COLLULI POTASH PROJECT

Transcription

1 ASX Release 31 July 2013 Company Details ASX Code: STB Share Price $0.24 Market Cap $30M Shares on issue 128M Company options 18M Cash at Bank $14M Contact Details CEO Paul Donaldson Address Ground Floor, 31 Ventnor Avenue West Perth WA 6000 PO Box 970 West Perth WA 6872 Telephone Facsimile & Web Page info@southbouldermines.com.au Media Enquiries Read Corporate Paul Armstrong & Nicholas Read Telephone QUARTERLY REPORT for the period ending 30 June 2013 HIGHLIGHTS COLLULI POTASH PROJECT Binding term sheet agreement reached with the Eritrean National Mining Corporation ( ENAMCO ) regarding ENAMCO s participation in the development of the Colluli Potash Project. Definitive Feasibility Study continued during the Quarter with studies underway into processing a mixed feed of Sylvinite, Carnallite and Kainite, which has the potential to improve the financial returns from the Colluli Project. More highgrade sylvinite mineralisation intersected between Area A and Area B of the current resource. CORPORATE Mr Seamus Cornelius appointed as NonExecutive Chairman of South Boulder. Mr Flavio Garofalo appointed as Joint Company Secretary. Proposed demerger of nonpotash assets finalised during the quarter via an inspecie distribution of 100% of the shares in Duketon Mining to shareholders of South Boulder. Class Ruling received from the Australian Taxation Office in relation to the demerger of the nonpotash assets. Exercise price for existing unlisted options in South Boulder reduced following completion of the demerger of nonpotash assets. Strong cash position of $14.3M at Quarterend.

2 PIVOTAL AGREEMENT SIGNED ON COLLULI POTASH PROJECT South Boulder Mines (ASX: STB) ( South Boulder or the Company ) enjoyed an extremely successful June Quarter, during which it signed a highly significant binding term sheet agreement ( the Agreement ) with Eritrean National Mining Corporation ( ENAMCO ) regarding ENAMCO s participation in the Colluli Potash Project ( Project ). This pivotal agreement represents a major milestone in the development of the Project and provides significant certainty as to the economic and fiscal basis under which the Project can be developed. This certainty is expected to assist ongoing discussions with potential strategic investors. PROJECT SUMMARY To date, South Boulder has completed two studies on the Colluli Project to scoping level: ESS1 (which considered processing 1Mtpa of Sylvinite material only) in November 2011, and ESS2 (which considered processing 2Mtpa of Sylvinite and Carnallite) in November Details of both studies have previously been released to the ASX. A Definitive Feasibility Study ( DFS ) is currently being prepared focussing on the 1Mtpa production case processing Sylvinite ore. In March 2013, the Company extracted key elements from each of these studies (including the most uptodate findings from the DFS) in order to generate a staged development scenario ( SDM ) commencing at 1Mtpa and expanding to 2Mtpa two years after initial commissioning. The Company s current resource estimate, as previously published in November 2012, is summarised below: Occurrence Tonnes (Mt) Equivalent KCl Contained KCl (Mt) Sylvinite(KCl.NaCl) % 31 Polysulphate(K 2 SO 4.NaCl.MgSO 4.H 2 O) % 7 Carnallite(KCl.MgCl 2.H 2 O) % 38 Kainitite(KCl.MgSO 4.H 2 O) % 118 Total 1, % 194 Colluli JORCCompliant Mineral Resource Estimate by potash mineral The resource contains four different principal minerals. Sylvinite is the mineral from which potash is most commonly produced globally. The DFS initially concentrated on the Sylvinite and is where most of the work to date has been focussed. However, Kainite and Polysulphate, neither of which were considered in the initial development studies, are currently also considered to have longterm potential. This is partly because inclusion of Kainite would better utilise the resource and infrastructure, further reducing unit costs and improving project economics. An update on the impact of including all minerals within the Colluli Potash Project will be provided in the next Quarter. This will assist in confirming the optimum development path for the Project. ASX RELEASE JUNE 2013 QUARTERLY REPORT 2

