Bauxite Resources Limited (ASX:BAU) Quarterly Report For The Period Ended 31 December 2009
Perth, Feb 4, 2010 AEST (ABN Newswire) - Bauxite Resources Limited (
ASX:BAU) (PINK:BXRDF) is pleased to provide a Quarterly Activities Report for the period ended 31 December 2009.
EXPLORATION PROGRAM - QUARTERLY UPDATE Overview
The Company's exploration program continued with 1970 vacuum holes drilled in the North Bindoon region, Toodyay Shire region and Brunswick Junction region during the December Quarter. Drilling in the North Bindoon region continued to return excellent grades and widths of mineralisation, with the objective of defining sufficient bauxite mineralisation to support a 1.2 Mt (2.4Mtpa rate) Direct Shipping Ore (DSO) operation in the second half of 2010 and 6 Mtpa DSO operations in 2011, subject to obtaining regulatory approval. It is intended that the increased mining operations will be conducted over a number of sites throughout the Darling Range North region. Drill results in the South Darling Range project area confirms the existence of refinery and DSO grade material with work focussing on securing land access and regulatory approvals.
Additional Exploration Licences Obtained for the Quarter BRL has applied for two additional Exploration Licences (EL) in the Darling Range during the quarter. This brings the number of granted licences and applications to 95 tenements in the five project areas totalling approximately 19,900km2; 87 tenements are located in the North, South and East Darling Range project areas, six tenements in the Kimberley project area and two tenement applications in the new Northern Territory project area.
Five of these licences have been granted in the North Darling Range Project area and land access to crown land and private freehold land is ongoing.
Target Generation
BRL is focusing exploration to meet its objectives of defining sufficient bauxite mineralisation to develop sustainable long-term DSO operations within the Darling Range.
BRL continues with its planned systematic drilling program of targets situated close to existing infrastructure, including rail lines and ports.
The initial exploration program is focused on identifying sufficient bauxite mineralisation to support the commencement of a greater than 6 Million tonne per annum DSO operation (at multiple sites throughout the Darling Range North region) from 2011 subject to obtaining regulatory approval and to establish a calcined bauxite operation in the North Darling Range project area. The priority targets are those areas with historical data on Crown and freehold land close to existing infrastructure and services.
Furthermore, an exploration program in the Southern Darling Range is targeting sufficient bauxite mineralisation to support the commencement of a refinery. Exploration will focus on a combination of Crown Land and freehold farmland close to existing infrastructure and services.
Exploration Program
Exploration work for the December Quarter consisted of target generation, surface mapping, drilling and securing land access agreements.
Mapping Work Completed this Quarter
BRL's on-going mapping programme continued during the December quarter and completed mapping over the East Darling Range project. This mapping and rockchip sampling confirmed the presence of extensive laterite plateaus indicating excellent potential for these tenements to host significant bauxite mineralisation.
Exploration Program scheduled for March 2010 Quarter
Work planned for the March quarter will focus on resource definition drilling of a number of targets in the North Bindoon region, New Norcia, Victoria Plains Shire region and Toodyay Shire region for the North Darling Range project and Brunswick Junction region for the South Darling Range project. The exploration program will consist of the following:
- Continued reconnaissance mapping, sampling and target generation of the Darling Range project.
- Resource definition drilling of high-grade targets in the North Bindoon region, New Norcia, Victoria Plains and Toodyay regions with the objective of defining sufficient bauxite mineralisation to support a 6Mtpa mining operations for 10 years.
- Scout and resource definition drilling of highgrade targets in the Bunbury hinterland region defining sufficient bauxite mineralisation to support a 1 Mt per annum DSO mining operation.
- Resource modelling of high-grade bauxite mineralisation defined by drilling in the North Bindoon Region in the December and March quarters.
TECHNICAL REPORT FOR BAUXITE MARKETING
Beneficiation testing
Beneficiation testing has indicated that magnetic separation and high pressure jet washing to remove the minus 500 micron material are the best options for the Darling Range North tenements. It is estimated that about 30% of the ore will undergo beneficiation by either or both methods.
Significant reserve recovery will result. The reject material is being evaluated for commercial use to substantially recover the cost of beneficiation by sale of by-products.
Analytical
BRL has formed an alliance with Nagrom laboratories.
Nagrom will carry out most of the company's development and exploration analytical work post February 2010. Nagrom has experienced PhD personnel to ensure the quality of test data and is working with state of the art equipment.
