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Quarterly Activities Report For the quarter ended 30 September 2018
Tawana Resources NL
(Incorporated in Australia)
(Registration number ACN 085 166 721)
Share code on the JSE Limited: TAW
JSE ISIN: AU0000TAWDA9
Share code on the Australian Securities Exchange Limited: TAW
ASX ISIN: AU000000TAW7
(“the Company” or “Tawana”)
Quarterly Activities Report
For the quarter ended 30 September 2018
Tawana Resources NL (ASX: TAW, Tawana or the Company) is pleased to report to shareholders its activities
for the quarter ended 30 September 2018.
Increased production of high quality lithium and tantalum concentrates at Bald Hill as the mine
continues to ramp up.
Highlights
Bald Hill Mine, Western Australia, Operations
Production
- Commercial lithium production declared in July
- Significant plant performance improvements during the quarter
- Production of 28,419 wmt of spodumene concentrate, up 63% from the June quarter
- Recovery of 36,100lbs of saleable Ta2O5, up 36% from June quarter
- Shipments of 18,670 dmt lithium concentrate and a further 10,336 dmt on 7 October
- Sales of parcels containing approximately 41,000 Lbs Ta2O5 negotiated during the quarter
- Bald Hill produces high quality lithium (+6% Li2O, <0.5% Fe, <0.5% mica) and tantalum (+30% Ta2O5)
concentrates
- Production Cash Costs2 for the Quarter were approximately A$900 (US$660) per tonne of spodumene
concentrate produced
- Revised production target of 55,000 to 60,000 tonnes of lithium concentrate for the 6 months between
July and December 2018 (previously 60,000 – 75,000 tonnes)
Optimisation Study Update
- Fines optimisation study completed; detailed design commenced
- Targeting increased combined throughput to 300tph and recovery of 72-80%
- Offtake discussions commenced on increased lithium concentrate production
Corporate
Proposed merger with Alliance Mineral Assets Limited (“Alliance”)
- Scheme Booklet registered with ASIC and despatched to shareholders
- Independent Expert BDO concluded that the Scheme is fair and in the best interests of Tawana
Shareholders (in the absence of a superior proposal)
- Supplementary Scheme Booklet progressed, subject to ASIC and Court approval
Demerger of non-core assets to form Cowan Lithium Limited
- Shareholders approved disposal of projects, capital reduction and amendment to constitution at a
General Meeting on 6 July 2018
- Cowan Lithium shares were distributed to eligible shareholders on 18 July 2018
Funding
- Institutional share placement completed in July 2018 to raise approximately $4.9m
- $40m funding package secured to strengthen balance sheet and expedite the ASX listing of Alliance
Tawana Managing Director Mark Calderwood said “The Bald Hill Mine continued to make excellent progress
throughout the quarter, notably significant increases in lithium and tantalum concentrate production. The
completion of the fines study and commencement of commissioning of an additional tantalum circuit were
also achieved. Improvements to plant performance continued throughout the quarter with an average
throughput rate of 202tph; 25% above nameplate capacity. In addition, we agreed terms for our first
tantalum sales and have continued to build our reputation as a supplier of premium lithium and tantalum
concentrates.”
Bald Hill Mine (Tawana 50%, Alliance 50%)
The Bald Hill Lithium and Tantalum Mine (Bald Hill Mine) is located 50km south east of Kambalda in the
Eastern Goldfields region of Western Australia. It is located approximately 75km south east of the
Mt Marion Lithium project. The Project comprises mining tenure totalling 774km2.
Safety Performance
The 12-month moving average Total Recordable Injury Frequency Rate (TRIFR) for the mine is 0.63 (up
0.27 due to a recordable Medically Treated Injury that occurred in September).
Mining
Mining during the September quarter occurred in Stages 1 and 2 of the pit with ore supply coming from
Stage 1. Mining continued at a rate of approximately 773kbcm per month for a total of 2.3mbcm of material
including 292,428t of lithium ore at 0.90 % Li2O and 265 ppm Ta2O5. An additional 98,510 wmt of low-grade
tantalum ore grading 284 ppm Ta2O5 was also mined.
The strip ratio for the September quarter was 14.7, and will continue to remain high as the Stage 3 pre-strip
begins in the schedule, allowing for continuity of ore supply in the medium to long term.
