Highlights
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Excelsior Gold $2.25m Financing Agreement executed;
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Wiluna West gold ore processing discussions continuing;
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Acquisition of Hatches Creek completed, drill planning underway;
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Updated tungsten resources for Tungsten Mining (GWR 13.3%);
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Nardoo Well project to be evaluated for lithium, and
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Strong balance sheet with $8.9m cash, no debt and $5.3m in listed securities and other material financial assets.
Excelsior Gold Ltd Financing
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GWR entered into a $2.25m financing arrangement with Excelsior Gold Ltd (ASX: EXG) to advance mining and exploration activities at their Kalgoorlie North Gold Project.
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GWR holds 17.2 million convertible notes in EXG at an issue price of $0.0387 per convertible note and a loan of $1.59m, both attracting an interest rate of 12% per annum.
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GWR director Mr Jimmy Lee has been appointed to the board of EXG.
Wiluna Gold Project - Ore Processing Discussions
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GWR and Blackham Resources (ASX: BLK) remain in discussions concerning the potential for the processing of ore from GWR's Wiluna West Gold Project through the Wiluna Gold mill - currently being refurbished and scheduled to be operational in late August or early September 2016.
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A detailed review of known gold deposits within the Wiluna West project is nearing completion and this will underpin studies in respect to commencing production via a milling agreement with BLK.
Hatches Creek Tungsten Project
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In May, GWR announced that it had agreed to purchase a 100% interest in the Hatches Creek Tungsten Project in the Northern Territory.
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An RC drilling program has been planned to test for high grade tungsten mineralisation beneath the extensive historical mine workings.
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The proposed RC drilling program will commence once statutory approvals are in place, with an Exploration Mining Management Plan (MMP) submitted to the NT Department of Mines and Energy and a Work Program submitted to the Central Land Council for approval.
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Hatches Creek was previously subject to a joint venture where GWR had the right to earn 50% by spending $1.5m. The Sale
About GWR
GWR Group Limited ("GWR") is an independent, Australian resource house, focused on creating shareholder wealth through the development of high quality mineral exploration and development projects.
The Company has a portfolio of mineral commodity projects that includes projects held in its own right, in joint venture and indirectly through investment in other listed entities. We aim to create value through operational excellence and innovation in exploration and project development. We will collaborate with our stakeholders to build a sustainable mining business and the respect of our peers.
Corporate Summary
ASX code: GWR
Issued Capital: 242.28 million
Issued Options: Nil
Cash on hand: $8.9 million
Board & Management
Gary Lyons
Non-executive Chairman
Mick Wilson
Executive Director
Tan Sri Dato' Tien Seng Law
Non-executive Director
Kong Leng (Jimmy) Lee
Non-executive Director
Datuk Chin An (CA) Lau
Non-executive Director
Mark Pitts
Company Secretary
Craig Ferrier
Chief Executive Officer
Agreement delivers GWR a 100% interest for a consideration of $0.5m and 1.5% Net Smelter Return.
Investment in Tungsten Mining NL (ASX: TGN)
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TGN released updated Mineral Resource estimates for the Big Hill (Pilbara) and Mulgine Hill (Murchison) tungsten deposits in June 2016, bringing all Mineral Resource estimates to JORC 2012 standard.
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TGN has a JORC 2012 resource inventory of 88.6 Million tonnes at 0.18% WO3, containing more than 15.5 million MTU (metric tonne units) of WO3 at a 0.10% cut-off grade.
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Core sampling program indicates the potential to add to existing intersections plus to identify new zones of mineralisation from historical diamond drilling.
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Work has advanced on the Mt Mulgine Strategic Development Plan, with drilling and metallurgical test work programs approved and commencing this quarter.
Project Generation & Acquisitions - RWG Minerals
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As previously announced, GWR established a 100% owned subsidiary, RWG Minerals Pty Ltd, with a mandate to create value through tenement acquisition.
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During the quarter, no new applications were made and RWG now has a total of four projects.
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It is planned to undertake an evaluation of the Nardoo Well project, which based upon the known pegmatite hosted tantalite and beryl mineralisation may have significant potential for lithium mineralisation
Corporate
Business Strategy
As described in the March Quarterly report, a revised business strategy has been adopted and is being implemented by the GWR Board with a particular focus on cash generating opportunities. Sector focus is on gold, base and specialty metals and to continue the move away from iron ore and bulk commodities. Substantial changes have been made in the business over recent years as the prospects for development of the Company's Wiluna West Iron Ore Project have diminished with the decline in the selling price for seaborne iron ore.
As reported previously, this has seen the Company place the Wiluna West Iron Ore Project on care and maintenance and take action to strictly limit cash outflows related to its iron ore assets. This has also provided the impetus to increase our exposure to other commodities, either by direct project participation or indirectly through equity investment, which has permitted the retention of capability, recovery of costs and generation of management fees.
As reported, GWR has been actively seeking new project and investment opportunities to create value throughout the commodity cycle. KPMG Corporate Finance were engaged as corporate advisor to accelerate and support this activity.
