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.
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Quarter Ended 31 December 2012
PROJECTS– INDONESIA
Indonesian Project’s
Sangata SUMATRA KALIMANTAN
PADANG
Kutai Kertanegara
Tapan
Banjar
Figure 1: Indonesia - Active Project Areas
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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.
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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
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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
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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.
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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.
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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 from borrowings - - 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other (cost of raising funds and sale unmarketable - - parcel of shares)
Net financing cash flows - -
Net increase (decrease) in cash held (169) (420)
1.20 Cash at beginning of quarter/year to date 339 590 1.21 Exchange rate adjustments to item 1.20 - - 1.22 Cash at end of quarter 170 170 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 in item 1.2 71
1.24 Aggregate amount of loans to the parties included in item 1.10 -
1.25 Explanation necessary for an understanding of the transactions § Payments totaling $47,202 were made directly to Mr J Risinger and to Larca Pty Ltd, an associated entity of Mr Risinger. The disbursements were in relation to travel costs and director fees. § Payments totaling $23,499 were made to Steinepreis Paganin, an associated entity of Mr R Steinepreis. The disbursements were in relation to legal services.
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 N/A
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 At 30 June 2012 the Company had a 60% interest in PT Adavale Harner Resources (AHR), a limited liability company existing under the laws of Republic of Indonesia, whereas Mr Haryono Eddyarto held 40%. By resolution of AHR dated 9 September 2012, by the payment of $300,000 to AHR (being Adavale Resources Limited (ADD) obligation under the joint venture agreement), Haryono Eddyarto acquired from ADD a further 205 interest thus making the interest of ADD 40% and that of Haryono Eddyarto 60%.
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 $1,000,000 -
3.2 Credit standby arrangements - -
On 1 August 2012 the Company announced that it had entered into a Convertible Loan Agreement with Mr Haryono Eddyarto (Company Chairman) to the value of up to $1,000,000. The loan facility is for a period of 24 months, carries interest at 8% (or 15% on any default amount), and is convertible into shares at a conversion price of 5 cents per share. There has been no draw down on this facility as at 31 December 2012. A previous convertible loan to Arthur Phillip Pty Ltd was terminated.
Estimated cash outflows for next quarter $A’000 4.1 Exploration and evaluation -
4.2 Development -
4.3 Production -
4.4 Administration 81
Total 81
Reconciliation of cash Reconciliation of cash at the end of the quarter (as Current quarter Previous quarter shown in the consolidated statement of cash flows) to $A’000 $A’000 the related items in the accounts is as follows. 5.1 Cash on hand and at bank 170 339
5.2 Deposits at call
5.3 Bank overdraft
5.4 Other (provide details) 170 339 Total: cash at end of quarter (item 1.22)
Changes in interests in mining tenements
Tenement Nature of interest Interest at Interest at reference (note (2)) beginning end of of quarter quarter 6.1 Interests in mining N/A tenements relinquished, reduced or lapsed
6.2 Interests in mining N/A 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 Issue price per Amount paid up per quoted security (see security (see note 3) note 3) (cents) (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 securities 316,990,035 316,990,035 Fully Paid
7.4 Changes during quarter (a) Increases 16 16 through issues $0.04 Fully Paid (b) Decreases through returns of capital, buy-backs 7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7 Options (description Exercise price Expiry date and conversion factor) 65,697,863 0.04 31 Jul 2014 10,000,000 0.04 31 Jul 2014 10,000,000 0.04 31 Jul 2014 10,000,000 0.04 31 Jul 2014 10,000,000 0.045 31 Jul 2015 10,000,000 0.05 31 Jul 2016 115,697,863 7.8 Issued during Nil quarter
7.9 Exercised during 16 $0.04 quarter 7.10 Expired during quarter Nil 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 (see note 4).
2 This statement does give a true and fair view of the matters disclosed.
Sign here: Date: 31 January 2013 (Director)
Print name: John Risinger
Notes
1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
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