Mining vertical advance rates were less than targeted and has resulted in lower than expected ore and
waste volumes. Improvements to the mining and dewatering procedures have been adopted and a fourth
excavator has arrived on site to reduce effects of equipment downtime.
Source Units June 2018 Quarter September 2018 Quarter Movement
Ore BCM's bcm 112,557 147,524 +31%
Waste BCM's bcm 2,244,198 2,171,246 -3%
Total Mined BCM's bcm 2,356,755 2,318,770 -2%
Strip Ratio W:O 19.9 14.7 -26%
Ore Tonnes (Lithium) wmt 211,978 292,428 +38%
Ore Tonnes (Tantalum) wmt 86,298 98,510 +14%
Mined Lithium Grade %Li2O 1.01% 0.90% -11%
Ore Grade (Tantalum) ppm 285 284 -
Processing
Processing during the September quarter resulted in a total of 337,287 tonnes of lithium and tantalum ore
at 0.82 % Li2O and 284ppm Ta2O5 being fed to the plant. From the plant feed, 93,164 tonnes of -1mm fines
were stockpiled after removal of 374wmt of tantalum concentrate containing about 36,100lbs of saleable
Ta2O5. The remaining 244,123 tonnes grading 0.94 % Li2O were processed through the DMS circuit for
recovery of 28,419 wmt of spodumene concentrate. Lithium recovery was approximately 74% (net 62%,
taking into account unprocessed fines and middlings).
The Bald Hill JV previously announced a lithium concentrate production target of 60,000 to 75,000 tonnes
for the six-month period July to December 2018. This target has been revised to 55,000 to 60,000 tonnes
due to mining delays and throughput limitations during construction of the tailings dam during the
December quarter.
Plant performance was consistently good with throughputs of up to 249tph. The average throughput rate
for the quarter was 202tph, up 17% from June quarter and 25% above nameplate.
Units June 2018 Quarter September 2018 Quarter Movement
Processed Tonnes (Gross) wmt 240,504 337,287 +40%
Lithium Grade %Li2O 0.79 0.82 +4%
Processed Tonnes (Net of unprocessed
stockpiled fines and middlings) wmt 179,875 239,253 +33%
Lithium Feed Grade %Li2O 0.89 0.94 +6%
Spodumene Produced wmt 17,403 28,419 +63%
Recovery (gross)
(including stockpiled fines) % 59% 62% +3%
Recovery (net)
(excluding stockpiled fines) % 72% 74% +2%
Tantalite Produced Lbs 26,480 36,100 +36%
Throughput (Gross) tph 172 202 +17%
Operational performance of the plant continues to improve with plant availability increasing to 78% as it
approaches the steady state target 85%. Crushed plant feed size increased from 10mm to 18mm. This
change has reduced the quantity of -1mm fines bypassing the DMS circuit from 27% to 20% and improved
overall mass yield, while maintaining overall concentrate grades of 6% or better.
The Bald Hill Mine currently produces a high quality spodumene concentrate containing +6% Li2O, <0.5%
Fe, <0.5% mica, <3% H2O, <1% K2O and +90% of concentrate greater than 1mm.
A total of 374 wmt of tantalum pre-concentrate containing 36,100 lbs of Ta2O5 was recovered from the
fines circuit. Commissioning of two tables to upgrade spiral concentrates resulted in the production of
concentrates containing 15-40% Ta2O5 on site. Work continued to be undertaken at Nagrom Mineral
Laboratory in Perth to upgrade pre-concentrates. Based on the treatment of spiral samples, results indicate
that a +30% concentrate is available with extremely low deleterious elements.
A pilot jig plant was also installed to recover liberated tantalite contained in the final lithium product. This
plant is currently being commissioned and is expected to provide recovery of additional liberated tantalum
minerals.
Fines Circuit Upgrade
A metallurgical and engineering options study to increase throughput and recovery has been completed.
The preferred option is to modify the existing DMS circuit from a 2-stream circuit currently processing a 1-
18mm feed range to a 3-stream circuit processing a 0.5mm to 18mm feed range through the addition of
cyclones, screens and pumps. A 3-stream DMS circuit provides maximum operational flexibility for the Bald
Hill Mine’s feed. It is proposed that +2mm feed would be processed through the existing DMS plant streams
and the ‘fines’ stream would treat an additional 20% of feed in the 2mm and 0.5mm size range. The plant
throughput rate with the addition of the fines stream is expected to increase from the current 220tph to
300tph and increase total lithium recovery rates to a range of 72-80% depending on feed grade. The
combined increase in throughput and recovery will significantly increase the total concentrate production
and reduce the processing cost per tonne produced. In addition, tantalum recovery rates would increase.
The preliminary capital cost estimate for the fines circuit addition, completed by Primero Group is estimated
at A$10M (+/- 20%) excluding contingency and contractor margin. Primero has extensive knowledge for
DMS circuits including the existing DMS circuit at the Bald Hill Mine.
Work is continuing on the Front End Engineering Design (FEED) works and it is expected that mechanical
equipment orders will commence being placed during the December 2018 quarter.
Sales and Marketing
During the quarter, Tawana and Alliance sold a total of 18,670 dmt of spodumene concentrate to offtake
partner Burwill Lithium Company Limited (Burwill) and a further 10,336 dmt was shipped on 7 October.
Tawana and Alliance agreed to sell approximately 400 wmt (50% each) of low-grade tantalum concentrate
(3-4% contained Ta2O5) produced by the Bald Hill Mine between April and July 2018 under a one-off sales
contract to Global Advanced Metals Greenbushes Pty Ltd, with the sale completed subsequent to the end
of the quarter.
Subsequent to quarter end, Tawana and Alliance also agreed to sell approximately 23 dmt (50% each) of
high-grade tantalum concentrate (approximately 30% contained Ta2O5) to H.C. Starck Tantalum and
Niobium GmbH (H.C. Starck). Tawana and Alliance remain engaged with H.C. Starck for the long-term
offtake of the high-grade tantalum concentrate production from the Bald Hill Mine.
Costs
Production Cash Costs2 for the Quarter, net of tantalum by-product credits were approximately A$900
(US$660) per tonne of spodumene concentrate produced.
Exploration
Limited exploration work was undertaken during the quarter. The grade control rigs were used periodically
to complete selected in-pit resource definition drilling in areas that were not previously available to
exploration during the 2017 program due to access restrictions. A total of 21 holes were completed for
2042m.
In addition to the limited drilling, field reconnaissance, mapping and rock chip sampling has been
undertaken on regional targets across the broader Bald Hill Mine area.
Notes:
2
Cash Costs per wmt of spodumene concentrate produced is a non-IFRS measure of the direct costs incurred
Corporate by-product credit value produced, net of waste deferral costs and excluding royalties.
net of tantalum
Proposed Merger of Tawana and Alliance
On 5 April 2018, Tawana announced a merger with Alliance by way of a members’ scheme of arrangement
(Scheme) pursuant to which, Alliance will acquire all Tawana shares and Tawana shareholders will receive
1.1 new Alliance shares for every 1 Tawana share held at the Scheme record date (Merger). Tawana and
Alliance entered into a Scheme Implementation Agreement (SIA) (as amended on 9 July 2018) which
documented the terms of the Merger.
On 20 August 2018, Tawana announced that ASIC had registered the Scheme Booklet in relation to the
Merger following Federal Court of Australia approval. The Scheme Booklet included an Independent
Expert’s Report prepared by BDO Corporate Finance (WA) Pty Ltd which concluded that the Scheme is fair
and reasonable and therefore in the best intrests of Tawana shareholders, in the absence of a superior
proposal.
As outlined in the Scheme Booklet, the Merger is subject to a number of conditions precedent. On 19
September 2018, Tawana announced that Tawana and Alliance agreed to waive the condition relating to
the admission of Alliance to the Offical List of ASX Limited (ASX) and Official Quotation of Alliance Shares
on ASX (ASX Listing Condition) as Alliance was unable to satisfy certain ASX listing conditions at the time
relating to its accounts not containing an empahsis of matter (as further explained in the announcement
on 19 September 2018).
On 27 September 2018, Tawana announced that it had secured a debt funding package (see details below)
which was expected to facilitate the satisfaction of the ASX listing requirements. Accordingly, Tawana and
Alliance confirmed that Alliance will seek ASX listing following the Merger.