Excelsior Gold Funding Agreement
On 20 June 2016, GWR announced that it had executed a funding agreement with Excelsior Gold Limited ("Excelsior Gold") (ASX: EXG) to provide funding to Excelsior Gold to advance mining and exploration activities at its Kalgoorlie North Gold Project.
Excelsior Gold is a gold production company focussed on the mining and development of the Kalgoorlie North Gold Project. Mining commenced in November 2015, with ore processed through the nearby Paddington processing plant operated by Zijin subsidiary, Norton Gold Fields. Excelsior Gold has defined 22 resource areas with total current Measured, Indicated and Inferred Mineral Resources of 24.53 million tonnes @ 1.76g/t Au for 1,385,100 ounces of gold (see EXG ASX announcement dated 2 May 2016).
Pursuant to the binding term sheet ("Term Sheet") GWR provided interim financing of $2.25 million by subscribing to approximately 17.2 million convertible notes ("Convertible Notes") at an issue price of $0.0387 per Convertible Note and lending Excelsior a further $1.59 million ("Loan").
The Term Sheet also provided that, subject to the satisfactory completion of due diligence by GWR, GWR had the right to elect to subscribe for approximately 27.8 million Shares ("Placement Option") at an issue price of $0.057 per share in full satisfaction of Excelsior Gold's liability pursuant to the Loan. The binding Term Sheet also provided for certain other funding rights and commitments for GWR conditional upon the satisfactory completion of due diligence and the exercise of the Placement Option.
On 11 July GWR announced that it had provided formal notice to Excelsior Gold of its decision not to exercise the Placement Option. GWR advised Excelsior Gold that it had not been able to complete due diligence to its satisfaction, primarily as a consequence of inconsistencies between the block model provided by Excelsior Gold prior to the Term Sheet being signed and the mine reconciliation data (refer EXG ASX Announcement's dated 4 July and 12 July 2016).
GWR and Excelsior Gold remain in discussions in relation to the future funding arrangements of Excelsior Gold and the Kalgoorlie North Gold Project and the funding provided pursuant to the Term Sheet to date. GWR director, Mr Jimmy Lee, was nominated by GWR to be appointed to the Excelsior Gold board pursuant to the Term Sheet and remains a director.
In response to GWR's decision not to take up their full financing rights, Farrah Property Securities Pty Ltd ("Farrah"), who provided a $0.5m loan contemporaneous with the GWR funding arrangements, reached agreement with Excelsior Gold to immediately convert their convertible loan to 10 million shares (at an issue price of 5 cents with 10m free attaching options) and subscribe to a further 4,000,000 Excelsior Gold shares at $0.05 each (with free attaching options).
On 13 July, Excelsior Gold lodged a Prospectus for a partially underwritten rights issue to raise $4.84m at an issue price of $0.05 per share. Farrah has agreed to underwrite 40 million shares (or $2 million) under the rights issue.
Hatches Creek Tungsten Project
On 12 May 2016, GWR announced that its wholly-owned subsidiary, NT Tungsten Pty Ltd ("NTT") had executed a Sale Agreement with Davenport Resources Limited ("Davenport"), for the acquisition of the Hatches Creek Tungsten Project ("Project") in the Northern Territory.
The Project was the subject of a JV Agreement between NTT and ASX-listed Arunta Resources Limited ("Arunta"). In February 2016, Arunta completed a demerger, with unlisted company Davenport retaining the Hatches Creek Project.
The consideration payable for the 100% interest in the Project was
$500,000 cash plus a 1.5% Net Smelter Return ("NSR"). Settlement of the transaction is currently being completed and the Sale Agreement will terminate the JV arrangements. As previously announced on 19 January 2015, GWR signed a binding Heads of Agreement with Arunta and agreed to sole fund $1,500,000 of JV Expenditure to earn a 50% JV interest in the Hatches Creek tungsten project in the Northern Territory.
The Sale Agreement allows GWR to accelerate exploration on this high grade tungsten project. The reduced cost allows the Company to assume complete control of the project, to develop it to our
Figure 1: Hatches Creek Project Location
timeframe and not be subject to JV pressures.
GWR's Chief Executive Officer, Craig Ferrier, said "With our recently updated vision and approach of targeting quality projects in a counter-cyclical manner, we are confident that detailed and methodical exploration of this high grade historical mining centre will deliver results."
An RC drilling program has been planned that will test for tungsten mineralisation beneath the historical mine workings, which are known to have produced high grade tungsten. The RC drilling program will commence once statutory approvals are in place. An Exploration Mining Management Plan ("MMP") has been submitted to the NT Department of Mines and Energy and a Work Program has also been submitted to the Central Land Council for approval.
The Project is located 375 km north east of Alice Springs in the Northern Territory of Australia (Figure 1).
During the June 2016 Quarter, other than preparation for the planned drilling program, there was only limited activity on the Hatches Creek project due to the commercial negotiations with Davenport and pending completion of the settlement process for the tenement Sale Agreement.