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Tawana Resources NL - Company Announcement
Tawana Resources NL
(Incorporated in Australia)
(Registration number ACN 085 166 721)
Share code on the JSE Limited: TAW ISIN: AU000000TAW7
Share code on the Australian Stock Exchange Limited: TAW ISIN: AU000000TAW7
("Tawana" or "the Company")
7 December 2005
PLACEMENT
We refer to the announcement regarding the halt in trade released on SENS on 5
December 2005.
Tawana Resources NL ("The Company") has engaged Intersuisse Corporate Pty Ltd
("Intersuisse") to place shares to institutional and sophisticated investors to
raise funds to supplement the Company"s working capital.
The placement is to be within the limits set out in the ASX Listing Rules and
does not require shareholder approval.
The purpose of the placement was to augment the funds raised by the exercise of
the November 2005 options, which raised a total of approximately $1,125,000.
Purpose of raising
Funds will be applied to continuation of the Company"s exploration and
development programs, with particular focus on taking the Company to diamond
mining producer status. Specific activities include :
* complete processing of the bulk samples from the Kareevlei Wes Project , and
definition drilling of the KV1 and KV2 kimberlites as a precursor to final
feasibility and production during 2006.
* fast track detailed bulk sampling and further definition drilling of the
Blacktop kimberlite in the Pilbara Project in Australia
* complete the purchase of the De Beers laboratory in Melbourne
* complete the assessment of the kimberlites discovered in the Daniel Kimberlite
Project in South Africa
* continue the trial mining of the Eastern Gravels.
Kareevlei Wes Kimberlite Project
Kimberley Region, Northern Cape, South Africa
Tawana 74%, Seven Falls 26%.
It is proposed to use funds raised in the placement to complete crushing and
processing of the remaining plus 6mm material of the 6,500 tonnes of kimberlite
excavated from 4 of the 5 kimberlites. The results of this work, and additional
drilling to determine the geometry of the kimberlites, will be used to plan and
implement the mining of the pipes. Subject to final feasibility, mining is
targeted to commence before the end of 2006.
The project encompasses 5 kimberlite pipes with a total surface area of 10.8
hectares.
Earlier drill-indicated grades strongly suggested the potential for a diamond
mining operation on a significant scale. The Company commissioned a Dense Media
Separation ("DMS") plant to treat a 6500 tonne Kareevlei Wes kimberlite sample.
Processing of this sample will be completed early in 2006.
Snowden Mining Consultants ("Snowden") has completed a scoping study aimed at
confirming initial project economics, scale, and estimated capital and operating
costs. Snowden concluded that under the technical and financial assumptions set
out in Table 1 mining of the KV1 and KV2 kimberlites is economically feasible
with a Net Present Value of Rand 24 million at 15% discount rate, and an
Internal Rate of Return of 43%. Snowden recommends that "additional expenditure
on defining the other kimberlites in the cluster by means of a full feasibility
study since the business case for mining the deposit is financially
justifiable."
The full Snowden report can be viewed on the Company"s web site at
www.tawana.com.au.
Table 1. Technical and Financial Assumptions used by Snowden
Grade (cpht*) 11
Value (US$/ct) 164
Mining Rate (t/yr) 500,000
Carats Produced 55,000
(ct/yr)
Life of Mine 12
(years)
Exchange Rate US$1 = R6.5
Mining Cost R22 US$ 3.38
Treatment Cost R27 US$ 4.15
Capital Cost R25M US$ 5.5M
*carats per hundred tonne
It is the opinion of Tawana management that the mining rate could be increased
to at least 1Mt per year, thus improving the economics of the project.
The Pilbara Project
Pilbara Region, Western Australia, Australia
Tawana 50% and management, De Beers Australia Exploration Ltd 50%.(Tawana"s
economic interest increases as it commits funds to the jointly owned operating
company)
Funds raised in the placement will be used to complete the purchase of the De
Beers Melbourne laboratory which is integral to the advancement of the Blacktop
kimberlite project, and essential for supporting the discovery of additional
kimberlites in the Pilbara.
Funds will also be used to fast track investigation of the Blacktop kimberlite.
To this end arrangements have been made to rent a DMS plant to process
approximately 14,000 tonnes of samples to be excavated from the Blacktop
kimberlite dyke during the dry season of 2006. Subject to weather and plant
commissioning, multiple 250-tonne samples will be taken along the kimberlite
dyke, with samples being concentrated through the DMS plant. After upgrading,
each sample will be analysed at our Melbourne laboratory. At a grade of 16cpht,(
the grade of the initial sample taken earlier this year) this program is
designed to produce in excess of 2000 carats of diamonds, sufficient to
determine a reliable value of the product. This, in addition to data gathered
from planned drilling along strike and at depth, is targetted to support a
feasibility study by the end of 2006.
