Quarterly report March 2012

Transcription

1 Quarterly report March 2012 About Latin Resources Limited Latin Resources Limited is a mineral exploration company focused on creating shareholder wealth through the identification and definition of mineral resources in Latin America, with a specific focus on Peru. The company has a portfolio of projects in Peru and is actively progressing its Guadalupito (Iron and Mineral Sands) and Ilo and Mariela (Iron, Copper, and Gold) projects. Corporate summary ASX: SETSQX: OTCQX: Shares issued: Options issued: Latin Resources Limited ABN LRS LRS LNRDY Million 62.4 Million Level 1, 173 Mounts bay Road Perth Western Australia 6000 T F E info@latinresources.com.au W Operations Highlights Guadalupito Over 28 km of strike of shoreline sediments have now been analysed with a total of 2,895 samples highlighting extensive contiguous areas with elevated Heavy Mineral Content in the first metre that in part comprise the central and southern areas of the Guadalupito Iron and Heavy Mineral Sand Deposit. Average 8.9% Total Heavy Mineral Content in a total of 1,913 samples after applying a 3.0% low grade cut to the data. Average 12.5% HM within an average "Sand" content of 70% by weight in a total of 2,234 samples after applying a 3.0% low grade cut to the Heavy Mineral Content of the "Sand" Fraction (-1mm+52µm). Gold content averages 0.32 g/t in the "Undersize" (-52µm) component of these 2,234 samples, (1.5% by weight), suggesting gold will be an important byproduct of any future operation. Initial JORC compliant inferred resource estimate announced 21 December 2011 with 5.7% HM. Drilling and sampling is continuing to enable expansion and upgrade of resources with immediate focus on high grade area to the south of initial resource estimate. Ilo - Mariela The field work component of the ground magnetic & gravity survey was completed at the Mariela Project and has been submitted to Southern Geoscience for compilation and interpretation. Preliminary interpretation of the ground magnetic survey further delineates the previously reported high intensity (3000nT) anomaly with the modelled source located under an estimated m of cover. Initial interpretation of the gravity survey reveals a significant gravity anomaly coincident with the magnetic anomaly and, using a gravity shell of SG 2.8, has been interpreted to be due to a body measuring 3000 m long, 1000 m wide and extending to several hundred meters below surface. Interpretation of these geophysical data continued through the quarter and once complete will allow for improved drill targeting. All requirements for initial drill permit complete. Once drill hole locations are finalised early in Q2 2012, permit will be submitted for automatic approval. Drilling to commence 2nd quarter 2012.

2 Quarterly report March 2012 Ilo Norte Latin continues to evaluate positive drill results (Fe-Cu-Au) in the context of the 2012 exploration program with follow up drilling expected to be undertaken in line with prioritisation of other regional targets during Ilo Regional Exploration: Regional exploration to intensify with appointment of Australian Geologist Sam Garret as Project Manager for the Ilo Region projects including Mariela. Corporate Appointment of Mr Anthony Begovich as Chief Financial Officer and Joint Company Secretary. Appointment of Mr Frankie Li, a Non-executive Director. Completion of the $8.4 million placement to Chinese backed group Junefield High Value Metals Investments Limited ( Junefield ) as previously announced on 30 November Commencement of trading on the Stock Exchange Electronic Trading System - quotes and crosses ( SETSQX ) of the London Stock Exchange under the ticker LRS. Commencement of trading on the OTCQX platform of the US OTC Marketplace under the ticker LNRDY.

