Thor Energy Regulatory News (THR)

30 Oct 2006 07:00

Thor Mining PLC30 October 2006 THOR MINING PLC ("Thor") Quarterly Operating Report to September 2006 Dated: 30 October 2006 Highlights MOLYHIL TUNGSTEN-MOLYBDENUM PROJECT ("Molyhil") • A 2038m Reverse Circulation ("RC") deep drilling program completed; • Significant widths of Molyhil black rock magnetite skarn intersected with visual tungsten-molybdenum mineralisation identified; • Results confirm depth extensions of Molyhil; • Geotechnical and hydro geological investigations successfully completed; • Metallurgical test work program successfully completed; and • Production estimates and concentrate specifications exceed scoping study, confirming potential production of approximately 100,000 mtu of tungsten oxide per annum and 1,000,000 lbs of Mo per annum. HALE ENERGY URANIUM PROJECTS ("Hale Energy") • Hale Energy portfolio comprises over 3,000 sq km of exploration ground, including advanced target areas with previous uranium exploration history in close proximity to existing uranium discoveries. All but one of the tenements were granted in September 2006; and • Commissioned helicopter borne HoisTEM survey over Hale River and Plenty Highway projects. CORPORATE • AGM and EGM held in London with all resolutions approved; • Shareholder approval received for acquisition of Hale Energy Limited; • Capital consolidation and warrant issue completed; • ASX IPO raising AUD10M completed; and • Exploration Manager appointed. OVERVIEW During the quarter, Thor continued to progress its key asset, the 100% ownedMolyhil Tungsten-Molybdenum Project located in Central Australia. This projectis in its final phase of its definitive feasibility study due for completion inNovember 2006. A program of Deep RC at Molyhil was successful in identify extensions to theSouthern and Yacht Club ore zones. The RC program also included geotechnical andhydro geological studies over areas designated for future mine developmentinfrastructure. The metallurgical test work program was successfully completed as part ofdefinitive feasibility study. This allowed the final concentrate volumes andspecifications to be calculated. The production estimates and concentratespecifications exceeded initial Scoping Study, confirming potential productionof approximately 100,000 mtu of tungsten oxide per annum and 1,000,000 lbs of Moper annum. Uranium exploration has begun with initial reconnaissance work at Harts Rangescompleted and the HoisTEM survey at Hale River and Plenty Highway Projectsunderway. Thor completed its ASX IPO raising AUD10 million during the Quarter, including acapital consolidation and issue of warrants. This enabled the purchase of HaleEnergy limited, now a 100% owned subsidiary of Thor with over 3000 sq kms ofUranium exploration ground. The proceeds of this fund raising will underpin the completion of the Molyhildefinitive feasibility study and allow Thor to pursue an aggressive uraniumexploration strategy. MOLYHIL TUNGSTEN - MOLYBDENUM PROJECT MOLYHIL EXPLORATION The program of deep RC drilling at Molyhil was completed. Three extra holes werecompleted beneath the Yacht Club and Southern ore bodies as a result ofencouraging geology. A total of 10 holes were completed for 2038m. Table 1 - Deep RC Drilling at Molyhil Hole ID East(GDA94) North(GDA94) RL Mag_Azi Dip Depth TMRC024 577187.8 7482937.0 418 252 -60 258 TMRC025 577177.0 7483038.0 418 252 -60 204 TMRC026 577198.5 7483003.0 418 252 -60 241 TMRC027 577217.0 7482977.0 418 252 -60 280 TMRC028 577048.2 7482998.0 410 252 -60 50 TMRC029 577062.0 7483143.0 418 252 -60 129 TMRC030 577135.4 7482836.0 413 252 -60 204 TMRC031 577204.8 7482916.0 410 252 -60 216 TMRC032 577157.0 7482840.0 412 252 -60 228 TMRC051 577157.0 7482810.0 410 252 -60 228 Total(m) 2038 The drilling was designed to test for depth extensions of the current Molyhilresource, which totals 2.38 million tonnes at a combined Tungsten-Molybdenumuncut grade of 0.80%. Previous magnetic modelling indicates that the Molyhilresource continues to a depth of at least 450m below surface. The results have confirmed depth extensions at both the Yacht Club and Southernore bodies. RC hole TMRC24 drilled beneath the Yacht Club ore zone to a depth of 258m,intersected black rock skarn from 133 to 155m down hole with visual tungsten-molybdenum mineralisation identified. This intersection appears to be offset tothe east and may represent a new zone of mineralisation not previouslyidentified sitting above the hanging wall of Yacht Club. In light of the resultsfrom this hole, drill hole TMRC31 was targeted approximately 30m south east andcompleted to a depth of 216m. Hornfels skarn and black rock magnetite skarn wasintersected from 153m to 190m with two zones of visual molybdenum mineralisationidentified between 170m and 179m, and 182m to 186m. TMRC30, drilled to the south and east of the known Southern ore body intersectedtwo zones of black rock skarn from 135 to 176m and 188 to 192m. TMRC32, drilledto 228m was collared 