]
30 April 2015
QUARTERLY ACTIVITIES REPORT
March 2015
Highlights
Coal
During the quarter 228,624 tonnes of coal produced from the Delta Coal mine – Altura
share 76,208 tonnes.
Focus continues on lowering costs via reductions in stripping ratio and mining costs.
The Indonesian Government benchmark price for coal sales was 5% higher in March
2015 as compared with December 2014.
Corporate Restructure
Shareholder approval obtained for the sale of the Mt Webber iron ore joint venture
interest for A$24m with settlement occurring on 17 February 2015, and for the
Singapore listing of the Indonesian coal assets into a new separate coal focused entity.
Future corporate profile of Altura Mining Limited (ASX: AJM) is that of a company with
a controlling interest in a Singapore listed coal investment entity, a developer of the
World Class Pilgangoora lithium deposit and a provider of mining services.
Capital Raising
Altura conducting a non-renounceable rights issue to raise A$3.12 million (before issue
costs).
The rights issue is partially underwritten to an amount of A$2.4 million.
Shareholders can purchase 2 New Shares for every 3 Existing Shares held, and will also
receive 1 free attaching New Listed Option for every 2 New Shares acquired.
Lithium
Altura continues search for a strategic investment partner to develop the world class
Pilgangoora project.
Capital raising will allow for completion of feasibility studies and progression of the
mining lease towards grant.
Altura is encouraged with progress to date having gained a better understanding of the
concentrated nature of the Chemical Grade Lithium supply market.
The Chemical Grade Lithium market continues to demonstrate encouraging long term
fundamentals.
Altura Mining Limited – Quarterly Activities Report March 2015
COAL
DELTA COAL MINE (East Kalimantan – Indonesia) Thermal Coal (33⅓% AJM)
Mine Operations
Production and sales for the quarter were as follows:
Saleable coal production (100% terms)
Coal sold (100% terms)
Saleable coal production (Altura 33⅓% share)
Coal sold (Altura 33⅓% share)
March 2015
Quarter
March 2014
Quarter
12 months
to March 2015
Tonnes
Tonnes
Tonnes
228,624
254,903
354,206
321,873
1,155,758
1,252,854
76,208
84,968
118,069
107,291
385,253
417,618
Production at Delta Coal during the 3 months to 31 March 2015 was below the previous quarter
with monthly average coal production of 76,208 tonnes (monthly average December quarter 2014
of 120,106 tonnes). Production in the March quarter 2015 was also below the corresponding
quarter in 2014.
The reduction in coal production can partially be attributable to adverse weather conditions
however a significant proportion of the result is from reduced equipment availability and
productivities. These factors coupled with the required re-allocation of equipment to new mining
areas in order to meet coal marketing requirements has produced a lower than forecast result.
Delta Coal management are engaging with its contractors in order to sustain the required
production level and cost. In order to assist with these items management have entered into an
arrangement with the neighbouring tenement holder to allow for mining of coal right up to the
western boundary of the Delta Coal tenement. The joint operation will require removal of the
overburden on the adjacent tenement in order to access the coal up to the Delta Coal boundary.
The adjacent tenement holder will then be provided access to the continuation of the coal into
their own tenement.
These works will form an extension of the existing Pit 37 which is located in the north-west of the
Delta Coal tenement and contains some of the thickest coal seams at the lowest strip ratio on site
(see map overleaf). It is anticipated that this agreement will unlock for Delta Coal approximately
800,000 tonnes of coal at a strip ratio ranging between 8:1 and 9:1. The Delta Coal site team
anticipate being in a position to commence mining the Pit 37 Extension area as early as May 2015.
During the quarter the mine operations experienced 50 rainfall affected days for a total of 868
millimetres which is above the overall December quarter total rainfall (December quarter - 45
rainfall affected days for a total of 715 millimetres).
Page 2 of 10
Altura Mining Limited – Quarterly Activities Report March 2015
The March quarter average coal price received was US$38.83 (equated to FOB basis) per tonne
(marginal increase from US$37.56 in December 2014 quarter) for coal ranging from 4,400 kcal /kg
to 4,800 kcal/kg (GAR). Sales for the quarter were based on 45% of 4,800 kcal/kg and 55% of
4,400 kcal/kg products.
