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TEL - Teal - Teal Releases Results For The Quarter Ended December 31, 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 THE QUARTER ENDED DECEMBER 31, 2006
HIGHLIGHTS
- Feasibility study for the Konkola North Copper Project in Zambia
remains ahead of schedule and on-track for completion by June 2007
- Geological scoping study completed for Konkola North`s Area `A`
Extension
- Off-take agreement being negotiated for the release of the 12,000tpa
Mwambashi Copper Project
- Resource definition and exploration drilling continues on the
Kalumines Copper-Cobalt Project
- Power agreement signed in DRC that will enable furnace to be
commissioned by mid-2007
- Additional positive exploration drilling results at the Otjikoto Gold
Project in Namibia confirms higher-grade mineralization extends down-
dip from identified resources
- Independent consultant verifies the Otjikoto resource of 1.3Moz of
gold, based on Phase 1 drilling only
TEAL Exploration & Mining Incorporated (TSX-"TL") (JSE-"TEL") ("TEAL" or
the "Company"), which is incorporated in Canada and listed on the Toronto
Stock Exchange ("TSX"), and the JSE Limited ("JSE") today released its
results for the three months ended December 31, 2006.
Patrice Motsepe, Chairman of TEAL, said, "TEAL continued on its growth path
of bringing its assets and properties up the value curve towards mining and
production activities. Good progress has been made with feasibility
studies, project developments and exploration drilling at the various
assets and properties owned by TEAL".
TEAL recorded a consolidated net loss for the three months ended December
31, 2006 of US$4.4 million, or a US$0.08 loss per share. This compares to
a consolidated net loss of US$4.6 million, or a US$0.09 loss per share, for
the previous three months ended September 30, 2006. The increase on the
quarter-on-quarter exploration and development costs, from US$3.9 million
to US$4.2 million, relates largely to a ramping-up of work on the Kalumines
Copper-Cobalt Project in the DRC following the cessation of artisanal
mining that has enabled TEAL to accelerate its exploration and feasibility
work.
As at December 31, 2006, TEAL had a net working capital balance of US$13.6
million and cash resources of US$14.5 million. The Company recorded US$4.6
million net cash outflows on operating activities compared to net cash
outflows of US$4.1 million for the previous quarter. The cash was used
mainly for feasibility studies, exploration work and associated activities
to advance the Company`s projects, including resource expansion drilling.
Rick Menell, TEAL`s President and Chief Executive Officer, commented, "The
Konkola North Copper Project feasibility study remains on-track and
completion is expected by June 2007".
As part of the main feasibility study, an independent third-party has
completed its assessment of the shaft and associated infrastructure and
provided TEAL with a report, which is being included in the study. It has
been confirmed that there is no water ingress into the historical
production levels, including the shaft bottom that was accessed towards the
end of 2006. The mapping of the underground levels, and sub-levels, is
underway. The first underground blast at Konkola North occurred in late
2006 to extract a 50-tonnes bulk sample for confirmatory milling and
metallurgical test-work, which is being undertaken by a laboratory in South
Africa.
Geotechnical drilling is being done to establish the ground conditions for
the proposed position of the Konkola North east limb where TEAL is
considering access by way of a decline from surface. The south limb will
be accessed using the existing shaft infrastructure.
All other aspects related to the feasibility, i.e. power requirements,
mining and metallurgical considerations, environmental issues, tailings and
rock disposal designs, are either completed or well advanced. The
feasibility study has also included an assessment of the viability of
accelerated mining from the existing and accessible workings and toll-
processing the ore produced. The technical aspects and economics of this
`rapid-entry` study are largely complete and are being reviewed by
management prior to it being presented to the TEAL Board of Directors.
At the Konkola North Area `A` Extension, a geotechnical study has been
completed of the borehole core that was previously drilled to provide
observations on the geotechnical and hydrological regime that can be
expected in this area. Following receipt of the report, a high level mine
design and costing study was done. The results, together with a proposed
copper ore feed model, were financially and economically evaluated and a
scoping study completed. TEAL subsequently issued a scope of works to
drilling companies with an invitation to tender on a two phase 18,000 metre
exploration drilling program in Area `A` Extension, which TEAL expects to
start within the next few months.