Calcined bauxite
Progress has been made in Chlorination and Leaching tests. Laboratory tests have confirmed the technical soundness of both pathways. Pilot plant scale test work is now being undertaken. SKM is providing expert and engineering support.
Customer interactions
Presentations to customers and evaluations of BRL bauxite samples by customers has led to acceptance that BRL's Darling Range bauxite represents good "value in use" to Chinese refineries.
Prospective customers in China following the visit in November all expressed the desire to enter into supply agreements.
The first trial shipment of bauxite ore left Kwinana for Yantai, Shandon Province China. The grade was as targeted, over the minimum specification and close to the indicative specification for chemistry, size distribution and moisture.
OPERATIONS FOR THE QUARTER
Trial Shipment Operations
Operations at BRL's trial shipment site at North Bindoon continued during the quarter, extracting and delivering 88,500 tonnes of DSO High Grade Bauxite to Kwinana Bulk Terminal (KBT). The ore was delivered to KBT primarily by rail, with approximately 7200 tonnes transported via road.
Road transport was only utilized when the rail network was unavailable. Of the 88,500 tonnes, 44,220 were used to make the first ever shipment of Western Australian bauxite to China, with the vessel Tai Shan Hai departing on 16th November 2009.
Second Shipment
The second shipment of 44,000 tonnes was loaded onto the vessel MV Typhoon which departed from KBT on 5th January 2010. The third and final Trial Shipment will be completed early February 2010.
Future Operations
Looking to the future, BRL purchased a Terex Jacques mobile screen, capable of processing ore at a rate of 1200tph. The screen was demobilized from site (Argyle Diamonds) and transported in sections to Bindoon in November awaiting refurbishment when required. Other major equipment purchased during the period included, a WA 500 front end loader, a Caterpillar 12H grader and D10T were ordered, delivery is expected mid January 2010.
Maintenance Contract
On 4 December 2009, BRL awarded a Maintenance Contract (subject to approval to mine being granted) valued at A$1.7 million per year to a local Bindoon company. The contract covers the provision of the operation and maintenance of the Terex Jacques mobile screen.
Grade Control
The control and reconciliation of ore prior to delivery at the rail or port stockpile has provided some challenges but all grades are within contract specifications. A process of daily visual pit checks, grab samples from mining surfaces, stockpile sampling at mine, railhead and port was implemented, and this had given confidence in the grades. Results for the second shipment are waiting to be confirmed from the Chinese agents while the third shipment results will be expected late February.
Mine Planning
The slower rate of drilling and assay results together with hole pick up surveys not scheduled until January 2010 has meant little block modelling was undertaken in the quarter for mining reserve definition in the Bindoon region. The current trial shipment site has been under constant review.
LAND ACCESS
With the plan to significantly increase exploration activities a highly experienced Tenements & Land Access Manager was recruited, further staff will be taken on early in 2010. As a result of the recent appointment BRL successfully negotiated a series of exploration agreements in the North Bindoon area, these included both Mineral to Owner (MTO) and Mineral to Crown (MTC). Land Access activities have now extended into other Northern Regional Shires, including, Toodyay, Victoria Plains and Harvey, a Shire located in the South Darling Range.
ALUMINA REFINERY PROJECT
China Trip
During the December quarter a delegation visited China to work with Yankuang Group as a prelude to completing the Heads of Agreement for the Alumina Refinery Project (Project).
Government Agencies
Also during the quarter the Project Definition Document (PDD) for the future Project was accepted by the Department of State Development (DSD). The DSD is the lead agency for major resource and industry infrastructure proposals in Western Australia.
Briefings with all key Government Agencies have now been scheduled for completion in the first quarter of 2010. BRL is working with government agencies aiming to formulate a roadmap to fulfil the regulatory approvals associated with the Project with the objective of delivering the Project in accordance with the scheduled timelines.
Bankable Feasibility Study (BFS)
Work on the BFS continues. The appointment of owner's representatives to all key sections of the project has been finalized and in line with an agreed Project Delivery Framework (PDF) arrangements have been made with external/internal infrastructure stakeholders/providers to agree/define the initial scoping definitions.
In order to provide communication support and ensure accurate reporting and scheduling controls throughout the projects work plans, an agreement with Aconex has been completed that includes providing ongoing working support with BRL's Information and document control personnel.
Aconex is the world's largest provider of online collaboration solutions to clients in the Commercial & Residential Construction, Government & Infrastructure and Energy & Resources sector.
