For personal use only

Transcription

1 Wednesday 19 September 2012 Highlights: ASX RELEASE TW Holdings to Purchase Basay Iron Sand Project in Philippines (ASX Code: TWH) (TW or Company) announces it has signed a binding term sheet with SDV International Export/Import (SDV) to purchase 100% of the Basay iron sand project (Basay Iron Sand Project) which is located in the Republic of the Philippines (Philippines) from SDV (Acquisition). Subject to conditions precedent being met, the consideration payable will be 710m fully paid up ordinary shares and 250m performance shares in TW, a royalty to SDV of US$3 per tonne of magnetite (Fe 3 O 4 ) mined and sold and a deferred, contingent cash sum of US$2.15m payable only upon the attainment of a series of commercial milestones including the commencement of commercial scale mining at the Basay Iron Sand Project. Change of company name to SDV Resources Limited. Overview The Board is pleased to announce that the Company has signed a binding term sheet with Philippine organisation SDV for the purchase by the Company from SDV of all of the Basay Iron Sand Project situated in the Philippines. Basay Iron Sand Project The Basay Iron Sand Project is located in the municipalities of Basay and City of Bayawan, Province of Negros Oriental, Island of Negros, Western Visayas, in the Philippines. The iron sands of Basay, both on the beach and on the nearby seafloor, present as dark grey or blackish in colour and have a heavy concentration of iron as a result of the presence of magnetite (Fe 3 O 4 ). The single exploration permit, which constitutes the Basay Iron Sand Project (Offshore Exploration and Mine Permit No. EP-VII-OMR ), covers the immediate offshore sea area between the municipalities of Basay and Bayawan City in Negros Oriental, with a total area of 8,022 hectares (being approximately 20km along the beach and approximately 4km into the sea and being a total of approximately 80 square kilometres in area).

2 SDV is controlled by Dr Solomon Villaplaza. Dr Villaplaza has a PhD in environmental science and regards the Basay Iron Sand Project as being an ideal candidate for the commencement of large, commercial scale offshore magnetite mining for export, undertaken in accordance with world s best practice sand mining techniques and environmental standards. Nature of Basay Iron Sands The Basay iron sands were originally eroded from nearby volcanic rocks then transported to the Basay coastal region by a number of rivers and pushed back onto the beaches and the nearby sea floor by ocean currents. The Basay iron sands present as dark grey or blackish in colour and have a heavy concentration of iron as a result of the presence of magnetite (Fe 3 O 4 ). Confirmatory due diligence and verification work, to be conducted by the Company over the next 5 months, will confirm and verify the length, width, depth and assemblage of the iron sand deposit that is lying on top of the sea bed. Iron sand mineralisation is visibly evident at seafloor surface. There are sediments of black iron sand, already cleaned and milled by nature, ready to be extracted via conventional, proven dredging techniques and magnetic separation processes. The Philippine Government regards any sea bed exceeding 10 per cent magnetite as pollution, as the ocean is too hot to allow much aquaculture to exist. Various onshore and offshore regions of the Philippines were extensively mined for iron sands in the 1950s, 1960s and 1970s in order to supply the steel industry of Japan and other Asian countries. Due to poor sand mining techniques and environmental practices, a moratorium was

3 imposed on offshore iron sand mining by the Government of the Philippines. That moratorium has now been lifted and the exploration permit that constitutes the Basay Iron Sand Project was the first granted by the Federal Government of the Philippines subsequent to the lifting of the moratorium. Location of the Basay Iron Sand Project within the Philippines The Basay Iron Sand Project is located in the municipalities of Basay and City of Bayawan, Province of Negros Oriental, Island of Negros, Western Visayas. The local populations of Basay and Bayawan are overwhelmingly Christian (with Catholicism being the main denomination) and are considered to be pro-business and pro-mining as a result of SDV s long and successful engagement with the local communities (particularly the fishing industry) regarding the benefits of the development of the Basay Iron Sand Project. Shipping time from the Philippines to Shanghai is approximately 1 day compared to 14 days from the Pilbara region of Western Australia and 42 days from South America; therefore a magnetite operation selling to Chinese buyers has significant freight advantages over South American and Australian iron ore supply. Accessibility Basay town is located approximately 130 kilometres west of Dumaguete City, Negros Oriental. It is the last town after Bayawan City in the southwest section of Negros Island and can be reached via the well-maintained Dumaguete-Basay National Road. Large vessels operate between Manila and Dumaguete city. In addition, inter-island vessels call into Dumaguete from other regional centres in Visayas and Mindanao like Cebu, Bohaol, Siquijor and Dipolog. Hydrography The area of the exploration permit is characterized by relatively shallow waters near the coastal zone with depths ranging from 1.0 to 4.0 metres. The bathymetry about 1.0 kilometre from the shoreline ranges from 6.0 to 40.0 metres. Configuration of the Exploration Permit The exploration licence lies within the territorial waters of Basay and Bayawan City in Negros Oriental. It covers approximately 20km x 4km of the offshore area and stretches from Barangay Carnangyawon in the west to Barangay Malabugas in the east. There is a 500m buffer zone extending from the shoreline outwards to the tenement.

