Quarterly Report for the Period Ended March 31st 2009
27 April 2009 - 5:01PM
UK Regulatory
TIDMFND
Highlights
The Company reached a significant milestone with the successful
commencement of copper cathode production from the Wetar
Demonstration Plant. From 23rd February 2009 until the end of the
period, approximately 200 tonnes of LME Grade A cathode were
stripped, around 10% above the plant design capacity of 5 tonnes per
day.
PICTURE 1 - Wetar Cathode
Wetar Copper Project
* Demonstration plant fully commissioned on 23rd February
2009.
* Initial cathode sales coincided with a rebound in copper
prices and each shipment has attracted a premium above LME prices.
* 60,000 tonnes of 3.5% Cu ore stacked in two heaps and
under irrigation.
* Copper leaching rates in line with expectations.
* Feasibility Study targeted for completion in August 2009.
Ojolali Gold-Silver Project
* Ongoing low cost evaluation of geochemical targets within
the mineral district with the completion of 500m of trenching in
new target areas.
* Wide zones of gold bearing quartz veins observed in the
trenches indicate potential to extend the Jambi mineralized zone
for at least 250m to the NW.
Corporate
* Drawdown of US$1.5m convertible note facility with RCF.
* A$0.7m loans from directors, partly converted to shares
with balance to be converted upon shareholders' approval.
* Placement of 28 Million ordinary shares at 20c/9p in two
tranches to raise approximately A$5.6 million, subject to
shareholders' approval.
* EGM scheduled for 4th May 2009 and notice of meeting sent
to shareholders.
* T. Quinn Roussel appointed as non-executive director.
PICTURE 2 - Demonstration Plant at Wetar
Wetar Copper Project
Finders Resources Limited 93% and earning through expenditure,
subject to audit
Background Information
As part of an ongoing definitive feasibility study, a demonstration
SX-EW plant with 5 tonnes per day copper cathode capacity is
operational and is permitted to process 100,000 tonnes of ore from
the Kali Kuning deposit. The Company is targeting commercial
production of 20-25,000 tonnes per year cathode in 2010, subject to
schedules for engineering design work and project funding.
Demonstration Plant
Full power and ramp-up of the demonstration plant was achieved on
23rd February 2009 and the maiden shipment of cathode occurred on 6th
March 2009.
Although the primary objective of the demonstration plant is to allow
optimization of operating parameters for the Feasibility Study and
"proof of concept" for the planned expansion project, other critical
benefits for the Company include a source of cash flow and hands-on
training experience for our staff and employees.
By the end of the period, approximately 60,000 tonnes of Kali Kuning
ore with an average grade of 3.67% Cu had been stacked in the first
three test heaps.
Leaching performance is aligned with estimates of recovery rates from
the scaled-up column test results, whilst the electrowinning plant
performance has exceeded design capacity. Key indicators are
summarized below:
Table 1: Operating Indicators*
Leach Performance Heap 1 Heap 2 Heap 3
Recovered Copper (this period) - Tonnes 127 157 26
Approx. % Copper Recovery 22% 17% 4%
Approx. Number of weeks under Irrigation 11 7 1
Electrowinning Period Target Variance
Copper Harvested - Tonnes 201 182 10%
Copper Shipped - Tonnes 176 150 17%
*All subject to final mass balances and weight reconciliations
Each of the cathode shipments have had representative samples assayed
by Copper Refineries Pty. Ltd. Townsville, Queensland. All
shipments comprise cathode of high quality and comfortably meet the
quality standard for LME A grade copper (BS EN 1978:1998) with, on
average, total impurities less than 10.5ppm.
From the outset, each shipment of Wetar cathode has attracted a
significant premium above the LME copper price from Asian buyers.
PICTURE 3 - Loading, Preparing, Sampling & Tank House
Feasibility Study
As advised in the previous quarter, the Board considered it was
prudent to finalise the bankable study once SX-EW plant purchase
options (used or new) were clearer and once operating data from the
test heaps is sufficiently robust to ensure that the final study has
minimal capital cost and technical risk.
Initial performance data from the test heaps is now available and
Finder's has been invited to bid for two used SX-EW plants.
Arrangements have therefore been made with key consultants,
Australian Mine Design and Development Pty Ltd, Ausenco, SRK
Consulting, ENSR and Helman & Schofield to restart the work required
to finish the study.
At this stage, with critical operational results from the test heap
leach pads due in the next two months, it is expected that the study
will be completed in August 2009.
