QUARTERLY ACTIVITIES REPORT December 2014

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30 January 2015
QUARTERLY ACTIVITIES REPORT
December 2014
Highlights
Corporate Restructure
Sale of Mt Webber iron ore joint venture interest to Atlas Iron (ASX: AGO) subject to
shareholder approval.
Certain royalty entitlements retained on iron ore sold where the average CFR 62% Fe
index is greater than A$95.
Indonesian coal assets to be consolidated into a new separate coal focused entity which
is planned to be listed on the Singapore Exchange.
General Meeting to be held on Thursday 12 February 2015 to obtain shareholder
approval for these changes.
Future corporate profile of Altura to be as a company with a controlling interest in a
coal investment entity, a developer of the Pilgangoora lithium deposit and a provider of
mining services.
Coal
During the quarter 360,317 tonnes of coal produced from the Delta Coal mine - AJM
share 120,106 tonnes.
Focus remains on increasing higher calorie coal stocks and maintaining consistent
monthly production and sales.
Preparations for on-ground works in order to gain formal approval for Forest Area
approval for the SPK IUP in the Tabalong project.
Lithium
Previously announced Pathion Inc. deal completion has been terminated.
Altura continues search for off-take partner to develop world class Pilgangoora project.
Altura Mining Limited – Quarterly Activities Report December 2014
CORPORATE RESTRUCTURE
During the quarter, the Company announced the following 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).
Sale of Mt Webber
The significant reductions in the iron ore price in 2014 have placed the Mt Webber joint venture
interest under pressure and negative cash flow. The revenue from the ore sales at current iron
ore prices was insufficient to allow for the repayment of the liabilities owed to Atlas, which
includes the repayment of the Atlas loan for Altura’s share of the capital costs at the mine site.
In order for Altura to remain in the joint venture, it would have been required to fund its share of
the operations via cash, and reduce its liability owing to Atlas to the loan limit of $18 million.
Consequently, Altura undertook a strategic review of its financial position to ensure its ongoing
financial viability. The Company considered the various options available to it, and determined
that the sale of the Mt Webber joint venture interest is the most effective way of restructuring the
balance sheet to strengthen its overall financial position.
The key features of the sale of the joint venture interest are as follows:
The discharge of all of Altura’s liabilities to Atlas, including the outstanding principal and
interest under the loan provided by Atlas.
Termination of the Production JV Agreement and related ore sales agreements, with Atlas
acquiring full legal and beneficial ownership of the M45/1209.
Altura to have an entitlement to a 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 AUD$95.
Termination of the Exploration JV Agreement, with Atlas acquiring full legal and beneficial
ownership of the E45/2244, E45/2268, E45/2288, E45/2312 and E45/2346 tenements.
Altura to have an entitlement to a 0.3% (1% on 30% on tonnage) 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 AUD$95.
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Altura Mining Limited – Quarterly Activities Report December 2014
Altura to retain the E45/2287 tenement (part of the Pilgangoora lithium project), which had
been subject to the Exploration JV Agreement, with Atlas relinquishing its interests in that
tenement.
The sale of the Mt Webber joint venture interest to Atlas is conditional upon receiving shareholder
approval for the transaction.
Singapore Listing of Indonesian Coal Assets
Altura plans to consolidate 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 process, new 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.
The principal benefit of the consolidation of the Company’s coal assets is that it will establish the
foundation for a substantially funded single coal business unit providing growth and access to
capital markets in the jurisdiction in which it operates.
After the listing, Merida will have the financial resources required for the development and
further exploration of the Tabalong Coal Project, as well as the opportunity to grow the coal
business by having funds to seek out new opportunities in coal in south-east Asia.
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.
General Meeting
Both the sale of the Mt Webber interest and the Singapore listing of the coal assets will require
shareholder approval under the ASX Listing Rules. A General Meeting to be held on Thursday 12
February 2015 has been called for this purpose. For further information, please refer to the ASX
announcement on 12 January 2015.
Future Corporate Direction
Following the approval of these changes, Altura’s corporate profile will be as a company with a
controlling interest in a coal investment entity, a developer of the Pilgangoora lithium deposit and
a provider of mining services.
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Altura Mining Limited – Quarterly Activities Report December 2014
The strengthened balance sheet will provide the Company with the financial flexibility necessary
to advance its existing projects and to investigate other initiatives in the resources sector going
forward.
Should the intended listing not eventuate Altura will consider other potential consolidation
options which may include a combined off-take and development funding partnership to develop
the Tabalong Coal project.
IRON ORE
MT WEBBER (Pilbara – Western Australia) 30% Altura Mining Limited, 70% Atlas Iron Limited
Production
Production for the December quarter 2014 at the Mt Webber mine was as follows:
Dec 2014 Qtr
Sept 2014 Qtr
Variance
Tonnes
Tonnes
Tonnes
Ore Tonnes Mined (100% terms)
753,780
529,703
224,077
Ore Tonnes Mined (Altura 30% share)
226,134
158,911
67,223
Note: Ore Tonnes Mined represents ore tonnes delivered to Run-of-Mine (ROM) stockpiles at the processing plant.
Residual Royalty Rights
As noted above, post the sale of Mt Webber, Altura will have 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 AUD$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 AUD$95;
Page 4 of 12
Altura Mining Limited – Quarterly Activities Report December 2014
COAL
DELTA COAL MINE (East Kalimantan – Indonesia) Thermal Coal (33⅓% AJM)
Mine Operations
Production and sales for the quarter were as follows:
Dec 2014
Quarter
Dec 2013
Quarter
12 months
to Dec 2014
Tonnes
Tonnes
Tonnes
Saleable coal production (100% terms)
Coal sold (100% terms)
360,317
385,903
355,593
452,332
1,281,340
1,319,824
Saleable coal production (Altura 33⅓% share)
Coal sold (Altura 33⅓% share)
120,106
128,634
118,531
150,777
427,113
439,941
Production at Delta Coal during the 3 months to 31 December 2014 was above the previous
quarter with monthly average coal production of 120,106 tonnes (monthly average September
quarter 2014 of 93,397 tonnes). Production in the December quarter 2014 was in line with the
corresponding quarter in 2013. Production for quarter was at an annualised rate of 1.44Mtpa
marginally below the 1.5Mtpa rate target for 2014.
During the quarter the mine operations experienced 45 rainfall affected days for a total of 715
millimetres which is well above the overall September quarter total rainfall (September quarter 32 rainfall affected days for a total of 329 millimetres). Production for November and December
was pleasing given these months received 285 millimetres and 342 millimetres respectively. The
improved result was attributable to a concerted effort between the mining contractors and BMSA
staff to improve pit sump locations and pumping strategies.
Total rainfall for 2014 was 2,524 millimetres over 169 rainfall affected days.
The December quarter average coal price was US$37.56 per tonne for coal ranging from 4,400 kcal
/kg to 4,700 kcal/kg (GAR). Delta targets an overall blend of between 4,800 kcal/kg to 5,000
kcal/kg (GAR). During the quarter production from two (2) of the higher calorie coal yielding pits
suffered geotechnical failures which resulted in lower production of the higher calorie coals. This
led to an increased proportion of the lower calorie production in overall sales (with 72% of sales
based on the 4,400 kcal/kg product).
The Delta mining operation is based on a strategy to blend the coals mined currently from the
discrete pits. Currently the mine is operating in five (5) separate pits within the concession; these
are identified as Pit 2N, Pit 21, Pit 29, Pit 37 and Pit 43. 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.
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Altura Mining Limited – Quarterly Activities Report December 2014
Each of these pits can also operate under a different cost mechanism determined by a mix of strip
ratio and waste haulage distance. The opportunity this method provides Delta is to offset higher
and lower stripping and waste haulage costs within each of its contractors’ mining areas which in
turn allows the mine to operate under an average mining cost scenario whereby the higher strip
ratio and higher value coals are offset with lower strip ratio and lower value coals.
Coal Pricing
The Indonesian Coal Reference Price or HBA for December 2014 quarter 2014 was US$64.65 per
tonne compared to US$69.69 for September 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.
The Delta Coal operations continue to look for opportunities to increase productivity and decrease
costs. Given the highest cost component of the operations is mining contractor costs, there is an
added focus on working with the contractors to improve efficiencies and productivities within
each pit.
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Altura Mining Limited – Quarterly Activities Report December 2014
Delta Coal Mine – Location Map
Delta Coal Mine – Map of Mine Layout
Page 7 of 12
Altura Mining Limited – Quarterly Activities Report December 2014
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). Additional approvals and exchange of IPPKH areas will be required as part of the
ongoing mining project progression.
During the quarter the company commenced preparations to complete work program required to
gain formal issue of the Borrow and use of Forest Area Permit (Ijin Pinjam Pakai Kawasan Hutan).
These works whilst not onerous include marking the application area with a series of concrete
survey markers, and quotations for this work have been sought with a view to commencing in the
near future. The Company is also seeking an additional In-Principle Forest Area approval for the
adjoining SCC IUP, and it is anticipated that subsequent approval will similarly be gained in the
near future.
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.
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Altura Mining Limited – Quarterly Activities Report December 2014
CATANDUANES COAL (Philippines)
The Coal Operating Contract (COC) 182 known as “Area 3 – Catanduanes” covers an area of 7,000
hectares and is located on Catanduanes Island on the eastern seaboard of the Philippines (see
map below). The area was awarded to Altura Mining Philippines Inc. in Q1 2013 following the
Philippine Energy Contracting Round 4 (PECR4) in March 2012.
Exploration activities cannot commence until there is a resolution to the previously reported land
access problems. Higher level discussions by Altura’s Philippine partners with the Department of
Energy (DOE) have progressed during the quarter in regards to the strategy to move forward with
exploration activities in Area 3 as well as the grant of the remaining two (2) bids submitted in the
Philippine Energy Contracting Round 4 (PECR4) in March 2012.
Discussions continue with the DOE however to date have not been concluded with any certainty as
to the way forward.
Catanduanes – Location Map
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.
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Altura Mining Limited – Quarterly Activities Report December 2014
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 the 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.
During the quarter Altura announced the sale of the Company’s interest in the Mt Webber iron
ore joint venture. One of the tenements comprising the Pilgangoora project, E45/2287, was one
of the six exploration licences held by Altura that comprised the Exploration JV Agreement. Whilst
Atlas will receive the other five tenements as part of the sale settlement process, Altura will retain
the E45/2287 tenement.
In addition, Altura will be relieved of its obligation to pay a cash amount to Atlas for the purchase
of the M45/1231 tenement.
LITHIUM CORPORATION (Nevada, USA & British Columbia, Canada - 15% AJM)
On 21 August 2014 Altura announced that Lithium Corporation had signed 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 however remained uncompleted.
Post the December 2014 quarter Lithium Corporation announced that it was terminating the
agreement.
High purity graphite is presently the most widely used anode material for lithium ion battery
technology. Typically greater than ten times more graphite is used in comparison to lithium in
lithium ion battery production.
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.
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Altura Mining Limited – Quarterly Activities Report December 2014
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 45/2244
E 45/2268
E 45/2277
E 45/2287
E 45/2288
E 45/2312
E 45/2346
E 45/3488
P 45/2758
M 45/1209
M 45/1230
M 45/1231
100%
100%
100%
100%
100%
100%
100%
100%
100%
30%
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%
There were no changes to the portfolio of mining tenements during the quarter.
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Altura Mining Limited – Quarterly Activities Report December 2014
CORPORATE – OTHER
CAPITAL RAISING – SHARE PURCHASE PLAN (SPP)
Subsequent to the end of the quarter, Altura announced on 12 January 2015 that it is seeking to
raise up to A$5 million through a Share Purchase Plan (SPP) offer to its existing shareholders.
The purpose of the SPP is to raise funds for budgeted exploration expenditure and working capital
requirements, and includes progression of feasibility studies for the Pilgangoora lithium project.
The key terms of the SPP are:
Shareholders on the company’s register as at close of business on Friday 9 January 2015 (the
“Record Date”) will be able to purchase up to a maximum of $15,000 worth of shares.
The purchase price has been set at A$0.05 per share, which is a 16.39% discount to the 30
day volume weighted average price for Altura’s shares of A$0.0598.
The SPP opened on Friday 16 January 2015, and closes on Friday 6 February 2015.
A maximum of 100 million shares will be issued under the SPP.
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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