30m south east of TMRC30 and intersected hornfels and blackrock magnetite skarn zones with intermittent visual molybdenum. A furthermolybdenum rich zone was intersected from 205 to 210. Full assay results are expected to be received shortly. Further to the above 10 deep holes explained above, a total of 7 short RC holeshave also been completed for 84m on existing run of mine stockpiles, which areestimated to contain over 300,000 tonnes of material, not included in thescoping study. The sample quality from this work was excellent with consistent sample weightswith little moisture affecting recoveries. The results from this drilling willallow an update of the existing resources in the fourth quarter of 2006. DEFINITIVE FEASIBILITY STUDY ("DFS") Geotechnical - Soil Engineering Golders and Associates geotechnical consultants were on site during August andSeptember 2006, completing soil and foundation studies relating toinfrastructure sites, including tailings dam design. Work completed: • 50 test pits at the proposed plant and tailings dam sites; • 12 test pits at the airstrip; and • 16 test pit at 3 proposed Village sites. An assessment of available road sheeting material to characterise road sub-gradeconditions was also completed with 20 test pits completed along the roadside outto the Plenty Highway. Insufficient gravel road materials were found and it islikely that coarser and gravel type road material will be sourced from existingwaste rock at Molyhil. All disturbed soils were backfilled and rehabilitated immediately. The program of geotechnical and hydro geological drilling included the drillingof two sets of holes, with a total metreage of 275m, as set out in table 2. The test work and objectives of the drilling are summarised as follows: Tailings Storage Facility ("TSF") Drilling was carried out at five locations within and down gradient of theproposed TSF. A pair of holes was drilled at each location, consisting of ashallow hole to a nominal depth of 5m and a deeper hole to 35m. Hydraulic conductivity tests were carried out in the drill holes. Analysis ofthe test data is currently being undertaken to provide estimates of thehydraulic conductivity within the underlying soil geological profile. This datawill be used for modeling potential seepage from the tailings storage facilityand for predicting the likely groundwater response. Plant Site Holes were drilled at five locations within the proposed plant site areto depths of 15m. Cuttings returned during the drilling were inspected to assessrock type, relative strength and degree of weathering. Rates of progress werenoted for the purpose of identifying any soft area within the profile. Theinformation obtained from the drill holes will assist in determining theallowable bearing capacity of the foundation soils and aid in the design offootings for the plant foundations. The information is currently being assessedfor inclusion in the DFS. Water Bore Investigation This program started late September 2006 and was completed subsequent to the endof the quarter, 14 holes were drilled for a total of 1005m. Six holes were inCambrian carbonate rocks 6 to 10 kilometres north east of the mine to locate theprincipal process water source. A further eight holes were drilled intoProterozoic rocks mostly to the south of the mine to locate a proximal potablewater supply. The yields achieved plus the presence of cavernous ground below standing waterlevels suggests that the bores have potential for high yields following boreconstruction and pumping. The work was supervised by KH Morgan and Associates. Mining and Reserves Australian Mining Consultants have completed a review of mining costs based onthe preliminary pit optimisation, the current run of optimisation studies arewaiting on indicative concentrate prices from metal marketing consultants. Studies completed during quarter: • Mine Planning involved a review mining methods and mining rates, determining mining dilution and ore loss parameters. The preparation preliminary mining costs for the chosen mining method; • Conduct pit optimisations of the resource model using Whittle Four-X pit optimisation software to determine economic pit limits; and • Determine the sensitivity of the project outcomes to key parameters. Create pit designs for appropriately selected pit shells as well as designs forstockpiles, waste dumps, haul roads etc. Preliminary Mine Layouts: • Schedule pit contents by period; • Pit designs suitable for estimation of ore reserves, plans and sections ofthe stage and final pit designs; and • A full report detailing the methodology, parameters, and outcomes ofthe study are due early November for inclusion in the DFS. Metallurgical Test Work The key metallurgical test work program carried out over the past 6 months hasbeen supervised by Thor and Proteus Engineering, with the involvement ofmetallurgical consultants, Independent Metallurgical Laboratories Pty Ltd, OrwayMineral Consultants and Nagrom & Co. The metallurgical recoveries used in the scoping study for WO3 and MoS2 werebased on pilot plant test work conducted by Nagrom in early 2005. The definitivemetallurgical results received have improved the scoping study figures, asreflected in the table below: Concentrates Scoping Study Definitive Feasibility Study Concentrate (Jan2006) (Oct2006) Production @ Recovery Concentrate Recovery Concentrate Grade 300,000 tpa GradeTungsten (WO3) 51% 68.6% 67.2% 69.3% 1,511 tonnesMolybdenum (MoS2) 78.1% 82.5% 77% 85% 905 tonnes This equates to planned production of approximately 100,000 mtu of tungstenoxide per annum and 1,000,000 lbs of Mo per annum. Current prices for TungstenOxide concentrates (min 65% WO3) are USD220mtu and the price for Molybdenumconcentrates (min 57% Mo) is USD26lb. The most significant change arising from the metallurgical test work program isin the recovery of Tungsten to the gravity circuit. The initial flow sheet usedmagnetic separation prior to flotation and gravity recovery, however thisprocedure is now completed at the end of the processing circuit on the finerTungsten fractions, removing deleterious elements and improving overallrecovery. The concentrate grade specifications are within a marketable range,and improvements in the molybdenum specifications were made with the removal ofbetween 2 and 4% copper in concentrates, with copper levels now withinspecification. Other DFS Progress Environmental and Notice of Intent (NOI) Keith Lindbeck and Associates ("Lindbeck") have been commissioned to completethe NOI and the environmental studies. Lindbeck is to utilise Low EcologicalServices if required and Golders and Associates which are doing the geotechnicalincluding tailings dam design. A visit to Darwin is planned to meet all partiesconcerned with the permitting process at NT Mines Department. Product Marketing A metal marketing consultant has been asked to provide possible prices for thesale of concentrate products. There are a number of interested parties that wishto enter into negotiations to purchase concentrates in conjunction with anopportunity to provide finance for the project. Negotiation of Mining Agreement Formation of development review committee has been commenced for thenegotiations with the Central Land Council with the aim to complete miningagreement in parallel with the DFS. This is currently planned to be completedduring the December quarter. Capital Cost Estimation Proteus and Thor personnel have now sourced second-hand crushing and processequipment to accelerate the timetable and reduce capital costs. They have alsoidentified all long lead items and have completed all equipment lists. This workis on going. Thor recently purchased a crushing circuit for AUD450,000 + GST. Operating Cost Estimation Initial operating costs have been compiled for the DFS and are similar toMeritt's scoping study costs (AUD58 per tonne). However, Meritt's costs did notinclude concentrate transport.. URANIUM EXPLORATION Hale River-Plenty Highway Projects The first phase of a comprehensive uranium exploration program has begun withinthe recently acquired portfolio in the Northern Territory of Australia. Thor'suranium portfolio comprises five advanced uranium projects covering a total areaof 3,000 sq km. The first phase of the program comprises a helicopter borne HoistEM(TM) surveycovering the Company's Hale River and Plenty Highway tenements, which cover some1,200 sq km of tertiary basin sediments and palaeo-drainage channels prospectivefor sandstone and roll-front style uranium deposits. The survey is being flown by GPX Airborne Pty Ltd, a WA-based geophysicalcompany that specializes in airborne electromagnetic techniques. Based onprevious experience, it is anticipated that the electromagnetic survey willrespond to saline water in buried tertiary palaeo-channels and define basinshapes prospective for roll-front uranium deposits, thereby defining targets forfollow up drilling. The survey is being conducted over the northern section of the garden sub-basin(Hale River) and the Waite Basin (Plenty Highway.) These basins are believed tohold the highest promise for a new uranium discovery. The airborne surveys willbe completed on 200m and 400m line spacings respectively. Harts Range Project The Harts Range prospects are located approximately 200 kms east north east ofAlice Springs and cover approximately 350 sq kms. Regional exploration foruranium was conducted over the Harts Range area between 1992 and 1995 includingregional reconnaissance sampling resulting in the discovery of significanturanium mineralisation. Thor's exploration program at Harts Range will initially focus on structurallycontrolled high-grade mineralisation, and will comprise detailed field mapping,ground surveys and follow up drilling. Initial reconnaissance work has been completed over several of the tenements, anumber of previously investigated PNC prospects were identified and 11 rocksamples taken (see table below). Results from this work will be availableshortly. Massive muscovite