4 Mining in the Philippines The Philippines, with its low mining and operational costs, proximity to major Asian markets such as China, offers significant competitive advantages to the Company. Iron sand mining and beneficiation operations commonly use offshore dredging combined with close but movable offshore separation and concentrating plants and storage facilities. Tailing materials are returned to the mined areas to minimise any environmental impact. This method of dredging and barging compares favourably to traditional onshore mining. In addition, the iron sands ore are already naturally ground to fine to very fine particle size, eliminating the requirement for blasting or crushing. Transaction The board of TW is pleased with this transaction for the following key reasons: 1. Viable and attractive economics: With the Acquisition subject to and conditional upon confirmation and verification of a JORC Indicated Resource of 150,000,000 tonnes of magnetite (Fe 3 O 4 ), the Basay Iron Sand Project ensures attractive economics despite a fall off in iron ore market conditions.

5 2. Distance to End Market: Shipping from the Philippines to Shanghai is approximately 1 day compared to two weeks from the Pilbara region of Western Australia and 42 days from South America. Offshore sand mining in the Philippines allows for the concentrated iron ore to be easily and readily transferred to cargo vessels and cheaply transported to markets such as China. 3. Strong industry fundamentals: despite the recent "soft" iron ore market, the board of TW believe China's iron ore demand will remain strong over the long term due to the country's continuous push to industrialise, supported by other steel-hungry developing countries in Asia, including the Philippines. With low estimated upfront capital expenditure and low ongoing operating costs, the Basay Iron Sand Project is positioned to benefit even if iron ore prices fall to US$60 per tonne. 4. Low Capital requirements and associated technical risks: Assuming that satisfactory confirmation and verification of a magnetite deposit occurs over the next 5 months, it is anticipated that in the initial phase of mining aside from third party contracted dredge mining operations and offshore on-barge concentration (by way of magnetic separation) and warehousing, there is expected to be little need for any other significant supporting project infrastructure. The Basay Iron Sand Project, in its initial stage of development, prima facie, will not require the extensive and costly infrastructure generally associated with establishing most inland-based iron ore mining operations, such as road and port facilities. The estimated capital requirements are therefore low for the Basay Iron Sand Project, and iron sand mining is a well understood process with limited technical risk. Low upfront capital expenditure will also facilitate the commencement of mining in a much shorter timeframe than is associated with most inland-based iron ore mining operations. 5. Ideally positioned to support expected Philippine growth and development: The Chief of the Mineral Economics Division of the Mines and Geosciences Bureau (MGB) of the Department of Environment and Natural Resources (DENR) has stated publicly that mining magnetite, also known as black sand, has the potential to boost the country s mineral sector, create more jobs and provide momentum to a local steel industry. Currently, Philippines is a major importer of steel because of the absence of local steel manufacturers, despite the country currently exporting iron ore for the production of steel in other countries such as China. Goldman Sachs has identified the Philippines as one of The Next Eleven (N-11) countries as having a high potential of becoming the world's largest economies in the 21 st century. For the Philippines to industrialise and develop its local steel industry, thereby becoming self-reliant in supplying the construction industry with steel, developing a vibrant successful iron ore mining industry is important.

