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TAW - Tawana Resources NL - Quarterly Activities and Cash Flow Report

Release Date: 31/07/2008 09:18:05      Code(s): TAW
TAW - Tawana Resources NL - Quarterly Activities and Cash Flow 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")                                                     
Quarterly Activities and Cash Flow Report                                       
1 April - 30 June 2008                                                          
Key Points                                                                      
Orapa                                                                           
Shafts on BK24 kimberlite completed                                             
Shaft sinking on BK22/23 commenced                                              
Bulk samples from BK24 being transported to processing plant                    
Kareevlei Wes                                                                   
Crushing circuit upgrade continuing                                             
Rakana                                                                          
Aquila Joint Venture intersects more manganese                                  
Flinders Island/Venus Bay                                                       
Drilling new kimberlite targets commenced                                       
Corporate                                                                       
Neil Barrie appointed as Executive Chairman                                     
BEE transactions commenced                                                      
Funding                                                                         
Funds raised for projects                                                       
Botswana                                                                        
Orapa Project, Botswana                                                         
(Tawana 100%, Nowak Investments Pty Ltd earning 51%)                            
Tawana has been advised by Nowak that shaft sinking on the Orapa Project        
kimberlite BK24 have been completed and bulk sampling of fresh kimberlite has   
commenced. To date approximately 30 tonnes of kimberlite has been excavated and 
is being transported to a dense media separation plant in Francistown where     
processing of the samples is expected to commence in Q3 2008.                   
Nowak excavated three shafts into the kimberlite to access fresh kimberlite at  
approximately 30m below surface.  A sample of kimberlite from one of the shafts 
contained a specimen of eclogite embedded in the kimberlite. This is an         
important specimen because it proves that BK24 sampled the eclogitic layer in   
the Earth`s mantle, which is the source of diamonds in the Orapa diamond field. 
(An image of this specimen can be seen on the Company`s website at              
www.tawana.com.au)                                                              
Nowak has commenced excavating shafts on the kimberlite BK22/23 which is located
2.5km northeast of BK24. The purpose of this is to excavate bulk samples to test
for diamond as for BK24.                                                        
Nowak has also collected 36 soil samples in the Moshaiwa Prospecting Licence    
with the aim to locate the source of the kimberlitic indicator minerals found   
here previously.                                                                
Background                                                                      
Nowak is a Botswana registered unlisted company. The Managing Director of Nowak 
is Roy Spencer, formerly CEO of European Diamonds plc. Technical consultant to  
Nowak is Dr. Leon Daniels, formerly a director of Tawana. Dr. Daniels and Mr.   
Spencer have a wealth of experience in diamond exploration, evaluation and      
mining. Dr Daniels was instrumental in acquiring the AK6 kimberlite for AIM     
listed African Diamonds Plc and Roy Spencer discovered the world class Grib     
Diamond Deposit in Russia and recently brought the Liqhobong Diamond Mine in    
Lesotho into production.                                                        
The probable development by De Beers and African Diamonds plc (AFD-L) of a new  
diamond mine in the Orapa area on the AK6 kimberlite (located 25km to the south 
of the Tawana licence), which was originally discovered and evaluated in the    
1970`s and considered at that time to be a small, low-grade kimberlite, provides
an indication of the potential that still remains in Botswana. It is also       
noteworthy that Firestone Diamond plc (FDI-L) has reported encouraging results  
from its work in the Orapa field on kimberlite BK11 and BK16, and elsewhere in  
Botswana.                                                                       
The Orapa kimberlite field is located in north eastern Botswana, and includes   
the Orapa, Letlhakane and Damtshaa diamonds mines, which produce in excess of 13
million carats of diamonds per year. The Orapa kimberlite field is one of the   
