Quarterly Report 31January2013
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31 January 2013 Company Announcements Office - ASX Limited RE: QUARTERLY ACTIVITIES REPORT FOR ADAVALE RESOURCES LIMITED (ASX: ADD) FOR THE PERIOD TO 31 DECEMBER 2012 HIGHLIGHTS • On December 20th 2012, ADD established a new board and management led by Mr. Haryono Eddyarto as the Executive Chairman. The primary focus is Indonesian coal production. • Tapan: Negotiations continue with an established mining company that has shown strong interest in the project; due diligence process is still in progress. • Lake Surprise: Actively seeking a strategic Joint Venture partner to continue exploring the project. CORPORATE At an EGM on the 20th of December the company finalised a change in directors and management that is intended to herald in a new direction for the company. New management aims to grow from exploration to become an end to end mining company, by actively seeking producing coal assets, together with additional green fields with significant potential matched to end user requirements. Within the management team, an Audit Committee and Investment & Capital Market Committee have been set up to support the company to achieve its goals. During 2013, the company plans to secure off- take agreements and load its first coal from production. 1 Quarter Ended 31 December 2012 PROJECTS– INDONESIA Indonesian Project’s Sangata SUMATRA KALIMANTAN PADANG Kutai Kertanegara Tapan Banjar Figure 1: Indonesia - Active Project Areas 2 Quarter Ended 31 December 2012 SUMATRA PERKASA PRIMA ABADI (PPA) (Wholly owned subsidiary of ARL) TAPAN PROJECT (100% PPA) PADANG JAMBI Prima Perkasa Abadi PAINAN TAPAN Sumatra Figure 2: Current Project Locations - Sumatra PPA holds an IUP production permit on 198Ha and an IUP exploration permit on 2054Ha. The company has been actively engaged in sourcing potential mining companies, joint venture partners and or buyers with a view to move the project into production. Currently, negotiations continue with an established mining company that has shown strong interest in the project. At the same time the company has maintained strong relationships with the local government authorities and village communities. Adavale is acting on the good relationship’s it has established with the local government bodies and is reviewing other projects located between Tapan and Painan that present an opportunity to secure a foothold in this West Sumatra coal belt. 3 Quarter Ended 31 December 2012 KALIMANTAN ADAVALE HARNER RESOURCES (AHR) (40% ARL) Kalimantan BML Kutai Kartanegara MB Banjar Kota Baru Tanah Bumbu Figure3: Current Project locations- Kalimantan 4 Quarter Ended 31 December 2012 The company focus remains on projects with a minimum coal GCV of 5800 along with additional quality coal specifications and sound logistics. Investigation and evaluation of projects in East and South Kalimantan continues. Projects that remain in the portfolio are listed below. EAST KALIMANTAN KUTAI KARTANEGARA REGION Sebuluh Project, Bukit Menjangan Lestari [BML] and Anggana Coal (AC) The project consists of 2 concessions, BML which has an IUP production permit of 2,657 Ha and AC an IUP production permit of 2157 Ha. The concessions are contiguous. Mining has taken place previously and is on-going in several pits inside 1200 Ha of the prospect areas. The coal bearing formations are the Pulaubalang which hosts good quality thermal coal (GCV >6000), and is found over most of the prospect area, and the Balikpapan formation which is a lower quality coal found in a small portion of the southern part of the concessions. According to previous exploration drilling totalling more than 400 holes, 14 coal seams between 0.8m and 2m thickness have been identified. The project lies in a prolific mining area west of Samarinda and is surrounded by producing CCOW concessions. Logistics are excellent with exclusive mine infrastructure and facilites up to the barging port that will enable the company to secure target production and allow for ease of upgrades. AHR has signed a Non Disclosure Agreement and submitted a Letter of Intent to the current owners. After technical desktop studies, an initial site visit has been conducted and legal and technical due diligence continues. Subject to completion of due diligence and reaching satisfactory terms, the company intends to enter into a formal agreement to acquire the project 5 Quarter Ended 31 December 2012 SOUTH KALIMANTAN BANJAR REGION The company was previously looking at three projects in the Banjar Region of South Kalimantan. AHR became interested in the group as information provided by the vendors supported minimum criteria and mining had taken place within the IUP production areas or on concessions immediately adjacent. Initial reconnaissance and regional geology maps show the coal bearing formation within the group is the Tanjung Formation which hosts good quality thermal coal. The project group offers an opportunity for a low cost operation centred on re-opening existing pits and using the operations as a base to expand within the area. Following due diligence the Dayakarsa Cakrawala Persada and Banjar Persada Resources projects were removed from the priority list and will remain in the data base for further review. Given the prospectivity of the area and the relatively low cost operations, the company is actively looking for additional projects in the area. Makmur Bersama [MB] The project consists of an IUP production permit of 192 Ha. The coal bearing formation is Tanjung which hosts good quality thermal coal. Mining has previously taken place within the southern part of the concession where only the upper coal seam was mined to a relatively shallow depth. 6 Quarter Ended 31 December 2012 Potential remains for deeper seams consistent with the deposition of Tanjung formation in the area already mined, and for continuation of the seams in the northern part of the concession. Mine Infrastructure and logistics have been established to maintain the previous mine production. After site visit’s, a technical review of previous mining, observation of existing pits and plotting of outcrops, AHR is satisfied as to the potential of the project. Subject to completion of due diligence and reaching satisfactory terms, the company intends to enter into a formal agreement to acquire the project. KOTA BARU - TANAH BUMBU REGIONS During the quarter, and following initial desktop studies, site visit’s and a review of the projects, the company withdrew from any further obligations on the Bangun Karya Sabumi [BKS] project in the KotaBaru Region and the Anugerah Kreasi Karya [AKK] in the Tanah Bumbu Region. AUSTRALIA LAKE SURPRISE - SOUTH AUSTRALIA (100% ARL) Adavale’s sedimentary uranium project at Lake Surprise in South Australia comprises EL 4949 and EL 4950 over an area of 1,836km 2. Two prospect areas – Clayton Basin and Mumpie - have been the focus of exploration to date. The original 5 year exploration licences have been renewed. It is the company’s opinion that the area holds significant potential and only a very small percentage of that potential has been explored to date. During the quarter the company commenced the search for a Joint Venture partner to continue exploring the project. John Risinger Managing Director (08) 9467 2049 Competent Person Statement: The information in this report that relates to Exploration Results, Mineral Resources or Ore Resources is based on information compiled by Eka Antasari Nugraha, who is a Member or Fellow of The Australasian Institute of Mining and Metallurgy. Eka Antasari Nugraha is a full time employee of Adavale Harner Resources. He 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 “Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Eka Antasari Nugraha consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 7 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 Adavale Resources Limited ABN Quarter ended (“current quarter”) 96 008 719 015 31 December 2012 Consolidated statement of cash flows Current quarter Year to date Cash flows related to operating activities $A’000 (3 months) $A’000 1.1 Receipts from product sales and related debtors - - 1.2 Payments for (a) exploration and evaluation (56) (77) (b) development - - (c) production - - (d) administration (121) (351) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature received 8 8 1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - - 1.7 Other (compulsory acquisition of shares) - - (169) (420) 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 flows (carried (169) (420) forward) 1.13 Total operating and investing cash flows (brought (169) (420) forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. - - 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds