| Wed 28 Nov 2007, 9:58 | | GVM - GVM Metals Limited - Project Updates |
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GVM
GVGVM
GVM - GVM Metals Limited - Project Updates
GVM Metals Limited
(previously, "Golden Valley Mines Limited")
(Incorporated and registered in Australia)
(Registration number ACN 008 905 388)
Share code on the JSE Limited: GVM
ISIN: AU000000GVM1
Share code on the Australian Stock Exchange Limited: GVM
ISIN: AU000000GVM1
("GVM" or `the Company")
PROJECT UPDATES
Since the last trading update released on 10 September 2007, the Company is
pleased to announce that significant progress has been made towards the
development of the Company`s coal projects in South Africa. An update on work
in progress and of that planned on each project is set out below:
Baobab (Soutpansberg Coalfield)
Gemecs (Pty) Limited ("Gemecs"), the Competent Person, have completed an initial
geological evaluation of the Tanga and Fripp properties based on the data
obtained from Exxaro Limited. They have also completed a conceptual mine plan.
The Competent Person has completed a Fripp & Tanga Resource Statement which is
available on the Company`s website. The results are as follows:
Million
Tonnes
Measured 39.7
Indicated 44.0
Inferred 263.0
Reconnaissance 366.4
TOTAL 713.1
Within this total resource, the Competent Person has identified potential
opencast resources of 156 million tonnes in the following categories:
Million
Tonnes
Measured 39.7
Indicated 43.0
Inferred 66.4
Reconnaissance 7.3
TOTAL 156.4
The Company will now lodge an amendment to the existing prospecting right to
allow for bulk-sampling, mining right application, conceptual feasibility study
and infill drilling starting in early 2008.
GVM will utilise additional exploration information from Exxaro to determine the
potential resources at the other properties comprising the Baobab Project where
the boreholes have been drilled and in parallel will commence exploration of the
other properties in early 2008.
GVM appointed East Coast Maritime (Pty) Ltd (ECM) to undertake a pre-feasibility
study to determine the logistics requirements needed to transport coking coal
from the Thuli and Baobab projects in the Limpopo Province. The intent is to
ultimately export 10 million tonnes per annum (Mtpa) in total from both
projects. It is envisaged that 3 Mtpa will be exported from Thuli, and 7 Mtpa
from the various Baobab properties.
The study completed by ECM encompassed the following:
- Existing railway network/s and railway capacity - the study reviewed
current rail infrastructure and operations which included perway and
signaling, train control, gradients, structures and rolling stock in terms
of wagons and locomotives.
- Conceptual route determination for a new private siding/s linking
Spoornet`s network with a rapid coal loading facility at the Thuli and
Baobab plants - 3 proposals have been selected:
- Thuli Link - 55km of new rail line up to Mussina;
- Baobab Link - 15km of new rail line to link to main line; and
- Mopani Balloon - 3km circular siding at the town of Mopani.
The report proposes design parameters for the railway lines, and suitable
yard layouts at the plant for loading of trains.
- Environmental Pre-Feasibility - The report includes a review of the
legislative setting, pre-development, project activities and environmental
issues related to the 3 selected sidings. During the next phase of
investigations landowner requirements, mineral rights, underground mining
activities and acceptance and approval conditions imposed by various
authorities are to be undertaken;
- Technical evaluation of alternative routes to Matola (TCM) in Maputo in
Mozambique and 2 route options to Richards Bay. Rail distance, single or
multiple line, ruling gradient, axle loading, traction, operational
methodology and existing train crossing facilities were analysed to
identify routes 1 (1275km) and route 4 (734km) as optimal from a shortlist
of 4 alternative routes.
- Review of the port infrastructure at:
- TCM - Maputo, Dry Bulk Terminal;
- Richards Bay Dry Bulk Terminal; and
- Richards Bay Coal Terminal.
The current operations of the Ports were examined including tippler
capability, stock-piling, ship loading performance, and Port, Berth and
Draft restrictions.
A Cooperation Agreement is being developed with Transnet Freight Rail which is
in the process of finalization. The term of agreement is that Transnet Freight
Rail will assist GVM to acquire freight rights based on production of 1.5
million tonnes in 2009, 4-5 million tonnes in 2010 and 2011, and 10 million
tonnes in 2012.
Mooiplaats
The infill drill program has now been completed on the Mooiplaats, Klipbank and
Adrianople farms which collectively comprise approximately two thirds of the
granted mining and prospecting rights and less than one third of the total area
both granted and under application.
