TIDMGGG
RNS Number : 0881R
GGG Resources PLC
31 October 2011
GGG Resources plc
(the "Company" or "GGG")
QUARTERLY ACTIVITIES REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2011
HIGHLIGHTS
Corporate
-- On 2 August 2011, the Company received the final payment of
US$3,273,200 from the sale of the Nimu Project in China. This
brings the total payments from the disposal of Nimu to US$7.4
million (circa GBP5million), approximately GBP0.7 million more than
was budgeted for at the time of the Company's 2009 statutory
accounts. The Company no longer has any assets or obligations in
China.
-- On 29 August 2011, the Company announced the signing of a
binding Heads of Agreement with Auzex Resources Limited ("Auzex")
to combine the Bullabulling Gold asset into a new entity called
Bullabulling Gold Limited, through an all share merger.
Bullabulling Gold Limited will be Australian domiciled and listed
on the ASX and AIM.
-- As the Company and Auzex had agreed to merge, on 5September
2011, GGG's bid for Auzex lapsed and GGG did not accept any Auzex
shares pursuant to the offer.
-- On 19 September 2011, the Company and Auzex announced the
formation of an operational company named BBG Management Pty
Limited. In addition, the Merger Implementation Agreement was
signed and a new company, the proposed consolidation vehicle
described above, Bullabulling Gold Limited was incorporated.
Exploration
-- On 26 July 2011, additional results from Phase Two drilling
at Bullabulling were announced. In May, June and July a total of 96
drill holes were drilled for 17,121metres.
-- By the end of September, the total of drilling undertaken by
GGG and its joint venture partner, Auzex (the "Joint Venture"),
since project acquisition in May 2010 was 82,667m in 507 holes.
-- In early August 2011, the Company announced that the Joint
Venture agreed with the resource consultant that, because
mineralisation at Bullabulling is unusually continuous and readily
predictable, the drill spacing required for an Indicated Resource
status at Bullabulling can be set at 75m North-South by 35m
East-West.
-- On 15 August 2011 the Joint Venture announced an updated JORC
compliant resource estimate based on the Phase One drilling
programme of approximately 35,000m. The new JORC compliant resource
is 78.84 Million tonnes at 1.03 g/t gold for 2,603,000 ounces,
using a 0.5 g/t gold cut-off. Of the 2.6 Million ounces of
resource, 711,700 ounces are in the indicated category.
-- Preliminary project optimisation studies were carried out and
all scenarios returned positive economics envisaging the
development of a main pit 3.1 km long, 180 metres deep and a
secondary pit of 1.0 km long and 120 metres deep.
-- On 19 September 2011 the Joint Venture announced the
appointment of John Barton to lead the feasibility study of
Bullabulling project.
-- At the end of September, the Joint Venture announced
additional prospecting licences covering 8km2 to extend the borders
of the southern end of Bullabulling. The Joint Venture now has a
total of 131km2 in tenements heldin various mining permits,
miscellaneous licences, prospecting licences and applications. The
Joint Venture also holds the underlying pastoral lease.
Maps and graphics ("Figures") referred to in this announcement
are available on the version of this release available on the
Company's website www.gggresources.com.
EXPLORATION
The Company has a 50% interest in the Bullabulling gold project
located 65 kilometres south-west of Kalgoorlie in Western
Australia. The remaining 50% interest is held by Auzex.
Bullabulling is a large tonnage, low-grade deposit associated
with the regional Bullabulling shear zone, which extends over tens
of kilometres. The mineralised structure is up to 800m wide,
consisting of multiple west dipping low-grade stacked zones with
narrow high grade mineralisation.
RESOURCE ESTIMATION
During the quarter, a JORC compliant resource update was
announced. This resource estimate is based on Phase One drilling of
approximately 35,000m. The Phase One JORC (2004) compliant Mineral
Resource estimate for the Bullabulling Gold Project now stands at
78.84 Mt at 1.03 g/t Au (2.60 million ounces contained gold) using
a 0.5 g/t cut-off (Indicated and Inferred). The new mineral
resource has been estimated up to the 200RL, approximately 230m
below surface, and remains open at depth and to the south.
The Phase One drilling programme consisting primarily of
confirmation drilling was completed in mid May 2011. Through a
planned programme of twinning and the infill of previous drill
holes, the project's resource consultant, Perth-based Snowden Group
("Snowden"), confirmed the historic drill data as being
statistically valid for use in a new resource estimate. The drill
spacing recommended by Snowden for defining Indicated Resources has
been set at 75m north-south and 35m east-west and has been used to
classify the new resource estimate.
