QUARTERLY REPORT FOR THE PERIOD ENDED 31 MARCH 2007

Transcription

1 ACN QUARTERLY REPORT FOR THE PERIOD ENDED 31 MARCH 2007 ROCKLANDS COPPER PROJECT INCORPORATING LAS MINERALE CDU 100% Introduction The Rocklands Group Copper project located 15km from Cloncurry in NW Queensland is the main focus of the Company. Although availability of drill rigs is a significant problem, approximately 40,000m of drilling has been completed to date. Up to 5 rigs have been operating on the Las Minerale project during the quarter. By the end of the quarter this had reduced to 1 x RC and 1 x diamond drilling rig. By mid May, there should be 3 RC and 2 diamond drill rigs operating on the site. During the quarter a preliminary geological model was completed by Geological Consultants Terra Search Pty Ltd. Technical aspects of this model are to be presented jointly by Terra Search C.E.O, Simon Beams and the Rocklands Chief Geologist, Malcolm Carson, at the James Cook University Economic Geological Research Unit s, International Symposium on Breccias which is being held in Townsville in late June. In January the Company outlined a drill program of 50,000 metres for This has been increased to 150,000 metres subject to the availability of drilling rigs. The Directors believe rigs can be secured to fulfill this programme. Drilling Las Minerale Subject to drill availability and receipt of assay results, the Company expects to be in a position to complete a resource estimate for release to the market in July During the quarter drilling concentrated on infilling to 25m by 25m grid spacings within the Las Minerale Central Zone which extends for approximately 800m within the 1,250m Las Minerale strike. This infill drilling confirmed the continuity of the high grade copper including native copper and chalcocite), cobalt and gold mineralization within the Central Zone. Drilling was also undertaken to the west and to the east of the Central Zone in the Las Minerale West and East zones respectively. Page 1

2 The objective in this intensive drilling in the Las Minerale Central Zone is to define a measured and indicated resource to provide data for a mine development scoping and feasibility study based initially on the Central Zone which the Company is aiming to complete by the end of the year. Drilling to the north of Rocklands Central 25m behind drill hole DORC002 intersected a wide zone of visual sulphides chalcopyrite) mineralization. Drill hole DORC002 is the most south eastern hole drilled on the Las Mineral Zone and to date, represent the eastern end of the 1,250m strike length. Rocklands Central and Rocklands South Drilling has also been active at Rocklands Central Zone which consists of a number of subordinate parallel shears striking and coincident geochemical and geophysical anomalies which can be traced up to 2000m and which represent a significant resource target. To date the Rocklands Central Zone has been tested over a strike length of 500m with a further 10 drill sites prepared which will extend the drilling over 800m. The Directors are confident that the geological evidence in Central Rocklands supports the presence of significant copper mineralization The main shear at Rocklands Central and Rocklands South is traceable over 1,500 to 2,000m and inclusive with Las Minerale, represents a suite of 5 shears over an area 1,000m wide. To date the visual and geochemically supported aggregate length of the various shears being tested in Rocklands Central and Rocklands South is approximately 6,000m and as such collectively represent a significant copper target in addition to Las Minerale. During the preparation of drill pads along strike at 50m spacings along the Rocklands Grid visual malachite copper oxide mineral) over a width of up to 30m, clearly showed the presence of copper mineralization. As more drill rigs become available an intense drilling program will be implemented at Rocklands Central with the objective to further define and link where possible, these mineralized zones over the 1,000m wide zone to establish the scope for a single combined resource. Geology Update During the quarter, CuDeco s exploration team which now comprises of over 40 personnel) have been collecting, compiling and interpreting drilling, mapping, geophysical, geochemical and petrology data. This information is being input into a secure independently managed SQL data base and updated continuously. The diamond core drilling undertaken during the quarter has given the Company s geological team the opportunity to understand the lithological and structural controls on the mineralization and the complex weathering and supergene influences. Page 2

