Luiri Gold Limited: Quarterly Report to 31 October 2011
25 November 2011 - 9:39AM
Marketwired Canada
HIGHLIGHTS OF THE QUARTER
Luiri Hill Gold Project, Zambia
-- Negotiations with the Zambian Government continued during the quarter
culminating in the Zambian Ministry of Mines and Mineral Development
reinstating the Company's Large Scale Mining License, LML 48.
-- Exploration work progressed with trenching to expose extensions to known
mineral resources and to delineate drilling targets.
-- Maxwell GeoServices engaged to reorganize, validate and maintain the
Company's exploration database.
-- Coffey Associates contracted to produce a new resource estimate.
-- An agreement was reached with Senior Chief Shakumbila to establish and
fund a Community Development Trust for the benefit of the communities in
the vicinity of the Company's area of operations.
-- Recruitment of two experienced Zambian geologists to oversee exploration
activities at Luiri Hill well advanced.
Corporate
-- Completion of a private placement of 10,000,000 common shares at an
issue price of A$0.115 to raise A$1.15 million.
-- Cash on hand at end of Quarter: A$2.7 million.
Luiri Gold Limited (ASX:LGM)(TSX VENTURE:LGL), ("Luiri" or the "Company) an East
African gold exploration and development company, is pleased to announce its
Quarterly Activities Report for the 3 months ended 31 October 2011.
LUIRI HILL GOLD PROJECT
Mining License Reinstatement
With the reinstatement of the large-scale mining license, the Company is gearing
up to recommence full-scale exploration activities and development studies in
Zambia. The mining license 8074-HQ-LML (previously called LML 48) contains the
Matala and Dunrobin gold deposits in the Company's Luiri Hill Gold Project.
Under the terms of the settlement reached with the Government of Zambia and
other agreements with relevant stakeholders:
-- The Government of Zambia has extinguished the Cancellation Notice issued
on 15 June 2010 in respect of LML 48, and the Company has discontinued
its appeal against the decision of the Honourable Minister of Mines.
Accordingly, the Government of Zambia has confirmed that LML 48 is once
again valid and effective as if the Cancellation Notice had never been
issued. Under the new naming system, this license is now known as 8074-
HQ-LML.
-- As a key part of the settlement, the Company has agreed to continue
project development activities and to be in a position to commence
construction of a mining project prior to December 31, 2013. The
timeframe allows for two complete dry seasons in which to progress and
complete field exploration and development studies. The directors of
Luiri believe this provides the Company with sufficient time to complete
the necessary exploration activities prior to commencing possible mine
development.
-- The Company has also made meaningful commitments to the local community
with the initial funding of a community development trust and the
facilitation and funding of a community development committee, each as
further described below.
The agreements are the result of extensive negotiations by the management team
of Luiri with the relevant Zambian Government departments and stakeholders to
resolve the various issues that had caused the Cancellation Notice. During the
negotiations, Luiri demonstrated good faith by continuing to employ 29 full time
workers and taking on 15 additional personnel on short-term contracts to
progress exploration trenching in preparation for a new drilling program.
Other Tenement Matters
During the quarter, negotiations with the Zambian government also considered
future access to the ground previously covered by the Company's two prospecting
licenses. The following outcomes have been established at the date of this
report as a result of these negotiations:
-- PL209 and PL 173 were due to expire on 1 October 2011 and 31 July 2011
respectively which was, in both cases, earlier than Company records had
indicated;
-- Both licenses had previously been renewed by the former management for
the maximum number of times so further renewals were not possible;
-- The former management of the Company had applied for a new mining
license on the part of PL173 that was to the east of 8074-HQ-LML (LML48)
and prospective for gold mineralisation. However, this application had
not progressed due to the suspension of LML48.
Negotiations are continuing with the Zambian Government in regard to these
license issues.
As a result of these outcomes, the Company has sharpened its strategic focus
onto the development of a gold project. These outcomes have also resulted in the
Nambala Iron Ore prospect no longer being held by the Company.
The Company had reviewed the Nambala Iron Ore prospect and considered it as a
possible source of iron ore for a small-scale Zambian steelmaking operation.
Regional transport infrastructure constraints added to the limited known
geological potential of the project contributed to the Company placing little
immediate value on the Nambala Iron Ore prospect. The new management has focused
on ensuring the Company regained access to its gold prospective areas as the
source of future shareholder value.
