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RESOURCE MINING CORPORATION LIMITED ABN 97 008 045 083 FINANCIAL

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RESOURCE MINING CORPORATION LIMITED ABN 97 008 045 083 FINANCIAL Powered By Docstoc
					RESOURCE MINING CORPORATION LIMITED

         ABN 97 008 045 083


         FINANCIAL REPORT


 HALF-YEAR ENDED 31 DECEMBER 2005
Contents                                 Page

CORPORATE DIRECTORY                          1

DIRECTORS’ REPORT                            2

CONSOLIDATED INCOME STATEMENT                9

CONSOLIDATED BALANCE SHEET                  10

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 11

CONSOLIDATED CASH FLOW STATEMENT            12

NOTES TO THE FINANCIAL STATEMENTS           13

DIRECTORS’ DECLARATION                      21

INDEPENDENT REVIEW REPORT                   22

AUDITOR’S INDEPENDENCE DECLARATION          24
Corporate Directory

Directors
S S JHOLL (Chairman)
W J DAVIES
P G JERMYN


Secretary
N BASSETT

Registered Office and Business Address
702 Murray Street
WEST PERTH WA 6005

Telephone: +61 8 9213 9400
Facsimile: +61 8 9213 9444
Website: www.resmin.com.au

Auditor
RSM Bird Cameron Partners
8 St George’s Terrace
PERTH WA 6000

ASX Listing
ASX Code:   Shares          RMI
            Options         RMIO

Bankers
Westpac Bank
109 St George’s Terrace
PERTH WA 6000

Share Registry
Computershare Investor Services Pty Limited
Level 2
Reserve Bank Building
45 St George's Terrace
PERTH WA 6000




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Resource Mining Corporation Ltd – 31 December 2005 Half Year Report




Directors’ Report
The Directors present the financial report of the consolidated entity, consisting of Resource Mining
Corporation Ltd [“RMC”] and its controlled entities, for the half-year ended 31 December 2005.

DIRECTORS
The names of the company’s directors in office during the half-year and until the date of this report
are as below. Directors were in the office for the entire period unless otherwise stated.

Mr Sarbir Singh Jholl                    Non Executive Chairman
Mr Warwick Davies                        Executive Director
Mr Peter G Jermyn                        Non Executive Director [Appointed 2 February 2006]

Mr Edmond Edwards                        [Resigned 19th January 2006]

REVIEW OF OPERATIONS

ARGYLE IRON ORE PROJECT

PROJECT DESCRIPTION
The Argyle Iron Ore Project is situated 120 kilometres south of the port of Wyndham in the eastern
Kimberley of Western Australia.

The project is contained within E80/2389 held by RMC’s 75% owned subsidiary Argyle Iron Ore Pty
Ltd and is located approximately 8 kilometres to the east of the Great Northern Highway
approximately 170 kilometres by road from Wyndham.

RMC is seeking to prove sufficient reserves with respect to tonnage and grade to sustain an annual
production and shipping rate of 1.5 to 2.0 Million tonnes per annum.

REVERSE CIRCULATION DRILLING PROGRAM OUTCOME

Tony Prospect
As of 31 December 2005, assays have been received for a total of 192 holes representing 3,809
metres covering the Tony prospect. The Tony prospect has now been drilled on a 100M by 20M
grid from 8159900mN in the south to 8160800mN in the north. Results of RC drilling to date have
shown that the Tony prospect has a uniform iron rich unit with a strike length of approx 900 metres,
a width of up to 80 metres across the full extent of the drilled area and is inferred to extend down
dip.

The high grade haematite ore represents that part of the ore body that has been subject to the
most oxidation of the magnetite and leaching of the silica which exists in varying stages throughout
the drilled area.

Sam Prospect
Assays have been received for a total of 329 holes covering the Sam prospect representing a total
of 6,726 metres. Results of drilling to date have shown that the high grade haematite ore has been
identified over a strike length of 2,300metres and a width of up to 120 metres. The southern most
600 metres of the Sam prospect and an area in the north around 8162800mN have shown the
most promise for the development of high grade enrichment. In the central portion of Sam (around
8162200mN) the high grade hematite enrichment appears to narrow to approximately 80m wide.




