25 July 2013 ASX Code: BAB, AIM Code: BGL QUARTERLY ACTIVITY REPORT FOR THE THREE MONTHS ENDED 30 JUNE 2013 Highlights Exploration and Resource Development Resources upgraded at the Gryphon and Edwards prospects An additional 3.9 Mt at 1.68g/t for 210,500 ounces of gold Continuity of mineralisation between Edwards and Gryphon confirmed, supporting creation of a single large pit Additional high grade mill feed available for early years of operation at the proposed Bullabulling Gold Mine Total project resource now exceeds 3.7 million ounces of gold Bullabulling Gold Project Corporate Outlook DFS mine plan prepared 12 year mine life at 7.5 million tonnes per annum 2.1 million ounces of gold production Average life of mine C1 cash costs of US$843 per ounce All in cash costs of US$930 per ounce Further potential remains for extending mine life and reducing costs Entitlements offer proceeds of $2.0 million received $2.0 million cash R&D tax credit received post end Additional R&D claim of similar value lodged Cash at 30 June 2013 of A$0.8 million (excluding R&D claim proceeds) Gold fundamentals remain sound, weaker AUD benefiting Australian producers Slowdown in WA resources sector improving cost, availability of labour and services Measures taken to reduce Company expenditure in the face of challenging equity market conditions, high priority work on the Bullabulling DFS to continue DFS work to date has reinforced the potential for the Bullabulling deposit to support a large scale, long life gold mine with competitive production costs The Company remains committed to progressing the Bullabulling Gold Project towards production 1
Exploration and Resource Development Final assay results were received during the for a 5,435 metre, 36 hole reverse circulation drilling program carried out at the Edwards and Gryphon prospects in the March. Significant intercepts included: Hole BJ4571 14 metres at 4.27g/t, including 2 metres at 17.60g/t Hole BJ4576 6 metres at 11.76g/t, including 2 metres at 29.08g/t Hole BJ4588 6 metres at 3.52g/t, including 1 metre at 12.30g/t Hole BJ4631 3 metres at 5.53g/t and 4 metres at 11.42g/t Hole BJ4931 12 metres at 5.78g/t, including 3 metres at 13.47g/t Results from the drilling program were used to update the Mineral Resource estimate for the Bullabulling Gold Project. Only the portion of the resource south of 6,564,800 mn was remodeled. Following the update total project resources increased by 3.9 million tonnes at 1.68g/t to 113.2 million tonnes at 1.02g/t. Contained gold increased by 210,500 ounces to 3,715,500 ounces. Resource details are presented in Table 1. Table 1: Bullabulling Gold Project Mineral Resource Estimate (0.5g/t cut off) Deposit Classification Tonnage Grade Cont. Gold Bullabulling Laterite Inferred 1.7 Mt 0.89 g/t 48,000 oz Bullabulling Primary Indicated 72.7 Mt 0.97 g/t 2,274,000 oz Inferred 34.0 Mt 1.11 g/t 1,216,000 oz Bullabulling Total Ind. & Inf. 108.4 Mt 1.02 g/t 3,538,000 oz Gibraltar Inferred 4.8 Mt 1.15 g/t 177,500 oz Project Total Ind. & Inf. 113.2 Mt 1.02 g/t 3,715,500 oz The grade of the extended resource exceeded management expectations and led to a two percent increase in the global resource grade. The additional high grade material will be scheduled for early processing and is expected to contribute to improved project economics. The Edwards/Gryphon drilling program successfully identified down dip extensions to both deposits and demonstrated that mineralisation was continuous between them, enabling a single pit some 1.2 km in length to be designed to efficiently extract the combined resource. The resource remains open at depth and further drilling is considered to be warranted. Bullabulling Gold Project Definitive Feasibility Study A revised open pit design and mining plan were developed during the initial phase of the definitive feasibility study (DFS). The DFS mine plan is based on development of four open pits, shown in Figure 1 below. Total diluted Mineral Resources within the pit designs is 89.3 million tonnes grading 0.84 g/t for 2.4 million ounces of contained gold. Average strip ratio over the life of mine is 3.6 to 1. 2
Figure 1: Isometric View of the Proposed Bullabulling Gold Mine Relocation of the highway and power transmission lines to enable amalgamation of the Phoenix, Dicksons and Bonecrusher pits will be evaluated as part of the on going DFS. This would extend mine life and increase gold production and is also expected to improve efficiency of the pit design. Relocation of this infrastructure would not need to take place until near mid way through the scheduled mine life. Detailed pit designs were developed from a Gemcom Whittle TM pit optimisation that was run and financially evaluated at a gold price of A$1,500 per ounce, which equates to US$1,371 per ounce at the exchange rate at close of business on 28 June 2013 of 0.9138. The DFS mine plan delivers gold production of 2.1 million ounces