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Quarterly Activities and Cashflow Report For the period ended 30 June 2016
FERRUM CRESCENT LIMITED
(Incorporated and registered in Australia and registered as an external company in the
Republic of South Africa)
(Registration number A.C.N. 097 532 137)
(External company registration number 2011/116305/10)
Share code on the ASX: FCR
Share code on AIM: FCR
Share code on the JSE: FCR
Australian ISIN: AU000000WRL8
South African ISIN: AU000000FCR2
22 July 2016
Ferrum Crescent Limited
("Ferrum Crescent", the "Company" or the "Group")(ASX: FCR, AIM: FCR, JSE: FCR)
Quarterly Activities and Cashflow Report
For the period ended 30 June 2016
Highlights
Option over GoldQuest Iberica S.L. (“GoldQuest”), Spain:
- Majority of the transaction documentation and legal process to enable
exercise of the Company’s exclusive option (the “Option”) over GoldQuest,
which owns interests in the promising Toral and Lago lead-zinc exploration
projects in Northern Spain (the “Iberian Projects”), now completed.
- Two final elements to be resolved ahead of exercising the Option such that
the counterparty to the option and sale agreement, TH Crestgate GmbH
(“Crestgate”), has recently agreed to an extension of the option period:
o Post-quarter end: on 22 July 2016, the Company announced that
Crestgate had agreed to extend the Option to enable the vendors to
finalise the settlement and documentation of certain administrative
issues and an historic back-in right over the Toral licence area held by
Lundin Mining Corporation (“Lundin”). Accordingly, the Option is now
scheduled to expire on 31 August 2016 (or such later date as the
parties may agree).
- Conclusion of Option exercise process anticipated during Q3 2016.
- Toral and Lago work plan structured to process and interpret significant
amounts of pre-existing data, key objectives:
o Re-examine the potential scale of the mineralising system
o Investigate structural controls on mineralisation and the possible
presence of plunging shoots of high grade material from old workings
at surface down to resources defined in previous deep drilling
campaigns
o Re-logging, assaying and petrographic study of old core
o Summary: rapidly re-examine the potential size of the mineralisation
and processing characteristics
Moonlight Iron Ore Project, South Africa:
- Evaluating alternative engineering pathways for new production routes, based
on existing technologies and modelled on equipment currently in use at
comparable mining operations. Examining lower cost capex development
options with potential partners utilising alternative methods for the
transportation of concentrate other than a pipeline.
- Ongoing assessment of potential construction/production share partners on a
Build-Own-Operate-Transfer model with our farm-in partner, Business Venture
Investments No. 1709 (Proprietary) limited ("BVI") and its sister company,
Ovation Capital.
- Memorandum of Agreement and co-operation framework (the "MoA") signed
with the Mayor of the Lephalale Municipality situated in the Waterberg District
of the Limpopo Province.
o With a full mining permit in place, the MoA secures the necessary
consents from local stakeholders for progression of the project into
development.
o Items covered by the MoA include: employment, corporate social
responsibility, assisting the Company in recovering important historic
geological data, cooperation with other mining companies and skills
training. The MoA will assist our discussions with both our existing
partners and various third parties with respect to the Moonlight project's
future development.
- Progressing the recovery of certain historic drilling and exploration data on the
Moonlight and Julieta licence areas held by Anglo American which is currently
in the process of compiling a consolidated list of all the available data held by
it.
Corporate:
- In early May 2016, the Company received the proceeds of a £650,000 (gross)
fundraising further to the completion of a placing and subscription of, in
aggregate, 500m new ordinary shares with 500m options attached entitling
the holders to subscribe for up to a further 500m shares at a price of 0.165
pence per share over a two year period from 23 June 2016.
Justin Tooth, Executive Chairman of Ferrum Crescent, today commented:
“The quarter under review has been extremely productive. In respect of our
Moonlight Project in South Africa, we have commenced a new process seeking to
determine its true potential as a viable high grade iron production source. A series of
initiatives are underway including assessing potential development partnerships,
offtake discussions and talks aimed at securing interesting historic data sets on the
project.
“Whilst the transaction documentation and legal process in respect of our Option
over GoldQuest and its Spanish assets have substantially been completed, we have
recently secured a nil-cost extension to enable the vendors to resolve certain
outstanding administrative issues. It is my firm belief that with the right team in place
we can rapidly deliver value on these projects following completion of the acquisition
in due course. I believe that all remaining matters should be concluded shortly so
that we can then set to work on determining the true nature of the Iberian Projects in
what is a highly exciting market for zinc. I look forward to announcing further
progress over the course of the third quarter.’”
Exploration Interests
As at 30 June 2016, the Company held interests in the following:
Project Location Right Number Right Status Holder Percentage
Interest
Moonlight Limpopo 30/5/1/2/2/201 MR Mining Right Ferrum Iron 97%
Province, Granted Ore (Pty) Ltd
South Africa
Moonlight Limpopo LP30/6/1/1/2/11868PR Prospecting Ferrum Iron 97%
Province, Right Ore (Pty) Ltd
South Africa Application
No licences were acquired or disposed of during the quarter.
