SYNDICATED METALS LIMITED Syndicated Metals Limited Quarterly Activities Report - December 2015
X
Assets, Experience, Growth
AUSTRALIAN SECURITIES EXCHANGE ANNOUNCEMENT - 11 January 2016
Quarter Highlights
Feasibility Study completed for the Barbara Copper-Gold Project, located near Mt Isa in North Queensland (in joint venture with CopperChem).
The Feasibility Study defined a financially robust, short-term open pit copper project capable of delivering pre-tax free cash flow of A$17M, based on total payable metal production of 16,223t of copper, 2,753oz of gold and 43,327oz of silver.
Implementation of a new corporate and strategic direction aimed at repositioning the Company for future growth.
Completion of assessment of the Reverse Circulation drilling program undertaken during the September Quarter across several target areas within the 100%-owned Northern Hub tenements.
Placement and Entitlement Offer capital raising commenced to raise $0.533m.
Overview
During the Quarter the Company announced the results of the Barbara Copper-Gold Project mining and off-site processing study and outlined its new strategic direction.
In December the Company announced that it was undertaking a share placement at 0.5 cents per share to raise $200,000.
The Placement is being undertaken in two tranches. Tranche 1 (T1) consisted of 26,000,000 fully paid ordinary Shares which were issued on 8 December to sophisticated and professional investors under the Company's 15% placement capacity, raising $130,000. The Tranche 2 (T2) Placement consisting of 14,000,000 Shares will be issued to entities associated with directors Mr Langworthy and Mr Morgan to raise $70,000, subject to shareholder approval being obtained. A meeting of shareholders will be held on 29 January 2016 to seek this approval.
Subscribers under the Placement will be offered the opportunity to subscribe for 1 free attaching unlisted Option for every 2 Shares issued, with each Option having an exercise price of 1.2 cents and expiring on 8 February 2018. The issue of Options to subscribers under the T2 Placement will also be subject to shareholder approval.
In addition, the Company announced that it is offering existing eligible shareholders the opportunity to participate in a non-renounceable entitlement offer on the basis of one Share for every six Shares held on the record date at an issue price of 0.5 cents per Share, together with one free Option for every two Shares subscribed for with an exercise price of 1.2 cents and expiring on 8 February 2018, to raise up to $333,500 before expenses.
Exploration and Development
Barbara Copper Project - Feasibility Study
During the Quarter the Company reported the key results of the Feasibility Study on open pit mining at its Barbara Joint Venture Copper-Gold Project in north-west Queensland. The Feasibility Study was funded and undertaken by its joint venture partner CopperChem Limited as part of its earn-in requirements to the Barbara Joint Venture.
The Feasibility Study defined a financially robust, short-term open pit copper project (Probable Ore Reserve of 818Kt at 2.23% Cu, 0.20g/t Au and 2.78g/t Ag) with a pre-tax free cash flow of A$17 million, based on total payable metal production of 16,223 tonnes of copper, 2,753 ounces of gold and 43,327 ounces of silver.
The Project has an estimated 21-month mine life, based on the development of two open pits with processing to be completed in Cloncurry and Mt Isa under a toll-treatment scenario.
Full details of the Feasibility Study are contained in the ASX Announcement released on 28 October 2015. The Company's plans in regard to further development of the Barbara Project are detailed in the Corporate Section of this Report.
Mt Remarkable/Northern Hub Regional Exploration
During the Quarter Syndicated completed an assessment of a reverse circulation (RC) drilling program undertaken during September across several target areas within its 100%-owned Northern Hub tenements in north-west Queensland. The overall objective of this program was to test copper- gold targets within a 10-25km radius of the Barbara Copper-Gold Project that were generated by recent VTEM and soil sampling programs completed within the Company's Mt Remarkable Project.
Exploration is targeting both high-grade Barbara-style deposits as well as larger, IOCG-style deposits associated with the Mt Remarkable Fault with a view to identifying potential areas where additional near-surface resources can be delineated relatively quickly and cheaply. Any additional resources defined within economic haulage distance of the Barbara deposit would enhance the potential of the Barbara project.
The targets were delineated following analysis of airborne VTEM data, soil sampling data and geological mapping and ground-checking over the Neso, Nereid and Proteus prospects.
RC drill holes were targeted approximately 75m to 100m below surface and towards conductive plates modelled from the recent VTEM survey results for both the Neso and Proteus prospects. Drilling was aimed at determining the relationship between the modelled VTEM plates and the sampled and mapped surface geology.
