Haoma Mining NL A.B.N

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Haoma Mining NL A.B.N Registered Office & Head Office: Level 3, 401 Collins Street, Melbourne, Vic., 3000, GPO Box 2282U, Melbourne, Vic., Telephone (03) , Facsimile (03)
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Haoma Mining NL A.B.N Registered Office & Head Office: Level 3, 401 Collins Street, Melbourne, Vic., 3000, GPO Box 2282U, Melbourne, Vic., Telephone (03) , Facsimile (03) Website: Company Announcements Office December 21, 2016 Australian Stock Exchange Level 4, North Tower, Rialto 525 Collins Street MELBOURNE, VIC 3000 Dear Sir, ACTIVITIES REPORT FOR THE QUARTER ENDED SEPTEMBER 30, 2016 HIGHLIGHTS Group Consolidated Financial Result: Haoma Mining s unaudited consolidated financial result for the three months ended September 30, 2016 was a before tax loss of $1.11 million after interest of $0.46 million, depreciation and amortisation of $0.05 million, and development and test work expenditure of $0.72 million. Haoma s Test Work at Bamboo Creek Haoma s test work in late 2015 and during 2016 focused on implementing in the Bamboo Creek Plant knowledge gained from laboratory test results. Test work was conducted on both: 1) Bamboo Creek Tailings Ore, and 2) Bamboo Creek Tailings Concentrate (1% of Bamboo Creek Tailings) collected when Bamboo Creek Tailings are processed through the Bamboo Creek Plant. The results in this report show clearly that based on physical gold recovered from Bamboo Tailings Concentrate the back calculated Bamboo Creek Tailings Head grade is greater than 25 g/t gold. Initial test work did not usually measure or recover significant quantities of silver and Platinum Group Metals (PGM) when samples of Bamboo Creek Tailings Concentrates were processed. Over the last 6 months test work has focused on developing a commercial process which can be used to: 1) Process ore through the Bamboo Creek Plant, 2) Produce a concentrate fraction (1% of Bamboo Creek Tailings), and 3) Recover gold, silver and PGM using the Bamboo Creek Plant. Results show clearly that commercial quantities of gold, silver and PGM measured by XRF analysis can be recovered into a concentrate fraction. The back calculated Bamboo Creek Tailings gold Head grade measured by XRF was greater than 25 g/t an important result as it is similar to earlier test results based on physical gold recovered. Recent test work has recovered significant quantities of physical silver. The back calculated Bamboo Creek Tailings silver Head grade measured more than 100 g/t or greater than 1% silver in the concentrate fraction. Significant quantities of Platinum Group Metals (PGM) were measured by XRF in concentrates collected. The back calculated total Bamboo Creek Tailings PGM Head grade measured more than 100 g/t or greater than 1% PGM in the concentrate fraction. 1 CONTENTS 1. Group Consolidated Result to September 30, Operations at Bamboo Creek Western Australia 3. Exploration Activities in Western Australia 4. Exploration Activities in Queensland 1. GROUP CONSOLIDATED RESULT TO SEPTEMBER 30, 2016 Haoma Mining NL Consolidated Profit & Loss Operating Revenue: Gold & Silver Sales Royalties Retail Sales & Misc. Other Income 2015/16 1st Qtr ($m) /16 Full Year ($m) /17 1st Qtr ($m) /17 YTD ($m) Operating Revenue Operating profit (loss) before interest, depreciation, amortisation, exploration & development costs: Interest Depreciation & amortization Exploration, development & test work (0.42) (0.94) (0.03) (0.62) 0.93 (1.92) (0.16) (2.76) 0.12 (0.46) (0.05) (0.72) 0.12 (0.46) (0.05) (0.72) Operating (loss) before tax (2.01) (4.40) (1.11) (1.11) 1.1 Haoma s Group Consolidated Result Haoma Mining s unaudited consolidated financial result for the three months ended September 30, 2016 was a before tax loss of $1.11 million after interest of $0.46 million, depreciation and amortisation of $0.05 million, and development and test work expenditure of $0.72 million. 