pegmatite intrusive bodies with potentialdisseminated uraninite were noted in ELA24734. Rock Chip Sampling Harts Range Sample ID East(GDA94) North(GDA94) Prospect Tenement Description HR1 512496 7454754 Eagle Beak EL24827 Epidote alt HR2 512440 7454848 Eagle Beak EL24827 Epidote alt 10m HR3 512544 7454964 Eagle Beak EL24827 Epidote alt 5m HR4 511278 7454386 Eagle Beak EL24827 Epidote alt HR5 511510 7454706 Eagle Beak EL24827 Epidote alt HR6 512496 7454754 Eagle Beak EL24827 Epidote alt HR7 518760 7418900 Ryoma EL24735 Biotite/Amph- vis Uraninite HR8 518760 7418900 Ryoma EL24735 Biotite/Amph- vis Uraninite HR9 518760 7418900 Ryoma EL24735 Biotite/Amph- vis Uraninite HR10 518170 7419160 Casper EL24735 Quartz Plagioclase HR11 518170 7419160 Casper EL24735 Quartz Plagioclase Uranium Consultant Thor has engaged the services of Mr Phillippe Kearns, a 13 year veteran ofCogema and Afmeco, he has been involved in the exploration for uranium acrossfour continents since the mid 1970's and was part of the team that discoveredthe Cigar Lake Uranium deposit in Saskatchewan, Canada. He will act asconsultant to Thor's exploration team in the Eastern Arunta. Tenements Granted During the quarter, nine out of the ten uranium exploration tenements held byHale Energy Limited were granted (see table below). Hale Energy Tenements Curtis Pound Uranium Project EL24823 Curtis Pound ProjectHale River Uranium Project EL24809 Hale River ProjectHarts Range Uranium Project EL24734 Harts Range Project EL24735 Harts Range Project EL24736 Harts Range Project EL24765 Harts Range Project EL24827 Harts Range Project ANA 24766 Harts Range ProjectPlenty Highway Uranium Project EL24810 Plenty Highway ProjectBundey River ELA25378 Bundey River Project CORPORATE Fund Raising and Listing on ASX Thor received shareholder approval to proceed with the acquisition of the ofuranium projects. Shareholder approval was also received for a 1-for-3 capitalconsolidation and an issue to existing shareholders of one warrant for every twopost-consolidation shares held ahead of the proposed dual listing of Thor'sshares on the Australian Stock Exchange. The consideration for the acquisition of Hale Energy was the issue of 16 millionfully-paid Thor shares and 8.5 million warrants. Thor closed its AUD10.0 million IPO fully subscribed ahead of the dual listingof its shares on the ASX on the 25th of September 2006. The successful completion of the IPO marked an important milestone for Thor. The funds raised from the IPO will be used to pursue an aggressive developmentstrategy focused on completion of a DFS for the Molyhil. Thor intends to bringMolyhil into production during 2007, in parallel with a major exploration efforton its newly acquired uranium portfolio. Appointment of Exploration Manager During October Thor announced that it has appointed Mr Stuart Till asExploration Manager. Mr Till is a West Australian geologist with 20 yearsexploration and development experience in a variety of geological terrains andcommodities and for the last 10 years has held a senior role with DominionMining Limited. He brings to Thor a pragmatic hands-on approach to modernexploration with a broad knowledge base including database and computing skills,field logistics, equipment maintenance in remote terrains, tenement managementand a thorough understanding of drilling equipment. Stuart's input will allowThor to manage a cost effective, efficient exploration department. Initially Mr Till will supervise the start up of our Uranium exploration, with ahelicopter borne HoistEMTM survey on its Hale River and Plenty Highwaytenements. The survey is being flown by GPX Airborne Pty Ltd in late October. JORC Compliance The information in this report that relates to exploration results, mineralresources or ore reserves is based on information compiled by John Young, who isa Member of The Australasian Institute of Mining and Metallurgy. John Young, theChief Executive Officer of Thor, has sufficient experience which is relevant tothe style of mineralisation and type of deposit under consideration and to theactivity which he is undertaking to qualify as a Competent Person as defined inthe 2004 Edition of the "Australasian Code for Reporting of Exploration Results,Mineral Resources and Ore Reserves". John Young consents to the inclusion in this RNS announcement of the mattersbased on his information in the form and context in which it appears.) Enquiries: John Young + 61 (0)419 954 020 Thor Mining PLC Chief Executive Officer John Simpson 020 7512 0191 ARM Corporate Finance Nominated Adviser Limited Leesa Peters 020 7429 6600 Conduit PR Limited Public Relations/UK orAbigail Singleton 020 7429 6606 Nicolas Read + 61 (0) 8 9388 1474 Jan Hope & Partners Public Relations/ Australia Updates on the Company's activities are regularly posted on Thor's websitewww.thormining.com, which includes a facility to register to receive theseupdates by email. This information is provided by RNS The company news service from the London Stock Exchange