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CMO - Chrometco Limited - Shareholder Update/Resource Update/Further cautionary

Release Date: 12/01/2011 17:41
Code(s): CMO
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CMO - Chrometco Limited - Shareholder Update/Resource Update/Further cautionary announcement CHROMETCO LIMITED (Incorporated in the Republic of South Africa) (Registration number: 2002/026265/06) (JSE Code: CMO ISIN: ZAE000070249) ("Chrometco" or "the company") -SHAREHOLDER UPDATE -RESOURCE UPDATE -FURTHER CAUTIONARY ANNOUNCEMENT SHAREHOLDER UPDATE Further to the announcements dated 20 July 2010 and 27 August 2010 shareholders are advised that during December 2010 the company received a further R13 million in terms of the mining and management agreement with DCM Chrome (Pty) Ltd ("DCM"). RESOURCE UPDATE Further to the cautionary announcement dated 29 November 2010 Chrometo has received an updated Competent Person`s Report ("CPR") in relation to the resource statement and valuation of the company`s Rooderand asset. Below is an extract of the executive summary of the CPR. The competent person, Mr Dexter Ferreira of Independent Resource Estimations ("IRES") and the competent valuator, Mr Derick de Wit of Venmyn Rand (Pty) Ltd ("Venmyn"), have given consent for the extract of the CRP including the valuation to be included in this announcement. Extract of Executive summary of CPR Purpose and Project Outline In preparation for the planned circular to obtain shareholder approval for the conditional sale of Chrometco`s Rooderand assets to DCM, Chrometco requested that IRES prepare a CPR compliant with the South African Mineral Resource Code ("SAMREC"), incorporating a valuation ("the Valuation")prepared by Venmyn compliant with the South African Code for the Reporting of Mineral Asset Valuation ("the SAMVAL Code"), and finally compliant with all the requirements of Section 12 of the JSE Limited Listings Requirements, for the Rooderand asset. Each section of the report is designated with the relevant SAMREC Code Table 1 reference number and SAMVAL Code Table 2 reference number. The CPR incorporates the Valuation completed by Venmyn entitled: "Independent Valuation in Accordance with the SAMVAL Code on the Rooderand Project for Chrometco" by Mr. Derick de Wit of Venmyn. Chrometco is a mining exploration and development company that previously intended to explore and develop chromite mineral resources in South Africa. It acquired the Rooderand mining rights in 2004, completed a limited amount of exploration and subsequently entered into a conditional sale of the Rooderand asset to DCM in 2007. Property and Location Chrometco`s Rooderand tenements are located approximately 60km north northwest from Rustenburg, located in the North West Province, of South Africa. Geology Setting Description The Bushveld Complex comprises an array of diverse igneous rocks ranging in composition from ultramafic to felsic. Different minerals were formed as the magma cooled. These minerals accumulated into sub-horizontal layers, building from the base of the chamber. Some low outcrops of Lower Critical Zone feldspathic pyroxenites are present in the northern part of the remaining extent of the farm Rooderand (immediately east of Chrometco`s Rooderand 46 JQ Portion 2), where chrome mining has taken place. The southern part of the farm is thought to be underlain by the upper Critical and Main Zones. It is believed that the Upper Zone underlies the southern parts of the farm Rooderand and the eastern parts of the farm Zandspruit and the farm Ruighoek. Exploration Program and Budget Chrometco acquired the Rooderand mining rights in early 2004 and when it listed in August 2005, the intention was to undertake further exploration work on this farm, with the ultimate aim of proving-up chromite mineral tonnage. Chrometco drilled 2 diamond and 24 percussion drillholes, and in doing this, identified the outcrop of the MG4 seam over a strike length of 1.2km. Chrometco opened a bulk sample pit and undertook limited laboratory evaluation of the MG4 chrome seam material. Previous mining took place on the adjacent property which is up- dip