RNS Number:4421T
Rusina Mining NL
30 April 2008
30 April 2008
QUARTERLY REPORT
FOR THE PERIOD ENDED 31 MARCH 2008
Highlights
* Cash flow for the Acoje project commences
* Three Shipments of Nickel Laterite Ore during the quarter
* Mining at Acoje by DMCI continues to expand
* Heap Leach Pre Feasibility study 50% complete
* Underwriting of Listed Options guarantees cash receipts
* New drilling program for PGM's, Chromite and Nickel Sulphides announced
* Ferro-nickel smelter proposal further advanced
* Barlo Project acquisition announced
In February the Company announced that it had secured an underwriting of its 31
March 2008 listed options by Lloyd Edwards-Jones FZE of Dubai. The issue was
fully sub-underwritten by European Nickel PLC, RAB Capital PLC and Ward Ferry
Ltd. European Nickel is the Company's joint venture partner in the development
of a nickel heap leach processing facility, and is spending US$10 million on a
bankable feasibility study to earn 40% of the Acoje nickel laterite deposit.
During the quarter 17,019,945 listed 31 March 2008 options were exercised at a
price of 20 cents per share. The shortfall amount of 20,370,394 was placed with
the sub-underwriters during the first week of April.
In addition to the exercise of listed options, 2,935,000 two year 26 cent
options were issued to employees under the Employee Share Ownership Plan,
750,000 17 September 2009 35 cent options were issued to an advisor in the U.K.
and 1 million employee options expired upon the resignation of an employee.
Cash at the end of the quarter was $3.2m, however post reporting period $4.0m
was collected as part of the option underwriting. An additional $3.2m in
receivables is due from DMCI for equity participation in Acoje and Zambales
Chromite. In addition to the above, first proceeds of direct shipping will be
received in the June 2008 quarter.
DMCI NICKEL LATERITE MINING AGREEMENT - Rusina 50%, DMCI 50%
Background:
DMCI Mining, a subsidiary of Philippine listed Construction Company DMCI
Holdings, and Rusina have an alliancing Direct Ship Ore (DSO) agreement wherein
DMCI are responsible for all funding, mining, grade control, rehabilitation,
road and port developments as well as the marketing and sales obligations of 5
million tonnes of ore over 5 years.
Update:
Commercial shipments of nickel laterite ore commenced in mid February with the
loading of a small shipment of high grade material by MV Mustang. Commissioning
of the pier occurred later in the quarter than expected due to some issues
outside the company's control, however shipping is now on a continuous basis.
There have been some shipping delays due to the late arrival of ships, however
no delays have been experienced with ship loading operations. The Santa Cruz
port is well protected from prevailing weather and is capable of loading all
year round.
# Ship Date Tonnage Grade Status
1 MV Mustang 13 Feb 08 6719 1.6% Ni Completed
2 MV Vega Rose 10 Mar 08 53,880 1.4% Ni Final documentation
3 MV Jin Hai 17 Mar 08 54,031 1.2% Ni Final documentation
4 MV Santa Anna 19 Apr 08 54,434 1.7% Ni Provisional documentation
5 MV Jin Hai 23 Apr 08 54,000 1.7% Ni Loading complete 30/4
6 TBA ETA 30 Apr 54,000 1.7% Ni Contracted
7 TBA ETA 10 May 54,000 1.1% Ni Contracted
During the quarter, the Acoje mine was successfully reconfigured to enable
greater flexibility to supply the higher grades of nickel laterite ore that is
now required in the direct shipping market.
The reconfigured mining area has some spectacular grades and thickness of
saprolite over a wide area. There is more than enough ore to meet current and
anticipated DSO demand to maintain this source of cash flow for the Company,
however both DMCI and Rusina are focused on introducing value added processing
solutions as soon as practicable.
Demand from China for nickel laterite ore is coming from two distinct markets.
High nickel, low iron saprolite ore continues to be in demand as electric arc
furnace feed stock, while high nickel high iron limonite ore is in demand from
blast furnace operators to create pig iron. The latter market has been buoyed in
recent months due to the high prevailing iron ore prices , as the iron content
within the feed stock is free. In addition, limonite ore greater than 1.4% Ni is
in demand to blend with stockpiles of low grade ore that remains at Chinese
ports. Even so, DMCI have been able to sell the 1.1 - 1.2% Ni material at the
Santa Cruz port freeing up valuable stockpile space.
