Quarterly Report HIGHLIGHTS information · Previous metallurgical results at the Bencubbin project...

Quarterly Report March 2013

ASX: AKA

AMMG Quarterly Activities ReportMarch 2013 Quarter ASX: AKA

South West HPA (High Purity

Alumina) Project Western Australia

• Increase of combined aluminous

clay resources to 297Mt with the

acquisition of the Gibson HPA

project (147Mt inferred resource

at 10.3% alumina).

• Historical exploration at

Gibson indicated grades

of up to 21% alumina, with

a screened grade of 37%

alumina after the removal of

the +2 micron size fraction.

• Successful production of

>99.9% (3N) HPA (high purity

alumina) using AMMG’s

innovative processing

technology; patent application

lodged.

• The process uses a

low energy input (low

temperatures & pressures)

and produces minimal waste.

• After a washing process,

99.99% (4N) HPA will be able

to be produced.

• AMMG toured its South West

WA projects with a leading

Chinese delegation that has

interest in the Company’s

HPA project and processing

technology.

Green Range Coal Project

Western Australia

• Stage 1 drilling program is

scheduled to commence by

next quarter, with land access

negotiations successful with

private landowners.

• The drilling will be co-funded

by the state government’s EIS

(Exploration Incentive Scheme)

program.

Bencubbin Iron Ore Project

Western Australia

• Successfully negotiated further

land access with private

freehold landowners at the

Bencubbin project.

• Co-funded by the state

government’s EIS program,

the stage 2 drilling program is

scheduled to commence later in

the year.

Corporate

• The Company participated in the

PDAC Toronto 2013 Investors

Exchange and the Bauxite &

Alumina conference in Miami.

• AMMG remains well funded

with $3.2m in the Bank as at 31

March 2013.

HIGHLIGHTS information

directors

Australia Minerals & Mining Group Ltd

ABN 45 125 301 206

ASX Code: AKA

Financial Information (as at 31 March 2013)

Share Price: 0.105

Shares: 107.62m

Market Cap: 11.39m

Cash: $3.2m

3 Bay Road, Claremont,

Western Australia, 6010

Tel: +61 (08) 9389 5557

Fax: +61 (08) 9389 5510

Email: [email protected]

Website: www.ammg.com.au

Ric Dawson - Managing Director

Luke Atkins - Non-executive Chairman

Peter Bailey - Non-executive director

Jamie Coote - Non-executive director

(independent)

Dan Tenardi - Non-executive director

Piers Lewis - Company Secretary/Chief

Financial Officer

Fig 1. HPA (high purity alumina) processing technology demonstration


ASX: AKA


During the quarter the Company (through its wholly owned subsidiary Kaolin Resources Pty Ltd) applied for the Gibson HPA (high purity alumina) project, located just 10-40kms from the Esperance port.

An inferred JORC resource of 147 million tonnes (Mt) of aluminous clay at 10.3% alumina was delineated at the 100% owned Gibson project (click for announcement dated 25/02/13).

The 200-block exploration licence application covers known aluminous clay outcrops and targets an area previously explored by Western Mining Corporation (WMC) in the early 90’s during an aircore drilling program. Significant samples, reported by WMC, indicated alumina grades of 20.86%, which upgrades to 36.96% alumina when the +2 micron size fraction is removed.

Increase in Aluminous Clay Resources

Combining AMMG’s Gibson HPA project’s resource with the Kerrigan HPA project’s inferred resource of 85Mt; and the Meckering HPA project’s 65Mt indicated and inferred resource, the combined resource amounts to 297Mt of aluminous clay at the Company’s 100% owned South West HPA project. AMMG is now planning the next phase of exploration in order to increase this resource.

Acid-Based Processing Technology

In collaboration with its consulting processing chemists, AMMG successfully produced >99.9% (3N) HPA using its processing technology (see announcement dated 18/02/2013). The process is favoured by AMMG’s aluminous clay material, which contains low levels of impurities, such as iron, and screened grades of up to 38% alumina.

The process benefits from a low-energy input; the process uses low temperatures and pressures. It produces saleable by-products and the key reagents are recyclable.

Patent Application

In order to protect the intellectual property of its processing technology, the Company filed a provisional patent application during the quarter (click to view announcement dated 26/02/2013). Patent numbers are 2013900637, 2013900636 and 20139000639.

This gives the Company the confidence to advance its commercialisation strategy, which involves determining the optimised location and potential construction of a HPA plant facility.

Given its success, AMMG now plans to progress the level of interest it has received to date from a number of significant international investment companies and potential off-take partners.

South West HPA (High Purity Alumina) Project Western Australia

Fig 2. AMMG’s high purity alumina sample


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South West HPA (High Purity Alumina) Project Western Australia

HPA (High Purity Alumina)

HPA (purity of >99.9%) is a premium high-value product that can be used in a number of electronic and other high-performance products.

It is a specialised alumina known for its superior hardness, high brightness, inertness (non-conductive), superior corrosion resistance and its ability to withstand high temperatures.

HPA is used in a variety of markets, such as high-tech, energy, communications and automobiles, but 60% of HPA produced is allocated to the LED industry (tablet, mobile and computer screen back-lighting).

Reported worldwide production of HPA is about 15,000tpa, which is expected to increase at 7% CAGR, driven by the rising LED market demand. Prices for HPA range from approximately US$40/kg to US$290/kg, depending on the level of purity.

Tour with Leading Chinese Delegation

AMMG hosted a leading Chinese investment firm on a tour of its South West mineral projects.

AMMG’s managing director Ric Dawson led the delegation comprising of Mr Xueli Wang, who has previously owned a large port in China through his role as president of a freight logistics company, and two other technical minerals delegates, Mr Shujun Pan and Mr Qiang Wang.

Mr Wang’s background is in freight and logistics, and as such the delegation met with Albany Port CEO Mr Brad Williamson to view the port and surrounding infrastructure.

The interest AMMG has received from the Chinese delegation is a vote of confidence in the Company’s South West projects, particularly the HPA projects.

The delegates also met with Member for Albany Mr Peter Watson MLA, Great Southern Development Commission chief executive Mr Bruce Manning, City of Albany mayor Mr Dennis Wellington and acting chief executive Mr Graham Foster.

Fig 4. AMMG with the Chinese delegation and Albany Port Authority personnel

Fig 3. HPA end-uses


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Green Range Coal Project Western Australia

The Company has secured land access with key private landowners in preparation for the upcoming stage 1 drilling program at its 100% owned Green Range project, located just 40-70 kilometres from the town and port of Albany.

The stage 1 aircore drilling program will be co-funded by the state government’s Exploration Incentive Scheme (EIS) drilling application for a refund of up to 50% of direct drilling costs.

The drilling will target the potential coal seams of the Green Range sub-basin. Based on historical drill hole data, AMMG estimates an exploration target* of 400-500Mt of thermal coal grade.

AMMG (via its wholly owned subsidiary Albany Energy Pty Ltd) 100% owned Green Range Coal Project consists of two granted tenements and one exploration licence application totalling approximately 1,122km2.

Historical Exploration

Both BHP Minerals Exploration (BHP) and Rio Tinto, formerly CRA Exploration (CRA), carried out coal exploration in the Green Range basin area in the 1980s. CRA concluded an estimated exploration target* of up to 500Mt of lignite.

Later in 2001, Phanerozoic Energy Pty Ltd carried out coal seam gas exploration in the Green Range basin area, intersecting coal seams up to approximately five (5) metres. Although concluding further drilling would be required to test for coal, Phanerozoic Energy acknowledged the existence of coal as a permanent feature in the Green Range basin area.

Additionally, recorded within historical drill logs is the presence of glauconite (an iron potassium phyllosilicate) and limestone. Glauconite is currently being tested as the potential feedstock for potash production.

Fig 5. Map showing AMMG’s Green Range Coal Project, Albany, Western Australia

*The term “Exploration Target” should not be misunderstood nor misconstrued as an estimate of Mineral Resources and Reserves as defined by the JORC Code (2004), and therefore the term has not been used in this context. It is uncertain if further exploration or feasibility study will result in the determination of a Mineral Resource or Mining Reserve


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Bencubbin Iron Ore Project Western Australia

During the quarter the Company was successful in negotiating further land access agreements with private landowners in anticipation of the stage 2 drilling program at AMMG’s 100% owned Bencubbin project. The stage 2 program is scheduled for later in 2013.

As per the stage 1 drilling program, stage 2 will be co-funded once again by the state government’s Exploration Incentive Scheme (EIS) drilling application for a refund of up to $100,000 of direct drilling costs.

The first EIS co-funded program was completed in February 2012 and since then the Company has obtained enhanced EIS aeromagnetic imagery, which will be used to target the length of the Bencubbin strike.

