LAFAYETTE MINING LIMITED (ABN )

Transcription

1 LAFAYETTE MINING LIMITED (ABN ) Quarterly Report for the period ending 30 June 2007 HIGHLIGHTS Production of metal at Lafayette s 74% owned Rapu Rapu mine increased by 31% during the quarter with 1,721 equivalent tonnes of copper being produced including 689 tonnes of copper, 1,775 tonnes of zinc, 1,442 ounces of gold and 31,045 ounces of silver. Metal contained in 2,802 dry metric tonnes (DMT) of copper concentrate and 4,114 DMT of zinc concentrate, representing increases of 69% and 39% respectively, compared to production last quarter. Two bulk shipments of concentrate with a total provisional value of US$8,759,839 were dispatched to customers during the quarter. Funds totalling US$8,901,303 were received under the terms of a stockpile financing facility provided by offtaker, LG International. Four drill holes of a seven drillhole exploration program have been completed with all four encountering mineralisation (including17 metres grading 1.0% Cu, 1.4% Zn and 2.6 g/t Au) increasing potential for a westward strike extension of the mineralisation currently being mined in the Ungay Pit. Base and precious metals price hedge contracts maturing on 29 June 2007 were cash settled on 3 July 2007, and rescheduled respectively. Share Purchase Plan successfully completed raising the sum of $4,727,963 for working capital purposes.

2 PLANS FOR THE NEXT QUARTER Continue the ramp up of production at Rapu Rapu towards the goal of achieving steady state production of base and precious metals in concentrate at or above design levels of performance. This is expected to be achieved by the end of the September quarter or early in the December quarter. Continue shipping copper and zinc concentrate to offshore smelters. Complete the current seven drill hole exploration program and then evaluate results and formulate details of the next phase of exploration drilling targeting extensions of the existing mineralisation. Restructure project debt and hedging obligations with the aim of ensuring financial sustainability of the Rapu Rapu operation. Quarterly Report 30 June 2007 Page 2 of 16

3 1. Restoration of Rapu Rapu Project Infrastructure During the quarter, damage to project infrastructure caused by Supertyphoon Reming in late 2006, continued to be restored. By the end of the quarter, the only significant restoration work that is yet to be completed is the installation of an underground high voltage cable between the base metals plant and the lower tailings storage facility (this will replace an aerial cable that is susceptible to damage in high winds), and repairs to the caissons and the wharf deck. The concentrate outloading facility has been repaired and is functional (it was used to load two vessels in May 2007), however, subject to further technical studies, some modifications to this facility may be performed as part of the wharf restoration work in order to improve its operational efficiency. Despite a positive recommendation by our insurance broker to the underwriting panel that the Industrial All Risks insurance policy that was current at the commencement of Supertyphoon Reming should respond to our claim for damage, one of the four underwriters continues to deny the claim. As a consequence, the relevant project company may initiate adversarial settlement procedures available under the insurance policy in order to resolve the matter. Lafayette is confident that if such action is initiated, the matter will be satisfactorily resolved. 2. Commissioning of Rapu Rapu Base Metals Plant Commissioning of the base metals plant continued during the quarter. Some advances were made, however, operating performance as measured by plant throughput, recoveries and the quality of copper and zinc concentrate, was frustrated by lower than expected plant availability and a number of other technical issues. Site management developed, and is implementing, a specifically targeted Performance Improvement Plan aimed at expediting achievement of design levels of performance as soon as possible. As part of this Plan, the base metals plant was shut down for a period of 10 days in June during which time, liners in the SAG mill were replaced. This shutdown also provided an opportunity for other remedial work to be undertaken. The benefits of the Performance Improvement Plan started to become evident late in the quarter. In the period since the end of the quarter, overall plant performance has improved significantly and this trend is expected to continue with design levels of performance anticipated to be achieved by the end of the September quarter or early in the December quarter. 3. Production Mining During the quarter a total of 1,138,207 bcms of ore and waste material were moved including 57,180 bcms or 137,424 wet metric tonnes (WMT) of ore and 1,081,027 bcms of waste. Quarterly Report 30 June 2007 Page 3 of 16

4 Processing Ore feed to the base metals plant totalled 140,825 WMT during the quarter. Metal production amounted to 689 tonnes of copper, 1,775 tonnes of zinc, 1,442 ounces of gold and 31,045 ounces of silver, contained in 2,802 dry metric tonnes (DMT) of copper concentrate and 4,114 DMT of zinc concentrate, respectively. These results of are summarised below: Table 1: Production Statistics * Units Quarter ended 31 March 2007 Quarter ended 30 June 2007 Fiscal Year to 30 June 2007 Mining Waste + Ore bcm 448,782 1,138,207 3,297,771 Waste bcm 402,197 1,081,027 3,145,502 Ore bcm 46,585 57, ,269 tonnes 131, , ,411 Processing Ore Milled tonnes 135, , ,554 Grade Copper % Zinc % Gold g / t Silver g / t Products Copper Concentrate Quantity DMT 1,662 2,802 5,935 Grade Copper % Gold g / t Silver g / t Zinc Concentrate Quantity DMT 2,970 4,114 8,499 Grade Zinc % Contained Metal ** Copper tonnes ,460 Zinc tonnes 1,462 1,775 3,909 Gold ounces 1,276 1,442 3,013 Silver ounces 26,988 31,045 64,062 Copper Equivalent tonnes*** 1,309 1,721 3,712 * Represents 100% of project production ** Where metal is payable *** Based on average metal prices for month of June 2007 Quarterly Report 30 June 2007 Page 4 of 16

5 4. Marketing During the quarter, two bulk shipments of concentrate with a total provisional value of US$8,759,839 were loaded through our port facilities on Rapu Rapu Island and dispatched to offshore smelters. In each case, the concentrate was sold through our contracted offtaker, LG International, to customers in China and Korea respectively on spot terms that reflected the size and quality of the material shipped. Details of the shipments are as follows: Shipment No. Type of Concentrate Quantity (WMT) #1 Bulk Copper 3,404 #2 Bulk Zinc 5,054 Under stockpile financing arrangements with LG International advance payments of US$8,901,333 for the future sale of concentrates produced in the period from March to May 2007 were received by a project company. Since the end of the quarter, further invoices totalling US$1,143,452 have been issued against June 2007 production. During the quarter, the average LME copper price was US$7,636 per tonne while the average LME zinc price was US$3,666 per tonne. Precious metal prices were US$ per ounce for gold and US$13.33 per ounce for silver. 5. Exploration On 15 May 2007, a seven drillhole diamonddrill exploration program commenced with collaring of the first drill hole (UMW001). Since commencing the program, four holes have now been completed and the fifth is underway. The location in plan view and cross sections of the completed holes are shown in Figures 1, 2 and 3 which follow. These drillholes are targeting an interpreted westward strike extension of the mineralisation exposed in the Ungay Pit. The assay results from the four drill holes that have been completed are averaged over approximately one metre sampling intervals and are as follows: Hole ID From (m) To (m) Drilled width (m) Cu (%) Zn (%) Au (g/t) UMW UMW UMW UMW Quarterly Report 30 June 2007 Page 5 of 16

6 These results provide encouragement that extra economic mineralisation may be defined adjacent to the existing open pit. The drill program will continue in the September quarter. At the conclusion of the programme, the results will be assessed and a decision taken on the way forward. Figure 1. Plan showing locations of drill holes on western end of Ungay pit. Quarterly Report 30 June 2007 Page 6 of 16

7 Figure 2. Cross Section at 19200E showing the completed UMW004 and the planned UMW005. Quarterly Report 30 June 2007 Page 7 of 16

8 Figure 3 Cross Section at 19100E showing drill holes UMW0103. Quarterly Report 30 June 2007 Page 8 of 16

9 6. Financial Position The consolidated statement of cash flows for the Lafayette group is attached in the form of an Appendix 5B report. As at 30 June 2007, the consolidated cash balance of the Lafayette group was A$4.337 million a decrease of approximately A$5.586 million from the balance at the end of the previous quarter. At 30 June 2007, the group was a party to forward sales contracts for the following quantities of metal: Metal Quantity Average Forward Price (US$) Copper 11,250 tonnes 1,855 per tonne Zinc 13,775 tonnes 952 per tonne Gold 145,887 ounces 412 per ounce Silver 1,224,557 ounces 5.82 per ounce On a marktomarket basis, this total hedge position was out of the money in the amount of US$ million as at 30 June At 30 June 2007, the Lafayette group had outstanding senior and subordinated debt plus unsecured convertible notes totaling A$ million. The Lafayette group also had undrawn lines of credit totaling A$ million at the end of the quarter. 7. Corporate Finance Share Purchase Plan (SPP) On 3 May 2007, Lafayette announced the closure of its Share Purchase Plan. A total of 67,542,329 ordinary shares were subscribed for by shareholders at an issue price of 7 cents per share. Total consideration of A$4,727,963.03, was raised under the SPP. These funds are providing additional working capital which is required during the period of ramping up of production of metals by the Rapu Rapu base metals plant. Tranche C Senior Debt During the June quarter, US$ million was drawn under Tranche C of the senior debt facility for the purpose of cash settling base metals forward sales contracts that matured on 29 March 2007 and were settled on 2 April Since the end of the quarter, a further US$ million has been drawn under the senior debt Tranche C facility for application in the settlement of base metals hedges that matured on 29 June 2007 and were settled on 2 July Quarterly Report 30 June 2007 Page 9 of 16

10 8. Corporate Management Shareholders General Meeting On 8 June 2007, the Company convened a General Meeting of shareholders to consider a number of resolutions relating to the ratification of prior share issues, consideration of the adoption of an Employee Options Scheme and the issue of options to executive directors pursuant to this scheme. All resolutions considered by the meeting, were comprehensively approved by shareholders. Lafayette s Managing Director, Mr David Baker, provided shareholders with an update on progress of the restoration works following Supertyphoon Reming, commissioning of the base metals plant and concentrate shipments as well as ongoing community programs and initiatives developed in conjunction with the community groups in and around the mine site. Copies of the presentation and a subsequent Boardroomradio interview were lodged with the ASX and uploaded to the Company s website for review by stakeholders. Appointment of Director and Company Secretary On 3 May 2007, Lafayette announced that the Company s Chief Financial Officer, Mr Jeff Quartermaine, had accepted an invitation to join the Board of the Company as an executive director. Mr Quartermaine is a Certified Practising Accountant (CPA) and has professional qualifications which include a Master of Business Administration (MBA) degree and an undergraduate degree in civil engineering (BE). He has established an extensive track record of achievement over a 20 year period in the resources sector both in Australia and overseas. Following this appointment, Mr Quartermaine resigned as Company Secretary on 10 May 2007 and Mr Michel Stevering was appointed to this role. Mr Stevering currently serves as Group Finance Manager having joined the Company from PricewaterhouseCoopers in September Mr Stevering has an extensive background in audit and accounting following 10 years with PricewaterhouseCoopers in both the Netherlands and Australia where he has provided a range of professional services to a number of international mining and energy companies. Quarterly Report 30 June 2007 Page 10 of 16

11 Corporate Directory Directors Reginald Gillard (NonExecutive Chairman) David Baker (Managing Director) Jeff Quartermaine (Executive Director and Chief Financial Officer) Robin Widdup (NonExecutive Director) Carlos Dominguez (NonExecutive Director) Steve Wood (NonExecutive Director) Company Secretary Michel Stevering Registered and Administration Office Philippines Corporate Office Level 13 8 th Floor The Linden Suites 190 Queen Street 37 San Miguel Avenue Melbourne, Victoria 3000 Ortigas Center Telephone: +61 (0) Pasig City 1600 Facsimile: +61 (0) Telephone: +63 (0) info@lafayettemining.com Facsimile: +63 (0) Website: Share Registry Advanced Share Registry Services 110 Stirling Highway Nedlands, Western Australia 6009 Telephone: +61 (0) Facsimile: +61 (0) Stock Exchange Listings Australian SX: LAF Berlin Stock Exchange: Frankfurt OTC: LFY Cusip No Current Shareholders Top 20 Shareholders: 55% Lion Group: 17.7% (included in Top 20) Issued Share Capital As at 24 July 2007: 981,467,099 Share Price Movement April to June 2007: High: 9.0 cents Low: 4.4 cents Close: 4.7 cents Latest: 4.0 cents (24/07/2007) For further information, visit David Baker Managing Director Jeff Quartermaine Chief Financial Officer Kay Donehue Executive Assistant / Investor Relations Lafayette Mining Limited: +61 (0) Quarterly Report 30 June 2007 Page 11 of 16

12 Appendix 5B Mining exploration entity quarterly report Appendix 5B Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001. Rule 5.3 Name of entity LAFAYETTE MINING LIMITED ABN Quarter ended ( current quarter ) June 2007 Consolidated statement of cash flows Current quarter Year to date Cash flows related to operating activities (12 months) $A 000 $A Receipts from product sales and related debtors 9,859 13, Receipts (payments) from settlement of metal forward contracts (13,995) (48,715) 1.3 Payments for (a) exploration and evaluation (b) development (c) production (d) administration (e) inventories (5,747) (2,335) (1,112) (1,503) (18,498) (9,436) (4,489) 1.4 Dividends received 1.5 Interest and other items of a similar nature received Interest and other costs of finance paid (585) (3,083) 1.7 Income taxes paid (1) (13,880) (72,047) 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 (1,332) (4,898) (c)other fixed assets 1.10 Loans to associated entities RRMI and RRHI (10,082) (28,791) 1.11 Loans repaid by other entities 1.12 Other Purchase of Royalty Net investing cash flows (11,414) (33,689) 1.13 Total operating and investing cash flows (carried forward) (25,294) (105,736) + See chapter 19 for defined terms. 30/9/2001 Append

13 Appendix 5B Mining exploration entity quarterly report 1.13 Total operating and investing cash flows (brought forward) (25,294) (105,736) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 4,674 5, Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 18, , Repayment of borrowings (2,810) (3,240) 1.18 Dividends paid 1.19 Repayment of financial lease (549) (1,706) Net financing cash flows 19, ,240 Net increase (decrease) in cash held (5,814) (3,496) 1.20 Cash at beginning of quarter/year to date 9,923 7, Exchange rate adjustments to item Cash at end of quarter 4,337 4,337 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' Aggregate amount of payments to the parties included in item Aggregate amount of loans to the parties included in item , Explanation necessary for an understanding of the transactions Payments to Parties included in 1.3: Directors Fees & Superannuation 51 Fees paid to entities associated with Directors for provision of management services 611 Noncash 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 Not applicable 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 Not applicable Financing facilities available Add notes as necessary for an understanding of the position. Amount available $A 000 Amount used $A Loan facilities 176, , Credit standby arrangements + See chapter 19 for defined terms. 30/9/2001 Append

14 Appendix 5B Mining exploration entity quarterly report Estimated cash outflows for next quarter $A Exploration and evaluation * 4.2 Development * Total Please note that exploration and evaluation activities are performed by RapuRapu Minerals, Inc, which is an associate of the Company and therefore not included in the consolidated cash flow statement. Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Current quarter $A 000 Previous quarter $A Cash on hand and at bank 4,337 9, Deposits at call 5.3 Bank overdraft 5.4 Other (provide details) Total: cash at end of quarter (item 1.22) 4,337 9,923 Changes in interests in mining tenements 6.1 Interests in mining tenements relinquished, reduced or lapsed Tenement reference N/A Nature of interest (note (2)) N/A Interest at beginning of quarter Interest at end of quarter 6.2 Interests in mining tenements acquired or increased N/A N/A + See chapter 19 for defined terms. 30/9/2001 Append

15 Appendix 5B Mining exploration entity quarterly report 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. 7.1 Preference + securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions Ordinary securities Total number 969,785,773 Number quoted Issue price per security (see note 3) (cents) Amount paid up per security (see note 3) (cents) 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks Convertible debt securities (description) 67,542,329 8,000,000 $1 convertible notes, with a coupon of 10% expiring 30 September 2009, convertible to shares at 20 cps. 15,000,000 US$1 convertible notes, with a coupon of 10% expiring 26 February 2012 and 9 March 2012, convertible to shares at US$ cps 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted + See chapter 19 for defined terms. 30/9/2001 Append

16 Appendix 5B Mining exploration entity quarterly report 7.7 Options (description and conversion factor) 1,000, , , , ,300 4,500,000 1,500,000 1,000,000 15,714,286 1,000,000 4,285,714 3,000,000 8,428,572 10,571,428 15,000,000 27,003,618 15,000,000 91,164,190 Exercise price 9 cents 10 cents 12 cents 16 cents 20 cents cents 26 cents 13 cents 16.1 cents 13 cents 16.1 cents 10.2 cents 10.1 cents 9.6 cents 10.2 cents 11.1 cents 9.8 cents 10.6 cents Expiry date 01/07/ /07/ /07/ /07/ /07/ /07/ /07/ /03/ /01/ /07/ /04/ /04/ /04/ /04/ /04/ /04/ /05/ /08/ Issued during quarter 7.9 Exercised during quarter 7.10 Expired /cancelled during quarter 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only) 8,750, cents 08/06/ ,000 1,875, , cents 18 cents 20 cents 31/10/ /11/ /02/2010 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: 25 July 2007 Company secretary Print name: Michel GM Stevering + See chapter 19 for defined terms. 30/9/2001 Append