Page 1 of 12 GME Resources Limited Quarterly Report – 30 June 2014 Highlights Non Renounceable Rights Issue raises $1.4 million. Large scale metallurgical test program underway. Strong gold results from first pass drilling program at Federation Well prospect. Capital Raising In May the Company announced a non-renounceable rights issue at 2.7 cents to raise up to two million dollars. The Company received applications totalling $1.389 million representing a take up of 67% by Shareholders. The Company has reserved the right to allocate the shortfall (25,474,869 shares) from the issue. Funds raised from the issue will be used to complete a major metallurgical test program that will provide process design data to support the proposed Heap Leach Direct Solent Extraction – Electrowinning (HL-DSX-EW) flow sheet for the NiWest Nickel Laterite development. Funds will also be applied to advance the Company’s gold assets which have potential to deliver near term cashflow. NiWest Nickel Laterite Project A major Sonic coring drill program is currently underway at the Hepi and Mt Kilkenny projects. The program, which will deliver approximately three tonnes of mineralised core sample from within the current pit shells, will be used for metallurgical test work designed to advance the proposed flow sheet from “proof of concept” through to “continuous piloting”. In summary key aspects of the program include: Sonic drilling program to gather major representative core samples from the Hepi and Mt Kilkenny resources. Agglomeration optimisation via hydrodynamic testing. Bulk column leach testing to generate sufficient solution for downstream process batch and continuous test work. Batch and continuous Fe removal and neutralisation. Batch and continuous Direct SX. The program, which will test the flow sheet at feasibility level, will be project managed by Mworx principal Mr David Readett who was directly involved in the successful development and management of the world’s first commercial integrated Nickel Heap Leach project which was located at Glencore Xstrata’s Murrin Murrin Nickel Refinery adjacent to the NiWest Project. QUARTERLY REPORT June 2014 About GME Resources GME Resources is a Perth- based nickel exploration company focused on the development of its 100%- owned NiWest Project, located in the Leonora district of Western Australia. GME has the potential to become a top 10-global nickel producer with its NiWest Project resource totalling over 100 million tonnes of ore containing over 1 million tonnes of nickel – making it one of the most exciting undeveloped laterite nickel projects in Australia. The Company has recently completed a Scoping Study on the development of a Heap Leach DSX –EW plant capable of producing 14,000 tonnes of nickel cathode and 540 tonnes of cobalt carbonate per annum. The project which has the potential to be the world’s first fully integrated Nickel Laterite Heap Leach project is estimated to cost $460m and has a mine life of over 20 years. For personal use only
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Highlights - Australian Securities Exchange · Critical Spares $1,992,905 Sub Total $357,637,489 Contingency $103,128,033 Total $460,765,522 NiWest Resource Statement – Jorc 2004
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Page 1 of 12
GME Resources Limited Quarterly Report – 30 June 2014
Highlights
Non Renounceable Rights Issue raises $1.4 million.
Large scale metallurgical test program underway.
Strong gold results from first pass drilling program at Federation Well prospect.
Capital Raising In May the Company announced a non-renounceable rights issue at 2.7 cents to raise up to two million dollars. The Company received applications totalling $1.389 million representing a take up of 67% by Shareholders. The Company has reserved the right to allocate the shortfall (25,474,869 shares) from the issue. Funds raised from the issue will be used to complete a major metallurgical test program that will provide process design data to support the proposed Heap Leach Direct Solent Extraction – Electrowinning (HL-DSX-EW) flow sheet for the NiWest Nickel Laterite development. Funds will also be applied to advance the Company’s gold assets which have potential to deliver near term cashflow. NiWest Nickel Laterite Project A major Sonic coring drill program is currently underway at the Hepi and Mt Kilkenny projects. The program, which will deliver approximately three tonnes of mineralised core sample from within the current pit shells, will be used for metallurgical test work designed to advance the proposed flow sheet from “proof of concept” through to “continuous piloting”. In summary key aspects of the program include:
Sonic drilling program to gather major representative core samples from the Hepi and Mt Kilkenny resources.
