Arafura Resources

Published : October 27th, 2015

Quarterly Activities & Cashflow Report

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Keywords :   Australia | Cerium | China | Iron | Rare Earth | Water |

Quarterly Activities & Cashflow Report

Microsoft Word - 20150930_20151027_Quarterly and cashflow_final.docx


Quarterly Activities Report

and Appendix

5B

For the period

ending 30 September

2015

ASX: ARU

HIGHLIGHTS


Testwork demonstrates removal of all cerium in the RE Intermediate Plant, presenting an opportunity for lower capital expenditure for the RE Separation Plant


Independent engineering report identifies significant opportunities for capital expenditure savings


EIS on track for submission in Q1 CY2016 as flora, fauna and archaeology surveys and reports are being advanced


Nolans Community and Stakeholder Engagement program underway in Central Australia


Implementation of strategies to preserve cash reserves and manage Project advancement


Cash balance at end of reporting period A$13.5 million


NOLANS PROJECT


RARE EARTH EXTRACTION PROGRAM


One of the significant optimisation opportunities examined in the Company's Australia‐based rare earth ('RE') extraction program has been in separating cerium ('Ce') from the other REs in intermediate stage processing. Recent work shows all Ce will now report as a Ce carbonate product at the RE Intermediate Plant, eliminating the need to process Ce in the downstream RE Separation Plant. In the current Q2 FY2016, Arafura is conducting a detailed review of capital expenditure for the Nolans Project (see Engineering section below), including re‐estimating the capital requirement for the offshore RE Separation Plant to account for reduced processing volumes resulting from Ce removal.


The China‐based Stage 1 flowsheet optimisation program with two Beijing institutes has been completed.


During the quarter the Company and one of the institutes convened a workshop to discuss results and to assess flowsheet development opportunities arising from the use of an alternative reagent to sulphuric acid in the RE extraction pre‐leach circuit, which appeared to work very efficiently with the Nolans concentrate. The Company understands a number of established Chinese producers have been testing this alternative reagent as a substitute for sulphuric acid.


+ See chapter 19 for defined terms.


Quarterly Activities Report and Appendix 5B - 30 September 2015

Page 1 of 15


There is the potential this alternative reagent may result in a simplified flowsheet and consequently lower capital and operating expenditure for the RE Intermediate Plant area. The Company has completed a focused testwork program in Australia to better understand this pre‐ leach opportunity and to test the downstream acid bake options for the flowsheet. However, the Company has decided that due to the advanced nature of its work using the known sulphuric acid pre‐leach ('SAPL') flowsheet, it will not continue investigations into the alternative reagent at this stage. Arafura's testwork is being documented for future reference in the event an appropriate industry partner is interested in examining this opportunity under a mutually acceptable development arrangement.


Flowsheet optimisation testwork with the second Beijing institute was also completed during the quarter. The Company has recently received the final report from this institute. In October the institute conducted a workshop to provide the Company with a better understanding of the optimisation opportunities being targeted. In Q2 FY 2016 the Company will further analyse these results to determine if further work beyond Stage 1 with this institute is warranted..


BENEFICIATION OPTIMISATION STAGE 2 & VARIABILITY TESTWORK


The Chengdu Analytical and Testing Centre for Minerals and Rocks ('CTC') completed the beneficiation variability test program during the period. A draft report is in review; however additional testwork data will be incorporated before the report is finalised. The Company has decided not to progress to Stage 3 beneficiation testwork / integrated pilot plant ('IPP') immediately. The reasons for this are discussed in greater detail below (see Corporate ‐ Project Focus section).


ENGINEERING


During the quarter Arafura commissioned an independent engineering analysis of the Nolans Project to review the beneficiation and RE extraction flowsheets for capital expenditure savings and to examine various alternative production options. This process included a review of individual equipment costs, waste treatment facilities, infrastructure and a high level examination of plant layout. The results of this analysis are being used in the current December 2016 quarter to support a detailed examination of engineering cost reduction opportunities for both the Nolans Site and the offshore RE Separation Plant.


