TIDMDME
27 January 2012
Discovery Metals Limited
QUARTERLY ACTIVITIES REPORT
1 October to 31 December 2011
Boseto Copper Project Development
* Boseto project construction continues on schedule for commissioning and
commencement of copper-silver concentrate production in the June half of
2012.
* Mining commenced at the Zeta Pit in December 2011.
* Zeta Underground Definitive Feasibility Study has been completed by the
consultants and is being reviewed.
Exploration
* Boseto Zone (targeting production expansion / mine life extension)
* Further encouraging drilling results were announced at Plutus
identifying potential for underground mining.
* Maiden Selene Inferred Mineral Resource of 15.95Mt @ 1.0% Cu & 15.9 g/t
Ag was announced in early January 2012. Selene is located approximately
20 km from the Boseto concentrator and has the potential to add further
life or contribute to the up-scaling of Boseto.
* New zone of copper-silver mineralisation was confirmed at Zeta North
East, with drill results including 6.9m @ 2.8% Cu & 5 g/t Ag and 5.9m @
1.9% Cu & 42 g/t Ag. This Prospect is approximately 7 km from the
current Zeta pit.
* Copper-silver mineralisation confirmed along 20 km of approximately
36km of prospective strike horizon at the Mango Prospect.
* Mid Kalahari Zone (targeting new standalone mining operation)
* Drilling commenced along the Gaia 60 km prospective horizon.
* South West Kalahari Zone (targeting new standalone mining operations)
* Soil sampling was completed at the Hermes target.
Corporate
* Major global asset management group Blackrock Investment Management
(Australia) Limited, became a substantial shareholder in the Company by
increasing their holding to approximately 53 million shares or 12%.
* Discovery Metals had US$98.7 million in cash and had drawn down
US$150 million of Boseto project financing by 31 December 2011.
1. Boseto Copper Project ('Boseto' or 'the Project')
a) Boseto Construction
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 December 2011 quarter included finalisation
of off-site engineering and procurement with most items of plant, equipment and
infrastructure having now been delivered to site. The construction timeline
remains on schedule to enable commencement of commissioning of the process plant
in first half of 2012. Boseto project progress for the quarter was:
o Engineering and procurement nearing completion;
o Toteng permanent housing construction continued;
o Delivery of mine mobile equipment (including spare parts and tyres)
continued;
o Open pit mining operations commenced at Zeta;
o Erection of structural steelwork for the process plant completed;
o Installation of plant, equipment, piping and electrical works nearing
completion;
o Construction of the mine offices completed and workshops continued;
o Pipe and power lines for the Project's water supply completed;
o Five of the eight 2.5 megawatt diesel powered generators are on site and
being installed; and
o Fuel storage tanks delivered and installation in progress.
Construction of the process plant is nearing completion. Photographs included
in this release show that work has continued to construct the Run of Mine (ROM)
ore pad up to the primary crusher, mining is progressing in the Zeta pit, the
power plant and fuel farm have progressed and the first batch of Toteng
permanent housing is nearing completion.
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.
Additional photographs and monthly progress of the Boseto construction can be
tracked pictorially on the Company's website (www.discoverymetals.com).
b) Boseto Operations
Mining operations commenced during the quarter with approximately 1 million
tonnes of material mined. Run of Mine (ROM) stockpile pad fill material was
sourced from the nearby Plutus pit. From the Zeta pit, free-dig calcrete
material at surface was removed and applied to haul-road construction or sent to
waste dumps. Calcrete was mined from the tailings dam footprint for haul-road
construction, and for ROM stockpile pad construction. The ROM stockpile pad was
substantially complete at the end of December 2011. The first blast was fired
in the Zeta pit on 16 December 2011 and included ore and waste.
The remaining mobile plant is on schedule for delivery and commissioning in
early 2012, except for the final Liebherr 350 tonne excavator, scheduled as
planned for commissioning in July 2012. Two 120 tonne excavators hired from
Liebherr are being used to provide additional excavation capacity while Liebherr
supply and commission the remaining excavators.
Recruitment and induction of mining mobile plant operators and support staff
continues in alignment with the fleet delivery schedule.
Recruitment of process plant operators is progressing and the first operators
are expected to commence training in February 2012 in readiness for the
commencement of commissioning in the first half of 2012.
