TIDMDME
20 October 2011
AIM ANNOUNCEMENT
Discovery Metals Limited
QUARTERLY ACTIVITIES REPORT
1 July to 30 September 2011
Boseto Copper Project Development
* Boseto Construction is 75% complete and is on schedule for commissioning and
commencement of copper silver concentrate production in the first half of
2012.
* All major components are on site.
* First mining fleet commenced work in September and recruitment of the
operations personnel continues.
* Construction of the Boseto project remains on time and within budget.
* Zeta Underground Definitive Feasibility Study scheduled for completion in
late 2011.
Exploration
* Boseto Zone (targeting production expansion / mine life extension)
* The Zeta Mineral Resource tonnage was increased by 25%.
* Potential for underground mining at the Plutus Deposit was confirmed.
This drilling is outside the current Plutus mineral resources.
* Reverse circulation and diamond drilling of 42 holes at the Selene
Prospect indicated potential for economic open pit mining with copper-
silver mineralisation in all holes. 37 holes reported with best results
of:
* Hole SLDD1288: 5.2m @ 2.2% Cu & 10.2 g/t Ag;
* Hole SLRC1302: 7.0m @ 1.8% Cu & 45.4 g/t Ag;
* Hole SLRC1303: 5.0m @ 1.6% Cu & 22.8 g/t Ag;
* Hole SLRC1276: 5.0m @ 1.4% Cu & 30.2 g/t Ag;
* Hole SLRC1290: 7.0m @1.2% Cu & 13.7 g/t Ag;
- Including 4.0m @ 1.8% Cu & 20.3 g.t Ag.
* Drilling at the Mango Prospect has confirmed a new discovery of copper-
silver mineralisation at both ends of what is believed to be a 36
kilometre prospective horizon.
* Mid Kalahari Zone (targeting new standalone mining operation)
* The seven Ghanzi district prospecting licences (first granted in 2008)
have been renewed for two years.
* Initial drill testing of Ourea, Kronos, Notus and Hemera Prospects was
completed. Assay results are anticipated to be available for release in
the December quarter.
* South-west Kalahari Zone (targeting new standalone mining operations)
* Soil sampling continued at the Hermes target.
Corporate
· The project finance package was completed and US$115 million
of $205 million available drawn down in three tranches during the quarter to
meet expected payments until the end of October.
· The Company entered into a commodity price protection strategy
by hedging 40% of forecast copper income and 65% of forecast silver income for
the period from July 2012 to March 2015 at average future strike prices of
US$4.01/lb for copper and US$36.07 for silver.
· Discovery Metals had US$118 million in cash and had drawn down
US$115 million of Boseto project financing at 30 September.
1. Boseto Copper Project Development Progress ('Boseto' or 'the
Project')
The Engineering Procurement and Construction (EPC) contract to construct the 3
million tonnes per annum Boseto processing plant and related works commenced in
September 2010. Activities in the September 2011 quarter included finalisation
of off-site engineering and procurement with most items delivered to site. On-
site works included erection of structural steelwork, installation of plant,
equipment, piping and electrical works. The construction timeline remains on
schedule to allow commencement of commissioning of the process plant in first
half of 2012. Boseto project progress for the quarter was:
* Engineering and procurement neared completion;
* Toteng housing contracts awarded and works commenced;
* Delivery of mine mobile equipment (including spare parts and tyres)
commenced to enable on-time commencement of mining operations;
* Structural concrete for the process plant has been completed;
* Erection of structural steelwork for the process plant continued;
* Installation of plant, equipment, piping and electrical commenced;
* Construction of the mine offices & workshops continued;
* Pipe and power lines for the Project's water supply progressed;
* Delivery and commissioning of mobile equipment commenced; and
* The first two of the eight 2.5 megawatt diesel powered generators arrived on
site in early October.
Construction of the project has been significantly advanced over the quarter.
Photographs included in this release show that the primary, secondary and
tertiary crushers have been installed, the screening plant is erected, the ball
mill is in place and float cells have been placed upon their concrete support
structures. All major components are on site and work has commenced on the
electrical and piping packages of work. Work continues to complete erection of
the fine ore bin and the concentrate shed and work has commenced to construct
the Run Of Mine (ROM) ore pad adjacent to the primary crusher.
The latest estimate to complete the Boseto capital works project show that the
project is expected to be completed within the US$175 million approved budget.
The separate estimate of US$75 million for the procurement and delivery of the
mobile mine equipment is also in line with budget estimates. The Company has
maintained progress in line with the schedule set in August 2010.
Monthly progress of the Boseto construction can be tracked pictorially on the
Company's website.
2. Boseto Operational Progress
Mining operations commenced during September following successful delivery and
commissioning of the first units of the mobile plant fleet and induction of the
first group of mobile plant operators. Two John Deere scraper units have been
engaged in top-soil stripping and haul-road construction and a Caterpillar front
end loader and truck fleet has commenced ROM stockpile pad construction.
Equipment delivered and commissioned by the end of September included:
* 2 John Deere scraper units;
* 1 Caterpillar 990 front end loader;
* 8 Caterpillar 777D haul trucks;
* 1 Caterpillar D10T bull-dozer;
* Caterpillar 16M grader;
* Caterpillar 834 rubber tyred dozers;
* 1 Sandvik D25KS blast hole drill;
* Terex rough terrain cranes; and
* 8 items of smaller auxiliary plant.
The first of three Liebherr 9350 excavators (350 tonne) was successfully
delivered and assembly commenced in late September. This unit was commissioned
and commenced operation in mid-October 2011. The remaining mobile plant is on
schedule for delivery and commissioning in late 2011 and early 2012.