Exploration Activities
During the quarter, the Company initiated work in preparation for the resumption
of full-scale exploration activities. Discussions were held with Coffey
Associates, Perth Office, ("Coffey") who had been responsible for the major part
of previous resource estimates. Following recommendations from Coffey, Maxwell
GeoServices ("Maxwell") were engaged to reorganize, validate and maintain the
Company's geological database. The information comprising the geological
database has been collected and provided to Maxwell. Coffey Associates will be
in Zambia during November 2011, for site visits to the Luiri Hill Project, and
to the Company's Lusaka office. Core samples from previous exploration are kept
on the project site whilst hard copies of exploration records are kept in the
Lusaka office.
The Company also updated its geological mapping hardware and software. Local
copies of the geological database will be used in planning and coordination of
field activities.
Recruitment of Local Geologists
During the quarter, geologists and other technical staff from Caracle Creek
International Consulting (CCIC) supported the Company's exploration activities.
The Company has entered a consulting agreement with CCIC, who will supply long
term support to the exploration work.
The Company also plans to engage two experienced local geologists to oversee
exploration work on the Luiri Hill Gold Project. Recruitment activities were
commenced and at the time of publication of this report, two suitable candidates
had been engaged.
Community and Environment
A key plank in the Company's negotiations in securing a reinstatement of its
mining lease was reaching agreements with the local community and Senior Chief.
These agreements will form a stable base from which the Company can develop
strong local alliances into the future. The Company has agreed to:
-- pay US150,000 to establish and fund a community development trust fund
(the "Community Fund"), which has been established by His Royal
Highness, Senior Chief Shakumbila.
-- issue (or transfer) to the Community Fund shares in Luiri Gold having a
value equivalent to 5% of the market value of the project, based on an
independent valuation of the project at the date of issue.
-- Facilitate and fund a local community development committee drawn from
the Shakumbila Chiefdom. This committee will monitor and administer the
funding of social development projects and activities within the Luiri
Gold project area.
-- Engage Senior Chief Shakumbila as a consultant to advise on issues
concerning the Company's interaction with the local community as well as
the Government of Zambia.
The Company has reviewed previous environmental studies and plans to actively
revalidate these in the forthcoming quarter. This will include continuation of
the previous base line environmental assessments so that any development
activities are in line with international best practices.
On behalf of the Board of Directors of the Company,
Mike Langoulant, Director and Corporate Secretary
Cautionary Note Regarding Forward Looking Statements: Certain disclosure in this
release, including statements regarding the exploration and study program in
relation to the area comprising LML 48 and the Company's plans and intentions
with respect to the Company's exploration activities and obligations pursuant to
the settlement agreement with the Zambian government, constitute forward-looking
statements. In making the forward-looking statements in this release, the
Company has applied certain factors and assumptions that are based on the
Company's current beliefs as well as assumptions made by and information
currently available to the Company, including that 8074-HQ-LML remains in good
standing, that the Company is able to obtain any other required government or
other regulatory approvals and adequate financing to complete the planned
exploration activities, that the Company is able to procure equipment and
supplies in sufficient quantities and on a timely basis, and that actual results
of exploration activities are consistent with management's expectations.
Although the Company considers these assumptions to be reasonable based on
information currently available to it, they may prove to be incorrect, and the
forward-looking statements in this release are subject to numerous risks,
uncertainties and other factors that may cause future results to differ
materially from those expressed or implied in such forward-looking statements.
Such risk factors may include, among others, actual results of the Company\'s
exploration activities being different than those expected by management, delays
in obtaining required government or other regulatory approvals or financing,
inability to procure equipment and supplies in sufficient quantities and on a
timely basis, and general market conditions. Readers are cautioned not to place
undue reliance on forward-looking statements. The Company does not intend, and
expressly disclaims any intention or obligation to, update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise, except as required by law.
Appendix 5B
Mining exploration entity quarterly report
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.