The site support services team continues with recruiting activities, regular
consultation with the community, setting up environmental systems and
establishment of the Toteng accommodation village.
2. Sustainability
The Company is developing systems to comply with the requirements of the Global
Reporting Initiative and the Minerals Council of Australia 'Enduring Value - The
Australian Minerals Industry Framework for Sustainable Development'.
a) Safety and Health
Intensive risk management workshops were conducted with Boseto staff to further
identify and assess risks, and to refine risk treatments and implement controls,
with this risk management system now implemented. The Company is committed to
compliance with IS0 18001 (Safety and Health) and ISO 31000 (Risk Management).
b) Environment
The Company's Boseto Project environmental obligations to the Government of
Botswana are embodied in the Environmental Management Plan (EMP) which formed
part of the approved Environmental Impact Assessment and the Boseto Mining
Licence approval. These obligations are comprehensive and are subject to annual
review and reporting to the Government of Botswana.
In addition, the Company has adopted best practice environmental standards in
accordance with the Equator Principles, IFC Performance Standards and ISO
14001.
During the quarter, the network of environmental monitoring sites was extended
to include the tailings dam, pollution control pond and waste treatment plants,
and to allow for monitoring of other environmental, production and regional
rancher bores.
A Biodiversity Management and Monitoring Plan has been developed and implemented
and dry season monitoring completed.
c) Community Relations
The Company has continuous engagement with the local communities and leaders to
design the community programmes for the operations phase of the Boseto
operations. The first project, in co-operation with the Botswana Department of
Water Affairs, has been completed and involved the upgrade of two water
treatment plants which supply potable water to six communities in the district
including the town of Toteng in which many of our employees will reside in
Company accommodation. Further community development programmes are expected to
follow as discussions with our community continue.
These community programmes are in addition to the benefits accruing to the local
communities from employment (including apprenticeships and trainees) and
supplying goods and services to the Boseto site and Boseto employees.
3. Zeta Underground Definitive Feasibility Study (DFS)
Snowden Mining Industry Consultants (Snowden) completed an upgrade of the
Mineral Resources for the Zeta Deposit incorporating 54 new infill holes drilled
earlier in 2011. The Mineral Resources at Zeta increased by 9 million tonnes
(25%) to 44.1 million tonnes and this resource model has formed the basis of the
Zeta Underground DFS.
The DFS for underground mining of the Zeta Mineral Resource was completed by
Mining Plus Pty Ltd (Mining Plus), and is currently being reviewed by
management.
During the quarter, Mining Plus completed the mine access design and evaluated
several options for the surface ore haulage between Zeta and the Boseto plant.
Geotechnical work was completed and recommendations made for a ground support
regime for haulage development and production areas. Stope design was completed
together with mine sequencing, production scheduling and the capital and
operating cost estimates. 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 underground operations. This will ensure that the Environmental
Management Plan is comprehensive for the entire scope of the Boseto operations.
An environmental consultancy company has been appointed and the necessary
community liaison meetings with Affected and Interested Parties have been
scheduled to commence in late January 2012.
4. Boseto Coal Fired Power Station
The due diligence process for the selection of an EPC partner for a coal fired
power station on site at Boseto has been completed. Subsequently a letter of
intent to award a Front End Engineering Design (FEED) contract has been issued
to EICS Power Services of Chennai, India. The FEED process will not be
initiated until the Company is satisfied that the permitting required by the
Government of Botswana is in place or imminent. A coal fired power station is
an integral part of the published Boseto Development Plan and will allow
replacement of the diesel power for the project bringing significant operating
cost savings and reduce the Boseto Project's dependence on imported oil
products. It will also deliver more jobs in Botswana and increase income for
both shareholders of Discovery Metals and the Government of Botswana. The
funding of the coal fired power station capital costs is currently planned from
operating cash flows with the commencement of operation of the coal fired power
station currently scheduled for the second half of 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 tenement package extends from 60 kilometres south-west of Maun
through to the Namibian border, a distance of over 280 kilometres. The
tenements 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 16% has been drill-tested to date.