Previous metallurgical results at the Bencubbin project indicated a very ‘coarse’ liberation of magnetite at a grind size of 150 microns. The average iron (Fe) concentrate was above 70% with an average mass recovery of 38.6% with a ‘coarser’ grind size of 150 microns.

The results are highly encouraging for magnetite in the Western Australian iron ore regions as it allows for much lower operating costs, as the ‘coarser’ the grain size, the lower the crushing costs associated with a potential processing plant.

The Company’s concentrated magnetite also contains low levels of impurities such as alumina, phosphorus, silica and sulphur, which is known to reduce production costs significantly.

Fig 6. Proposed stage 2 drilling programBencubbin Iron Ore Project, Western Australia


ASX: AKA


Corporate

International Road Show

During the quarter a delegation from AMMG travelled to Canada to participate in the Prospectors and Developers Association of Canada (PDAC) conference in Toronto. The PDAC convention attracted over 30,000 delegates from 125 countries this year.

The PDAC conference was a significant opportunity for AMMG, particularly as a platform to promote the HPA (high purity alumina) project and processing technology. The Company established new alliances in the industry, which is significant, especially in a knowledgeable Canadian market, with the success of an existing Canadian company with a market capitalisation of $500 million.

During the PDAC convention, Mr Dawson presented to a large number of Canadian stockbrokers, including analysts, who have provided extensive coverage on other HPA industry participants.

After PDAC, AMMG travelled to Miami to attend the 19th Bauxite & Alumina conference. Mr Dawson was accompanied by non-executive director Mr Peter Bailey, former president of Alcoa Worldwide Chemicals.

The conference was a particularly successful event for AMMG; at its booth the Company introduced its innovative HPA processing technology to other industry players and outlined the inherent environmental and capital benefits the process proposes.

Overall AMMG gained significant investor interest from the Canadian/USA trip, with various parties seeking opportunities for further involvement.

Fig 7. AMMG’s booth at the PDAC 2013 Toronto Investors Exchange

Fig 8. AMMG’s booth at the Bauxite & Alumina conference in Miami


ASX: AKA


Options Issue

AMMG previously announced a non-renounceable offer of one new option for every one listed option held by option holders registered at 5.00pm on 30 November 2012 at an issue price of 1 cent per Option to raise approximately $420,000. Each Option has an exercise price of $0.20 each on or before 5.00pm (WST) on 31 March 2014.

The Company was unable to comply with the Quotation Condition by 26 February 2013 and accordingly the options are now void (shareholders do not need to take any action) and the application funds for those options were refunded.

Under ASX Listing Rule 2.5, Condition 6, in order for the ASX to grant quotation of convertible securities that are not already quoted, there must be at least 50 holders with a marketable parcel. Unfortunately the Company received slightly less than required.

The Company lodged a Supplementary Prospectus and will allocate priority to those original options applicants and as part of the Shortfall Offer, which will remain open until May 24, 2013.

Working Capital

The Company remains well funded with circa $3.2 million cash at Bank as at 31 March 2013.

Corporate

Contact

AMMG

Mr Ric Dawson

Managing Director

Tel: +61 (08) 9389 5557

[email protected]

MEDIA CONTACT

Tony Dawe

Professional Public Relations Pty Ltd

Tel: +61 (08) 9388 0944

[email protected]

Technical information in this report is based on information compiled by Mr. Michael O’Mara B.Sc. Geology, AMMG Chief Geologist and a member of the Australian Institute of Geologists. Mr. O’Mara has sufficient exploration experience which is relevant to the styles of mineral-isation and types 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’ (“JORC 2004”). Mr. O’Mara consents to the inclusion in this release of the matters based on his information in the form and context in which it appears.


ASX: AKA


About AMMG

AMMG was established in 2007 for the purpose of securing exploration ground over areas that have typically been subject to historical exploration and where significant geological data was available and/or the land was considered sufficiently prospective.

Areas with existing or potential access to infrastructure were also targeted.

To date, the Company has identified and is focused on advancing a diversified suite of mineral project areas located in Western Australia and Queensland.

The directors believe these projects have the potential for the realisation of economic resources of these commodities currently targeted: aluminous clay (kaolin), iron ore, coal, gypsum and mineral sands.

As at quarter end, the Company had 22 granted tenements and 36 tenement applications totalling approximately 11,926km².

Fig 9. AMMG’s 100% owned mineral projects

Quarterly Report HIGHLIGHTS information · Previous metallurgical results at the Bencubbin project...

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