The Scheme Meeting scheduled to be held on 26 September 2018 was adjourned until a later date so that
additional disclosure can be provided to shareholders in respect of the impact of the new debt facilities and
waiver of ASX listing condition. The new date for the Scheme Meeting and an updated indicative timeline
will be advised in due course, subject to the required orders being obtained from the Federal Court of
Australia. Shareholders will also be provided with a Supplementary Scheme Booklet.
General Meeting of Alliance Shareholders
The General Meeting of Alliance shareholders was held on 21 September 2018, where all the resolutions in
respect of the Merger were approved. This satisfied a key condition to the Merger, and also facilitates the
listing of Alliance on ASX through the adoption of ASX-compliant changes to Alliance’s constitution.
Demerger of Assets
In the March quarter, Tawana announced a proposed demerger of its non-core assets to allow it to focus
on the development of the Bald Hill Mine (Demerger). The Demerger involved transferring the Cowan,
Yallari and Mofe Creek assets and shares in Rakana Consolidated Mines (Proprietary) Ltd to a new wholly-
owed public company, Cowan Lithium Limited (Cowan Lithium) before undertaking a capital reduction and
an in-specie distribuion of 85% of all of the Cowan Lithium shares to the Company’s shareholders.
The Demerger was approved at a General Meeting held on 6 July 2018, and shares in Cowan Lithium were
distributed on 18 July 2018. Tawana no longer has a direct interest in these projects, however retains
exposure through its 15% shareholding in Cowan Lithium.
Placement
In July 2018 Tawana completed a placement of 12,195,122 fully paid ordinary shares to an institutional
investor at a price of 40 cents per share to raise gross proceeds of approximately $4.9 million.
Debt Funding Package
In September, Tawana secured a $40m funding package from a consortium of lenders led by Tribeca
Investment Partners to strengthen balance sheet liquidity and to facilitate an expeditious ASX listing of
Alliance following the Merger. The funding package comprised the following:
- $20 million secured debt facility for Tawana (Tawana Facility)
- Additional secured $20 million line of credit for Merged Group, conditional upon Merger
completion and Alliance receiving conditional ASX listing approval (Conditional MergeCo Facility)
$15 million of the $20 million Tawana Facility will be used to advance the proposed fines lithium and
tantalum circuit additions to the existing DMS plant and for additional working capital. The remaining $5
million of the $20 million of the Tawana Facility will be used to repay the Red Coast loan (Refer to ASX
Announcement dated 5 February 2018).
The Tawana Facility was conditional upon (amongst other things), receipt of a waiver of listing rule 10.1
from ASX in respect of the grant of security in favour of Tribeca. This waiver was granted by ASX on 4
October 2018.
Cash Position and Movements
As at 30 September 2018, Tawana Resources held $11.4m in cash (June 2018: $11.6m).
For further movements in cash during the Quarter, refer to the Appendix 5B.
About Tawana
Tawana Resources NL is a resources focused ASX and JSE-listed company located in Perth, Western
Australia.
Tawana has a 50% interest in the Bald Hill Mine.
About the Bald Hill Mine
The Bald Hill Mine is in the southeast of the Goldfields?Esperance Region of Western Australia,
approximately 105km south?southeast of Kalgoorlie. Kalgoorlie is the main hub in the region providing
access to the Project which can be accessed from Perth by air, rail and road.
The principal road access to the Project is via the (sealed) Coolgardie?Esperance Highway (National Highway
94), and then the Binneringie Road from Widgiemooltha, a distance of 65km of unsealed shire road. The
Project is approximately 350km by road from the Port of Esperance.
The Mine currently consists of an open pit, a Dense Media Separation and Spiral Circuits, waste rock dumps,
stores, a camp (including administrative and living quarters) and associated infrastructure. Lithium
concentrate is hauled via Binneringie Road to the Port of Esperance. Tantalum concentrates are planned to
be packed into 205L drums and/or bulka?bags and exported via Fremantle in standard shipping containers.
