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TAW - Tawana Resources NL - Reviewed Results for the year ended 31 December 2006
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")
REVIEWED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
Comment on Company Operations by Wolf Marx, Managing Director. The full Annual
Report can be viewed on the Company`s website at www.tawana.cm.au
TAWANA GROUP`S DIAMOND PROJECTS
Brief overviews of Tawana`s diamond projects, which are all located in
prospective areas, are as follows:
SOUTHERN AFRICAN DIAMOND PROJECTS
DANIEL KIMBERLITE PROJECT, LIMEACRES DISTRICT, SOUTH AFRICA (22.2% owned and
operated by Tawana, 51.8% BHP Billiton and 26% Seven Falls)
The Daniel Kimberlite Project encompasses an area 30kms in radius centred on
the De Beers owned Finsch Mine. Utilisation of BHP Billiton`s Falcon (R)
technology has resulted in the identification of targets to be tested to
determine if they are kimberlitic.
Percussion drilling of these targets to which access was granted was conducted
during 2004 and 2005 resulting of in the discovery of three kimberlites (A1,
A2, and A95).
Following the discovery of these kimberlites, the Falcon (R) data was reviewed,
resulting in a re-assessment of all of the previously identified targets and the
selection of several of these for drill testing during 2006. No new kimberlites
were identified but samples of drill chips collected from holes which failed to
reach target depth or were considered to worthy of further investigation were
submitted for analysis. Kimberlitic indicator minerals were recovered from a
number of these targets and these will be followed up during 2007.
KAREEVLEI WES PROJECT, KIMBERLEY REGION, SOUTH AFRICA
(74% owned and operated by Tawana; 26% Seven Falls)
The Kareevlei Wes Project comprises a cluster of 5 kimberlitic pipes (KV1-KV5).
Recent re-interpretation of drilling and geophysical data show that the pipes
range in surface area from 5.5ha to less than 0.1ha. Drilling to a depth of
100 meters showed that KV3 is 13Mt and KV2 is 2Mt.
As a result of processing percussion and Bauer drill bulk samples during
2004/2005 the grade of KV1 and KV2 was estimated to be 8.57 cpht. Subsequent
statistical analyses of the diamonds recovered from these two kimberlites
suggested that the grade could be expected to be 11 cpht if larger parcels of
diamonds could be produced.
Diamonds from KV1 and KV2 were valued at US$110/ct with the valuer predicting
substantially higher values for larger parcels. This prediction was supported
by subsequent statistical analysis of a parcel from the KV1 and KV2
kimberlites, which suggested that US$164/ct was a reasonable value estimate
for diamonds from these kimberlites. Subsequently a parcel of 33.24ct of
diamonds from KV3 was valued by Mr Gregory Katz of Johannesburg at US$170/ct.
At the estimated operating cost of open pit kimberlite mining and processing in
South Africa of US$7.53/t (2005 costs), the required breakeven grade at a
diamond value of US$170 /ct is 4.43 cpht.
An application for a Mining Right for Kareevlei Wes is being processed by the
South African Department of Minerals and Energy. Tawana was advised in January
2007 that the Mining Right may be granted in the June Quarter of 2007.
On granting of the Mining Right, it is proposed to conduct a trial mining and
treatment operation at Kareevlei Wes, taking up to 20,000 tonnes from KV2. The
Company`s two dense media separation plants will be used to treat material,
which will be mined by contract. Key Tawana staff are already in place to
supervise this trial.
Note: The Company considers that any tonnage and grade estimates reflected 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 made as provided by paragraph 18 of the JORC Code in relation to an
exploration target or exploration potential. The diamonds were recovered from
the minus 19mm plus 1.5mm fractions of kimberlite sampled by 2.5m diameter
Bauer drill holes. The kimberlite material was processed in the Company`s DMS
plant with diamond recovery by a Flowsort X-ray plant and a grease table.