of Chrometco`s Rooderand portion 2. No further exploration work has been done since by Chrometco. Mineral Resources Historical In 2005, Chrometco hired Mr. N.A. Bleeker to complete an estimate of mineral resources. Using an average Cr2O3 grade of 45.50%, Inferred Mineral Resource estimates were calculated within the Rooderand 46JQ Portion 2 only. These are presented with no geological losses (first table below), and with 15% geological losses (second table below). Inferred Mineral Resources in Portion 2 - No Geological Losses (Dated 2005) Unit Dip SG Width Volume Tonnes Cr2O3 (cm) (m3) (w/o Content losses) (tonnes) LG6 14 4.25 77.00 5,290,000 22,470,000 10,223,850 LG5 14 4.05 94.00 6,210,000 25,160,000 11,447,800 MG4A 14 3.75 97.00 4,660,000 17,490,000 7,957,950 Total 16,160,000 65,120,000 29,629,600 Inferred Mineral Resources in Portion 2 - With Geological Losses (Dated 2005) Unit Dip SG Width Volume Tonnes Cr2O3 (cm) (m3) (w losses) Content (tonnes) LG6 14 4.25 77.00 5,290,000 19,100,000 8,690,500 LG5 14 4.05 94.00 6,210,000 21,390,000 9,732,450 MG4A 14 3.75 97.00 4,660,000 14,890,000 6,774,950 Total 16,160,000 55,380,000 25,197,900 Mineral Corporation In late 2008, DCM hired The Mineral Corporation to manage an exploration program which entailed the drilling of 25 surface drillholes. The results from this program were used to define SAMREC compliant mineral resource estimates. These are presented for Indicated Mineral Resources (first table below) and for Inferred Mineral Resources (second table below) and only represent approximately 25% of the total tenement area held by Chrometco. Geological losses of 20% to 30% have been applied on a block-by-block basis. Indicated Mineral Resources in Portion 2 (Dated 2008) Source Unit Tonnes Grade Cr2O3 Cr2O3 Content (%) (tonnes) Open Pit LG5, 2,008,958 37.10 745,244 LG6, LG7, MG2, MG3,
MG4 Underground LG6, 6,662,671 39.42 2,626,098 MG4A Total 8,671,629 39.00 3,371,342 Inferred Mineral Resources in Portion 2 (Dated 2008) Source Unit Tonnes Grade Cr2O3 Cr2O3 Content (%) (tonnes)
Open MG2 213,764 35.36 75,587 Pit Total 213,764 213,799.36 75,622.36 Current In 2010, Mr Bleeker was approached by the directors of Chrometco to re-evaluate the potential mineral resources within portion 2 and the remainder extent of Rooderand 46JQ farm. The Mineral Corporation only reported on a selected area which only represents about 25% of the tenement area, and only utilized exploration drilling results as undertaken by DCM. However, in this recalculation, Mr Bleeker utilized available drilling and geological information obtained from Chrometco, DCM, Nkwe Platinum Pty Ltd. ("Nkwe") and Anglo Platinum Ltd ("Anglo"). Drilling information from Nkwe and Anglo only reported intersections on economic platinum bearing layers. MG chromitite layers were intersected in some of Nkwe exploration holes. The average thickness between LG6 chromitite and UG2 chromitite layers is approximately 230m. Only three stratigraphicaly delineated chromitite layers (i.e. LG5, LG6 and MG4) were selected in the recalculation of potential mineral resource estimation and these are shown without (first table below) and with 15% geological losses (second table below) in and respectively using an average Cr2O3 grade of 45.5%. Inferred Mineral Resources in Portion 2 - No Geological Losses (Dated 2010) Unit SG Width (cm) Tonnes Cr2O3 (w/o Content losses) (tonnes) LG6 4.25 77.00 31,700,000 14,423,500 LG5 4.05 94.00 25,600,000 11,648,000 MG4A 3.75 97.00 25,200,000 11,466,000 Total 82,500,000 37,537,500 Inferred Mineral Resources in Portion 2 - With Geological Losses (Dated 2010) Unit SG Width (cm) Tonnes Cr2O3 (w losses) Content (tonnes) LG6 4.25 77.00 27,000,000 12,285,000 LG5 4.05 94.00 21,800,000 9,919,000 MG4A 3.75 97.00 21,400,000 9,737,000 Total 70,200,000 31,941,000 Summary Considering all available data and vast amount of experience that the various authors have of the area, this report concludes that the mineral resources within the entire tenement held by Chrometco comprises the work completed by DCM and Mr Bleeker; these are presented for Indicated Mineral Resources (first table below), and for Inferred Mineral Resources (second table below). Indicated Mineral Resources - Entire License Area Unit Tonnes Grade Cr2O3 Cr2O3 Content