The estimation used assays from all the historic reverse
circulation (RC) and diamond drill hole data, but excludes the RAB
drilling data (previously included in the August 2010 resource
estimate completed by CSA Global), over a 9 km2 area covering the
Bullabulling Trend.
Multiple Indicator Kriging ("MIK") was used to establish the
resource estimate, after the data were unfolded, using Datamine
software. Variography carried out on the unfolded data provided
ranges of up to 208m along strike and 108m down dip. These ranges
were then used to design the primary search ellipse dimensions used
in the modelling, which were 50m along strike, 25m down dip and 15m
across strike. The variography reconciles well with the
orientations of mineralised shoots derived from the recent
structural study.
The updated Bullabulling Trend resource estimates by Snowden (at
a 0.5g/t Au cut off) are listed in Table 1. The Gibraltar estimate
was complied by CSA in 2010 while the Laterite Dumps estimate was
compiled from data taken from previous company reports dated
1998.
Recent feasibility studies on processing and mining cost
estimations suggest a 0.5 g/t Au cut off is appropriate for this
project at current gold prices and this, and future resource
estimates, will be quoted at this cut off.
Table 1. The Bullabulling Mineral Resource (August 2011) at 0.5
g/t cut off (JORC 2004)
Mineralisation Cut Off Class Tonnes (Mt) Gold grade Contained
Type (g/t g/t Ounces
Au)
----------------------- -------- ---------- ------------ ----------- ----------
Bullabulling Laterite 0.5 Inferred 1.6 0.89 45,700
----------------------- -------- ---------- ------------ ----------- ----------
Bullabulling Fresh 0.5 Indicated 21.3 1.01 691,000
----------------------- -------- ---------- ------------ ----------- ----------
0.5 Inferred 50.9 1.03 1,683,900
----------------------- -------- ---------- ------------ ----------- ----------
Bullabulling Trend
Total 73.8 1.02 2,420,600
----------------------- -------- ---------- ------------ ----------- ----------
Gibraltar 0.5 Inferred 4.5 1.12 161,900
----------------------- -------- ---------- ------------ ----------- ----------
Laterite Dumps 0.5 Indicated 0.5 1.2 20,700
----------------------- -------- ---------- ------------ ----------- ----------
Grand Total 78.8 1.03 2,603,100
----------------------- -------- ---------- ------------ ----------- ----------
Note: The resource is quoted for blocks with a grade of greater
than 0.5 g/t and the tonnage figures for the fresh mineralisation
have been discounted by 7% to allow for the impact of barren
pegmatite dykes.
PRELIMINARY PROJECT OPTIMISATION
Four optimisation scenarios were developed to check the new
resource estimate and to assess the economic potential of the
Project. The optimisations were carried out using a spot gold price
(US$1,500 and exchange rate of US$1.07), recovery of 92.5%, a
discount rate of 8% and process rates of 3.5, 5.0, 7.5 and 10
million tonnes per annum ("mtpa"). No mining dilution was applied
on the basis that the MIK resource model incorporates some degree
of dilution and a mining recovery of 95% was used.
All scenarios returned positive economics and all scenarios mine
a main pit 3.1 km long and 180m deep and a second pit at
Bonecrusher that is 1.0 km long and 120m deep. Importantly, all
scenarios include a significant proportion of the new Indicated and
Inferred Resources, which means with infill drilling the majority
of these resources should convert to reserves.
PHASE TWO DRILLING PROGRAMME
During the September quarter Phase Two drilling commenced to
define the resources north of Phoenix to the Bonecrusher pit and to
the areas south of Bacchus, with 3 rigs actively drilling on
site.
The aim of this programme is to convert a significant portion of
the Inferred Resources into Indicated Resources. The programme
consists of 70,000m of infill drilling and 20,000m of exploration
drilling. To date over 46,411m of drilling in 261 holes has been
completed for the Phase Two programme.
Results from the Phase Two drilling programme thus far continue
to confirm and expand the current resource model and include new
high-grade intersections.
Approximately 60% of mineralised intersections returned similar
or better grades and/or widths than expected from the resource
model and about 35% of the reported mineralised sections are
similar to the current resource model.
