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Tawana Resources NL - December 2005 Quarterly Report
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")
December 2005 Quarterly Report
Highlights
Drilling program to commence over additional Falcon targets in the Daniel
Kimberlite Project area.
- Drilling and bulk sampling of A95 in Q1 2006
- Composition of kimberlitic minerals recovered from
kimberlite A95 indicate high potential for diamonds.
- Three kimberlites discovered in December quarter
Trial mining on the Eastern Channel completed
- Large average diamond sizes recovered
Completion of processing of Kareevlei Wes bulk sample crushed material from
kimberlite KV2.
..- Application for trial mining submitted
Sampling of targets in Pilbara completed
- Dense Media Separation (DMS) plant for bulk sampling
- of Blacktop kimberlite secured
- Purchase of De Beers diamond laboratory completed
Successful listing on JSE Limited
Company funding boosted by option exercise and placement
South African Projects
Daniel Kimberlite Project
(BHP Billiton 51.8% /Seven Falls 26%/Tawana 22.2% and operator)
The discovery of three new kimberlites (A1, A2, A95) was announced during the
quarter. These kimberlites were discovered by exploratory drilling of the
Falcon targets.
The kimberlites are in the form of near vertical dykes or fissures with several
blows or small pipes and can be traced by magnetic data over several
kilometers. One of the kimberlites, A95, can be traced to the Eastern Gravel
diamondiferous alluvial deposit.
It was previously reported that the high quality (US$274 per carat) diamonds
found in the Eastern Gravels are different to those found draining the Finsch
Mine and are thought by Tawana geologists to be derived from a different
source. The A95 kimberlite may be this source.
The A95 target will be sampled by drilling and bulk sampling in Q1 of 2006 to
ascertain whether it is diamondiferous and, if diamonds are recovered, to
compare these diamonds with those recovered from the Eastern Gravels.
The DMS plant located at the nearby Eastern Gravels will be used to process the
bulk samples collected from A95 and the other kimberlites discovered in the
Daniel Kimberlite Project.
Following the discovery of kimberlites A1, A2 and A95, the BHP Billiton Falcon
data was reviewed, resulting in a reassessment all of the previously identified
targets and the selection of several of these for drill testing during Q1 of
2006.
A program for this exploration has been agreed to by the joint venture partners
and entails the drilling of approximately 65 Falcon targets.
Tawana Alluvial Diamond Project
(Tawana 74% and operator, Seven Falls 26%, BHP Billiton 2.5% gross
revenue/profit' royalty)
Eastern Gravels
Trial mining was completed during the quarter in an area which appeared to
typify the geology and grade of the Eastern Gravels. Diamond grades from the
Bauer drilling in the top 5 metres of the gravels in this section were 2.27 and
3.07 carats per 100 cubic metres (cphm3).
Excavation during the trial mining phase has shown that there is an overburden
of only 1.6m of fine sand and gravel, which contains traces of diamonds. This
is underlain by 4-5m of coarse gravels. Diamonds recovered from the base of
these gravels recorded an average size of 0.4 carats per stone (ct/st). This is
a much larger average stone size than the 0.1ct/st recorded from the Feeder
Channel near the De Beers Finsch Diamond Mine and re-confirms our view that the
Eastern Gravel diamonds are not all derived from the Finsch kimberlite.
Tawana"s regular spaced Bauer drill holes drilled during 2005 returned grades
of up to 3.07 cphm3 near the trial pit. The grades are more than twice the
estimated breakeven grade (1.32 cphm3) of the Eastern Gravels providing strong
encouragement for the economic potential of this deposit.
The 0.48 cphm3 grade (see table below) reported from the trial mining pit is
lower than the grades from the Bauer holes; and the grade discrepancy is
considered typical of the erratic distribution of diamonds in alluvial
deposits.
Industry experience with Bauer drilling is that the relatively large volumes
extracted with such drilling and the regular spacing of drill holes, provides
the most reliable evidence of grade distribution in an alluvial deposit.
The proposed next stage for the Eastern Gravels Project is a large scale
operating trial. Tawana will seek to secure involvement of an operator having
the plant, mobile equipment and staff to mine at a rate that will confirm the
project economics. Discussions have commenced with several alluvial operators.