Name of entity
LUIRI GOLD LIMITED
Quarter ended ("current
ACN quarter")
-------------------------- --------------------------------
139 588 926 31 October 2011
-------------------------- --------------------------------
Consolidated statement of cash flows
--------------------------------
Current quarter Year to date
(12 months)
Cash flows related to operating activities $A'000 $A'000
--------------------------------
1.1 Receipts from product sales and
related debtors
1.2 Payments for (a)exploration and
evaluation (658) (1,361)
(b)development
(c)production
(d)administration (131) (1,598)
1.3 Dividends
received
1.4 Interest and other items of a
similar nature received 25 122
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 (764) (2,837)
----------------------------------------------------------------------------
Cash flows related to investing
activities
1.8 Payment for
purchases of: (a)prospects
(b)equity
investments
(c)other fixed
assets (22) (22)
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)
Tenement Expenditure Guarantee
(refundable)
--------------------------------
Net investing
cash flows (22) (22)
--------------------------------
1.13 Total operating and investing
cash flows (carried forward) (786) (2,859)
----------------------------------------------------------------------------
1.13 Total operating and investing
cash flows
(brought forward) (786) (2,859)
----------------------------------------------------------------------------
Cash flows related to financing
activities
1.14 Proceeds from issues of shares,
options, etc. 1,150 2,031
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 (provide details if
material)
--------------------------------
Net financing cash flows 1,150 2,031
----------------------------------------------------------------------------
Net increase (decrease) in cash
held 364 (828)
1.20 Cash at beginning of quarter/year
to date 2,353 3,545
1.21 Exchange rate adjustments to item
1.20 2 2
--------------------------------
1.22 Cash at end of quarter 2,719 2,719
----------------------------------------------------------------------------
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'000
----------------
1.23 Aggregate amount of payments to the parties
included in item 1.2 118
----------------
1.24 Aggregate amount of loans to the parties included
in item 1.10
----------------------------------------------------------------------------
1.25 Explanation necessary for an understanding of the
transactions
-----------------------------------------------------------------
-----------------------------------------------------------------
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
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
----------------------------------------------------------------------------
Estimated cash outflows for next
quarter
$A'000
4.1 Exploration and
evaluation 500
4.2 Development
4.3 Production
4.4 Administration 150
----------------------------------------------------------------------------
Total 650
----------------------------------------------------------------------------
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 Current quarter Previous quarter
accounts is as follows. $A'000 $A'000
----------------------------------------
5.1 Cash on hand and at
bank 951 603
----------------------------------------
5.2 Deposits at call 1,768 1,750
----------------------------------------
5.3 Bank overdraft
----------------------------------------
5.4 Other (provide
details)
------------------------------------------------------------------------
Total: cash at end of quarter
(item 1.22) 2,719 2.353
----------------------------------------------------------------------------
Changes in interests in mining
tenements
----------------------------------------
Nature of Interest at Interest
Tenement interest beginning of at end of
reference (note (2)) quarter quarter
--------------------------------------------------
6.1 Interests in mining PL 209 & Expired 100% 0%
tenements PL 173
relinquished, reduced
or lapsed
--------------------------------------------------
6.2 Interests in mining 8074-HQ-LML Licence 100% 100%
tenements acquired or (formerly LML48) reinstated
increased by
agreement
with
Zambian
government
--------------------------------------------------
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 Amount paid up
price per per security
security (see note 3)
(see note (cents)
3) (cents)
---------------------------------------------------------------------------
7.1 Preference
+securities
(description)
----------------------------------------------------
7.2 Changes during
quarter
(a) Increases
through issues
(b) Decreases
---------------------------------------------------------------------------
7.3 +Ordinary 127,431,905 127,431,905
securities
----------------------------------------------------
7.4 Changes during
quarter
(a) Increases
through issues
- Placement 10,000,000 10,000,000 11.5 11.5
(b) Decreases
---------------------------------------------------------------------------
7.5 +Convertible debt
securities
(description)
----------------------------------------------------
7.6 Changes during
quarter
(a) Increases
(b) Decreases
---------------------------------------------------------------------------
Exercise
7.7 Options price Expiry date
1,000,000 AUD$0.20 13/05/2012
100,000 AUD$0.45 01/04/2015
100,000 AUD$0.60 01/04/2015
100,000 AUD$0.85 01/04/2015
8,800,000 AUD$0.17 30/06/2015
----------------------------------------------------
7.8 Issued during
quarter: 800,000 AUD$0.17 30/06/2015
----------------------------------------------------
7.9 Exercised during
quarter
----------------------------------------------------
7.10 Expired during
quarter
----------------------------------------------------------------------------
7.11 Debentures
(totals only)
----------------------------------------------------------------------------
7.12 Unsecured notes
(totals only)
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: Michael Langoulant (Company Secretary) Date: November 25, 2011
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 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.
Corporate Structure
Shares on issue 127.43m
Options 10.1m
52 week high A$0.27
52 week low A$0.09
Cash (as at 31 Oct) A$2.7m
Company Directors
Melissa Sturgess, Chairman
Evan Kirby, Managing Director
Mike Langoulant, Executive Director
Robert Brown, Non-Executive Director
See chapter 19 for defined terms.
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