For personal use only

Transcription

1 For the period ending 31 March 2012 Highlights Tasmania Mine Operations Continued good safety performance with no LTIs and three MTIs. Mining continued with excellent stope recovery, achievement of tonnage targets and commencement of production from lower grade Stockworks. March quarter production was 11,312 ounces. Cash cost of production further reduced to A$911 per ounce, with average gold price received of $1,620 per ounce generating a significant cash surplus. Preparation for mining of final stopes in June quarter completed to schedule. Closure Plan for Tasmania Mine operations accepted by EPA and Mineral Resources Tasmania. Lefroy Tailings Project on schedule for low cost gold production to Dec Licences lodged over further tailings deposits at Beaconsfield. Corporate All debt eliminated with cash flow allowing redemption of secured convertible notes in March quarter ($9.7m including interest) and early redemption of unsecured convertible notes in April ($1.02m including interest). Average gold price of A$1,620 per ounce achieved for March quarter. No hedging currently in place. Buyback of small and unmarketable parcels completed reducing number of shareholders from 6,173 to 1,896. Interest in plant and equipment sales registered by several parties. CEO S COMMENTARY ON THE QUARTER BCD Resources CEO, Peter Thompson said Continued safe and complete extraction of mining blocks in the March quarter has been very pleasing, and has enabled the company to generate significant cash and reach an important milestone with the elimination of all debt. The convertible notes issued in 2011 were a necessary instrument at the time for the survival of BCD, but inevitably they also impacted the share price. The focus of the Board and management is to increase shareholder value by the safe and complete extraction of remaining underground gold, complete the Mine Closure Plan, deliver the Lefroy tailings project, and in doing so build a substantial cash position. The Victoria Copper project has been denied exploration funds for three years, and will now be the focus of a significant exploration effort aimed at establishing a viable copper business. Preparations for the Lefroy Tailings project are advanced and on schedule, and the opportunity to re-treat historical tailings from Beaconsfield represents potential for further low-cost gold production. I wish to thank our employees at the Tasmania Mine who have shown great loyalty and pride in staying on with the Company to date, many of whom will depart over coming months.

2 Ounces 000 MRIFR Jan-03 Sep-03 Jan-04 Sep-04 Jan-05 Sep-05 Jan-06 Sep-06 Jan-07 Sep-07 Jan-08 Sep-08 Jan-09 Sep-09 Jan- Sep- Jan-11 Sep-11 Jan-12 TASMANIA MINE SAFETY TASMANIA MINE SAFETY PERFORMANCE Lost Time Injuries & Medical Treatment Injuries 12 Month Rolling Average MRIFR (Medically Referred Injury Frequency Rate number of injuries per million man hours) Safety performance for the quarter was good, with no LTIs and three medical treatment injuries reported. The 12 month rolling average MRIFR further reduced to 21.2 at the end of March, the lowest in the history of the mine. PRODUCTION 0 80 Annualised gold production rates June 09Sept 09 Dec 09 Mar June Sept Dec Mar 11June 11Sept 11 Dec-11 Mar-12 Gold produced 2

3 A$/ounce 2,000 Unit Production Costs 1,500 1, June 09 Sept 09 Dec 09 Mar June Sept Dec Mar 11 June 11 Sept 11 Dec- 11 Mar- 12 Cash cost $/oz Capital $/oz Gold price A$/oz Gold production of 11,312 ounces was 8% lower than December quarter production, resulting from a slightly lower 56,571 tonnes processed, at a slightly lower average grade of 7.0 g/t gold, and higher metallurgical recovery of 89%. Remaining stopes to be extracted in the June Quarter are shown in green in Figure 1. BCD expects to recover a similar amount of gold to the March Quarter, but at a 20% lower cost per ounce. Final ore hoisting is planned for the end of June/early July, with shaft access to be maintained until September/October to allow equipment to be retrieved to surface. Figure 1 Tasmania Mine Long section showing production for March quarter, and planned production for the June quarter. 3

