATED LTD
Wei Hua shall provide the equipment for the proposed project delivered free of charge and
as per a mutually-acceptable delivery schedule.
NSL and Wei Hua shall jointly discuss and finalise JV shareholder and operating agreements
in a timely manner, post completion of feasibility studies and shall collectively approach and
apply for financing from Asian Infrastructure Investment Bank.
NSL and Wei Hua shall ensure that the proposed project results in enhancing the welfare of
the local community and economic and social development in the area of the proposed
project.
The binding agreement is valid for a period of 12 months from the commencement date, or
as extended by the parties in writing; or either party may terminate this agreement by giving
a notice of 30 days to the other Party.
MEMORANDUM OF UNDERSTANDING WITH ANDHRA PRADESH GOVT
During the Quarter, the Company further progressed actions pertaining to the Memorandum
of Understanding (MoU) with the Government of Andhra Pradesh (GoAP) for collaboration in
the mining, beneficiation and value addition of low grade iron ores that are abundant in the
State.
Over the past 12 months the Company has executed agreements with both the GoAP and
the Andhra Pradesh Mineral Development Corporation (APMDC), the State owned enterprise
charged with maximising utilisation of mineral resources.
The scope of the MoU is to define a collaboration between the Company and Andhra
Pradesh, whereby the Company will work with APMDC in the reconnaissance and exploration
for minerals in the State. The Company has also agreed to provide state of the art testing,
process flow development and technology for the setting up of value addition plants such
as beneficiation and pellet plants for low grade iron ore located in the State of Andhra
Pradesh, an endeavour which the APMDC has agreed to assist.
To develop this MoU further both parties have been conducting detailed legal and technical
reviews of potential target projects within the State. This work is expected to accelerate
during the coming months.
Key Facts
During a World Bank survey in 2015 Andhra Pradesh was rated as #2 state in India for ease of
doing business.
The 15-year business plan sees an expected 14% growth rate projected out to 2029 for the
State, based on an aggressive infrastructure program including airports, ports, highways and
a new greenfield Capital City located at Amaravati.
The State has implemented a dedicated single window process for investments and projects,
with a guaranteed 21-day approval timeframe for all state permissions.
Two major initiatives that will impact on the State are the Vizag – Chennai and Bangalore –
Chennai infrastructure corridors. The Asian Development Bank (ADB) is supporting the AP
Govt in the development of the Vizag - Chennai corridor. The $900 m project will have $700
m funded by the ADB and $200 m to be provided by the State Govt. This linkage is part of the
much larger Pan Asia land bridge connecting India to China and South East Asia.
For
per
sona
l use
onl
y
Page | 5
NSL CONSOLIDATED LTD
State GDP US$8 Billion
Per Capita Income $1,500
Capital City Amaravati
Largest City Visakhapatnam
Cities with more than 1m people 27
KURNOOL IRON ORE BENEFICIATION PLANT
PHASE TWO WET PLANT
During the quarter, the Company, as the only Australian or foreign company to own and
operate in India’s massive iron ore market continued to progress is Phase Two wet
beneficiation project.
Huate Engineers Site Visit
The Company hosted a team of engineers from equipment provider Shandong Huate Magnet
Technology Co. Ltd or Huate Magnetism (Huate), one of China’s premier global beneficiation
Consolidated statement of cash flows Cash flows related to operating activities
Current quarter $A’000
Year to date (12 months) $A’000
1.1 Receipts from product sales and related debtors
11
24
1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration (Aust, Sing & India)
-
(119) -
(652)
(18) (301)
- (1,855)
1.3 Dividends received - - 1.4 Interest and other items of a similar nature
received 3 4
1.5 Interest and other costs of finance paid - (50) 1.6 Income taxes paid - - 1.7 Other - -
Net Operating Cash Flows
(757)
(2,196)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets
- -
(555)
- -
(901) 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
(555)
(901)
1.13 Total operating and investing cash flows (carried forward)
(1,312)
(3,097)
For
per
sona
l use
onl
y
Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms.