Competent Persons SRK have provided an interim Coal Resource and Coal Reserve
Estimate as follows:
GTIS*(mt) SAMREC Geological Model Layout MTIS**
Loss Loss Loss (Reserves)
Mooiplaats 25.7 Measured 10% 2% 15% 19.3
Klipbank 48.8 Measured 10% 2% 15% 36.6
Adrianople 28.8 Measured / 15% 3% 15% 20.2
Inferred
103.3 76.1
*GTIS - Gross Tonnes in Situ (Resources) **MTIS - Mineable Tonnes in Situ
(Reserves)
The first proposal has been received from potential mining contractors. Based
on this proposal, the Company is confident that mining costs will be in the
projected range of ZAR 90-100 per tonne of Run of Mine (ROM) Coal. Washing and
de-stoning estimated costs remain in the range of ZAR 20-25 per tonne.
The original plan was to provide principally ROM coal to Eskom, but with the
rapid escalation of prices at Richards Bay Coal Terminal (RBCT), it is now
planned to wash all the coal to produce an export fraction (75%) and a domestic
thermal fraction (25%). FOB cost RBCT is expected to be of the order of USD 35-
40 per tonne.
The production plan is to commence operations in Q3 2008 with a 18-24 month ramp
up to final planned levels of phase 1 of 4.5 million tonnes of export and 1.5
million tones of domestic thermal. Expansion of production beyond this level
will depend on exploration results to be conducted in 2008.
Thuli (Limpopo Coal Field)
GVM have commenced with the exploration activities at the Thuli project to
confirm the potential qualities resource and structure with intention of
developing an indicated resource early in the third quarter of 2008. This will
be followed by a mining right application, conceptual feasibility study and
infill drilling. Currently Thuli has a JORC compliant inferred resource of 352
million tonnes and it is expected that this will be significantly expanded.
Holfontein & Wilderbeesfontein
The Mining Right Application is underway with approval expected from the
Department of Mineral and Energy (DME) by the third quarter of 2008. Subject to
permitting from the DME, the Company expects mine development / production to
commence in late 2008. The Environmental Impact Assessment (EIA) /
Environmental Management Plan (EMP) is also in progress with completion expected
in the 1st Quarter of 2008 for submittal to the DME.
The Company intends to develop Holfontein and the adjacent Wilderbeesfontein as
a single bloc. Drilling to bring the latter into a measured resource will
commence during the first quarter 2008. To ensure contiguity with
Wilderbeesfontein, it is also expected that further exploration drilling on
Holfontein will commence early in 2008. This is to re-confirm the major dykes
and sills and ensure that structural interpretation on both properties is
consistent.
The formal agreement enabling GVM to commence prospecting work on the
Wildebeesfontein prospect consisting of 550 ha contiguous with GVM`s Holfontein
coal project has been signed.
Dependent on the availability of drill rigs, GVM management expect drilling on
this project to commence towards the end of the first quarter of 2008. The
project acquisition price will be based on the mineable coal in terms of JORC/
SAMREC codes. The project acquisition price of US$0.50 per ton In-Situ coal will
be determined for seam 4 and seam 5 coal with widths greater than 1.4 metres and
seam 4 coal with a Calorific Value exceeding 23MJ/kg.
Tshikunda Project
The Heads of Agreement for the acquisition of the 32,000 ha prospect in the
Pafuri coal field in Limpopo has been converted into formal agreements which GVM
management expect to complete by the end of November 2007. The Section 11
application to the Department of Minerals and Energy for GVM`s acquisition of
60% of Tshikunda Mining (Pty) Ltd, the company owning the Tshikunda Prospecting
Rights, was submitted during the third quarter.
Exploration on the project in the form of an Aeromagnetic study is expected to
commence in the fourth quarter of the 2008 financial year.
Sekoko Project
GVM have agreed to acquire an additional 7,000 ha in the Soutpansberg coal field
pending the satisfaction of suspensive conditions. The six farms constituting
the Sekoko project are located in the vicinity of GVM`s Baobab coal project in
the Makhado district of the Limpopo province. The acquisition of 74% of the
Sekoko coal project for R55 million will be formalised in the second quarter of
the current financial year, with the Section 11 application following soon
thereafter. Exploration on the project will commence once the Section 11
approval for the transaction from the Department of Minerals and Energy has been
granted.