Agglomeration optimisation via hydrodynamic testing.
Bulk column leach testing to generate sufficient solution for downstream process batch and continuous test work.
Batch and continuous Fe removal and neutralisation.
Batch and continuous Direct SX.
The program, which will test the flow sheet at feasibility level, will be project managed by Mworx principal Mr David Readett who was directly involved in the successful development and management of the world’s first commercial integrated Nickel Heap Leach project which was located at Glencore Xstrata’s Murrin Murrin Nickel Refinery adjacent to the NiWest Project.
QUARTERLY REPORT
June 2014
About GME
Resources
GME Resources is a Perth-
based nickel exploration
company focused on the
development of its 100%-
owned NiWest Project,
located in the Leonora
district of Western Australia.
GME has the potential to
become a top 10-global
nickel producer with its
NiWest Project resource
totalling over 100 million
tonnes of ore containing
over 1 million tonnes of
nickel – making it one of the
most exciting undeveloped
laterite nickel projects in
Australia.
The Company has recently
completed a Scoping Study
on the development of a
Heap Leach DSX –EW plant
capable of producing 14,000
tonnes of nickel cathode
and 540 tonnes of cobalt
carbonate per annum.
The project which has the
potential to be the world’s
first fully integrated Nickel
Laterite Heap Leach project
is estimated to cost $460m
and has a mine life of over
20 years.
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GME Resources Limited Quarterly Report – 30 June 2014
The test program is expected to commence in August following shipment of sample to HRL’s laboratory in Brisbane and is scheduled to be completed by July 2015. A summary of the results generated from Scoping Study on the HL-DSX-EW development at the NiWest Nickel Laterite Project are shown in APPENDIX 1. For full details refer to ASX announcement dated 11 Dec 2013. Gold Projects Federation Well Prospect - Aircore Drilling Results During the reporting period, the Company completed an aircore drilling program at the company’s 100% owned Abednego Gold Project located 50 kms east of Leonora in the North Eastern Goldfields of WA. The program was located at the Federation Well prospect where previous drilling below the historic gold workings had recorded promising results. (refer ASX announcement 4 July 2014) The program identified a relatively broad, shallow, moderately mineralised structure in the range of 1.0 – 2.0 grams per tonne, up to 10 metres width containing narrower high-grade zones. Continuous gold mineralisation has been delineated over approximately 500 metres of strike and remains open to the north, south and at depth. (Refer Appendix 2 & 3). Drilling Highlights 14FDAC002 10 metres averaging 1.91 g/t from 22 metres 14FDAC003 13 metres averaging 1.73 g/t from 15 metres 14FDAC004 11 metres averaging 1.14 g/t from 10 metres 14FDAC006 10 metres averaging 1.99 g/t from 38metres 14FDAC008 7 metres averaging 2.01 g/t from 9 metres 14FDAC009 2 metres averaging 8.21g/t from 23 metres 14FDAC014 8 metres averaging 1.49 g/t from 42 metres 14FDAC017 4 metres averaging 2.13 g/t from 20 metres The drilling program tested approximately 500 metres of strike over the historic Federation gold workings. Twenty four air core holes were completed to advance the project by a further 1052 metres. Gold mineralisation at Federation is hosted in the district-scale north northeast trending, Federation Shear Zone - associated with steeply, east southeast dipping quartz veins. Out cropping and sub cropping quartz veins continue north and south of the area drill tested. As a first pass drilling program, the Company is very encouraged with these results, which significantly increase the upside potential for the project. A follow up program is currently being planned. A full table of results including cross sections and drill hole locations are shown in Appendix 2 and 3.
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GME Resources Limited Quarterly Report – 30 June 2014
Further work on the Company’s gold projects is planned over the September quarter, with drilling planned at the Devon gold project. The infill drilling program is designed to further delineate known high-grade gold mineralisation between surface and twenty metres depth. Results will contribute to a subsequent economic evaluation for a potential small scale, high-grade gold open pit mine and haul operation. The Company looks forward to providing further updates as work programs are completed.