The Company looks forward to providing updates on these activities during the current quarter.


REGULATORY APPROVALS - ENVIRONMENTAL IMPACT STATEMENT STUDIES


Several Environmental Impact Statement ('EIS') studies, analysis and draft reporting were advanced during the September quarter.


Field work for flora and archaeology were completed, with draft reports in review. A draft fauna study report is in preparation and is expected to be received during October.



+ See chapter 19 for defined terms.


Quarterly Activities Report and Appendix 5B - 30 September 2015

Page 2 of 15



Images 1 and 2: Biodiversity survey activities at the Nolans Site.


Work on the establishment of additional baseline monitoring stations for radiation and dust was completed during the reporting period. The analysis of testwork aimed at measuring radioactive gas emissions from mineralised and waste rock types is at an advanced stage.



Image 3 (left): Air quality sampling station at the Nolans Site. Image 4 (right): Radioactive gas emission testwork on mineralised and waste rock samples being completed offsite.


Work continues on the consolidation of all analytical and monitoring data for the final report for the Southern Basins. Modelling of the data shows that the bore field aquifer system is very robust, the extraction of groundwater for the proposed mining and processing operations will have only minor localised impacts during operations, and the long term impacts on the aquifer system are anticipated to be minimal.



Image 5: Rising stage sampler installed at the Nolans Site for the collection of water samples from an ephemeral creek.


+ See chapter 19 for defined terms.


Quarterly Activities Report and Appendix 5B - 30 September 2015

Page 3 of 15


Geochemical analysis work has commenced to characterise and predictably model un‐mineralised waste rocks from the proposed Nolans mining operation to better understand the short and long‐ term risks associated with placement of large quantities of waste rock into waste rock dumps. This information will be a key input for the EIS.


COMMUNITY AND STAKEHOLDER ENGAGEMENT


During the period Arafura provided an update on the Nolans Project to the Anmatjere Local Authority of the Central Desert Regional Council in Ti Tree, and to participants at the Mining the Territory Conference in Darwin. In addition, the Company established an access portal for the Nolans Project using the Industry Capability Network ('ICN') Gateway. A large focus of stakeholder engagement has been on the impact footprint of the proposed development and on the benefits to the community, in particular employment and opportunities for local businesses.


EXPLORATION


AILERON - REYNOLDS (Rare Earths; Water; Extractive Minerals)


NOLANS REVISED RESOURCE STATEMENT


During the quarter work on a revised estimate of Mineral Resources for the Nolans Project was advanced, and is expected to be reported during the December quarter. The Nolans Bore block model now incorporates waste rocks whose detailed modelling was necessary to advance their geochemical and geotechnical characterisation as part of the EIS.


CARBONATE RESOURCES EMEL 30510


Reconnaissance mapping of the carbonate area has been completed on EMEL 30510. Prospecting in the southern end of the EMEL demonstrated good outcrops of quality carbonate (marble) beneath a veneer of calcrete and alluvium. Work to date indicates this area has the potential to supply the life of mine carbonate requirements for the RE Intermediate Plant. Trenching of this target area will be undertaken during the next six months.


YALYIRIMBI (Iron)


Ferrowest Limited ('Ferrowest'; ASX: FWL) and the Company recently entered into a Deed of Cancellation in respect of all future Ferrowest iron ore rights in the Yalyirimbi Iron Project on EL 24548. The Company is the owner of the underlying mineral tenement, and iron rights are held through Arafura Iron Pty Ltd ('AIPL'). The Deed of Cancellation was executed in September and unwinds Ferrowest's participation in Yalyirimbi and results in the following:


  • Transfer of the 51% of the shares in AIPL held by Ferrowest back to the Company. AIPL now being a wholly owned subsidiary of the Company;


  • Resignation of the two Ferrowest nominated directors from the AIPL Board;


+ See chapter 19 for defined terms.