(%) (tonnes) LG5, 2,008,958 37.10 745,244 LG6, LG7, MG2, MG3, MG4 LG6, 6,662,671 39.42 2,626,098 MG4A Total 8,671,629 39.00 3,371,342 Inferred Mineral Resources - Entire License Area Unit Tonnes Grade Cr2O3 Cr2O3 Content (%) (tonnes) LG6 27,000,000 45.50 12,285,000 LG5 21,800,000 45.50 9,919,000 MG4A 21,400,000 45.50 9,737,000 Total 70,200,000 45.50 31,941,000 Independent Valuation Venmyn was commissioned by Chrometco to perform an independent valuation of the Rooderand asset. Venmyn applied both the cost and market valuation approaches to value the asset. The SAMVAL Code definition states that the cost approach relies on historical and/or future expenditure on the Mineral Asset. A Prospectivity Enhancement Multiplier ("PEM") is a factor applied to the total cost of exploration, at different stages of exploration and project advancement. The magnitude of the PEM is determined by the level of sophistication of the exploration for which positive exploration results, applying the concept of successful efforts, have been obtained. Using the cost approach and a total historical and future amount of ZAR2.7 million spent on the asset by Chrometco, as well as a PEM for historical mining of 5, Venmyn determined: a "fair" (attributable) value for the Project of ZAR13.5million; and using a 10% deviation around the "fair" value, an upper and lower value of ZAR 14.850 million and ZAR12.150 million is determined, respectively. In valuing the Project, using the market approach, Venmyn made use of a comparative valuation graph, consisting of a database of various, similar, "arm`s length" transactions, which are plotted in relation to their specific stage of exploration (the Venmyn Chromite Valuation Curve). Using the Venmyn Chromite Valuation Curve, Venmyn determined a "fair" value of USD1.93/t and an upper and lower value range of USD2.76/t and USD1.11/t, respectively. To calculate the total project value, the contained Cr2O3 tonnes per Mineral Resource category are multiplied by the unit values. Using the market approach and a total inferred and indicated Cr2O3 content of 31.941Mt and 3.371Mt, respectively, and spot exchange rate on 1st December 2010 of ZAR7.02669/USD, Venmyn determined: a "fair" (attributable) value for the Project of ZAR480.041 million; and an upper and lower value of ZAR685.773 million and ZAR274.309 million, respectively. Concluding Opinion Since the market approach relies on similar, recent, "arm`s length" transactions, the Competent Valuator prefers the valuation results of the market approach. The concluding opinion of value (attributable) for the Project is based on the market approach as follows: a "fair" (attributable) value for the Project of ZAR480.041 million; and an upper and lower value of ZAR685.773 million and ZAR274.309 million, respectively. Statement All requirements of the SAMREC Code (including Table 1), and the SAMVAL Code (including Table 2) have been complied with in preparing the full CPR report which will become available as part of the planed circular to shareholders. This announcement is a true reflection of the full Competent Person`s Report presented herein. Capacity and Independence IRES prepared the report and it is signed off according to SAMREC by Mr. Dexter S. Ferreira, a consultant to IRES, as well as Derick de Wit of Vemnyn. Details of their qualifications and experience are contained within the report; which is available for inspection at the company`s registered office during business hours. IRES has previously completed Independent Reports for listings on the Vancouver, London, Johannesburg and Australian Stock Exchanges. FURTHER CAUTIONARY ANNOUNCEMENT Shareholders are advised to continue to exercise caution when dealing in the Company`s securities until a further announcement is released in terms of the potential disposal of the Rooderand asset. Johannesburg 12 January 2011 Designated Advisor Sasfin Capital (a Division of Sasfin Bank Limited) Date: 12/01/2011 17:41:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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