Excavator and truck mining operations are planned to commence at the Zeta
Deposit in the next month to start the building of the run-of-mine (ROM) ore
stockpile ahead of plant feed requirements. Recruitment and induction of mining
mobile plant operators and support staff continues in alignment with the fleet
delivery schedule.
The fixed plant technical and supervisory team is largely recruited and
established temporarily in Maun. The Plant team is currently focussed on
development of training modules, spares and supplies procurement and plant
management systems development. Recruitment of fixed plant operators is in
progress and the first operators are expected to commence training late in the
4th quarter of 2011 in anticipation of commissioning in the first half of 2012.
The site support services team is engaged with recruiting activities, regular
consultation with the community, setting up environmental systems and
establishment of the Toteng accommodation village.
Overall, the operations team is being established on schedule to deliver ore and
participate in plant commissioning activities in the first half of 2012.
3. Zeta Underground Definitive Feasibility Study (DFS)
The DFS for underground mining of the Zeta Mineral Resource is on track and
scheduled for completion in late 2011 with the results expected to be released
to the ASX in early 2012. Independent consultant Mining Plus Pty Ltd (Mining
Plus) is assisting with the completion of the DFS.
Snowden Mining Industry Consultants (Snowden) completed an upgrade of the
Mineral Resources for the Zeta Deposit incorporating 54 new infill holes drilled
earlier this year. The Mineral Resources at Zeta increased by 9 million tonnes
(25%) to 44.1 million tonnes and this resource model will form the basis of the
Zeta underground DFS. Please refer to the updated Mineral Resource and Ore
Reserves statement on the second last page of this report.
During the quarter, Mining Plus evaluated several mine access options and
geotechnical work progressed with recommendations made for a ground support
regime for haulage development and production areas. A stope design exercise
commenced together with mine sequencing and production scheduling. A
metallurgical test work programme on samples of Zeta underground material
confirmed the similarity of the Zeta underground ore with Zeta open pit
material.
The Preliminary Environmental Impact Assessment (PEIA) report for Boseto
underground mining has been accepted by the Department of Environmental Affairs
(DEA). It has been agreed that an addendum to the Boseto Environmental and
Social Impact Assessment (ESIA) will be sufficient to grant permission to
proceed with the underground operations. This will ensure that all impacts and
the Environmental Management Plan are comprehensive for the entire scope of the
Boseto operations. The process to select a consultant for this role has
commenced.
4. Boseto Coal Fired Power Station
Engineering, Procurement & Construction (EPC) proposals with indicative pricing
for a 25MW Coal Fired Power Station have been received from several potential
EPC contractors from South Africa, Australia, Europe, China and India. All
proposals have been evaluated and a short list determined. Fully priced Front
End Engineering Design (FEED) proposals have now been received from these short
listed bidders. The EPC selection due diligence process is underway which will
incorporate visits to contractor facilities and design offices together with
nominated projects recently completed or under construction. It is intended to
award a FEED contract to a preferred EPC contractor after this process has
concluded. This initiative is an integral part of the Boseto Development Plan
and will allow replacement of the diesel power for the project bringing
significant operating cost savings. The funding of capital costs is planned
from operating cash flows during 2013 with the commencement of operation of the
coal fired power station currently scheduled for mid-2014.
5. Kalahari Copperbelt Exploration
Discovery Metals holds 14 prospecting licences covering 8,877 square kilometres
in the Kalahari copperbelt of north-west Botswana.
The entire prospecting licences package extends from 60 kilometres south-west of
Maun through to the Namibian border, a distance of over 280 kilometres. The
prospecting licences contain approximately 1,300 strike kilometres of favourable
geology with the potential to host copper-silver mineralisation. Approximately
40% of this prospective horizon's strike has been explored (soil sampled) by
Discovery Metals and approximately 13% has been drill-tested to date.
Exploration in the September quarter has also been examining the potential for
mineralisation at stratigraphic levels other than that hosting mineralisation at
Zeta and Plutus. Soil sampling has also tested about 100 km of strike length of
the Ngwako Pan formation from Kronus in the south-west to Zeta in the north-east
at spacing of approximately two kilometres along strike.
The seven north-eastern prospecting licences, located in Ngamiland, have been
renewed until September 2012, and the seven south-western prospecting licences,
located in the Ghanzi District, were renewed in July for another two years,
until 30 June 2013.
Exploration in the Kalahari Copperbelt during the quarter included regional soil
geochemical sampling with drilling continuing at seven areas, utilising four
drill rigs during the quarter as follows:
* Deep mineralisation at Plutus has been tested for underground potential;
* Mineralisation at Mango and Zeta north-east has been drill tested; and
* Geochemical anomalies at Mango, Ourea, Hemera and Notus have also been
subjected to first past drill testing.
The continuing soil sampling programme, with interpretation of the aeromagnetic
surveys flown in the first half of 2011, will assist in planning further work in
the December quarter and beyond. In addition, a large number of drilling
results from work conducted earlier in the year have been received. Most of
these have been reported in separate releases during the quarter and the
remaining results are currently being reviewed and compiled for release.
(a) Boseto Zone - targets additional resources for Boseto
Zeta Underground Resource - The Zeta mineral resource was upgraded to 44.1
million tonnes @ 1.3% copper and 22 g/t silver, an increase of 25% in tonnes
over the previous mineral resource and a 16% increase in contained metal.
Plutus Underground Target - The results of this program were reported to the ASX
in early October, indicating continuity of both grade and thickness of
mineralisation at Plutus to approximately 350 metres below surface. Potential
for underground mining was identified along at least 1,400 metres of strike
length from the 7km zone drill tested. Additional work at Plutus will be
planned upon completion of current work on the Definitive Feasibility Study for
underground mining at Zeta.