The feasibility study for the Mwambashi Copper Project was completed in
August 2006. Development remains subject to a favourable off-take
arrangement and a successful financing plan, both of which are nearing
conclusion. Once these are finalized, the project will be presented to the
TEAL Board of Directors for a final decision on developing a 12,000 tonnes
per annum copper producer with capital expenditure of approximately US$10
million, including contingencies. In addition, pre-production costs,
including exploration drilling, de-watering of the pit area and pre-
stripping, are estimated at about US$7.5 million.
TEAL`s current expenditure to advance the Mwambashi Copper Project is being
directed at the upgrade of the access road, a de-watering program, where
eight monitoring holes and one de-watering hole are complete (out of a
total 23 holes), and the implementation of a relocation action plan.
Discussions are being held with the various independent contractors
involved with the Mwambashi feasibility study to further optimize the
project. Negotiations are also being held with the Zambian authorities on
the necessary permits, including surface rights applications, in
preparation for project release.
The Mwambashi Copper Project resource is estimated at 11 million tonnes at
a grade of 2.03% copper in the measured, indicated and inferred categories,
using a 0.5% total copper cut-off. The reserve estimate used in the
feasibility study and for an open-pit mining operation only, amounts to
three million tonnes at a grade of 2.08% copper.
Management anticipates that mine site establishment and open-pit pre-
stripping will commence during 2007, followed by the build-up to full
production. TEAL will release the detailed project description as we as
all technical and economic information when the board approves its go-
ahead.
At the Kalumines Copper-Cobalt Project ("Kalumines"), a joint venture with
La Generale des Carrieres et des Mines ("Gecamines"), an initial scoping
study on the Lupoto resource has been completed, while infill and
confirmatory exploration drilling to verify the historical resource is
underway. TEAL management believes that the historical inferred resource
is open-ended and expansion drilling is also being undertaken with the aim
of increasing the resource.
There is currently no informal mining activity occurring on TEAL`s mining
licence area. TEAL has moved machinery, including three exploration drill
rigs, onto the property for the resource drilling program. Once the
drilling is completed, it will enable TEAL to advance the feasibility study
for an open-pit mining operation and processing plant.
TEAL management is planning the start of mining on a modest scale to
produce a high copper concentrate that will be used to `feed` TEAL`s
furnace, which will be operational in Lubumbashi by mid-2007.
The furnace that was acquired by TEAL has been structured into a company
called TEAL Metals (DRC) s.p.r.l. that is currently 100%-owned by TEAL.
Consideration is being given to introducing local partners in the DRC into
this venture. In December 2006, a Memorandum of Understanding was signed
with La Societe Nationale d`Electricite ("SNEL"), the energy and power
authority in the DRC, to supply the required power for the furnace. The
technical aspects are now being assessed, prior to the signing of a final
agreement with SNEL. Civil and structural construction is underway on site
in Lubumbashi.
During the Phase 1 expansion drilling program, which concluded at the end
of June 2006, TEAL announced an increase in the overall Otjikoto Gold
Project resource to 32.2 million tonnes, which equates to 1.30 million
ounces, at a grade of 1.26g/t gold. This is an increase in inferred gold
resources of 46% and an increase in gold grade of 10.3%. An independent
competent persons report has been issued and supports TEAL`s Phase 1
resource statement of 1.30 million ounces. A project appraisal study has
commenced to further scope the critical mining, metallurgical and financial
aspects of the Otjikoto Gold Project based on the current inferred
resource. The conclusions of this study will dictate the detailed design
and the nature of the subsequent feasibility work.
As a result of the enlarged Phase 1 resource, TEAL commenced with a Phase 2
exploration plan in August 2006. This includes (i) further resource
expansion drilling to the south-west along strike and down-plunge, and (ii)
drilling on 25m X 50m centres in the shallow parts of the known resource.
This Phase 2 is aimed at expanding the total resource further, guided by
higher grade drill intersections at the southern and eastern zones of the
resource identified to date. Deeper borehole results from its Phase 2
resource expansion drilling have provided further evidence for the
continuation of higher grade zones. Drilling has also intersected
mineralization some 200 metres further to the southwest from the Phase 1
resource expansion drilling.