The Salaita and Telema properties lie on the same coal body as that at Fripp and
Tanga and it is believed that the resources identified on Fripp and Tanga will
be replicated.
Managing Director, Simon Farrell, said "clearly we are building up a very
substantial resource base and following recent capital raisings of some AUD 120
million we are well placed to fast track development of our Baobab and
Mooiplaats projects. We are confident of resolving the various infrastructure
issues in the near future and with rapidly increasing coal prices, the Company`s
prospects are very, very exciting."
Authorised by
SIMON J FARRELL
Managing Director
For more information contact:
Simon Farrell, Managing Director GVM:+61 417 985 383 or +61 8 9322 6776
Nonkqubela Mazwai, Deputy Managing Director, GVM:+27 83 690 9079
Petronella Gorrie The Event Shop: +27 82 827 8815
Leesa Peters / Jos Simson Conduit:PR +44(0) 20 7429 6606
Olly Cairns / Romil Patel Blue Oar Securities Plc +61 8 6430 1631: +44(0) 20
7448 4400
www.gvm.com.au
Notes: The information in this report as it relates to the geology, geochemistry
and geophysics, regarding Mooiplaats, has been prepared by Grant van Heerden.
Grant van Heerden has more than five years of experience in estimation,
assessment of, and evaluation of Mineral Resources and Ore Reserves which are
relevant to the style of mineralization under consideration. Grant van Heerden
is a Senior Coal Geologist with SRK Consulting. Grant van Heerden has sufficient
experience which is relevant to the style of mineralisation and type of deposit
under consideration and activities herein reported, 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` and Part two of the AIM
Guidance Notes for Mining, Oil and Gas Companies. Grant van Heerden consents to
the inclusion in this report of such information in the form and context in
which it appears.
The information in this report as it relates to geology of the Baobab Project
was overseen by J C Sparrow a Director of Gemecs (Pty) Ltd. Mr Sparrow is a
member of the South African Council for Natural Scientific Professions
(400109/03), with a BSc (Univ. of Natal), BSc Hons Geology. (Univ. of
Johannesburg) and a Chamber of Mines certificate in Rock Mechanics and qualifies
as a competent person in the field of activity being reported on and consents to
the inclusion of this information in the form and context in which it appears in
this report.
28 November 2007
Sponsor
South African Sponsor to GVM
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Annexure
Introduction
GVM Metals Limited has a number of Prospecting permits in the northern areas of
the Limpopo Province of South Africa.
An Initial evaluation of the borehole information provided to GVM Metal Limited
by Exxaro Resources (Pty) Ltd., at the beginning of November 2007 with respect
to the region contained within and adjacent to the Fripp and Tanga properties
has been completed.
Locality and general geology
The Soutpansberg Coalfield is situated some 30kms to the north of Makhado (Louis
Trichardt) in the Limpopo Province of South Africa. The Coalfield is divided
into three sub basins named from South to North as Waterpoort, Mopani and
Sandriver sub-basins. The sub-basins are fault bounded remnants of the Karoo
sequence (late Permian and early Triassic) sediments and volcanics.
Main Karoo Basin Formation Name Soutpansberg Formation Names
Lower Beaufort Group (Normandine Fripp Fm.
Fm.)
Upper Ecca Group (Volksrust Fm.) Mikambeni Fm.
Middle Ecca Group (Vryheid Fm.) Madzaringwe Fm. (Coal bearing)
Lower Ecca Group Tshidzi Fm.
(Pietermaritzburg Fm.)
The coal bearing formation in the area is the Madzaringwe Formation which is a
very thick sequence of carbonaceous siltstone, mudstone and coal. Predominantly
the coal in the areas is bright coal with high vitrinite content. The full
Madzaringwe formation is in the order of 40m in thickness on the prospect farms.
The total current selection of broad coal bearing horizons is on average 30m.
Figure 1, Locality of the project area (can be found on the GVM website)
Borehole Information
Proof of coal occurrence and continuity, is provided by the 378 boreholes
drilled on or adjacent to the two Farms Fripp 645MS and Tanga 648MS, by Iscor
Resources (now Exxaro Resources) in the 1970`s and 1980`s.
In addition to these boreholes GVM Metals has drilled some 25 boreholes to
partly validate the information provided by Exxaro Resources. The occurrence of
the coal is further substantiated by the presence of a 500m long "Boxcut" on the
farm Fripp 645MS. The Boxcut was utilised by Iscor to evaluate a bulk sample of
the coal and to attempt trial mining on the coal.
