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From: Nigel
ArtDate: 29th September 2006
Section: (FILLYABOOTS NEWS RELEASES)
Remote Name: 87.74.115.61
Date: 10/10/06
Time: 22:51
29th September 2006
Sylvania Resource - Interims Results
News Item - Conduit PR
SYLVANIA RESOURCES LIMITED
ANNUAL REPORT
For the year ended 30 June 2006
CORPORATE INFORMATION
Directors Terence M McConnachie - Chief Executive Officer Edward F G Nealon - Non-executive Chairman Grant M Button -- Executive Director Dr Evan Kirby - Chief Operating Officer Melissa J Sturgess Smith - Non-executive Director Kevin S Huntly - Non-executive Director
Company Secretary Michael James Langoulant
Registered Office and Principal Place of Business
98 Colin Street West Perth, Western Australia 6005 Australia
Telephone: (08) 9481 8711 Facsimile: (08) 9324 2977 Website: www.sylvaniaresources.com
Share Register Computershare Investor Services Pty Limited Reserve Bank Building Level 2 45 St George's Terrace Perth, Western Australia 6000 Australia
Auditors HLB Mann Judd Chartered Accountants 15 Rheola Street West Perth, Western Australia 6005 Australia
Solicitors Clayton Utz QV1 250 St Georges Terrace Perth, Western Australia 6000 Australia
Stock Exchange Listings Sylvania Resources Limited is listed on the Australian Stock Exchange (Shares: SLV) and on the Alternative Investment Market of the London Stock Exchange (Shares: SLV)
OPERATIONS AND FINANCIAL REVIEW and AIM LISTING
Admission to the Alternative Investment Market of the London Stock Exchange Plc ("AIM")
Subsequent to the year end, the shares of Sylvania Resources Limited ("the company") commenced trading on AIM after a placing of new shares which raised £12 million (A$29.6 million) (before expenses). The company issued 40,000,000 placing shares, representing 27.5 per cent of the enlarged issued share capital of the company, at 30 pence (A$0.74) per ordinary share. Williams de Broe acted as the company's Nominated Adviser and Broker. The placement was approved at a general meeting of shareholders of the company, which was held on 26 June 2006.
SOUTH AFRICAN OPERATIONS
Chromite Tailings Retreatment Project (Sylvania 25%)
The company has a 25% interest in a consortium which owns the Chrome Tailings Retreatment Project ("CTRP") which is managed by Aquarius Platinum Limited.
The CTRP operation had a positive year with Platinum Group Metal ("PGM") production for the year increasing nearly three fold to 6,234 PGM ounces (1,558 PGM ounces attributable to the company).
Over the year recoveries and production have improved markedly as the technical enhancements to the Plant began to take effect. This led to consistent and stable operation being achieved with recoveries rising to 68% against 51% in the previous quarter. The average PGM basket price received for the year increased by an average 45% to US$1,207 per PGM ounce. As a result of the increased production levels and basket prices, revenue increased to R43 million (R10.7 million attributable to the company). The cash operating margin for the year increased to 63% from 37.5% in the previous year.
During the year, the management team at CTRP commissioned test work at Mintek to better understand the metallurgical characteristics of the feed sources. This work primarily identified the material being treated from Bayer as the source of the production and recovery problems and consequently CTRP stopped treating this material during the March quarter. During the fourth quarter, only current arisings from the Krooondal Chrome Mine were fed to CTRP. This led to monthly tonnages being treated falling to roughly half design capacity at 10,000 tonnes per month. However despite the lower monthly throughput, PGM production levels actually increased as recoveries and grade improved.
CTRP is currently completing a project to add dump material from the Kroondal Chrome Mine to the CTRP feed, which is scheduled for completion at a cost of approximately R2 million. This is planned to increase feed tonnages back to current design capacity of 20,000 tonnes per month and consequently it is anticipated that PGM production will continue to increase throughout the 2007 financial year.
Additional staged expansions, including the pipeline to feed Bayer current arisings, plus additional flotation cells at CTRP to increase the capacity beyond 20,000 tonnes per month, are under consideration by the consortium. Test work is in progress, which is aimed at gaining a better understanding of the processing requirements of the Bayer current arisings and dump material.
Samancor Dumps
During the year the company signed a range of agreements with Samancor in relation to the retreatment of chromite mine tailings for the extraction of chrome and PGM's. The Samancor Agreement ("Agreement") expires on the later of 30 April 2011 or the date on which all of the chrome in the relevant tailings dumps has been processed. The Agreement provides that following the expiry of its initial term (as referred to above) it can be renewed by agreement between the parties. The company estimates that it should take just under 5 years to complete the washing of the historical chrome dumps covered by the Agreement, however, the rewashing of current arisings should last considerably longer.
Under the terms of the Agreement, the company will be able to process five Samancor tailings dumps at its Western Chrome Mines (Buffelsfontein, Waterkloof, Mooinooi, Elandsdrift and Millsell), and eight at its Eastern Chrome Mines (Tweefontein, Lannex, Steelport, Doornbosch, Montrose, Groothoek, Onverwacht and Mooihoek). The company will recover for Samancor the chrome washed from the tailings at a price agreed by reference to a sliding price scale that is dependent upon the volume of chrome recovered and will receive in exchange the resultant tailings to be processed for PGM recovery. Full details of the Agreements are disclosed in the AIM Listing document dated 17 July 2006.