INFRASTRUCTURE PROJECTS
The BRL infrastructure projects are summarized as:-
- Kwinana Port Direct Shipping Ore (DSO)
- Bunbury Port DSO
- Albany Port DSO
Kwinana Port DSO
Following the successful shipment of the first cargo of bauxite a review of the port operation was conducted, the result of which was to put in place a number of process changes and system up -grades designed to improve the loading rate at Kwinana Bulk Terminal (KBT2). With the changes implemented, the loading rate for the second shipment was improved. The third and final shipment will be made during early February 2010.
Both parties continue to work together in reviewing shipping options for 2010, 2011 and beyond.
Bunbury Port DSO
Plans to conduct a trial spot shipment out of the port are in the later stages of development and are dependant upon ship availability, and all necessary approvals.
Albany Port DSO
Both parties continue to work closely and BRL is currently finalizing its Exploration Plan for 2010, which will include exploring on its eastern tenements, in order to identify sufficient grades of Direct Shipping Ore to support a long-term operation out if the Albany Port.
MARKETING REPORT - INTERNATIONAL BUSINESS DEVELOPMENT
FOB Sales Contract with Hongfan Holdings Ltd (Hongfan) for Trial Sample Shipments In October, BRL signed a FOB sales contract with Hongfan, a Chinese metals trading company, for 120,000 Dry Metric Tonnes (DMT) of bauxite to be mined from the North Darling Range.
The contract is a significant step for BRL to tap into the international market as a new supplier of bauxite and to raise alumina refinery market awareness as to the attributes of Darling Range bauxite.
First Bauxite Shipment
In December, BRL delivered its maiden 43,200 Wet Metric Tonnes (WMT) shipment of bauxite out of Kwinana Bulk Berth 2, marking the historic occasion as it is the first export of run of mine (ROM) bauxite from the state of Western Australia.
The testing results received from CCIC (China Certification & Inspection Corporation) shows that the bauxite grade and characteristics are well above the contractual specifications.
Negotiations with Yankuang Group Corporation LTD (Yankuang)
In November, a BRL Marketing team led by Mr Barry Carbon and Mr Dan Tenardi conducted negotiations with Yankuang on the Heads of Agreement for joint development of an alumina refinery in South West WA.
Deputy Governor of Shandong Province receives BRL Delegation In November, as distinguished guests of Shandong province, Mr Tenardi, Mr Carbon and their four colleagues had the privilege to be received by Deputy Governor Cai Limin of Shandong Province and some other senior officials at the government's official hotel. Mr Cai commended Mr Tenardi and his management team for their enormous efforts in building a business relationship with Shandong for the benefit of both WA and China. Mr Cai also hosted an official banquet in honour of the BRL delegation.
It is believed that this high level event is symbolic of the Shandong province's determination to be involved in the joint development of bauxite resources in the Darling Range and secure a stable supply of bauxite to its refineries.
Visit to Refineries in Shandong The visit to Chalco Shandong and Nanshan Group in November by the Marketing team has proved to be a constructive one. Mr Ziegelaar provided presentations regarding the latest research on potential beneficiation processes which has impressed the senior management of both Chalco and Nanshan.
Chalco Shandong, as the oldest refinery of the group, agreed to conduct joint research into the Darling Range bauxite. Their intention is to diversify supply channels and provide opportunities for BRL to be added to their existing list of suppliers.
Nanshan has explicitly expressed its intention of using BRL's bauxite on a competitive price basis.
It was the first time the Company has received positive Chinese refinery feedback that BRL's Darling Range bauxite has excellent qualities after their completion of testing and analysis.
Position Feedback received from Chinese Refineries Feedback now received from potential Chinese customers is that they have accepted the relative high extractible alumina content and low reactive silica bauxite and the refinery operating cost savings attributable to the bauxite.
JFE Shoji continued marketing efforts JFE Shoji has continued its marketing efforts in India, China and Japan and gained an increasingly better understanding of the attributes of BRL's Darling Range bauxite. Samples sent to Japanese end-users are being tested in their laboratory to ascertain whether they fit into the process being applied in their operations. Additional samples from North Bindoon and Brunswick will be provided for detailed analysis and testing.
ENVIRONMENT
On the 25th of November 2009 under the terms of its Town Planning Scheme the Shire of Chittering made the decision not to grant an extractive industry licence for the proposed mining works on Mineral to Owner (MTO) freehold land located in Bindoon.