Analysis of the borehole and sampling data allowed the initial determination of
three principle coal horizons, an Upper, Middle and Lower. These coal horizons
are based on the mass percentage of coal from the sampling. This has resulted in
a very consistent correlation of the stratigraphy over the whole property. At
this stage of the project this is still a broad based correlation that would
require more detailed work to refine the potential mining horizons.
The locality of the boreholes are indicated on the following figure:
Figure 2. Borehole locality plan in relation to the prospect farms(can be found
on the GVM website)
The basic statistics for the coal horizons from the borehole dataset is as
follows:
Coal Depth to top of seam (m) Seam width (m) No. of
Horizon boreholes
Averag Min Max Averag Min Max
e e
Upper 87.59 18.05 593.09 13.15 3.59 19.47 207
Middle 99.98 19.02 617.19 12.72 4.25 19.04 227
Lower 89.32 26.36 578.53 3.63 0.94 6.72 207
Geological Modelling and Concept Mine Planning
Preliminary geological Modelling has been undertaken in the Gemcom software`s
"Minex`s Horizon" geological modelling software. The concept mine planning has
been done In "Minex`s Apollo" mine design and scheduling software.
Coal Quality
The coal qualities are currently in the process of being validated. This
process is expected to take a month or so. In general a float and sink analysis
has been performed on the coal of each sample, at the following float relative
densities:
1.40,1.50,1.60,1.70,1.80,and Raw
A resultant composited wash table for each of the coal seams for each of the
farms ( can be found on GVM website)
It should be noted that these washtables are for the broad coal horizon
selections and will change once more defined selections are determined.
Geological structure.
The strata dips to the North at approximately 8 to 12. There is a dolerite sill
that is predominantly located below the Madzaringwe Formation, in two areas of
the project area the sill cross cuts the coal and results in the dolerite being
located above the coal. It is apparent from the "boxcut" That small scale
faulting is a feature of the deposit and this faulting rarely has throws of more
than a couple of metres. However as the major boundary faults are approached,
large scale faults are encountered. These faults have in places resulted in
duplication of the coal horizons.
Concept Mine Design and Scheduling
The concept Mine design and scheduling has taken into account a potential
contribution model based on the expected revenue and cost. This contribution
model has been used to define the potential opencast pit limits and also to
attempt to determine Boxcut positions, and potential spoils relief at the
termination of mining. This concept mine plan is expected to change as
optimization of the pit and mining horizons is investigated during the pre-
feasibility and feasibility studies.
Figure 3. Concept Life of Mine Schedule Volumes. (can be found on the GVM
website)
Figure 4. Concept Life of Mine Volumes and strip Ratios. (can be found on the
GVM website)
Figure 5 . Geological Confidence Classification (SANS 10320 ed 1) (can be found
on the GVM website)
Resource Statement on the entire Prospect area (can be found on GVM website)
Resources contained in the Potential Opencastable area (can be found on the GVM
website)
Conclusions and Statements
The current status of the project is still at a concept level, this will however
change quite rapidly as the current data set and new drilling information
becomes available. The working of the data and optimization of the coal horizon
definition and mining benches will make a substantive increase in the potential
profitability and in the expected specifications of the products produced.
The following however will need to be addressed in the very near future to bring
the project to a feasibility level.
- Detailed work is required on the selection of coal and waste benches to
optimize mining cost
- Detailed drilling is required to delineate the influence of the dolerite
sill.
- Coal selection is to be investigated to reduce the feed to plant tonnage
and increase in plant yield.
- Pit optimization is required to determine the final pit shell size.
- Methods to control in pit and discard waste volumes needs to be
investigated.
- The expected drilling required is to reach a staggered drill pattern of 100
x 45m.
J C Sparrow Pr.Nat.Sci
Director - Gemecs (Pty) Ltd.
"The information in this report as it relates to geology was overseen by J C
Sparrow a Director of Gemecs (Pty) Ltd. Mr Sparrow is a member of the South
African Council for Natural Scientific Professions (400109/03), with a BSc
(Univ. of Natal), BSc Hons Geology. (Univ. of Johannesburg) and a Chamber of
Mines certificate in Rock Mechanics and qualifies as a competent person in the
field of activity being reported on and consents to the inclusion of this
information in the form and context in which it appears in this report."
Date: 28/11/2007 09:58:11 Produced by the JSE SENS Department.
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