Depth (m) Calculated S.G. Tonnes Tot No. Avg. cphm3
Vol (m3) carats diamonds st
size
0.5-1.6m 1007 2.5 2517 1.85 23 0.080 0.184
1.6-4.5m 930 2.8 2604 2.83 20 0.142 0.304
4.5-5.5m 690 2.6 1794 3.25 8 0.406 0.471
5.5-6.5m 634 2.5 1585 3.97 16 0.248 0.626
6.5-7.2m 410 2.5 1025 3.76 20 0.188 0.917
7.2-8m 434 2.5 1085 4.96 20 0.248 1.143
8-12m 560 2.5 1400 1.77 23 0.077 0.316
4665 12011 22.39 130 0.172 0.480
The Company"s 30 tph DMS plant will remain on the Tawana Alluvials site to
process bulk samples collected from the new kimberlites discovered in the
Daniel Kimberlite Project area.
Kareevlei Wes
(Tawana 74% and operator, Seven Falls 26%.)
Kareevlei Wes project comprises a cluster of 5 kimberlite pipes, which vary in
surface area from a large 5.8 ha to 0.3 ha. Previous work shows that four of
these kimberlites, KV1, KV2, KV3 and KV5 are diamondiferous. KV4 remains to be
tested, but it is a small 0.35ha kimberlite.
Diamonds from KV1 and KV2 were valued at US$110 per carat with the valuers
predicting substantially higher values if larger parcels could be provided.
This prediction was supported by subsequent statistical analysis of the parcel
from the KV1 and KV2 kimberlites, which suggested that a value of US$164/ct was
a reasonable value estimate for diamonds from these kimberlites.
Subsequently a parcel of 33.24 carats of diamonds from KV3 was valued by Mr
Katz of Johannesburg at US$170/ct per carat. (see Tawana release 5 October,
2005)
At the estimated operating cost of open cut kimberlite mining and processing in
South Africa of US$7.53 per tonne, the required breakeven grade at a diamond
value of US$170/ct is 4.43 cpht.
First pass processing of 6500 tonnes of Bauer drilled bulk samples from four of
the five kimberlites in the Kareevlei cluster was completed during the quarter.
Crushing and processing of the resultant plus 6mm material from KV2 was also
completed. The plus 6mm material comprised approximately one third of the
tonnage excavated by Bauer drilling from KV2 .
The grade of KV1 and KV2, estimated from the recovered diamonds and the
expected recoveries from the oversize material, is 8.57 carats per hundred
tonnes. The grade reported from the crushed plus 6mm material from KV2 has
confirmed this expectation. This is considered to be the minimum grade before a
multiplier is established from a future mining operation.
The 1.4 hectare KV2 pipe is estimated to contain 2 Mt to a depth of 100m. The
surface area of KV1 has been determined by shallow drilling to be 1.2 hectares.
The grade of KV3 is variable due to the presence of various different phases
encountered in the top 30 - 40m intersected by the Bauer drilling. The northern
3 hectares of the pipe is composed of a homogenous phase of kimberlite and has
been shown to have an estimated grade of 4.89cpht, based on the recovered grade
from the minus 6mm fraction.
Earlier 10.5 inch percussion drilling in this northern section of KV3 achieved
a higher grade of 6.10cpht. This discrepancy could be due to the fact that the
percussion drilling sampled deeper sections of the kimberlite.
The KV5 kimberlite was sampled by drilling two Bauer holes. The estimated
grade, based on the recovered grade from the minus 6mm fraction, from these two
holes was 3.7cpht and 8.06cpht, with an average grade of 5.70cpht. No
valuations of the diamonds recovered from KV5 have been conducted.
Kimberlite Size* Grade Diamond Value*** Value Cost****
Ha cpht US$/carat US$/t US$/t
KV1 1.2 11** 164 18.04 7.53
KV2 1.4 11** 164 18.04 7.53
KV3 5.8 4.89-6.10 170 8.31-10.37 7.53
KV5 2.1 5.70 N/A NA 7.53
*Based on 10.5 inch drilling to 100m for KV2 and KV3, surface percussion
drilling for KV1 and geophysical interpretation for KV5.
** Based on statistical analysis of a parcel of diamonds recovered from the
minus 6mm fraction of material excavated by Bauer drilling. Not JORC/SAMREC
compliant. See note below.
*** Based on best estimate. Larger parcels of diamonds may change the given
values substantially.
**** Estimated mining and operating costs of open cut kimberlite mines in South
Africa by Snowden Mining Consultants. (see Tawana release 7 December 2005)
An application for a Mining Right has been submitted to the South African
Department of Minerals and Energy (DME). The Company has been advised that the
Mining Right Application will take at least four months to process.