Delta Coal is currently mining five (5) separate pits within the concession; these are identified as
Pit 21N, Pit 21S, Pit 37, Pit 38 and Pit 43. Operations in Pit 2N ceased during the quarter after
exhausting all recoverable coal. The coals from these pits can vary in both quantity and quality
which is taken into consideration by the mine according to their marketing requirements. Each of
these pits can also operate under a different cost mechanism determined by a mix of strip ratio
and waste haulage distance.
Coal Pricing
The Indonesian Coal Reference Price or HBA for March 2015 was US$67.76 per tonne representing
a 5% increase to the US$64.65 price for December 2014. The HBA represents the Indonesian
Government set benchmark pricing for coal sales and is based on GCV (GAR) 6,322 kcal/kg, Total
Moisture (arb) 8.00%, Sulphur (arb) 0.80% (arb) and Ash Content (arb) 15.00%. Therefore price
adjustments (based on quality) are performed in order to equate to Delta’s range of coal
specifications from 4,400 – 5,000 kcal/kg (GAR) products.
Delta Coal Mine – Map of Mine Layout
Pit 37 Extension
About Coal
Coal is a plentiful natural source of energy. Thermal coal provides a reliable fuel for electricity generation
with Indonesia now the world’s largest exporter of thermal coal products. Higher value PCI (pulverised coal)
and coking coal are used in the production of steel.
Page 3 of 10
Altura Mining Limited – Quarterly Activities Report March 2015
TABALONG COAL JOINT VENTURE (South Kalimantan – Indonesia) - 70% AJM
Project Approvals
Altura advised on 30 September 2014 that it had received the In-Principle Forest Area approval
from the Indonesian Minister for Forestry for its 70% owned Suryaraya Permata Khatulistiwa (SPK)
IUP in the northern area of the Tabalong Coal Project in South Kalimantan, Indonesia.
The initial approval area of 465.29 hectares allows for the mining pit, waste dumps, mine
infrastructure and haul road with the survey and compliance documentation (including marking
out of the area). During the quarter the company continued preparations to complete work
program required to gain formal issue of the Borrow and use of Forest Area Permit (Ijin Pinjam
Pakai Kawasan Hutan). Recent post- election changes in the Indonesian Government has resulted
in some delays, however the Company believes these delays are temporary and will enable a
smooth progression of the formal issue document.
Upon conclusion of the coal asset listing process in Singapore it is anticipated that the additional
funds raised will enable a fast-tracking to production at Tabalong.
Tabalong Coal Project JV – Location Map
About the Tabalong Coal Project
The Tabalong Coal Project consists of five (5) Mining Licences (IUPs) in the province of South Kalimantan on
the island of Borneo. All five (5) IUPs are granted for Operation Production and Altura is seeking the
necessary Forestry Land Use approvals to allow mining to proceed.
Page 4 of 10
Altura Mining Limited – Quarterly Activities Report March 2015
CORPORATE
Shareholder Approval for Changes to Corporate Structure
Late in 2014, the Company announced the following proposed changes to its corporate structure:
The sale of its interest in the Mt Webber iron ore joint venture (see ASX release on 24
December 2014); and
The sale of Indonesian coal assets into a Singapore-based entity, Merida Corporation Pte Ltd,
(Merida) proposed to be listed on the Singapore Exchange (see ASX release on 18 November
2014).
Both of these changes required shareholder approval under the ASX Listing Rules, and at a General
Meeting held on 12 February 2015, Altura received overwhelming approval for the two resolutions
(see ASX release on 12 February 2015).
Following the divestment of Mt Webber and subject to completion of the Singapore listing of the
Indonesian coal assets (see below), Altura’s corporate profile will be that of a company with a
controlling interest in a coal investment entity, a developer of the Pilgangoora lithium deposit and
a provider of mining services.
Singapore Listing of Indonesian Coal Assets
Altura is progressing the consolidation of its Indonesian coal assets into a new Singapore-based
entity to be listed on the Singapore Exchange. These existing investments comprise:
(a)
a 33⅓% interest in the Delta coal mine in East Kalimantan, Indonesia (the Delta Project); and
(b)
a 70% interest in three Mining Permits (“SPK”, “SCC” and “SP”) and a 56% interest in two
Mining Licences (“KM” and “MBM”) that form the Tabalong coal project in South
Kalimantan, Indonesia (the Tabalong Coal Project).
