| Wed 12 Jan 2011, 17:41 | | CMO - Chrometco Limited - Shareholder Update/Resource Update/Further cautionary |
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CMO
CMO
CMO - Chrometco Limited - Shareholder Update/Resource Update/Further cautionary
announcement
CHROMETCO LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2002/026265/06)
(JSE Code: CMO ISIN: ZAE000070249)
("Chrometco" or "the company")
-SHAREHOLDER UPDATE
-RESOURCE UPDATE
-FURTHER CAUTIONARY ANNOUNCEMENT
SHAREHOLDER UPDATE
Further to the announcements dated 20 July 2010 and 27 August 2010 shareholders
are advised that during December 2010 the company received a further R13 million
in terms of the mining and management agreement with DCM Chrome (Pty) Ltd
("DCM").
RESOURCE UPDATE
Further to the cautionary announcement dated 29 November 2010 Chrometo has
received an updated Competent Person`s Report ("CPR") in relation to the
resource statement and valuation of the company`s Rooderand asset. Below is an
extract of the executive summary of the CPR. The competent person, Mr Dexter
Ferreira of Independent Resource Estimations ("IRES") and the competent
valuator, Mr Derick de Wit of Venmyn Rand (Pty) Ltd ("Venmyn"), have given
consent for the extract of the CRP including the valuation to be included in
this announcement.
Extract of Executive summary of CPR
Purpose and Project Outline
In preparation for the planned circular to obtain shareholder approval for the
conditional sale of Chrometco`s Rooderand assets to DCM, Chrometco requested
that IRES prepare a CPR compliant with the South African Mineral Resource Code
("SAMREC"), incorporating a valuation ("the Valuation")prepared by Venmyn
compliant with the South African Code for the Reporting of Mineral Asset
Valuation ("the SAMVAL Code"), and finally compliant with all the requirements
of Section 12 of the JSE Limited Listings Requirements, for the Rooderand asset.
Each section of the report is designated with the relevant SAMREC Code Table 1
reference number and SAMVAL Code Table 2 reference number. The CPR incorporates
the Valuation completed by Venmyn entitled: "Independent Valuation in Accordance
with the SAMVAL Code on the Rooderand Project for Chrometco" by Mr. Derick de
Wit of Venmyn.
Chrometco is a mining exploration and development company that previously
intended to explore and develop chromite mineral resources in South Africa. It
acquired the Rooderand mining rights in 2004, completed a limited amount of
exploration and subsequently entered into a conditional sale of the Rooderand
asset to DCM in 2007.
Property and Location
Chrometco`s Rooderand tenements are located approximately 60km north northwest
from Rustenburg, located in the North West Province, of South Africa.
Geology Setting Description
The Bushveld Complex comprises an array of diverse igneous rocks ranging in
composition from ultramafic to felsic. Different minerals were formed as the
magma cooled. These minerals accumulated into sub-horizontal layers, building
from the base of the chamber.
Some low outcrops of Lower Critical Zone feldspathic pyroxenites are present in
the northern part of the remaining extent of the farm Rooderand (immediately
east of Chrometco`s Rooderand 46 JQ Portion 2), where chrome mining has taken
place. The southern part of the farm is thought to be underlain by the upper
Critical and Main Zones. It is believed that the Upper Zone underlies the
southern parts of the farm Rooderand and the eastern parts of the farm
Zandspruit and the farm Ruighoek.
Exploration Program and Budget
Chrometco acquired the Rooderand mining rights in early 2004 and when it listed
in August 2005, the intention was to undertake further exploration work on this
farm, with the ultimate aim of proving-up chromite mineral tonnage. Chrometco
drilled 2 diamond and 24 percussion drillholes, and in doing this, identified
the outcrop of the MG4 seam over a strike length of 1.2km. Chrometco opened a
bulk sample pit and undertook limited laboratory evaluation of the MG4 chrome
seam material. Previous mining took place on the adjacent property which is up-
dip of Chrometco`s Rooderand portion 2.
No further exploration work has been done since by Chrometco.