3 PROJECT AGREEMENT During the Quarter, the Company announced a binding term sheet agreement with the Eritrean National Mining Corporation ( ENAMCO ) regarding ENAMCO s participation in the Colluli Potash Project. The key terms of the agreement are: ENAMCO and STB will each hold a 50% ownership interest in the Project through a newly formed company, Colluli Mining Share Company ( CMSC ); It is proposed that Project Development Costs for initial development will be funded 70% by debt and 30% by equity; To the extent that third party commercial debt is not available for 70% of Project Development Costs, STB will be required to provide the debt to CMSC on arms length commercial terms; The balancing 30% project equity required (including ENAMCO s 50% share) for initial Development Costs will be funded by STB. STB will be entitled to recoup 50% of this equity as a preferential payment from 50% of the Project cashflows that would have otherwise been available to all equity holders. As a result, until such time as the 50% of the equity contributed by STB on behalf of ENAMCO is repaid, STB will be entitled to receive 75% of all free distributable cashflows after debt service obligations; CMSC will have a Board of 5 being 3 members from STB and 2 from ENAMCO; and ENAMCO will provide a stabilisation agreement under which it bears the risk of adverse changes in the Eritrean fiscal regime for 10 years from first production. A binding term sheet has been executed by the parties and approved by the Government of the State of Eritrea, ENAMCO and the STB Board. The next step is for this term sheet to be documented, largely in the form of establishing CMSC and signing the associated agreements between ENAMCO and STB. A more detailed overview of the terms of the Agreement, its potential financial impact and STB s current activities are outlined below: Ownership and Board of CMSC STB and ENAMCO will incorporate a new Eritrean company, CMSC; ENAMCO and STB will each own 50% of the issued shares of CMSC; STB shall transfer its interest in the Project (primarily an exploration licence) to CMSC (without incurring any tax, stamp duty or other costs) and CMSC will own 100% of the Project; The Exploration Agreement between STB and the State of Eritrea shall be transferred to CMSC; CMSC will take over the exploration, development and operation of the Project; The Board of CMSC shall consist of 5 members, 3 appointed by STB and 2 appointed by ENAMCO; and CMSC will manage the Project through the Board and its own employees, with certain specified key decisions requiring the unanimous approval of both shareholders. Mining Agreement ENAMCO will support CMSC s efforts in negotiating a Mining Agreement with the State of Eritrea and the issuing of a mining licence within two years of entry into the CMSC Shareholders Agreement. Debt Funding CMSC will seek to borrow up to 70% of Development Costs (which includes STB costs to date) from a third party financier on commercial terms; ASX RELEASE JUNE 2013 QUARTERLY REPORT 3

4 To the extent the full 70% of Development Costs cannot be funded by externally sourced debt, it will be contributed by STB on market terms and conditions as agreed between ENAMCO and STB; and CMSC will provide security for debt funding. Equity Funding The required equity funds for 30% of Development Costs will be contributed by STB in respect of both its shares and ENAMCO's shares; Of equity funding, 50% shall be recouped as outlined below; Free cashflows available to equity holders after obligations to debt providers have been satisfied will be applied as follows: 50% to the repayment of the equity funds contributed by STB (until repaid); then The balance will be distributed to CMSC shareholders in proportion to their equity holdings. The equity contribution regime outlined above only applies to initial Development Costs. Equity funding for project development costs that may be required after first production shall be financed by CMSC either through its own internal cash or from debt funding decided upon by the Board (e.g. for expansions). Project Development Costs Preproduction development costs include all expenditure incurred for capital costs, exploration (including past exploration), financing costs/interest, working capital and all other funding required prior to first production ( Development Costs ). Fiscal Stabilisation ENAMCO will bear the risk of adverse impact on the economics of the Project or CMSC associated with a change to the fiscal regime in Eritrea for 10 years from first commercial production through a stabilisation agreement between ENAMCO and STB. EXPLORATION During the Quarter, the Company received assays for grade control holes and resource extension holes targeting sylvinite, carnallite and kainite mineralisation (see Figure 1). The assays returned highgrade and shallow potash mineralization (see Table A and Table B). Some of the best intersections from the grade control drilling (which only targeted the sylvinite and upper carnallite lithology s in the resource) included the following (see Figure 2): COL078: 2.75m of 32.76% KCl from 34.86m (including 44.85% KCl from 36.64m); 0.76m of 19.42% KCl from 37.61m COL080: 3.11m of 35.73% KCl from 36.00m (includes 39.39% KCl from 37.00m); 0.32m of 22.99% KCl from 39.11m COL081: 1.84m of % KCl from 32.24m; and 2.92m of 33.98% KCl from 37.78m (includes 41.47% KCl from 39.77m); 0.95m of 20.35% KCl from 40.70m ASX RELEASE JUNE 2013 QUARTERLY REPORT 4

5 COL082: 1.79m of 30.49% KCl from 32.94m; and 2.73m of 33.09% KCl from 39.00m (includes 37.54% KCl from 39.77m) COL084: 3.09m of 38.06% KCl from 35.91m (includes 40.44% KCl from 36.72m); 0.54m of 22.10% KCl from 39.00m COL087: 3.15m of 30.56% KCl from 33.73m (includes KCl from 34.70m); 0.53m of KCl from 36.87m COL090: 2.28m of 27.38% KCl from 28.92m (includes KCl from 29.86m); and 2.31m of 37.33% KCl from 35.30m (includes % KCl from 35.66m); 0.52m of 26.89% KCl from 37.61m Assays were also received for resource extension holes which were located outside of the current JORC/NI43101Mineral Resource Estimate. Holes (COL094 to COL097) were drilled in order to extend & define the southeastern extension of Area B. Some of the best intersections from the resource extension drilling included the following (see Figure 3): COL093: 12.89m of 14.93% KCl from 44.37m (includes 17.67% KCl from 51.13m); and 12.76m of 16.05% KCl from 57.26m (includes 21.30% KCl from 64.92m) COL095: 2.50m of 26.60% KCl from (includes 34.11% KCl from 42.65m); 0.99m of 21.58% KCl from 48.41m; 2.93m of 14.05% KCl from 49.40; 10.88m of 18.95% KCl from 52.33m; (includes 23.58% KCl from 58.62m) COL097: 2.61m of 31.06% KCl from 48.23m; 0.73m of 17.16% KCl from 50.84m; 0.88m of 13.33% KCl from 54.00m; 7.11m of 22.09% KCl from 54.88m Adequate drilling has now been completed for the Feasibility Study and, as a result, drilling activities are being wound down. CORPORATE CASH Consolidated cash on hand as at 30 June 2013 was $14.3 million. ASX RELEASE JUNE 2013 QUARTERLY REPORT 5

6 EQUITY Share Capital During the Quarter, there was no movement in the Company s issued capital. Total issued capital at the end of the Quarter was 127,952,826 ordinary fully paid shares. Options The exercise price for each existing South Boulder option was reduced during the Quarter by the same amount as the amount returned in relation to each South Boulder share (being 5.1 cents) under the inspecie distribution of Duketon Mining Limited shares to South Boulder shareholders, completed on 15 April The number of STB options on issue has not changed as a result of the inspecie distribution and the adjustment to the exercise price of South Boulder options is set out in the table below: Option Expiry Date Number of Options Exercise Price (original) Exercise Price (adjusted) 31 July ,950,000 $0.35 $ June ,600,000 $0.20 $ July ,450,000 $1.50 $ March ,250,000 $2.00 $ June ,800,000 $0.75 $ November ,000 $1.50 $ November ,000 $2.00 $ January ,000 $0.65 $ January ,000,000 $0.70 $ January ,300,000 $1.00 $0.949 Performance Rights The South Boulder Mines Ltd Performance Rights Plan was approved at the 2011 Annual General Meeting. The purpose of the Plan is to provide recognition to employees of the Company and its subsidiaries for their continued and ongoing support of the Company. A total of 1,397,000 Performance Rights were outstanding at the end of the Quarter. DUKETON MINING LTD The demerger of the Company s nonpotash assets was implemented on 15 April 2013 via an inspecie distribution of 100% of the shares in Duketon Mining Ltd to South Boulder shareholders. The Company received a Class Ruling from the Australian Taxation Office ( ATO ) confirming the taxation implications for shareholders. The Class Ruling, CR 2013/37, states that the ATO accepts a reasonable apportionment of the shareholders existing cost base is 85.36% to South Boulder shares and 14.64% to Duketon shares. The Class Ruling only applies to South Boulder shareholders who held their shares in South Boulder on capital account and are residents of Australia for income tax purposes. ASX RELEASE JUNE 2013 QUARTERLY REPORT 6

7 South Boulder shareholders should refer in detail to the Class Ruling and are advised to seek their own independent professional advice for further clarification and the specific income tax consequences of the Demerger for them. A copy of the Class Ruling CR 2013/37 is available from the ATO s website. EXECUTIVE MANAGEMENT CHANGES Subsequent to the Quarterend, the Company announced the appointment of Seamus Cornelius as Nonexecutive Chairman and Flavio Garofalo as Joint Company Secretary in addition to his role as Chief Financial Officer. Mr Cornelius replaces Terry Grammer, who has resigned to focus on his other corporate positions. Mr Cornelius is a corporate lawyer and former partner of one of Australia s leading international law firms. He specialised in crossborder transactions, particularly in the resources sector. Mr Cornelius has been based in Shanghai and Beijing since 1993 and brings more than 20 years of corporate experience in legal and commercial negotiations. He has also advised global companies on their investments in China and in recent years advised Chinese Stateowned entities on their investments in overseas resource projects. Mr Grammer has been Nonexecutive Chairman of South Boulder since October 2007 and assisted the Company in early exploration activities at the Colluli Potash Project in Eritrea. The Board wishes Mr Grammer well in his future endeavours. STOCK EXCHANGE LISTINGS South Boulder is listed on the Australian, Frankfurt, Munich and Berlin Stock Exchanges. The relevant codes are ASX: STB, SO3.F, SO3.MU and SO3.BE respectively, and can be accessed via Yahoo Finance. In addition a Sponsored American Depository Receipt (ADR) Program has been established to create a broader secondary market for South Boulder equities particularly, in the United States and Canada, thereby providing better access for North American investors to trade in STB securities. The ADR s will be tradeable via licensed U.S. brokers in the ordinary course of trading in the OverThe Counter (OTC) Market in the U.S. STB has appointed The Bank of New York Mellon (BNYM) as its authorised U.S. representative, Principal American Liaison (PAL) and Depository Bank to establish the ADR facility. Particulars for the U.S. sponsored ADR program is as follows: U.S. Exchange: OTC Ticker Symbol: SBMSY CUSIP Number: DR ISIN Number: US ADR to Ordinary Share Ratio: 1:1 The establishment of the ADR program is the first step in listing STB on the OTCQX Exchange in the U.S. Participation in the ADR program is aimed to increase STB s exposure and visibility in key markets that have a strong understanding of the potash industry. ASX RELEASE JUNE 2013 QUARTERLY REPORT 7