3 Operations Guadalupito (Iron and Mineral sands) Guadalupito is one of Latin s most advanced projects and has the potential to become a world class Iron and Heavy Mineral Sand project. The project is located in close proximity to high quality infrastructure, being 10 kilometres from Chimbote, home to a major Port and one of the largest steel smelters in Peru, which is owned by the Brazilian Gerdau Group, the largest long steel producer in the Americas. Latin Resources Limited s Peruvian subsidiary owns or controls a total of 30 mining concessions totalling 16,437 hectares along Peru s North Central coast. Geological mapping at Guadalupito confirms that at least 6,000 hectares within the Company s concessions are highly prospective. Previously reported work conducted at Guadalupito highlights good potential for economic content of Magnetite ( %), Andalusite ( %) and Gold (6-556 mg/m3). In addition there is potentially economic content of Monazite (REE) (trace 1.7%), Zircon (trace 1.1%), Ilmenite (trace 2.8%) and Wolframite (trace). During Q1 2012, Latin Resources Limited (LRS.ASX) announced an update of all available results from 2,895 exploration samples collected from 1m deep pits from its Guadalupito Iron and Heavy Mineral Sand Project in northern Peru that confirm elevated heavy mineral contents in 1 m deep pits sampled along 28 km of strike of prospective shoreline sediments. The mineralised sediment package is up to 4 km wide and is open to the north and south. One metre deep pit sampling has now been completed at roughly 200 m x 100 m spacing along 28 km of strike, and up to 4 km across strike, covering all coastal shoreline sediment packages. Of particular significance is the area immediately south along strike from the inferred resource estimate published 21 December 2011 where high grade Heavy Mineral content and significant gold content in Undersize (-52µm) fraction was present in samples along 8 km of strike with an average width of 1.5 km (Table 1). Sections are numbered according to the labels on the maps on the following pages beginning at 1.0, the southerly most line of samples, and continuing north in increments of 0.2 km. Drilling has advanced in this highly attractive part of the deposit in order to test the depth extent of the mineralisation. Drilling will also contribute to the expansion and upgrade of the initial inferred resource estimate as will the continued sampling of shafts above the water table to a maximum depth of 4 m. Latin s initial inferred resource estimate at Guadalupito represents an area of approximately 5% of the coastal sediment system controlled by the Company and the extensive areas of elevated heavy mineral content within a meter of the surface indicate great potential for expanding heavy mineral resources at Guadalupito. More extensive mineralogical work has been initiated in order to begin classification of target minerals both along the entire mineralised strike of the deposit, and at depth, focusing on those minerals previously identified including magnetite, ilmenite (and other ferro-titanium minerals), zircon, andalusite, garnets, rutile, titanite (sphene) and Rare Earth Element (REE) bearing monazite.results of sampling of 1m deep pits.

4 Table 1 Summary of results from sections across 8 km of strike immediately south of the inferred resource estimate area published in December Section No. Of Pits Avg. Depth of Pits Dist. from shoreline (km) Easterly extension from shoreline (km) Width of Section (km) HM (%) in Sand (-1mm+52um) RAW AVERAGES Magnetite (1500G magnetic separation) % in - 1mm Field Sample test Weight % Undersize (-52um) Au (g/t) in Undersize (-52um)

5 Results from the 2,895 pit samples have been mapped on two overlapping map sheets located with respect to Latin s concessions on Map 1. Thematic maps with each sample location plotted with a colour representing a range of values determined as statistically distinct populations are shown on Map 2 & Map 3. Map 1: Location map of Latin s concessions CENTRAL AREA SOUTHERN AREA