3 PRELIMINARY MODEL AND GEOLOGICAL INTERPRETATION OF LAS MINERALE The Las Minerale Preliminary Model and Geological Interpretation Report by Terra Search Pty Ltd is hosted on the CuDeco website and a summary of key points from the report is presented below. Drilling to date shows strong geological continuity in the mineralised system lode) of Las Minerale. The geological model explains the shape of the mineralised system, lithological, metamorphic and weathering relationships including supergene mineralization and the stratigraphy. It has been determined from the interpretation of the drilling data, that these relationships are complex. The following key points have been drawn from the Terra Search report: Copper mineralization at Rocklands is hosted in a series of sub parallel, linear zones with a general northwest trend of to magnetic. The mineralized lodes occur within a metamorphosed sedimentary sequence of fine quartz rich sandstone or quartzite, quartz magnetite sandstone, siltstone, limestone and calc silicates. Medium grained intrusive dolerite is very prominent in the area and appears conformable with the sediments. The overall attitude of the regional sedimentary sequence is a strike of west north west and a 25 0 to 40 0 dip to the north. At Las Minerale, the Chalcopyrite 1 mineralization occurs in a linear structure which cuts through the north dipping sedimentdolerite package at a high angle. In Las Minerale Central, from the analysis of diamond cores along line 11400E the structure has been observed to be striking west northwest at magnetic and steeply dipping either sub vertical or 70 to 80 0 to the south west. A geological plan and generalized section illustrating the lithological and structural setting as it is presently interpreted from the existing data) is provided below. Las Minerale structure has been shown to contain copper over a strike length of 1,200 metres and within this structure drilling indicates strong mineralization over 600 metres between 11000E and 11600E. 1 Chalcopyrite CuFeS2 ) is a primary copper iron sulphide mineral Page 3

4 The primary copper mineralization is evident as coarse splashes of irregular Chalcopyrite with coarse well formed Pyrite 2, particularly associated with calcite 3 quartz 4 vein and breccia 5 infill. Total sulphide content within the Las Minerale structure is variable from 12% up to 1020%. With respect to secondary mineralization oxides, native copper, chalcocite), oxidation of the sulphidic mineralized structures at Las Minerale and Rocklands South have generated acid fluids which have resulted in leaching, deep oxidation and supergene enrichment of copper. For example, within the oxidized zone, copper has been leached from near surface areas and redeposited as coarse nuggets of native copper. Copper carried in solution downwards to below the base of oxidation, replaces existing sulphides with strongly copper enriched minerals, namely chalcocite and bornite 6. The leaching and reprecipitation is responsible for some of the spectacular high copper grades. Oxidation at Las Minerale has been observed at vertical depths in excess of 100m. Terra Search note in the conclusion of their report, within the CuDeco tenements there are several other promising sub parallel linear breccia and alteration zones, additional to Las Minerale and Rocklands South. 2 Pyrite FeS2 ) is a primary iron sulphide mineral 3 Calcite is a mineral made of calcium carbonate CaCO 3 ). USGS Geologic Glossary) 4 Quartz is one of the most common minerals in the Earth s crust and in some newage boutiques). Made up of silicon dioxide SiO 2 ),lso called. 5 Breccia is a rock made up of angular fragments of other rocks held together by mineral cement or a finegrained matrix. Volcanic breccia is made of volcanic rock fragments, generally blown from a volcano or eroded from it. Fault breccia is made by breaking and grinding rocks along a fault. USGS Geologic Glossary) 6 Bornite Cu5 FeS 4 ) is an important copper ore mineral Page 4

5 MT NORMA OPERATIONS Mining at Mt Norma: Mining at Mt Norma is now entering the final phase to remove a targeted 100,000 tonnes of highgrade oxide ore. There is one more firing to be undertaken to enable the final stripback down to the 320 level by removal of approximately 50,000 tonnes of wasterock for transfer to the wasterock stockpile. During the most recent stripback a larger body of ore, not detected during exploratory drilling was encountered immediately above and directed down towards the main orebody. The southern face was sampled and graded at 9.95%Cu. Approximately 5,000 tonnes of ore was removed and stockpiled with the other parcels removed previously in readiness for screening and crushing. Indications are that this section of the orebody is plunging at angle to the south. This final phase will result in reaching the main orebody by the end of June, 2007 after which drilling and grade assay will be undertaken prior to firing and mining. It is now believed that the target tonnage will be exceeded by a substantial amount. The Company has purchased and is in the process of installing) a large grizzly for screening out the oversize ore. This oversize fraction will be crushed and blended with the undersize ore and transferred to the leach circuit. Mt Norma Copper Sulphate Plant: A decision has been made to implement a wholesale change to the mode of operation of the Mt Norma copper sulphate production operations. With the advent of substantial quantities of new ore from Mt Norma, and the granting of new lease area surrounding the existing operating leases still some way off, there is an immediate need to accommodate this ore into the Mt Norma leach circuit in order to gain early returns from its processing. The operation of four small leach vats is proving to be inefficient, and it has been decided to transfer the ore which still contains approximately 75% of the original copper content) from these small vats to our large vat Vat 5), which still has capacity for some 20 30,000 tonnes of ore. The four vats will be remodelled and extended into one large vat new Vat 1), which will have a capacity of a minimum 100,000 tonnes of ore. The ore from Mt Norma will be screened and the oversize crushed and then loaded into this new vat. The design of the vat is similar to design of previous vats and therefore will meet all regulatory requirements for design and risk management. Submission for approval of these changes has been made to the Environment Protection Authority EPA), supported by a revised Environmental Management Plan EMP) for the Mt Norma Project. Page 5