The seven north-eastern tenements, located in Ngamiland, have been renewed until
September 2012, and the seven south-western tenements, 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 continuation
of the regional soil geochemical sampling and drilling continued at six areas,
utilising four drill rigs as follows:
o Shallow drilling (RAB and rotary hammer) at Selene, Nexus and Zeta NE;
o RC Drilling at SW Mango;
o Diamond core drilling at SW Mango, NE Mango, Zeta NE and Gaia.
Assay results were received from drilling at Zeta NE, NE Mango and SW Mango.
a) Boseto Zone - targets additional resources for Boseto
Within the Boseto Zone (Figure 1), exploration in the December quarter focused
on the Zeta, Mango, Nexus and Selene areas. Diamond core and RC drilling, aimed
at intersecting the base of the mineralisation at depths below 50 metres was
conducted at the Zeta North-east (Zeta NE) and, the NE and SW Mango prospects.
Shallow RC and RAB drilling, aimed at identifying the position of the target
horizon beneath up to 45 metres of sand and calcrete cover was undertaken in the
SW Mango and Selene areas. Soil sampling was conducted over the Ngwako Pan
Formation and basement at Zeta, exploring for footwall mineralisation, and over
the Dekar Formation at Plutus, exploring for hanging wall mineralisation.
Zeta NE - A 12 hole diamond core drilling programme was completed in Q4, with
the final two holes being drilled. The program tested 5.5 kilometres of strike
length of the prospective horizon, with all drill holes intersecting
mineralisation. Intercepts of greater than five metres drilled thickness and
1% Cu were made in 10 drill holes over a strike length of three kilometres and
to a vertical depth of 120 metres.
Significant diamond drilling intercepts included:
o GDDD1331 6.9 m @ 2.8% Cu & 5 g/t Ag;
o GDDD1335 7.6 m @ 1.4% Cu & 27 g/t Ag;
o GDDD1336 3.3 m @ 1.8% Cu & 22 g/t Ag;
o GDDD1337 5.9 m @ 1.9% Cu & 42 g/t Ag.
A follow-up drill programme of 12 drill holes will begin in the March quarter of
2012, with the intention of proving sufficient mineralisation to allow the
preparation of a JORC compliant inferred mineral resource.
Mango - Following on from the identification of mineralisation in Q2 and Q3 of
2011 at Mango, drilling resumed at the north-eastern and south-western ends of
the 36 kilometres of strike length of the prospective horizon within this area.
To assist reporting, and reflecting the different mineralisation styles, Mango
has been divided into the NE and SW Mango prospects.
At NE Mango, diamond core drilling resumed in Q4 of 2011, following on from the
successful initial diamond core drill programme, which intersected
mineralisation over a one kilometre strike length, and a RAB drilling programme
which returned bottom-of-hole Cu assays of up to 10,450 ppm Cu over a strike
length of 10 kilometres. The aims of the programme were to:
o test the prospective horizon in the areas with anomalous RAB drilling
results; and
o reduce the drill hole spacing in the area of the known mineralisation to
allow the preparation of a JORC compliant inferred mineral resource.
Nine of 12 planned diamond core holes have been drilled for a total of 1,102
metres, extending the drilling southwest of the known mineralisation for a
strike length of eight kilometres. Results of this drilling are expected to be
available for reporting in Q1 of 2012. Drilling intended to fulfil the second
aim is anticipated to begin in Q1 of 2012.
At SW Mango, 108 shallow holes were drilled, aiming to identify the position of
the prospective horizon beneath up to 23 metres of Kalahari Sands and calcrete.
Bottom-of-hole assay results, using a bench-top XRF, returned Cu assays of up to
13,341 ppm Cu. Three of the eight lines drilled have at least one drill hole
with above 1,000 ppm Cu. Average cover depth is 15 metres.
Four RC holes were drilled in Q4 for 334 metres to complete a programme of 11
holes. All drill holes intersected copper-silver mineralisation. The best
intercept reported in Q4 was 4.0 m @ 1.8% Cu and 144 g/t Ag.
A programme of 14 diamond core holes was completed in Q4, for 1,416 metres
drilled. These holes were aimed at twinning the RC holes on eight sections,
with the remainder drilled on intermediate sections to test the continuity of
mineralisation. The best result reported in Q4 was 4.4 m @ 3.2% Cu and 561 g/t
Ag in a hole that twinned the best RC result (see above). The results from the
remaining programmes are expected to be reported in Q1 of 2012.