As part of the planned listing, funds will be raised in Singapore to fund the development of the
Tabalong project through to production, strengthen the balance sheet for the existing Delta mine
and progress the exploration programs for both projects.
Whilst Altura will no longer have majority ownership of the Tabalong project, it will however
retain a controlling interest by holding two of the five board positions, including the Chairman’s
role. The process is targeting completion as early as possible in 2015.
The shareholder group (including Altura) has continued to complete the pre-requisite
documentation including audits, legal due diligence and technical reports (including valuation
reports). Finalisation of the technical reports (including revised JORC Reserve and Resource
estimates) is dependent on completion of independent peer reviews. The prevailing coal market
conditions have provided challenges and contributed to some revisiting of these technical reports.
Pleasingly, Altura has seen scope for reductions in significant cost items such as fuel and
contracting rates to offset reductions in coal pricing with both current and long term forecasts.
Page 5 of 10
Altura Mining Limited – Quarterly Activities Report March 2015
CAPITAL RAISING
CAPITAL RAISING – NON-RENOUNCEABLE RIGHTS ISSUE
Subsequent to the end of the quarter, Altura announced on 23 April 2015 that it is seeking to raise
up to A$3.12 million (before issue costs) through a non-renounceable rights issue to existing
shareholders.
Under the offer up to approximately 311,874,787 New Shares will be issued at a price of 1.0 cents
per New Share and 155,937,394 free attaching New Listed Options on the basis of two (2) New
Shares and one (1) New Listed Option for every three (3) Existing Shares held.
The funds raised under the pro rata offer will be used for the completion of feasibility studies and
progression of the mining lease towards grant at the Pilgangoora Lithium Project, and for working
capital requirements.
The key terms of the rights issue are:
Shareholders on the company’s register as at close of business on Wednesday 29 April 2015
(the “Record Date”) will be able to participate in the offer.
Shareholders can purchase 2 New Shares for every 3 Existing Shares held, and will also
receive 1 free attaching New Listed Option for every 2 New Shares acquired.
The purchase price has been set at 1 cent per share.
The rights issue opens on Friday 1 May 2015, and closes on Friday 15 May 2015.
The New Listed Options will be exercisable at 2 cents each, and have an expiry date of 30
June 2016.
Shareholders can apply for additional shares in excess of their entitlement (in the event that
not all rights are taken up). Such additional shares will be allocated at the discretion of the
Company and the Underwriter.
The New Shares will rank equally from allotment with Existing Shares in all respects.
The issue is partially underwritten up to an amount of A$2.4 million by Bizzell Capital Partners Pty
Ltd.
Page 6 of 10
Altura Mining Limited – Quarterly Activities Report March 2015
LITHIUM
ALTURA LITHIUM – Pilgangoora (Western Australia - 100% AJM)
Altura has previously identified a world class lithium deposit located in the Pilbara region of
Western Australia. Following the completion of a project scoping study (see ASX release on 19
November 2012) the Company believes there is strong potential for the deposit to be mined and
to be able to recover a highly saleable spodumene concentrate. Internal work on a pre-feasibility
study is ongoing and will be accelerated upon successful completion of the current Rights Issue
with funds raised to be predominantly directed to rapid progression of this project. Altura is
continuing to identify a suitable off-take and equity partner for this project.
LITHIUM CORPORATION (Nevada, USA & British Columbia, Canada - 15% AJM)
Lithium Corporation had previously announced the execution of an Asset Purchase Agreement
with Pathion Inc. to sell its interests in the BC Sugar flake graphite property, as well as the San
Emidio and Fish Lake Valley lithium-brine properties. The completion date was extended until 31
December 2014 but was terminated during the quarter after failing to complete.
The Company also signed a Letter Of Intent (LOI) with Kingsmere Mining Ltd. which is the
preliminary step whereby Kingsmere or their appointee may choose to buy or option Lithium
Corporation’s lithium brine properties in Nevada. The letter allows for a due diligence and
election period until 1 April 2015 with closing extended to 31 May 2015. The terms of the
arrangement are to be finalised should Kingsmere elect to move forward.
Please refer to the Lithium Corporation website for further information.
About Lithium
Lithium (Li) is recovered from the mineral spodumene and lithium-rich brines. It is used in a range of
products such as ceramics, glass, batteries and pharmaceuticals. Lithium use has expanded significantly in
recent years due to increasing use in rechargeable batteries in portable electronic devices and in batteries
and electric motors for hybrid and electric cars.