Ojolali Project
Finders Resources Limited 72% with option
Background Information
Finders believe that the Ojolali project has strong potential to
generate short-term cash flow by open pit CIL/CIP development of the
gold resource at the Jambi Oxide gold deposit (Table 2.)
Table 2. Jambi Resource Estimates
Cut Indicated Inferred Total Contained Attrib.
off FND
Au Mt Au Ag Mt Au Ag Mt Au Ag Au koz (72%) Au
g/t g/t g/t g/t g/t g/t g/t koz
0.5 2.98 1.1 8.3 1.1 0.9 5.7 4.08 1.05 7.6 138 99
1.0 1.13 1.74 8.5 0.3 1.6 6.7 1.43 1.71 8.1 79 57
Finders has previously announced Inferred Resources at the Tambang
Prospect (7.9 Mt @ 167g/t Ag and 0.7 g/t Au at a 1 g/t Au equivalent
cut-off using drilling data from a previous explorer). Other
prospects have outstanding potential for the discovery of additional
resources using modern geophysical techniques to optimize drill
targeting.
Recent Activities
Activities during the quarter were restricted to surface mapping and
trenching to follow up target areas defined by the 2008 detailed soil
geochemical program.
A total of 440m of trenching was completed. Trenches were hand dug to
bedrock, and channel sampled at 2m intervals, with selected zones
also tested by panning for gold. An additional 160m of surface
outcrops was sampled by channel sampling. Reconnaissance geological
mapping and prospecting was also completed over approximately 25 Km2.
At Jambi North, low density of quartz veins (1-10cm thick) with fine
pannable gold has been encountered in three trenches over widths of
up to 50m, extending for 250m to the NNW from the northern tip of the
current Jambi drilling area. A similar gold/arsenic soil anomaly
extending to the north east is currently being followed up by
trenching. Subject to the results of channel sampling from these
trenches, this discovery has the potential to significantly increase
the open pit resource base for the Jambi deposit.
PICTURE 4 - Location Map
Corporate
Board Changes
On 25th March 2009 Thomas Quinn Roussel was appointed to the Board of
the Company. Mr Roussel is a Principal with Resource Capital Funds
("RCF"). Prior to joining RCF in 2006, he worked in the capacity of
corporate development for Asian American Coal, Inc ("AACI"), one of
RCF's portfolio companies in China. He holds MBA degrees from the
University of South Carolina and Wirtschafts Universitat-Wien as well
as a BSc in Mining Engineering from the Colorado School of Mines.
During March, Russell Fountain, who has had the role of executive
Chairman since the Company was established, became non-executive
Chairman. He is continuing to provide technical expertise in respect
of the completion of the Wetar feasibility study, specifically in
matters related to the practical geological interface with mining and
metallurgical operations, continuing exploration of the highly
prospective tenements elsewhere on Wetar Island and directing all
other exploration activities in the Company.
Mr Ian Neuss has retired as Dr Fountain's alternate.
Corporate Structure
On 16th January 2009, Finders announced that it had entered into a
Convertible Note Facility Agreement ("Facility") with Resource
Capital Fund IV L.P. ("RCF"). Finders drew down the entire Facility
of US$1.5 million during the quarter. The note carries a coupon rate
of 12% per annum maturing 20th January 2012. The note is convertible
to Finders shares at 37.2 cents per share, subject to shareholders'
approval.
The Company also entered into loan agreements, with four of its
Directors lending the Company a total of AUD$714,000. Subject to
shareholders' approval, these unsecured loans would convert into
Finders shares as follows:
i) AUD$134,000 being interest free, would convert at A$0.50 per
share, unless the relevant Director has earlier elected to apply the
loan amount to the exercise of existing options; and
ii) AUD$580,000 being at an interest rate of 10% per annum, would
convert to shares at the market price at the time of the shareholders
approval.
All relevant directors subsequently, by 20th March 2009, elected to
exercise their existing options to the value of AUD$134,000 and apply
the loan amounts receivable from the Company, also totaling $134,000,
to the exercise of these existing options.
On 20th March 2009, Finders announced a placement of 28 million
shares at 20 cents/9 pence per share to raise AUD$5.6m before
financing charges (final numbers subject to exchange rate
fluctuations). The issue comprises two tranches: the first tranche
of 6.4 million shares was placed on 27th March 2009; the second
tranche of 21.6 million shares is subject to shareholder approval at
an Extraordinary General Meeting to be held on 4th May 2009. The
placement consists of up to 25 million shares at AUD$0.20 per share
through Southern Cross Equities and 3 million shares at 9p per share
through FinnCap in London.