over a mine life of 12 years with average C1 cash costs of US$843 per ounce. State and private royalties total US$63 per ounce and sustaining capital amounts to US$24 per ounce, taking total all in cash costs to US$930 per ounce. The PFS capital cost estimate for fixed plant and infrastructure of A$326 million was retained for the latest evaluation. However this estimate will be refined during the DFS and there is an expectation that construction costs may reduce as a result of the recent sharp downturn in construction activity within the Western Australian mining sector. In the latest evaluation, pre production capital expenditure of A$81.6 million was allocated for procurement of the mining fleet to accommodate owner mining. A further A$10.5 million was allowed for additional mining equipment as mining ramps up and pit depth increases. Mine establishment and pre production mining expenses were estimated at A$32.4 million. 3
Based on the above parameters, the project would generate net cash flow of $564.5 million over the scheduled mine life. Net present value (NPV) at an 8% discount rate is A$166.0 million and internal rate of return (IRR) is 15.2% before tax. Mining equipment manufacturers have indicated a willingness to provide funding for the purchase of the fleet through a stand alone facility that may enable the Company to receive the benefits of owner mining without material impact on funding of the core project. Dry hiring the fleet during the early years of the project will also be evaluated as a means of reducing pre production capital requirements. This may also lift NPV and IRR. Key project statistics are summarised in Table 2 below, with Figures 2 and 3 graphically presenting forecast annual mining rates and gold production. Table 2 Key Project Statistics Mineral Resources (excluding Gibraltar) Tonnage Grade Cont d Gold Indicated Resource 72.7Mt 0.97g/t 2,274,000 oz Inferred Resource 35.7Mt 1.10g/t 1,264,000 oz Total Resource 108.4Mt 1.02g/t 3,538,000 oz In Pit Diluted Mineral Resources Tonnage Grade Cont d Gold Indicated Resource 76.3Mt 0.82g/t 2,007,000 oz Inferred Resource 13.0Mt 0.97g/t 405,000 oz Total In Pit Diluted Mineral Resources 89.3Mt 0.84g/t 2,412,000 oz Capital Costs Fixed Plant & Infrastructure Establishment & Pre production Mining Mobile Equipment Pre production Mobile Equipment Additions Sustaining Capital Life of Mine A$326.4M A$32.4M A$81.6M A$10.5M A$54.4M Production Summary Years 1 3 Life of Mine Project Life 3 years 12 years Strip Ratio 4.4:1 3.6:1 Annual Processing Rate 7.5 Mtpa 7.5 Mtpa Processing Recovery 87.0% 87.3% Gold Production 569,000 oz 2,106,000 oz Total Operating Costs A$21.39/t A$21.79/t Project Economics Years 1 3 Life of Mine Base Case Gold Price US$1,371/oz US$1,371/oz C1 Cash Costs US$774/oz US$843/oz NPV at 8% discount (Pre tax) $166M IRR (Pre tax) 15.2% Net Cash Flow (Pre tax) A$111M A$565M 4
Figure 2: Graph of Forecast Annual Mine Production 50 1.2 Mine Production (million tonnes) 40 30 20 10 0 1.0 0.8 0.6 0.4 0.2 0.0 Mined Grade (g/t) Waste Mined Ore Mined Mined Grade Figure 3: Graph of Forecast Annual Gold Production and Plant Head Grade Gold Production (thousand ounces) 250 200 150 100 50 0 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Head Grade (g/t) Recovered Ounces Head Grade The incorporation of Gibraltar into the production schedule will be evaluated at a later stage in the DFS. There is potential for Gibraltar ore, which has a higher average grade than Bullabulling, to be scheduled in years 2020 to 2022 to address a forecast dip in head grade and gold production. 5
Whilst the current mine plan has been designed to optimise value at a gold price of A$1,500 (US$1,371) per ounce, a series of optimisation runs were carried out at gold prices ranging from A$1,200 (US$1,097) per ounce to A$1,800 (US$1,645) per ounce. The results, summarised in Table 3 below, provide guidance on gold production and cash costs for mine plans based on alternative gold prices. Table 3: Bullabulling DFS Whittle Pit Optimisation Results Optimisation Gold Price Tonnage Grade Mine Life Contained Gold Recovered Gold Indicated C1 Cash Cost US$1,097/oz 50 Mt 0.92 g/t 7 years 1.5 Moz 1.3 Moz US$716/oz US$1,234/oz 77 Mt 0.86 g/t 10 years 2.1 Moz 1.9 Moz US$797/oz US$1,371/oz 92 Mt 0.85 g/t 12 years 2.5 Moz 2.2 Moz US$843/oz US$1,508/oz 109 Mt 0.83 g/t 15 years 2.9 Moz 2.5 Moz US$897/oz US$1,645/oz 120 Mt 0.81 g/t 16 years 3.1 Moz 2.8 Moz US$936/oz The revised mine plan has delivered a substantial improvement in cash costs, extended mine life and increased gold production relative to the pre feasibility study (PFS). Factors that led to this improvement include: Additional high grade resources in the Gryphon prospect following the resource update Reduced mining costs based on owner mining and the utilisation of larger excavators and trucks Amended pit slope designs to improve geotechnical stability and reduce waste stripping