4 Tonnes 000 Grade g/t Mine Development Development activity for the quarter comprised only 115 metres of sill driving on 1115m and 630m levels, all of which was expensed. Mine Operations Mining has had to follow a strict sequence of stope extraction in order to minimise the impact of seismicity. 59,904 tonnes were mined and hoisted at an average grade of 7.0 g/t gold. The main production areas are shown in red in Fig 1 above and include the final stopes from 1130 level in the Western Zone, and stoping from the two deepest levels, 12 and All development and ground support work has been completed, and production from the large, low-grade (4 grams gold per tonne) Stockwork Zone on 915 level commenced; all of that material has been fired and is being bogged out. Recovery of all economically viable pillars is occurring, with success in all attempts during the quarter, notably from the 630 and 930 levels. Importantly, mining recovery from all high grade stopes in the Western Zone and from 1200 and 12 levels has been close to 0%, giving excellent reconciliations between reserve models and mill production. A further independent expert report on the possible viability of underground mining beyond June 2012 confirmed the Company s conclusion that no further viable mining is possible, even at gold prices significantly higher than the current price of A$1600 per ounce. Mill Operations Annualised mill throughput rates and grade June 09 Sept 09 Dec 09 Mar June Sept Dec Mar 11 June 11 Sept 11 Dec-11 Mar Ore milled Grade Mill throughput was 56,571 tonnes for the quarter, at an average grade of 7.0 g/t gold with a further improved mill recovery of 89.1%. The mill continued to perform well during the quarter, with no unplanned downtime and a continued reduction in operating costs. Plant modifications to allow carbon-in-circuit processing of tailings are well advanced and on schedule (refer below Lefroy Tailings ). Closure Plan The draft Decommissioning and Rehabilitation Report ( DRP ) is being finalised with the EPA and Mineral Resources Tasmania ( MRT ), with all issues agreed and a final document expected in early May. To eliminate the liability of having tailings contained at surface in the 3-year old tailings dam 2, those tailings will be piped back underground. Work on rehabilitation of the wetlands system between Beaconsfield and the Tamar estuary has already commenced, in consultation with landholders, EPA and MRT. As far as possible, all Closure Plan activities will be undertaken by BCD employees, with the bulk of work scheduled to be completed by December The closure costs have been provided for both in accounting terms and the cash retained to meet environmental costs. 4

5 COSTS Site and Corporate costs continue to reduce. Cash costs of production of A$911 per ounce were 12% lower than in the December quarter despite the lower tonnes and grades treated. The total workforce numbers further reduced to 124. Capital expenditure for the quarter reduced to less than $0.1m. ASSET SALES Preparation for the sale of certain mining and processing assets is advanced, with major mobile underground equipment items documented and listed on the Company website (bcdresources.com.au). These items, as well as the Bacterial Oxidation ( Bacox ) processing plant, have attracted buyer interest. As previously stated, the processing plant has a replacement cost of approximately A$60m, and is of interest to those developing refractory gold deposits who wish to avoid the by-product emissions of roasting. LEFROY TAILINGS PROJECT The historical Lefroy tailings are located on a mining lease near Lefroy, 40km from the Beaconsfield plant. Plans for treatment of this material at the Beaconsfield treatment plant are advanced, with an EPA submission lodged in February and publically advertised in March/April. No public submissions were received by the closing date of 19th April, and Council approval is now anticipated in mid-may. The tailings stockpile at Lefroy is estimated to be 140,000 tonnes averaging 1.4 g/t gold, containing 6,000oz of gold. Metallurgical recovery using carbon-in-pulp (CIP) technology is expected to be 75%. The existing five bacox tanks are suitable for use as CIP tanks, and are already equipped with the required agitator blades. Design and ordering of plant modifications (carbon screens, pumps, etc.) is complete, and pipework to take the spent tailings underground will be installed in the June quarter. Processing of this material is expected to occur between August and December EXPLORATION HISTORICAL BEACONSFIELD TAILINGS Historically, the Tasmania Mine at Beaconsfield operated between 1877 and 1914, recovering gold by roasting and discharging tailings into the Tamar river estuary at Middle Arm Bay. An estimated 1,073,000 tonnes were mined and treated, and these tailings are known to contain some residual gold. Between 1985 and 1988, Golconda recovered some 237,000 tonnes of these tailings and using carbon-in-leach (CIL) technology, extracted a reported 1.1 gram of gold per tonne. A Mineral Resources Tasmania report of 1996 suggests that up to 800,000 tonnes of historical tailings of variable grade still exist within Middle Arm Bay, with limited sampling of the upper 4 feet interval suggesting grades of 1.1 gram gold per tonne (sampling locations shown in Fig. 2). The Company has applied for an exploration licence covering the area of historical tailings (see Fig 2) with a view to undertaking sampling and scoping studies on future gold extraction using part of the Beaconsfield plant. It is likely that for any such development to be approved, strict limitations on the impact on the estuary would have to be met. In order to isolate that part of the estuary, a coffer dam of 450m length would need to be constructed across Middle Arm Bay for the duration of the extraction. The intention would be to remove the tailings, maximise gold recovery, and return the Bay to its premining condition. Additionally, the Company has applied for a Mining Lease covering the three tailings dams left by Golconda in 1988, which are known to contain some gold due to incomplete CIL extraction. 5

6 Figure 2 Middle Arm Bay Exploration Licence Application covering historical Tailings deposits Figure 3 Scotchsmans Point, Beaconsfield. Historical jetty at low tide was abandoned due to silting up by tailings in early 1900s. 6

7 VICTORIAN COPPER PROJECT Significant copper mineralisation has previously been delineated by BCD and earlier explorers at the Stavely (0% owned) and Ararat (51% owned) Projects in Western Victoria. Two current Inferred copper resources have been previously reported as shown in Table 1 below, in addition to significant drillhole intercepts from other prospects which have had no resource estimates, including drillhole TGAC078 at the Junction 1 prospect which intersected 3.7% copper from 12 to 47m downhole in Table 1 Inferred Resources, Stavely and Ararat Projects Deposit Tonnes Copper % Gold g/t Silver g/t Contained Copper tonnes TGC.6 million 0.45 nil nil 47,000 Ararat 0.7 million ,000 The Fairview gold project is a 5km-long zone of elevated gold mineralisation, discovered by the Company in 2006 by soil sampling. Mineralisation comprises shallow gold mineralisation in sandstones and porphyry intrusions, and is open along strike and requires further drilling to establish resources. Best drillhole intersections to date include 4.6g/t and gold. An infill and extensional aircore drilling programme for the Thursdays Gossan Chalcocite (TGC) and Fairview Gold prospects, is underway, following lengthy rig mobilisation delays due to flooding in NSW. To date, 22 holes have been drilled at TGC and 8 holes at Fairview, with no assays received to date. Results are expected to be available during May and June and will be reported when available. A significant exploration budget is being prepared for the 2012/13 financial year to enable the company to advance these copper and gold assets. The Stavely exploration licence, EL4556 has been reduced in size and a further extension of term granted (see Fig 4 below). The relinquished ground is not believed to contain any significant potential for mineralisation. Figure 4 Stavely-Ararat Tenement plan and prospects 7

8 Figure 5 TGC Infill drilling completed to date, Plan view The Resource/Reserve Statements accurately reflect information compiled by Peter Hills in relation to Ore Reserves at the Tasmania Mine and Troy Lowien for Exploration Results and Mineral Resources at the Tasmania Mine and the Lefroy Project. Mr Hills is a full time employee of BCD Resources (Operations) NL, and at the time of estimation Mr Lowien was a full time employee of Coffey Mining Pty Ltd, and each has sufficient relevant experience in relation to the mineralisation being reported on to qualify as Competent Persons as defined in the Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves (The JORC Code, 2004). The Resource Statements for the Pinafore, Stavely and Ararat Copper deposits and the exploration results presented in this report accurately reflects information compiled under the supervision of Peter Thompson M.Sc, a full-time employee of BCD Resources NL, who is a Corporate Member of The Australasian Institute of Mining and Metallurgy and has sufficient relevant experience in relation to the mineralisation being reported on to qualify as a Competent Person as defined in the Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves (The JORC Code, 2004). Mr Thompson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 8