Selene- A RAB drilling programme of 227 holes was completed in Q4, with the
drilling of 96 holes for 3,349 metres. The programme identified two lines of
the prospective horizon, on both limbs of a syncline. The southeastern limb is
along strike from the Zeta and Zeta NE mineralisation and the northwestern limb
is along strike from the known Selene mineralisation, reported in Q3 of 2011.
Bottom-of-hole assays returned a highest Cu assay of 938 ppm Cu, south-west of
the known mineralisation at Selene. The full results of this programme are
expected to be reported in Q1 of 2012.
Work on the maiden Selene Mineral Resource was completed in Q4 of 2011 and
announced in January 2012 as follows:
+-------------------------+----------------------------------------------------+
|Inferred Mineral Resource|15.95 Mt @ 1.0% Cu and 15.9 g/t Ag |
+-------------------------+----------------------------------------------------+
|TOTAL MINERAL RESOURCE |15.95 Mt @ 1.0% Cu and 15.9 g/t Ag, at a cut-off |
| |grade of 0.6% Cu. |
+-------------------------+----------------------------------------------------+
Nexus and Zeta NE - A RAB drilling programme of 32 holes, for 706 metres, aimed
at identifying the position of the prospective horizon between known
mineralisation at Nexus and Selene, and north-east of Zeta NE. The position of
the horizon was successfully identified under up to 20 metres of Kalahari Sand
and calcrete, on both limbs of the syncline. Bottom-of-hole samples returned a
best Cu assay, by bench-top XRF, of 36 ppm Cu.
Plutus - Assay results for three diamond drill holes at the Plutus Deposit were
reported during the quarter. These holes were planned to confirm the continuity
of mineralisation between the base of the planned open pit and a series of
deeper holes that intersected mineralisation at a vertical depth of
approximately 350 metres below surface, and which were report to the ASX in June
2011.
The results of these infill holes suggest a zone of high grade copper-silver
mineralisation with potential for economic underground mining is present at
depth over a long strike length of at least 1,400 metres at the Plutus Deposit.
The Company intends to leverage off the results of the Zeta Definitive
Feasibility Study for underground mining to better assess the economic potential
for an underground mining operation at Plutus.
Soil Sampling - 368 soil samples were collected in the Zeta area, targeting a
possible repetition of the prospective horizon south-west of the Zeta deposit,
interpreted from the aeromagnetic survey image, flown in Q3. In the Plutus
area, 487 soil samples were collected north of the Plutus deposit, testing the
potential of hanging wall mineralisation. Results of the soil sampling are
expected to be reported in Q1 of 2012.
b) Mid Kalahari Zone - targets new standalone open pit project
Exploration in the Mid Kalahari Zone (Figure 1) consisted of soil sampling in
the Ophion, Kronus, Ourea, Gaia and Coeus areas. Drilling began in the Gaia
area, targeting soil anomalism identified in the previous quarter.
Gaia-Coeus-Theia
Diamond core drilling commenced with the first five holes of an initial 12 hole
programme being completed for a total of 649 metres. The initial programme is
intended to test about 11 kilometres of strike length of the prospective
horizon, from a total strike length of 61 kilometres within the Gaia area.
Drilling is adjacent to and along strike length to the five kilometre zone held,
drilled and reported by MOD Resources showing grades of up to 3.87% Cu and 106
g/t Ag. No assay data is available at the time of writing but logging indicates
that all holes intersected copper sulphide mineralisation.
Soil Sampling was conducted in the Coeus, Ourea and Ophion areas within the Mid
Kalahari Zone. At Coeus, 2,614 soil samples were collected, following up zinc
(Zn) in soil anomalism. At Ourea, 1,345 soil samples were collected around the
limbs and north-east hinge of the Ourea Anticline. At Ophion, 2,531 soil
samples were collected targeting footwall mineralisation. They identified Cu +
Zn + Pb in soil anomalism over a strike length of eight kilometres, with a
highest Cu assay of 66 ppm Cu.