Drill highlights reported during this period include:
10 m @ 2.25 g/t Au from 137 m in BJ0240,
2 m @14.20 g/t Au from 82 m in BJ0245,
4 m @ 4.45 g/t Au from 101 m in BJ0249,
4 m @ 10.61 g/t Au from 126 m in BJ0259,
7 m @ 3.85 g/t Au from 82 m in BJ0268,
9 m @ 2.17 g/t Au from 70 m in BJ0274,
5 m @ 2.76 g/t Au from 95 m in BJ0277,
8 m @ 3.35 g/t Au from 5 m in BJ0347,
4 m @ 2.89 g/t Au from 23 m in BJ0389,
8 m @ 2.00 g/t Au from 159 m in BJ0393,
12 m @ 6.96 g/t Au from 157 m in BJ0397,
10 m @ 1.76 g/t Au from 120 m in BJ0419,
8 m @ 2.25 g/t Au from 27 m in BJ0457,
9 m @ 1.57 g/t Au from 28 m in BJ1228,
12 m @ 1.33 g/t Au from 48 m in BJ1246,
5 m @ 14.09 g/t Au from 70 m in BJ1274,
13 m @ 1.55 g/t Au from 152 m in BJ1470,
6 m @ 3.49 g/t Au from 194 m in BJ1946,
6 m @ 3.10 g/t Au from 39 m in BJ2022,
4 m @ 3.19 g/t Au from 14 m in BJ2023,
7 m @ 1.78 g/t Au from 156 m in BJ2047 and,
10 m @ 5.59 g/t Au from 69 m in BJ2050.
An additional 20,000 metre exploration drill programme is also
in progress targeting Sphinx, Medusa, Edwards, Gryphon, Kraken and
Minotaur on the southern extension of the Bullabulling Trend.
MERGER
The Company and Auzex have agreed to merge to create an emerging
gold producer, Bullabulling Gold Limited, which owns 100% of the
Bullabulling Gold project, located 65km south-west of Kalgoorlie,
Western Australia.
Auzex and GGG shareholders will own 50% each of Bullabulling
Gold Limited adjusted both for the Auzex securities already owned
by GGG and the relative cash holdings of both companies as at the
merger date.
The merger will allow for a unified management team with sole
focus on the development of Bullabulling Project. A new independent
Board will be formed and Bullabulling Gold will be listed on the
ASX and AIM providing global access to capital markets.
The merger will involve two Schemes of Arrangements.
UK Scheme:
In the first step, GGG will create an Australian registered
company called Bullabulling Gold Limited ("BBG") and undertake a UK
Scheme of arrangement to cancel each ordinary share, warrant and
option in GGG for the issuance of an equivalent number of shares,
warrants and options in BBG. Initially the share capital and the
Board of Directors of BBG will be exactly the same as that of GGG.
BBG will seek admission to the Australian Stock Exchange ("ASX") as
its primary listing with a secondary listing on the AIM market in
London; and
Australian Scheme:
The second step is an all scrip merger of Auzex and
Australian-registered Bullabulling Gold Limited ("BBG")through an
Australian Scheme of arrangement under part 5.1 of the Australian
Corporations Act under which all of the fully paid ordinary shares
of Auzex are transferred or cancelled for new shares in BBG that
will result in Auzex shareholders holding 50% of all BBG shares,
subject to any adjustment for shares already held by BBG.
Any difference in cash as at the merger date will be adjusted by
private placement by the company with larger cash into the company
with lesser cash at a placement price at a 10% discount to the 5
days VWAP of that party, such that the cash position of both
companies are identical.
Existing Auzex options are to be exchanged for equivalent
options in BBG on equivalent terms or converted into shares in
Auzex prior to the Australian Scheme taking effect.
Following the implementation of the Australian Scheme, the Board
of Directors of BBG will change so that it consists of two
non-executive directors nominated by GGG and two non-executive
directors nominated by Auzex. BBG will appoint three new
independent directors including the Chairman and Managing
Director.
Auzex will spin out its non-Bullabulling assets and its
shareholding in GGG into a separate vehicle ("AZX2") prior to the
Australian Scheme.
In the meantime GGG and Auzex have formed a management company
called BBG Management Pty Ltd., owned by GGG and Auzex in equal
shares ("OpCo"). This entity has assumed the management of the
Bullabulling Gold Project to progress the agreed development
strategy. The Board of OpCo comprise 3 directors from each of GGG
and Auzex with Nigel Clark from GGG and Chris Baker from Auzex
acting as co-Chairman until a new Non-Executive Chairman is
appointed. OpCo has commenced a search for a Chairman, Managing
Director and a third non-executive director all of whom will
subsequently become directors of BBG.
