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Tawana Resources NL - Company Announcement

Release Date: 07/12/2005 09:00:01      Code(s): TAW
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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