9 CORPORATE GOLD PRICING The BCD Resources Group currently is completely unhedged and all production from the Tasmania Mine is available for delivery at the spot price. The average gold price received during the quarter was A$1,620 per ounce. The policy concerning hedging is regularly reviewed. CASH POSITION Group cash and bullion despatched and included as revenue totalled A$4.4 million at 31 March Of this, A$3.1 million was held as environmental bonds or to guarantee employee entitlements. $9.7m was paid for redemption of convertible notes (see below). CORPORATE STRATEGY As indicated at the Nov 2011 AGM, the Company will transition in 2012 from an underground miner to a well-funded exploration company, whose principal assets will be cash from underground and tailings operations, the Victoria Copper and Gold project, and the processing plant at Beaconsfield. Further exploration and development of the Stavely/Ararat project is regarded as delivering better value to shareholders than a sale or joint venture of those assets. TASMANIA ROYALTY DISPUTE The BCD Resources group continued its proceedings in the Supreme Court of Tasmania to recover alleged overpayment of Tasmanian mining royalty totalling $2.6 million. These payments were made during the period 2003 to 2006 by the then receiver and manager of BCD and by the deed administrators of Allstate Explorations NL (now BCD Resources (Operations) NL). Discovery by all parties is now virtually complete, and the Company will now work towards mediation at an early date. CONVERTIBLE NOTES During the March quarter all outstanding secured convertible notes were redeemed from mine generated cash flow, requiring total payments of $9.68 million including interest. In April the Company s outstanding unsecured convertible notes were redeemed ($1.02 million including interest) ahead of the scheduled August 2012 redemption date. The Company is now debt-free, apart from a number of small equipment leases. BUYBACK OF SMALL AND UNMARKETABLE PARCELS The Company completed a small parcel buyback and top-up program in March to provide an opportunity for eligible small shareholders to sell their shareholding without incurring any brokerage or handling costs. The program was successful, with 145 shareholders topping up, and a significant reduction in small parcel holders reducing the Company s administrative costs. The total number of shareholders was reduced from 6,163 to 1,896. 9

10 APPENDIX QUARTERLY COMPARATIVES PRODUCTION June 2011 September 2011 December 2011 March 2012 Ore hoisted 60,524 tonnes 57,360 tonnes 59,204 tonnes 59,904 tonnes Ore treated 67,645 tonnes 57,542 tonnes 58,887 tonnes 56,571 tonnes Head Grade 6.5 g/t 6.8 g/t 7.4 g/t 7.0 g/t Gold treated 14,138 ounces 12,653 ounces 14,0 ounces 12,694 ounces Recovery * 81.1% 81.8% 88.1% 89.1% Gold produced 11,474 ounces,348 ounces 12,346 ounces 11,312 ounces * Recovery excludes movements of gold in circuit COSTS June 2011 September 2011 December 2011 March 2012 Cash cost $1,317 per ounce $1,398 per ounce $1,034 per ounce $911 per ounce Capital cost * $7 per ounce $53 per ounce $26 per ounce $33 per ounce Cash cost per tonne milled Revenue received $223 per tonne $251 per tonne $217 per tonne $182 per tonne $1,424 per ounce $1,631 per ounce $1,7 per ounce $1,620 per ounce All costs and revenues in Australian dollars Cash costs are calculated in accordance with former Gold Institute definitions, and include Tasmanian Government ad-valorem royalties and credit for by-product silver.