GGG and Auzex have agreed to provide OpCo with sufficient
funding to meet three months budgeted expenditure for the
Bullabulling Project within 5 days of completion of a capital
raising by Auzex and to keep OpCo funded for at least two months of
budgeted expenditure on a rolling basis.
On 19 September 2011, GGG and Auzex announced the signing of the
Merger Implementation Agreement and preparations for the UK Scheme
of Arrangement documentation, EGM Notice and Admission Documents
for Bullabulling Gold are in progress. In Australia, the
preparation of the EGM notice for the divestment of Auzex's
non-Bullabulling assets is underway.
FUTURE WORK PLAN
The following work is expected to be completed in the coming
months:
-- Complete Phase Two infill drilling to convert a substantial
portion of the Inferred Resources into Indicated Resources
-- Update resource estimation based on Phase Two infill drilling
-- Complete 20,000 metres of Phase Two exploration drilling
-- Finalise preliminary engineering design
-- Sign-off on capital costs
-- Sign-off on processing costs
-- Optimisation and ore reserve estimation
-- Commence geophysical studies to target high grade deep exploration
-- Drilling of potential high grade targets
-- Start next phase of drilling, either exploration or infill,
driven by the results of optimisation studies
-- Completion of Pre-Feasibility Study
COMPETENT PERSON STATEMENT
The information in this letter/report that relates to the
Exploration results, the 1998 Mineral Resource estimate and data
that was used to compile the 2010 and 2011 Mineral Resource
estimates is based upon information compiled by Dr. Jeffrey
Malaihollo who is a full-time employee of the Company and Fellow of
The Australasian Institute of Mining and Metallurgy and a Fellow of
the Geological Society of London. He is qualified as a Competent
Person under the Code for the Reporting Mineral Exploration
Results, Mineral Resources and Mineral Reserves, 2004 ("The
Reporting Code") prepared by the Australasian Institute of Mining
and Metallurgy and the Australian Institute of Geoscientists. Jeff
Malaihollo consents to the inclusion in the report of the matters
based on his information in the form and context in which it
appears.
The information in this letter/report that relates to the 2011
Mineral Resource estimate is based on information compiled by
Richard Sulway. Richard Sulway is a member of the Australasian
Institute of Mining and Metallurgy (MAusIMM) CP and has sufficient
experience which is relevant to the style of mineralisation and
type of deposit under consideration and to the activity to which he
is undertaking to qualify as a competent person as defined in the
2004 edition of the "Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves". Richard Sulway is a
full-time employee of Snowden Mining Industry Consultants Pty
Ltd.
Contacts:
David McArthur David Brook
GGG Resources plc (Australia) Professional Public Relations
41 Stirling Highway (Australia Media)
Nedlands, WA, 6009
Australia Email: david.brook@ppr.com.au
Tel: +61 8 9423 3200 Tel: +61 8 9388 0944 / +61 433
112 936
----------------------------------------- --------------------------------
Dr. Jeffrey Malaihollo Westhouse Securities Limited
Managing Director, GGG Resources (UK Nominated Adviser)
plc (UK) Tom Price / Martin Davison
Email: jeff.malaihollo@gggresources.com Tel: +44 20 7601 6100
Tel: +44 1992 531820
----------------------------------------- --------------------------------
Neil Boom Collins Stewart Europe Limited
MD, Gresham PR Ltd (UK media) (Broker)
Tel: +44 7866 805 108 John Prior / Adam Miller
Tel: +44 20 7523 8350
----------------------------------------- --------------------------------
1. Appendix 5B
1.1 Mining exploration entity quarterly 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
GGG RESOURCES PLC
-----------------
ARBN Quarter ended ("current
quarter")
143 978 376 30 SEPTEMBER 2011
----------- -----------------------
(a) Consolidated statement of cash flows
Current quarter Year to date
Cash flows related to operating $A'000 (9 months)
activities
$A'000
---------------- -------------
1.1 Receipts from product sales
and related debtors
Payments for (a) exploration
and evaluation (4,352) (8,307)
(b) development
(c) production
1.2 (d) administration (328) (1,169)
1.3 Dividends received
Interest and other items of
1.4 a similar nature received 376 379
1.5 Interest and other costs of
finance paid
1.6 Income taxes paid
1.7 Other (provide details if
material)
Net Operating Cash Flows (4,304) (9,097)
----- --------------------------------- ---------------- -------------
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
1.10 Loans to other entities
1.11 Loans repaid by other entities
1.12 Other (provide details if
material)
Net investing cash flows
---------------- -------------
Total operating and investing
cash flows