The table below indicates the corrected width and grades of the borehole
intersections:
LOCATION BOREHOLE Depth Depth Corrected Gold
from to (m) width (m) g/t
(m)
6100N/4800E OT120 221 230 5.40 0.48
6100N/4900E OT126 229 265 25.20 8.37
Including
OT126 229 232 2.70 45.84
OT126 256 265 8.10 8.80
6100N/5000E OT127 266 271 4.50 13.15
OT127 282 291 8.10 1.53
6000N/4800E OT121 152 158 5.40 1.40
OT121 216 223 6.30 1.13
6000N/4850E OT128 RESULTS PENDING
6000N/4900E OT129 RESULTS PENDING
6000N/4950E OT130 SAMPLING IN PROGRESS
6000N/5000E OT122 262 266 3.60 2.24
OT122 286 295 8.10 0.50
6000N/5050E OT131 GEOLOGICAL LOGGING IN PROGRESS
TEAL has also recently completed a second high resolution airborne survey
over a large portion of its prospective Otavi Exploration Area. Results of
the survey are being assessed and interpreted to provide direct drill
targets for Otjikoto-style mineralization.
It is expected that TEAL will conclude the transaction over the coming
months with a local Namibian partner, EVI Mining (Pty) Limited, to acquire
a 10% shareholding in Avdale Namibia (Pty) Limited.
Within the Copperbelt Joint Venture Exploration Area in Zambia, TEAL has
identified several high-priority targets along strike from the Mwambashi
Copper Project where copper mineralization is known. A preliminary
drilling program was completed by end December 2006 that focused on the
shallow copper oxide potential at both the Mwambashi "A" and Pitanda
prospects, as well as the shallow copper potential of the Samba prospect.
At Samba, boreholes are presently being logged and sampled for borehole
core processing and assaying. RC drilling has commenced on the shallow,
open-pittable resource potential of the Mwambashi `A` and Pitanda copper
prospects, with RC chip logging and sampling in progress. These
exploration prospects, together with the Mwambashi Copper Project, all form
part of the mining licence that was awarded to TEAL in September 2006.
The Kafue Joint Venture Exploration Area previously consisted of three
exclusive exploration licences in central Zambia and was subject to joint
venture agreement with Billiton Development (Zambia) Limited, a subsidiary
company of BHP Billiton plc ("BHP Billiton"). BHP Billiton has informed
TEAL that it wishes to withdraw from the Kabwe West and Kabwe Mine zinc
exploration project areas due to a strategic decision related to its
targeted commodities. BHP Billiton, however, indicated that it would
participate and jointly fund the nickel exploration project in the Lusaka
West license area.
The Lusaka West joint venture has nickel, platinum group metals and copper
exploration targets. TEAL has acquired, as part of the joint venture, the
previously flown FalconTM geophysical data from BHP Billiton, and the
results of the FalconTM data are being integrated with the airborne electro-
magnetic information and other geophysical data. TEAL has also submitted
borehole core samples for analysis from the exploration drilling of a
priority target in the region. The results of this sampling program are
being awaited.
At the Kabwe West and Kabwe Mine Exploration Areas, TEAL is continuing with
a review of the existing resource defined in the Kabwe region held under
licence by TEAL.
Previous work on the Lusaka North property identified a high-grade zinc
resource comprising 0.29Mt at 19.7% zinc and 2.0% lead. This historical
resource is considered important to TEAL`s development strategy, which has
zinc as a target commodity, and exploration work surrounding the resource
has revealed encouraging results. A number of anomalies are drill-ready.
There remains a conflict with a non-compliant small-scale licence holder
and TEAL will attempt to resolve this matter in the near future. TEAL has
identified a Zambian consortium that is ideally suited to partner TEAL in
this venture. The two parties are advancing a Memorandum of Understanding
outlining a possible partnership structure.
Claus Schlegel, Pr. Sci. Nat., TEAL`s Vice President: Exploration and
Business Development, is the "qualified person" for the content of this
press release in terms 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
NOTE:
TEAL is a mineral development and exploration company that is currently
focused on properties located in Zambia, Namibia and the DRC. The Company
has targeted four specific projects: the Konkola North and Mwambashi copper
projects in Zambia; the Otjikoto Gold Project in Namibia; and the Kasonta-
Lupoto Mines sprl ("Kalumines") Copper-Cobalt Project in the DRC. TEAL also
has interests in various other mineral licence areas in Zambia and in
Namibia on which the Company continues drilling and other exploration
activities. TEAL is 64.9% owned by the South African diversified mining
company, African Rainbow Minerals Limited.
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 Financial Statements for the three month period ended
December 31, 2006, 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 82 4524 389 (SA); or
julian@tealmining.com,
or
Rick Menell (President and CEO) on +27 82 450 2301; or rick@tealmining.com.
Date: 06/02/2007 07:57:01 Produced by the JSE SENS Department.
