Quarterly Activities Report and Appendix 5B

Transcription

1 1For personal use only Highlights: Ngualla Project Bankable Feasibility Study on track f Further key work programs were successfully completed during the quarter and detailed engineering studies are well advanced. f The Bankable Feasibility Study (BFS) is on track for completion late in the first quarter or early in the second quarter of Final Pilot Plant successfully completed f The third and final Pilot Plant campaign was successfully completed, confirming the feasibility of Peak s three stage processing flowsheet and providing valuable engineering data for the BFS. f The Pilot Plant demonstrated the selective leach recovery stage flowsheet to be robust, delivering high recoveries (>90%) of the target magnet metals neodymium and praseodymium ( NdPr ) along with low dissolution of cerium and gangue elements. f The selective leach process is a key factor in Ngualla s low operating and capital costs and aligns the final products to the high demand magnet metal rare earth market. Rare Earth refinery site selected in United Kingdom f Following an extensive global search Peak has selected Tees Valley in the UK as the location for a rare earth refinery. f Tees Valley, an existing industrial park close to ports and bulk low cost reagent supplies also offers plug and play utilities including environmentally sustainable options for tailings and effluent disposal. Engagement with potential strategic partners f The Company continued to proactively engage with a number of potential strategic partners. This included but was not limited to evaluating potential additional routes to market to provide the Company with maximum flexibility and options related to today s market environment. f Joint technical evaluation of these options is continuing, with follow up discussions expected to take place in the second quarter of China to restrict rare earth production, refining and raw material exports f China s Ministry of Industry and Information Technology released the five year Rare Earth Industry Development Plan ( ) in October. Key policy elements will effectively promote the development of new rare earth production outside of China. f Targets to be achieved by 2020 include restrictions on rare earth mining output and the grant of new mining rights in China, a 33% reduction in solvent extraction refining capacity, increased profit margins and a reduction in the export of primary rare earth raw materials from China. Project Environmental Permit Application f The environmental permitting process in Tanzania continues to advance with the lodgement of the final stage Environmental and Social Impact Assessment ( ESIA ) report to regulatory authorities. $1.8 million R&D rebate received f A rebate of $1.8 million was received for the 2015/2016 financial year claim. The rebate is for work completed in developing the metallurgical process for the Ngualla Rare Earth Project. f The Company is fully funded for completion of the BFS. DECEMBER 2016 Quarterly Activities Report and Appendix 5B Developing the Ngualla Project into an ethically sustainable long term high quality supplier of choice to the global high technology rare earth market DIRECTORS Non-executive Chairman: Peter Harold Managing Director: Darren Townsend Technical Director: Dave Hammond Non-Executive Directors: Jonathan Murray John Jetter Company Secretary: Graeme Scott CORPORATE DETAILS AS AT 31 DEC 2016: Ordinary Shares on issue: 477.5m 52 week range: 4.2c 9.0c Market Cap: $31.5m (at 6.6c) ASX: PEK PEAK RESOURCES LIMITED Ground Floor, 5 Ord St West Perth, WA ACN Tel: info@peakresources.com.au

2 PEAK RESOURCES LIMITED... f is developing a truly world class neodymium asset critical for the increasing demand for high strength and lightweight magnets f is the only rare earth developer who has deep in-house rare earth manufacturing and sales expertise and has infused this real world know-how into the engineering design and BFS f has de-risked the mine to product supply chain through extensive pilot plant operation and testing (>$4 million) combined with real life operational know how and rare earth expertise f track record demonstrates a steady, conservative and deliverable approach f has a good understanding of who the customers are and their requirements f management team is well connected in the industry and has the capability to build out the business team to deliver quality products with a reliable supply chain We do what we say. And what we do is based on real world experience AUTOMOBILE ELECTRIFICATION AND GREEN ENERGY GENERATION ARE PREDICTED TO DRIVE A SURGE IN DEMAND FOR THE MAGNET METALS NEODYMIUM AND PRASEODYMIUM. Battery System: Lithium-Ion Drivetrain: Permanent Magnet Rare Earth Motor The Company is positioning Ngualla as one of the very few ready to go rare earth projects able to meet the expected surge in demand for the magnet metals neodymium and praseodymium from electric vehicles and green energy applications. 2 Source: - For illustrative purposes only.