At a recent World Diamond Conference in Perth, details of the Blacktop
kimberlite were presented by De Beers. The salient points are:
* the kimberlite is in the from of a dyke/fissure
* it varies in width from <0.5m to 6m with an average width of 5m
* it has been identified over a strike length of over 5km
* it has been drilled over a strike length of 1.5km and to a depth of 100m
It was previously reported that the single 32.85tonnes bulk sample taken by De
Beers from the Blacktop kimberlite produced 135 diamonds weighing 5.27 carats.
The 16cpht grade of that sample is considered particularly encouraging,
considering the relatively small size of the sample. The diamonds from this
sample have not been valued.
The apparent high grade and the unusually large width of the kimberlite has
encouraged Tawana Directors to fast track the advancement of this project. A
senior geologist will be appointed to directly manage this project and further
regional exploration work.
Tawana Alluvial Project - Eastern Gravels
Limeacres Region of the Northern Cape, South Africa
Tawana74%, Seven Falls 26%.
Funds raised in the placement will be used to continue trial mining of the
Eastern Gravels.
Processing of the gravels already excavated is continuing. Snowden has completed
a scoping study aimed at confirming initial project economics, scale, and
estimated capital and operating costs. Snowden has concluded that under the
technical and financial assumptions set out in Table 2 mining of the Eastern
Gravels is economically feasible with a Net Present Value of Rand 46 million at
15% discount rate and Rand 74 million at 10% discount rate, and an Internal Rate
of Return of 49%. Snowden recommends that "additional expenditure on defining
the deposit by means of a full feasibility study since the business case for
mining the deposit is financially justifiable."
The full Snowden report can be viewed on the Company"s web site at
www.tawana.com.au.
Table 2. Technical and Financial Assumptions used by Snowden
Grade (cphm3) 3
Value (US$/ct) 274
Mining Rate (t/yr) 2M in yr 1 and 2 4M yr 3 - 21
Carats Produced 23,529 47,059
(ct/yr)
Life of Mine (years) 21
Exchange Rate US$1 = R6.5
Mining Cost R10/t US$ 1.54/t
Treatment Cost R10/t US$ 1.54/t
Capital Cost year 1 R25M US$ 5.5M
Capital Cost year 3 R10M US$ 1.54M
It is the opinion of the management of Tawana that, considering the tonnage of
gravels in the deposit, the mining rate could be increased significantly to
improve the economics of the project. Two major alluvial mining companies are
operating successfully in the region at throughput rates well in excess of the
rate assumed by Snowden to demonstrate the Eastern Gravel economics.
Daniel Kimberlite Project
Limeacres Region of the Northern Cape, South Africa
Tawana 22.2%, Seven Falls 26%, BHP Billiton 51.8%
The discovery of the first kimberlites in the Daniel Kimberlite Project, A1 and
A2, has prompted a review of the FalconRegistered data. This has revealed
additional targets, which are currently being followed up by sampling and ground
geophysical surveys. Identifying the potential source of the diamonds in the
Eastern Gravels is an additional focus for the Daniel kimberlite program.
The funds raised in the placement and rights issue will be used to advance the
assessment of the A1 and A2 kimberlites and to drill and bulk sample these and
any additional kimberlites discovered. Soil samples collected prior to drilling
the A1 kimberlite demonstrated that it is potentially diamondiferous.
Trade has accordingly resumed on the JSE Limited today, 7 December 2005.
*Note; The Company considers that any tonnage and grade estimates in this report
do not satisfy the definition of a Mineral Resource as set out in the JORC and
SAMREC Codes as insufficient work has been conducted to be able to determine
the grade and tonnage of the deposit with greater accuracy. Further work may or
may not establish a Mineral Resource on the property. Accordingly, the estimate
of grade is released as provided by paragraph 18 of the JORC Code of 2004 in
relation to an exploration target or exploration potential. The diamonds were
recovered from the minus 19mm plus 1.5mm fractions of gravelsand kimberlite
sampled by 1.5m or 2.5m diameter Bauer drill holes and excavations. The Eastern
Gravels and Kareevlei Wes kimberlites were processed in one of the Company"s
Dense Media Separation plants with diamond recovery by a Flowsort x-ray plant
and a grease table. The Blacktop kimberlite diamonds were recovered by
proprietary De Beers recovery methods.
W T Marx (BSc, BA, FAusIMM, CPGeo)
MANAGING DIRECTOR
The information in this report is based on information compiled by Wolf Marx
BSc, BA, FAusIMM, CPGeo, Managing Director of Tawana Resources NL. He has
sufficient experience relevant to the style of mineralization and types of
deposits under consideration, and to the activity undertaken, to qualify as a
competent person as defined in the 2004 addition of the "Australasian Code for
Reporting of Mineral Resources and Ore Reserves"
For enquires contact:
Wolf Marx Andrew Smith
Tel: +61 3 99097551 Tel: 08 82768794
Mob: 0428 398446 Mob:0428 65205
wolf.marx@tawana.com.au ahs.taw@bigpond.net.au
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
All press releases and announcements may be inspected on the Company"s web site,
namely: www.tawana.com.au
Date: 07/12/2005 09:00:23 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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