ELKEDRA DIAMONDS NL
Level 1, 130 Hay St, Subiaco, Western Australia 6008
P O Box 8035, Subiaco East, Western Australia 6008
Telephone: +61-8-6380 2855; Facsimile: +61-8-6380 1644
E-mail: elkedra@elkedra.com.au Web Site: www.elkedra.com.au
QUARTERLY REPORT TO SHAREHOLDERS
31 March 2006
Listed on ASX and AIM (Code EDN)
HIGHLIGHTS
BRAZIL
Chapada Diamond Project
* Dry commissioning of diamond recovery processing plant has commenced
* Mining contractor agreement finalised and mining operations commenced
* 20,000 m3 of gravel being stockpiled for plant start-up
* Recruitment and training of project operations personnel essentially
completed
* Operating licence issued by environmental authorities
* International security transport company and Independent diamond valuer
engaged
* First diamond production targeted for May
AUSTRALIA
Diamond Exploration
* Aerial magnetic survey completed over Cravens Peak and Cravens Peak North
tenements (Queensland)
Base Metal and Uranium
* Planning underway to fast track exploration progress of the Red Heart -
Boat Hill base metals and Desert Syncline uranium prospects
CORPORATE
* Offer made to UK warrant holders to cancel �0.12 warrants and issue of
corresponding number of shares at �0.10
* Acceptances received for cancellation of 14,440,766 UK warrants and the
issue of 14,440,766 shares in April 2006 will raise approximately A$3.5
million
1.0 BRAZIL
CHAPADA DIAMOND PROJECT -Elkedra 100%
DEVELOPMENT OF CHAPADA DIAMOND RECOVERY PLANT AND QUILOMBO MINE
Significant milestones for the new 200 tonne per hour diamond recovery plant
and mine at the Chapada project site were achieved during the March quarter.
Erection of all major components of the processing plant has been completed and
electrical and piping installation are in the final stages of completion. Dry
commissioning of the Feed Preparation module of the plant has commenced.
All going well with the progressive plant commissioning activities first
diamonds are expected to be recovered at the end of April or early May 2006.
(for photo refer to PDF version on www.elkedra.com.au web site)
Fig. 1 Heavy Media and Magnetic Separation Modules, Security House and
Administration Building
All major infrastructures, including power supply, access roads and buildings
are complete and in a ready state to support the ramp up of the processing
plant and mine operations.
(for photo refer to PDF version on (for photo refer to PDF version on
www.elkedra.com.au web site) www.elkedra.com.au web site)
Fig.2 Staff Facilities Building Fig.3 Site Entry Gate House
The mining contractor agreement has been finalised and mine pre-stripping
operations commenced in mid February. By the end of April some 20,000 m3 of
diamondiferous gravels will have been stockpiled at the processing plant for
the plant commissioning phase. Stockpiling of gravels will continue allowing
production to ramp up at the conclusion of plant commissioning.
(for photo refer to PDF version on (for photo refer to PDF version on
www.elkedra.com.au web site) www.elkedra.com.au web site)
Fig.4 Mining Quilombo Deposit Fig. 5 Surveying Ore Terraces
(for photo refer to PDF version on
www.elkedra.com.au web site)
Fig. 6 Employee Training Session
Recruitment and training of the operations workforce is essentially complete
with final training activities being carried out during the commissioning
phase. The majority of operations employees were recruited from the local town
of Chapada dos Guimar�es and the nearby city of Cuiaba. This employment
generated within the region has further enhanced the Company's positive
relationship and support of the local community and its administrators.
In order to obtain personnel with suitable levels of past experience and
specialised training the security workforce has been recruited from the major
Brazilian cities of Brasilia and Belo Horizonte.
The Operating License was issued by the environmental authorities in February
and all statutory permits required are now in place for the Chapada project to
operate at full capacity.