A ground magnetic survey of 559 line kilometres was undertaken over the Ngwako
Pan Formation in the Ophion area. It was intended to provide structural
information over an area that had returned Cu + Zn + Pb in soil anomalism with
the Ngwako Pan Formation and the basement. It showed that the soil geochemical
anomalies with the Ngwako Pan Formation are above a single magnetic unit sitting
an estimated 100 metres above the basement contact. The planned drilling
programme for 2012 will test this horizon.
c) South West Kalahari Zone - targets underground resources
An additional 223 soil samples were collected from the Hermes area, within the
South West Kalahari Zone (Figure 1). These were the final soil samples
collected to follow up weak Cu in soil anomalism centred on a complex magnetic
feature within what is interpreted to be Dekar Formation. The highest Cu assay
from the initial survey is 36 ppm Cu, and the highest Cu assay from the follow
up assays is 20 ppm Cu, with the samples being assayed by a bench top XRF. A
broad but regionally low magnitude Cu in soil anomaly has been defined over the
magnetic feature, which is planned for follow up exploration in 2012.
6. Manganese Prospects, South Botswana (Discovery Metals
100%)
Sixteen 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.
This Transvaal Supergroup strata extends south east into the Griqualand West
Basin of South Africa, where it hosts the Kalahari Manganese Field (KMF)
deposits. The Supergroup also occurs in the Eastern Transvaal Basin in south-
east Botswana where it hosts a number of smaller manganese mines.
To date, in excess of 8,000 water boreholes drilled by farmers have been
reviewed by Discovery to provide additional geological and regolith thickness
information. The majority of the bore holes did not intersect the targeted
Transvaal Supergroup strata as they ranged from surface to 60 metres below. The
information from the boreholes indicated that the regolith cover is thicker than
initially thought. In the western areas of the tenements some holes have
penetrated greater than 120 metres below surface without intersecting the
targeted rock strata.
Re-processing of the aeromagnetic data was also completed. Data from the
Kalahari Manganese Field in South Africa was acquired and compiled to assist the
interpreting of the Botswana data. There are no obvious KMF type signatures.
Detailed interpretation and understanding of the magnetics is being hampered by
the extensive, thick sand cover.
Landsat has been used successfully to detect manganese bearing formations in
areas of low cover thickness in the KMF. Landsat anomalies were ground
checked. Some of the anomalies were due to surface accumulation of various
minerals not related to manganese mineralisation and warrant follow up
investigation.
Re-interpretation of the regional aeromagnetic data from the Botswana Government
archives was completed. The resultant maps identified the regional geological
elements of the area overlain by the tenements. While this information was not
detailed enough to select drill targets, it was used to identify the relevant
target stratigraphy.
No work has been conducted on three of the 16 prospecting licences, due to the
Geological Survey instructing the Company to cease activities and await further
advice relating to issues of possible overlap with pre-existing licences. The
Company has secured an additional prospective area of 920 square kilometres at
the western extent of the current held prospecting licences.
The focus over the next coming months will be on reviewing our tenement holdings
in this area to ensure an optimum holding land position. Evaluation of
opportunities on Prospecting Licences in the Eastern Transvaal Basin will also
be completed in the next few months.
7. Dikoloti Nickel Project (Discovery Metals 40% and
diluting)
In line with the Company's application to the Botswana Government, the Company
has been granted a prospecting licence extension for part of the prospecting
licences previously held. The reduced licence areas cover all the areas of
interest to the Company. The Dikoloti Nickel Project now comprises three
prospecting licences covering an area of 273 square kilometres surrounding the
nickel operations of BCL Limited in the Selebi-Phikwe region of north-east
Botswana.
The Company manages the Joint Exploration Agreement with The Japan Oil, Gas and
Metals National Corporation (JOGMEC) and JOGMEC have funded the $3 million
exploration programme over the past two years. JOGMEC will also provide funding
for the future two year exploration programme and therefore Discovery Metals'
share of the project is expected to continue to dilute as it continues to focus
on the development and potential expansion of the Boseto Copper Project.
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 expenditure
of the US$80 million equity portion of the Boseto project cost in June 2011.
The remaining project costs are being debt financed. The Project budget is
US$175 million for the Boseto processing plant and other infrastructure and
US$75 million for the Boseto mine mobile fleet with Caterpillar being the
largest supplier.
In addition to debt funding of US$180 million, the banking syndicate provides a
US$25 million overrun and working capital facility plus hedging lines for both
copper and silver production.