Mining during the quarter was not hampered by any adverse weather as experienced
in other areas of the Philippines. The Zambales region in located on the west
coast of Luzon and is fairly well protected from the low pressure systems that
cross the Visayan Islands further south at this time of the year.
With DMCI's cash costs currently averaging $US 16 per wmt, and estimating that
the average shipping grade will be 1.4%Ni, and that the Nickel price will
fluctuate US$25,000 - 30,000 per tonne, then the DSO may net US$12-15 million
for Rusina on an annualised basis. Rusina has been able to do this with no
Capital expenditure or risk, in a time where the ability to raise equity for
small cap companies is challenging. The ongoing development for value added
processing of the nickel does not require significant cash outflows for the
Company, allowing an increasing focus for the chromite and Platinum Group
Metals development
DMCI FERRONICKEL PROJECT, SEMIRARA - Rusina 40%, DMCI 60%
Background:
Under an arrangement between DMCI and Rusina, DMCI are investigating the
feasibility of a ferronickel facility where Rusina has up to 40% free carry in
such a project, and will guarantee the ore supply for up to 5 years.
Update:
During the quarter DMCI, assisted by Rusina, progressed the study on a ferro
nickel facility. The study is investigating 4 options that can be scaled up
progressively. Option 1 is a low cost production of a metalised calcine. This
involves crushing and heating the ore in a kiln at about 1100degreesC driving
off all the moisture (as much as 35% in laterites) and achieving some slight
reduction of the nickel. The value of the product will be increased due to lower
transport costs, and reduced oncost in processing.
Option 2 involves a lower temperature Kiln 900degreesC discharging to an
Electric Arc Furnace to produce molten FeNi at about 20 to 22% Ni. Slag is
granulated and discarded and the product moulded and sold. The product will
still require further refining.
Option 3 only involves the Kiln to produce a final ferro nickel. The ore is
grinded and mixed with anthracite or coke, limestone and returned dusts and then
pelletised. The material is then fed through the kiln to achieve a temperature
of about 1300degreesC and operates under a state of semi-fusion. The product
calcine, containing about 8% Luppen (crude FeNi @ 23% Ni) is cooled, crushed,
separated from the slag and sold.
Option 4 is option 2 with the addition of the pelletising stage to produce a
pure ferronickel.
The location of the facility, whether the equipment is new or existing
facilities can be acquired, and the inclusion of a technology partner are all
part of ongoing investigation. The suitability of ore from Zambales and coal
from Semirara has been established at a desktop level and some bulk sample test
work is being conducted.
EUROPEAN NICKEL PLC, HEAP LEACH STUDY - Rusina 40%, EN 40%, LP 20%
Background:
European Nickel plc and Rusina have entered into a JV agreement to investigate
the feasibility of Heap Leaching of Acoje Ore. Under the agreement European
Nickel will spend USD 10 Million on the Feasibility Study to earn up to 40% of
the Nickel laterite Project.
Update:
The Pre-Feasibility Study (PFS) conducted by European Nickel was 50% complete by
quarter end with PFS results expedited by the third quarter 2008. The PFS study
consolidates all the various conceptual infrastructure and process options to be
included in the final bankable feasibility study (BFS). The proposed project
scale is to produce 25 to 30 thousand tonnes of nickel per year over a 20 year
period. The final BFS will include the results of the trial heap leach facility
to be built at Acoje. Two sites are currently being investigated by Vector
Engineering of California USA. Vector was involved in EN's Caldag project design
in Turkey. Permitting for the construction of these trial pads is well advanced
and construction can commence following final design and approvals.
SRK Engineers of Perth have been retained to undertake the mine design,
scheduling and haulage components of the study. Wardrop/Westmar Engineering of
Vancouver, Canada are engaged on infrastructure and port options. Gaia South of
the Philippines and Citrus Partners of the UK are proceeding with the
Environmental and Social Impact Assessment.
Metallurgical column test work continues at Caldag Turkey. These studies
continue to demonstrate the fast leaching Acoje saprolite ore and the slow but
steady leaching of limonite. The column tests are also demonstrating the clear
benefit of acid agglomeration of the ores.
ZAMBALES DISTRICT
Acoje Nickel Saprolite Drilling
EN will be undertaking further drilling on the Acoje nickel laterites to JORC
measured category as part of the BFS. EN also propose to bring the resource to
43-101 status during the process.
Zambales Chromite Mining Company Inc (ZCMC) - Rusina 40%, EN 40%, DMCI 20%
As advised last quarter, EN and DMCI have taken up their allocated percentages
on this property. During the quarter, the company continued to work towards
finalising the permitting with the Mines & Geosciences Bureau to commence to
drill the resource to indicated status and measure the saprolite ore zone.