PERDEVLEI KIMBERLITE PROJECT, KIMBERLEY REGION, SOUTH AFRICA
(74% owned and operated by Tawana; 26% Seven Falls)
The Perdevlei Kimberlite Project comprises two kimberlite pipes having a
surface area of approximately 1.7 ha and 0.2 ha, respectively. Both K1 and K2
are known from previous work to be diamondiferous.
A 2,000 tonne bulk sampling program during 2006 showed that the grade of the K1
pipe to be uneconomic.
TAWANA ALLUVIAL PROJECT, LIMEACRE DISTRICT, KIMBERLY REGION, SOUTH AFRICA
(70% owned and operated by Tawana; 30% Seven Falls; BHP
Billiton 2.5% gross revenue royalty)
The Tawana Alluvial Project area encompasses two alluvial deposits, the Feeder
Channel and the Eastern Gravels, which extend from 300 meters from the De Beers
owned Finsch Mine for a distance of approximately 18 kms from the mine.
These deposits resulted from the discovery by Tawana during early exploration
of the Daniel Alluvial Project.
During 2004/2005/2006 large volumes of alluvial material were extracted by
percussion and large diameter Bauer drilling and processed in the Company`s DMS
plants. Remarkably, this resulted in the recovery of diamonds from all of the
holes drilled and the identification of zones of enrichment in the channels.
The Eastern Gravels were also identified as hosting higher quality diamonds
although additional exploration is needed to define minable zones.
Such exploration would entail a large scale operating trial and it was decided
to invite the participation in the project of operators with the required
specialised skills and funding to undertake the program. While there is no
satisfactory commercial basis for an agreement, discussions are continuing.
DANIEL ALLUVIAL PROJECT (DAP)
(29.6% owned and operated by Tawana; 44.4%; BHP Billiton;
26% Seven Falls)
The DAP encompasses the Main Channel of an ancient river channel that was
initially discovered by BHP Billiton utilising its Falcon (R) technology. The
main channel is adjacent to the Eastern Gravels and appears to contain gravels
similar in nature to those identified in the Eastern Gravels. The gravels in
the Main Channel are covered by deeper overburden, and further exploration will
depend on successful exploitation of the Eastern Gravels.
SEOLO DIAMOND PROJECT, BOTSWANA
(100% owned by Tawana)
Exploration licenses covering 2,009 square kilometers in the prospective
northern region of Botswana, between the city of Francistown and the Orapa
kimberlite province, were granted to Tawana during early 2004. The licenses
cover areas which are known to be geologically favourable for kimberlite
intrusions and which were known to include sites where kimberlitic indicator
minerals had been recovered by earlier explorers.
Kimberlitic indicator minerals were recovered from soil samples collected over
identified targets during 2004 and 2005. Additional follow up sampling was
conducted during 2006 which confirmed the presence of anomalous kimberlitic
indicator minerals in this highly prospective region.
Tawana plans to recommence a reconnaissance program in this area during 2007,
and it is anticipated that the source of these kimberlitic minerals will be
identified.
AUSTRALIAN PROJECTS
PILBARA - BLACKTOP PROJECT
(66.6% owned and operated by Tawana ; 33.3% De Beers
Australia Exploration Limited )
A DMS plant was commissioned in early September 2006, and the on-site
processing was completed by mid-November 2006. The DMS concentrates were
processed by X-ray diamond recovery methods in a Perth laboratory and the
diamonds sorted and weighed in the Company`s Melbourne laboratory. A total of
2,320 diamonds, weighing 163.89 carats was recovered. The majority of the
stones are white dodecahedrons, with the largest stone weighing 1.41 carats.
All diamonds were recovered from the 19mm/+1mm size fractions of the material
processed.
Approximately 6,000 tonnes were excavated and trucked to the DMS plant. While
additional blows may exist along strike of Blacktop 01, costeaning was in areas
which were readily accessible. The grade of the kimberlite varies along strike
but the quality of the diamonds remains consistent. The variable grade is
interpreted as being mainly the result of contamination of the kimberlite in
near-surface exposures by surrounding country rocks. In narrow sections of the
kimberlite contamination of the samples was greatest. In the early evaluation
stage it is common practice to excavate kimberlite from costeans with minimal
cut back of the surrounding country rocks, which minimizes environmental
disturbance of the area but can result in the contamination of the samples and
consequential dilution of the recovered grade. It has been previously reported
that De Beers recovered 135 diamonds weighing 5.27 carats from a 32.8t sample.