6 Map 2: Central area pit results HM (%) in Sand Fraction (-1mm+52µm) CENTRAL AREA PIT RESULTS

7 Map 3: Southern areas pit results HM (%) in Sand Fraction (-1mm+52µm) SOUTHERN AREA PIT RESULTS

8 Ilo - Mariela (Iron, Copper & Gold) The Mariela project comprises 7 mining concessions covering approximately 5,200 hectares in the Islay Province of Arequipa in southern Peru.. It is situated in very close proximity to key infrastructure as it is located directly on the Panamerican Highway, a major road transport route, and is only 60 km from the port of Ilo. Figure 3 shows the location and proximity to the paved Panamerican Highway that crosses the concession area. The Company received data collected from the infill gravity and ground magnetic survey from its Mariela Iron Ore Project in Southern Peru during Q The survey delineates a co-incident magnetic and gravity anomaly of potentially significant size. A preliminary interpretation of the ground magnetic and gravity survey by Southern Geoscience Consultants has identified a high intensity (3000nT) magnetic anomaly with the modelled source being located under an estimated metres of cover. The modelled gravity body, using a gravity shell of SG 2.8, is sizeable and measures up to 3000 metres in length, up to 1000 metres in width and extends up to several hundred metres below surface. An initial drilling program is planned to test the co-incident gravity and magnetic features and will commence in 2 nd quarter Environmental and social prerequisites for the drill permit application are completed and once drill locations are finalised, the initial drill permit application will be submitted for automatic approval. Ilo - Norte (Iron) The Ilo Norte project comprises concessions covering approximately 7,300 hectares. Latin continues to evaluate positive drill results (Fe-Cu-Au) in the context of the 2012 exploration program with follow up drilling expected to be undertaken in line with prioritisation of other regional targets during Ilo Regional exploration Latin has been granted mining concessions expanding the already significant holdings in the coastal copper-iron belt in the departments of Tacna, Moquegua and Arequipa. The company now has rights over more than 115,000 hectares of the coastal copper-iron belt. This strategic expansion in mineral rights control is in line with the company s strategic exploration focus on geologically favourable areas close to infrastucture. The company is in the process of recompiling all available exploration data over this expanded area of interest and has embarked upon a systematic, multi-disciplinary regional exploration program combining mineral mapping using remotely sensed data, interpretations of stereo aerial photography, field mapping, geophysics and geochemistry.

9 Gravity Model CrossSection: Gravity shell at SG 2.8 (red shell core, just visible is SG 2.9) Gravity Model Sections L N

10 Location of the Mariela Project concessions, crossed by the Panamerican Highway and 60 km north of the Ilo mineral port. Latin s Ilo Norte and Ilo Este projects are also marked.

11 Corporate New appointments The Company announced the appointment of Mr Anthony Begovich as Chief Financial Officer and Joint Company Secretary on 9 March Mr Begovich is a chartered accountant with more than 16 years experience in the resources sector. Mr Begovich previously worked with one of the big four accounting firms with postings in Australia, Indonesia and London and over the last 10 years he has worked with Australian listed companies as Company Secretary and Chief Financial Officer. Mr Frankie Li, the Chief Financial Officer of Junefield (Holdings) Limited, was appointed as a Non-executive Director on 21 March Mr Li has 25 years of experience in the accounting and finance profession and has extensive experience in compliance, profit planning and cash management for various Hong Kong listed companies and Chinese businesses. Placement On the 21 March 2012 the Company completed tranche 2 of the $8.4 million placement to Chinese backed group Junefield High Value Metals Investments Limited ( Junefield ) as previously announced on 30 November Tranche 2 consisted of 20,000,000 shares being issued at $0.28 each and 6,666,667 options being issued exercisable at $0.30 each and expiring on 20 June Tranche 2 was approved at a shareholders meeting on 14 March Funds raised from the placement will be used to accelerate the current exploration and drilling campaign at the Company s flagship project, the Guadalupito Iron and Mineral Sands project in Peru. Junefield is a subsidiary of private company Junefield Holdings Limited that is a Chinese based business with considerable interests and standing in China, owned by Mr Zhou Chu Jian He. Junefield has significant concession holdings in Peru and a strong exploration capability with numerous geologists and drill rigs. Trading in the UK The Company announced on 27 February 2012 that it had commenced trading on the Stock Exchange Electronic Trading System - quotes and crosses ( SETSQX ) of the London Stock Exchange under the ticker LRS. The aim of having the Company s shares traded on SETSQX is to expose the Company to a much broader range of UK based investment funds and institutional investors and to increase liquidity in the Company s shares. The Company s shares will be traded on SETSqx in depository interest format without affecting the listing of all shares on the Australian Stock Exchange. The Company s UK broker is finncap and its registrar is Computershare.