There have been some illegal mining activities occurring on this, and adjacent
properties belonging to Benguet Corporation, Eramen Minerals Inc. and Filipinas
Mining Corp. Together with Rusina and ZCMC the 5 companies have formed a loose
alliance, the Zambales Alliance, to co-operate together on issues such as
security, community, government relations, common infrastructure etc, to ensure
that the Zambales district becomes the pre-eminent nickel laterite region in the
Philippines.
Acoje Chromite and Platinum Group Metals (PGM's) - Rusina 80%, LP 20%
Background:
The Acoje Mine operated from 1935 as South East Asia's largest metallurgical
grade chromite mine producing over 10 million tonnes of ore. The underground and
surface mining closed in 1991 due to insufficient sustaining capital and low
commodity prices. The mine reportable had on its books when it closed between
3.6 - 3.7 Million tonnes of chromite grading between 17-18% Cr2O3 remaining
underground. Between 1970 and 1975, the mine produced 15,000 oz of PGMs from a
nickel sulphide mineralised schute intercepted as part of the underground
operation.
A scoping study in 2006 conducted by the company established that the surface
chromite resources were mostly lateritic and presently uneconomic, whilst the
primary surface chromite was located in widely disseminated pods across the
property not lending itself to an efficient open pit operation capable of
sustaining sufficient cash flow to fund a process plant and the underground
refurbishment.
Update:
Open Minable Chromite:-
Current prices of "lump" ferrochrome at greater than US$300 tonne, making the
selective direct shipment of this material very attractive. DMCI, under their
DSO alliance, has re-established haul road access to the southern outcrops. A
stockpile has been established through hand sorting and collecting by a local
workforce. The company, through DMCI, anticipates it will soon be in a position
to ship these bulk samples in 3000 tonne monthly shipments.
Rusina geologists have been extensively mapping the southern areas of the
property during the quarter and have discovered previously unrecorded chromite
surface outcrops. These will be tested for depth extensions by drilling and or
small exploration adits if appropriate. The addition of these new outcrops, plus
potential ore from the ZCMC property, once measured, may justify a small
chromite beneficiation plant at Acoje.
Underground Chromite, Nickel Sulphide, and PGM exploration:-
The data of all the historic underground data from Acoje on the underground
chromite remaining resource and the nickel sulphide and PGM exploration
potential has now been digitised and validated. The intention is to upgrade this
data to a JORC resource category, which will require validation "twinning" of
previous drilling. A number of potential joint venture partner companies have
signed confidentiality agreements and began a review of the data during the
quarter.
The Company announced in early March that it is to commence a new drilling
program at its Acoje tenement for platinum group metals ('PGM's'), chromite and
nickel sulphides. The initial program will comprise approximately 10 diamond
drill holes for 2,000 metres which will target 6 high signature anomalies that
were identified during the 2005 Induced Potential ('IP') survey. In addition to
the IP anomalies there are several targets which have been identified from the
digitisation of old underground drill data.
Quotes have been received from various drilling companies, with varying
availabilities of appropriate drill rigs. The Company expects to award the
contract for the initial program in the next few weeks, and commence
mobilisation to site as soon as practical thereafter. As discussed above, we
also expect to drill the new chromite mineralisation as well as twin previous
chromite historic drilling.
BARLO PROJECT
Background:
Rusina has entered into an agreement to purchase the Barlo Project from the
Administrator of Fire Resources Limited. The Company paid a deposit of $50,000
in early April, with the balance of $350,000 to be paid on delivery of the
assets to Rusina's wholly owned Philippine subsidiary. This is expected to be
completed within 90 days however may take considerably longer due to issues
outside of the Company's control.
The Barlo Project is situated approximately 30km due north of the Company's
Acoje Project near the township of Dasol on the island of Luzon, the Philippines
. The project has an approved exploration permit covering 4,371 ha. The Barlo
property is a volcanic hosted sulphide project representing sea floor "black
smokers" similar to Woodlawn (NSW), Golden Grove (WA) and Rosebury (Tas).
The Acoje Mining Company operated the Barlo mine between 1974 and 1991 using
underground and open pit mining methods. The mine is understood to have produced
approximately 3 million tonnes of ore grading on average 1.5% Cu and 1.0% Zn.
The mine was initially operated as an underground mine that produced
approximately 55,000 tonnes of hand-sorted high grade copper ore was estimated
to exceed 10.0% Cu from the upper supergene mineralised zone of the ore body.