This sample was collected at the BTB01/03 site. The small size of the sample
enabled De Beers to collect that sample relatively free of contamination.
The larger samples collected by Tawana have provided a large enough parcel of
diamonds for valuation purposes. The diamonds were valued by Diamdel NV, a De
Beers Group diamond trading and marketing company, at US$52.56 per carat.
Commenting on the diamonds, the Valuers said that the parcel was unusual in
that it contained no boart (low quality industrial) diamonds and that the
presence of larger diamonds in a larger parcel would result in a higher
valuation.
Exploration in the area around the Blacktop kimberlite dyke has given strong
indications of extensions to and new dykes parallel to the Blacktop kimberlite.
Indicator minerals recovered from one of these sites, Blacktop East, display
mineral chemistry signatures typical of diamondiferous kimberlites.
The future program for Blacktop will be formulated when the results of the
regional exploration have been received.
Samples were also taken over the Blacktop 02 dyke for heavy mineral analysis.
These samples have been analysed in Tawana`s laboratory and the diamondiferous
nature of this sub-parallel dyke has been confirmed.
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 1mm fractions of kimberlite excavated. The
kimberlites were processed in a rented Dense Media Separation plant with
diamond recovery by a Flowsort X-ray plant and manual sorting.
PILBARA REGION EXPLORATION
(66.6% owned and operated by Tawana; 33.3% De Beers Australia Exploration
Limited)
Helicopter supported regional reconnaissance and follow-up sampling within the
17 granted De Beers Australia Exploration Limited tenements commenced in late
September and was completed by early October 2006. This program included
reconnaissance stream sampling and the follow up of anomalies generated from
aeromagnetic surveys and heavy mineral anomalies from previous De Beers
sampling.
This sampling program was based out of Blacktop camp and involved Tawana
geologists and a geologist on secondment from De Beers. The sampling area
covered approximately 4,000 square km.
The 266 samples are being processed and examined in the Melbourne Laboratory.
Results are expected during Q2 2007.
WHIRLWIND PLAINS PROJECT, NORTHERN TERRITORY
(100% owned by Tawana)
The Whirlwind Plains Project covers 500 square kms and is located in the
Northern Territory some 200km from the Western Australian border. A
ground-based gravity survey has been conducted over a part of the tenement to
test the hypothesis that several ancient river channels exist in this area.
No substantial work was conducted on this project during 2006.
TIMBER CREEK PROJECT, NORTHERN TERRITORY.
(100% owned by Tawana)
The Timber Creek Project, which was originally acquired from De Beers,
comprises a cluster of 5 kimberlitic intrusions and the surrounding potential
for alluvial diamond placers.
No substantial work was conducted on this project during 2006.
FLINDERS ISLAND PROJECT, SOUTH AUSTRALIA
(80% owned by Tawana; 20% Orogenic Exploration)
Flinders Island is some 39 kms(2) in extent and situated 28 kms west of the Eyre
Peninsula of South Australia. The island is formed of granite and is covered by
some 10 meters to 30 meters of younger sediments and sands. Results from
earlier soil sampling and drilling has shown an abundance of kimberlitic
minerals from surface to the bedrock contact, at approximately 15m below
surface in a defined area in the northern part of the island.
No substantial work was conducted on this project during 2006.
EYRE PENINSULA PROJECT, SOUTH AUSTRALIA
(80% owned by Tawana; 20% Orogenic Exploration)
Chemical analyses of kimberlitic indicator minerals recovered from samples in
this project area show a high percentage of picroilmenites displaying chemical
attributes which are characteristic of minerals associated with diamond bearing
kimberlites.