Tawana Resources NL Mining Tenements (as at 30 September 2018)
Tenement Location Registered Owner Structure and Ownership
Bald Hill Mine1
M15/400 Western Australia Alliance Mineral Assets Limited 50%
M15/1470 Western Australia Alliance Mineral Assets Limited 50%
M15/1305 Western Australia Alliance Mineral Assets Limited 50%
M15/1308 Western Australia Alliance Mineral Assets Limited 50%
M15/1840 (application) Western Australia Alliance Mineral Assets Limited 50%
M15/1851 (application) Western Australia Alliance Mineral Assets Limited 50%
G15/28 Western Australia Alliance Mineral Assets Limited 50%
P15/5862 Western Australia Alliance Mineral Assets Limited 50%
P15/5863 Western Australia Alliance Mineral Assets Limited 50%
P15/5864 Western Australia Alliance Mineral Assets Limited 50%
P15/5865 Western Australia Alliance Mineral Assets Limited 50%
R15/1 Western Australia Alliance Mineral Assets Limited 50%
E15/1058 Western Australia Alliance Mineral Assets Limited 50%
E15/1212 Western Australia Alliance Mineral Assets Limited 50%
E15/1161 Western Australia Alliance Mineral Assets Limited 50%
E15/1162 Western Australia Alliance Mineral Assets Limited 50%
E15/1166 Western Australia Alliance Mineral Assets Limited 50%
E15/1353 Western Australia Alliance Mineral Assets Limited 50%
E15/1066 Western Australia Alliance Mineral Assets Limited 50%
E15/1067 Western Australia Alliance Mineral Assets Limited 50%
Tenement Location Registered Owner Structure and Ownership
E15/1492 Western Australia Alliance Mineral Assets Limited 50%
E15/1493 Western Australia Alliance Mineral Assets Limited 50%
E15/1555 Western Australia Alliance Mineral Assets Limited 50%
E15/1556 Western Australia Alliance Mineral Assets Limited 50%
1
Lithco No. 2 Pty Ltd has a 50% beneficial interest in these tenements pursuant to the Farm-In Agreement described on page 12 of the Company’s 2017
Annual Report. Registrations in the name of Lithco No.2 Pty Ltd are pending.
Mining Tenements acquired: Alliance Mineral Assets Limited applied for M15/1851 (Lithco No.2 Pty Ltd – 50% beneficial interest).
Mining Tenements disposed: P15/5465, 5466 and 5467 were relinquished.
Beneficial percentage interests held in farm in or farm-out agreements: Refer above.
Beneficial percentage interests in farm-in or farm-out agreements acquired or disposed: Nil.
Competent Persons Statement
Metallurgical
The information in this release that relates to metallurgy and metallurgical test work has been reviewed by Mr Noel O’Brien,
FAusIMM, MBA, B. Met Eng. Mr O’Brien is a part time employee of the company. Mr O’Brien is a Fellow of the Australasian
Institute of Mining and Metallurgy, and he has sufficient experience with the style of processing response and type of deposit
under consideration, and to the activities undertaken, to qualify as a competent person as defined in the 2012 edition of the
“Australian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr O’Brien consents to the
inclusion in this report of the contained technical information in the form and context as it appears.
Forward Looking Statements
This announcement may contain certain forward looking statements and projections, including regarding estimated
resources and reserves, production and operating costs profiles, capital requirements and strategies and corporate
objectives. Such forward looking statements/projections are estimates for discussion purposes only and should not
be relied upon as representation or warranty, express or implied, of Tawana Resources NL. They are not guarantees
of future performance and involve known and unknown risks, uncertainties and other factors many of which are
beyond the control of Tawana Resources NL. The forward looking statements/projections are inherently uncertain
and may therefore differ materially from results ultimately achieved.
Tawana Resources NL does not make any representations and provides no warranties concerning the accuracy of the
forward looking statements, and disclaims any obligation to update or revise any forward looking statements based
on new information, future events or otherwise except to the extent required by applicable laws. While the
information contained in this announcement has been prepared in good faith, neither Tawana Resources NL nor any
of their directors, officers, agents, employees or advisors give any representation or warranty, express or implied, as
to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this
announcement. Accordingly, to the maximum extent permitted by law, none of Tawana Resources NL, its directors,
employees or agents, advisers, nor any other person accepts any liability whether direct or indirect, express or limited,
contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness of the information or for any
of the opinions contained in this announcement or for any errors, omissions or misstatements or for any loss,
howsoever arising, from the use of this announcement.
End Note
All figures throught this report regarding the Blad Hill Mine are, unless expressly stated otherwise, presented on a
100% basis. Tawana, through its 100% owned subsidary Lithco No. 2. Pty Ltd has a 50% interest in the project.
31 October 2018
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Date: 31/10/2018 09:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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