The mine closed in 1981 due to low copper prices and other management issues.
The company believes the property is particularly strategic due to reported
massive pyrites grading greater 20% adjacent to the Barlo mineralisation that
could provide sulphuric acid for the Acoje nickel projects proposed heap leach
operations. A pyrite concentrate was previously produced by the Acoje Mining
Company at Barlo and sold to local Philippine fertilizer companies.
DMCI - RUSINA EXPLORATION
Background:
Rusina has entered a joint exploration agreement with DMCI Holdings Inc to form
an exploration and mining joint venture company (DMCI (60%) and Rusina (40%))
where all Rusina's and DMCI's non Zambales properties would be vended into the
yet to be formed subsidiary. These properties include Rusina's Abogado
properties EXPA-00068-XII and EXPA-00074-XII and DMCI's Mineral Production
Sharing Agreement (MPSA) MPSA-000166-XII in Sultan Kudarat and the Sodaco
Agricultural Corporation, a fully owned subsidiary of DMCI, MPSA application
APSA-00008-XI located at South Cotabato.
Sodaco Prospect - Rusina 40% DMCI 60%
The Sodaco Project is located on Mindanao Island, 48 km. north-northwest of
General Santos City in Southern Philippines. The project boundary lies entirely
within the Tampakan FTAA-002-95-X1 and is 900 meters from the world class
Tampakan copper-gold deposit with a resource of 2.2 billion tonnes at 0.72%
copper equivalent. The Tampakan copper-gold deposit is a major high-sulphidation
epithermal deposit superimposed on an underlying porphyry copper system.
DMCI are initially responsible to receive the free and prior informed consent
(FPIC) of the stakeholders prior to the approval of the exploration work program
being put together by Rusina. The process is quite lengthy and involves the
co-operation of the National Commission of Indigenous Peoples (NCIP). DMCI
report that progress has been further delayed by the death of the NCIP head who
was handling the case. The new case handler is the same person Rusina has been
working with on the Abogado prospect below, and we anticipate progress will
proceed in a timely manner.
Abogado Prospect - Rusina 40%, DMCI 60%
The Abogado Project is located on Mindanao Island in Sultan Kudarat province, 67
km. west of General Santos City in Southern Philippines. The project is held
under two Exploration Permit Applications (EXPA) and an MPSA, for a total area
of 7,898 hectares (79 km2),
During the quarter the company received the FPIC consent from the stakeholders
of this property. A Memorandum of Agreement with the stakeholders and the NCIP
is currently being signed. The EXPA work program will then be processed by the
Mines and Geosciences Bureau and exploration can commence.
PANAY PROJECTS - Rusina 100%
Pan de Azucar Project, Iloilo
The Pan de Azucar project (PDA) is located on Pan de Azucar Island, 112 km.
north-east of Iloilo City, Panay Island, central Philippines. The project is
held through the 1,296 hectare EXPA.
This property is currently under negotiation with a third party to farm into the
property but has been delayed due to the recent market conditions by the third
party. Details of the agreement if they proceed will be released upon completion
of those negotiations.
Guimaras Project, Iloilo
The Guimaras project is part of a 2,592 hectare EXPA, located on Guimaras Island
, 30 km. south of Iloilo City, Panay Island, central Philippines. A recent
public hearing regarding the EXPA raised several environmental concerns of the
local stakeholders. This is understandable due to an unrelated oil spill near
the island 1 year ago when a ship sank. As any planned exploration activities
have a minimal to zero impact on the environment, the company is confident that
the local concerns of the community can be addressed in further discussions with
the stakeholders.
Copies of Quarterly Activities Report and Quarterly Cashflow Report, as released
on the ASX, can be viewed on the Company's website www.rusina.com.au and as
links to this announcement:
http://www.rns-pdf.londonstockexchange.com/rns/4421t_-2008-4-30.pdf
http://www.rns-pdf.londonstockexchange.com/rns/4421t_2-2008-4-30.pdf
For further information, please contact:
Mark Hanlon Rusina Mining NL Tel: +61 8 9226 1111
Roland Cornish Beaumont Cornish Tel: +44 (0) 207 628 3396
Note:
The information in this report is based on information compiled by Mr Robert
Gregory, who is a Member of The Australasian Institute of Mining and Metallurgy.
Mr Gregory 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". Mr Gregory consents to the inclusion in this report
of the matters based on his information in the form and context in which it
appears.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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