Appendix 5B Page 2
1.13 Total operating and investing cash flows (brought forward)
(1,312)
(3,097)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc.
1,193
3,150
1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from borrowings - 1,007 1.17 Repayment of borrowings (203) (266) 1.18 Dividends paid - - 1.19 Other
- -
Net financing cash flows
990
3,891
Net increase (decrease) in cash held
(322)
794
1.20 Cash at beginning of quarter/year to date 1,245 198 1.21 Exchange rate adjustments to item 1.20 (4) (73)
1.22 Cash at end of quarter
919
919
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
102
1.24
Aggregate amount of loans to the parties included in item 1.10
NIL
1.25
Explanation necessary for an understanding of the transactions
Wages, superannuation and car lease.
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
-
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 facilities available
For
per
sona
l use
onl
y
Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms.
Appendix 5B Page 3
Add notes as necessary for an understanding of the position.
Amount available $A’000
Amount used $A’000
3.1 Loan facilities *
5,000,000
1,100,000
3.2 Credit standby arrangements
- -
* Relates to the MG Partners II Ltd A$5M secured loan agreement as announced on 13 August 2015. Refer to announcement on 13 August 2015 for key terms to the transaction.
Estimated cash outflows for next quarter **
$A’000
4.1
Exploration and evaluation 9
4.2 Development (inc PPE)
1,473
4.3 Production
-
4.4 Administration (Aust, Sing & India) ***
902
Total
2,384
** Not included above, are cash inflows for the next quarter in relation to sales of product produced through the Phase Two wet plant commissioning phase and production. *** Increase in forecast administration outflows, due to increased activity and resources in India associated with the commencement of the Phase Two wet plant project, and due to repayments associated with the Magna secured loans during the Sept 16 qtr.
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 **** 919 1,245
5.2 Deposits at call - -
5.3 Bank overdraft -
-
5.4 Other - -
Total: cash at end of quarter (item 1.22) 919 1,245
**** Not included above, is approximately $559k in proceeds from option conversions received subsequent to the quarter, and $3.4m raised through the Placement announced on 22 July 2016.
For
per
sona
l use
onl
y
Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms.
Appendix 5B Page 4
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
-
-
-
-
6.2 Interests in mining tenements acquired or increased
-
-
-
-
For
per
sona
l use
onl
y
Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms.
Appendix 5B Page 5
Issued and quoted securities at end of current quarter (continued) 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)
Amount paid up per security (see note 3)
7.1 Preference +securities (description)
- - - -
7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions
- - - -
7.3 +Ordinary securities
1,378,886,239 1,378,886,239
7.4 Changes during quarter
(a) Increases through issues
(b) Exercise of options (c) Decreases through return of capital, buy-backs (d) Increase pursuant to underwriting of options
227,509,987
21,875,000 - -
15,454,766
21,875,000 - -
$0.008
$0.01
-
-
$0.008
$0.01 - -
7.5 +Convertible debt securities (description)
1
-
US$2.5M
US$2.5M
7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
- - - -
7.7 Options (description and conversion factor)
548,208,886
177,000,000
10,000,000
548,208,886 -
-
Exercise price
$0.01
$0.0096
$0.03
Expiry date
31/12/2016
31/12/2016
14/08/2018
7.8 Issued during quarter
232,590,218
232,590,218
$0.01
31/12/2016
For
per
sona
l use
onl
y
Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms.
Appendix 5B Page 6
7.9 Exercised during quarter
21,875,000
21,875,000
$0.01
31/12/2016
7.10 Expired/Forfeited during quarter
-
-
-
-
7.11 Debentures
(totals only) - -
7.12 Unsecured notes (totals only)
- -
For
per
sona
l use
onl
y
Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms.
Appendix 5B Page 7
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 /does not* (delete one) give a true and fair view of the matters disclosed.
Sign here:.............Sean Henbury.............. Date: 29 July 2016 (Company Secretary)
Print name: Sean Henbury 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.