largest diamondiferous kimberlite fields in the world, containing 79 known      
kimberlites, of which the majority has been proven to be diamondiferous. The    
Orapa mine is one of the largest producing kimberlites in the world and is 113  
hectares in surface area.                                                       
The Orapa mine is located 20 km to the west, Letlhakane is 30km to the south,   
and Damtshaa is 6km to the south of the Tawana licence.                         
South Africa                                                                    
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 diamondiferous kimberlite    
pipes (KV1-KV5). Previous drilling and bulk sampling by Tawana has shown that   
KV1 and KV2 are potentially economic.                                           
The Company`s 25 tph processing plant has been constructed on site and the Dense
Media Separation (DMS) section has been commissioned.  Work has commenced on    
upgrading the crushing circuit. This work is continuing.                        
Contracts for the trial mining earthmoving will be let when sufficient funds    
have been raised to complete this program. Tawana is in discussions with a      
number of parties to progress this project.                                     
Lexshell Alluvial Diamond Project                                               
(Tawana 88% revenue share, Lexshell Mining 366 (Pty) Limited 12% revenue share) 
During the quarter Tawana drilled 23 holes in the central portions of the       
Lexshell granted New Order Mining Right located some 60km northwest of          
Kimberley. This drilling identified a well defined palaeochannel. The boundary  
of the palaeochannel has been identified by aerial photography and close        
inspection of the Google Earth image. (This image can be seen on the Company`   
website)                                                                        
The area occupied by the palaeochannel within the Mining Right is interpreted as
covering 20 to 26 hectares, and is immediately adjacent to existing third party 
alluvial diamond mining operations.                                             
Rakana /Aquila Joint Venture                                                    
(74% owned and operated Aquila Resources Limited; 26% Rakana Consolidated Mines 
Pty Ltd; 6.8% indirect Tawana)                                                  
In April carbon steel resources producer and developer, Aquila Resources Limited
(ASX:AQA Aquila) announced promising manganese assay results from its Avontuur  
Projects located 75km north west of Kuruman, in the Northern Cape Province of   
South Africa.                                                                   
Tawana holds an indirect interest of 6.8% (previously incorrectly stated as     
5.2%) in the Joint Venture through its 26% holding in Rakana.                   
In early July Aquila announced further promising manganese assay results from   
its Avontuur Projects.                                                          
The manganese discoveries were identified on two mineralised prospects some 20km
apart and adjoining the northern-most farms of the main Kalahari Manganese      
Field.                                                                          
Australia                                                                       
Flinders Island/Venus Bay Joint Venture                                         
(80% Tawana; 20% Orogenic Exploration Pty Ltd; Flinders Mines Limited operator  
and earning 70%)                                                                
Tawana`s joint venture partner and operator, Flinders Mines Limited (formerly   
Flinders Diamonds Limited) ("Flinders") has reported that it has commenced      
drilling targets at Venus Bay.                                                  
In Q1 2008 Flinders completed a helicopter-borne magnetic survey over the Venus 
Bay project area and identified interesting targets over indicator mineral      
anomalies which resulted from previous exploration.                             
Flinders is able to earn 70% in the Flinders Island and Venus Bay project areas 
by sole funding $2million of exploration.                                       
Melbourne Laboratory                                                            
Activity within the Melbourne Laboratory during the quarter was focused on the  
examination of the Orapa exploration samples.                                   
Treatment, examination and reporting of third party exploration samples from    
South Africa and Australia was also undertaken.                                 
Corporate                                                                       
Appointment of Executive Chairman                                               
Following the resignation of Brian Phillips as Chairman of Tawana, the Board    
appointed Mr. Neil Barrie as Executive Chairman. Despite other business         
commitments Mr. Phillips has agreed to remain as a non-executive director of the