Mineral Resources
Historical
In 2005, Chrometco hired Mr. N.A. Bleeker to complete an estimate of mineral
resources. Using an average Cr2O3 grade of 45.50%, Inferred Mineral Resource
estimates were calculated within the Rooderand 46JQ Portion 2 only. These are
presented with no geological losses (first table below), and with 15% geological
losses (second table below).
Inferred Mineral Resources in Portion 2 - No Geological Losses (Dated 2005)
Unit Dip SG Width Volume Tonnes Cr2O3
(cm) (m3) (w/o Content
losses) (tonnes)
LG6 14 4.25 77.00 5,290,000 22,470,000 10,223,850
LG5 14 4.05 94.00 6,210,000 25,160,000 11,447,800
MG4A 14 3.75 97.00 4,660,000 17,490,000 7,957,950
Total 16,160,000 65,120,000 29,629,600
Inferred Mineral Resources in Portion 2 - With Geological Losses (Dated 2005)
Unit Dip SG Width Volume Tonnes Cr2O3
(cm) (m3) (w losses) Content
(tonnes)
LG6 14 4.25 77.00 5,290,000 19,100,000 8,690,500
LG5 14 4.05 94.00 6,210,000 21,390,000 9,732,450
MG4A 14 3.75 97.00 4,660,000 14,890,000 6,774,950
Total 16,160,000 55,380,000 25,197,900
Mineral Corporation
In late 2008, DCM hired The Mineral Corporation to manage an exploration program
which entailed the drilling of 25 surface drillholes. The results from this
program were used to define SAMREC compliant mineral resource estimates. These
are presented for Indicated Mineral Resources (first table below) and for
Inferred Mineral Resources (second table below) and only represent approximately
25% of the total tenement area held by Chrometco. Geological losses of 20% to
30% have been applied on a block-by-block basis.
Indicated Mineral Resources in Portion 2 (Dated 2008)
Source Unit Tonnes Grade Cr2O3
Cr2O3 Content
(%) (tonnes)
Open Pit LG5, 2,008,958 37.10 745,244
LG6,
LG7,
MG2,
MG3,
MG4
Underground LG6, 6,662,671 39.42 2,626,098
MG4A
Total 8,671,629 39.00 3,371,342
Inferred Mineral Resources in Portion 2 (Dated 2008)
Source Unit Tonnes Grade Cr2O3
Cr2O3 Content
(%) (tonnes)
Open MG2 213,764 35.36 75,587
Pit
Total 213,764 213,799.36 75,622.36
Current
In 2010, Mr Bleeker was approached by the directors of Chrometco to re-evaluate
the potential mineral resources within portion 2 and the remainder extent of
Rooderand 46JQ farm. The Mineral Corporation only reported on a selected area
which only represents about 25% of the tenement area, and only utilized
exploration drilling results as undertaken by DCM. However, in this
recalculation, Mr Bleeker utilized available drilling and geological information
obtained from Chrometco, DCM, Nkwe Platinum Pty Ltd. ("Nkwe") and Anglo Platinum
Ltd ("Anglo"). Drilling information from Nkwe and Anglo only reported
intersections on economic platinum bearing layers. MG chromitite layers were
intersected in some of Nkwe exploration holes. The average thickness between
LG6 chromitite and UG2 chromitite layers is approximately 230m.
Only three stratigraphicaly delineated chromitite layers (i.e. LG5, LG6 and MG4)
were selected in the recalculation of potential mineral resource estimation and
these are shown without (first table below) and with 15% geological losses
(second table below) in and respectively using an average Cr2O3 grade of 45.5%.
Inferred Mineral Resources in Portion 2 - No Geological Losses (Dated 2010)
Unit SG Width (cm) Tonnes Cr2O3
(w/o Content
losses) (tonnes)
LG6 4.25 77.00 31,700,000 14,423,500
LG5 4.05 94.00 25,600,000 11,648,000
MG4A 3.75 97.00 25,200,000 11,466,000
Total 82,500,000 37,537,500
Inferred Mineral Resources in Portion 2 - With Geological Losses (Dated 2010)
Unit SG Width (cm) Tonnes Cr2O3
(w losses) Content
(tonnes)
LG6 4.25 77.00 27,000,000 12,285,000
LG5 4.05 94.00 21,800,000 9,919,000
MG4A 3.75 97.00 21,400,000 9,737,000
Total 70,200,000 31,941,000
Summary
Considering all available data and vast amount of experience that the various
authors have of the area, this report concludes that the mineral resources
within the entire tenement held by Chrometco comprises the work completed by DCM
and Mr Bleeker; these are presented for Indicated Mineral Resources (first table
below), and for Inferred Mineral Resources (second table below).
