Austindo Resources Corporation NL. March 2008 Quarter Activities Report

Transcription

1 Austindo Resources Corporation NL March 2008 Quarter Activities Report ABOUT AUSTINDO Formed in 1983, Austindo Resources Corporation NL (ASX Code: ARX) is an Australian listed gold company focused on developing projects in Indonesia. The company s key project is Cibaliung, a high-grade epithermal gold/silver vein system located southwest of Jakarta in Banten Province, western Java. Cibaliung is expected to produce at an annual rate of 70,000 oz (gold equivalent). Two key strategic alliances in Indonesia are taking Austindo closer to achieving its growth objective. In association with Anglo American Group, the Company is exploring for large porphyry copper/gold deposits in Papua. In addition the Company has a 95% joint venture interest with PT Sumber Mineral Nusantara in the Pekalongan and Trenggalek tenements located in Central and East Java respectively, areas prospective for low sulphidation epithermal gold/silver deposits similar to the Cibaliung project. Cibaliung Gold Project Indonesia Ground conditions in the decline proved to be very poor throughout the quarter. Remedial work was required on both the Cikoneng Decline and the Cikoneng Vent Shaft Access development following significant overbreak early in the quarter. Total decline development to date has advanced to over 674 metres. Further scoping and procurement was undertaken during the quarter to support the construction, refurbishment and commissioning of the gold processing plant. Subject to funding and satisfactory project development progress, the Company anticipates that first gold pour will now be delayed until the third quarter of The Company initiated discussions with a number of potential farm-in partners to fund the major portion of the remaining development expenditure through to positive cash flow. Negotiations with interested parties are continuing. Project Generation Indonesia Limited exploration activity was undertaken during the quarter due to the Company s focus on the development of the Cibaliung Gold Project. Expenditure Austindo Resources Corporation NL ABN Level 8, North Tower 459 Collins Street Melbourne VIC 3000 AUSTRALIA Tel: info@arx.net.au Corporate Total exploration and development expenditure in Indonesia during the quarter amounted to A$8.7m. Following shareholder approval the Company completed a A$ million Debt for Equity conversion involving the issue of 1,877,489,177 Fully Paid Ordinary Shares and 187,748,918 Options to ANZ, Bridging Loan Providers and Convertible Note holders.

2 CIBALIUNG GOLD PROJECT INDONESIA (89.75%) The Cibaliung Gold Project is operated by PT. Cibaliung Sumberdaya, a joint venture company established between the Company and PT. Antam Tbk ( Antam ). Cibaliung is located in Banten Province near the western tip of the island of Java, 150km south west of Jakarta. Key development and production parameters for the Cibaliung Gold Project are: Two shoot epithermal vein-gold deposit; Logistically well located within a 4 hour drive from Jakarta; Mine life of 6 years with a production rate of 240,000 tonnes per annum with recovery of gold and silver by a conventional CIL processing plant; Mining by conventional underground cut and fill stoping with decline access; Annual production of approximately 70,000 ozs gold equivalent; The Company anticipates that first gold pour will occur within the third quarter of 2008 subject to funding, satisfactory underground development and progress in terms of construction of the gold processing plant and development of mine infrastructure. Decline Development Ground conditions in the decline proved to be very poor throughout the quarter. Remedial work was required on both the Cikoneng Decline and the Cikoneng Vent Shaft Access development following significant overbreak early in the quarter. Total decline development now exceeds 674 metres (including muck bays and other underground development). The remaining distance to the ore body is less than 96 metres on one heading and 65 metres on the other. The Company now expects to commence stockpiling ore in late June and is targeting a stockpile in the order of 10,000 tonnes prior to commencing gold Page 2 of 7

3 Gold Processing Plant Civil, structural and mechanical installation work was undertaken during the quarter although progress was hampered by wet weather. A detailed construction and commissioning schedule is now being finalised which will also take refurbishment work into account as required. Expenditure Cibaliung Gold Processing Plant Expenditure in relation to development of the Cibaliung Gold Project totalled A$8.4 million during the quarter. Base Case Financial Model A revised Base Case Financial Model (BCFM) was completed in January The BCFM assumed that first gold pour would be achieved by the second quarter 2008 with production scheduled to ramp up to planned throughput of 240,000 tonnes per annum over a 16 month period from first gold pour and to achieve positive cash flow in the September quarter of The revised BCFM identified total development (Capex and Opex) costs from commencement of construction in July 2005 through to positive cash flow are expected to amount to US$112.5 million. Total development expenditure (excluding project exploration and development prior to July 2005) to 31 March 2008 stood at approximately US$74.5 million. The BCFM identified that further funding in the order of US$38 million would be required to achieve positive cash flow (including an additional provision for contingency but excluding planned exploration at Cibaliung). Additional costs will be incurred as a result of the delay in first gold pour to the third quarter The Company, as a matter of practice, continues to review development and operating costs in relation to the project. This process may identify further cost increases in a number of Page 3 of 7

4 Funding Strategy The Company recently raised $13.1m from a Rights Issue which closed 16 April 2008 and was partly underwritten by ANZ. The Company initiated discussions during the quarter with a number of potential farm-in partners to fund the major portion of the remaining development expenditure through to positive cash flow in exchange for a significant equity interest in the project. Negotiations with interested parties are continuing. The Company will shortly require further funding to continue the development of the Cibaliung Gold Project if a farm-in partner is not identified. If such funding is not obtained in a timely manner the Company will need to significantly reduce operations at Cibaliung in order to conserve cash. In addition the Company will require further funding to meet its exploration objectives assuming that it is successful in attracting a farm-in partner. Cibaliung Exploration The exploration team continued providing technical support to the mine decline development. This work included underground geological mapping and the supervision of diamond drilling. The first phase of infill drilling for stope definition at the top of the Cikoneng ore-shoot was completed late in the quarter. A total of eight inclined diamond holes (AC-135, AC-139 to AC-145) was completed for m. Assay results were received for five of these holes during the quarter. Drill-hole details and best mineralised intercepts are presented below. The results from infill drilling received to-date generally confirm the expected grades and lode-thickness at the top of the Cikoneng ore-shoot. Table 1: Cibaliung Project Infill Drilling on Cikoneng Ore-shoot Summary of Drill-hole Details Final Collar Collar Collar Collar Collar Hole ID Depth mn me mrl Dip Azimuth AC-135 9,254, , AC-139 9,254, , AC-140 9,254, , AC-141 9,254, , AC-142 9,254, , AC-143 9,254, , AC-144 9,254, , AC-145 9,254, , Page 4 of 7

5 Hole ID Table 2: Cibaliung Project Infill Drilling on Cikoneng Ore-shoot Summary of Best Mineralised Intercepts From To Interval Au g/t Ag g/t Core Recovery True Width Ore Type AC % 2 QBX/QSV AC % 3.5* FCA/QBX % FCA/QBX % QBX AC % 4.3 FCA/QBX % QBX % QBX AC % 2.8 QBX % QBX AC % 8.6 FCA/QBX % FCA % QBX/QSV % QBX/QSV ORE TYPES: FCA Clayey cataclasite on contact of ore-shoot QBX Strongly mineralised, brecciated banded quartz vein QSV Strongly mineralised banded quartz vein * The lower contact of this intercept abuts a local mine cavity Expenditure in relation to Cibaliung Exploration totalled A$0.3 million. PROJECT GENERATION INDONESIA Page 5 of 7

6 The Company is exploring for high-grade epithermal gold-vein deposits on the island of Java, which lies on the highly prospective Sunda-Banda volcanic arc. The geological settings of the Company s Cibaliung, Trenggalek and Pekalongan projects on Java show strong similarities to world-class gold deposits lying on or close to the same volcanic arc (Pongkor & Gosowong). Total Expenditure for exploration completed on the Trenggalek and Pekalongan projects totalled A$86,000 during the quarter. Trenggalek Project, East Java (ARX 95%) A two-year extension to the Trenggalek Exploration KP tenement was signed by the regency government, late in The area of the KP tenement was expanded from 17,586 ha to 30,044 ha to cover additional prospective ground identified in regional reconnaissance work during A remote-sensed imagery interpretation and field checking of the Trenggalek project area was completed by a geological consultant during the quarter. The study supports that the project contains several major prospects with outstanding, largely untested potential for the discovery of economic gold mineralisation. This work has also advanced the Company s understanding of the project area and provides a better geological framework for the planning of future exploration programs. Pekalongan Project, Central Java (ARX 95%) The Pekalongan KP exploration area in Central Java covers 5,618 ha. An application for a two-year extension to this KP tenement, which expires in May 2008, will be made to the regency government early in the next quarter. A permit to access forestry production areas, which cover about 60% of the Exploration KP, was received from the Department of Forestry early in the quarter. This permit is valid for two-years and is extendible. It allows the Company to undertake detailed exploration activity in all forestry production areas within the KP. This includes further work at the Kuning gold prospect which, subject to funding, could be quickly advanced to drill testing. Papua Aisasjur Project - Anglo Strategic Alliance (ARX 20%) The Company has a strategic alliance with the Anglo American Group (Anglo) to explore for large copper and gold deposits in Papua. The Company has a 20% joint venture interest in the Aisasjur Project while Anglo has the obligation to fund all exploration activities pursuant to the terms of the strategic Page 6 of 7

7 The Aisasjur KP tenement in the Kepala Burung area of West Papua Province covers 9,486 ha. Geologically, the project area lies within one of Indonesia s young volcano-plutonic arcs and is prospective for large porphyry copper-gold and epithermal gold-silver deposits. Mineralised intrusive rocks intersected in deep drilling completed by Anglo early last year show a similarity in age, geological setting and geochemistry to the Grasberg Igneous Complex, located about 500 km to the east-southeast along the New Guinea Fold Belt. No field activity to report during the quarter. Anglo and ARX continue working toward obtaining a new forestry access permit to the KP exploration area, which will allow us to undertake further diamond drilling of deep porphyry copper-gold targets identified on the Aisasjur Prospect. The information in this report that relates to Exploration Results is based on information compiled by Mr. Brad Wake, who is a member of the Australian Institute of Geoscientists. Mr. Wake has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity 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. Mr. Wake consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. This report is dated 29 April For further information please contact: Andrew J. Cooke Company Secretary Tel: Page 7 of 7