An international security company has been engaged to transport diamonds from
the high level security area on site to secure off site facilities for
valuation and sale to L.L.D. Diamonds Ltd (a member of the Leviev Diamond
Group). L.L.D. Diamonds Ltd is contracted to purchase 100% of the Chapada
Project diamond production for 6 years at independently assessed market price.
An independent, London based, international diamond valuation company has been
engaged by Elkedra to carry out the diamond valuations and the first production
of diamonds is targeted for May 2006.
BRAZILIAN TENEMENTS AND RESERVES
The Chapada Project Tenements in Brazil currently cover a total area of
approximately 291 km2.
(for photo refer to PDF version on www.elkedra.com.au web site)
Fig. 7 Tenement Plan - Brazil
Current Reserves
The Chapada Project has a current probable reserve of 5.4 million bcm of
diamondiferous gravels at a grade of 0.05 carats per bcm. This reserve is
sufficient to sustain a mine life of 9 years based on the proposed initial rate
of gravel processing of 600,000 bcm (1.5 million tonnes) per annum, with
expected annual diamond production of more than 30,000 carats. The diamonds
recovered during bulk sampling are of a high gemstone quality with an average
size of 0.5 carats. Based on an independent assessment of the sales data from
previous sales an average selling price of above US$400 per carat is expected
to be realised.
This current probable reserve of gravels is contained on two tenements,
"Quilombo", for which mining licences have been granted, and the adjacent "Peba
Lagoinha" tenement, for which a development installation licence is being
progressed. These two tenements together give an expected mine life of 9 years
and cover an area of only 17 km2.
Exploration Tenements
Elkedra holds a further seven granted exploration tenements covering some
274 km2 within the surrounding Chapada basin region. Historical exploration
activities have shown these areas to also contain diamondiferous gravel
deposits. If ongoing exploration work indicates economic resources in these
tenements then low capital cost satellite mining operations can be established
at these tenements providing a gravel concentrate back to the Chapada process
plant for final diamond recovery.
2.0 AUSTRALIA
AUSTRALIAN TENEMENTS
A summary of the tenement position at the end of March 2006 for the Northern
Territory and Queensland is shown in Figure 8.
(for photo refer to PDF version on www.elkedra.com.au web site)
Fig. 8 Tenement Plan - Australia
During the quarter Cravens Peak tenement (EPM15083) in the Altjawarra Project
Area was granted.
The company's total tenement holding in the NT and Queensland is 5,835 km2,
including both granted tenements and applications.
(for photo refer to PDF version on www.elkedra.com.au web site)
Fig. 9 Map showing Current Primary Target Areas for the Altjawarra Project (NT)
Diamonds - Elkedra 100%
Diamond Bulk Sampling Progress (NT)
Three mini-bulk samples of stream gravels totalling 11 tonnes (from the
Bloodwood Creek, Craigie East and Poodyea sites; see Fig. 9) have been screened
into two size fractions. The +0.3-1.2 mm fractions are undergoing DMS
concentration and the +1.2-4.0 mm fractions have been submitted for X-ray
diamond recovery. Results of the diamond test work are due in early May.
Cravens Peak Aerial Magnetic Survey (Queensland)
An in-fill aerial magnetic survey over a 30 km by 17 km area covering Elkedra's
two Cravens Peak tenements (Queensland) was flown in March. The aim of the
survey is to identify kimberlite diatreme targets on prospective ground where
hundreds of diamond indicator minerals have previously been recovered.
Preliminary results of the survey are due in early May for quality control
assessment. Final data sets from this survey are expected later in May.
Base Metals and Uranium - Elkedra 100%
2006 Field Season Planning (NT)
Elkedra is reviewing options for progression of base metals and uranium targets
on the Company's Field River and Marqua tenements. The targets (see Fig. 9)
include:
* Desert Syncline: Uranium
* Christmas Dam and Mt Dobbie: Copper, lead, silver, uranium, rare earths
* Boat Hill - Red Heart Corridor: Base metals and phosphate
* CWN-169 and CWN-148: Bulls-eye magnetic anomalies and potential iron
oxide-copper-gold targets
The total issued capital of the company is 69,709,340 shares of which
62,355,425 shares are listed and 7,353,915 are subject to ASX escrow until 20/
12/2006.