Indicated Mineral Resources - Entire License Area
Unit Tonnes Grade Cr2O3
Cr2O3 Content
(%) (tonnes)
LG5, 2,008,958 37.10 745,244
LG6,
LG7,
MG2,
MG3,
MG4
LG6, 6,662,671 39.42 2,626,098
MG4A
Total 8,671,629 39.00 3,371,342
Inferred Mineral Resources - Entire License Area
Unit Tonnes Grade Cr2O3
Cr2O3 Content
(%) (tonnes)
LG6 27,000,000 45.50 12,285,000
LG5 21,800,000 45.50 9,919,000
MG4A 21,400,000 45.50 9,737,000
Total 70,200,000 45.50 31,941,000
Independent Valuation
Venmyn was commissioned by Chrometco to perform an independent valuation of the
Rooderand asset. Venmyn applied both the cost and market valuation approaches
to value the asset. The SAMVAL Code definition states that the cost approach
relies on historical and/or future expenditure on the Mineral Asset. A
Prospectivity 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.
Using the cost approach and a total historical and future amount of ZAR2.7
million spent on the asset by Chrometco, as well as a PEM for historical mining
of 5, Venmyn determined:
a "fair" (attributable) value for the Project of ZAR13.5million; and
using a 10% deviation around the "fair" value, an upper and lower value of ZAR
14.850 million and ZAR12.150 million is determined, respectively.
In valuing the Project, using the market approach, Venmyn made use of a
comparative valuation graph, consisting of a database of various, similar,
"arm`s length" transactions, which are plotted in relation to their specific
stage of exploration (the Venmyn Chromite Valuation Curve).
Using the Venmyn Chromite Valuation Curve, Venmyn determined a "fair" value of
USD1.93/t and an upper and lower value range of USD2.76/t and USD1.11/t,
respectively. To calculate the total project value, the contained Cr2O3 tonnes
per Mineral Resource category are multiplied by the unit values.
Using the market approach and a total inferred and indicated Cr2O3 content of
31.941Mt and 3.371Mt, respectively, and spot exchange rate on 1st December 2010
of ZAR7.02669/USD, Venmyn determined:
a "fair" (attributable) value for the Project of ZAR480.041 million; and
an upper and lower value of ZAR685.773 million and ZAR274.309 million,
respectively.
Concluding Opinion
Since the market approach relies on similar, recent, "arm`s length"
transactions, the Competent Valuator prefers the valuation results of the market
approach. The concluding opinion of value (attributable) for the Project is
based on the market approach as follows:
a "fair" (attributable) value for the Project of ZAR480.041 million; and
an upper and lower value of ZAR685.773 million and ZAR274.309 million,
respectively.
Statement
All requirements of the SAMREC Code (including Table 1), and the SAMVAL Code
(including Table 2) have been complied with in preparing the full CPR report
which will become available as part of the planed circular to shareholders.
This announcement is a true reflection of the full Competent Person`s Report
presented herein.
Capacity and Independence
IRES prepared the report and it is signed off according to SAMREC by Mr. Dexter
S. Ferreira, a consultant to IRES, as well as Derick de Wit of Vemnyn. Details
of their qualifications and experience are contained within the report; which is
available for inspection at the company`s registered office during business
hours. IRES has previously completed Independent Reports for listings on the
Vancouver, London, Johannesburg and Australian Stock Exchanges.
FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised to continue to exercise caution when dealing in the
Company`s securities until a further announcement is released in terms of the
potential disposal of the Rooderand asset.
Johannesburg
12 January 2011
Designated Advisor
Sasfin Capital
(a Division of Sasfin Bank Limited)
Date: 12/01/2011 17:41:01 Produced by the JSE SENS Department.
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