Boseto Zone - additional open pit target exploration - Within the Boseto zone,
exploration was focused on the Mango, Selene and the Zeta north-east prospects.
RAB drilling has been used to identify the position of the target horizon under
sand and calcrete cover, and diamond core drilling to test mineralisation. A
soil sampling programme was undertaken to test the potential for mineralisation
to be hosted by the Ngwako Pan Formation in the Zeta area.
Zeta North-east - Zeta North-east is centred about seven kilometres north-east
of Zeta. Mineralisation has been intersected in two historic holes and five DML
drill holes completed prior to 2009. In the September quarter, ten diamond core
holes were drilled to follow up historic drill results, close-off the
mineralisation to the north-east and reduce the drill hole spacing to
approximately 500m along strike. The results of this drilling will be reported
in the December quarter.
Selene - The assay results received for 37 drill holes at Selene (28 reverse
circulation and 9 diamond) which were part of a 42 hole programme, completed in
the June quarter, were reported in July. All 42 holes intersected copper-silver
mineralisation at depths below surface of between 25 metres and 200 metres along
a strike length of more than 7 kilometres. These results demonstrated the
potential for economic open pit mineralisation at Selene. The assay results for
the remaining 5 holes drilled are now expected to be available in the next
quarter.
Rotary Air Blast (RAB) drilling began in September with the aims of extending
the known mineralisation to the north-east, identifying the position of the
mineralised horizon and determining the number of repetitions of the mineralised
horizon in the Selene area. A total of 132 holes were drilled during the
quarter for 2,053 metres on nine sections. No assay results have been received
from this work as yet. An initial interpretation suggests that there may be two
lines of the mineralised horizon on either side of a north-east trending
syncline.
Nexus - Initial interpretation of the helimag survey flown earlier in the year
suggests a complex structure in the area of Nexus and Zeta with the possibility
of an un-tested limb of the Zeta Syncline at the north-east and south-west
extremities of the known Nexus mineralisation. Drilling will test this
interpretation in the next six months.
Mango - Drilling was conducted at the north-east end of the Mango area in the
quarter, in an area believed to be contiguous to the Toronto Stock Exchange
listed Hana Mining's Zone 5 mineralisation. An initial six diamond holes were
drilled over a strike length of more than one kilometre with all holes
intersecting copper-silver mineralisation that now remains open to the south-
west and down dip. The results of these holes were reported in September, with
the most significant results as follows:
* MGDD1324: 13 metres @ 1.8% Cu and 22 g/t Ag; and
* MGDD1319: 11 metres @ 1.7% Cu and 19 g/t Ag.
Further drilling in this area is underway to determine the extent of the
mineralisation to the south-west.
Shallow drilling was also undertaken at the south-west end of Mango,
approximately 36 kilometres to the south-west of the area of initial diamond
drilling conducted during the quarter. A total of 43 shallow RC holes have been
drilled to determine the position of the target horizon. The shallow drilling
has been followed by seven deeper RC holes and three diamond core holes, to test
the target horizon at least 50 metres below the surface. Three of the deeper RC
holes have intersected malachite and one of the diamond core holes has
intersected copper sulphides over four metres. No assays have been received as
yet.
The work completed at Mango in the quarter has demonstrated that mineralisation
occurs in two areas approximately 36 kilometres apart. Planned work in the next
six months is focused on determining the continuity of mineralisation in the
zones discovered to date and between the two areas drilled as well as
identifying potential parallel repetitions of the mineralised horizon at targets
identified from the helimag survey.
(b) Mid Kalahari Zone - targets new standalone open pit project
Exploration in the Mid Kalahari Zone consisted of drilling in the Hemera, Notus
and Ourea areas, and analysis of results from drilling conducted in the June
quarter. Soil sampling was also undertaken to test for zones of anomalous
copper at surface at stratigraphic levels both above and below the known
mineralisation. Final images of the helimag survey, flown in the first half of
2011 were received and interpretation has commenced.
Ophion - Results from the RC and diamond drilling conducted to date at Ophion
were reported during the quarter. These results indicate a zone of potentially
economic mineralisation exists with a strike length of up to seven kilometres.
No further drilling is currently planned for Ophion while a review is undertaken
to rank and then prioritise existing prospects in the mid-Kalahari zone with
respect to mineral resource definition drilling.
A total of 3,870 soil samples were collected within the Ophion area across a
previously untested and potentially mineralised horizon. A coherent zinc and
copper in soil anomaly has been identified over a strike length of approximately
eight kilometres at the contact with the Kgwebe Volcanics basement. An initial
drilling programme to test for mineralisation in this anomalous zone is planned
for completion within the next six months.
Kronus North-East - A total of 1,568 soil samples were collected in the Kronus
area, with a weak zinc and copper in soil anomaly, approximately eight
kilometres long being defined at the contact with the Kgwebe Formation.
Notus - One additional diamond core drill hole was completed at Notus in the
quarter to finalise the planned programme. This hole is expected to be reported
in the next quarter once the assay results have been compiled and reviewed.
Hemera - Four diamond core drill holes, for 411 metres, were completed at Hemera
during the quarter, testing copper and zinc in soil anomalism over eight
kilometres of strike length of the target horizon. Although copper sulphides
were intersected in all holes, the mineralisation appears to be thin and
relatively low grade. Results from Hemera are expected to be reported in the
next quarter.
Ourea - An initial ten hole diamond drilling programme at the Ourea target was
completed for 893 metres. Drilling targeted copper and zinc in soil anomalism
around the north-east hinge of a large, shallow plunging anticline. The
anomalous copper values from soil sampling in this area represented the
strongest anomalous copper results sampled by Discovery Metals to date in the
Kalahari copperbelt. Initial drilling indicates that Ourea is more structurally
complex than initially believed and further drilling and reinterpretation of
magnetic imagery will be required to understand the structure in this area.