1.13 (carried forward) (4,304) (9,097)
----- --------------------------------- ---------------- -------------
Total operating and investing
cash flows
1.13 (brought forward) (4,304) (9,097)
----- ----------------------------------
Cash flows related to financing
activities
Proceeds from issues of shares,
1.14 options, etc. - 8,129
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 - (715)
--------- ---------
Net financing cash flows - 7,414
----- ---------------------------------- ---------
Net increase (decrease) in
cash held (4,304) (1,683)
Cash at beginning of quarter/year
1.20 to date 19,755 16,285
Exchange rate adjustments
1.21 to item 1.20 150 999
--------- ---------
1.22 Cash at end of quarter 15,601 15,601
----- ---------------------------------- --------- ---------
(b) Payments to directors of the entity and associates of the directors
(c) Payments to related entities of the entity and associates of the related entities
Current quarter
$A'000
----------------
Aggregate amount of payments to the parties
1.23 included in item 1.2 101
----------------
1.24 Aggregate amount of loans to the parties Nil
included in item 1.10
------- ------------------------------------------------- ----------------
1.25 Explanation necessary for an understanding of the transactions
All intercompany loans have been eliminated at consolidation
for purposes of this report
---------------------------------------------------------------------------
(d) 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
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
------------------------------------------------------------
(e) Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available Amount used
$A'000 $A'000
3.1 Loan facilities - -
----------------- ------------
3.2 Credit standby arrangements - -
---- ---------------------------- ----------------- ------------
(f)
(g) Estimated cash outflows for next quarter
$A'000
-------
4.1 Exploration and evaluation 3,600
-------
4.2 Development
-------
4.3 Production
-------
4.4 Administration 700
---- --------------------------- -------
Total 4,300
---- --------------------------- -------
1.2 Reconciliation of cash
Reconciliation of cash at the Current quarter Previous quarter
end of the quarter (as shown $A'000 $A'000
in the consolidated statement
of cash flows) to the related
items in the accounts is as follows.
---------------------------------------- ---------------- -----------------
5.1 Cash on hand and at bank 15,601 19,755
---------------- -----------------
5.2 Deposits at call - -
---------------- -----------------
5.3 Bank overdraft - -
---------------- -----------------
5.4 Other (provide details) - -
---------------- -----------------
Total: cash at end of quarter
(item 1.22) 15,601 19,755
----- --------------------------------- ---------------- -----------------
(a) Changes in interests in mining tenements
Tenement Nature of interest Interest Interest
reference (note (2)) at beginning at end
of quarter of quarter
----------- ------------------- -------------- ------------
6.1 Interests in
mining tenements
relinquished, N/A
reduced or
lapsed
----------- ------------------- -------------- ------------
6.2 Interests in
mining tenements N/A
acquired or
increased
----------- ------------------- -------------- ------------
(b) 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 Amount paid
per security up per security
(see note (see note 3)
3) (cents) (cents)
--------------------------- ------------- -------------- -------------- -----------------
7.1 Preference
+securities
(description)
------------- -------------- -------------- -----------------
7.2 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns
of capital,
buy-backs,
redemptions
----- -------------------- ------------- -------------- -------------- -----------------
+Ordinary
securities
7.3 ** 20,322,500 20,322,500 N/A N/A
------------- -------------- -------------- -----------------
7.4 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns
of capital,
buy-backs
7.5 +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)
------------- -------------- -------------- -----------------
7.8 Issued during
quarter
------------- -------------- -------------- -----------------
7.9 Exercised
during quarter
------------- -------------- -------------- -----------------
7.10 Expired during
quarter
------------- --------------
7.11 Debentures
(totals only)
------------- --------------
7.12 Unsecured
notes (totals
only)
----- -------------------- ------------- --------------
1.3 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:
Director/Company Secretary
Print name:
1.4 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 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.
== == == == ==
This information is provided by RNS
The company news service from the London Stock Exchange
END
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