The company plans to construct a total of six chrome washing plants ("CWP's") and four PGM recovery plants ("PRP's") to treat both current tailings arisings and stockpiled dump tailings from the Samancor mines.
The company has constructed a CWP which is located at the Samancor Millsell Mine near Kroondal. This plant is producing chrome concentrates from Millsell dump and current arisings tailings. Additional facilities which will allow increased throughput as well as PGM concentrate production are currently being constructed at Millsell. The operation of the processing facilities has been contracted out to Tailings Technology Pty Ltd, a South African company with extensive experience in PGM recovery by flotation.
A project to construct CWP's and PRP's at Samancor's Steelpoort mine has commenced and Matomo Projects (Pty) Ltd (Matomo) has been awarded the contracts for this work. Matomo has extensive experience with small minerals processing plants and their core team of engineers were involved with the design and construction of CTRP. The company anticipates working with Matomo on the remaining CWP's and PRP's.
The company has scheduled the construction of the six CWP's by July 2007. The company's current intention is for each CWP (except Mooinooi which is planned for a capacity of 57,000 tonnes per month) to be designed to treat a minimum of 30,000 tonnes of input tailings per month to recover approximately 7,500 to 10,000 tonnes of saleable chrome product per plant per month.
Once the chrome tailings have been washed and the extracted chrome has been returned to Samancor, the company will pipe the resultant tailings to one of the four PRP's for recovery of PGMs.
The company plans to construct and commission four PRP's by October 2008, which will be located at Waterkloof, Buffelsfontein, Tweefontein and Steelport. Each of the plants has planned capacity to treat 20,000 tonnes per month of final tailings, with the exception of Buffelsfontein where the design capacity will be for 40,000 tonnes per month
The company has announced that it intends to finalise an agreement with a self funding, broad based BEE partner, to ensure compliance with South Africa's Broad Based Economic Empowerment Act No. 53 of 2003 and the codes of good practice published in terms of the South African Mining Charter. It is anticipated that the company will hold a 74% interest in each of the CWP's and PRP's, with the remaining 26% held and funded by the BEE partner.
Everest North PGM Project
The Everest North project lies on the Farm Vygenkoek JT 10 in the eastern Bushveld of South Africa, and is prospective for PGMs. Previous work has outlined an inferred resource of 4.2 million tonnes grading 5.87 g/t PGM, for an inferred resource of 796,000 ounces of PGMs.
A full feasibility study commenced in April 2006, with a diamond drilling programme commencing in the forth quarter and Metago Environmental Engineers being awarded the Environmental Impact Assessment study work.
To date, five boreholes and deflections have been drilled on the Vygenhoek Farm at the Everest North Project site. Drilling commenced in June 2006 and currently two rigs are deployed on site. A third rig will commence operation in October. To date 546.56 metres have been drilled. The average reef thickness obtained in 11 UG2 intersections is 1.42 metres, with the narrowest measuring 1.21 metres and thickest reef seam measuring 2.00 metres. The entire reef intersected so far has been composite UG2 reef comprising the full UG2 package with no interstitial pyroxenite waste. It would appear at this stage that the composite reef is present on the bulk of the of the Vygenhoek portion of the reserve.
It is pleasing to note that the reef intersected appears solid and the top and bottom waste intersections are characterized by competent rock implying that the underground extraction thereof is a viable and feasible proposition.
Results of the feasibility study are anticipated by the end of the 2006 calendar year.
AUSTRALIAN OPERATIONS
Exploration by the company within Australia has been focused on the Archean Sylvania Inlier, situated in Western Australia. Within this area the company still retains mineral exploration projects known as Copper Knob and Jimblebar. The projects lie east and south of Newman and are located within the Peak Hill Mineral Field. Exploration on these tenements has targeted gold, copper-zinc, nickel and platinum group element mineralisation.
The company had previously entered into an Option agreement with Warwick John Flint (Flint) over all of its Australian tenements at Jimblebar and Copper Knob. Under the terms of the Option Agreement, Flint had the right to exercise the Option at any time up until 16 August 2005, to acquire the company's interests in its Australian tenements for the consideration of A$55,000, and the issuance to the company of fully paid ordinary shares in a listed entity to the value of A$200,000. Flint has the obligation to maintain the tenements in good standing during the life of the Option Agreement.
During the year Flint exercised his right to extend the Option Agreement for a further 12 month period until 16 August 2006 through the payment of $10,000. Under the terms of the Option extension, the share consideration component of the exercise price of the Option has increased to $300,000.
Subsequent to year end, Flint and the company extended the Option Agreement until 16 February 2007 for an Option fee of $7,500. Under the terms of the Option Agreement extension, the share consideration component of the exercise price of the Option remains at $300,000.
Entering into this Option Agreement is consistent with the Board's intention of focusing its attention on its platinum related activities in Southern Africa.
Edward Portman Conduit PR Ltd 76 Cannon St London EC4N 6AE Office: +44 (0) 20 7429 6666 Direct: +44 (0) 20 7429 6607 Fax: +44 (0) 20 7429 6699 Mob: +44 (0) 773 3363 501
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