8 More information: Website: South Boulder Mines Limited: Telephone ABN: Mr Paul Donaldson CHIEF EXECUTIVE OFFICER About South Boulder Mines Ltd South Boulder is an ASXlisted (ASX: STB) resources company currently developing the emerging, worldclass Colluli Potash Project located in Eritrea, Africa. The Colluli Potash Project is located in the Danakil Depression region of Eritrea ~65km from the coast comprising 906km².South Boulder Mines Limited has been actively exploring for potash at the Colluli Potash Project in Eritrea since The project comprises of a significant 906km² area and Colluli is the world s shallowest potash deposit (starting at 16m), facilitating the low capex open pit mining and favourably positioned to supply the world s fastest growing markets. The JORC/NI43101 Compliant Mineral Resource Estimate for the flagship Colluli Potash Project now stands at 1.08 billion 18% KCl for 194Mt of contained potash. Substantial project upside exists in higher production capacity and market development for other contained products. Engineering Scoping Study (ESS) results were favourable, proving that an economic 2Mt p.a. potash mine can be built at a materially lower cost than typical potash development. The startup capital cost for Colluli is one of the lowest in the industry; couple this with cheap expansion capability via open pit mining methods, excellent infrastructure and location, and it becomes even more attractive, ensuring South Boulder gains a high level of investment interest for the long term. South Boulder Mines Ltd is working steadily towards developing the world s first, modern, open pit potash mine. Competent Persons and Responsibility Statement The Colluli Potash Project has a current JORC/NI43101 Compliant Measured, Indicated and Inferred Mineral Resource Estimate of 17.97% KCl or 11.35% K2O (total contained potash of Mt KCl or Mt K2O). The resource contains 17.94% KCl or 11.33% K2O of Measured Resources, 17.98% KCl or 11.36% K2O of Indicated Resources and 18.00% KCl or 11.37% K2O of Inferred Resources. The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Greg Knox using estimates supplied by South Boulder Mines Ltd under supervision by Ercosplan. Dr Henry Rauche and Dr Sebastiaan Van Der Klauw are coauthors of the JORC and NI43101 compliant resource report. Greg Knox is a member in good standing of the Australian Institute of Mining and Metallurgy and Dr.s Rauche and Van Der Klauw are members in good standing of the European Federation of Geologists (EurGeol) which is a Recognised Overseas Professional Organisation (ROPO). A ROPO is an accredited organisation to which Competent Persons must belong for the purpose of preparing reports on Exploration Results, Mineral Resources and Ore Reserves for submission to the ASX. Mr Knox,Dr Rauche and Dr Van Der Klauw are geologists and they have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they have undertaken to qualify as a Competent Person as defined in the 2004 Edition of the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Knox, Dr Rauche and Dr Van Der Klauw consent to the inclusion in the report of the matters based on information in the form and context in which it appears. Quality Control and Quality Assurance South Boulder Exploration programs follow standard operating and quality assurance procedures to ensure that all sampling techniques and sample results meet international reporting standards. Drill holes are located using GPS coordinates using WGS84 Datum, all mineralisation intervals are downhole and are true width intervals. Assay values are shown above a cutoff of 6% K2O. The samples are derived from HQ diamond drill core, which in the case of carnallite ores, are sealed in heat sealed plastic tubing immediately as it is drilled to preserve the sample. Significant sample intervals are dry quarter cut using a diamond saw and then resealed and double bagged for transport to the laboratory. Halite blanks and duplicate samples are submitted with each hole. Chemical analyses were conducted by KaliUmwelttechnik GmBH Sondershausen, Germany utilising flame emission spectrometry, atomic absorption spectroscopy and ionchromatography. Kali Umwelttechnik (KUTEC) Sondershausen1 have extensive experience in analysis of salt rock and brine samples and is certified according by DIN EN ISO/IEC by the Deutsche Akkreditierungssystem Prüfwesen GmbH (DAR). The laboratory follow standard procedures for the analysis of potash salt rocks chemical analysis (K+, Na+, Mg2+, Ca2+, Cl, SO42, H2O) and Xray diffraction (XRD) analysis of the same samples as for chemical analysis to determine a qualitative mineral composition, which combined with the chemical analysis gives a quantitative mineral composition. ASX RELEASE JUNE 2013 QUARTERLY REPORT 8

