| Wed 22 Dec 2010, 9:00 | | MMH - Miranda Mineral Holdings Limited - Miranda Coal Division: Newcastle |
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MMH
MMH
MMH - Miranda Mineral Holdings Limited - Miranda Coal Division: Newcastle
Project Area Valuation Update
Miranda Mineral Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/001940/06)
Share code: MMH ISIN: ZAE000074019
("Miranda" or "the Company" or "the Group")
Miranda Coal Division: Newcastle Project Area Valuation Update
1. Summary
The board of directors of Miranda has mandated Venmyn to complete independent
technical resource and valuation statements for six of the Mining and
Prospecting Rights held by its wholly-owned subsidiary Miranda Coal (Pty) Ltd.
This announcement summarises the results for Yarl, one of the properties in
Miranda Coal`s Newcastle project area. The original report may be accessed on
Miranda`s website at: www.mirandaminerals.com.
The SAMVAL-compliant valuation attributed to the Yarl property, holder of a
Prospecting Right, are summarised underneath:
Valuation Miranda Miranda
of 100% Coal Attributable
of Project Interest Value
Yarl ZAR8.4 100% ZAR8.4m
2. SAMREC/ SAMVAL Compliance
The key features of the Yarl project have been prepared in the format of a Short
Form SAMREC Code compliant Technical Resource and Valuation Statement, dated 31
May 2010. This Short-form Technical Resource and Valuation Statement is based on
the guidelines set out in Table 1 of the SAMREC Code and Table 2 of the SAMVAL
Code. A full SAMREC Code Compliant CPR has not been compiled by Venmyn. SAMREC
Table 1 and SAMVAL Table 2 checklists have been completed for the Yarl project.
3. Competent Persons and Valuators
The Technical Resource and Valuation Statement to which this announcement
refers, has been prepared by Venmyn and have been compiled for the purposes of
outlining the features, identifying potential risks and making recommendations
in respect to areas of potential downside and upside in the Yarl project. In the
preparation of the Statement, Venmyn utilised the results of studies conducted
by various consultants for Miranda Coal. Where possible, Venmyn has verified
this information after making due enquiry into all material issues that are
required in order to comply with the SAMREC and SAMVAL Codes.
The Competent Persons and Valuators responsible for the Statement are:
Ms. Catherine A Telfer, B.Sc. Hons (Geol.), (DMS) Dip Bus Man, Pr. Sci. Nat.,
MGSSA, MAusIMM, Director, Venmyn; and
Mr. Derick R De Wit, Pr Tech Eng, B Tech (Chem Eng) (Cum Laude), MAP (WBS),
MIASSA, MSAIMM, MAusIMM, MECSA, Mineral Industry Analyst, Venmyn.
They were assisted by the following Key Technical Personnel:
Ms. Mpai M Motloung, B.Sc. Hons (Geol.), MGSSA, ASAIMM, Mineral Project Analyst,
Venmyn.
The Competent Persons and Valuators are independent, and approved the
information contained in this announcement in writing in advance of its
publication.
4. Yarl
4.1 Introduction
Venmyn`s work considered the results of the areas where Miranda had been
actively drilling. Miranda is planning further exploration both on the Yarl
Prospecting Right area and on adjacent and nearby Prospecting Right areas.
4.2 Resource Statement
Historical Resource Statement
Gross Total Ave
Tonnes Geol. Tonnes Thick- Ave
In Situ Losses In Situ ness Depth
(mill) (%) (mill) (m) (m)
Top Seam
Block 1 6.802 15 5.782 1.17 135.0
Block 2 2.920 15 2.482 1.18 141.0
Total Top Seam 9.722 15 8.264 1.18 138.0
Bottom Seam
Block 1 7.444 15 6.327 1.56 167.0
Block 2 2.751 15 2.338 0.93 159.0
Total Bottom
Seam 10.195 15 8.666 1.25 163.0
Total 19.917 15 16.930
The entire SAMREC underground resource of 16.9 million tonnes was classified at
inferred resource status. The following assumptions and modifying factors were
taken into account when creating the historical resource model:
* mined-out areas were excluded;
* raw RD for the seams in the open pit were laboratory determined and assumed to
be similar for underground areas;
* areas of low volatile content (Vols < 5%) were excluded;
* areas where seam thickness is below 0.5m were omitted;
* geological losses of 15% were assumed due to the complexity of the deposit;
and
* all tonnages and qualities are quoted air dry.
The historical resource statement on Yarl was prepared in April 2008 by Mr PC
Meyer (Pr.Sci.Nat. 400025/03), a SAMREC-registered Competent Person, member of
the GSSA and Fossil Fuel Foundation, and proprietor of PC Meyer Consulting CC,
an independent geological consultancy.
Adjusted Resource Statement
Gross Total
Tonnes Geol. Tonnes
In Situ Losses In Situ SAMREC
(mill) (%) (mill) Classific-
ation
Top Seam
Block 1 10.105 20 8.084 Inferred
Bottom Seam
Block 1 10.860 20 8.687 Inferred
Total 20.965 20 16.771
Notes to the Venmyn adjusted resource statement:
* According to SANS, reconnaissance resources cannot be included for JSE Limited
reporting purposes;
* Coal intruded by dolerites was excluded;
* A dry ash free volatile cutoff of 26% was applied to take into account any
burning by dolerites;
* A seam thickness cutoff of 0.8m was applied to underground resources;
* Weathering, unknown dolerites and faults were taken into account in geological
losses; and
* Delineation between opencast and underground resources was applied at a seam
depth from surface of 55m.
4.3 Valuation
Venmyn`s valuation of the Yarl project is based on a 100% project value and uses
the Cost Approach and the Market Approach.
Cost Approach
The SAMVAL Code definition states that the Cost Approach relies on historical
and/or future expenditure on the Mineral Asset. In the case where insufficient
confidence exists in the technical parameters of the mineral asset, valuation
methods rely almost entirely on the principle of historical cost, implying that
an asset`s value is correlated to the money spent on its acquisition, plus a
multiple of expenditures. A prospectively enhancement multiplier (PEM) is a
factor applied to the total cost of exploration, at different stages of
exploration and project advancement. The magnitude of the PEM is determined by
the level of sophistication of the exploration for which positive exploration
results, applying the concept of successful efforts, have been obtained.
To date, Miranda Coal has spent ZAR1.101m on the Yarl Project on drilling, coal
analyses and washability testwork, establishing coal qualities, market
potential, resource tonnage estimation, and inferred coal resource
classification. The PEM attributable to the Yarl Project lies between an upper
value of 11 and a lower value of 5. Using the Cost Approach, a "fair" value for
the Yarl Project of ZAR8.8m was determined with an upper value of ZAR12.1m and a
lower value of ZAR5.5m.
Market Approach
The Market Approach relies on the principle of "willing buyer, willing seller"
and requires that the amount obtainable from the sale of the asset is determined
as if in an arm`s length transaction. The Market Valuation Approach requires
comparison with relatively recent transactions of assets that have similar
characteristics to those of the asset being valued. It is generally based upon a
monetary value per unit of resource (where available) or per unit of defined
mineralisation.
Venmyn has compiled a Coal Valuation Curve on Income Graph, which represents
over 50 properties valued by Venmyn within the major South African coalfields
over the last four years. This approach is highly useful in setting the unit
values of different coal projects in different coalfields in South Africa that
have various combinations of Mineral Resource categories. The graph shows the
average values per tonne of coal that are likely to be paid in an arm`s length
transaction involving a willing buyer and willing seller.
Using the Mineral Resources of the Yarl Project and the above-mentioned
approach, Venmyn obtain an upper per tonne value of ZAR0.70 and lower per tonne
value of ZAR0.20. The total Mineral Resource tonnes attributable to the Yarl
Project are 16.771Mt. Using the Market Approach, a "fair" value for Yarl of
ZAR8.39m was determined, with an upper value of ZAR11.74m and a lower value of
ZAR3.35m.
Concluding Opinion of Value
The table underneath summarises the "fair", upper and lower values of the Yarl
Project using the Cost Valuation and Market Approaches:
Method "Fair" Value Upper Value Lower Value
(ZARm) (ZARm) (ZARm)
Cost 8.81 12.11 5.50
Market 8.39 11.74 3.35
Venmyn`s database provides a comprehensive and reliable benchmark for recent
relevant transactions in the coal industry. Venmyn`s confidence in the Market
Approach, led the Competent Valuator to prefer the results of the Market
Approach versus the Cost Approach.
Consequently, the concluding opinion of the total value for the Yarl Project,
calculated on a 100% basis and based on the Market Approach, is as follows:
* the upper and lower valuation range is ZAR11.74m and ZAR3.35m, respectively;
and
* a "fair" value is ZAR8.39m.
4.4 Conclusions and recommendations
This update of the coal resources of the Yarl Project quotes 20.9 Mt of gross in
situ coal resource at an RD of 1.55. This resource tonnage is based on a cut-off
of 0.8m for underground mining resources. Recommendations are that quality
surveys be carried out, with emphasis on acquiring calorific value and sulphur
and moisture content. Miranda will have to drill more boreholes in order to
improve the resource classification to Indicated Resources.
Centurion
22 December 2010
Sponsor:
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
Corporate Adviser:
Touchstone Capital (Pty) Ltd
Date: 22/12/2010 09:00:02 Produced by the JSE SENS Department.
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