firmenpresse print | Quarter Reports to Dec 31 2009
28.01.2010
Quarter Reports to Dec 31 2009
Quarterly Report - 1 October to 31 December 2009
Discovery Metals Limited (AIM: DME) (ASX/BSE: DML)
('Discovery Metals' or the 'Company')
HIGHLIGHTS
Boseto Copper Project Bankable Feasibility Study
* The Bankable Feasibility Study ('BFS') for current open pit deposits is 80%
complete and remains on track for completion in March 2010.
* BosetoEnvironmental and Social Impact Assessment ('ESIA') has been submitted
to the Government of Botswana for approval. From the findings of the ESIA,
the Company sees no mitigated impacts or risks that will preclude the
development of the Boseto Copper Project.
* The Boseto Copper Project'sBFS Progress Economics Update, released 6
October, shows:
* Operating costs - 10 year average Net Cash Costs US$1.04/lb
* Capital costs - US$150 million
* Project economics improved with 10% rate of return being achieved at
less than US$1.53/lb
* Net Present Value range from US$116 million (US$2.00/lb) to US$426
million (US$4.00/lb copper price)
* Internal Rates of Return range from 18% (US$2.00/lb) to 57% (US$4.00/lb
copper price)
* Payback is expected within 2 years of production commencing (at the base
case copper price)
* Targeted initial project life of 10 years.
Exploration & Infill Drilling
* Five deep holes were drilled at depth at the Zeta prospect. Two holes were
drilled in the area within the existing resource envelope thought to be high
grade and three holes drilled between 600 & 650 metres below surface. All
holes intersected mineralisation and assays are pending.
* Regional soil sampling concentrated on the new Nyx target area.
* Work has commenced on the JOGMEC funded Dikoloti nickel/copper joint
exploration programme.
Corporate
* In October 2009, the Company secured additional funding by the placement of
29,100,000 shares at 45 cents per share (GBP 25.5p) to raise AUD $13.1
million, to fund completion of the BFS, continued exploration and for
deposits on long lead items in the future.
* In addition, the Company completed the AUD$2.7 million Share Purchase Plan
for shareholders with addresses in Australia and New Zealand, for up to
AUD$15,000 worth of shares at 45 cents per share.
* At the end of December 2009, Discovery Metals held AUD $17.6 million in
cash.
1. Boseto Copper Project Bankable Feasibility Study
The Boseto Copper Project (the 'Project') Bankable Feasibility Study ('BFS')
progressed during the quarter and was approximately 80% complete by the end of
2009. Finalisation of the BFS remains on schedule for the end of the March
quarter 2010. The major items outstanding are the completion of the capital
cost estimate by GRD Minproc (now called AMEC-Minproc) and the final mineral
resource and mine plans from Snowden Mining Industry Consultants ('Snowden') for
Plutus and Petra mineral resources after these resources are upgraded with all
of the assay results since the previous calculation cut- off date in May 2009.
The infill drilling programme was completed in September 2009 and final assay
results have been received. The programme was designed to upgrade portions of
the Zeta, Plutus and Petra Inferred mineral resources to Indicated and Measured
mineral resource categories. The final BFS updating of the Zeta Resource
estimate was completed and announced in October. All deposits remain open along
strike and at depth.
A major milestone for the Project was achieved with the completion of the
Environmental Impact Assessment study ('ESIA') and submission to the Botswana
Authorities (Department of Environmental Affairs).
Work on the copper concentrator design has been completed and is expected to
culminate in a detailed capital expenditure estimate to BFS standard in February
2010.
The selection process for the Engineering, Procurement and Construction (EPC)
contractor for the next phase of the Project (Implementation) has commenced with
the short listing of suitably qualified internationally accredited consultancy
companies in the areas of engineering and construction and a site visit of these
companies to the Boseto project area in Botswana. The development of the EPC
contract documentation based on recognised international standards has been
completed. The award of the EPC contract is expected as soon as the BFS results
are finalised.
(a)Â Update of BFS Progress Inputs/Outputs
An extensive update of the Boseto Copper Project economics was released on 6
October 2009 showing:
* Cash operating costs continue to be in the middle of the copper producer
cost curve with the updated 10 year estimated average cost of US$1.04/lb
(January 2009 - US$1.06/lb);
* Capital costs have increased to US$150 million (January 2009 - US$131
million) based on an increased contingency for capital component price
changes;
* Overall project economics have improved despite including additional capital
contingency and exploration expenditure, with the break even copper price at
which the project provides a 10% discounted cash flow rate of return now
being less than US$1.53/lb;
* Net Present Values ranging from US$116 million at a US$2.00/lb copper price
to US$426 million at a US$4.00/lb copper price;
* Internal Rates of Return ranging from 18% at a US$2.00/lb copper price to
57% at a US$4.00/lb copper price;
* Paybackis expected within 2 years of production commencing (at the base case
copper price); and
* Targeted initial project life of 10 years.