9 Table A: Colluli Project table of drill hole collar details and results: Area A Hole No. East (m) North (m) RL (m) Azi. (degr.) Dip (degr.) E.O.H. From To Interval (m) KCl (%) Comment COL Area A Sylvinite (Grade control hole) Includes Area A Sylvinite (Grade control hole) Includes Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) Area A Sylvinite (Grade control hole) Includes OR Includes Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) Area A Sylvinite (Grade control hole) Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) Includes Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) Area A Sylvinite (Grade control hole) Includes Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) Area A Sylvinite (Grade control hole) Includes COL Area A Sylvinite (Grade control hole) Includes Area A Sylvinite (Grade control hole) Includes Area A Carnallite (Grade control hole) ASX RELEASE JUNE 2013 QUARTERLY REPORT 9

10 Table A: Colluli Project table of drill hole collar details and results: Area A (cont d) Hole No. East (m) North (m) RL (m) Azi. (degr.) Dip (degr.) E.O.H. From To Interval (m) KCl (%) Comment COL Area A Sylvinite (Grade control hole) Includes Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) COL Area A Sylvinite (Grade control hole) Includes Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) Area A Sylvinite (Grade control hole) Includes Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) Includes Area A Sylvinite (Grade control hole) Includes Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) Area A Carnallite (Grade control hole) COL Area A Sylvinite (Grade control hole) ASX RELEASE JUNE 2013 QUARTERLY REPORT 10

11 Table B Colluli Project table of drill hole collar details and results: Area B Hole No. East (m) North (m) RL (m) Azi. (degr.) Dip (degr.) E.O.H. From To Interval (m) KCl (%) Comment COL093A New Area Carnallite (Resource Confirmation hole) Includes New Area Kainite (Resource Confirmation hole) Includes COL Area B Carnallite (Resource extension hole) Area B Kainite (Resource extension hole) COL Area B Sylvinite (Resource extension hole) Includes Area B Kainite (Resource extension hole) Area B Carnallite (Resource extension hole) Area B Kainite (Resource extension hole) Includes COL Area B Kainite (Resource extension hole) COL Area B Sylvinite (Resource extension hole) Area B Kainite (Resource extension hole) Area B Carnallite (Resource extension hole) Area B Kainite (Resource extension hole) ASX RELEASE JUNE 2013 QUARTERLY REPORT 11

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15 Appendix 5B Mining exploration entity quarterly report Appendix 5B Rule 5.3 Mining exploration entity quarterly report Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10 Name of entity South Boulder Mines Limited ABN Quarter ended ( current quarter ) June 2013 Consolidated statement of cash flows Cash flows related to operating activities Current quarter $A 000 Year to date (12 months) $A Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration (907) (238) (10,115) (1,545) 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net Operating Cash Flows (1,005) (10,677) 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 (13) (4) (181) (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows (13) (136) 1.13 Total operating and investing cash flows (carried forward) (1,018) (10,813) 49 + See chapter 19 for defined terms. 17/12/2010 Appendix 5B Page 1

16 Appendix 5B Mining exploration entity quarterly report 1.13 Total operating and investing cash flows (brought forward) (1,018) (10,813) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 4, Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) payment to Duketon Mining Ltd per inspecie distribution (1,000) (1,000) Net financing cash flows (1,000) 3,785 Net increase (decrease) in cash held (2,018) (7,028) 1.20 Cash at beginning of quarter/year to date 16,278 21, Exchange rate adjustments to item Cash at end of quarter 14,260 14,260 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 Item 1.2 includes aggregate amounts paid to directors including salary, directors fees, consulting fees and superannuation. 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 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 Financing facilities available Add notes as necessary for an understanding of the position. Amount available Amount used $A 000 $A Loan facilities Nil Nil 3.2 Credit standby arrangements Nil Nil + See chapter 19 for defined terms. Appendix 5B Page 2 17/12/2010

17 Appendix 5B Mining exploration entity quarterly report Estimated cash outflows for next quarter $A Exploration and evaluation 1, Development 4.3 Production 4.4 Administration 187 Total 1,978 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 Deposits at call 13,789 15, Bank overdraft 5.4 Other (provide details) Total: cash at end of quarter (item 1.22) 14,260 16,278 Changes in interests in mining tenements 6.1 Interests in mining tenements relinquished, reduced or lapsed Tenement reference Nature of interest (note (2)) Refer ANNEXURE A Interest at beginning of quarter Interest at end of quarter 6.2 Interests in mining tenements acquired or increased + See chapter 19 for defined terms. 17/12/2010 Appendix 5B Page 3