Results for drilling completed to date at Ourea are expected to be reported in
the December quarter.
Gaia-Coeus - Results from the soil sampling program undertaken in the June
quarter have identified a copper-zinc in soil anomaly at Gaia and several zinc
in soil anomalies at Coeus. Additional soil sampling has been undertaken in
both areas to extend the known anomalism and better define it prior to drilling
within the next six months. The results of the full soil sampling programme are
planned to be reported in the December quarter.
(c) South-west Kalahari Zone - targets underground resources
A total of 3,065 soil samples were collected in the Hermes area during the
quarter. Analysis of these samples were conducted by bench-top XRF and have
returned Cu assays of up to 32 ppm Cu, 59 ppm Zn and 54 ppm Pb which are
considered anomalous in the Kalahari copperbelt. Further soil sampling will be
conducted to define the anomalism, with the results to be reported in the
December quarter.
6. Manganese Prospects, South Botswana (Discovery Metals 100%)
Sixteen new Prospecting Licences, covering 14,425 square kilometres in southern
Botswana were granted to Discovery Metals in January 2011. This area, known as
the Kanye Basin in Botswana, is underlain by rocks of the Transvaal Supergroup.
These strata possibly represent the northwest extension of the Griqualand West
Basin of South Africa, which is host to both the Kalahari Manganese field (KMF),
and the eastern Transvaal basin which is host to a number of smaller manganese
mines in South Africa.
In the Kanye Basin in Botswana, four separate manganese deposits are known to be
located in the eastern Transvaal sequences, with historical production totalling
about 224,000 tonnes of manganese from three small mines.
There is no evidence of any exploration work targeting manganese deposits of the
KMF type in Botswana.
Historical exploration data (from the early 1950s to mid-1980s) for the entire
tenement portfolio was compiled during the quarter.
A geological desk top study is progressing to assess the available data and plan
for future fieldwork.
In excess of 8,000 water boreholes drilled by farmers for water are being
reviewed to provide additional geological and regolith thickness information.
Preliminary interpretation of the regolith data shows a depth of Kalahari cover,
mainly unconsolidated sediments of sand and calcrete, progressively ranging from
less than one metre in the eastern area of the Prospecting Licences to over 50
metres in the western areas.
In addition a Landsat thematic map image interpretation of the area was
completed and identified targets in both the Eastern Transvaal Basin extension
and the northwest extension of the Griqualand West Basin of South Africa into
Botswana.
Re-interpretation of the regional aeromagnetic data from the Government archives
is also in progress. An integrated approach including aeromagnetic data from
the known KMF type deposits in north-west South Africa has been adopted to
provide a broader prospective on the target area.
The next phases of work will include completing the reprocessing of the aero-
magnetics, orientation and regional soil geochemistry in selected areas and is
expected to result in the generation of targets for drill testing.
7. Dikoloti Nickel Project (Discovery Metals 40%)
The Dikoloti Nickel Project comprises four prospecting licences covering an area
of 613 square kilometres surrounding the nickel deposits of BCL Limited in the
Selebi-Phikwe region of north-east Botswana. Discovery Metals previously earned
an 85% interest from Xstrata. An Inferred Mineral Resource of 4.1Mt @ 0.7% Ni,
0.5% Cu and 1.2 ppm PGE's (Pt + Pd) at a cut-off of 0.5% Ni for 28,700 tonnes of
contained nickel has been reported in accordance with the guidelines of the
2004 Edition of the "Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves".
In October 2009, the Company entered a Joint Exploration Agreement with The
Japan Oil, Gas and Metals National Corporation (JOGMEC) to fund an AUD$3 million
exploration programme for Dikoloti. Discovery Metals will remain operator of
the joint venture during the farm-in exploration period and for any future
projects or operating phases. JOGMEC has expended the required exploration
funding to earn a joint venture interest of 60%.
Drilling at Dikoloti was completed in February 2011, with an additional three
holes drilled at Dikoloti North. JOGMEC has indicated an intention to fund
future drilling programmes and Discovery Metals' current strategy is to continue
to allow its interest in Dikoloti to dilute.
Discovery Metals has submitted a renewal application to the Geological Survey
Department of Botswana to retain only the most prospective parts of the Dikoloti
project area and also to significantly reduce the area of current tenement
holding.
8. Corporate Activities
Financial
The Boseto debt syndicate project finance documents were executed with the first
draw down of project debt in July 2011. The Company completed the US$80 million
equity portion of the Boseto project financing in June 2011. By the end of
September 2011 a total of US$115 million of debt finance had been drawn to pay
expenditure in the quarter and in advance for October payments, where
significant mine mobile fleet expenditure is scheduled.
Total debt funding of US$180 million will be applied to the Boseto processing
plant for US$115 million and the Boseto mine mobile fleet for US$75 million with
Caterpillar being the largest supplier of the mining fleet for the Boseto
operations.
In addition to project and equipment finance, the banking syndicate provides a
US$25 million overrun and working capital facility plus hedging lines for both
copper and silver production.
Discovery Metals entered into a commodity price protection strategy by hedging
approximately 40% of forecast copper and 65% of forecast silver production (for
the scheduled period of the loan repayment). The hedge contracts provide
downside price protection on a portion of the Boseto production. Approximately
60% of the copper production will be sold at spot market prices. The total
hedged quantities are 40,000 tonnes of copper and 1,850,000 ounces of silver.
The average future strike prices attained for these hedge contracts are US$4.01
per pound (/lb) for copper and US$36.07 per ounce (/oz) for silver. These
compare very favourably to the Bankable Feasibility Study (BFS) prices of
US$3.00/lb for copper and US$17/oz for silver and the projected life of mine
cash costs of US$1.24/lb. The hedge book value was US$78 million in excess of
commodity market prices at 30 September.
