2009 Annual Report
Address by the Chairman
It is my pleasure to present to you the annual report for the year to 30th June 2009.
In October 2008 the Company released to the market, a revised combined resource statement for both its Kihabe and Nxuu zinc/lead/silver deposits, in north western Botswana, amounting to 27.4 million tonnes @ 2.3% zinc equivalent grade.
This combined resource was the subject of a revised Scoping Study conducted by Promet Engineers, the results of which were released to the market in the July 2009 quarterly report. The Study concluded that at prices around US$2,300/t for zinc and lead the project was considered to be fairly robust, yielding an IRR of around 26%, geared at 30% equity. It was also concluded that the project IRR could, through additional metallurgical test work, be further enhanced by improving the metal recoveries, from around 60%, as used in the scoping study model. Further enhancement of the project IRR could also be achieved by conducting further infill drilling at the Nxuu deposit, in order for a pit design to be applied to the deposit so that it could then be included in the Scoping Study.
To this end, further metallurgical test work conducted to date has shown that with a finer grind, 92% of lead recoveries can now be achieved. Results from mineralogical test work are still awaited in respect of zinc. It is intended to conduct some 500m - 600m of RC resource in-fill drilling at the Nxuu Deposit for the purpose of the likely expansion of this resource and also to enable a pit design to be applied to the deposit.
Zinc and lead prices used in the scoping study, were as of March 2009 at US$1,228/t and US$1,176/t respectively. As at the beginning of September 2009, those prices have improved significantly, with zinc around US$1,900/t and lead at US$2,300/t, showing increases of 55% and 96% respectively.
All of these factors – improved metal recoveries, higher metal prices and a larger resource base able to be incorporated into the scoping study with a pit design, will show significant improvements to the project economics.
With the fall in base metal prices, the Company maintained its focus on diamond exploration during the course of the year. It was particularly fortunate in being able to acquire close to seven thousand square kilometres of highly prospective diamond exploration licences in Western Ngamiland, Botswana. The licences adjoin the Company’s Tsumkwe diamond exploration project in Namibia. With this significant area now under licence all within the southern margins of the Angolan Craton, the Company believes that it is in an excellent position to discover any kimberlites that may exist in this region. With the Kihabe base camp situated in the same region, the Company already has a well established base from which it can operate its diamond exploration programme.
Since August 2008 the Company has not been required to raise funds from the market for the purpose of exploration funding. Close to three million dollars was realised during the course of the year through the sale of a royalty and the relinquishment of an exploration licence application at the Company’s Telfer Project in Western Australia. Because of the cost of maintaining its remaining mining leases at Telfer, the Company has withdrawn from this project.
I would like to thank the remaining members of the Company’s Board for their contribution during this difficult year and for their fee sacrifices to help the Company through this economic downturn. I also extend my thanks to our staff and consultants for their contribution in helping the Company achieve its goals.
Nigel Forrester
Chairman & Managing Director