Follow up sampling was conducted late in 2005 and results confirmed the
presence of anomalous concentrations of kimberlitic minerals in discrete areas.
Additional sampling in 2006 further defined these areas.
Melbourne Laboratory
The diamond laboratory in Melbourne was acquired from De Beers in late 2005 by
Tawana and key staff were employed to operate this facility.
During 2006 the laboratory processed the Company`s samples from the Blacktop
kimberlite and the Pilbara Exploration projects. In addition it conducted check
analyses on samples collected in South Africa and elsewhere.
The specialised skills of the laboratory were also utilised by other companies
on a commercial basis.
Corporate
Guma Strategic Alliance
The Company has formed a strategic alliance with Guma Resources (Proprietary)
Limited ("Guma Resources"), a subsidiary of Guma Capital (Proprietary) Limited
("Guma"). The Guma group of companies is a diversified investment group based
in Johannesburg that is black owned and managed. The Guma group was established
in 1997 by highly successful South African entrepreneur Robert Matana Gumede.
Guma focuses on multi-faceted businesses where it can add value and assist in
their growth potential. In addition to several private investments in
diversified sectors, Guma owns 36.6% of GijimaAST, which is one of South
Africa`s largest IT companies and is listed on the JSE Limited ("JSE").
GijimaAST posted revenues of R1.95 billion (A$344.4 million) in the last
financial year and received 8th place overall in the Financial Mail/Empowerdex
Top 200 Empowerment Companies Survey 2006. In 2005, Robert Gumede, chairman of
Guma, was runner up in the South African Chapter of the World Entrepreneur of
the Year.
The strategic alliance provides Tawana with a black-controlled business
partner having the ability to leverage of its sizeable net asset base and
introduce resource projects via its strong networks throughout Africa.
The purpose of the strategic alliance is to combine the exploration and mining
skills of Tawana with the financial, entrepreneurial, accounting and business
skills of Guma to explore for, develop and mine diamond and other mineral
deposits in South Africa, Botswana, Namibia, Mozambique and other countries as
agreed by the parties.
The alliance will comprise two stages. The first will be to identify, assess
and acquire mineral rights to projects deemed to be potentially economic.
The second stage will involve the formation of joint ventures on a project by
project basis with the aim to confirm the economic merit of the projects by
exploration and the completion of feasibility studies.
The participation in Stage One will be on a 50:50 basis and thereafter the
participating interests will be dependent on the nature of the specific
projects. Tawana will be operator of the alliance, with Guma participating in
all phases of each program.
Tawana`s long standing relationship with Seven Falls will continue on existing
projects in South Africa and Botswana and will be further strengthened with
the appointment of Seven Falls Chairman, Thabo Makweya (former Member of the
Executive Council for Economic Affairs in the Northern Cape), as CEO of
Guma Resources.
Staff Changes
Dr Leon Daniels resigned as Executive Director of the Company, effective
30 September 2006, Harry Hill resigned effective 22 January 2007 as Company
Secretary of the Company, Manfred Marx resigned as Exploration Manager
effective 30 November 2006 and Basil Tambanis resigned as Corporate
Operating Officer effective 31 December 2006.
Craig Bailey has been promoted to General Manager with primary responsibility
for the South African operations.
Edward Derrick Ehmke was appointed Company Secretary on 22 January 2007.
Derrick has over 40 years` business experience in Finance, Administration, IT
Supply Chain Management and Marketing. He has been involved predominantly in
Retailing and Manufacturing public companies in South Africa, United Kingdom
and Australia. He is a Fellow of the Institute of Corporate Managers,
Secretaries and Administrators. He owns and manages a consultancy company.
Capital Raising
Tawana successfully completed a capital raising through an underwritten rights
issue by ABN AMRO Morgans which resulted in the Company welcoming some new
Shareholders to the register; a number of whom are domiciled in South Africa.