During the quarter 41,778 unlisted convertible notes were converted into
417,780 new shares at 36 cents per share. The number of unlisted convertible
notes on issue at 31 March 2006 therefore reduced to 513,834.
On 24 February 2006, 81,667 new shares were issued for 81,667 options exercised
at 10 pence.
On 14 March 2006 the following options expired:
* 6,092,950 exercisable at A$0.75
* 166,667 exercisable at A$1.05
As at 31 March 2006 a total of 11,190,392 unlisted options exercisable at
between A$0.35 and A$0.75 are on issue, in addition to 23,487,247 warrants
exercisable at 12 pence listed on AIM in the UK.
The Company retained $1.8 million in cash as at 31 March 2006.
On 27 February the Company made an offer to warrant holders to cancel their �
0.12 (British pence) AIM quoted warrants in exchange for the issue of a
corresponding number of shares at �0.10. On 28 March 2006, at a general meeting
of the Company, shareholders approved the cancellation of the �0.12 warrants
and the issue of a corresponding number of shares at �0.10 to warrant holders
accepting the Company's offer. Acceptances representing a total of 14,440,766
AIM quoted warrants were received subsequent to the end of this March quarter
and a corresponding number of shares will be allotted at �0.10 in April 2006
raising A$3.5 million.
The Company regularly updates its Web Site at www.elkedra.com.au
For and on behalf of the Board
M.D.J. Cozijn
Director/Company Secretary
24 April 2006
The resource information on the Brazilian Chapada Alluvial Diamond Project has
been prepared in accordance with the 2004 edition of the Australasian Code for
Reporting Exploration Results, Mineral Resources and Ore Reserves (the "JORC
Code"). The term "Probable Reserve" is used as per its definition in the JORC
Code (available at www.jorc.org). The information is based on data compiled by
and reported upon by Mr Hugh Durey of Hugh Durey & Associates Pty Ltd. Mr Durey
is a member of the Australasian Institute of Mining & Metallurgy and qualifies
as a Competent Person as defined in the JORC Code. Mr Durey consents to the
inclusion in this report of the matters in the form and context in which it
appears.
The geological information on the Australian projects is based on information
compiled by and reported upon by Dr Wayne Taylor, Elkedra's Chief Mineralogist,
who is a member of the Australian Institute of Geoscientists and qualifies as a
Competent Person as defined in the JORC Code. Dr Taylor consents to the
inclusion in this report of the matters in the form and context in which it
appears.
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.
Name of entity
ELKEDRA DIAMONDS NL
ABN Quarter ended ("current
quarter")
ABN 42 092 334 220 31 March 2006
Consolidated statement of cash flows
Cash flows related to operating activities Current quarter Year to date
$A'000 (9 months)
$A'000
1.1 Receipts from product sales and related - -
debtors
1.2 Payments for: (a) exploration and (134) (362)
evaluation (net)
(1,981) (5,873)
(b) development
- -
(c) production
(335) (1,329)
(d) administration (net)
1.3 Dividends received - -
1.4 Interest and other items of a similar 118 418
nature received
1.5 Interest and other costs of finance paid (171) (435)
1.6 Income taxes paid - -
1.7 Other (provide details if material) - -
Net Operating Cash Flows (2,503) (7,581)
Cash flows related to investing
activities
1.8 Payment for purchases of: (a) prospects - -
(b) equity investments - -
(c) other fixed assets (98) (250)
1.9 Proceeds from sale of: (a) prospects - -
(b) equity investments - -
(c) other fixed assets - 2
1.10 Loans to other entities - -
1.11 Loans repaid by other entities - -
1.12 Other (provide details if material) - - -
Chapada/RFC
Net investing cash flows (98) (248)
1.13 Total operating and investing cash flows (2,601) (7,829)
(carried forward)
1.13 Total operating and investing cash flows (2,601) (7,829)
(brought forward)
Cash flows related to financing
activities
1.14 Proceeds from issues of shares, options, 19 1,216
etc. (net)
1.15 Proceeds from sale of forfeited shares - -
1.16 Proceeds from borrowings - 5,000
1.17 Repayment of borrowings (73) (111)
1.18 Dividends paid - -
1.19 Other - Trade Creditors/etc.. 73 148
Net financing cash flows 19 6,253
Net increase (decrease) in cash held (2,582) (1,576)
1.20 Cash at beginning of quarter/year to 4,079 2,564
date
1.21 Exchange rate adjustments to item 1.20 299 808
1.22 Cash at end of quarter 1,796 1,796
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
$A'000
1.23 Aggregate amount of payments to the parties included 117
in 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
1.23 Being Executive Directors salaries and retirement payments prior to
overhead recovery plus Director's fees and superannuation.
