| Thu 31 Aug 2006, 7:00 | | TEAL - Results for its financial year and fourth q |
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TEAL - Results for its financial year and fourth quarter ended June 30, 2006
TEAL Exploration & Mining Inc.
Corporate Access Number: 31403
ISIN: CA8781511099
(Incorporated in Yukon, Canada on 1 June 2005)
SA Company Registration Number: 2006/003229/10
JSE share code: TEL
JSE short name: TEAL
TEAL RELEASES RESULTS FOR ITS FINANCIAL YEAR AND FOURTH QUARTER ENDED JUNE 30,
2006
HIGHLIGHTS FOR THE YEAR ENDED JUNE 30, 2006
Initial Public Offering concluded on the Toronto Stock Exchange in November
2005, raising US$33.3 million, net of costs
JSE Limited listing concluded in April 2006
Technical work completed for the feasibility study on the Mwambashi Copper
Project in Zambia
Studies underway on the Konkola North Copper Project in Zambia and the
Kalumines Copper-Cobalt project in the Democratic Republic of Congo (DRC)
Resource expansion and infill drilling on TEAL"s exploration portfolio in
Zambia and Namibia are underway
Resource expansion drilling on Namibian gold project delivers positive results
Furnace acquired to produce 5,000 tonnes a year of copper in the DRC
TEAL Exploration & Mining Incorporated (TSX-"TL") (JSE-"TEL") ("TEAL" or the
"Company"), a Yukon, Canada corporation listed on the Toronto Stock Exchange
("TSX"), and the JSE Limited ("JSE") today released its June 30, 2006 year end
and fourth quarter results.
TEAL is a mineral development and exploration company that is currently focused
on properties located in Zambia, Namibia and the DRC.
The Company recorded a consolidated net loss for the year ended June 30, 2006
of US$9.0 million, or US$0.27 per share. TEAL was incorporated on June 1, 2005
and acquired African Rainbow Minerals Limited"s (ARM) non-South African
exploration and development assets and businesses on November 15, 2005. The
results therefore include only seven and a half months of consolidated results.
Reorganization costs and professional fees of US$1.0 million were primarily
incurred on setting up the Company structure and expenses attributable to the
TSX and the JSE listings.
TEAL"s Chairman, Patrice Motsepe, said, "This has been a significant and
important year for TEAL following its IPO on the TSX late last year. This
occurred following ARM"s decision to separately list its non-South African
mineral assets. The IPO was favourably received by the market: we raised
US$33.3 million, meeting our objective of capitalizing the Company to enable it
to add value to its assets. These funds are being directed towards exploration
drilling on TEAL"s properties in central and southern Africa where TEAL
operates, as well as towards preparing feasibility studies in order to convert
resources into reserves that we hope will support new mining operations. I am
exceptionally pleased with the progress that has been made to date and look
forward to pursuing major achievements over the coming years as TEAL strives to
transform itself into a fully-fledged mining company."
Rick Menell, TEAL"s President and Chief Executive Officer, commented, "At our
largest copper asset, Konkola North, we are advancing our feasibility study as
fast as possible and are currently installing a winder, in a shaft that we
inherited when we acquired the property, to access existing underground
workings to gain a better understanding of underground conditions and costs
required to start mining. We have also made good progress at the Mwambashi
Copper Project with the technical part of the feasibility study having been
completed. Our priority is to achieve a satisfactory off-take agreement,
complete the permitting process and conclude an optimum financing plan so that
a go-ahead decision can be made on establishing a new mine. Over the next few
months, approximately US$1.5 million will be spent to advance Mwambashi,
including an important de-watering program."
"At the Otjikoto Gold Project in Namibia," continued Menell, "We expect that
revised resource estimations will be completed and announced during late 2006.
Both diamond and reverse circulation ("RC") drilling are continuing on the
expansion program. Infill drilling is underway on certain areas of the existing
inferred resource aimed at upgrading this resource into the indicated and
measured category.
This follows the release today of additional borehole results that indicate an
increase in extent of further higher grade zones that were previously reported.
The geological interpretation of these results supports a continuation of the
resource expansion drilling."
The US$3.1 million quarter-on-quarter increase in the net loss, from US$2.3
million to US$5.4 million, reflects the increased level of activity to advance
the Company"s exploration and development projects and also includes the
accounting of stock based compensation expenses of US$1.9 million, following
the ratification by participants. The increase in exploration and development
costs were primarily incurred on the Company"s Otjikoto, Konkola North and
Mwambashi projects as commented in more detail below.