This will underpin the Company capitalising on its 2005 listing on the JSE and
gain local support for its projects in southern Africa. The funds raised were
principally applied to the bulk sampling of the Blacktop 01 kimberlite and will
be applied to the Kareevlei Wes trial mining once the Mining Right has been
granted. Funds are also used to maintain the Company`s exploration and
evaluation focus. It is anticipated that further funds will be generated from
sales of diamonds from Kareevlei Wes, participation in projects by joint
venture partners and from additional capital raisings.
Financial Results
INCOME STATEMENT
Year Ended 31 December 2006
Consolidated Parent
2006 2005 2006 2005
$ $ $ $
Continuing
Operations
Revenue 233,201 92,570 136,886 92,570
Other Income 216,242 94,470 216,242 94,470
Exploration
expenses
written off (2,439,577) (2,144,826) (2,439,577) (2,042,897)
Finance costs (26,090) (30,845) - (11,229)
Foreign
Exchange
gains/(losses) (61,661) (371,329) (27,457) 12,012
Corporate (535,330) (513,309) (401,528) (513,309)
Costs
Employee
benefits
expense (369,995) (928,806) (203,470) (351,984)
Travel costs (253,233) (343,456) (71,794) (103,525)
Depreciation (832,518) (656,507) (334,031) ( 115,714)
Impairment of
assets - - (2,121,692) (1,119,897)
Prospecting
Fee - - (202,855) (272,373)
Other
expenses (697,308) (895,918) (369,751) (473,811)
Loss from
continuing
operations
before income
tax expense (4,766,269) (5,697,596) (5,819,027) (4,805,687)
Income Tax
expense - - - -
Loss from
continuing
operation
after income
tax expense (4,766,269) (5,697,596) (5,819,027) (4,805,687)
Net loss /
(gain)
attributable
to outside
equity
interest - - - -
Loss for the
year
attributable
to members of
the parent (4,766,269) (5,697,596) (5,819,027) (4,805,687)
Earnings per share for continuing operations
Headline earnings per share (0.061) (0.095)
Diluted earnings per share (0.061) (0.095)
Tangible Net Assets per Share 0.19 0.26
BALANCE SHEET
As at 31 December 2006
Consolidated Parent
2006 2005 2006 2005
$ $ $ $
CURRENT
ASSETS
Cash and
cash
equivalents 2,655,399 1,340,481 278,558 1,152,797
Trade and
other
receivables 561,231 706,608 138,654 263,837
Inventories 94,181 54,039 - -
TOTAL CURRENT
ASSETS 3,310,811 2,101,128 417,212 1,416,634
NON-CURRENT
ASSETS
Receivables 51,291 61,324 - -
Other
financial
assets - - 7,730,151 5,592,973
Property,
plant and
equipment 1,371,547 3,859,985 778,414 2,610,779
Exploration
expenditure 12,037,202 9,749,360 8,931,447 7,109,772
TOTAL NON-
CURRENT
ASSETS 13,460,040 13,670,669 17,440,012 15,313,524
TOTAL ASSETS 16,770,851 15,771,797 17,857,224 16,730,158
CURRENT
LIABILITIES
Trade and
other
payables 480,664 158,607 119,890 93,434
Provisions 71,760 - 71,760 -
TOTAL CURRENT
LIABILITIES 552,424 158,607 191,650 93,434
NON-CURRENT
LIABILITIES
Provisions 51,291 13,427 - -
Interest
bearing
liabilities - 2,577 7,692 7,692
TOTAL NON-
CURRENT
LIABILITIES 51,291 16,004 7,692 7,692
TOTAL
LIABILITIES 603,715 174,611 199,342 101,126
NET ASSETS 16,167,136 15,597,186 17,657,882 16,629,032
EQUITY
Contributed
Equity 32,544,335 25,744,021 32,544,335 25,744,021
Reserves (1,484,642) (20,547) 206,447 158,884
Accumulated
Losses (14,892,557) (10,126,288) (15,092,900) (9,273,873)
TOTAL EQUITY 16,167,136 15,597,186 17,657,882 16,629,032
CASH FLOW STATEMENT
Year Ended 31 December 2006
Consolidated Parent
2006 2005 2006 2005
$ $ $ $
Cash Flows from
Operating
Activities
Receipts from
customers 192,532 - 162,305 -
Interest
received 178,102 81,460 81,787 81,460
Miscellaneous
income - 11,110 - 11,110
Interest expense (26,090) (164,152) - (144,896)
Payments to
suppliers and