For further information on the Company, please visit www.ferrumcrescent.com or contact:
Ferrum Crescent Limited
Justin Tooth, Executive Chairman
Grant Button, Company Secretary
T: +61 8 9474 2995
UK enquiries:
Laurence Read (UK representative)
T: +44 7557 672 432
Strand Hanson Limited (Nominated Adviser)
Rory Murphy/Matthew Chandler
T: +44 (0)20 7409 3494
Beaufort Securities Limited (Broker)
Elliot Hance
T: +44 (0)20 7382 8300
Bravura Capital (Pty) Ltd (JSE Sponsor)
Doné Hattingh
T (direct): +27 11 459 5037
APPENDIX 5B
See attachment
Notes to Editors:
Further Information on GoldQuest and the Iberian Projects
GoldQuest is a private company incorporated in Spain which owns 100 per cent. of both the Toral
Project and the Lago Project in northern Spain, each having high prospectivity for lead and zinc.
Principal Terms of Ferrum Crescent’s Option
- Option to potentially acquire 100 per cent. of GoldQuest. GoldQuest owns 100 per cent. of two
lead-zinc exploration projects in the provinces of León and Galicia, in historic Spanish mining
areas.
- Exclusive option, valid until 31 August 2016. If exercised, Ferrum Crescent, will be required to:
o pay up to approximately £320,000 in cash consideration (calculated as a fixed amount of
£250,000 plus a further cash payment comprising the lesser of 50 per cent. of GoldQuest’s
current liabilities and £92,500, minus the option consideration); and
o issue, credited as fully paid, 100 million new ordinary shares in the capital of Ferrum
Crescent.
Toral Project
The Toral Project has been extensively explored historically by its previous owners Portex Minerals Inc.
and Lundin Mining S.L. and the 2,024ha of mineral rights contains extensive high grade zinc
mineralisation. Located in north-west Spain, approximately 400km north-west of Madrid, the project’s
licence area hosts excellent road, rail and power infrastructure and is situated in a known historic mining
jurisdiction. The asset also has a pre-existing NI 43-101 resource estimate reported by Micon
International Co. Limited on 30 April 2012.
Lago Project
The Lago Project is located approximately 54km to the north-east of the Toral Project. Historical
investigations completed by or on behalf of the Spanish mining firm, Exploracion Minera International
Espana S.A. (“EXMINESA”), between 1985 and 1990, indicated that mineralisation at the Lago
Project may be similar to that encountered at the Toral Project with vertical, lenticular bodies
(probably more than one) approximately 800m long by 300m wide.
Further Information on the Moonlight Project, South Africa
Ferrum Crescent’s principal project is the Moonlight Iron Project located in Limpopo Province in the
north of South Africa. The Moonlight Deposit (upon which the Project is based) is a magnetite deposit
located on the Moonlight, Gouda Fontein and Julietta farms and is the main operational focus for the
Company. Iscor Limited (“Iscor”), which explored the Project in the 1980s and '90s, reported
mineralisation capable of producing a concentrate grading at 68.7% iron. At that time, Iscor concluded
that the deposit, which was described as being comparable to the world’s best, was easily mineable
due to its low waste-to-ore ratio. The beneficiation attributes of Moonlight ore are extremely
impressive, with low-intensity magnetic separation considered suitable for optimum concentration.
Metallurgical tests on Moonlight material, undertaken since then by Ferrum Crescent, suggest that
Iscor’s historical results are conservative, that good metal recoveries can be achieved, and that the
resulting concentrates have a high iron content and only negligible impurities, at grind sizes
considered to be industry standard (P80 of 75 - 125 microns).
Key features of the Project to date are:
- JORC (2012) compliant Mineral Resource;
- Historical drilling, drilling by the Group, geological modelling and a high density geophysical
survey conducted by the Company in 2012 confirm tonnage upside potential;
- 30 year Mining Right granted;
- Environmental licence (EIA) in place for the Moonlight mining area (approved 4 April 2013);
- Metallurgical test work indicates the potential for high quality concentrate and/or pellets with in
excess of 69% iron content and low deleterious elements (DR grade pellets for use in direct
reduction iron/electric arc steel-making processes);
- The quality of product that can potentially be produced at Moonlight is a clear differentiator
against its industry peers, as is the access to infrastructure (port, power and rail);
- Duferco offtake partner (4.5 Mtpa plus first right on a further 1.5 Mtpa if not sold domestically).
South Africa currently has a growing demand for high grade iron concentrate and/or pellets for its
steel industry;
- Independent valuation by The Mineral Corporation completed in June 2014 - this valuation
served as the basis for the recent BVI (Ovation Capital) transaction;
- BEE compliant South African investment company (BVI) will provide a completed BFS to the
Group by 2018/19 at no expense to the Group in return for a 39-43% equity position in the
Moonlight Project;
- Located near Kumba railhead at Thabazimbi (Kumba operation depleting in grade), Limpopo
Province, northern South Africa;
- New Eskom power plant (4,800MW) commissioning first 800MW module;
- Richards Bay port expansion for potential export of future iron ore products; and
- Local community, Ga-Seleka, has an effective 3% carried interest in the Moonlight Project.
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