Date: 22 July 2014
JAMIE SULLIVAN
MANAGING DIRECTOR
Competent Person Statements The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Mr Stephen Hyland of Ravensgate Resource Consultants. . Mr Hyland is a member of The Australasian Institute of Mining and Metallurgy. Mr Hyland is a Principal Consultant with Ravensgate Minerals Industry Consultants who consults to the Company. Mr Hyland has sufficient experience, which is relevant to the style of mineralization 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 Mineral Resources and Ore Reserves”. Mr Hyland consents to the inclusion in the report of the matters based on information provided in the form and context in which it appears.
The information in this announcement that relates to Processing / Engineering and related operating and capital cost estimates is based on information reviewed by Mr David Readett (B.E. Met Eng., FAusIMM, CP (Met)). Mr Readett is an independent consulting engineer working through a Company known as MWorx Pty Ltd. Mr Readett is a Chartered Professional Metallurgical Engineer and has 25 years of relevant experience in this area of work. Mr Readett consents to the inclusion in this announcement of the matters based on information provided by him and in the form and context in which it appears.
The information in this report that relates to Exploration Results at the Fairfield Gold Prospect is based on information compiled by Mr Mark Hill who is a member of The Australasian Institute of Geoscientists. Mr Hill is a Principal Consultant with Exman Consultancy. Mr Hill has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Mineral Resources and Ore Reserves. Mr Hill consents to the inclusion in the report of the matters based on information provided in the form and context in which it appears.
Forward-Looking Statements Certain statements made in this announcement, including, without limitation, those concerning the scoping study, contain or comprise certain forward-looking statements regarding GME Resources Limited’s (GME) exploration operations, economic performance and financial condition. Although GME believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in metals prices and exchange rates and business and operational risk management. GME undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events.
The Company notes that an inferred resource has a lower level of confidence than an indicated or measured resource. The Company believes that based on the geological nature of its deposits and the work done over several years by its Competent Person that there is a high degree of probability that the inferred resources will upgrade to indicated resources with further exploration work.
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GME Resources Limited Quarterly Report – 30 June 2014
APPENDIX 1 NiWest Nickel Laterite Project –Scoping Study Results Table 1 - Summary of financial model including parameters and assumptions
Declared Resource Base (JORC 2004)
Million Tonnes
% Ni
% Co
Ni Metal
Co Metal
Measured 34.22 1.04 0.07 355,198 23,037
Indicated 22.41 0.99 0.06 222,273 14,189
Inferred 19.09 0.96 0.06 184,038 11,303
Total Resource (0.8% Ni cut off grade) 75.73 1.01 0.06 761,509 48,529
Mining Inventory 29.5 1.28 0.08 377,600 23,600
Average Nickel Production Per Annum 14,000
Cobalt Production Per Annum 540
Extraction Rates
72% 40%
Life of Mine 20 years
Nickel Price US$10/lb
Cobalt Price US$25/lb
Assumed Acid Price A$75/tonne
Capital Cost Estimate $460 million
LOM Capital Estimate $606 million
Operating Cost Breakdown
Mining US$1.02/lb
Processing US$4.18/lb
Administration / Royalties US$0.49/lb
Total Operating Costs US$5.68/lb
Cumulative Operating Revenue
A$7.71 billion
Cumulative Operating Surplus (Pre Tax)
A$2.82 billion
NPV 10% discount (Pre Tax)
A$934 million
Internal Rate of Return 37%
Capital Payback 2.0 years
Exchange Rate US$1 : AUS$0.85
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GME Resources Limited Quarterly Report – 30 June 2014