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Resource Mining Corporation Ltd – 31 December 2005 Half Year Report




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Resource Mining Corporation Ltd – 31 December 2005 Half Year Report


MAGNETITE POTENTIAL
The recently flown high resolution - low level aeromagnetic survey has outlined a substantial
potential magnetite resource. These zones of elevated magnetic response directly correlate with
elevated down hole magnetic susceptibility, drill hole geology and elevated Fe assay results and
provides additional upside to the Argyle Iron Ore Project.




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Resource Mining Corporation Ltd – 31 December 2005 Half Year Report


TRANSITION ORE – POTENTIAL HEAVY AGGREGATE SOURCE
Both the Tony and Sam prospects contain additional Fe rich material which is considered
unsuitable for iron and steelmaking customers. (high silica and or alumina content restrict use of
this type of ore in traditional blast furnaces). However, the physical characteristics of the ore
appear to be suitable for use as heavy aggregate in the sub-sea pipe coating industry.

Heavy aggregate material is sold as Iron Ore fines, typically with a top size of 9mm, with the main
quality parameters being: Specific Gravity, Bulk and Proctor Densities, moisture content, absence
of organic matter, and low levels of deleterious elements such as arsenic, cadmium and chromium.

Based on preliminary test work, ore found within the transition zone and other similar quality ore on
the surface at the extreme southern end of Tony prospect, appears to satisfactorily meet the heavy
aggregate specifications. Preliminary discussions with potential customers for the aggregate
material have commenced. A detailed test program is planned for the first quarter of CY 2006 to
further investigate this potential product opportunity.

FUTURE WORK PROGRAM

RESOURCE ESTIMATION
Geological logging of all RC and diamond holes has been completed, and geological interpretation
is progressing.

Resource estimation and reporting is underway and a JORC compliant Mineral Resource is
expected to be reported by late March.

Satmagan analysis had been carried out to test the quantity of magnetite within approximately 300
one metre interval samples from zones in the drill holes which show elevated magnetic
susceptibility. Results are encouraging, although we have yet to compile the results for detailed
analysis.

Scanning Electron Microscope (SEM) analysis on a number of RC chips is underway to clarify the
relationship of the haematite and magnetite to the sandstone. This study will assist in the
understanding of the genesis of the deposit as well as the potential of beneficiation of the iron ore.

METALLURGY
As a result of the problems with the diamond core drilling, the planned core test program has been
deferred. However, a modified metallurgical test program will proceed during the first quarter of CY
2006 where a wide variety of surface samples from both Sam and Tony prospects will be tested.
Tests planned included bulk density and crushing and screening tests.

Based on encouraging assay results from areas of magnetic highs, (as evidenced from the
Aeromagentic survey work), a program of Satmagan testing has been initiated. (Satmagan tests
involve the use of a sensitive balance that determines natural magnetic intensity and correlates to
the percentage of magnetite in a sample). “In-Field” magnetic susceptibility tests were routinely
carried out on all RC drill samples. The samples for Satmagan testing were selected from the field
‘mag-sus’ results, the samples with the highest ‘mag-sus’ readings being sent for further testing.

This initial program will test chip samples from the RC drilling to determine Iron (Fe) liberation at a
variety of size ranges and magnetic field strengths. Separation characteristics by both Wet and Dry
techniques will also be investigated.

The objectives of this test program will be to provide information to assist in the understanding of
the development potential of the magnetite zone in both Tony and Sam prospects.

PROJECT REVIEW

MINING
The RC drilling program has confirmed that within the areas of the haematite occurrence, the ore-
body has minimal overburden with an ore horizon that dips 10 to 15 degrees to the East. An
average Waste to Ore ratio of less than 0.5:1 is expected for the overall haematite mining



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Resource Mining Corporation Ltd – 31 December 2005 Half Year Report


operation. RMC plans to undertake contract mining, with the ore body conditions being suitable for
relatively small mining equipment including front end loaders and haul trucks of 45 to 50 tonne
capacity. Preliminary engineering conditions and recent “on-the-ground” experience suggests that
a hydraulic excavator will be the most appropriate digging unit. This recent engineering review
supports mining operations being carried out on a single shift basis, 6 days per week. Experience
gained from the RC drilling program, has reconfirmed original ground condition assessments at the
Argyle Iron Ore Project. These vary from hard on the southern end of Tony, to relatively soft at the
northern end of Sam. (The Atlas Copco L8 RC drilling rig averaged 160 metres drilled per operating
day inclusive of relocation).

CARTAGE TO PORT
Road trains of approximately 100 tonnes capacity will carry the iron ore from the mine site 170km
to Wyndham during a round-trip of approximately 6 hours. The road conditions are excellent, with a
wide shouldered two lane sealed carriageway from within 7km of the mine site to the port of
Wyndham. Discussions continue with potential cartage contractors. Indications suggest between
14 and 15 road trains will be required to haul +1.5 Mtpa of product to Wyndham port.

WYNDHAM PORT ASSESSMENT
Wyndham, the planned loading port for export of products from the Argyle Iron Ore
Project, is located in a calm, well protected area. The existing port is under-utilised with significant
development potential. The existing facilities of wharf and shiploader are unsuitable for the export
of iron ore. The wharf facilities are limited in the size of ship that can lay alongside, being rated for
ships of a maximum size of 25,000 dwt. However, suitable development areas for loading facilities
are situated close to the current facilities.

Consultants appointed to conduct a detailed study to assess the most cost-effective ship loading
operation for Wyndham are considering two options:- barge-loading, and a new purpose built ship
loading and berthing facility. The ongoing assessment of hydrographic and other available data has
indicated the best location for the shiploader and port handling facilities. The original location for
the onshore stockpile and loader, (just north of the current ship loading facilities), has been
determined as appropriate for deep water loading and ideal for the loading facilities. Wyndham Port
is operated by the Ord River District Co-operative Limited under contract to the WA Government.
RMC is in discussion with the Ord River District Co-operative Limited with respect to future port
development and operation options.

LICENSING AND ENVIRONMENTAL APPROVALS
Argyle Iron Ore Pty Ltd has made application for two mining leases MLA80/599 and 600 covering
the Sam and Tony prospects. These leases also cover the area of the anticipated mining
infrastructure. A miscellaneous licence application LA80/50 has been made to cover the proposed
route of the access road through to the Great Northern Highway.

Ecologia Environment has been engaged as RMC’s Environmental Consultant responsible for
review of flora, fauna, archaeological and ethnographic surveys in the area of the proposed drilling,
access route and mining areas. In addition, specialist consultants have completed comprehensive
ethnographic and aboriginal heritage surveys of the area in compliance with the Aboriginal Heritage
Act and in consultation with the relevant Aboriginal persons.

RMC continues to proactively communicate with all concerned parties regarding environmental and
heritage matters.

MARKETING
China’s iron ore imports for 2005 are estimated to be 275Mt or 62Mt greater (+32%) than 2004.
Industry analysts suggest that a level of 300Mt of iron ore imports will be achieved by China in
2006. Iron ore price negotiations for 2006/07 commenced in the second half of November 2005.
Little specific information is available regarding the progress of negotiations, but some Industry
analysts are claiming that the major iron ore producers are seeking price increases from 10 to 20%.
This estimate is against a background of falling spot prices for Indian iron ore to China, whilst
overall Chinese demand is continuing strong.




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Resource Mining Corporation Ltd – 31 December 2005 Half Year Report


RMC has also been fortunate to conclude “In Principle” iron ore sales Off-Take Agreements with
parties associated with the share placements. These Off-Take Agreements, (for 80% of the
anticipated annual haematite output), are subject to the development of the Argyle Iron Ore Project
and are clearly focused on the China market. The Off-Take Agreements will provide certainty for
future product sales. The planned metallurgical testing will assist in defining the final product
grades. Once metallurgical test work and all drilling assays are completed a review of other
potential iron ore products will be made. This review will include potential magnetite product(s).

RAVENSTHORPE PROJECT
Resource Mining Corporation Limited and Traka Resources Limited announced on 24 May 2005
that agreement has been reached for the establishment of an iron ore joint venture to explore for
iron ore on Traka’s Ravensthorpe project in south west Western Australia.

RMC has paid $200,000 and will expend a minimum of $500,000 in the first 12 months to earn an
option to earn up to 51% equity in the joint venture by expenditure of $5 million over 5 years
(inclusive of the $500,000 to earn the option). Once RMC has earned its 51% interest, Traka can
elect to contribute pro-rata or be Free Carried for a 30% interest to a Decision to Mine. In the event
RMC earns a 70% equity Traka may contribute on a pro- rata basis or elect to covert its interest
into a 2% Royalty interest.

The Ravensthorpe Iron Ore Project area lies within the layered Archaean greenstone succession of
the Ravensthorpe Range north of Ravensthorpe in south-western Western Australia.The
Ravensthorpe Range greenstones comprise a sequence of mafic and felsic volcanics, ultramafic
rocks and sediments (shale, siltstone, conglomerate and banded iron-formation). The greenstone
succession is located within a faulted southplunging and overturned syncline. The area is overlain
by a thick lateritic profile. The mineralisation exhibits textures consistent with iron enrichment in
other areas of the Archaean in Western Australia. In lateritised surface samples, goethite is the
dominant mineralogy with subordinate haematite. It is inferred that the enrichment mineralization
below lateritic cover is a martite-goethite ore, typical of that seen in enrichment ores in the Yilgarn
and Pilbara regions of WA.

Little exploration has been undertaken in the area other than costeaning and a number of shallow
percussion drill holes, the latter appearing to be limited to the laterite profile. The following activities
have been undertaken:

•       Completion of Flora survey in the area of specific interest to RMC for hematite enrichment
•       Comprehensive ground mapping of the iron rich stratigraphic units
•       Field truthing of the existing geological mapping with the aid of geophysical datasets,
        (DEM, aeromagnetics and radiometric datasets).

Once the review of the ground mapping and geological truthing work has been evaluated, RMC will
prepare for the next stage of evaluating the iron enrichment at Ravensthorpe.

WOWO GAP PROJECT - PAPUA NEW GUINEA
The Wowo Gap Project, held under EL 1165, is located about 200km east of Port Moresby, and
35km from the villages of Safia, near the Musa River and Wanigela, situated on Collingwood Bay.
The deposit is located at the eastern end of the Didana Range in a topographic saddle some 700m
above sea level. The area is drained by the Musa River and its various tributaries, the largest of
which is Bereruma Creek which flows north from the deposit.

The Company has been actively exploring options to progress Wowo Gap development. A variety
of options have been considered including the potential to negotiate direct equity funding into the
child entity that holds the project, Niugini Nickel NL, and the potential to create value by separately
listing the asset on a securities exchange. The Company withdrew the proposed resolution to
achieve equity funding into Niugini Nickel NL at the 25 January 2006 General Meeting of
Shareholders on 20 January 2006, and will outline their rationale for this asset at an appropriate
time.




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Resource Mining Corporation Ltd – 31 December 2005 Half Year Report


CORPORATE - SHARE PLACEMENT
On the 25 October 2005, RMC announced that it had agreed to place 20 million ordinary shares at
an issue price of $0.08 per share to a group of iron industry participants and sophisticated investors
to raise $1.6 million. The placement included a free attaching option exercisable at $0.10 expiring
on 30 April 2006 for every share subscribed. Ratification of this placement was achieved at a
General Meeting of Shareholders on 25 January 2006.

MANAGING DIRECTOR’S RESIGNATION
On the 16 January 2006, RMC received a 249D Notice from shareholders Matthew Stephen Lewis
and ANZ Nominees, (representing in excess of 5% of the RMC issued shares), seeking the
removal of Mr Edmond Edwards as a Director of RMC and his replacement by Mr Peter Jermyn.

Mr Edwards tendered his resignation to the RMC board on 19 January 2006. The RMC Board
recognizes and appreciates the valuable contribution made by Mr Edwards, particularly in the
development of the Argyle Iron Ore Project to its current status. Mr Jermyn was appointed a
Director to fill the casual vacancy on 2 February 2006.

RESULT
The operating result for the half-year ended 31 December 2005 was a loss after income tax of
$447,148.

ADOPTION OF AUSTRALIAN EQUIVALENT TO IFRS
This interim financial report has been prepared under Australian equivalents to IFRS. A
reconciliation of differences between previous GAAP and Australian equivalents to IFRS has been
included in Note 3 of this financial report.

AUDITOR’S INDEPENDENCE DECLARATION
We have obtained an independence declaration from our auditors, RSM Bird Cameron Partners, as
presented on page 24 of this half-year financial report.

Signed in accordance with a resolution of the Board of Directors.




W Davies
Executive Director

Signed on 15 March 2006




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