Company.                                                                        
Mr. Barrie`s brief is to drive development across our range of existing highly  
advanced diamond interests in South Africa and Botswana, and to seek out        
directly or through strategic alliance partners, new mineral opportunities with 
the major focus on iron ore, coal, gold and base metals in the highly           
prospective southern African countries. In Australia, the right to access data  
collected by De Beers Australia Exploration Limited is a valuable asset that is 
being pursued.                                                                  
Mr. Barrie, an Honours graduate from the University of Western Australia and a  
former KPMG Director, resides in Melbourne and has 20 years experience in mining
evaluation and corporate development throughout Australia, South Africa and     
Botswana.                                                                       
On appointment, Mr. Barrie praised the outstanding prospects for Tawana based on
the company`s advanced Kareevlei Wes, St Augustine`s and Alluvial diamond       
prospects in South Africa, our highly encouraging Orapa diamond project in      
Botswana and the value to the Company of the recent manganese discovery by joint
venturer, Aquila Resources, in South Africa.                                    
Mr. Barrie said: "Over the past quarter we have significantly increased our     
focus on the capital requirements of our projects to fast-track Kareevlei Wes   
and to further evaluate the outstanding potential of our Orapa assets.          
We have been in discussion with a number of companies in Australia and Southern 
Africa to evaluate a range of additional resource opportunities in coal, gold   
and base metals to add to our diamond and manganese interests.                  
The clear aim of our Board is to see Tawana move from an exploration to a mining
Company in the near future."                                                    
He went on to say, "I take over at a time where there is increasing focus in    
South and Southern Africa and our already established presence and excellent    
strategic alliance partners provide us with a solid platform for strategic      
growth. I look forward to being an integral contributor to Tawana Resources     
which is on the threshold of potentially realising significant successes based  
on the excellent stewardship of the Board and its senior management team."      
Seven Falls Transaction                                                         
During the quarter Tawana advised that two prominent South African business     
people, Ms Basetsana Kumalo and Ms Lindiwe Leketi became Tawana shareholders via
a transaction between their company, Pro Direct 189 Pty Ltd, ("Pro Direct") and 
Tawana.                                                                         
Tawana acquired Pro Direct`s 21% stake in Tawana`s Black Empowerment Partner    
("BEE"), Seven Falls Trading 155 (Pty) Limited ("Seven Falls"). The             
consideration for the acquisition was 2,125,600 Tawana shares, giving Pro Direct
a holding of 2.09% in Tawana.                                                   
Subsequently Tawana sold the Seven Falls shares it had acquired from Pro Direct 
to Motjoli Resources Pty Ltd ("Motjoli").                                       
Tawana is in discussions with Motjoli, the major shareholder of Seven Falls, to 
restructure the BEE relationship in line with current best practice.            
Funding                                                                         
During the quarter the Company placed an uncommitted portion of the recent      
rights issue to raise an additional $260,000 and, subsequent to the end of the  
quarter, completed a placement to sophisticated investors to raise a further    
$319,976. All shares were placed at A$0.08 with a free attached option          
exercisable at A$0.10 on or before 1 April 2011.                                
Directors are in discussions with a number of parties to raise additional funds 
to complete the trial mining of Kareevlei Wes.                                  
Contact:                                                                        
Wolf Marx                                                                       
Tel: +61 (0)3 98635222                                                          
Mob: + 61 (0)428 398446                                                         
Email:wolf.marx@tawana.com.au                                                   
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 edition of the "Australasian Code for the         
Reporting of Mineral Resources and Ore Reserves"                                
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                                   Quarter ended                             
("current quarter")                          
69 085 166 721                        30 June 2008                              
                                                                                
Consolidated statement of cash flows                                            
Current     Year to                
Cash flows related to operating activities    quarter     date ( 6              
                                             $A`000      months)                
                                                         $A`000                 
1.1   Receipts from product sales and         -           32                    
     related debtors                                                            
                                                                                
1.2   Payments for   (a)  exploration and     (73)        (160)                 
evaluation                                                                 
               (b)  development              -           -                      
               (c)  production               -           -                      
               (d)  administration           (436)       (612)                  
1.3   Dividends received                                                        
1.4   Interest  received                       -          2                     
1.5   Interest and other costs of finance                                       
     paid                                                                       
1.6   Income taxes paid                                                         
1.7   Other (provide details if material)     (7)         1                     
     (VAT Refund from SARS)                                                     
                                             (516)       (737)                  
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                            -           -                      
     (b)equity investments                   -           -                      
     (c) other fixed assets                  8           8                      
1.10  Loans to other entities                 -           -                     
1.11  Loans repaid by other entities          -           -                     
                                                                                
                                                                                
Net investing cash flows                8           8                      
1.13  Total operating and investing cash                                        
     flows (carried forward)                 (508)       (729)                  
                                                                                
1.13  Total operating and investing cash      (508)       (493)                 
     flows (brought  forward)                                                   
                                                                                
     Cash flows related to financing                                            
activities                                                                 
1.14  Proceeds from issues of shares,         606         606                   
     options, etc.                                                              
1.15  Proceeds from sale of forfeited shares  -            -                    
1.16  Proceeds from borrowings                31           119                  
1.17  Repayment of borrowings                 (88)         (88)                 
1.18  Dividends paid                          -            -                    
1.19  Other (provide details if material)     -            -                    
Net financing cash flows                549         637                    
     Net increase (decrease) in cash held    41          (92)                   
1.20  Cash at beginning of quarter/year to    16          150                   
     date                                                                       
1.21  Exchange rate adjustments to item 1.20              (1)                   
1.22  Cash at end of quarter                  57          57                    
Note 1: Tawana completed the placement of the shortfall of a renounceable rights
issue and a placement to sophisticated investors during the quarter, raising    
A$319,976 These funds were cleared and paid into the Company`s account on 9 and 
17 July 2008                                                                    
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 parties included in      Nil          
     item 1.2                                                                   
                                                                                
1.24  Aggregate amount of loans to the parties included in item    Nil          
     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 available  Amount used          
                                         $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           100                                  
                                                                                
4.2   Development                          0                                    
                                                                                
                                          100                                   
     Total                                                                      
Reconciliation of cash                                                          
Reconciliation of cash at the end of the         Current      Previous          
quarter (as shown in the consolidated statement  quarter      quarter           
of cash flows) to the related items in the       $A`000       $A`000            
accounts is as follows.                                                         
5.1  Cash on hand and at bank                    57           16                
5.2  Deposits at call                            -            -                 
5.3  Bank overdraft                                                             
-            -                  
5.4  Other (provide details)                     -            -                 
    Total: cash at end of quarter (item 1.22)   57           16                 
Note 1: Tawana completed the placement of the shortfall of a renounceable rights
issue and a placement to sophisticated investors during the quarter, raising    
A$319,976 These funds were cleared and paid into the Company`s account on 9 and 
17 July 2008                                                                    
Changes in interests in mining tenements                                        
Tenement    Nature of   Interest at    Interest at  
                            reference   interest    beginning of   end of       
                                        (note (2))  quarter        quarter      
6.1 Interests in mining                                                         
tenements relinquished,                                                      
   reduced or lapsed                                                            
                                                                                
6.2 Interests in mining                                                         
tenements acquired or                                                        
   increased                                                                    
                                                                                
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.                           
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 price Amount paid  
                             number       quoted       per         up per       
                                                       security    security     
7.1  Preference +securities                                                     
(description)            Nil          Nil                                   
7.2  Changes during quarter                                                     
    (a)  Increases through                                                      
    issues                                                                      
(b)  Decreases through                                                      
    returns of capital, buy-                                                    
    backs, redemptions                                                          
7.3  +Ordinary securities     102,763,134  102,763,134  various     Various     

7.4  Changes during quarter                                                     
    (a)  Increases through                                                      
    issues                                                                      
6,990,053    6,990,053    $0.08       $0.08        
                             2,125,600    2,125,600    $0.07       $0.07        
                             1,250,000    1,250,000    $0.08       $0.08        
    (b)  Increase through                                                       
exercise of options                                                         
7.5  +Convertible debt                                                          
    securities               Nil          Nil                                   
    (description)                                                               
7.6  Changes during quarter                                                     
    (a)  Increases through                                                      
    issues                                                                      
    (b)  Decreases through                                                      
securities matured,                                                         
    converted                                                                   
7.7  Options  (description                              Exercise    Expiry date 
    and conversion factor)   8,240,053    8,240,053    price       1 April      
$0.10       2011         
7.8  Issued during quarter    8,240,053    8,240,053    $0.10       1 Apirl     
                                                                   2011         
7.9  Exercised during         Nil          Nil                                  
quarter                                                                     
7.10 Expired during quarter   29,234,843   22,344,843   $1.00       30 April    
                                                                   2008         
7.11 Debentures               Nil          Nil                                  
(totals only)                                                               
7.12 Unsecured notes (totals  Nil          Nil                                  
    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.    
Sign here:                             Date:    30 July 2008                    
            (Director)                                                          
Print name:   W.T.Marx                                                          
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
    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.                                                              
31 July 2008                                                                    
Sponsor                                                                         
PricewaterhouseCoopers Corporate Finance (Pty) Ltd                              
Date: 31/07/2008 09:18:01 Supplied by www.sharenet.co.za                     
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