HAOMA MINING NL ANNUAL REPORT JUNE 30, PDF

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HAOMA MINING NL ANNUAL REPORT JUNE 30, 2016 Haoma Mining Projects including the location of Haoma s Bamboo Creek Processing Plant, North Pole Area (including Mickey s Find and Normay Mine), Cookes Hill,
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HAOMA MINING NL ANNUAL REPORT JUNE 30, 2016 Haoma Mining Projects including the location of Haoma s Bamboo Creek Processing Plant, North Pole Area (including Mickey s Find and Normay Mine), Cookes Hill, Soansville, Daltons JV and the Comet Gold Mine Tourist Centre. ACN HAOMA MINING NL Front Cover: Haoma Mining Projects Map Inside Back Cover: Bamboo Creek Processing Plant and Bamboo Creek Valley Bamboo Creek, WA 2. Marble Bar, WA 3. Cookes Hill, WA 4. Daltons JV & Mt. Webber, WA 5. Ravenswood, QLD Directors Gary Cordell Morgan, B.Comm (Chairman) Michele Levine, B.Sc (Hons), Env. St. Wilton Timothy Carr Ingram Secretary James Andrew Wallace, CA Registered Office and Head Office: Melbourne 401 Collins Street, Melbourne, Victoria 3000 Tel: (03) Fax: (03) Postal Address GPO Box 2282U Melbourne, Victoria 3001 Website: Bamboo Creek Mine Site: PO Box 2791 South Hedland, Western Australia 6722 Tel: (08) Fax: (08) Comet Mine Site: PO Box 89 Marble Bar, Western Australia 6760 Tel: (08) Fax: (08) Ravenswood, Queensland: Top Camp c/- Ravenswood Post Office Ravenswood, Queensland 4186 Tel: (07) Fax: (07) Principal Bankers Bendigo & Adelaide Bank Limited Melbourne, Victoria 3000 National Australia Bank Melbourne, Victoria 3000 Share Registry ComputerShare Investor Services Pty. Ltd. Yarra Falls 452 Johnston Street Abbotsford, Victoria 3067 Postal Address GPO Box 3224 Melbourne, Victoria 3001 Investor Enquiries: Auditors BDO East Coast Partnership Collins Square, Tower 4, Level Collins Street Melbourne, Victoria 3008 Solicitors William Murray Level 1, 401 Collins Street Melbourne, Victoria 3000 Tel: (03) Fax: (03) Stock Exchange Listing Haoma Mining NL shares are listed on the Australian Stock Exchange. (Code HAO) The Home Exchange is Melbourne, Victoria. ACN MISSION STATEMENT The mission of Haoma Mining is to establish a highly profitable mining company with sustainable growth in shareholder value. In pursuit of this mission, Haoma will acquire quality tenements, explore for gold and other minerals, utilise the most effective exploration and recovery techniques to extract minerals in the most efficient way with a strong commitment to health, safety and the environment. Haoma s strategic approach can be characterised as both innovative and practical. Haoma is dedicated to developing a leading edge gold mining province in the Pilbara (WA) and Ravenswood/ Charters Towers region (QLD) by linking research with modern technology and new ways of thinking. Haoma operates with a flat management structure, which allows all company personnel to be handson, practical and single-minded about improving the bottom line performance. CONTENTS Section 1: Chairman s Review & Report on Operations Section 2: Financial Statements & Reports Director s Report Auditors Independence Declaration Corporate Governance Statement Financial Statements and Reports Directors Declaration Independent Auditors Report ASX Additional Information ANNUAL GENERAL MEETING The Annual General Meeting of the members of Haoma Mining NL is to be held at: Morgans at 401 Ground Floor 401 Collins Street Melbourne, Australia. Tuesday February 14, 2017 Commencing at 9.30am. All shareholders are encouraged to attend. Light refreshments will be available to members and guests following the meeting. A Notice of Meeting and proxy form will be mailed to shareholders. 1 ACN CHAIRMAN S REVIEW AND REPORT ON OPERATIONS CHAIRMAN S REVIEW & REPORT ON OPERATIONS 1. Financial Results The financial statements for the Year to June 30, 2016 show that Haoma Mining recorded a consolidated loss of $5.35 million. The result is after expensing interest charges of $1.92 million and writing off $2.15 million of costs associated with research and test work. Over the past year Haoma has further reduced operating costs and has realised proceeds from non-core assets including the disposal of shares held in Exterra Resources Ltd and the completion of Right to Mine Agreements with Keras Resources Pty Ltd and DeGrey Mining Ltd. Through my family investment company, I have continued to provide the funding needed for Haoma to continue with its research and development activities. The Haoma financial reports reflect that the costs to date have been extensive and the revenues limited which has resulted in the current deficiency in net assets. At June 30, 2016 my family s total cash commitment to Haoma was recorded at $36.82 million. This does not include my family s equity investment or any interest on the funds. Shareholders will be aware that Haoma has a perpetual free licence to use and commercially exploit the Elazac Process. 2. Recent Activities at Bamboo Creek 2.1 Gold grades from January 2017 test work on Bamboo Creek Tailings Ore Since Haoma s September 2016 Quarterly Report (released December 21, 2016) Haoma s test work at Bamboo Creek has concentrated on recovering physical gold: (i) In Solutions collected by DIBK and read on a standard AAS (traditional assay method), and (ii) In Solids gold percentage measured by XRF Haoma s latest test work using the Elazac Process was conducted on 3kg samples of Bamboo Creek Tailings Ore. The following gold grades were measured in Bamboo Creek Tailings Ore samples (total of gold measured in the solution fractions and solid fractions). Bamboo Creek Tailings Ore: (i) g/t gold (ii) g/t gold The above Bamboo Creek Tailings Ore gold grades are not final as there are additional sample fractions (both solution and solid) which are yet to be measured. More Bamboo Creek Tailings Ore gold grade results will be released with Haoma s December 2016 Quarterly Report due before January 31, The Elazac Process used to achieve the above results can be implemented in the Bamboo Creek Plant to process Bamboo Creek Tailings. 2 ACN CHAIRMAN S REVIEW AND REPORT ON OPERATIONS Figure 1: Bamboo Creek Processing Plant 2.2 Other Significant Results Released over the last 12 Months In Haoma s September 2016 Quarter Activities Report released December 21, 2016 shareholders were advised that Haoma s test work in late 2015 and during 2016 focused on implementing at the Bamboo Creek Plant knowledge gained from laboratory test results. The 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. Based on physical gold recovered from Bamboo Tailings Concentrate those results clearly showed that the back calculated Bamboo Creek Tailings Head grade is greater than 25 g/t gold. The results of recent test work are as reported above. More results will be released in the December 2016 Quarter Activities Report. 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. Since mid-2016 test work has focused on developing a commercial process 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 was similar to earlier test results based on physical gold recovered. The test work also recovered significant quantities of physical silver. The back calculated Bamboo Creek Tailings silver Head grade was measured to be more than 100 g/t or greater than 1% silver in the concentrate fraction. 3 ACN CHAIRMAN S REVIEW AND REPORT ON OPERATIONS 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. 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. Those 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. 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 re-commencement 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. 4 ACN CHAIRMAN S REVIEW AND REPORT ON OPERATIONS 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). Figure 3: 2.714g gold button recovered from 361g sample of Gold Concentrate 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. 2.3 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 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. 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). 5 ACN CHAIRMAN S REVIEW AND REPORT ON OPERATIONS The April 2012 Tenement Sale Agreement under which Haoma sold its Mt Webber iron ore rights to Atlas Iron Limited includes a Reserve Uplift Payment entitlement. The payment entitlement is triggered whenever reserve development work on the tenements which were subject to the Sale Agreement (E45/2186 and M45/1197) result in Atlas Iron releasing an announcement to the ASX of a JORC compliant iron ore reserve in excess of 24 million tonnes inclusive of any iron ore tonnes previously mined. The uplift payment per Excess Reserve is $1.38 per tonne. That amount is indexed by CPI from March 23, (Today the uplift payment is about $1.50 per tonne.) Under the Tenement Sale Agreement, Haoma was granted the right to access and explore for other minerals within Mining Lease M45/1197. If Haoma subsequently identifies a JORC Compliant Resource of a mineral other than iron within the Designated Area and Haoma proposes a development of the resource then the parties to the Agreement must confer to discuss whether development of the resource can be achieved without any adverse impact on the iron ore activities. If the parties are not able to reach agreement as to how potential conflict of activities may be resolved then the conflict will be resolved in favour of the activity with the higher Assessed Economic Value. 2.4 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 paid by Keras was: $250,000 cash upon execution of the five year Right to Mine Agreement which included an the irrevocable option for Keras 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 granted 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. 6 ACN CHAIRMAN S REVIEW AND REPORT ON OPERATIONS 2.5 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. In relation to the Right to Explore and Mine, DeGrey provided the following consideration: $290,000 was paid to Haoma at Commencement for the Right to Explore and Mine; DeGrey has issued 5 million share options (post-reconstruction) to Haoma at an exercise price of $ The options expire September 6, In relation to the Option to Purchase (if exercised): DeGrey will make payment to Haoma of $10,000; and Haoma will retain all rights to pegmatite related mineralisation and alluvial sand and scree deposits on E45/2983; and will receive from DeGrey the rights to alluvials and screes on part of the adjacent DeGrey tenements E45/4751 and E45/ EXPLORATION ACTIVITIES IN WESTERN AUSTRALIA During 2016 Haoma s exploration activities focussed on the ongoing comparative studies of geological setting and mineralisation styles. Results from Haoma s metallurgical test work program were used to direct Haoma s field exploration activities towards 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 the Cookes Hill gold prospect and surrounds the Elazac hard rock 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 zone of prospective lithologies is a continuation of the DeGrey King Col Pegmatite Trend (ASX DEG 11/10/2016 and ASX DEG 16/01/2017) extending from the neighbouring tenement (E45/2533) over the southern portion of E45/2983 for approximately 7km (See Figure 4). Twenty rock chip samples were collected ( to 018, B01 and B02) including 10 from pegmatite outcrops ( to 010). (See Figure 4). Multi-element analysis (4-acid ICP MS) by an independent laboratory returned: 1) in 4 samples, anomalous silver (Ag) and 2) in 4 sa
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