12 Appendix 5B Competent persons statement Trading in the USA The Company commenced trading on the OTCQX platform of the US OTC Marketplace under the ticker LNRDY on 26 March The Company has also established an American Depository Receipt ( ADR ) program and appointed The Bank of New York Mellon to establish the ADR facility and act as its authorized US representative and Depository bank. Admission to trading on the OTCQX platform and the establishment of a sponsored ADR program creates a broader secondary market for the Company to trade and increases opportunities for North American investment funds, institutional and other investors to participate in the future growth of the Company. The Appendix 5B for the Quarter is attached The information in this report that relates to Geological and Geochemical Data, Exploration Results and any Conceptual Exploration Target is based on information compiled by Mr Andrew Bristow, a full time employee of Latin Resources Limited s Peruvian subsidiary. Mr Bristow is a member of the Australian Institute of Geoscientists and has sufficient experience which is relevant to the style of mineralization and the type of deposit under consideration to qualify as a Competent Person as defined in the December 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mr Bristow consents to the inclusion in this report of the matters based on his information in the form and context in which they appear. Enquiries Australia United Kingdom United States Chris Gale Managing Director Latin Resources Limited Ben Thompson (Broker) FinnCap bthompson@finncap.com Stefan Spath (PAL) INTL Stefan.Spath@intltrading.com Roderick Brown Chairman Latin Resources Limited David Tasker PPR david.tasker@ppr.com.au

13 Report on cash flows - March 2012 Appendix 5B 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 Latin Resources Limited ABN March 2012 Quarter ended ( current quarter ) Consolidated statement of cash flows Cash flows related to operating activities Current quarter $A 000 Year to date (9 months) $A Receipts from product sales and related debtors Payments for (a) exploration & evaluation (1,137) (4,120) (b) development - - (c) production - - (d) administration (870) (1,969) 1.3 Dividends received Interest and other items of a similar nature received Interest and other costs of finance paid (12) (18) 1.6 Income taxes paid Other (provide details if material) - - Net Operating Cash Flows (1,991) (6,074) Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (529) (529) (b) equity investments - - (c) other fixed assets (34) (111) 1.9 Proceeds from sale of: (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 Security deposits/bonds (184) (184) Net investing cash flows (747) (145) 1.13 Total operating and investing cash flows (carried forward) (2,738) (6,219)

14 Report on cash flows - March Total operating and investing cash flows (brought forward) (2,738) (6,219) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 5,630 8, Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other 15 (9) Net financing cash flows 5,645 8,860 Net increase (decrease) in cash held 2,907 2, Cash at beginning of quarter/year to date 3,385 3, Exchange rate adjustments to item 1.20 (305) Cash at end of quarter 5,987 5,987 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 Payment of director and consultant fees, salaries and superannuation paid to directors for the quarter. Non-cash 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

15 Report on cash flows - March 2012 Financing facilities available Add notes as necessary for an understanding of the position. Amount available $A 000 Amount used $A Loan facilities Credit standby arrangements - - Estimated cash outflows for next quarter $A Exploration and evaluation 2, Development 4.3 Production 4.4 Administration 922 Total 3,378 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 487 3, Deposits at call 5, Bank overdraft Other (provide details) - - Total: cash at end of quarter (item 1.22) 5,987 3,484

16 Report on cash flows - March 2012 Changes in interests in mining tenements 6.1 Interests in mining tenements relinquished, reduced or lapsed Tenement reference Nature of interest (note (2)) Interest at beginning of quarter Interest at end of quarter 6.2 Interests in mining tenements acquired or increased 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 180,921, ,921,151 Amount paid up per security (see note 3) (cents) 7.4 Changes during quarter (a) Increases through issues 1,000, ,000 20,000,000 (b) Decreases through returns of capital, buy-backs 1,000, ,000 20,000,000 - $0.30 $ $0.30 $ 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) 52,450,000 10,000,000 Exercise price $0.30 $0.30 Expiry date 31/3/ /6/ ,450, Issued during quarter 6,666,667 - $ /6/ Exercised during quarter 100,000 $ /3/ Expired during quarter 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only)

17 Report on cash flows - March 2012 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 give a true and fair view of the matters disclosed. Sign here: Date: 30/4/2012 (Company secretary) Print name: Anthony Begovich 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.