Amended waste rock stockpiling strategy to utilise dumps on both sides of the open pit resulting in reduced haulage distances Allowance has been made to source a combination of locally generated power and power transmitted from the south west grid Use of an alternative tailings storage facility design with reduced construction costs Whilst work to date has centered on improving the mine plan, the DFS will also evaluate opportunities to improve performance in other areas including: Relocation of infrastructure to enable the Phoenix, Dicksons and Bonecrusher pits to be combined to extend mine life and improve mining efficiency Inclusion of Gibraltar into the mining plan to extend mine life and lift average grade Additional metallurgical test work aimed at lifting plant gold recoveries Review of plant and infrastructure capital expenditure following a marked fall in WA and global demand for mining/construction service providers Review of processing operating costs Further drilling to consolidate resources within or in close proximity to the current pit designs 6
Corporate Board Change Prior to the Company s annual general meeting on 31 May, non executive director Tim Netscher advised the Board that due to the recent extension of his tenure as managing director and CEO of Gindalbie Metals, he would not seek re election as a director of Bullabulling Gold. Cash Position During the the Company received gross proceeds from an entitlement offer to shareholders of $2.0 million and made stamp duty payments of $1.4 million associated with the merger completed last year. At the end of the, the Company had cash on hand of $0.8 million. However post end a A$2.0 million cash Research and Development (R&D) Tax Incentive was received via wholly owned subsidiary, Bullabulling Gold UK Ltd (formerly GGG Resources PLC). An application of similar value lodged by subsidiary, Bullabulling Operations Pty Ltd (formerly Auzex Resources Limited), is currently being processed by the Australian Tax Office (ATO). Whilst the second application is still with the ATO, the fact that it essentially relates to the same program of work as the application that has already been processed, leads the Company to expect a successful outcome. Outlook Despite recent price volatility, the Board believes the fundamentals for gold remain sound and Australian producers are benefiting from the Australian Dollar trending back towards long term levels relative to the US Dollar. The Company remains committed to progressing the Bullabulling Gold Project towards production. Work completed on the DFS to date has reinforced the potential for the Bullabulling deposit to support a large scale, long life gold mine with competitive production costs. As reported, there is scope to identify further improvements in financial performance as the DFS examines other areas of the project. In addition, the Company has observed that a recent marked reduction in development activity within the Western Australian resources sector, coupled with production cut backs at some marginal operations, has improved the availability and reduced the cost of labour and services. This is expected to benefit Bullabulling during the development and operational phases of the project. However in response to challenging equity market conditions, a number of measures have been implemented to prudently manage the Company s available funds. These include the temporary deferment of some elements of the DFS until such time as markets stabilise. However proceeds from the R&D Tax Incentive program together with cash on hand enable high priority work on the DFS to continue and the Company looks forward to reporting further progress in coming months. 7
For information, contact: Brett Lambert Bullabulling Gold Limited Level 2, 55 Carrington Street Nedlands, WA, 6009, Australia Tel: +61 8 9386 4086 Neil Boom Gresham PR Ltd (UK media) Tel: +44 7866 805 108 Westhouse Securities Limited (UK Broker & Nominated Adviser) Martin Davison/Jonathan Haines Tel: +44 20 7601 6100 John Gardner / Rupert Dearden MAGNUS Investor Relations. Corporate Communication. (Australian Media) Tel: +61 8 6160 4900 jgardner@magnus.net.au rdearden@magnus.net.au About Bullabulling Gold Limited Bullabulling Gold Limited is listed on the Australian Securities Exchange (ASX:BAB) and London s AIM Market (AIM:BGL) and has approximately 341.7 million shares on issue. The Company s primary asset is the wholly owned Bullabulling Gold Project, located near Coolgardie in Western Australia. The Bullabulling Gold Project hosts JORC compliant Mineral Resources of 3.7 million ounces comprising Indicated Resources of 72.7 million tonnes at 0.97 g/t gold (2.3 million ounces) and Inferred Resources of 35.7 million tonnes at 1.11 g/t gold (1.2 million ounces) at Bullabulling and Inferred Resources of 4.8 million tonnes at 1.15 g/t gold (0.2 million ounces) at Gibraltar. Exploration has demonstrated strong