1.2 Funding of Operations Funding for Haoma s operations is presently being provided by The Roy Morgan Research Centre Pty Ltd, a company owned and controlled by Haoma s Chairman, Gary Morgan. Interest on debt to Roy Morgan Research Centre accrues at the 30 day commercial bill rate plus a facility margin of 1%. At September 30, 2016 the principal debt to The Roy Morgan Research Centre Pty Ltd was $28.67 million. Interest accrued for the 3 months to September 30, 2016 was $252,982. Total interest accrued and unpaid to September 30, 2016 is $37.40 million. The Roy Morgan Research Centre Pty Ltd has advised that that no net debt repayment will be required until Haoma s annualised EDITDA exceeds $15 million per annum and that debt repayments will not exceed 50% of Haoma s EBITDA in any year. On October 8, 2015, the District Court in Perth ordered that Haoma s workers compensation insurer pay the judgement amount awarded to a former employee of Haoma Mining in relation to an injury claim. Haoma Mining has provided an amount of $748,420 in its financial statements in respect to this item. The workers compensation insurer has appealed the decision. Haoma has also filed an appeal in relation to the compulsory vehicle injury insurance provider s liability to meet the amount awarded by the Court. 2 2.0 OPERATIONS AT BAMBOO CREEK, WESTERN AUSTRALIA Figure 1: Location map of Haoma Mining and other Pilbara mining locations. 3 2.1 Haoma s Test Work at Bamboo Creek 1 Haoma s test work in late 2015 and during 2016 focused on implementing in the Bamboo Creek Plant knowledge gained from laboratory test results. Test work was conducted on both: 1) Bamboo Creek Tailings Ore, and 2) Bamboo Creek Tailings Concentrate (1% of Bamboo Creek Tailings) collected when Bamboo Creek Tailings are processed through the Bamboo Creek Plant. The results in this report show clearly that based on physical gold recovered from Bamboo Tailings Concentrate the back calculated Bamboo Creek Tailings Head grade is greater than 25 g/t gold. Initial test work did not usually measure or recover significant quantities of silver and Platinum Group Metals (PGM) when samples of Bamboo Creek Tailings Concentrates were processed. Over the last 6 months test work has focused on developing a commercial process which can be used to: 1) Process ore through the Bamboo Creek Plant, 2) Produce a concentrate fraction (1% of Bamboo Creek Tailings), and 3) Recover gold, silver and PGM using the Bamboo Creek Plant. Results show clearly that commercial quantities of gold, silver and PGM measured by XRF analysis can be recovered into a concentrate fraction. The back calculated Bamboo Creek Tailings gold Head grade measured by XRF was greater than 25 g/t an important result as it is similar to earlier test results based on physical gold recovered. Recent test work has recovered significant quantities of physical silver. The back calculated Bamboo Creek Tailings silver Head grade measured more than 100 g/t or greater than 1% silver in the concentrate fraction. Significant quantities of Platinum Group Metals (PGM) were measured by XRF in concentrates collected. The back calculated total Bamboo Creek Tailings PGM Head grade measured more than 100 g/t or greater than 1% PGM in the concentrate fraction. 2.2 Haoma Mining Significant Results Released over the last 12 Months Summary of Bamboo Creek Tests on Bamboo Creek Tailings Ore and Bamboo Creek Tailings Concentrate: On September 30, 2015, October 15, 2015, and November 6, 2015 Haoma Mining NL released reports to the ASX which advised shareholders of significant findings from laboratory test work. The reports showed gold and silver could be extracted from Bamboo Creek Tailings into aqua regia (acid) and cyanide solutions and then into bullion using the Bamboo Creek Laboratory Pilot Processing Facility. Note 1: 1 The information & data in Section 2 of this report as it relates to Metallurgical Results is based on information compiled by Mr. Peter Cole who is an expert in regard to this type of metallurgical test work. The results relate to testing the effectiveness of a new method of assaying for gold and other mineral content (the Refined Elazac Assay Method) and a new method for extraction of gold and other minerals from the ore (the Refined Elazac Extraction Method). These methods are together referred to as the Elazac Process. The information reported relates solely to ongoing test work in relation to bringing the Elazac Process to commercial realisation. Mr. Cole has worked in the mining industry for over 30 years and has been associated with the development of the Elazac Process over a long period (approximately 15 years). Mr. Cole is one of only a few people with sufficient relevant knowledge and experience to report results in relation to test work on the Refined Elazac Assay Method and Refined Elazac Extraction Method. Mr. Cole has consented to the inclusion in this report of the information and data in the form and context in which it appears. 4 On September 30, 2015 Haoma shareholders were advised results from processing a bulk sample of 5.98 tonnes of Bamboo Creek Tailings (utilising the Elazac Process) had successfully recovered 4.49g/t of gold and 0.75g/t of silver to bullion. This result was despite conventional assay techniques consistently measuring in Bamboo Creek Tailings about 0.30g/t gold and negligible silver. On October 15, 2015 Haoma shareholders were advised the Elazac Process had been refined and laboratory test work processed a trial parcel of 1.72 kg of Bamboo Creek Tailings Concentrate and measured (by traditional assay methods read in DIBK on a standard AAS) gold in aqua regia solution resulting in a back calculated Bamboo Creek Tailings Head grade of g/t gold. The gold was also measured (by traditional assay methods read in DIBK on a standard AAS) in cyanide solution resulting in a back calculated Bamboo Creek Tailings Head grade of g/t gold. On November 6, 2015 Haoma shareholders were advised that using conventional assay techniques the Bamboo Creek Tailings average only 0.30g/t gold, but utilising the Elazac Process Haoma had been able to successfully recover 4.49g/t of gold and 0.75g/t of silver to bullion from 5.98 tonnes of Bamboo Creek Tailings. (See Figure 2 below showing gold produced and then analysed on the University of Melbourne SEM.) Figure 2: Photograph of 4.49g/t of gold and 0.75g/t of silver which was read on the University of Melbourne SEM On February 29, 2016 (Haoma s Half Year Financial Report Ended December 31, 2015) Haoma shareholders were advised that since the end of January 2016 the Bamboo Creek Pilot Plant had recommencement Trial processing of Bamboo Creek Tailings. In late January and early February a Trial Parcel of dry tonnes of Bamboo Creek Tailings was treated and 1, grams of fine gold recovered (3.08g/t) with a further 281 grams (0.82g/t) of gold held in solution in the carbon leach circuit. From gold produced the back calculated Bamboo Creek Tailings Head grade was about 4g/t gold. Haoma shareholders were also advised on February 29, 2016 that on January 15, 2016 Elazac Mining Pty Ltd filed a new Australian Provisional Patent Application in respect to the Elazac Extraction and Assay Method. (Haoma Mining has unlimited access to and use of the technology described in the Provisional Patent Application for no fee.) The Provisional Patent Application Number was prepared by Griffith Hack. The Provisional Patent covers a confidential process which measures and extracts significantly more gold and silver than measured by traditional assaying methods (fire assay or aqua regia) or traditional mineral processing methods (such as using cyanide). During April 2016 tests in the Bamboo Creek Gold Smelting Room used the Elazac Process to process a 361g sample of Bamboo Creek Concentrate approximately 0.4% of the Bamboo Creek Tailings Plant Feed. In total 2.714g of gold bullion (90% gold) was recovered which represents a back calculated Bamboo Creek Tailings Head grade of 27g/t gold (See Figure 3 below) 5 Figure 3: 2.714g gold button recovered from 361g sample of Gold Concentrate The Bamboo Creek Plant is now capable of producing at least 2.5 tonne of Concentrate from processing about 250 tonnes of Bamboo Creek Tailings per 10 hour day. In addition to the Bamboo Creek Plant a continuous gold stripping circuit is installed. On July 31, 2016 Haoma shareholders were advised gold was recovered gravimetrically from a 500g sample of Bamboo Creek Concentrate (1% of Bamboo Creek Tailings) equating to 1,807g/t gold in the Concentrate sample processed, or a back calculated Bamboo Creek Tailings Head grade of 18.1 g/t gold. Haoma s initial test work focused on implementing in the Bamboo Creek Plant knowledge gained from laboratory tests. Test work over the last 6 months has focused on implementing a commercial process using the Bamboo Creek Plant. A summary of the latest results are included in the first section of this report to shareholders Low Grade Mt Webber Iron Ore ( 55% Fe): On July 31, 2016 Haoma shareholders were advised that gold was recoverable and read in cyanide after processing a large sample of Mt Webber low grade ( 55% Fe) iron ore. Initially a g sample of low grade ( 55% Fe) Mt Webber iron ore was wet beneficiated to produce two fractions: (i) An Upgraded ore fraction (78.5% of sample). The iron grade of the Upgraded ore fraction was about 58% Fe, and (ii) A Slimes fraction (21.5% of sample) a 'Gravity concentrate was recovered from the Slimes fraction which produced cyanide recoverable gold with Slimes fraction back calculated gold grade of 8.96 g/t. A repeat test using wet beneficiation test was conducted with a 7.8 kg sample of Mt Webber low grade ( 55% Fe) iron ore and produced two fractions: (i) An Upgraded ore fraction (77.9% of the sample), and (ii) A Slimes fraction (22.1% of the sample) - a Gravity concentrate was recovered from the Slimes fraction which produced in acid solution DIBK readable gold with a Slimes fraction back calculated gold grade of 9.4g/t. The above results showed low grade iron ore ( 55% Fe) from Mt Webber and surrounding tenements could, at a relatively low cost, be upgraded to higher % iron ore with the extraction of the Slimes fraction which contained about 9g/t of commercially accessible gold. It is anticipated that during the next 6 months bulk samples of low grade ( 55% Fe) iron ore will be processed through the Bamboo Creek Plant using the wet beneficiation facilities. Wet beneficiation of low grade ( 55% Fe) iron ore will increase the value of the iron ore exported and significantly increase iron ore reserves in the Mt Webber Region; and at the same time enable the production of a significant quantity of gold from the iron ore Slimes fraction. 6 Shareholders were advised in Haoma s ASX Release of March 26, 2012 that Haoma has a Royalty Payment Entitlement regarding iron reserves in Mt Webber (M45/1197). (See Appendix 1) 2.3 Haoma Agreement with Keras Resources Right to Mine Klondyke and Warrawoona Group Tenements with Option to Purchase On September 13, 2016 Haoma shareholders were advised that an Agreement had been signed with Keras (Gold) Australia Pty Ltd to grant Keras an exclusive five year right to explore, mine and process gold on Haoma s Klondyke and Warrawoona Group tenements. During the Right to Mine period Keras may at any time exercise a call option to purchase the tenements. The Haoma Tenements comprise seven tenements covering an area of 650 hectares, which are centered on the Klondyke Deposit and on the historic Fieldings Gully, Coronation and Copenhagen Deposits. The consideration to be paid by Keras is: $250,000 cash upon execution of the five year Right to Mine Agreement which includes an the irrevocable right to purchase the tenements within the Right to Mine period, and If Keras exercises its Option to Purchase: $1.25 million, comprising $500,000 in cash and a Convertible Note issued by Keras parent entity, Keras Resources plc in the amount of $750,000 with the right to convert the Convertible Note into Keras Resources plc ordinary shares at the 30 day VWAP after announcement of the Right to Mine and Option to Purchase Agreement. If Haoma does not exercise the Convertible Note then Keras must pay Haoma the $750,000 face value of the Convertible Note. In addition to the above, the Agreement grants Haoma a full free and exclusive licence to treat any Alluvial or Scree Resources and the tailings and waste dumps arising from the Mining undertaken on the Klondyke Project Tenements. The Klondyke Project Tenements include the Tenements subject to the Agreement and all Other Tenements of which Keras is the registered holder that are located within 25 kilometres of any of the Tenements. 