6 Conditions Precedents to Completion of the Acquisition Completion of the Acquisition is subject to and conditional upon satisfaction of the following: (a) receipt from ASX of conditional re-listing approval on ASX in compliance with Chapters 1 & 2 of the Listing Rules; (b) (c) (d) (e) (f) completion (to the satisfaction of TW) of legal in-country due diligence; completion (to the satisfaction of TW) of geological, environmental science and mining engineering confirmatory due diligence; TW obtaining shareholder approval for the acquisition of the Basay Iron Sand Project; completion of a re-listing equity capital fundraising by the Company of no less than $5,000,000; and confirmation and verification that there is a JORC Indicated Resource for the Basay Iron Project of at least 150,000,000 metric tonnes of saleable magnetite (Fe 3 O 4 ). Refer to the indicative timetable below for the respective completion dates. Transaction Details The consideration payable for the purchase of the Basay Iron Sand Project is as follows: (a) (b) (c) 710,000,000 fully paid up ordinary shares and 250,000,000 convertible performance shares in TW shall be paid to SDV and/or its nominees within 5 business days of the satisfaction of the conditions precedent stated above and complete settlement of the assignment and transfer of the Basay Iron Sand Project to TW shall occur at this time. Whilst the Company has agreed to issue the convertible performance shares, their terms are required to be approved by ASX pursuant to Chapter 6 of the Listing Rules; plus the payment of a royalty to SDV and/or its nominees which shall be calculated at the rate of US$3 per tonne of magnetite (Fe 3 O 4 ) mined, sold and paid for from production from the Basay Iron Sand Project; plus the payment of US$2,150,000 to SDV and/or its nominees within 30 days of the completion of all of the following: (i) (ii) completion of the Acquisition; the grant of a Mining Production Sharing Agreement (MPSA) with respect to the Basay Iron Sands Project;

7 (iii) the grant of all necessary environmental licences permitting mining to occur (i.e. full permission therefore for the extraction and sale of magnetite (Fe 3 O 4 ) ore from the granted MPSA); (iv) the confirmed delineation of a JORC Indicated Resource of at least 150,000,000 metric tonnes of saleable magnetite (Fe 3 O 4 ); and (v) the commencement of commercial-scale mining operations on the Basay Iron Sands Project. Indicative Timetable The milestone dates for the Acquisition are set out in the table below. They are indicative only and are subject to change. EVENT DATE ASX announcement of the Acquisition 19 September 2012 Legal due diligence completes 31 January 2013 Geological and other technical due diligence completes 15 February 2013 Notice of General Meeting for shareholder approval of the Acquisition lodged with ASIC and ASX 15 March 2013 Lodgement of prospectus with ASIC 20 March 2013 Prospectus offer opens 29 March 2013 General Meeting of shareholders 15 April 2013 Company placed in suspension from trading on ASX 15 April 2013 Prospectus offer closes 18 April 2013 Allotment of new shares and despatch of holding statements 22 April 2013 Completion of the Acquisition 24 April 2013 Anticipated date for requotation on ASX 30 April 2013

8 Pro-forma Statement of Financial Position On the basis that the Acquisition is completed, the pro-forma statement of financial position of the Company will be as follows: UNAUDITED Purchase of 30 June Capital Basay Iron Total 2012 Raising Sand Project proforma (1) (2) (3) $ $ $ $ CURRENT ASSETS Cash and cash equivalents 1,317,218 4,700,000-6,017,218 Trade and other receivables 8, ,347 TOTAL CURRENT ASSETS 1,325,565 4,700,000-6,025,565 NON-CURRENT ASSETS Exploration assets - - 7,100,000 7,100,000 TOTAL NON-CURRENT ASSETS - - 7,100,000 7,100,000 TOTAL ASSETS 1,325,565 4,700,000 7,100,000 13,125,565 CURRENT LIABILITIES Trade and other payables 37, ,297 TOTAL CURRENT LIABILITIES 37, ,297 TOTAL LIABILITIES 37, ,297 NET ASSETS 1,288,268 4,700,000 7,100,000 13,088,268 EQUITY Issued capital 79,987,061 4,700,000 7,600,000 92,287,061 Reserves 14, ,000 Retained losses (78,712,793) - (500,000) (79,212,793) TOTAL SHAREHOLDERS' EQUITY 1,288,268 4,700,000 7,100,000 13,088,268 (1) Assumption of $5,000,000 capital raised less costs of 6% ($300,000). (2) Assumption that 710,000,000 ordinary shares are issued at $0.01 per ordinary share. (3) Corporate advisory fee will be payable in the form of 50,000,000 ordinary shares at $0.01. (4) An additional 250,000,000 performance shares are to be issued on achievement of the following targets: 25,000,000 Class B Performance Shares on the release of JORC Compliant Indicated and/or Measured resource of 50MT or more 50,000,000 Class C Performance Shares on the release of JORC Compliant Indicated and/or Measured resource of 100MT or more 75,000,000 Class D Performance Shares when the shipping of 50,000 tonnes of iron sand per month is attained 100,000,000 Class E Performance Shares when the shipping of 100,000 tonnes of iron sand per month is attained (5) A contingent liability exists over US$2.15m payable on attainment of commercial milestones as detailed in "Transaction Details". This would not be brought to account until it is probable that all these milestones will be met.

9 For further information please contact: MEL DRUMMOND Executive Director TW HOLDINGS LIMITED PIERRE VAN DER MERWE Company Secretary TW HOLDINGS LIMITED Tel: Tel: