DECEMBER 2008 QUARTERLY REPORT AND STATEMENT OF CASHFLOWS

Transcription

1 (ABN ) DECEMBER 2008 QUARTERLY REPORT AND STATEMENT OF CASHFLOWS About Tri Origin (ASX:TRO) Tri Origin Minerals Ltd is an Australian resources company, which will become a significant explorer, developer and producer of base and precious metals. The Company has its main operational base at Woodlawn near Goulburn, in the Lachlan Fold Belt region of New South Wales, Australia, where its two main mineral resource assets the Woodlawn Retreatment Project and the Woodlawn Underground Project, are located. The Company also holds a portfolio of advanced and early stage exploration prospects, including the Lewis Ponds polymetallic prospect, located near Orange in the Lachlan Fold Belt. COMPANY REVISES CORPORATE STRATEGY FOLLOWING COMPREHENSIVE REVIEW Key Points The Company has completed a review of its strategic direction and its capacity to adjust to the prevailing market conditions and has commenced implementing a revised corporate strategy designed to: 1. conserve the Company cash resources which at 31 December 2008 were slightly more than $2.5 million; 2. manage the Company s asset base to ensure that intrinsic asset values are maintained and where possible, improved; 3. position the Company to be able to respond rapidly to any sustained improvement in base metals and capital markets generally; and The Company has in excess of 28 million tonnes (Mt) of Mineral Resources, including the JORC compliant Mineral Resources of the Woodlawn Retreatment Project (11.7 Mt), Woodlawn Underground Project (10.1 Mt), and the Lewis Ponds Project (6.6 Mt). The in situ metal value of the Company s resource portfolio is dominated by zinc and copper with the balance attributable to lead, gold and silver. Tri Origin Minerals Ltd ABN Level 3, 50 Park Street Sydney NSW 2000 Australia Phone (61 2) Fax (61 2) proactively identify and respond to new opportunities that will arise and that have the potential to generate shareholder value. Based on current metal prices, development of Woodlawn Retreatment Project and or the Woodlawn Underground Project cannot be economically justified and no further substantive work will be conducted on these projects until metal prices improve. Exploration work programmes are being designed to focus on the exploration of the Company s tenements that are highly prospective for gold, such as Lewis Ponds. The Company may investigate joint venture opportunities to fund these exploration programmes. Friday, 30 January 2009 Page 1

2 December 2008 Quarterly Report 1. STRATEGIC REVIEW During the quarter, in response to the well published rapid deterioration of the global base metals, debt and equity capital markets, Tri Origin has undertaken a thorough review of its asset base and corporate strategy, to ensure its strategic direction is appropriate and adjust it as necessary to the prevailing market conditions. As a consequence of this review, the Company has revised its strategy which is now designed to achieve the following key objectives: 1 Conserve the Company s cash resources to accommodate a prolonged period of poor market conditions; 2 manage the Company s asset base to ensure that intrinsic asset values are maintained or improved e.g. give priority to exploration for further gold resources at Lewis Ponds; 3 position the Company to be able to respond rapidly to any sustained improvement in base metals and capital markets; and 4 proactively identify and respond to opportunities that have the potential to generate shareholder value. The implementation of this strategy therefore involves a number of significant changes for the Company. Accordingly, the status of the Company s key projects and exploration prospects, and the way forward for each, is given below. 2. WOODLAWN ZINCCOPPER PROJECTS Woodlawn Retreatment Project (WRP) Tri Origin s study of the feasibility of WRP which involves the processing of 11.2 Mt of tailings containing 181,000 tonnes of zinc and 42,000 tonnes of copper (plus less significant quantities of gold, silver and lead) contained in tailings dams on the Woodlawn site, indicated that acceptable financial returns could be generated if the base and precious metals produced by the project could be sold at prices equating to at least the long term consensus price forecasts that applied at the time of the study (June 2008). Since June 2008, the demand for base metals concentrates has diminished and the prices for zinc, copper and lead have fallen significantly (>50%), as have the long term consensus price forecasts for these metals. The development of WRP cannot currently be justified on economic grounds, even if the debt and equity finance required to fund its development was available. Friday, 30 January 2009 Page 2

3 December 2008 Quarterly Report Consequently, Tri Origin has determined that until commodity markets improve to a point where significant expenditure can be justified: o efforts to finance the project and complete other commercial arrangements associated with the sale of products will be suspended; o other than documentation of recently completed metallurgical test work aimed at optimizing metal recoveries and concentrate grades, no further technical work will be undertaken; o documentation of the draft application for statutory approval of the project (i.e. Part 3A approval) will be progressed until it is ready for submission to government authorities; and o terms of transfer of SML 20 from Denehurst Limited (in receivership) to a wholly owned subsidiary of Tri Origin will be progressed with the NSW Department of Primary Industries. Woodlawn Underground Project (WUP) More than 10 Mt of JORC compliant Mineral Resources containing 1,030,000 tonnes of zinc, 404,000 tonnes of lead and 182,000 tonnes of copper (plus less significant quantities of gold and silver) were delineated as part of the study of the feasibility for developing the WUP. Based on preliminary estimates of the capital and operating costs required to develop and extract the resource, and integrate the processing of underground ore with the retreatment of tailings (as envisaged by WRP), additional Mineral Resources or higher metal prices would be required to economically justify and finance a project.. Therefore, while Tri Origin considers that further successful exploration drilling would greatly benefit the feasibility of the WUP, no further drilling is proposed in the foreseeable future, and the Company has determined that until commodity markets improve: o geological modelling and analysis of the Company s existing WUP Resources and its extensive geological database derived from a number of tenements in the Woodlawn area will be undertaken as a matter of priority, with the aim of designing an exploration programme targeted to identify additional resources that can be accessed as part of the WUP; o no further engineering feasibility work will be undertaken on the project; and o efforts to reach agreement on the terms of a farmin arrangement with a financially strong joint venture partner will continue with the aim of obtaining a commitment to fund the exploration programme deemed desirable to enhance project economics. Friday, 30 January 2009 Page 3