Table 2 - Major capital item estimate
Description Heap Leach $88,058,202
SX EW Plant $88,032,651
Acid Regeneration $34,860,095
Power Plant and Electrical Installation $36,399,419
Calcrete Plant $9,158,879
Water Supply $27,788,345
Piping $12,196,581
Site Buildings $12,484,632
Site Establishment $20,389,831
EPCM PCM PCN $17,467,715
Vendor $4,822,422
First Fill $3,985,811
Critical Spares $1,992,905
Sub Total $357,637,489
Contingency $103,128,033
Total $460,765,522
NiWest Resource Statement – Jorc 2004
0.7% COG
CATEGORY
Tonnes
(Millions) %Ni %Co
Ni Metal
(tonnes)
Co Metal
(tonnes)
TOTAL Measured 45.86 0.96 0.06 441,692 28,229
Indicated 32.28 0.92 0.06 295,631 18,502
Inferred 30.32 0.89 0.06 270,250 19,600
Combined 108.46 0.93 0.06 1,007,573 66,331
0.8% COG
CATEGORY
Tonnes
(Millions) %Ni %Co
Ni Metal
(tonnes)
Co Metal
(tonnes)
TOTAL Measured 34.22 1.04 0.07 355,198 23,037
Indicated 22.41 0.99 0.06 222,273 14,189
Inferred 19.09 0.96 0.06 184,038 11,303
Combined 75.73 1.01 0.06 761,509 48,529
1.0% COG
CATEGORY
Tonnes
(Millions) %Ni %Co
Ni Metal
(tonnes)
Co Metal
(tonnes)
TOTAL Measured 19.21 1.19 0.08 228,996 15,215
Indicated 8.47 1.14 0.08 96,299 6,461
Inferred 5.07 1.14 0.07 57,741 3,786
Combined 32.74 1.17 0.08 383,036 25,463
1.2% COG CATEGORY Tonnes
(Millions)
%Ni %Co Ni Metal
(tonnes)
Co Metal
(tonnes)
TOTAL Measured 7.43 1.37 0.09 101,534 6,681
Indicated 2.23 1.31 0.09 29,165 1,981
Inferred 1.29 1.28 0.09 16,591 1,106
Combined 10.96 1.34 0.09 147,290 10,067
(This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last updated.)
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GME Resources Limited Quarterly Report – 30 June 2014
NiWest Heap Leach DSX –EW Flow Sheet
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APPENDIX 2 Federation Well Cross Section diagrams and drill hole location plan
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+ See chapter 19 for defined terms. Appendix 5B Page 2 17/12/2010
1.13 Total operating and investing cash flows
(brought forward) (390) ( 598)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. 1,380 1,380 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) - -
Net financing cash flows 1,380 1,380
Net increase (decrease) in cash held
990
782
1.20 Cash at beginning of quarter/year to date 554 762 1.21 Exchange rate adjustments to item 1.20
1.22 Cash at end of quarter 1,544 1,544
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
(81)
1.24
Aggregate amount of loans to the parties included in item 1.10
-
1.25
Explanation necessary for an understanding of the transactions
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
51,457,641 shares issued at 2.7 cents under a non renounceable entitlement issue.
2.2 Details of outlays made by other entities to establish or increase their share in projects in
+ See chapter 19 for defined terms. 17/12/2010 Appendix 5B Page 3
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
- -
3.2 Credit standby arrangements
- -
Estimated cash outflows for next quarter
$A’000
4.1 Exploration and evaluation
400
4.2 Development
4.3 Production
4.4 Administration
135
Total
535
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 177 554
5.2 Deposits at call 1,367 -
5.3 Bank overdraft - -
5.4 Other (provide details) - -
Total: cash at end of quarter (item 1.22) 1,544 554
+ See chapter 19 for defined terms. 17/12/2010 Appendix 5B Page 5
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
NIL
7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions
7.3 +Ordinary securities
436,121,505 436,121,505
7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs
51,457,641
51,457,641
2.7 cents
2.7 cents
7.5 +Convertible debt securities (description)
NIL NIL
7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
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 6: Exploration for and Evaluation of
Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International
Financial Reporting 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.