Page 7 of 10
Altura Mining Limited – Quarterly Activities Report March 2015
IRON ORE
MT WEBBER (Pilbara – Western Australia) 30% Altura Mining Limited, 70% Atlas Iron Limited
Residual Royalty Rights
Post the sale of Mt Webber to Atlas Iron, Altura retains the following residual royalty rights:
1% FOB sales royalty on iron ore sold from the Mt Webber production tenements
(M45/1209 and M45/1197) up to the equivalent of Altura’s current remaining share (8.44
million DMT), but only payable for the months in which the average CFR 62% Fe index is
greater than A$95; and
0.3% FOB sales royalty on iron ore sold from the undeveloped Mt Webber exploration
tenements (E45/2244, E45/2268, E45/2288, E45/2312 and E45/2346), but only payable for
the months in which the average CFR 62% Fe index is greater than A$95;
Altura notes the decision by Atlas Iron Limited on 10 April 2015 to suspend its mining operations
at its Pilbara mines, including the Mt Webber mine which was the subject of the joint venture with
Altura.
Altura advises that the royalty arrangements on iron ore at Mt Webber are based on Altura’s
proportion of the defined resource, and continue until such time as the remaining share is mined
and sold with no sunset clause in effect.
Page 8 of 10
Altura Mining Limited – Quarterly Activities Report March 2015
SCHEDULE OF MINING TENEMENTS
The following mining tenements were held by the Company at the end of the quarter:
Location
Tenement
Interest
Pilbara, Western Australia
E 45/2277
E 45/2287
E 45/3488
P 45/2758
M 45/1230
M 45/1231
100%
100%
100%
100%
100%
100%
Mt Shoobridge, Northern Territory
EL 29549
MCN 60
MLN 296
MLN 544
100%
100%
100%
100%
Tanami, Northern Territory
ELA 26626
ELA 26627
EL 26628
EL 29828
100%
100%
100%
100%
Delta, East Kalimantan
PT Delta Ultima Coal
33⅓%
Tabalong, South Kalimantan
PT Suryaraya Permata Khatulistiwa
PT Suryaraya Cahaya Cemerlang
PT Suryaraya Pusaka
PT Kodio Multicom
PT Marangkayu Bara Makarti
70%
70%
70%
56%
56%
Catanduanes, Philippines
COC 182 (Area 3) - Catanduanes
100%
The following mining tenements were relinquished during the quarter:
Location
Tenement
Interest
Pilbara, Western Australia
E 45/2244
E 45/2268
E 45/2288
E 45/2312
E 45/2346
M 45/1209
100%
100%
100%
100%
100%
30%
Page 9 of 10
Altura Mining Limited – Quarterly Activities Report March 2015
About Altura Mining Limited (ASX:AJM)
“Aggressively building independently sustainable businesses that deliver profitability, liquidity and growth in coal and
non-ferrous mining and exploration” - The Altura Vision
Altura is a multi-faceted miner with significant coal and lithium projects in Indonesia and Australia, a diverse minerals
exploration portfolio, and a profitable mining services arm that provides drilling, geophysical and project development
services.
With experienced leadership and a strong and supportive shareholder base, Altura’s success is further underpinned by
its solid suite of exploration and development projects. The Company’s main focus is coal production from the Delta
Coal project in Indonesia, and the Tabalong Coal project which is in the final stages of approvals before mining
commences.
Key Projects and Prospects:
•
Coal: a 33⅓ % interest in the Delta coal mine currently targeting production 1.5 million tonnes per annum rate in
East Kalimantan, Indonesia.
•
Coal: Mine construction planned at Tabalong upon receipt of final regulatory approvals.
•
Coal: Exploration tenement at Catanduanes on the eastern seaboard of the Philippines.
•
Lithium: Prefeasibility at Pilgangoora WA, one of the world’s largest high grade deposits.
•
Uranium: Exploration stage of key targets in Hayes Creek region, Mt Shoobridge NT.
•
Base/Precious Metals: Exploration stage for lead, copper, zinc, gold and silver prospects - Shoobridge NT, Pilbara
WA, Tanami NT.
For further information, please visit www.alturamining.com or phone James Brown, Managing Director on
+ 61 7 3814 6900.
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