3 Bankable Feasibility Study on track Detailed engineering studies for the Ngualla Rare Earth Project are well advanced and the BFS remains on track for completion late in the first quarter or early in the early second quarter of Key work programs successfully completed during the December 2016 Quarter included the third and final Pilot Plant campaign on the important selective leach recovery process, and the selection of a site in the Tees Valley industrial park in the United Kingdom for a rare earth refinery. Remaining work programs to be finalised in coming weeks include the receipt of final pricing data for some major plant and equipment components, results from metallurgical variability confirmation programs for the successive phases of mining and access road engineering and costings. Final Pilot Plant Complete Peak announced the successful completion of the final Pilot Plant of the Company s three stage process (Figure 1) in October 2016, confirming the preliminary results reported in the September 2016 Quarterly report. Run of mine ore Piloted Piloted Piloted Beneficiation Leach Recovery Separation Rare Earth Oxide and Carbonate Products Figure 1: Pilot Plants status of the three stage process developed by Peak for Ngualla s rare earth mineralisation. The Leach Recovery Pilot Plant uses the selective leach process developed by Peak and summarised in Figure 2. Concentrate Roast and Water Wash HCI Selective Leach Solution Purification Rare Earth Chloride Solution Separation Plant - Cerium rejection - Flourine removal - Iron removal - Insoluble gangue Figure 2: Simplified overview of Peak s Leach Recovery flowsheet piloted at ANSTO. Two tonnes of concentrate with a grade of >40% rare earth oxide (REO) produced during the successful Beneficiation Pilot Plant program completed at the end of 2015 was sent to ANSTO s dedicated piloting facility near Sydney. Final results received during the Quarter from the processing of the concentrate via the roast, water wash and selective leach stages show extraction of >90% of the targeted NdPr whilst minimising cerium and iron extraction (Figure 3). The subsequent purification (Figure 4) resulted in a high grade, high purity rare earth solution suitable for direct feed to a solvent extraction (SX) separation circuit. Figures 3 and 4: The Selective Leach and Purification circuits at ANSTO s dedicated pilot facility. 3

4 Ancillary thickening and filtration test programs were also completed by vendors on a series of samples during the pilot plant operation to collect data for engineering design, equipment selection and cost estimations. Waste characterisation test work was also undertaken according to European standard procedures and confirmed all plant solid wastes are classified as stable and non-reactive. The selective leach process is a key factor in Ngualla s low operating and capital costs and in aligning the final products to the high demand magnet metal rare earth market. Reagent costs are significantly reduced by minimising the dissolution of impurities and low value cerium whilst maximising the recovery of the high value magnet metals neodymium and praseodymium. The depleted cerium stream reporting to separation reduces the size, and therefore cost, of the downstream SX separation circuit. The selective leach recovery flow sheet (Figure 2) also has advantages over other processes in that it reduces operational risk. The kiln design and operation is simple as the roasting stage is dry and acid free. The leaching process uses a low strength hydrochloric acid at modest temperatures, which can be undertaken in low cost fibreglass reinforced plastic tanks. The final stage of purification is accomplished by simple ph control using lime slurry followed by thickening and filtering to remove dissolved impurities prior to SX separation. Essentially, the entire circuit after roasting uses standard industry equipment consisting of plastic tanks, pumps and filters. European Rare Earth Refinery site selection After an extensive worldwide location search completed with input from consultants Worley Parsons, Deloitte and AmecFW, Peak has selected a site for its proposed Rare Earth Refinery at Tees Valley on the north east coast of the United Kingdom. The main focus for the study was on operating and capital costs, which are primarily driven by the availability of bulk lower cost reagents A location with ready access to cheap bulk reagent supplies (particularly hydrochloric acid and caustic soda), global shipping, readily available power, water, environmentally sustainable options for tailings disposal and a skilled work force is essential to be cost competitive. Wilton International Site in Tees Valley near the town of Middlesbrough in the United Kingdom is a large scale industrial park offering a plug and play option (Figures 5 and 6) with existing access to reliable competitively priced power, utilities and services. Wilton is the planned home of UK listed Sirius Minerals Plc s US $237 million materials handling and port facility for its polyhalite fertiliser project. Wilton is also located within 3km of the Teesport, a deep water port where the rare earth mineral concentrate will be shipped, and close to a number of facilities that are capable of managing the tailings from the process. Figure 5: Location of rare earth refinery site and associated infrastructure in Tees Valley, UK. The major operating costs of the Refinery are reagents. The current cost of hydrochloric acid at Tees Valley, our primary reagent, is approximately 40% below the indexed cost seen in the gulf coast of the United States over the past 5 years. Likewise, the competitive local cost for utilities including power, steam, water and natural gas also make this site attractive. 4

5 PLUG AND PLAY SITE Water Potable Water Demineralised Water Raw Water Fire Water supply Water Storage supply Industrial wastewater treatment capability On-site Logistics & Services Land Service corridors Building and land lease Roads infrastructure Port 5th largest port in the UK with 40 million tonnes of cargo p.a CENTRALISED UTILITIES INDUSTRIAL SITE CUSTOMERS Energy Power generation Process steam production and distribution Natural Gas supply EW (in development) Utilities Compressed air Bulk nitrogen storage Labour Availability of highly skilled workforce with chemical plant experience Figure 6: Wilton, Tees Valley. A Plug and Play solution close to European markets. Peak, through its majority owned associated company Peak African Minerals has agreed an option fee of 60,000 for a 24 month option agreement to purchase the 16.3 hectare site with the United Kingdom s Homes and Communities Agency. A consultant has been appointed to assist with the preparation and submission of the planning application for the selected site. An ecological survey has been completed over the preferred site, where no major ecological concerns were observed. Engagement with potential strategic partners The Company is evaluating a number of options from direct sale of rare earth concentrate, toll treatment through third party facilities as well as the base case of the establishment of a refinery in Tees Valley. To this end, the Company continued to proactively engage with a number of potential strategic partners during the Quarter. Joint technical evaluation of these options is continuing, with follow up discussions expected to take place in the second quarter of China to restrict rare earth production, refining and raw material exports In response to China s 13th Five Year Plan, China s Ministry of Industry and Information Technology on 18th October 2016 released the Rare Earth Industry Development Plan ( ). Key targets set to be achieved by 2020 include: f restriction of rare earth mining output to no more than 140,000 tonnes REO per year f no new mining rights to be issued to companies other than the selected six State Owned Enterprises f total China solvent extraction refining capacity to be cut by 33% to 200,000 tonnes REO per year f rare earth industry profit margins to increase 12 percent f increase high end downstream rare earth product market penetration from 25% to 50% f improve environmental compliance from 40% to 90% for rare earth operations f reduce export of primary rare earth raw materials from 57% to 30% of total Chinese rare earth export Combined with the demand drivers for the magnet metals neodymium and praseodymium of increased automobile electrification and green energy generation, these internal China policies and the targeted expansion of high value downstream industry applications may well lead to China becoming a net importer of NdPr by A component of China s Rare Earth Industry Development Plan ( ) is to encourage the use and development of offshore rare earth resources and strengthen international co-operation. 5

6 Ngualla Project Permitting The Company continues to advance the permitting process for the Ngualla Rare Earth Project in Tanzania. The final step in the application process (Figure 7) for an Environmental Certificate, the Environmental and Social Impact Assessment (ESIA) Report, was completed and the report submitted to the Tanzanian regulators National Environmental Management Council in December. Project Registration Scoping Study Terms of Reference Baseline Studies & Consultation Community Programs The Company places great importance on the active and positive relationship it maintains with the communities in which it operates and is committed to assisting with the improvement of those communities whilst maintaining best practise environmental management. Draft ESIA Report NEMC TAC Review Final ESIA Report Dec 2016 Prior to the closure of the Ngualla camp for the rainy season in December 2016, the Company handed over community projects completed during the year. These projects had been identified as the highest priority by the local Community and District earlier in the year. The handover ceremony was attended by the Songwe District Commissioner, the Honourable Mr Samwel Jeremiah (Figure 8). Environmental Certificate Figure 7: Stages and status of the Tanzania regulatory environmental permitting process for Ngualla. An Environmental Certificate is required for the grant of a Mining Licence. Individual works completed during 2016 included the rehabilitation of an Ngwala Primary School teacher s house and the construction of a pair of new teachers houses (Figure 9) at the Ngwala Magereza (sub village) Primary School and assistance with the rehabilitation of parts of the Ngwala village water supply system. Additional projects completed in 2016 included maintenance and improvements to the village airstrip and the provision of storage facilities for medicines at the Ngwala village dispensary. The Company also sponsored the Farmers Day Sports Tournament and made a contribution of 1,300 corrugated iron sheets for Regional education construction projects. Figure 8 and 9: Songwe District Commissioner, the Honourable Mr Samwel Jeremiah opening the pair of teachers houses built by Peak at Magareza Primary School near the Ngwala. 6

7 $1.8 million R&D rebate On 22nd December the Company announced receipt of the research and development (R&D) rebate for work completed in developing the metallurgical process for Ngualla. The rebate amount of $1.8 million was received for the 2015/2016 financial year claim. Corporate Structure and Cash on Hand During the Quarter the Company issued a total of 22,981,097 fully paid shares, with 16,306,957 to Appian and IFC as a placement of the Entitlements Issue shortfall, to raise $815,348 and 6,674,140 to IFC on conversion of convertible notes at 10.3c per Peak share. The issue of the above shares results in Appian holding a 16.12% shareholding in Peak and IFC a 6.67% shareholding interest in Peak. An additional $1.8 million R&D rebate (see above) was received in December. Peak s Annual General Meeting was held on 16th November 2016, with all resolutions put to the meeting passed. 1,000,000 unlisted options were issued during the quarter following shareholder approval at the AGM. The corporate structure as at the 31 December 2016 was: ASX: PEK Ordinary Shares on Issue: million Cash at hand: $5.08 million^ (Peak Resources Limited only) Appian Debt (due September 2019): US$3.28 million 52 week range: 4.2c 9.0c* Market Cap: $31.5m (at 6.6c) Unlisted Performance Rights: 8 million# Unlisted Options outstanding: 36.4 million# (exercise prices A$0.10 to A$0.55) Liquidity: million shares per day (average over 3 months**) * From 01 January 2016 to 31 December ** Average from 1 October 2016 to 31 December 2016 # some subject to performance and vesting criteria. ^PAM, 75% PEK ownership, also retained cash at bank of US$22k at the end of the Quarter. Post quarter end 6,383,334 unlisted options expired and 633,332 unlisted options were cancelled following failure to meet the vesting conditions (ASX announcement Expiry and cancellation of Unlisted Options of 6 January 2017). About Appian Appian Natural Resources Fund is a private equity fund which has been established to invest specifically in the metals and mining sector. Appian has a uniquely collaborative investment approach that seeks to partner with local owners, managers and investors to leverage its world-class operational and corporate finance expertise. With this value-add approach and long-term investment horizon, it aims to generate significant value for the investors and other stakeholders of both the Company and Appian. For more information, visit About IFC IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in about 100 countries, IFC use their capital, expertise and influence to help eliminate extreme poverty and boost shared prosperity. In FY14, IFC provided more than US$22 billion in financing to improve lives in developing countries and tackle the most urgent challenges of development. For more information, visit Darren Townsend Managing Director 7

8 Metallurgy The information in this report that relates to Metallurgical Test Work Results based on information compiled and / or reviewed by Gavin Beer who is a Member of The Australasian Institute of Mining and Metallurgy and a Chartered Professional. Gavin Beer is the General Manager Metallurgy of the Company and has sufficient experience relevant to the activity which he is undertaking to be recognised as competent to compile and report such information. Gavin Beer consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Project Engineering The information in this report that relates to infrastructure, project execution and cost estimating is based on information compiled and / or reviewed by Lucas Stanfield who is a Member of the Australian Institute of Mining and Metallurgy. Lucas Stanfield is the General Manager Development for Peak Resources Limited and is a Mining Engineer with sufficient experience relevant to the activity which he is undertaking to be recognised as competent to compile and report. Lucas consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Summary of Mining Tenements and Areas of Interest As at 31 December 2016 Project Tenement End of September 2016 Quarter End of December 2016 Quarter Status Arrangement/Comment Ngualla PL6079/ %* 75% Granted Held by 100% Tanzanian associate company PR NG Minerals Ltd Mikuwo PL 9157/ %* 75% Granted Held by 100% Tanzanian associate company PR NG Minerals Ltd Mlingi PL10897/ %* 75% Granted Held by 100% Tanzanian associate company PR NG Minerals Ltd * On 26 July 2015, the Company announced the closing of Stage 1 of the financing transaction with Appian and IFC. On 15 August 2016 the closing of Stage 2 with Appian occurred and on 22 September 2016 with IFC. As a result, Peak holds a 75% beneficial interest in the above three licences with Appian and IFC holding a 20% and 5% interest respectively through their equity interest in Peak African Minerals. 8

9 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report +Rule 5.5 Appendix 5B Mining exploration entity and oil and gas 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, 01/05/13, 01/09/16 Name of entity PEAK RESOURCES LIMITED ABN Quarter ended ( current quarter ) DECEMBER 2016 Consolidated statement of cash flows 1. Cash flows from operating activities Current quarter Year to date (6 months) 1.1 Receipts from customers Payments for (a) exploration & evaluation - - (b) development (987) (2,335) (c) production - - (d) staff costs (net of development allocations) (268) (485) (e) administration and corporate costs (152) (333) (f) development costs recovered 583 1,152 (g) administration costs recovered Dividends received (see note 3) Interest received Interest and other costs of finance paid (181) (181) 1.6 Income taxes paid Research and development refunds 1,814 1, Other (provide details if material) Net cash from / (used in) operating activities 872 (220) 2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (2) (4) (b) tenements (see item 10) See chapter 19 for defined terms 1 September 2016 Page 1 9

10 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report Consolidated statement of cash flows Current quarter Year to date (6 months) (c) investments - - (d) other non-current assets Proceeds from the disposal of: (a) property, plant and equipment - - (b) tenements (see item 10) - - (c) investments - - (d) other non-current assets Cash flows from loans to other entities associate companies (2,065) (2,037) 2.4 Dividends received (see note 3) Other (provide details if material) 2.6 Net cash from / (used in) investing activities (2,067) (2,041) 3. Cash flows from financing activities 3.1 Proceeds from issues of shares 1,503 1, Proceeds from issue of convertible notes Proceeds from exercise of share options Transaction costs related to issues of shares, convertible notes or options (22) (79) 3.5 Proceeds from borrowings Appian loan 181 4, Repayment of borrowings Transaction costs related to loans and borrowings (46) (150) 3.8 Dividends paid Other (provide details if material) Net cash from / (used in) financing activities 1,616 5, Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of period 4,659 1, Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 872 (220) (2,067) (2,041) 1,616 5,635 + See chapter 19 for defined terms 1 September 2016 Page 2 10

11 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report Consolidated statement of cash flows 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period Current quarter Year to date (6 months) - - 5,080 5, Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts Current quarter Previous quarter 5.1 Bank balances 4,330 2, Call deposits 750 1, Bank overdrafts Other (provide details) Cash and cash equivalents at end of quarter (should equal item 4.6 above) 5,080 # 4,659 # # figure excludes cash at end of the Quarter retained by Peak s majority (75%) owned associate company Peak African Minerals (PAM). PAM had cash at bank at the end of Quarter of US$22k (previous quarter US$668k). 6. Payments to directors of the entity and their associates Current quarter $A' Aggregate amount of payments to these parties included in item Aggregate amount of cash flow from loans to these parties included in item Include below any explanation necessary to understand the transactions included in items 6.1 and includes salaries, directors fees paid to Directors and payments to Steinepreis Paganin Lawyers & Consultants, an entity related to Non-executive Director Jonathan Murray Payments to related entities of the entity and their associates Current quarter $A' Aggregate amount of payments to these parties included in item Aggregate amount of cash flow from loans to these parties included in item Include below any explanation necessary to understand the transactions included in items 7.1 and See chapter 19 for defined terms 1 September 2016 Page 3 11

12 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report 8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end Amount drawn at quarter end 8.1 Loan facilities 4,361 4, Credit standby arrangements Bank Guarantee re office rent Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well. During the September Quarter the Company fully drew down a 3 year unsecured term loan provided by Appian Pinnacle Holdco Limited. The loan is denominated as US$3.146m (1A$=0.7526US$) with interest of 15% per annum calculated daily and capitalised at the end of each calendar quarter payable at time of the loan repayment. $181k (US$136k) interest has been capitalised to the loan at the end of the Quarter. 9. Estimated cash outflows for next quarter 9.1 Exploration and evaluation Development Production Staff costs (net of recoveries) Administration and corporate costs (net of recoveries) Other Company s share of PAM project evaluation and development costs 1, Total estimated cash outflows 2,082* * The above figures are for Peak s costs and its share of the project development and evaluation expenditure only. Additional project development and evaluation expenditure will be incurred and funded by the other PAM investors. 10. Changes in tenements (items 2.1(b) and 2.2(b) above) Tenement reference and location Nature of interest Interest at beginning of quarter Interest at end of quarter 10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced Refer Quarterly Activities Report 10.2 Interests in mining tenements and petroleum tenements acquired or increased Refer Quarterly Activities Report + See chapter 19 for defined terms 1 September 2016 Page 4 12

13 Compliance statement Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A. 2 This statement gives a true and fair view of the matters disclosed. Sign here:...graeme Scott... Date:...24 January Company secretary Print name:...graeme Scott... 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 that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report. 2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, 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. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report. 3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity. + See chapter 19 for defined terms 1 September 2016 Page 5 13