The DMS plant currently located at Kareevlei Wes is being re-located to the
Perdevlei Project so that a trial mining program can be completed to confirm
indicated grades and diamond values at this project while the Kareevlei Wes
Mining Right granting is awaited.
*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 Code
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 gravels sampled by 1.5m
or 2.5m diameter Bauer drill holes. The gravels and kimberlites were processed
in the Company"s Dense Media Separation plants with diamond recovery by a
Flowsort x-ray plant and a grease table.
Australian Projects
Tawana Diamonds Australia Pty Ltd (TDA) has been formed by De Beers and Tawana
to explore and to develop Australian diamond projects is to be known as. TDA
will be managed by Tawana and staff will be seconded to TDAL as required.
Tawana"s equity will increase with its expenditure from a $3M/50% base.
Melbourne Laboratory
The De Beers diamond laboratory in Melbourne was acquired by Tawana and key
staff were employed to operate this facility.
De Beers has developed specialized techniques to recover kimberlitic indicator
minerals from the difficult iron-rich samples from the Western Australian
Pilbara. Without these unique skills the kimberlites in the Pilbara Project may
not have been discovered. These techniques and the highly specialised
laboratory facilities are now available to TAW and will be used to further
advance the Pilbara Project and the Company"s other Australian and South
African Projects.
Pilbara Project
A helicopter supported sampling program was completed during the quarter during
which 350 samples were collected over areas in which previous De Beers sampling
had identified kimberlitic indicator mineral anomalies. These samples are being
processed in Perth and will be concentrated and examined in the Company"s
Melbourne Laboratory during Q1 2006.
In addition a ground based gravity survey was completed over the Blacktop
Kimberlite to more accurately delineate the structure.
A 20 tph DMS plant has been secured to facilitate the bulk sampling of the
Blacktop Kimberlite during the 2006 dry season. It is proposed to process
approximately 14,000 tonnes of kimberlite through this DMS and to examine the
resultant concentrate in the Company"s Melbourne Laboratory.
The only bulk sample (32.85t) taken by De Beers from the Blacktop kimberlite
produced 135 diamonds weighing 5.27 carats. If the grade of the kimberlite is
similar to the initial sample, the planned program could produce sufficient
diamonds to support an analysis of the economic viability of mining the
Blacktop kimberlite.
*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 Code 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 kimberlite
sample was crushed and concentrated in the -8.0+1.0mm fraction by proprietary
De Beers methods and diamonds were recovered in the +11 to -1 standard diamond
sieve sizes.
Corporate
1:3 Bonus Option Issue
The Company completed a 1:3 bonus issue of options to shareholders during the
quarter.
The purpose of the Bonus issue is to provide the Company with funding to
substantially upgrade the envisaged future production from the Kareevlei Wes
and Tawana Alluvial projects in South Africa. The Company will also require
funds to maintain its exploration momentum including participation in the joint
venture with BHP Billiton over the Main Channel and Daniel Kimberlite Projects.
In addition the funds will also be used to advance the new Australian Tawana/De
Beers initiative.
The options issue was considered by the Board to be attractive qualifying
shareholders as it is not dilutionary and provides a means for shareholders to
maintain their equity interest when the Company"s capital is expanded.
JSE Dual Listing
In November the Company successfully listed its shares on the JSE Limited
(JSE).
The purpose of the listing is to expose Tawana to a broader investor base and
to investors with an intimate knowledge and appreciation of the potential of
the Company"s South African projects.
Funding
On 8 December, Tawana Resources N.L. placed 3,712,985 shares at $0.60 each to
institutional and sophisticated investors raising $2,227,791 to supplement the
Company"s working capital, fund the ongoing exploration program and augment the
funds of $1,151,937 raised through the exercise of the November 2005 options.
The placement of shares was with clients of Intersuisse Corporate Pty Ltd which
received a fee of 6% for managing and arranging the placement.
The placement was within the limits set out in the ASX Listing Rules and does
not require shareholder approval.
Following the allotment of the placement shares and the exercise of options,
the Company will have a total of 65,609,529 shares on issue.
30 January 2006
For enquires contact:
Wolf Marx
Tel: +61 3 99097551
Mob: 0428 398446
Email:wolf.marx@tawana.com.au
Andrew Smith
Tel: 08 82768794
Mob: 0428 265205
Email: ahs.taw@bigpond.net.au
Sponsor
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
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 mineralisation and types of deposits under
consideration, and to the activities undertaken, to qualify as a competent
person as defined in the 2004 addition of the "Australasian Code for the
Reporting of Mineral Resources and Ore Reserves"
The report is available on the companies website in PDF format.