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
None
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
None
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available Amount used
$A'000 $A'000
3.1 Loan facilities 5,000 5,000
3.2 Credit standby arrangements - -
* On 2 September2005, the Company executed Loan Agreements with the LinQ
Resources Fund covering a $5 million project debt facility to be used for the
completion of construction of the Chapada Diamond Project and provide working
capital.
Estimated cash outflows for next quarter
$A'000
4.1 Exploration and evaluation 200
4.2 Development 1,250
Total 1,450
Reconciliation of cash
Reconciliation of cash at the end of the Current quarter Previous quarter
quarter (as shown in the consolidated
statement of cash flows) to the related $A'000 $A'000
items in the accounts is as follows.
5.1 Cash on hand and at bank 1,067 1,037
5.2 Deposits at call 729 3,042
5.3 Bank overdraft - -
5.4 Other (provide details) - -
Total: cash at end of quarter 1,796 4,079
(item 1.22)
Changes in interests in mining tenements
Tenement Nature of interest Interest Interest
reference at at end of
(note (2)) beginning quarter
of
quarter
6.1 Interests in Refer covering
mining tenements quarterly report
relinquished, attached hereto
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 per Amount paid up
security (see per security
note 3) (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 69,709,340 62,355,425
securities
after (1) for
(3)
consolidation
7.4 Changes during 417,780 417,780 Conversion of 36cents
quarter 41,778
81,667 81,667 convertible 10p (A$0.24)
(a) Increases notes
through issues
Exercise of
(b) Decreases Options
through
returns of
capital,
buy-backs
7.5 +Convertible 513,834 - $3.60/
debt convertible
securities (1) into 10 shares
for (3) @ 36c
consolidation
7.6 Changes during - - Converted into
quarter 417,780 shares
41,778 -
(a) Increases
through issues
(b) Decreases
through
securities
matured,
converted
7.7 Options 166,668 - Exercise price Expiry date
1,540,390 - Exercisable @ Expire 31/12/
75c 2006
1,250,000 -
Exercisable @ Expire 14/03/
1,250,000 - 75c 2007
333,334 - Exercisable @ Expire 30/11/
40c 2009
23,487,247 -
Exercisable @ Expire 30/11/
6,250,000 - 60c 2009
400,000 - Exercisable @ Expire3/09/2008
45c
Expire 31/8/
Exercisable @ 2007
12p
Expire 30/9/
Exercisable @ 2008
40c
Expire 30/11/
Exercisable @ 2009
35c
7.8 Issued during - - - -
quarter
7.9 Exercised 81,667 - 10p (A$0.42) 10p (A$0.42)
during quarter
7.10 Expired during 6,092,950 - Exercisable @ Expired 14/03/
quarter 75c 2006
166,667 -
Exercisable @ Expired 14/03/
$1.05 2006
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.
2 This statement doesgive a true and fair view of the matters disclosed.
Sign here:
Date: .*. 24 April 2006*....
--(Director/Company Secretary)
Print name: .........Max D.J. Cozijn...............
END
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