employees (1,398,787) (2,112,773) (1,085,642) (794,273)
Net cash
inflow/(outflow)
from operating
activities (1,054,243) (2,184,355) (841,550) (846,599)
Cash Flows from
Investing
Activities
Purchase of
fixed assets (10,437) (2,600,998) - (2,050,000)
Proceeds on sale
of fixed assets 1,714,576 - 1,714,576 -
Sale/(Purchase)
of shares - 319,919 - 319,919
Payments for
exploration (4,727,419) (2,276,101) (4,261,252) (1,537,481)
Advances to
related bodies
corporate - - (4,286,327) (3,049,539)
Loans repaid (2,577) - - -
Net Cash
Inflow/(Outflow)
from Investing
activities (3,025,857) (4,557,180) (6,833,003) (6,317,101)
Cash Flows from
Financing
Activities
Proceeds from
Share Issues
(net) 6,800,314 5,382,769 6,800,314 5,382,769
Net Cash
Inflow/(Outflow)
from Financing
activities 6,800,314 5,382,769 6,800,314 5,382,769
Net Increase
(Decrease) in
Cash and cash
equivalents 2,720,214 (1,358,766) (874,239) (1,780,931)
Cash and cash
equivalents at
beginning of
financial year 1,340,481 3,040,461 1,152,797 2,933,728
Effects of
exchange rates
changes on cash
and cash
equivalents (1,405,296) (341,214) - -
Cash and cash
equivalents at
end of financial
year 2,655,399 1,340,481 278,558 1,152,797
The financial report complies with Australian Accounting Standards, which
include Australian equivalents to International Financial Reporting Standard
(`AIFRS`). Compliance with AIFRS ensures that the financial report, comprising
the financial statements and notes thereto, complies with International
Financial Reporting Standards (`IFRS`).
The financial statements have been audited by PricewaterhouseCoopers. The
report of the auditors is available for inspection at the Company`s registered
office and on the Company`s website at www.tawana.com.au
Share Capital
During the year the Company allotted 21,487,952 ordinary shares as a result of
an underwritten rights issue. The net funds raised of $6,800,315 were applied
towards the ongoing exploration activities of the Company and to provide
additional working capital.
The number of ordinary fully paid shares on issue at 31 December 2006 was
87,097,481.
Share Options
During the year 390,000 options were issued to employees of the Company under
the employees option scheme. These options were exercisable at 35 cents each on
or before 30 November 2011.
Also during the year, 1,000,000 options were issued to B Tambanis as part of an
employment arrangement. These options expire on 30 November 2011 and are
exercisable at $0.50 each.
Also during the year, 475,000 options with an expiry date of 30 April 2008 and
exercisable at $1.00 were issued to consultants of the Company for services
provided.
The number of options on issue at 31 December 2006 the exercise price and the
expiry date of the options are as follows:
22,344,144 options exercisable at $1.00 each on or before 30 April, 2008.
1,000,000 options exercisable at $0.50 each on or before 30 November 2011.
390,000 options exercisable at $0.35 each on or before 30 November 2011 of
which 130,000 have vested.
The number of unissued ordinary shares under these options at the date of this
report is 23,334,144.
29 March 2007
Corporate Directory
Directors
Brian Phillips (Non- Executive Chairman)
Wolfgang Marx (Managing Director)
Euan Luff (Non-Executive Director)
Company Secretary
Edward Derrick Ehmke
Registered Office
60 Wilson Street
South Yarra
Melbourne Vic 3141
Telephone: (03) 9863 5222
Facsimile: (03) 9863 5288
Email: wolf.marx@tawana.com.au
Web Site www.tawana.com.au
Date: 29/03/2007 10:03:00 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
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