4 December 2008 Quarterly Report 3. EXPLORATION Lewis Ponds (EL % owned by TRO) Tri Origin has delineated a JORC compliant Mineral Resource of 6.6 Mt containing 320,000 ounces of gold, 14,700,000 ounces of silver and 160,000 tonnes of zinc and has assembled a sizeable geological database for the Lewis Ponds prospect, located near Orange, in NSW The Lewis Ponds Prospect is located approximately 15 kilometres to the north of, and in a similar geological setting to, the McPhillamys gold deposit owned by Alkane Resources Ltd and being explored in joint venture with Newmont Australia Limited. Gold intersections at the Lewis Ponds deposit suggest that there is untested gold potential throughout the Exploration Licence which warrants further exploration. As a priority, Tri Origin will: o review its geological modelling of the Lewis Ponds Resource and the associated geological database to reassess the gold and zinc potential for the development of the property; o design an exploration programme targeted at extending the Mineral Resource at Lewis Ponds; and o investigate the terms of a farmin arrangement with a financially strong joint venture partner with the aim of obtaining a commitment to fund the exploration programme deemed desirable to enhance project economics. Cullarin Joint Venture (EL6292 and EL % owned by TRO) During the December Quarter, exploration expenditure by Tri Origin on the Cullarin Joint Venture tenements exceeded the amount required to earn a 51% interest in the JV. Subsequent to this, Tri Origin s JV partner, Golden Cross Resources Ltd advised that it did not intend to contribute its prorata share of JV exploration costs and accordingly, Tri Origin s interest in the JV increased to 62.5% by 31 December Moving forward, as manager of the JV, Tri Origin intends to: o review its geological modelling of the Cullarin mineralisation and the associated geological database to assess the potential for the delineation of a Mineral Resource; o design a targeted exploration programme designed to identify additional resources on the Cullarin tenements; and o endeavour to reach agreement on the terms of a farmin arrangement with a financially strong joint venture partner committed to fund the exploration programme. Friday, 30 January 2009 Page 4

5 December 2008 Quarterly Report Other Exploration Prospects Tri Origin s other exploration prospects include: Tenement Number Name Targeted Commodity EL 5878 Overflow Gold ML 739 and EL 7023 Calarie Gold EL 6551 Pylara Limestone EL 6611 Mt Fairy Limestone EL 7497 Gurrundah Baryte Tri Origin has determined that until commodity markets improve to a point where significant expenditure can be justified or additional capital can be raised to fund exploration activities on these tenements, no further expenditure will be applied to them other than that required for maintaining them in good standing. 4. CORPORATE Organisation On 22 December 2008, Mr Richard Procter was promoted to Chief Executive Officer of the Company from his previous position of General Manager Development, following the resignation of Mr Bruce Robertson from the roles of Managing Director and CEO with effect from close of business on 19 December Following Mr Robertson s resignation, the Board of Directors of the Company is comprised of four non executive directors including Chairman Bruce Kay, and Directors Dr Robert Valliant, Bill Killinger and Alan Snowden. Messrs Kay and Killinger are also independent directors. The Company s decision to revise its corporate strategy in response to the downturn in the economic environment has also resulted in the resignation of several other members of staff who will not be replaced. The Company extends its sincere appreciation to these staff for their significant contribution to the Company whilst in its employ. Cash Position Details of Tri Origin Minerals Ltd s consolidated cash flow and associated details for the Quarter are contained in the Appendix 5B Mineral Exploration Entity Quarterly Report which follows this activities report. At 31 December 2008, the Tri Origin Group s net cash balance amounted to $2,506,603, a net decrease of approximately $708,000 since the end of the previous Quarter. The Company has recast its operating budget to align with its current strategy, eliminating all nondiscretionary expenditure to conserve its cash resources. This will result in a substantially lower monthly cash outflow than incurred in prior quarters. Friday, 30 January 2009 Page 5

6 December 2008 Quarterly Report Securities on Issue On 22 December 2008, 680,000 unvested and unlisted options to acquire ordinary shares in the Company, held by employees who ceased employment on 19 December 2008, were cancelled. Accordingly, at 31 December 2008, the Company s issued securities included 101,918,234 ordinary shares; and 9,790,000 unlisted options to acquire ordinary shares. 5. CORPORATE DIRECTORY Directors Bruce Kay* + (Chairman) Robert Valliant* William Killinger* + Alan Snowden* *Denotes Nonexecutive + Denotes Independent Executive Management Richard Procter Chief Executive Officer Jeffrey Quartermaine Company Secretary & CFO Issued Share Capital Tri Origin Minerals Ltd has 101,918,234 ordinary shares and 9,790,000 options to acquire ordinary shares on issue. The options have expiry dates ranging from 1 Nov 09 to 18 Mar 13 and have exercise prices ranging from 20 cents to 154 cents. Quarterly Share Price Activity (Cents per share) Month High Low Close Oct Nov Dec Registered Office and Address for Correspondence Level 3, 50 Park Street Sydney NSW 2000 Australia Telephone (02) International Facsimile (02) info@trioriginminerals.com.au Website Share Registry Registries Limited Level 7, 207 Kent Street Sydney NSW 2000 Telephone (02) callcentre@registries.com.au Please direct shareholding enquiries to the Share Registrar. Auditors Clarence Assurance Level Clarence Street Sydney NSW 2000 For Further Information: Visit our Website: Or Telephone Richard Procter Chief Executive Officer; or Jeff Quartermaine Chief Financial Officer on +61 (0) Friday, 30 January 2009 Page 6

7 Appendix 5B Appendix 5B Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98. Name of entity Tri Origin Minerals Ltd ABN Quarter ended ( current quarter ) December 2008 Consolidated statement of cash flows Current quarter Year to date (6. months) Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration (387) (398) (1,596) (808) 1.3 Dividends received 1.4 Interest and other items of a similar nature received Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net operating cash flows (708) (2,269) Cash flows related to investing activities 1.8 Payment for purchases of: 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets (a) prospects (b) equity investments (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 (5) 1.13 Total operating and investing cash flows (carried forward) (708) (2,274) (5) + See chapter 19 for defined terms. 1/7/98* Appendix 5B Page 7

8 Appendix 5B 1.13 Total operating and investing cash flows (brought forward) (708) (2,27 4) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other Share issue costs (190) Net financing cash flows 429 Net increase (decrease) in cash held (708) (1,845) 1.20 Cash at beginning of quarter/year to date 3,214 4, Exchange rate adjustments to item Cash at end of quarter 2,506 2,506 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 Directors fees & expenses 93,941 Directors superannuation 7,670 Consultant Fee 34,880 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 + See chapter 19 for defined terms. 1/7/98* Appendix 5B Page 8

9 Appendix 5B Financing facilities available Add notes as necessary for an understanding of the position. Amount available Amount used 3.1 Loan facilities 3.2 Credit standby arrangements Estimated cash outflows for next quarter 4.1 Exploration and evaluation Development Total 250 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 Previous quarter 5.1 Cash on hand and at bank Deposits at call 2,220 2, Bank overdraft 5.4 Other (provide details) Total: cash at end of quarter (item 1.22) 2,506 3,214 Changes in interests in mining tenements Tenement reference Nature of interest (note (2)) Interest at beginning of quarter Interest at end of quarter 6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased + See chapter 19 for defined terms. 1/7/98* Appendix 5B Page 9

10 Appendix 5B 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 (cents) (see note 3) Amount paid up per security (cents) (see note 3) 7.1 Preference + securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions Ordinary securities 101,918, ,918, Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks Convertible debt securities Performance Share 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options Listed Unlisted 1 November: 1 share for 1 option 26 October: 1 share for 1 option 8 June: 1 share for 1 option 9 March: 1 share for 1 option 10 February: 1 share for 1 option 24 May: 1 share for 1 option 8 June: 1 share for 1 option 9 March: 1 share for 1 option 26 September: 1 share for 1 option 26 September: 1 share for 1 option 27 September: 1 share for 1 option 7 February: 1 share for 1 option 20 March: 1 share for 1 option 3,000, , ,000 1,340, ,000 60,000 1,400, , , ,000 20,000 1,000, ,000 Exercise price 20cents 20cents 30cents 25cents 121cents 114cents 136cents 154cents 154cents 109cents 109cents 107cents 73cents Expiry date 01/11/09 26/10/10 08/06/11 09/03/11 10/02/12 24/05/12 22/06/12 10/08/12 26/09/12 26/09/12 27/09/12 01/12/12 18/03/ Exercised during quarter 7.9 Issued during quarter 7.10 Expired/Lapsed during quarter 9 March: 1 share for 1 option 20 March: 1 share for 1 option 660,000 20, Debentures 7.12 Unsecured notes 25cents 67cents 09/03/11 20/02/11 + See chapter 19 for defined terms. 1/7/98* Appendix 5B Page 10

11 Appendix 5B + See chapter 19 for defined terms. 1/7/98* Appendix 5B Page 11

12 Appendix 5B Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the matters disclosed. Sign here: Date: 30 January 2009 (Company secretary) Print name: Jeff Quartermaine 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 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. + See chapter 19 for defined terms. 1/7/98* Appendix 5B Page 12