At the end of the December 2011, Discovery Metals held US$98.7 million in cash
and had drawn Boseto project debt of US$150 million.
Issued capital
The Company conducted its Annual General Meeting in November with all agenda
items supported by shareholders.
The Company welcomes the asset management group, Blackrock Investment Management
(Australia) Limited, as a significant shareholder and thanks Macquarie Bank for
their support during the early stages of development of the Company. Blackrock
increased its holding in Discovery Metals to approximately 53 million shares or
12%, through the purchase of a substantial portion of the Macquarie Bank
holding.
Three million director and executive incentive options were exercised during the
quarter for approximately US$1.4 million. Only 1.35 million unlisted director
and executive incentive options remain to be exercised.
Boseto Hedging Summary
In July 2011, 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 through to
March 2015). The hedge contracts provide downside price protection for 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 "C1" cash costs
of US$1.24/lb. At quarter end, the hedge book value represented an unrealised
gain of US$65 million in excess of end of quarter commodity market prices.
Discovery Metals will cash settle or receive payment from the hedging banks
based on the difference between the average monthly London Metal Exchange (LME)
copper price and the following contracted hedge prices. The positive market to
market value (MTM) for each hedge period and total is also shown below.
+---------------+------+------+------+---------+------+----------+----------+
| Hedge |Copper|Copper|Copper| Silver |Silver| Copper | Silver |
| Period |Hedge |Price |Hedge | Hedge |Hedge | Mark to | Mark to |
| |Tonnes|USD/t |Price | Ounces |Price | Market | Market |
| | | |USc/lb| |US$/oz| US$ | US$ |
+---------------+------+------+------+---------+------+----------+----------+
|Jul to Sep 2012|3,000 |9,208 | 4.18 | 141,489 |36.32 |4,749,428 |1,202,664 |
+---------------+------+------+------+---------+------+----------+----------+
|Oct to Dec 2012|3,759 |9,148 | 4.15 | 183,240 |36.29 |5,705,699 |1,556,614 |
+---------------+------+------+------+---------+------+----------+----------+
|Jan to Mar 2013|3,681 |9,069 | 4.11 | 160,890 |36.24 |5,301,091 |1,360,020 |
+---------------+------+------+------+---------+------+----------+----------+
|Apr to Jun 2013|3,621 |8,995 | 4.08 | 161,079 |36.19 |4,981,752 |1,350,747 |
+---------------+------+------+------+---------+------+----------+----------+
|Jul to Sep 2013|3,939 |8,918 | 4.05 | 195,759 |36.13 |5,163,256 |1,627,669 |
+---------------+------+------+------+---------+------+----------+----------+
|Oct to Dec 2013|4,352 |8,845 | 4.01 | 218,679 |36.08 |5,454,775 |1,804,938 |
+---------------+------+------+------+---------+------+----------+----------+
|Jan to Mar 2014|3,879 |8,762 | 3.97 | 180,408 |36.02 |4,601,013 |1,480,980 |
+---------------+------+------+------+---------+------+----------+----------+
|Apr to Jun 2014|3,663 |8,678 | 3.94 | 167,961 |35.95 |4,102,320 |1,373,637 |
+---------------+------+------+------+---------+------+----------+----------+
|Jul to Sep 2014|3,370 |8,597 | 3.90 | 140,370 |35.88 |3,565,975 |1,143,304 |
+---------------+------+------+------+---------+------+----------+----------+
|Oct to Dec 2014|3,240 |8,511 | 3.86 | 136,140 |35.82 |3,212,516 |1,105,377 |
+---------------+------+------+------+---------+------+----------+----------+
|Jan to Mar 2015|3,496 |8,424 | 3.82 | 163,985 |35.75 |3,230,161 |1,326,845 |
+---------------+------+------+------+---------+------+----------+----------+
|Total/ Average |40,000|8,834 | 4.01 |1,850,000|36.07 |50,067,986|15,332,794|
+---------------+------+------+------+---------+------+----------+----------+
Based on spot prices of US$7,589.67/t or US$3.44/lb for copper and US$27.75/oz
for silver.