The placement was strongly supported by existing shareholders,
including RCF, but also includes a significant contribution from
Acorn Capital, who is new to the Company's share register and will
become a significant shareholder in the Company on completion of the
proposed share issue.
Table 3. Current Capital Structure
Type of Security Number on Issue
Fully Paid Ordinary Shares
("Shares")
Shares on issue at 31
December 2008 84,051,835
Placement of shares 6,400,000
Exercise of options 288,133
Issued in payment of convertible note
facility fee 112,500
Shares on Issue at 31
March 2009 90,852,468
Exercise
Unlisted Options Price Expiry Date
June 13 ,
A$0.6875 2010 500,000
Total Unlisted Options on
issue 500,000
Note: the following options expired during the period:
Unlisted Options Exercise Price Expiry Date
A$0.50 March 20, 2009 2,802,234
24p March 22, 2009 1,322,881
Total Expired 4,125,115
Options
Table 4. Top 20 (April 24th 2009)
Shareholder Shares %
1 EXSOLUTIONS PTY LIMITED* 6,414,535 7.1%
2 RESOURCE CAPITAL FUND IV L P 6,081,020 6.7%
3 MR IAN DAVID NEUSS* 5,869,943 6.5%
4 DR CHRISTOPHER BEN FARMER 5,556,202 6.1%
5 TENNANT METALS PTY LIMITED* 5,437,561 6.0%
6 LUJETA PTY LTD 5,386,250 5.9%
7 LYNCHWOOD NOMINEES LIMITED 4,455,000 4.9%
8 MR STEPHEN DE BELLE* 2,646,164 2.9%
9 DARLEY PTY LIMITED 2,243,403 2.5%
10 LOMACOTT PTY LTD 1,811,003 2.0%
11 CLODENE PTY LTD 1,595,102 1.8%
12 M H STIRZAKER* 1,493,845 1.6%
HSBC CUSTODY NOMINEES (AUSTRALIA)
13 LIMITED 1,000,000 1.1%
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY
14 LIMITED 1,000,000 1.1%
15 MR STEPHEN JACK FOUNTAIN 936,000 1.0%
16 MR HENRY WIECHECKI 901,500 1.0%
MR DAVID JEFFREY TAYLOR + MRS ROSEMARY
17 HELEN TAYLOR 882,717 1.0%
18 FORTIS CLEARING NOMINEES P/L 859,750 0.9%
19 BARCLAYSHARE NOMINEES LIMITED 791,933 0.9%
20 TREECITY PTY LTD 771,968 0.8%
* and related parties 56,133,896 61.8%
Interim Financial Report December 31st 2008
On 13th March, the Company lodged the Interim Financial report for
the six months to December 31st 2008. Headline numbers are in the
following table, full disclosure is available in the published report
on the Company's website (click to follow link).
Table 5. Half-year ended 31 December 2008
2008 2007 Movement
A$ '000 A$ '000 %
Revenues from ordinary activities 51 122 (58%)
Loss from ordinary activities after tax (5,009) (1,739) (188%)
attributable to members
Net loss for the period attributable to (5,009) (1,739) (188%)
members
Loss per share - basic (cents) (7.2) (3.4) (112%)
Loss per share - diluted (cents) (7.2) (3.2) (125%)
Outlook
With the Wetar demonstration plant now in production, the Group's
priority is to complete the Feasibility Study, with a view to
unlocking the value of the project through the development of a
20,000 to 25,000 tonnes per year copper cathode operation. Initial
results from the demonstration plant have added to the already high
confidence level that the expansion project is technically feasible
and economic.
It is expected that, with consistent production from the
demonstration plant for the remainder of the year and a continued
upturn in LME copper prices, the Company's working capital position
can be maintained until project finance for the Wetar expansion
project is secured. The Company has a secured loan of US$ 5 million
from Meridian International Capital Limited which is required to be
repaid by 31 December 2009. The current plan is that this will be
repaid at the time project finance is secured for the Wetar expansion
project.
The Company is also currently evaluating options to increase
production from the demonstration plant.
As at 31 March 2009, Finders had A$0.43m cash in hand.
The mining exploration entity quarterly report (Appendix 5B) is
appended.
Chris Farmer
Managing Director
Further details for all projects including location maps, tenement
schedules and technical descriptions may be found on the Finders
website at www.findersresources.com
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