potential for further expansion of the resource base. The Bullabulling deposit is amenable to bulk tonnage open pit mining and conventional CIL processing. All resources are situated on granted Mining Leases in close proximity to infrastructure. The Company is conducting a definitive feasibility study into the development of a large scale, low cost mining operation at Bullabulling, with first production targeted for Q4 2015. Competent Person Statement The information in this report that relates to the Exploration Results, Mineral Resources or Ore Reserves is based upon information compiled by Mr Trevor Pilcher, who is a full time employee of the Company and is a member of The Australasian Institute of Mining and Metallurgy. Mr Pilcher has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and the activity in which he is undertaking to qualify as a Competent Person under 2004 Edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mr Pilcher consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. 8
Appendix 5B Rule 5.3 Mining exploration entity ly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/01, 01/06/10, 17/12/10 Name of entity BULLABULLING GOLD LIMITED ABN Quarter ended ( current ) 50 153 234 532 30 JUNE 2013 Consolidated statement of cash flows Cash flows related to operating activities Current Year to date (6 months) 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration (1,129) (688) (2,312) (1,338) 1.3 Dividends received 1.4 Interest and other items of a similar nature received 10 61 1.5 Interest and other costs of finance paid 1.6 Income taxes received / (paid) (1) (1) 1.7 Other stamp duty (1,415) (1,415) Net Operating Cash Flows (3,223) (5,005) 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 (c) other fixed assets (132) (155) 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows (132) (155) 1.13 Total operating and investing cash flows (carried forward) (3,355) (5,160) 9
1.13 Total operating and investing cash flows (brought forward) (3,355) (5,160) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 2,000 2,000 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other capital raising costs (159) (159) Net financing cash flows 1,841 1,841 Net increase (decrease) in cash held (1,514) (3,319) 1.20 Cash at beginning of /year to date 2,272 4,079 1.21 Exchange rate adjustments to item 1.20 4 2 1.22 Cash at end of * 762 762 *$2 million R&D grant received in July 2013 not included. 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 $A'000 1.23 Aggregate amount of payments to the parties included in item 1.2 332 1.24 Aggregate amount of loans to the parties included in item 1.10 1.25 Explanation necessary for an understanding of the transactions 1.23 Includes salaries paid to directors, as well as superannuation paid on behalf of directors and senior executives. 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 None 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 None 10
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 4.1 Exploration and evaluation 950 4.2 Development 4.3 Production 4.4 Administration 350 Total 1,300 Reconciliation of cash Reconciliation of cash at the end of the (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Current Previous 5.1 Cash on hand and at bank 762 1,622 5.2 Deposits at call 650 5.3 Bank overdraft 5.4 Other (provide details) Total: cash at end of (item 1.22) *762 2,272 *$2 million R&D grant received in July 2013 not included. Changes in interests in mining tenements 6.1 Interests in mining tenements relinquished, reduced or lapsed Tenement reference N/A Nature of interest (note (2)) Interest at beginning of Interest at end of 6.2 Interests in mining tenements acquired or increased P15/4290 P15/5201 Gold exploration Gold exploration 100% 100% 11
Issued and quoted securities at end of current 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) Amount paid up per security (see note 3) (cents) 7.1 Preference + securities (description) 7.2 Changes during (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions 7.3 + Ordinary securities ** 341,748,780 341,748,780 7.4 Changes during (a) Increases through issues (b) Decreases through returns of capital, buybacks 39,214,906 39,214,906 7.5 + Convertible debt securities (description) 7.6 Changes during (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options (description and conversion factor) 15,359,242 Exercise price Various Expiry date Various 7.8 Issued during 7.9 Exercised during 7.10 Expired during 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only) 12
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: 25 July 2013 Company Secretary Print name: David M McArthur Notes 1 The ly report provides a basis for informing the market how the entity s activities have been financed for the past 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 6.2. 3 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. == == == == == 13