| Tue 10 May 2011, 17:30 | | CMO - Chrometco Limited - Resource Update |
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CMO
CMO
CMO - Chrometco Limited - Resource Update
CHROMETCO LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2002/026265/06)
(JSE Code: CMO ISIN: ZAE000070249)
("Chrometco" or "the company")
RESOURCE UPDATE
Further to the SENS announcement dated 12 January 2011, Chrometco has revalued
its Rooderand chrome mineral assets based upon an independent review of the
original mineral resource statements prepared in late 2010. The latest mineral
resource statement includes chromite tonnages that are classified as
Exploration Results at a lower level of confidence compared to previously
defined Inferred Mineral Resources, as defined in the SAMREC Code. The
attributable monetary value for Exploration Results is substantially (JSE
definition >20%) lower than for Inferred Mineral Resources. The revised
valuation has taken the confidence levels into account and the lower value is
being reported. However, future drilling will be required to raise the level
of confidence of the Exploration Results to the Inferred Mineral Resource
classification
Considering all available data, the Competent Person concluded that the SAMREC
compliant mineral resources within the tenement held by Chrometco comprises
the work completed by DCM as illustrated below.
Indicated Mineral Resources - DCM Area - Mineral Corp. 2008 - SAMREC Compliant
Unit Tonnes Grade Cr2O3
Cr2O3 Content
(%) (tonnes)
LG5, LG6, 2,008,958 37.10 745,244
LG7, MG2,
MG3, MG4
LG6, MG4A 6,662,671 39.42 2,626,098
Total 8,671,629 39.00 3,371,342
The drilling completed by others , outside of DCM`s project area, has provided
sufficient information to demonstrate continuity of the chromite seams.
This has enabled Mr. Bleeker to map the various chrome seams. Given that no
actual chrome samples have been taken, or assayed, the Competent Person
concluded that only the tonnages should be tabulated herein. The figures
presented below, have been categorized as Exploration Target.
Exploration Target - Balance of DCM Area - Not SAMREC Compliant (April 2011)
Unit Tonnes
LG6 20,477,000
LG5 16,591,459
MG4A 14,063,164
Total 51,131,623
Independent Valuation
Due to the re-classification of the resources, Venmyn amended its 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 ZAR2.7m
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 ZAR13.5m; and
using a 10% deviation around the "fair" value, an upper and lower value of
ZAR14.85m and ZAR12.15m 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
USD1.02/t and an upper and lower value range of USD1.44/t and USD0.59/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 Exploration Result and indicated
resource Cr2O3 content of 23.265Mt and 3.371Mt, respectively, and spot
exchange rate on 4th April 2011 of ZAR6.70/USD, Venmyn determined:
a "fair" (attributable) value for the Project of ZAR181.53m; and an upper and
lower value of ZAR257.11m and ZAR105.96m, 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) is based on
the market approach as shown above.
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.
Johannesburg
10 May 2011
Designated Advisor
Sasfin Capital
(a Division of Sasfin Bank Limited)
Independent Competent Valuator
Venmyn
Competent Person
Independent Resource Estimations
Date: 10/05/2011 17:30:01 Produced by the JSE SENS Department.
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