Quarterly Activities Report and Appendix 5B - 30 September 2015

Page 4 of 15

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Arafura Resources

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CODE : ARU.AX
ISIN : AU000000ARU5
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Arafura Res. is a gold and nickel exploration company based in Australia.

Arafura Res. develops gold, nickel, rare earth and uranium in Australia, and holds various exploration projects in Australia.

Its main asset in development is NOLANS BORE in Australia and its main exploration properties are AILERON / REYNOLDS RANGE, JERVOIS, KURINELLI, MT PORTER / FRANCES CREEK and HAMMER HILL in Australia.

Arafura Res. is listed in Australia and in Germany. Its market capitalisation is AU$ 210.6 millions as of today (US$ 152.0 millions, € 133.1 millions).

Its stock quote reached its highest recent level on April 20, 2007 at AU$ 2.16, and its lowest recent point on December 19, 2014 at AU$ 0.04.

Arafura Res. has 546 900 032 shares outstanding.

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Corporate Presentations of Arafura Resources
5/20/2008The Nolans Project
Nominations of Arafura Resources
12/8/2008today - Appointment of Chairman - Mr. Ian Laurance
Project news of Arafura Resources
12/1/2010(Nolans Bore)Presentation of the Nolans Project
11/18/2008(Nolans Bore)NOLANS RARE EARTHS PROJECT, NORTHERN TERRITORY
11/12/2008(Nolans Bore)Nolans Resource Upgrade
8/5/2008(Nolans Bore)New Mineralization at Nolans returns outstanding assays.
7/11/2008(Nolans Bore)NOLANS PROJECT RARE EARTHS MARKET UPDATE
7/4/2008(Hammer Hill)Hammer Hill update 040708
5/20/2008(Hammer Hill)Sulphine mineralisation intersected in early drilling
Corporate news of Arafura Resources
7/14/2016Response to ASX Price Query
6/28/2016BRR Webcast - Nolans Review and Major Improvements
6/20/2016AHK: Progress Report
5/25/2016Webcast Nolans OPEX and EIS Update
5/23/2016Nolans Environmental Approvals Update
1/8/2016RE Separation MOU Executed with OCI
12/23/2015$3.0 Million R&D Tax Refund Received
11/25/2015RXL: Drilling to Commence at Bonya
11/19/2015Chairman's Address 2015 AGM
11/19/2015AGM 2015 Presentation
10/29/2015Increase Nolans Project Mineral Resources
10/27/2015Quarterly Activities & Cashflow Report
10/9/2015Notice of Annual General Meeting/Proxy Form
10/6/20152015 Annual Financial Report
9/22/2015FWL: Deed of Cancellation
9/17/2015Annual Report to shareholders
9/17/2015Appendix 4G - Corporate Governance
7/27/2015AHK: Frances Creek MMP Approved
7/27/2015Quarterly Activities & Cashflow Report
3/3/2015Initial Director's Interest Notice
2/18/2015Half Year Accounts
2/16/2015Change of Share Registry Notification
11/5/2014Letter to Shareholders
10/30/2014Quarterly Activities and Cashflow Report
10/30/2014FWL: 51% of Arafura Iron Pty Ltd Secured
10/23/2014NT Major Projects Presentation
10/20/2014RXL: Exceptional Copper Assays From Bonya Mine Drilling
11/25/2013BRR Webcast- Arafura AGM
11/8/2013Mulga Drilling Results
7/31/2009Quarterly Report
6/15/2009Settlement of Chinese Share Subscription List
5/29/2009FIRB Approval for Nolans Project
2/19/2009Strategic Investment in Arafura Resources Ltd
8/26/2008Incitec Heads of Agreement
5/16/2008Phosphate Project Recoveries
4/28/2008Releases Flotation Demonstration Results
7/9/2007Releases Outstanding REO and Uranium Results
3/19/2007Nu Power lists at 300% Premium
3/14/2007releases Nolans Phosphate Test Work
3/1/2007releases Lagoon Creek Results for March 2007.
2/16/2007Results of General Meeting
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