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.
Name of entity
Tawana Resources N.L.
ABN
69 085 166 721
Quarter ended ("current quarter")
31 December, 2005
Consolidated statement of cash flows
Current Year to date
Cash flows related to operating quarter (12 Months)
activities $A"000 $A"000
1.1 Receipts from product sales and -
related debtors
1.2 Payments for (a) exploration and (1,260) (5,277)
evaluation
(b) development
(c) production
(d) administration (469) (972)
1.3 Dividends received - -
1.4 Interest received 26 78
1.5 Interest and other costs of finance (147) (147)
paid
1.6 Income taxes paid
1.7 Other (provide details if material)
(1,850) (6,318)
Net Operating Cash Flows
Cash flows related to investing
activities
1.8 Payment for purchases of:
(a)prospects
(b)equity investments
(c) other fixed assets
1.9 Proceeds from sale of: - -
(a)prospects 310 310
(b)equity investments - 880
(c)subsidiary company-
Joren (Pty) Ltd
1.10 Loans to other entities
1.11 Loans repaid by other entities
1.12 Acquisition Building and Contents (2,050) (2,050)
Net investing cash flows (1,740) (860)
1.13 Total operating and investing cash (3,590) (7,178)
flows (carried forward)
1.13 Total operating and investing cash (3,590) (7,178)
flows (brought forward)
Cash flows related to financing
activities
1.14 Proceeds from issues of shares, 3,380 5,383
options, etc.
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 3,380 5,383
Net increase (decrease) in cash (210) (1,795)
held
1.20 Cash at beginning of quarter/year 1,456 3,041
to date
1.21 Exchange rate adjustments to item - -
1.20
1.22 Cash at end of quarter 1,246 1,246
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 113
parties included in item 1.2
1.24 Aggregate amount of loans to the parties Nil
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
Nil
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
Nil
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount Amount used
available $A"000
$A"000
3.1 Loan facilities Nil Nil
3.2 Credit standby arrangements Nil Nil
Estimated cash outflows for next quarter
$A"000
4.1 Exploration and evaluation 500
4.2 Development Nil
Total 500
Reconciliation of cash
Reconciliation of cash at the end Current Previous
of the quarter (as shown in the quarter quarter
consolidated statement of cash $A"000 $A"000
flows) to the related items in the
accounts is as follows.
5.1 Cash on hand and at bank 445 129
5.2 Deposits at call 801 1,327
5.3 Bank overdraft - -
5.4 Other (provide details) - -
Total: cash at end of 1,246 1,456
quarter (item 1.22)
Changes in interests in mining tenements
Tenement Nature of Interest Interest
reference interest at at end of
(note beginning quarter
(2)) of
quarter
6.1 Interests in
mining
tenements
relinquished,
reduced or
lapsed
6.2 Interests in
mining
tenements
acquired or
increased
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 Issue Amount
number quoted price paid up
per per
security security
7.1 Preference
+securities Nil Nil
(description)
7.2 Changes
during
quarter
(a)
Increases
through
issues
(b)
Decreases
through
returns of
capital, buy-
backs,
redemptions
7.3 +Ordinary 65,609,529 65,609,529
securities
7.4 Changes
during
quarter 3,712,985 3,712,985 $0.60 $0.60
(a)
Increases 1,535,916 1,535,916 $0.75 $0.75
through
issues
(b) Increase
through
exercise of
options
7.5 +Convertible
debt Nil Nil
securities
(description)
7.6 Changes
during
quarter
(a)
Increases
through
issues
(b)
Decreases
through
securities
matured,
converted
7.7 Options Exercise Expiry
(description 21,869,843 21,869,843 price date
and $1.00 30 April
conversion 2008
factor)
7.8 Issued during 21,869,843 21,869,843 $1.00 30 April
quarter 2008
7.9 Exercised 1,535,916 1,535,916 $0.75 30
during November
quarter 2005
7.10 Expired 16,238,205 16,238,205 $0.75 30
during November
quarter 2005
7.11 Debentures Nil Nil
(totals only)
7.12 Unsecured Nil Nil
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 4).
2 This statement does give a true and fair view of the
matters disclosed.
W.T.Marx. (Director)
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.
Date: 30/01/2006 09:56:15 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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