Subsequently, BRL formally submitted an Environmental Referral Document (ERD) to the Office of the Environmental Protection Authority (EPA) on the 11th December for mining works on 23.7 hectares of Mineral to Crown land on the same property as stated above. BRL are currently awaiting assessment by the EPA. The EPA will assess the potential environmental risks of the operation and determine if BRL's environmental management planning is appropriate.
On 14th January 2010, BRL hosted a tour of the trial mining operation in Bindoon; state environmental agencies were well represented. The objective of the tour was to demonstrate to key agency staff "Minimum Impact Mining" techniques and discuss future rehabilitation strategies.
COMMUNITY & PUBLIC AFFAIRS
During the December quarter BRL has stepped up information exchange to community and regulatory agencies alike.
This quarter's focus internally has been to highlight the importance of community relations and stakeholder engagement. BRL initiated a Community Newsletter to update regions BRL operate in, specifically Bindoon.
BRL have committed to a number of community and conservation support initiatives, including the provision of major funding for a Disease Investigation Manager into the critically endangered Woylie - the BRL Woylie Rescue program supported by Perth Zoo, DEC and other conservation stakeholders.
EXECUTIVE STAFF - QUARTERLY UPDATE
During November 2009, BRL engaged the following three Senior Management personnel:
Terry O'Connor joined the Company as the General Manager DSO Operations. Terry has extensive experience in operational and project management, international sales & marketing and a proven track record of increasing shareholder value.
Dr Matthew Todd joined BRL as Environmental Manager. Prior to joining BRL Matthew spent 10 years in the environmental consulting industry primarily working for the mining sector. Matthew's PhD was conducted in conjunction with Alcoa World Alumina and Worsley Alumina investigating the success of rehabilitated bauxite mines in the Darling Rang. Matthew has an excellent understanding of ecological processes and sustainability principles.
Jacqui Jankowski joined BRL as Manager for Tenements, Contracts and Land Access. Jacqui has more than 9 years experience in the mining industry with her most recent role with Rio Tinto Iron Ore involving supervision of land tenure and liaising with government agencies to ensure compliance with statutory requirements. Jacqui also has experience liaising in contract management and contractor management systems.
The new staff bring a wealth of knowledge from their various backgrounds to the BRL Management team which will be invaluable to the Company's future development.
CORPORATE SUMMARY
A$57M Capital Raising During the quarter the company completed a private placement of 60 million shares at 95 cents each to institutional and sophisticated investors to raise A$57 million (less raising costs). A number of share options (1,936,668) were also exercised during the quarter at exercise prices varying from 25 - 50 cents to further improve cash reserves by approximately A$0.6 million.
Yankuang Share Placement
Shortly after the end of the quarter the company signed a Heads of Agreement with Yankuang Corporation (Yankuang) and part of this agreement was a placement of 19.7 million shares at 50 cents each to raise A$9.85 million. The placement was completed on 25 January 2010 to further strengthen cash reserves.
Market Capitalisation
There are now approximately 234 million shares on issue following the above Yankuang placement. The Company's shares at 31 December were 86c which gives the company a current market capitalisation of around A$201 million, a substantial increase over the last quarterly report due to the placements.
Cash Reserves and Expenditure
Cash reserves at 31 December 2009 were A$61 million and following the Yankuang placement will be approximately A$71 million. During the quarter approximately A$3.5 million was spent on fixed assets including laboratory equipment and mining equipment which will enable the company to reduce operating costs. Subsequent to the end of the quarter the company purchased a second property in Bindoon adjacent to the rail siding where the bauxite is loaded onto rail cars for freight to Kwinana Port.
Board of Directors Changes
There were two board changes during the quarter with the appointment of Non Executive Chairman Mr Barry Carbon and the former Chairman Mr Atkins stepping down from his executive chairman role to become a non executive director.
For the complete Bauxite Resources Quarterly Report for the period ended 31 December 2009, please click the link below:
http://www.abnnewswire.net/media/en/docs/62217-ASX-BAU-478700.pdf
About Bauxite Resources Limited
Bauxite Resources (ASX:BAU) (OTCMKTS:BXRDF) was established with a substantial tenement holding in Western Australia to develop new bauxite supply for the global alumina/aluminium industry. The Company listed on the Australian Securities Exchange (ASX) in October 2007.
The Darling Range in the south-west of Western Australia (WA) is the world's largest bauxite mining and alumina refining region producing around 20% of the world's alumina. This area has mined bauxite and refined alumina since the 1960s. These industries are leaders in sustainable resource development and represent the fifth largest sector of WA's resource industry.
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