Mineral Resources & Ore Reserves
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 |
+------------------------------------------------------------------------------+
+-------------+--------------------+--------------------+----------------------+
| 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 |
+------------------------------------------------------------------------------+
+-----------------------+---------------------+
| | SELENE |
| Mineral Resources +-----+------+--------+
| | Mt |Cu (%)|Ag (g/t)|
+-----------------------+-----+------+--------+
| Inferred |15.95| 1.0 | 15.9 |
+-----------------------+-----+------+--------+
|Total Mineral Resources|15.95| 1.0 | 15.9 |
+-----------------------+-----+------+--------+--------------------------------+
| Mineral Resources are reported at a cut-off grade of 0.6% Cu. |
| Please refer to Competent Persons Statement |
+------------------------------------------------------------------------------+
Competent Persons Statements
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 (AIG). 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
they are 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" (JORC Code).
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 JORC Code.
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 JORC Code.
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 JORC Code.
The information in this report as it relates to the Selene Mineral Resource
estimate for the Boseto Copper Project has been compiled by Mr Matthew Readford,
who is a MAusIMM. Mr Readford is employed fulltime by Xstract Mining
Consultants Pty Ltd. Mr Readford 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 JORC Code.
Messrs Nhiwatiwa, Mackay, Arnott, Myers, Mujdrica and Readford 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.
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.
Directory
DISCOVERY METALS LIMITED AIM Listing:
ABN 29 104 924 423 AIM Nominated Advisor & AIM
Broker
Web site: www.discoverymetals.com Fairfax I.S. PLC
Email: info@discoverymetals.com Contact: Ewan Leggat
Tel: +44 20 7460 4389
Investor information contacts: Contact: Laura Littley
Brad Sampson Tel: +44 20 7460 4387
Managing Director
Tel: +61 7 3218 0222 United Kingdom investor
Email: brad@discoverymetals.com information:
or Tavistock Communications
Paul Fulton Contact: Jos Simson/Emily
Chief Financial Officer Fenton
Tel: +61 7 3218 0218 Tel: +44 207 920 3150
Email: paul.fulton@discoverymetals.com Mobile: +44 7788 554 035
Shareholder enquiries: Stock exchange listings
Queries related to share registry matters should be Australian Stock Exchange -
directed to: ASX Code: DML
Computershare Investor Services Botswana Stock Exchange -
117 Victoria Street BSE Code: DML
West End, Queensland 4101 Alternate Investment Market
Tel: 1300 552 270 or +61 7 3237 2100 - London Stock Exchange
Fax: +61 7 3237 2152 AIM Code: DME
Web site: www.computershare.com
Issued capital
Registered Office At 31 December 2011 ordinary
Level 20, 333 Ann Street, Brisbane, issued capital of Discovery
Queensland 4000, Australia Metals was 442,128,231
Tel: +61 7 3218 0222 ordinary shares and
Fax: +61 7 3218 0233 1,350,000 director and
executive unlisted options.
Botswana Country Office
Plot 21314, Sebele Station Road, Phakalane Directors
Gaborone, Botswana Gordon Galt - Chairman
Tel: +267 318 0751 Brad Sampson - Managing
Fax: +267 318 0752 Director
Morrice Cordiner - Non-
Executive Director
Ribson Gabonowe - Non-
Executive Director
Jeremy Read - Non-Executive
Director
John Shaw - Non-Executive
Director
Company Secretary - Greg
Seeto
Further information on the Company including Mineral Resources and Ore Reserves
is available on its website: www.discoverymetals.com
Appendix 5B
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 | | 31 December 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 & | -2,187 | -7,163 |
evaluation | -49,453 | -125,326 |
(b) | | |
development | -2,051 | -4,376 |
(c) | | |
production | | |
(d) | | |
administration | | |
| | |
1.3 Dividends received | | |
| | |
1.4 Interest and other items of a similar | 97 | 299 |
nature received | | |
| | |
1.5 Interest and other costs of finance | -2,296 | -8,000 |
paid | | |
| | |
1.6 Income taxes paid | | |
| | |
1.7 Other (provide details if material) - | 736 | 2,172 |
GST/VAT | | |
+---------------+------------------+
| -55,154 | -142,394 |
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 | -55,154 | -142,394 |
flows (carried forward) | | |
=-------------------------------------------+---------------+------------------+
1.13 Total operating and investing cash | -55,154 | -142,394 |
flows (brought forward) | | |
=-------------------------------------------+---------------+------------------+
| | |
Cash flows related to financing | | |
activities | | |
| | |
| | |
1.14 Proceeds from issues of shares, | 1,094 | 2,250 |
options, etc. | | |
| | |
1.15 Proceeds from sale of forfeited shares | | |
| | |
1.16 Proceeds from borrowings | 35,000 | 150,000 |
| | |
1.17 Repayment of borrowings | | |
| | |
1.18 Dividends paid | | |
| | |
1.19 Other (provide details if material) | | |
+---------------+------------------+
Net financing cash flows | 36,094 | 152,250 |
=-------------------------------------------+---------------+------------------+
| | |
Net increase (decrease) in cash held | -19060 | 9,856 |
| | |
| | |
1.20 Cash at beginning of quarter/year to | 117,723 | 88,807 |
date | | |
| | |
1.21 Exchange rate adjustments to item 1.20 | | |
+---------------+------------------+
1.22 Cash at end of quarter | 98,663 | 98,663 |
=-------------------------------------------+---------------+------------------+
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 | 150,000 |
| | |
+------------------+-------------+
3.2 Credit standby arrangements | 25,000 | o |
| | |
=----------------------------------+------------------+-------------+
Estimated cash outflows for next quarter
+---------+
| USD'000 |
+---------+
4.1 Exploration and evaluation | 7,318 |
| |
+---------+
4.2 Development | 60,565 |
| |
+---------+
4.3 Production | |
| |
+---------+
4.4 Administration | 2,608 |
| |
=---------------------------------+---------+
| |
Total | 70,491 |
=---------------------------------+---------+
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 | 98,663 | 117,723 |
+---------------+----------------+
5.2 Deposits at call | | |
+---------------+----------------+
5.3 Bank overdraft | | |
+---------------+----------------+
5.4 Other (provide details) | | |
=---------------------------------------------+---------------+----------------+
Total: cash at end of quarter (item 1.22) | 98,663 | 117,723 |
=---------------------------------------------+---------------+----------------+
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 |PL147/2011 |Holder | 0% | 100% |
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 (see|
| | |(cents) |note 3) |
| | | |(cents) |
=----------------------+------------+-------------+--------------+-------------+
7.1 Preference | | | | |
+securities | | | | |
(description) | | | | |
+------------+-------------+--------------+-------------+
7.2 Changes during | | | | |
quarter | | | | |
| | | | |
(b) Decreases | | | | |
through returns of| | | | |
capital, buy- | | | | |
backs, redemptions| | | | |
=----------------------+------------+-------------+--------------+-------------+
7.3 +Ordinary |442,128,231 |442,128,231 | | |
securities | | | | |
| | | | |
+------------+-------------+--------------+-------------+
7.4 Changes during | | | | |
quarter | | | | |
|1,000,000 |1,000,000 |35 cents |35 cents |
| | |(option | |
| | |exercise) | |
| |1,000,000 | |50 cents |
|1,000,000 | |50 cents | |
| | |(option | |
(b) Decreases | |1,000,000 |exercise) |55 cents |
through returns of| | | | |
capital, buy-backs|1,000,000 | |55 cents | |
| | |(option | |
| | |exercise) | |
=----------------------+------------+-------------+--------------+-------------+
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 price|Expiry date |
(description and | | | | |
conversion factor)|100,000 | |37.5 cents |1 November |
| | | |2012 |
|1,000,000 | |35 cents | |
| | | |1 November |
|250,000 | |37.5 cents |2013 |
| | | | |
| | | |1 November |
| | | |2013 |
+------------+-------------+--------------+-------------+
7.8 Issued during | | | | |
quarter | | | | |
+------------+-------------+--------------+-------------+
7.9 Exercised during |1,000,000 | |35 cents |12 December |
quarter | | | |2011 |
|1,000,000 | |50 cents | |
| | | |12 December |
|1,000,000 | |55 cents |2011 |
| | | | |
| | | |1 February |
| | | |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: 27 January
2012
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.
Attachment: Quarterly Activities and Cashflow Report:
http://hugin.info/137928/R/1580619/493551.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#1580619]
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