At Neso, 250m of RC drilling was completed in two holes. Drilling intersected an iron-rich (in weathered rock) and pyrite rich (in fresh rock) altered breccia zone at the contact of the dolerite and Leichardt Volcanics. The target zone contained low grade (less than 0.2% Cu) mineralisation in strongly pyritic alteration which corresponded to the modelled position of the VTEM plate. No high grade (greater than 1% Cu) mineralisation was encountered within the broader mineralised zone.
The intersection of a pyrite rich breccia zone at approximately 75m below surface in NSRC001 is consistent with the interpretation of a steeply west dipping and north-west striking vein and shear zone derived from the Hardaway Granite intrusion located underneath and to the south-west of the Neso prospect. The vein and shear zone is interpreted from surface geological mapping and 3D modelling of the VTEM data.
At Proteus, 241m of RC drilling was completed in two holes. Results included:
14m @ 0.24% Cu from 33m down-hole; and
26m @ 0.40% Cu and 0.02g/t Au from 44m down-hole.
The intersection of low-grade copper mineralisation at approximately 30m below surface in PTRC002 in a pyrite-rich alteration zone associated with quartz-calcite veining is consistent with the interpretation of a steeply west-dipping and north-west striking vein structure interpreted from surface geological mapping and 3D modelling of the VTEM data.
Fountain Range/Southern Hub Regional Exploration
At the Southern Hub, the Company continued desktop studies during the Quarter.
The area is being targeted for high-grade copper and gold mineralisation similar to deposits historically mined at Duchess (205Kt @ 12.5% Cu), Tick Hill (705Kt @ 22.5g/t Au) and Trekelano (2.4Mt @ 2.5% Cu and 0.3g/t Au).
In addition, the Company is also targeting large-scale IOCG-style mineralisation associated with granite intrusions and the Pilgrim Fault.
Priority projects include the completion of soil sampling over the tenements which cover the Mt Erle Granite (see Figure 1).
Figure 1 - Southern Hub Duchess soil geochemistry
Corporate
New Strategic Direction & Cost Reductions
During the Quarter, Syndicated announced the implementation of a new corporate and strategic direction aimed at repositioning the Company for future growth.
The two-pronged strategy is aimed at progressing opportunities to unlock the value of the Company's existing north-west Queensland copper assets - including the advanced Barbara copper deposit and Syndicated's extensive exploration tenure in the region - while at the same time identifying and acquiring new resource assets and project opportunities outside of north-west Queensland.
One of Syndicated's key strategies this year has been to undertake an extensive regional exploration program in the Barbara region in order to identify opportunities to expand its resource inventory and support the potential for an alternative standalone treatment facility at Barbara.
The Company has completed a review of the results of this exploration program and received the Barbara Feasibility Study completed by CopperChem.
While exploration has delineated a large number of exploration targets - with only a limited number of these opportunities tested by the recent drilling program - the review has concluded that there are limited opportunities, in the short term, to delineate additional Barbara-style mineralisation in the near-surface environment.
Therefore it is unlikely that additional resources will be defined to complement the Barbara project and allow establishment of on-site processing facilities. Accordingly, the exploitation of the Barbara Mineral Resource will be confined to the scope of works defined in the Mining and Off-Site Processing Study (MOSP) (refer to the ASX announcement of 28 October 2015).
Accordingly, Syndicated has reached in-principle agreement with CopperChem to embark on a new strategic direction, which is based on:
Pursuing opportunities to progress and/or monetise the Company's existing north-west Queensland resource assets, including the Barbara Joint Venture assets; and
Identifying new resource assets and project opportunities outside of north-west Queensland with the potential to create value for Syndicated shareholders, including projects where the Company can leverage the experience and contact network of its Board of Directors.
It should be noted that CopperChem's support of this strategy is conditional on any new opportunities being consistent with CopperChem's corporate and strategic objectives, and each asset or opportunity will be assessed on a case-by-case basis.
Syndicated remains open-minded about which assets and opportunities it will pursue, but its preference is for advanced, high quality Australian gold and/or base metals resource assets.
In light of the Company's new strategic direction, Syndicated implemented a number of Board, management and corporate changes as part of an ongoing cost reduction program across all aspects of its operations to ensure that it appropriately manages its cash position and remains well placed for future growth.
The Company has retained its current Managing Director and three Non-executive Director positions, however the Board including the Managing Director agreed to reduce their remuneration levels by 33% effective 1 October 2015.
Syndicated Metals Limited issued this content on 2016-01-11 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2016-01-11 01:02:11 UTC
Original Document: http://www.syndicatedmetals.com.au/reports/QuarterlyReportDec2015FINAL.pdf