As the Company's assets and prospects are located in Botswana, the Company
enjoys a stable taxation regime including a progressive profitability based
mining tax system that automatically adjusts the tax rate to the copper price
cycle - both up and down.
Approximately 2 million director and executive incentive options were exercised
during the quarter for A$0.9 million.
At the end of the September quarter 2011, Discovery Metals held US$118 million
in cash and had drawn down Boseto project debt of US$115 million.
Boseto Hedging Summary
Copper-silver production from Boseto will cash settle or receive payment from
the hedging banks based on the difference between the average monthly London
Metal Exchange (LME) copper price and the following contracted hedge prices.
The positive market to market value (MTM) for each hedge period and total is
also shown below.
+---------------+------+------+------+---------+------+----------+---------+
|Hedge |Copper|Copper|Copper|Silver |Silver|Copper |Silver |
| | | | | | | | |
|Period |Hedge |Price |Price |Hedge |Price |Mark to |Mark to |
| | | | | | | | |
| |Tonnes|USD/t |USc/lb|Ounces |US$/oz|Market |Market |
+---------------+------+------+------+---------+------+----------+---------+
|Jul to Sep 2012|3,000 |9,208 |4.18 |141,489 |36.32 |6,410,703 |745,109 |
+---------------+------+------+------+---------+------+----------+---------+
|Oct to Dec 2012|3,759 |9,148 |4.15 |183,240 |36.29 |7,761,547 |963,712 |
+---------------+------+------+------+---------+------+----------+---------+
|Jan to Mar 2013|3,681 |9,069 |4.11 |160,890 |36.24 |7,280,661 |951,349 |
+---------------+------+------+------+---------+------+----------+---------+
|Apr to Jun 2013|3,621 |8,995 |4.08 |161,079 |36.19 |6,870,668 |721,488 |
+---------------+------+------+------+---------+------+----------+---------+
|Jul to Sep 2013|3,939 |8,918 |4.05 |195,759 |36.13 |7,149,172 |1,002,969|
+---------------+------+------+------+---------+------+----------+---------+
|Oct to Dec 2013|4,352 |8,845 |4.01 |218,679 |36.08 |7,554,477 |1,113,373|
+---------------+------+------+------+---------+------+----------+---------+
|Jan to Mar 2014|3,879 |8,762 |3.97 |180,408 |36.02 |6,376,837 |911,434 |
+---------------+------+------+------+---------+------+----------+---------+
|Apr to Jun 2014|3,663 |8,678 |3.94 |167,961 |35.95 |5,685,394 |840,529 |
+---------------+------+------+------+---------+------+----------+---------+
|Jul to Sep 2014|3,370 |8,597 |3.90 |140,370 |35.88 |4,947,703 |695,731 |
+---------------+------+------+------+---------+------+----------+---------+
|Oct to Dec 2014|3,240 |8,511 |3.86 |136,140 |35.82 |4,474,939 |665,752 |
+---------------+------+------+------+---------+------+----------+---------+
|Jan to Mar 2015|3,496 |8,424 |3.82 |163,985 |35.75 |4,522,691 |787,301 |
+---------------+------+------+------+---------+------+----------+---------+
|Total/ Average |40,000|8,834 |4.01 |1,850,000|36.07 |69,034,792|9,398,746|
+---------------+------+------+------+---------+------+----------+---------+
Based on spot prices of US$6,998/t or US$3.17/lb for copper and US$31.05/oz for
silver.
Further information on the Company including Mineral Resources and Ore Reserves
is available on its website: www.discoverymetals.com
For further information on this release and Discovery Metals Limited, please
contact:
Brad Sampson, Managing Director Ph: +61 73218 0200
e: brad@discoverymetals.com
AIM Nominated Advisor - Fairfax I.S. PLC, Contact Ewan Leggat/Laura Littley Ph:
+44 20 7460 4389 or 7460 4387
UK PR - Tavistock Communications, Contact Jos Simson/Emily Fenton Ph +44 (0)
207 920 3150 or 778 855 4035
Forward Looking Statements
This release includes certain statements that may be deemed "forward-looking
statements". All statements in this discussion, other than statements of
historical facts, that address future activities and events or developments that
Discovery Metals expects, are forward-looking statements. Although Discovery
Metals believes the expectations expressed in such forward-looking statements
are based on reasonable assumptions, such statements are not guarantees of
future performance and actual results or developments may differ materially from
those in the forward-looking statements. Factors that could cause actual
results to differ materially from those in forward-looking statements include
market prices, continued availability of capital and financing, and general
economic, market or business conditions. Investors are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in forward-looking
statements.