As at June 30, 2006, the Company had a net working capital balance of US$24.8
million and cash resources of US$26.6 million. During the quarter ended June
30, 2006, US$0.9 million of the ARM interim facility was repaid. The remaining
US$0.5 million balance at year end represents SA Rand-based project expenditure
paid by ARM on behalf of the Company, which is repayable within 30 days. The
Company made US$2.3 million net cash outflows on operating activities compared
to net cash outflows of US$2.1 million for the previous quarter. The cash was
mainly used for exploration, feasibility studies and associated activities to
advance the Company"s projects, including resource expansion drilling. The
Company"s activities for the financial year were funded by its IPO that raised
a net US$33.3 million, including an over-alloent of US$2 million.
At the Konkola North Copper Project, a review and audit on the existing
geological database, including Area "A" and the Area "A" Extension, was
commissioned to reclassify and upgrade the resource base. This information,
together with the ongoing review of possible future underground development, is
essential for the mining schedule and extraction plan that will form part of
the feasibility study.
The feasibility study to assess the mining of the south and east limb areas is
on schedule. Murray & Roberts Cementation Limited is conducting an assessment
of the shaft as well as surface and underground infrastructure. The shaft
winder system to allow underground access is currently being installed, while
the ventilation system and the necessary power requirements are in place.
Access to the existing underground workings will provide an indication of the
capital required for re-equipping the shaft and related infrastructure.
The technical work of the feasibility study for a 12,000 tonnes per annum
copper producer at Mwambashi has been completed. The results of this study are
positive, subject to achieving a favorable off-take arrangement with a third-
party Zambian company with whom TEAL is currently in discussion, as well as a
successful financing plan, and final permitting. Management anticipates that
mine site establishment and open-pit pre-stripping will commence during 2007,
followed by the build-up to full production. The application for the conversion
of a part of the large-scale prospecting license into a large-scale mining
license has been submitted to the Zambian Minister of Mines. It is anticipated
that the license will be issued before the end of the calendar year 2006. SRK
Consulting (Pty) Limited is finalizing the report for the Environmental Impact
Study and the Environmental Management Project Report. These reports are
expected to be submitted to the Zambian authorities shortly. Ukwazi Mining
Solutions (Pty) Limited has completed the Mwambashi mining study.
The extended time taken to finalize off-take arrangements and environmental as
well as other permitting brings with it an additional cost in time and capital
required. The feasibility study is also highlighting the requirement for a
dedicated power supply facility on site and the need to establish de-watering
infrastructure in advance of developing an open pit. This, together with
upgrades to an access road of 12 kilometres, will increase the required capital
expenditure from previous indications. Full details of capital requirements
and project economics will be communicated in detail when the final study is
released, once the off-take arrangements have been finalized.
In November 2005, TEAL announced an indicated resource of approximately 8.6
million tonnes at 2.43% total copper, using a 1% total copper grade cut-off.
In January 2006, GeoLogix Mineral Resources Consultants (Pty) Limited was
contracted to carry out a SAMREC / NI 43-101 compliant resource re-estimation
and classification study using more stringent wire-framing and geostatistical
parameters. Following an audit and review of the geological drill-hole data,
the complete database now consists of 123 RC and diamond drillholes, drilled
from surface at an average collar elevation of 1,270 metres. All drill-hole
assay records have been merged with lithological records together with a total
of 152 additional density determinations. Drillholes were imported into
Datamine and used for wire framing. In summary, as part of the feasibility
study, the resource has been updated using a 0.5% total copper cut-off grade.
This has increased the resource to 11 million tonnes at a grade of 2.03% copper
in the measured, indicated and inferred categories. Additional low grade
resources between 0.3% and 0.5% total copper have been estimated: this
mineralization consists largely of refractory, oxide and mixed material
flanking higher grade zones close to surface.
In November 2005, TEAL reported an inferred mineral resource of 25 million
tonnes at 1.13g/t for 890,000 ounces of gold defined at the Otjikoto Gold
Project. In April 2006, TEAL announced that it had completed an additional 29
core boreholes totaling 7,000 metres, out of a planned 38 boreholes totaling
9,000 metres. TEAL today announced that it has now completed 39 core
boreholes totaling 9,300 metres as part of its current Otjikoto resource
expansion program. These borehole results, specifically holes OT64, OT98,
OT104, OT105, and OT110, have returned high grade intersections over
significant widths. These intersections indicate the development of further
higher grade zones as previously intersected in boreholes OT88 and OT90. The
integration and geological interpretation of these results has supported a
continuation of the resource expansion drilling to further determine the
geometry and impact of these higher grade zones of gold mineralization.
A total of fourteen core boreholes, totaling approximately 3,500 metres, will
be drilled to further define the expansion program to the south-west. This
additional resource expansion definition drilling program is anticipated to be
completed by November, 2006. In addition, TEAL plans to drill a total of 38
diamond and 74 RC infill drill holes to upgrade specific areas of the known
resource into the indicated and measured categories.
At the Kalumines Copper-Cobalt Project in the DRC, extensive illegal and
informal mining activity has developed on at least two of the copper
mineralization areas within the Company"s Kalumines mining licence boundary.
This activity interferes with TEAL"s access, and is delaying the Company"s
resource confirmation and expansion drilling. Working closely with provincial
and local government agencies, as well as TEAL"s partner, Gecamines, and
community leadership, an urgent program has been launched to end all informal
mining activity in a peaceful and efficient manner.
Once this situation is resolved, the resource expansion drilling program is
expected to continue with the objective of allowing management to make a
decision to proceed with a feasibility study on a large scale mining operation.
In the interim, TEAL is working on the feasibility of a smaller Phase 1 mining
operation to provide additional feed to the newly-acquired furnace that is
expected to be commissioned during the first-half of calendar 2007.
In July 2006, TEAL announced that it acquired an electric arc furnace with a
capacity to produce approximately 5,000 tonnes per annum of `black copper"
ingots grading 85% to 95% copper. TEAL intends to locate the furnace in
Lubumbashi. It is expected that the material feed for the furnace will be
derived from Kalumines, some 20 kilometres from Lubumbashi, as well as locally
available feedstock. Operation of the smelter will further depend on
arrangements with the DRC government concerning power and environmental
permitting, which processes are both underway. The capital expenditure and
associated working capital to bring the furnace into operation will result in a
total financing requirement of US$6 million.
In November 2005, TEAL contracted with NOVA Mining sprl ("NOVA") for NOVA to
become the sole purchaser of any material produced by the informal miners at
Kalumines and to manage the transition away from the informal mining on the
property. The objectives of this contract have not been met to the Company"s
satisfaction and TEAL is pursuing a termination of the agreement with NOVA.
Within the Copperbelt Joint Venture Exploration Area, TEAL expects to complete
the initial expansion drilling of the shallow oxide potential on the Mwambashi
"A" and Pitanda properties, as well as to conduct further work on the
historical inferred resources of the Samba prospect. The initial drilling
program targeting copper soil anomalies on the Chipopo prospect is anticipated
to be completed within calendar 2007.
At TEAL"s Kafue Joint Venture Exploration Area, exploration work, including
drilling, is continuing to focus on zinc, nickel and copper targets generated
through an airborne survey and soil sampling with a view to define the future
potential of these areas.
TEAL Corporate
TEAL also announced today that effective August 29, 2006, Mr. Arne N. Lewis has
been appointed Chief Operating Officer (COO) of the Company. Rick Menell
said, "As TEAL"s business is developing toward the objective of becoming an
operating entity, the Board supported the recommendation to appoint Arne as COO
to assume responsibility for all projects, mines and the related operational
general management issues. He has 18 years of experience in the industry,
notably in respect of underground and open pit mining in the platinum group
metals, base metal and gold sectors. Arne brings to TEAL deep experience in
building and commissioning new mines, as well as managing the day-to-day
operations of existing producers. He has been a valued colleague for many years
and his expanded role will support our excellent team during TEAL"s critical
development stage".
Mr. Claus Schlegel, Pr. Sci. Nat., TEAL"s Vice President: Exploration and
Business Development, is the "qualified person" for the content of this press
release for purposes of National Instrument 43-101.
ends
A copy of TEAL"s Annual Financial Statements and the MD&A are available at
www.sedar.com as well as at www.tealmining.com
For further details contact:
Julian Gwillim (VP: Investor Relations and Corporate Development) on
+1 416 828 1422 (Canada); or +27 (0) 82 4524 389 (SA); or
julian@tealmining.com,
or
Rick Menell (President and CEO) on +27 82 450 2301; or rick@tealmining.com.
Date: 31/08/2006 07:00:22 AM Produced by the JSE SENS Department