6 As a result of the changes above it has been necessary to progressively dry off the vats, which has restricted operations to the use of two and now one leach vat, with a consequent substantial fall in production rates. There was some interruption to production during the wetseason this year, but the effect was not nearly as pronounced as the previous two years where extended shutdowns were experienced. Production for the quarter was 93,000kg. Sales for the quarter were down on the previous quarter at 66,000kg. At the point of the last vat being dried off early in the next quarter, a maintenance shutdown for the process plant will be carried out. As well as routine and some oneoff maintenance, it is planned to upgrade the Main Distribution Board and install a larger refrigeration plant to cater for the higher production rates anticipated. No 2 PLS pond, completed just prior to the commencement of the wetseason proved to provide good security for the PLS management, although as a result of lower than normal rainfall, and good solution management there were no overflows to this pond. Manual maintenance of the vat surfaces has been continued and is seen as a prudent means of maintaining the vat surfaces in good condition. The copper extraction and crystallisation plant has performed well during the quarter. Extraction rates of around 90+% have been maintained by vigilant control of organic quality. The No 1 Crystalliser agitator stubshaft replacement has taken substantially longer than anticipated to fabricate and will now not be replaced until the plant shutdown discussed above. Services: Water Supply: A more economical pump and motor proposed earlier for the Mt Freda Water Supply was designed, purchased and commissioned during this quarter. It is expected to have a 34 month payback on improved fuel consumption. Main Electrical Distribution Board and Refrigeration Plant: The larger refrigeration plant, purchased as a replacement and to facilitate increased production rates is now in position awaiting connection of power and pipework. This will be completed during the next quarter. Installation of a new main electrical distribution board is required to accommodate the new plant, but also to enable replacement of some switchgear which is starting to wear. Ore Stocks There is approximately 7,000 tonnes of ore now stockpiled ready for transfer to the leach circuit in conjunction with the final oremining phase at Mt Norma. Page 6

7 Substituted Kerosene Problem: It was stated last quarter that the Company has commenced preparation of what is expected to be a substantial claim to be lodged against the supplier s insurance company. This documentation is still not completed, but is now expected to be completed this coming quarter. Wayne McCrae Chairman 27 April 2007 The information in this report that relates to exploration results is based on data compiled by Mr Malcolm Carson, who is a Member of the Australian Institute of Mining and Metallurgy, Mr Carson is employed by Mineral Resource Consultants Pty Ltd. Mr Carson 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 Carson consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. Page 7

8 ALUV Alluvium DLT Dolerite QHBX/QBX Quartz Hematite/Quartz Breccia QMST Quartz Magnetitie Sandstone QZCB Quartz Carbonate Rock SDST Sandstone CUDRL4003_InterpretiveGeologyDrilling_10ka4l.WOR SCPST Scapolitic Siltstone SLST Siltstone LMST Limestone CSRK CalcSilicate Rock Breccia Zone Fault Orientation Bedding Terra Search Pty Ltd me COPPER %) >=5 1 to me me me 0 Metres 1:10, Double Oxide Grid AMG Zone 54 AGD66) Rocklands Project Preliminary Interpretive Geology and Cu in Drillholes mn mn mn mn mn mn mn mn mn mn me me me me me mn Rocklands Rocklands Rocklands Rocklands Rocklands Rocklands Rocklands Rocklands Rocklands South South South South South South South South South Las Minerale Minerale Minerale Minerale Minerale Minerale Minerale Minerale Minerale Geology by SD Beams March 2007 Note: Assays pending for LMDH009 and LMDH mn mn mn mn mn mn mn mn mn me me me

9 13000 mn mn ALUV Alluvium DLT Dolerite SCPST Scapolitic Siltstone CSRK CalcSilicate Rock QHBX/QBX QZCB SLST Metres Quartz Hematite/Quartz Quartz Carbonate Rock Siltstone Breccia Zone Orientation 1:10,000 Breccia QMST SDST LMST Fault Bedding Quartz Magnetitie Sandstone Sandstone Limestone Double Oxide Grid AMG Zone 54 AGD66) CUDRL4002_InterpretiveGeology_10ka4l.WOR Terra Search Pty Ltd me me me Rocklands Project Preliminary Interpretive Geology me me me Las Minerale Minerale Minerale Minerale Minerale Minerale Minerale Minerale Minerale 45 Rocklands Rocklands Rocklands Rocklands Rocklands Rocklands Rocklands Rocklands Rocklands South South South South South South South South South mn mn mn mn mn mn mn mn mn Geology by SD Beams March mn mn mn mn mn mn mn mn mn me me me me me me