Mineral Resources
The total Mineral Resources and Ore Reserves for the Boseto Copper Project,
reported in accordance with The Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (The JORC Code, "2004 Edition"), at
a cut-off of 0.6% Cu, are:
+-------------+--------------------+--------------------+----------------------+
| Mineral | ZETA | PLUTUS & PETRA | TOTAL |
| Resources +----+------+--------+----+------+--------+-----+------+---------+
| | Mt |Cu (%)|Ag (g/t)| Mt |Cu (%)|Ag (g/t)| Mt |Cu (%)|Ag (g/t) |
+-------------+----+------+--------+----+------+--------+-----+------+---------+
| Measured |4.6 | 1.6 | 23.5 |0.1 | 1.3 | 11.4 | 4.7 | 1.6 | 23.2 |
+-------------+----+------+--------+----+------+--------+-----+------+---------+
| Indicated |12.4| 1.5 | 26.1 |11.5| 1.4 | 14.1 |23.9 | 1.5 | 20.3 |
+-------------+----+------+--------+----+------+--------+-----+------+---------+
|Subtotal M&I |17.0| 1.5 | 25.4 |11.6| 1.4 | 14.1 |28.6 | 1.5 | 20.8 |
+-------------+----+------+--------+----+------+--------+-----+------+---------+
| Inferred |27.1| 1.2 | 20.0 |55.8| 1.4 | 14.8 |82.9 | 1.3 | 16.5 |
+-------------+----+------+--------+----+------+--------+-----+------+---------+
|Total Mineral|44.1| 1.3 | 22.1 |67.4| 1.4 | 14.7 |111.5| 1.4 | 17.6 |
| Resources | | | | | | | | | |
+-------------+----+------+--------+----+------+--------+-----+------+---------+
| Mineral Resources are reported at a cut-off grade of 0.6% Cu. |
| Please refer to Competent Persons Statement |
+------------------------------------------------------------------------------+
Ore Reserves
The Mineral Resource is inclusive of High Grade Ore Reserves at a cut-off of
0.6% Cu.
+-------------+--------------------+--------------------+----------------------+
| High Grade | ZETA | PLUTUS & PETRA | TOTAL |
|Ore Reserves +----+------+--------+----+------+--------+----+------+----------+
| | Mt |Cu (%)|Ag (g/t)| Mt |Cu (%)|Ag (g/t)| Mt |Cu (%)| Ag (g/t) |
+-------------+----+------+--------+----+------+--------+----+------+----------+
| Proved |4.0 | 1.6 | 22.1 |0.2 | 1.3 | 11.7 |4.2 | 1.6 | 21.6 |
+-------------+----+------+--------+----+------+--------+----+------+----------+
| Probable |6.5 | 1.5 | 23.5 |11.1| 1.3 | 13.7 |17.6| 1.4 | 17.3 |
+-------------+----+------+--------+----+------+--------+----+------+----------+
| High Grade |10.5| 1.5 | 23.0 |11.3| 1.3 | 13.7 |21.8| 1.4 | 18.2 |
|Ore Reserves | | | | | | | | | |
+-------------+----+------+--------+----+------+--------+----+------+----------+
|High Grade Reserves reported at a cut-off grade of 0.6% Cu |
| Please refer to Competent Persons Statement |
+------------------------------------------------------------------------------+
Competent Persons Statement
The information in this report that relates to Exploration Results is based on
information compiled by Mr Fred Nhiwatiwa who is a Member of the Australasian
Institute of Mining and Metallurgy (MAusIMM) and Mr Wallace Mackay who is a
Member of the Australian Institute of Geoscientists. Mr Nhiwatiwa and Mr Mackay
are full-time employees of Discovery Metals Limited. Messrs Nhiwatiwa and
Mackay have sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which
he is undertaking to qualify as a Competent Person as defined in the 2004
Edition of the "Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves".
The information in this report as it relates to the Zeta, Plutus and Petra
Mineral Resources for the Boseto Copper Project was reviewed by David Arnott,
who is a MAusIMM. Mr Arnott is employed fulltime by Snowden Mining Industry
Consultants Pty Ltd (Snowden). Mr Arnott has sufficient experience which is
relevant to the style of mineralisation and type of deposit under consideration
and to the activity which he is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the "Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves".
The information in this report as it relates to the Ore Reserves is based on
information reviewed by Mr Peter Myers, who is a MAusIMM and a fulltime employee
of Snowden. Mr Myers has sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration and to the preparation
of mining studies to qualify as a Competent Person as defined in the 2004
Edition of the "Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves".
The information in this report as it relates to the Dikoloti Mineral Resource
was reviewed by Mr Stefan Mujdrica of Xstract Mining Consultants Pty Ltd. At
the time of reviewing the reported Mineral Resource, Mr Mujdrica was employed by
Snowden. Mr Mujdrica is a MAusIMM and has sufficient experience which is
relevant to the style of mineralisation and type of deposit under consideration
and to the activity which he is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the "Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves".
Messrs Nhiwatiwa, Mackay, Arnott, Myers and Mujdrica consent to the inclusion in
this report of the matters based on information provided by them and in the form
and context in which it appears.
Directory
DISCOVERY METALS LIMITED AIM Listing:
ABN 29 104 924 423 AIM Nominated Advisor & AIM
Broker
Fairfax I.S. PLC
Web site www.discoverymetals.com
Contact: Ewan Leggat Phone:
Email: info@discoverymetals.com +44 20 7460 4389
Investor information contacts: Contact: Laura Littley
Phone: +44 20 7460 4387
Brad Sampson
United Kingdom investor
Managing Director information:
Phone: +61 7 3218 0200 Tavistock Communications
Email: brad@discoverymetals.com Contact: Jos Simson/Emily
Fenton
or
Phone +44 207 920 3150
Paul Fulton
Mobile +44 7788 554 035
Chief Financial Officer
Phone: +61 7 3218 0218
Stock exchange listings
Email: paul.fulton@discoverymetals.com
Australian Stock Exchange - ASX
Shareholder enquiries: Code: DML
Queries related to share registry matters should Botswana Stock Exchange - BSE
be directed to: Code: DML
Computershare Investor Services Alternate Investment Market -
London Stock Exchange
117 Victoria Street
AIM Code: DME
West End, Queensland 4101
Issued capital
Tel: 1300552270 or +61 7 3237 2100
At 30 September 2011 ordinary
Fax: +61 7 3237 2152 issued capital of Discovery
Metals was 439,128,231 ordinary
Web site: www.computershare.com shares and 4,350,000 director
and executive options.