2.4 Haoma Agreement with DeGrey Mining Ltd Right to Explore and Mine (E45/2983) On October 27, 2016 Haoma shareholders were advised that an Agreement had been signed with DeGrey Mining Ltd in respect to a portion of Haoma s Exploration Lease at Cookes Hill (E45/2983) to grant DeGrey an exclusive five year right to enter the Tenement for the purposes of mineral exploration and to mine and process all Minerals with the exception of Alluvial or Scree Resources and Pegmatic Minerals on the specified area of the lease. After the first anniversary of the Agreement DeGrey may at any time and for as long as Haoma continues to hold E45/2983 exercise an option to purchase the tenement. The key terms and conditions of the Agreement with DeGrey are as follows: Payment at Commencement of the Agreement of $290,000 to Haoma for the Right to Explore and Mine; Issue by DeGrey of 100,000,000 share options (pre-reconstruction) to Haoma or its nominees, subject to DeGrey shareholder approval at an exercise price of $ per share with a 9 month expiry period; DeGrey right to acquire the defined tenement area through the payment to Haoma of $10,000; Haoma retains all rights to pegmatite related mineralisation and alluvial sand and scree deposits on E45/2983; and obtains rights to alluvials and screes on part of adjacent DeGrey tenements. 7 3. EXPLORATION ACTIVITIES IN WESTERN AUSTRALIA Exploration for the Haoma Group holdings continued during the Quarter with ongoing comparative studies of geological setting and mineralisation styles. Results from Haoma s metallurgical test work program were used to direct Hoama s field exploration activities toward locating and evaluating iron-rich lithologies and mineralised zones with specific focus on fine to ultra-fine occurrences of gold and platinum group metals (PGM). Identification of an extensive zone of pegmatites south of Cookes Hill at the Wallaringa Project has led to preliminary evaluation of the potential for lithium, tantalum and rare earth elements in the area. 3.1 Wallaringa Project Cookes Hill, Western Australia (E45/2983) The Wallaringa Project is 50km south of Port Hedland, Western Australia. The Project hosts Cookes Hill Prospect and surrounds the Elazac Quarry. A recent sampling program identified pegmatite veins as part of a zone of prospective lithologies in the southern portion of the project area (E45/2983). The Orthophotography interpretation indicates the prospective lithologies zone is a continuation of the De Grey King Col Pegmatite Trend (ASX DEG 11/10/2016) extending from the neighbouring tenement (E45/2533) over the southern portion of E45/2983 for approximately 7km. (See Figure 4 and Appendix 2) In the Quarter twenty rock chip samples were collected ( to 018, B01 and B02) including 10 from pegmatite outcrops ( to 010). (See Figure 4 below) Multi-element analysis (4-acid ICP MS) by an independent laboratory returned: 1) in 4 samples, anomalous silver (Ag) and 2) in 4 samples geochemical indicators returned rare earth element mineralisation caesium (Cs), lithium (Li), niobium (Nb), rubidium (Rb) and tantalum (Ta). Subsequent fire assay for gold yielded 0.48g/t Au in complimenting earlier analysis of 10.45g/t Ag, 225g/t Nb and 1130g/t Rb. (See Table 1 below) Table 1 - Wallaringa Project - Anomalous Rock Chip Samples 2016 Coordinates Fire Assay 4 Acid ICP-MS Au- Sample ID East North AA25 Ag Cs Li Nb Rb Sn Ta K K/Rb g/t g/t g/t g/t g/t g/t g/t g/t % 100* *Note: Ta exceeded limit of detection for this m
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