10 DOLERITE BRECCIA QUARTZMAGNETITESANDSTONE DOLERITE HYDROTHERMAL BRECCIA MAFIC DYKE SANDSTONE SILTSTONE BRECCIA SILSTONE CROSS SECTION LODE LAS MINERALE CENTRAL

11 Appendix 5B Mining exploration entity quarterly report Appendix 5B Rule 5.3 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 CUDECO LIMITED ACN Quarter ended current quarter ) ACN March 2007 Consolidated statement of cash flows Current quarter Year to date Cash flows related to operating activities 9 months) $A 000 $A Receipts from product sales and related debtors 137 1, Payments for a) exploration and evaluation b) development c) production d) administration 1,728) 248) 118) 4,118) 1,583) 714) 1.3 Dividends received 1.4 Interest and other items of a similar nature received Interest and other costs of finance paid 41) 283) 1.6 Income taxes paid 1.7 Other Security Deposit Recouped / Paid) 34 23) Net Operating Cash Flows 1,850) 5,292) 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 95) ) c) other fixed assets 1.10 Loans to other entities 1) 1.11 Loans repaid by other entities Other Part Term Deposit repaid to cheque account on conversion of notes Net investing cash flows ) 1.13 Total operating and investing cash flows carried forward) 1,806) 5,436) See chapter 19 for defined terms. Appendix 5B Page 11 30/9/2001

12 Appendix 5B Mining exploration entity quarterly report 1.13 Total operating and investing cash flows brought forward) 1,806) 5,436) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc , Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other share issue costs) 4) 4) Net financing cash flows ,412 Net increase decrease) in cash held 1,230) 5, Cash at beginning of quarter/year to date 7, Exchange rate adjustments to item Cash at end of quarter 6,563 6,563 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' Aggregate amount of payments to the parties included in item Aggregate amount of loans to the parties included in item Explanation necessary for an understanding of the transactions Directors remuneration $75,000 Rent paid to directorrelated entity $29,883 Equipment hire paid to directorrelated entity $19,652 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 131,250 ordinary shares were issued on conversion of 26,250 convertible notes. 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 Not Applicable. + See chapter 19 for defined terms. Appendix 5B Page 12 30/9/2001

13 Appendix 5B Mining exploration entity quarterly report Financing facilities available Add notes as necessary for an understanding of the position. Amount available $A 000 Amount used $A Loan facilities Nil Nil 3.2 Credit standby arrangements Nil Nil Estimated cash outflows for next quarter $A Exploration and evaluation 1, Development Total 1,500 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 accounts is as follows. Current quarter $A 000 Previous quarter $A Cash on hand and at bank Deposits at call 5,900 7, Bank overdraft 5.4 Other provide details) Total: cash at end of quarter item 1.22) 6,563 7,793 Changes in interests in mining tenements 6.1 Interests in mining tenements relinquished, reduced or lapsed Tenement reference Nature of interest note 2)) Not applicable Interest at beginning of quarter Interest at end of quarter 6.2 Interests in mining tenements acquired or increased Not applicable + See chapter 19 for defined terms. Appendix 5B Page 13 30/9/2001

14 Appendix 5B Mining exploration entity quarterly report 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 per security see note 3) cents) Amount paid up per security see note 3) cents). Preference 1 + securities description) 7.2 Changes during quarter Ordinary securities 79,959,534 79,959, Changes during quarter a) Increases through conversion of options Conversion of convertible notes 1,026, , ,250 1,026, , , b) Decreases Convertible debt securities 12% December 2008 Convertible Notes 7.6 Changes during quarter a) Decreases refer 2.1) 26,250) 7.7 Options Exercise price Expiry date description and conversion factor) CDUO 24,732,871 24,732,871 $ Director options 5,200,000 $ Consultant options 250,000 $ Issued during quarter 250,000 $ Exercised during quarter 800,000 1,026,779 1,026,779 $0.50 $ Expired during quarter lapsed) 7.11 Debentures totals only) 7.12 Unsecured notes totals only) + See chapter 19 for defined terms. Appendix 5B Page 14 30/9/2001

15 Appendix 5B Mining exploration entity quarterly report 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:... Date: 27 April 2007 Company secretary) Print name: LISA ROWE 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 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. == == == == == + See chapter 19 for defined terms. Appendix 5B Page 15 30/9/2001