Registered Office
Directors
Level 20, 333 Ann Street, Brisbane,
Gordon Galt - Chairman
Queensland 4000, Australia
Brad Sampson - Managing
Phone: +61 7 3218 0222 Director
Fax: +61 7 3218 0233 Morrice Cordiner - Non-
Executive Director
Botswana Country Office
Ribson Gabonowe - Non-Executive
Plot 21314, Sebele Station Road, Phakalane Director
Gaborone, Botswana Jeremy Read - Non-Executive
Director
Phone: +267 318 0751
John Shaw - Non-Executive
Fax: +267 318 0752 Director
Company Secretary - Greg Seeto
Appendix 5B
Mining exploration entity quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended
01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10
Name of entity
+--------------------------+
| DISCOVERY METALS LIMITED |
+--------------------------+
ABN Quarter ended ("current quarter")
+----------------+ +-----------------------------------+
| 29 104 924 423 | | 30 September 2011 |
+----------------+ +-----------------------------------+
Consolidated statement of cash flows
+---------------+------------------+
|Current quarter| Year to date (3 |
Cash flows related to operating activities | $USD'000 | months) |
| | $USD'000 |
+---------------+------------------+
1.1 Receipts from product sales and related| | |
debtors | | |
| | |
| | |
1.2 Payments for (a) exploration & | -4,975 | -4975 |
evaluation | -74,101 | -74,101 |
(b) | | |
development | -9,801 | -9,801 |
(c) | | |
production | | |
(d) | | |
administration | | |
| | |
1.3 Dividends received | | |
| | |
1.4 Interest and other items of a similar | 202 | 202 |
nature received | | |
| | |
1.5 Interest and other costs of finance | | |
paid | | |
| | |
1.6 Income taxes paid | | |
| | |
1.7 Other (provide details if material) - | 1,436 | 1,436 |
GST/VAT | | |
+---------------+------------------+
| -87,240 | -87,240 |
Net Operating Cash Flows | | |
=-------------------------------------------+---------------+------------------+
| | |
Cash flows related to investing | | |
activities | | |
| | |
1.8 Payment for purchases of: (a) | | |
prospects | | |
(b) | | |
equity investments | | |
(c) other| | |
fixed assets | | |
| | |
1.9 Proceeds from sale of: (a) | | |
prospects | | |
(b) | | |
equity investments | | |
(c) other| | |
fixed assets | | |
| | |
1.10 Loans to other entities | | |
| | |
1.11 Loans repaid by other entities | | |
| | |
1.12 Other (provide details if material) | | |
+---------------+------------------+
| | |
Net investing cash flows | | |
+---------------+------------------+
1.13 Total operating and investing cash | -87,240 | -87,240 |
flows (carried forward) | | |
=-------------------------------------------+---------------+------------------+
Total operating and investing cash | -87,240 | -87,240 |
1.13 flows (brought forward) | | |
=-------------------------------------------+---------------+------------------+
| | |
Cash flows related to financing | | |
activities | | |
| | |
| | |
1.14 Proceeds from issues of shares, | 1,156 | 1,156 |
options, etc. | | |
| | |
1.15 Proceeds from sale of forfeited shares | | |
| | |
1.16 Proceeds from borrowings | 115,000 | 115,000 |
| | |
1.17 Repayment of borrowings | | |
| | |
1.18 Dividends paid | | |
| | |
1.19 Other (provide details if material) | | |
+---------------+------------------+
Net financing cash flows | 116,156 | 116,156 |
=-------------------------------------------+---------------+------------------+
| | |
Net increase (decrease) in cash held | 28,916 | 28,916 |
| | |
| | |
1.20 Cash at beginning of quarter/year to | 88,807 | 88,807 |
date | | |
| | |
1.21 Exchange rate adjustments to item 1.20 | | |
+---------------+------------------+
1.22 Cash at end of quarter | 117,723 | 117,723 |
=-------------------------------------------+---------------+------------------+
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related
entities
+---------------+
|Current quarter|
| USD'000 |
+---------------+
| |
1.23 Aggregate amount of payments to the parties included in | 58 |
item 1.2 | |
+---------------+
| |
1.24 Aggregate amount of loans to the parties included in item | |
1.10 | |
=--------------------------------------------------------------+---------------+
1.25 Explanation necessary for an understanding of the transactions
+--------------------------------------------------------------------------+
| |
| |
| |
| |
+--------------------------------------------------------------------------+
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material
effect on consolidated assets and liabilities but did not involve cash
flows
+---------------------------------------------------------------------------+
| |
| |
| |
| |
+---------------------------------------------------------------------------+
2.2 Details of outlays made by other entities to establish or increase their
share in projects in which the reporting entity has an interest
+---------------------------------------------------------------------------+
| |
| |
| |
| |
+---------------------------------------------------------------------------+
Financing facilities available
Add notes as necessary for an understanding of the position.