Annual production from the Boseto copper concentrator is planned to average
approximately 25,600 tonnes of copper and nearly 700,000 ounces of silver
contained in a high grade concentrate grading 44% Cu.
(b)Â BFS Team
Discovery Metals continues to use a small team of experienced executives to
manage a number of specialist consulting teams who are completing their
respective areas of responsibility of the BFS for the Boseto Copper Project.
Key aspects of the planned project development are subjected to further review
by external specialists.
Completed work and reports on critical areas (resource geology and mine
planning, ground water supply, metallurgy & process plant design and
environmental compliance) have been forwarded to consultants performing the
independent engineering review. The process has been designed to ensure that
the quality of information contained in the BFS is verified and externally
reviewed. This will provide improved confidence in the study outcomes and to
contribute towards a BFS that meets the requirements of all stakeholders
including existing and prospective investors, the Botswana Government and local
authorities and debt financiers.
The principal consultancy groups working on the BFS are:
* Snowden has undertaken mineral resource estimation, geotechnical assessment,
open pit design, production schedule optimisation, grade control assessment
and underground mining conceptual studies;
* AMEC-Minproc are progressing the engineering package including process
engineering, plant design and associated infrastructure;
* SRK Consulting ('SRK') was assigned the ESIA; together with the skills
assessment study related to the area surrounding the proposed
mine/processing site, as well as undertaking the tailings dam study. SRK
has also completed the hydro-geological work required to define a water
resource for the Project;
* Metallicon, a South African based metallurgical consulting group, with
extensive copper and platinum experience, is assisting with understanding
the metallurgy, coordinating the test work and advising on the process
design; and
* SRK has supplied a team from Australia supplemented by outside specialists
to form the independent review team for the BFS.
The BFS team has been complemented with highly experienced consultants in the
fields of geology, mining equipment evaluation, human resources strategy and
project execution as required.
During the quarter, several peer reviews were carried out by internationally
accredited consultancy companies in the areas of resource classification and
resource modelling, metallurgy, mineral processing, hydro-geology and the
ESIA.The results of the peer review confirm the BFS work performed to date, with
minimal additional follow up required.
(c) Mineral Resource Evaluation
The infill drilling programme required to upgrade significant portions of the
Zeta, Plutus and Petra Inferred mineral resources to Measured and Indicated
resource status was completed and all assay results were received during the
quarter. An updated Zeta mineral resource estimation was completed and
announced on 19 October 2009. The final Plutus/Petra resource estimate for the
BFS is planned for completion by February 2010.
The total Mineral Resource at the Boseto Copper Project, reported in accordance
with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (The JORC Code, "2004 Edition") at a cut off grade of
0.6% Cu is:
60.4 Mt @ 1.4% Cu and 19.5g/t Ag containing 846kt copper metal and 38 Moz of
silver comprising:
Measured Resources of 3.9 Mt @ 1.6% Cu and 23.0g/t Ag;
Indicated Resources of 7.8 Mt @ 1.5% Cu and 22.8g/t Ag; and
Inferred Resources of 48.7 Mt @ 1.4% Cu and 18.7g/t Ag.
(d)Â Open Pit Mining Study
An open pit design and mining engineering study was undertaken by Snowden. The
study included detailed pit design and production scheduling to optimise cash
flows and the project NPV. These formed the basis of the BFS Project Update
announced on 6 October 2009.
Production scenarios using the different options of stockpiling low grade
material and oxide mineralisation were also evaluated.
(e) Underground Mining Study
Snowden is completing a Scoping Study to determine the potential to develop
underground mining operations for the Zeta mineral resource and the outcomes
from this project are presently under review. It is intended to include the
potential upside from an underground development at Zeta in the BFS document and
commission Snowden to undertake a Pre-Feasibility Study ('PFS') level assessment
and prepare an underground mine design for the Zeta mineral resource. It is
planned to drill a number of deeper holes beneath the Plutus Prospect to explore
for a continuation of high grade zones which may also present potential for an
underground mine.
(f) Grade Control Study
Snowden has also completed a grade control study for the BFS and the review of
the first draft report has commenced. The study has addressed grade control
philosophy, resource model confidence, control of mining (dilution), control of
metal flows to plant, mass balance and metal accounting and control of product
quality.
Grade control is critical to the operations at Boseto and management is
confident that the mining of mineralised zones can be tightly controlled.
(g)Â Geotechnical Assessment
Snowden has completed a geotechnical assessment of the pit slope parameters to
be used in the BFS. This included development of geotechnical and structural
models for each deposit, assessment of the potential pit slope failure
mechanisms and a suite of kinematic and limit equilibrium analyses to assess
slope stability and determine slope design parameters to the required
probability of failure. The geo-mechanical laboratory testing programme
included compressive strength tests, slake durability tests on the weathered
materials as well as direct shear tests on core containing structural features.
The results confirmed the pit slope angles from the Pre-Feasibility Study.
(h)Â Processing Study
Process Engineering has been completed for the concentrator design with the
generation of Block Flow Diagrams, Process Flow Diagrams, Process Design
Criteria, Mass Balance and Mechanical Equipment Lists. The results from this
work have undergone an extensive peer review and been scrutinised by an external
independent review team.
Detailed plant design was completed with the development of Piping &
Instrumentation Diagrams, General Arrangement and detailed plant design
drawings.
Vendor packages for the main equipment have been issued and the technical and
financial adjudication process has been completed. This work will lead to a
detailed and up to date capital expenditure estimate to BFS standard by February
2010.
The processing plant throughput is currently planned at 2Mtpa, although the
design will encompass the capability of expanding to 3Mtpa at incremental
capital cost.The comminution circuit comprises single stage crushing, SAG
milling with pebble crusher and then ball milling. The flotation circuit
incorporates a conventional rougher-cleaner-re-cleaner circuit for sulphide and
oxide material.
The final metallurgical variability test work programme for comminution and
flotation work encompassing Plutus, Zeta and Petra samples has been completed.
The results, analyses and interpretation of test work findings confirm present
metallurgical understanding of the Boseto mineralisation. High copper
concentrate grades of 44% have been predicted from the processing of Boseto ore.
(i)Â Infrastructure Studies
Ongoing discussions continued with the Botswana Power Corporation ('BPC')
requesting grid power supply by the first quarter of 2012. BPC confirmed that
the contracts for Botswana's new power plant projects have been awarded and
their plans remain on track to significantly increase the country's power grid
capacity. The present Botswana power supply deficit is expected to decline
gradually over the next few years until 2012, after which a small power surplus
is anticipated.
The probable power supply route to the Project would be via Maun by extension of
the Francistown-Maun power line or via Orapa. Alternate power generation
methods available to the Project for self generation on site at Boseto include
diesel, heavy fuel oil (HFO) generator sets and small coal fired power
stations. The capital cost estimate for the Project includes an allowance for
full self generation of all the power needs of the operation.
(j)Â Environmental and Social Impact Assessment
The final version of the ESIA report has been completed. All specialist studies
including archaeology, ecology, groundwater supply and impact, noise, air
quality, soil and land use capability and socio-economic considerations have
been completed. The ESIA report has been submitted to the Botswana Authorities
for approval. The review meeting with the Botswana Government has been
scheduled for late February 2010.
No impacts that would be considered to constitute an unacceptable level of risk
in developing the Boseto Copper Project have been identified in the ESIA
studies.
Archaeological clearance for the development of the Project has been granted by
the National Museum. The archaeological clearance covers the proposed mine
footprint area as well as for the linear infrastructure (power line, road and
water pipeline).
The baseline monitoring programme has been established in line with the Equator
Principles and Performance Standards of the International Finance Corporation
('IFC'). This is consistent with Discovery Metals' commitment to progress
Project development to comply with the Equator Principles.
(k) Â Hydro-Geological Study
Discovery Metals previously announced the successful delineation of groundwater
resources which are more than sufficient to meet the processing and other
operational needs of the Project. Well fields to develop these ground water
resources will be situated within approximately 15 kilometres of the proposed
plant site and design and capital cost estimates are currently being finalised.
(l)Â Tailings Disposal Study
The PFS design recommended conventional wet tailings deposition using a ring
main with spigots. With the water resource now confirmed, conventional wet
tailings deposition will form part of the BFS design. Field work regarding
geotechnical investigations and soil analyses has been completed together with
the final design work and the final report is expected by February 2010.
2. Boseto Execution Phase
Discovery Metals has secured the services of Alan Smyth, an experienced civil
engineer with extensive international experience in construction projects. Alan
will lead the Discovery Metals owner's team in the selection and monitoring of
the EPC contractor and form a team to oversee many of the smaller design and
construct contracts required for the site. Alan will be with Discovery Metals
through the construction and commissioning phases.
As stated in Section 1, the selection process for the EPC contractor for the
next phase of the Project (Implementation) has commenced with the short listing
of suitably qualified internationally accredited consultancy companies in the
areas of engineering and construction. EPC contract documentation based on
recognised international standards has been completed, with the award of the EPC
contract expected once the BFS results are finalised.
3. Exploration & Infill Drilling
Botswana Copper Project (Discovery Metals 100%)
The Botswana copper tenements comprise 14 prospecting licences covering 10,100
square kilometres in north-west Botswana. The tenements extend from 60
kilometres south-west of Maun to the Namibian border, a distance of over 300
kilometres. These tenements contain approximately 1,300 strike kilometres of
rocks potentially hosting copper-silver mineralisation across the Kalahari
Copper Belt.
To date, less than 220 kilometres of the 1300 kilometre prospective horizon have
been explored by Discovery Metals' soil sampling programme. In addition to the
reported Mineral Resources, Zeta and Plutus/Petra remain open at depth and along
strike. Mineralised prospects not yet included in the Mineral Resource include
Quirinus, South-West Petra, Nexus and north east extensions of Plutus, Nexus and
Zeta. Only 67 kilometres of the 220 kilometre prospective horizon has been
drilled to date with various grades of mineralisation intersected across that
entire strike.
Field activity in the December quarter focussed on deep drilling at Zeta to
evaluate the underground resource.Regional soil sampling programmes continued in
a number of areas within 10 kilometres of the proposed Boseto plant site. A
total of 4 diamond drill holes for 2,357m were completed.
Zeta Infill Drilling Programme
Following a final round of infill drilling, the Zeta mineral resource was
updated in October 2009 to:
35.4 Mt @ 1.4% Cu and 22.3 g/t Ag at a cut-off grade of 0.6% Cu
consisting of Measured resources of 3.9 Mt @ 1.6% Cu and 23.0g/t Ag, Indicated
resources of 7.0 Mt @ 1.5% Cu and 23.8g/t Ag and Inferred Resources of 24.5 Mt @
1.4% Cu and 21.8g/t Ag.
Although the Zeta deposit remains open along strike and at depth, this updated
resource will together with the updated Plutus/Petra resources form the basis of
the Bankable Feasibility Study. No further drilling for open pit resources will
be undertaken at Zeta prior to the completion of the Bankable Feasibility Study.
Zeta Underground Drilling program
A program is underway to evaluate the potential for an underground mining
operation at Zeta. This program includes drilling deep holes to test the
mineralisation at depth. A further four more holes (2,357m) were completed
during the quarter to complete the first phase of the drilling program. Assay
results are still pending.
Petra Prospect Drilling Programme
The Petra mineral resource was last updated in April 2009 to:
9.1Mt @ 1.2% copper (Cu) and 14.1g/t silver (Ag) using a cut-off grade of 0.6%
Cu
consisting of Indicated resources of 0.8 Mt @ 1.4% Cu and 14.0g/t Ag and
Inferred resources of 8.3 Mt @ 1.2% Cu and 14.1g/t Ag.
The Petra resource now connects directly to the Plutus resource creating a
continuous strike length of more than 10 kilometres, open at depth and to the
north east. To the south west, Petra is cut off by a younger, barren Karoo
Graben.
Plutus Prospect Drilling Programme
The Inferred Mineral Resource for the Plutus Prospect was last updated in
October 2008 to:
15.9Mt @ 1.6% copper (Cu) and 16.4g/t silver (Ag) at a cut-off grade of 0.6% Cu.
Infill drilling at Plutus was completed in September 2009 and will improve the
quality of the Plutus resource (from Inferred to Indicated status) and was
focused on the portion of the resource being considered for open pit mining.
The current round of drilling results will generate assay information from a
number of shallow holes specifically drilled to improve the Company's
understanding of the near surface mineralisation where previous drilling and
metallurgical testing has demonstrated the presence of oxide copper minerals
including chrysocolla and malachite.
These results will assist in defining the boundaries of higher grade mineralised
zones within the Plutus mineral resource where the grades exceed 2% copper.
These +2% copper zones are anticipated to enable development of shallow
higher?grade starter pits which will contribute to improved project economics as
well as provide potential for future underground resources. The potential for
underground resources will be further tested with a deep drilling program during
the first half of 2010.
An updated mineral resource estimate is expected to be completed late in
February 2010 using all drill hole results since the determination of the
current resource.
Quirinus Prospect Drilling Programme
The Quirinus Prospect is located 15 kilometres from the current identified
mineral resources at Zeta, Plutus and Petra and is located within trucking
distance of the proposed concentrator site.
Three discrete anomalous copper zones (greater than 100ppm Cu) were delineated
by soil geochemistry at Quirinus, with the total anomalous copper signature of
13.4 kilometres in strike length. Four diamond drill holes and three reverse
circulation holes were drilled at Quirinus, confirming copper-silver
mineralisation identified by the Niton soil geochemical programme.
There has been no further work on the Quirinus Prospect this year as efforts
were focused on the mineral resources currently designated for the BFS. Further
exploration and delineation programmes at Quirinus are expected to be carried
out in 2010 as part of the regional exploration programme.
Regional Exploration Programme
The regional soil geochemical programme (using a hand held 'Niton' XRF Analyser)
expanded into areas outside the Boseto project. The main area sampled during
the December quarter is the Nyx area which is located approximately 10
kilometres south of Zeta on a different geological structure to that hosting the
Zeta deposit. A total of 2,075 samples were analysed. Results are undergoing
quality control checks.
With sufficient "near-Boseto" drilling targets now generated, the Niton crews
are gearing up for a programme of targeted regional soil sampling in 2010 over
prospective areas on the rest of the Discovery Metals' tenements.
4. Dikoloti Nickel Project, North-East Botswana (Discovery Metals 85% owned)
Exploration consisted of a helicopter borne VTEM (Versatile Time Domain
Electro-Magnetics) survey over all four prosecting licences at Dikoloti, soil
sampling over various geophysical, geochemical and geological targets generated
from compilation of previous exploration results and re-logging of drill core
from Dikoloti North.
The Dikoloti nickel project comprises four prospecting licences covering an area
of 600 square kilometres surrounding the nickel deposits of BCL Limited in the
Selebi-Phikwe region of north-east Botswana. Discovery Metals has earned an
85% interest from Xstrata, which is currently diluting its interest in this
project. An Inferred mineral resource of 4.1Mt @ 0.7% Ni, 0.5% Cu and 1.2 ppm
PGE's (Pt + Pd) at a cut-off of 0.5% Ni for 28,700 tonnes of contained nickel
has been reported in accordance with the guidelines of the JORC (2004) code.
Discovery Metals announced on 8 October 2009 that it has entered into a Joint
Exploration Agreement with The Japan Oil, Gas and Metals National Corporation
(JOGMEC) to fund an AUD$3 million exploration programme for Dikoloti. The
highlights of the agreement are:
* Discovery Metals will remain operator of the joint venture during the
farm-in exploration period and for any future projects or operating phases;
* The joint venture will be controlled by a joint operating committee, with
representation of both JOGMEC and Discovery Metals;
* A number of highly prospective exploration targets have been identified
adjacent to the existing Inferred Resource;
* JOGMEC has the right to earn a joint venture interest of up to 60%; and
* Should the exploration programme prove successful, it would be expected that
JOGMEC would assign its interest to another Japanese entity for the
development and operating phases.
In detail, the VTEM survey completed 3,461 line kilometres and the preliminary
data has been received. Discovery Metals is encouraged by the results generated
and is planning to carry out ground based EM follow up over several VTEM targets
in order to establish if drill testing is warranted. Such drilling could be
carried out later in 2010.
A total of 790 soil samples were collected but the results have not yet been
received and compiled.
Re-logging of the drill core at Dikoloti North indicates that previous drilling
of a significant UTEM anomaly had not extended deep enough to intersect the
plunging copper/nickel massive sulphide mineralisation. Estimates of the plunge
suggest the mineralisation occurs at least 200m vertically below surface and
therefore remains open to the north.
5. Australian Projects
a) Musgrave Project, Western Australia (Discovery Metals 100%)
A joint venture agreement is in place with Redstone Resources Limited
('Redstone'). The Company is in the process of evaluating the standing of these
tenements.
b) Litchfield Project, Northern Territory (Discovery Metals 100%)
The Litchfield tenements are in the process of being relinquished.
6. Corporate Activities
On 23 October 2009, the Company announced it had successfully placed 29,100,000
shares at AUD 45 cents per share (GBP 25.5p) to raise AUD $13.1 million (net of
expenses) with institutional and retail investors in both the United Kingdom and
Australia. In anticipation of a successful BFS outcome, this funding will
enable the assembly of the Company's project team responsible for the
construction of the Boseto Copper Project facilities commencing in 2010. The
funding will also allow the Company to pay early cash deposits on long lead
items of plant and equipment with the aim of shortening the development
time-frame to the production of copper concentrate and for ongoing exploration
programmes.
In addition, the Company completed an AUD$2.7 million Share Purchase Plan (SPP)
for shareholders with addresses in Australia and New Zealand, for purchases of
up to AUD$15,000 worth of shares at 45 cents per share.
At the end of the December quarter 2009, Discovery Metals held AUD $17.6 million
in cash.
--------------------------------------------------------------------------------
For further information on this release and Discovery Metals Limited
generally, please contact:
Brad Sampson Managing Director Ph: +61 7 3218 0200 or Mob: +61 4 3877 1037
brad@discoverymetals.com.au
AIM Nominated Advisor - Fairfax, Contact Ewan Leggat/Laura Littley Ph: +44
20 7460 4389 or 7460 4387
UK PR - Conduit PR, Contact Jos Simpson Ph +44 7899 870 450
--------------------+------------+----------------------------------------------
ASX & BSE: DML |Â | AIM: DME
--------------------+------------+----------------------------------------------
Share Price: A$0.69|SHARES: 230M| Market Cap: A$159M
--------------------+------------+----------------------------------------------
Competent Persons Statement
The information in this report that relates to Exploration Results is based on
information compiled by Mr Fred Nhiwatiwa who is a Member of the Australasian
Institute of Mining and Metallurgy (MAusIMM). Mr Nhiwatiwa is a full-time
employee of Discovery Metals Limited. Mr Nhiwatiwa 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 "Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves".
The information in this report as it relates to the Zeta, Plutus and Petra
Mineral Resources for the Boseto Copper Project was reviewed by David Arnott,
who is a MAusIMM. Mr Arnott is employed fulltime by Snowden Mining Industry
Consultants Pty Ltd (Snowden). Mr Arnott 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 "Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves".
The information in this report as it relates to the Dikoloti Mineral Resource
was reviewed by Mr Stefan Mujdrica of Xstract Mining Consultants Pty Ltd. At
the time of reviewing the reported Mineral Resource, Mr Mujdrica was employed by
Snowden. Mr Mujdrica is a MAusIMM and 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 "Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves".
Messrs Nhiwatiwa, Arnott and Mujdrica consent to the inclusion in this report of
the matters based on information provided by them and in the form and context in
which it appears.
Forward Looking Statements
This release includes certain statements that may be deemed "forward-looking
statements". All statements in this discussion, other than statements of
historical facts, that address future activities and events or developments that
Discovery Metals expects, are forward-looking statements. Although Discovery
Metals believes the expectations expressed in such forward-looking statements
are based on reasonable assumptions, such statements are not guarantees of
future performance and actual results or developments may differ materially from
those in the forward-looking statements. Factors that could cause actual
results to differ materially from those in forward-looking statements include
market prices, continued availability of capital and financing, and general
economic, market or business conditions. Investors are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in forward-looking
statements.
Directory
DISCOVERY METALS LIMITED AIM Listing:
ABN 29 104 924 423 AIM Nominated Advisor & AIM Broker
Fairfax I.S. PLC
Web site www.discoverymetals.com.au Contact: Ewan Leggat  Phone: +44
20 7460 4389
Email: info@discoverymetals.com.au Contact: Laura Littley  Phone: +44
20 7460 4387
Investor information contacts: United Kingdom investor information:
Brad Sampson Conduit PR
Managing Director Contact:Â Jos Simson/Emily Fenton
Phone: +61 7 3218 0200  Mobile:+61 Ph +44 20 7429 6603 / +44
4 3877 1037 20 7429 6608
Email: brad@discoverymetals.com.au Mobile +44 7899 870 450 / +44
7788 554 035
or
Paul Fulton Stock exchange listings
Chief Financial Officer Australian Stock Exchange - ASX Code:
Phone: +61 7 3218 0218Â Â Mobile: +61 DML
4 0054 4831 Botswana Stock Exchange - BSE Code:
Email:Â DML
paul.fulton@discoverymetals.com.au Alternate Investment Market - London
AIM Code:Â DME
Shareholder enquiries: Issued capital
Queries related to share registry At 31 December 2009 ordinary issued
matters should be directed to: capital of Discovery Metals was
Computershare Investor Services 230,261,453 ordinary shares and
Level 19, 307 Queen Street 43,042,835 shareholder, director and
Brisbane, Queensland 4000 executive options.
Tel:Â 1300552270 or +61 7 3237 2100
Fax:Â +61 7 3237 2152 Directors
Web site: www.computershare.com Gordon Galt - Chairman
Brad Sampson - Managing Director
Morrice Cordiner - Non-Executive
Registered Office Director
Level 8, 410 Queen Street Ribson Gabonowe - Non-Executive
Brisbane, Queensland 4000, Australia Director
Phone: +61 7 3218 0222 Jeremy Read - Non-Executive Director
Fax:Â +61 7 3218 0233 John Shaw - Non-Executive Director
Botswana Country Office Company Secretary - Roslynn Shand
Unit 2, Ipelo House Plot 103,
International Commerce Park
Gaborone, Botswana
Phone: +267 318 0751
Fax:Â +267 318 0752
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
Discovery Metals Limited
ABN Quarter ended ("current quarter")
29 104 924 423 December 2009
Consolidated statement of cash flows
+---------------+-------------------+
 |Current quarter| Year to date |
| | (6.months) |
 | $A'000 | |
| | $A'000 |
Cash flows related to operating activities| | |
| | |
 | | |
+---------------+-------------------+
1.1 Receipts from product sales and | - | - |
related debtors | | |
| | |
 | | |
| | |
1.2 Payments for (a)Â exploration and | (3,166) | (6,560) |
evaluation evaluation | | |
(b)Â development | Â | Â |
(c)Â production | | |
(d)Â administration | - | - |
| | |
| - | - |
| | |
| (589) | (1,507) |
| | |
1.3 Dividends received | - | - |
| | |
1.4 Interest and other items of a similar| Â | Â |
nature received | | |
| 93 | 170 |
| | |
1.5 Interest and other costs of finance | - | - |
paid | | |
| | |
1.6 Income taxes paid | - | - |
| | |
1.7 Other (Indirect Taxes) | 258 | 407 |
+---------------+-------------------+
  |  |  |
| | |
Net Operating Cash Flows | (3,404) | (7,490) |
-------------------------------------------+---------------+-------------------+
  |  |  |
| | |
Cash flows related to investing | | |
activities | | |
| | |
1.8 Payment for purchases of:Â Â Â Â Â Â Â Â Â Â Â | - | - |
(a)prospects | | |
| - | - |
           (b)equity investments | | |
| Â | Â |
           (c) other fixed assets | | |
| - | - |
| | |
| Â | Â |
| | |
1.9 Proceeds from sale of:Â Â (a)prospects| - | - |
| | |
           (b)equity investments | - | - |
| | |
           (c)other fixed assets |  |  |
| | |
| - | - |
| | |
| Â | Â |
| | |
1.10 Loans to other entities | - | - |
| | |
1.11 Loans repaid by other entities | - | - |
| | |
1.12 Other (provide details if material) | 726 | 726 |
| | |
 (JOGMEC Joint Venture Contribution) |  |  |
+---------------+-------------------+
  |  |  |
| | |
Net investing cash flows | 0 | 0 |
+---------------+-------------------+
1.13 Total operating and investing cash | Â | Â |
flows (carried forward) | | |
| (2,678) | (6,764) |
-------------------------------------------+---------------+-------------------+
Total operating and investing cash | Â | Â |
1.13 flows (brought forward) | | |
| (2,678) | (6,764) |
-------------------------------------------+---------------+-------------------+
 |  |  |
| | |
Cash flows related to financing | | |
 activities | | |
| | |
1.14 Proceeds from issues of shares, | 15,504 | 15,504 |
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 (provide details if material) | - | - |
+---------------+-------------------+
 Net financing cash flows | 15,504 | 15,504 |
-------------------------------------------+---------------+-------------------+
  |  |  |
| | |
Net increase (decrease) in cash held | 12,826 | 8,740 |
| | |
 |  |  |
| | |
1.20 Cash at beginning of quarter/year to | 4,776 | 8,862 |
date | | |
| | |
1.21 Exchange rate adjustments to item | Â | Â |
1.20 | | |
+---------------+-------------------+
1.22 Cash at end of quarter | 17,602 | 17,602 |
-------------------------------------------+---------------+-------------------+
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 | 60 |
item 1.2 | |
+---------------+
  | - |
| |
1.24 Aggregate amount of loans to the parties included in item| |
1.10 | |
---------------------------------------------------------------+---------------+
1.25 Explanation necessary for an understanding of the transactions
+-------------------------------------------------------------------------+
 |- |
| |
 | |
+-------------------------------------------------------------------------+
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
+--------------------------------------------------------------------------+
 | |
| |
|- |
| |
|Â |
+--------------------------------------------------------------------------+
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
+--------------------------------------------------------------------------+
 | |
| |
|- |
| |
|Â |
+--------------------------------------------------------------------------+
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 | - | - |
| | |
 | | |
+------------------+-------------+
3.2 Credit standby arrangements | - | - |
| | |
 | | |
------------------------------------+------------------+-------------+
Estimated cash outflows for next quarter
+--------+
  | $A'000 |
+--------+
4.1 Exploration and evaluation | 2,000 |
| |
 | |
+--------+
4.2 Development | - |
| |
 | |
-----------------------------------+--------+
  | 2,000 |
| |
Total | |
-----------------------------------+--------+
Reconciliation of cash
+---------------+----------------+
Reconciliation of cash at the end of the |Current quarter|Previous quarter|
quarter (as shown in the consolidated | | |
statement of cash flows) to the related items| $A'000 | $A'000 |
in the accounts is as follows. | | |
----------------------------------------------+---------------+----------------+
5.1 Cash on hand and at bank | 17,602 | 4,776 |
+---------------+----------------+
5.2 Deposits at call | - | - |
+---------------+----------------+
5.3 Bank overdraft | - | - |
+---------------+----------------+
5.4 Other (provide details) | - | - |
----------------------------------------------+---------------+----------------+
 Total: cash at end of quarter (item 1.22)| 17,602 | 4,776 |
----------------------------------------------+---------------+----------------+
Changes in interests in mining tenements
+--------------+-------------+-------------+------------+
  |Tenement |Nature of |Interest at |Interest at |
|reference |interest |beginning of |end of |
| | |quarter |quarter |
| |(note (2)) | | |
+--------------+-------------+-------------+------------+
6.1 Interests in |Â |Â |Â |Â |
mining tenements | | | | |
relinquished, | | | | |
reduced or lapsed | | | | |
| | | | |
 | | | | |
| | | | |
 | | | | |
+--------------+-------------+-------------+------------+
6.2 Interests in |Â |Â |Â |Â |
mining 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 quoted|Issue price |Amount paid up|
| | |per security |per security |
| | |(see note 3) |(see note 3) |
| | |(cents) |(cents) |
----------------------+-------------+-------------+-------------+--------------+
7.1 Preference |Â |Â |Â |Â |
+securities | | | | |
(description) | | | | |
+-------------+-------------+-------------+--------------+
7.2 Changes during |Â |Â |Â |Â |
quarter | | | | |
|Â |Â | |Â |
(a)Â Increases | | | | |
through issues | | | | |
| | | | |
(b)Â Decreases | | | | |
through returns | | | | |
of capital, | | | | |
buy-backs, | | | | |
redemptions | | | | |
----------------------+-------------+-------------+-------------+--------------+
7.3 +Ordinary |230,261,453 |230,261,453 |Â |Â |
securities | | | | |
| | | | |
 | | | | |
+-------------+-------------+-------------+--------------+
7.4 Changes during |Â |Â |Â |Â |
quarter | | | | |
|35,046,820 |35,046,820 |45 cents |45 cents |
(a)Â Increases | | |(placement & | |
through issues |Â 1,136,253 |Â 1,136,253 |SPP) |30 cents |
| | | | |
 | | |30 cents | |
| | |(options | |
(b)Â Decreases |Â |Â |exercise) | |
through returns | | | | |
of capital, |Â |Â |Â | |
buy-backs | | | | |
|- |- | | |
----------------------+-------------+-------------+-------------+--------------+
7.5 +Convertible |- |- |Â |Â |
debt securities | | | | |
(description) | | | | |
+-------------+-------------+-------------+--------------+
7.6 Changes during |- |- |Â |Â |
quarter | | | | |
|Â |Â | | |
(a)Â Increases | | | | |
through issues |Â |Â | | |
| | | | |
(b)Â Decreases |Â |Â | | |
through | | | | |
securities |- |- | | |
matured, | | | | |
converted | | | | |
----------------------+-------------+-------------+-------------+--------------+
7.7 Options | | |Exercise |Expiry Date |
(description and| | |Price | |
conversion |500,000 | | |1 April 2010 |
factor) | | |30 cents | |
|1,500,000 | | |1 May 2010 |
| | |30 cents | |
|1,300,000 | | |1 May 2010 |
| | |35 cents | |
|28,677,310 | | |25 May 2010 |
| | |30 cents | |
|718,188 | | |1 September |
| | |26 cents |2010 |
|500,000 | | | |
| | |30 cents |1 September |
|250,000 | | |2010 |
| | |36 cents | |
|497,337 | | |1 October 2010|
| | |36 cents | |
|250,000 | | |5 December |
| | |36 cents |2010 |
|2,000,000 | | | |
| | |50 cents |1 October 2011|
|1,000,000 | | | |
| | |35 cents |12 December |
|Â | | |2011 |
| | |Â | |
|1,000,000 | | |Vest |
| | |44 cents |24/11/2010 |
|500,000 | | | |
| | |43 cents |Expire |
|250,000 | | |12/12/2011 |
| | |26 cents | |
|1,000,000 | | |1 February |
| | |55 cents |2012 |
|Â | | | |
| | |Â |25 March 2012 |
|500,000 | | | |
| | |54 cents |1 November |
|Â | | |2012 |
| | |Â | |
|100,000 | | |Vest 1/02/2010|
| | |37.5 cents | |
|250,000 | | |Expiry |
| | |32 cents |1/02/2013 |
|Â | | | |
| | |Â |Vest |
|1,000,000 | | |25/03/2010 |
| | |35 cents | |
|1,250,000 | | |Expiry |
| | |37.5 cents |25/03/2013 |
| | | | |
| | | |1 November |
| | | |2012 |
| | | | |
| | | |Vest |
| | | |01/11/2010 |
| | | | |
| | | |Expiry |
| | | |01/11/2013 |
| | | | |
| | | |1 November |
| | | |2013 |
| | | | |
| | | |1 November |
| | | |2013 |
+-------------+-------------+-------------+--------------+
7.8 Issued during |Â |Â |Exercise |Expiry Date |
quarter | | |Price | |
|8,518,519 |- | |25 May 2010 |
| | |30 cents | |
|1,000,000 | | |Vest |
| | |35 cents |24/11/2010 |
| | | | |
| | | |Expire |
| | | |12/12/2011 |
+-------------+-------------+-------------+--------------+
7.9 Exercised during|1,136,253 |Â |30 cents |Â |
quarter | | | | |
+-------------+-------------+-------------+--------------+
7.10 Expired during |Â |- |Exercise |Expiry Date |
quarter | | |Price | |
----------------------+-------------+-------------+-------------+--------------+
7.11 Debentures |Â |Â |
| | |
(totals only) | | |
----------------------+-------------+-------------+
7.12 Unsecured notes |Â |Â |
(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 /does not* (delete one) give a true and fair view of the
matters disclosed.
Sign here: Â Â Â Â Â Â Â .....................................................
Date:Â 28 January 2010
(Company Secretary)
Print name: Â Â Â Â Â Roslynn Shand
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
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