18 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. Total number Number quoted Issue price per security (see note 3) (cents) 7.1 Preference + securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions Ordinary securities 127,952, ,952,826 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) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options (description and conversion factor) 1,950,000 1,600,000 5,450,000 1,250,000 3,800, , , ,000 1,000,000 1,300,000 Exercise price $0.299 $0.149 $1.449 $1.949 $0.699 $1.449 $1.949 $0.599 $0.649 $0.949 Expiry date 31/07/ /06/ /07/ /03/ /06/ /11/ /11/ /01/ /01/ /01/ Issued during quarter 1,397,000 Performance Rights 7.9 Exercised during quarter 7.10 Expired during quarter 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only) + See chapter 19 for defined terms. Appendix 5B Page 4 17/12/2010

19 Appendix 5B Mining exploration entity quarterly report 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 5). 2 This statement does /does not* (delete one) give a true and fair view of the matters disclosed. Sign here: Date: 31 July 2013 (Company Secretary) Print name: Flavio Garofalo 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 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 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 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting 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. == == == == == + See chapter 19 for defined terms. 17/12/2010 Appendix 5B Page 5

20 Appendix 5B Mining exploration entity quarterly report ANNEXURE A Tenement Nature of interest % at beginning of quarter % at end of quarter Interests in mining E38/1511 Registered Holder tenements relinqished, E38/1535 Registered Holder reduced or lapsed E38/1537 Registered Holder E38/1800 Registered Holder E38/1979 Registered Holder E38/2177 Registered Holder E38/2206 Registered Holder E38/2231 Registered Holder E38/2255 Registered Holder E38/2397 Registered Holder E38/2614 Registered Holder E38/2649 Registered Applicant E38/2660 Registered Applicant E38/2661 Registered Holder E38/2666 Registered Holder E38/2686 Registered Applicant E38/2697 Registered Applicant E38/2699 Registered Holder E38/2714 Registered Applicant E38/2716 Registered Applicant E38/2717 Registered Applicant E38/2730 Registered Holder E38/2731 Registered Holder E38/2736 Registered Applicant E38/2737 Registered Applicant E38/2738 Registered Holder E38/2767 Registered Applicant E38/2781 Registered Applicant E38/2782 Registered Applicant E38/2803 Registered Applicant E38/2804 Registered Applicant E38/2805 Registered Applicant E38/2807 Registered Applicant E38/2811 Registered Applicant E38/2812 Registered Applicant E38/2819 Registered Applicant E38/2834 Registered Applicant E38/2835 Registered Applicant L38/33 Registered Holder L38/174 Registered Holder M38/330 Registered Holder M38/1252 Registered Holder P38/3893 Registered Holder P38/3897 Registered Holder P38/3984 Registered Holder P38/4028 Registered Holder P38/4029 Registered Holder P38/4030 Registered Holder P38/4031 Registered Holder P38/4032 Registered Holder P38/4033 Registered Holder P38/4034 Registered Holder P38/4035 Registered Holder P38/4067 Registered Applicant E45/3259 Registered Applicant E45/3984 Registered Applicant E45/4047 Registered Applicant E69/2558 Registered Applicant E38/2762 Registered Applicant E15/1188 Registered Holder E26/132 Registered Holder E08/2302 Registered Holder 20 0 E08/2303 Registered Holder 20 0 E08/2322 Registered Holder 20 0 E08/2411 Registered Holder 20 0 E08/2423 Registered Holder 20 0 E08/2424 Registered Holder 20 0 E45/2375 Registered Holder 10 0 E45/2768 Beneficial interest 100% tin rights 0 + See chapter 19 for defined terms. Appendix 5B Page 6 17/12/2010