+------------------+-------------+
| Amount available | Amount used |
| USD'000 | USD'000 |
+------------------+-------------+
3.1 Loan facilities | 180,000 | 115,000 |
| | |
+------------------+-------------+
3.2 Credit standby arrangements | 25,000 | o |
| | |
=----------------------------------+------------------+-------------+
Estimated cash outflows for next quarter
+---------+
| USD'000 |
+---------+
4.1 Exploration and evaluation | 3,000 |
| |
+---------+
4.2 Development | 90,000 |
| |
+---------+
4.3 Production | |
| |
+---------+
4.4 Administration | 1,500 |
| |
=---------------------------------+---------+
| |
Total | 94,500 |
=---------------------------------+---------+
Reconciliation of cash
+---------------+----------------+
Reconciliation of cash at the end of the |Current quarter|Previous quarter|
quarter (as shown in the consolidated | USD'000 | USD'000 |
statement of cash flows) to the related items | | |
in the accounts is as follows. | | |
=---------------------------------------------+---------------+----------------+
5.1 Cash on hand and at bank | 117,723 | 88,807 |
+---------------+----------------+
5.2 Deposits at call | | |
+---------------+----------------+
5.3 Bank overdraft | | |
+---------------+----------------+
5.4 Other (provide details) | | |
=---------------------------------------------+---------------+----------------+
Total: cash at end of quarter (item 1.22) | 117,723 | 88,807 |
=---------------------------------------------+---------------+----------------+
Changes in interests in mining tenements
+--------------+-------------+--------------+------------+
| Tenement | Nature of | Interest at |Interest at |
| reference | interest | beginning of | end of |
| | (note (2)) | quarter | quarter |
+--------------+-------------+--------------+------------+
6.1 Interests in |- |- |- |- |
mining tenements | | | | |
relinquished, | | | | |
reduced or lapsed | | | | |
| | | | |
| | | | |
+--------------+-------------+--------------+------------+
6.2 Interests in |- |- |- |- |
mining tenements | | | | |
acquired or | | | | |
increased | | | | |
| | | | |
| | | | |
+--------------+-------------+--------------+------------+
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights
together with prices and dates.
+---------------+-------------+-------------+------------+
| Total number |Number quoted| Issue price |Amount paid |
| | |per security | up per |
| | |(see note 3) | security |
| | | (cents) | (see note |
| | | | 3) (cents) |
=---------------------+---------------+-------------+-------------+------------+
7.1 Preference | | | | |
+securities | | | | |
(description) | | | | |
+---------------+-------------+-------------+------------+
7.2 Changes during | | | | |
quarter | | | | |
(a) Increases | | | | |
through issues | | | | |
(b) Decreases | | | | |
through returns | | | | |
of capital, buy- | | | | |
backs, | | | | |
redemptions | | | | |
=---------------------+---------------+-------------+-------------+------------+
7.3 +Ordinary | 439,128,231 | 439,128,231 | | |
securities | | | | |
| | | | |
+---------------+-------------+-------------+------------+
7.4 Changes during | | | | |
quarter | | | | |
(a) Increases | 513,750 | 513,750 | 50 cents | 50 cents |
through issues | | | (option | |
| 500,000 | 500,000 | exercise) | 43 cents |
| | | 43 cents | |
| 500,000 | 500,000 | (option | 54 cents |
| | | exercise) | |
| 500,000 | 500,000 | 54 cents | 37.5 cents |
| | | (option | |
| | | exercise) | |
(b) Decreases | | | 37.5 cents | |
through returns | | | (option | |
of capital, buy- | | | exercise) | |
backs | | | | |
=---------------------+---------------+-------------+-------------+------------+
7.5 +Convertible debt| | | | |
securities | | | | |
(description) | | | | |
+---------------+-------------+-------------+------------+
7.6 Changes during | | | | |
quarter | | | | |
(a) Increases | | | | |
through issues | | | | |
(b) Decreases | | | | |
through | | | | |
securities | | | | |
matured, | | | | |
converted | | | | |
=---------------------+---------------+-------------+-------------+------------+
7.7 Options | | | Exercise |Expiry date |
(description and | | | price | |
conversion | 1,000,000 | | |12 December |
factor) | 1,000,000 | | 50 cents | 2011 |
| 1,000,000 | | 35 cents |12 December |
| 100,000 | | 55 cents | 2011 |
| 1,000,000 | | 37.5 cents | 1 February |
| 250,000 | | 35 cents | 2013 |
| | | 37.5 cents | 1 November |
| | | | 2012 |
| | | | 1 November |
| | | | 2013 |
| | | | 1 November |
| | | | 2013 |
+---------------+-------------+-------------+------------+
7.8 Issued during | | | | |
quarter | | | | |
+---------------+-------------+-------------+------------+
7.9 Exercised during | 513,750 | | 50 cents |12 December |
quarter | 500,000 | | 43 cents | 2011 |
| 500,000 | | 54 cents | 25 March |
| 500,000 | | 37.5 cents | 2012 |
| | | | 25 March |
| | | | 2013 |
| | | | 1 November |
| | | | 2013 |
+---------------+-------------+-------------+------------+
7.10 Expired during | | | | |
quarter | | | | |
=---------------------+---------------+-------------+-------------+------------+
7.11 Debentures | | |
(totals only) | | |
=---------------------+---------------+-------------+
7.12 Unsecured notes | | |
(totals only) | | |
| | |
+---------------+-------------+
Compliance statement
1 This statement has been prepared under accounting policies which
comply with accounting standards as defined in the Corporations Act or other
standards acceptable to ASX (see note 5).
2 This statement does give a true and fair view of the matters
disclosed.
Sign here:
............................................................ Date:
20 October 2011
Company Secretary
Print name: Gregory Seeto
Notes
1 The quarterly report provides a basis for informing the market how
the entity's activities have been financed for the past quarter and the effect
on its cash position. An entity wanting to disclose additional information is
encouraged to do so, in a note or notes attached to this report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options in
respect of interests in mining tenements acquired, exercised or lapsed during
the reporting period. If the entity is involved in a joint venture agreement
and there are conditions precedent which will change its percentage interest in
a mining tenement, it should disclose the change of percentage interest and
conditions precedent in the list required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is
not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 6: Exploration for and
Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to
this report.
5 Accounting Standards ASX will accept, for example, the use of
International Financial Reporting Standards for foreign entities. If the
standards used do not address a topic, the Australian standard on that topic (if
any) must be complied with.
== == == == ==
Discovery Metals Limited: Quarterly Activities and Cashflow Reports:
http://hugin.info/137928/R/1556361/480261.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Discovery Metals Limited via Thomson Reuters ONE
[HUG#1556361]
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