• Coal sales of 558000 tonnes for the quarter. • Large upgrade in

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• Coal sales of 558000 tonnes for the quarter. • Large upgrade in Powered By Docstoc
					                 QUARTERLY REPORT



•       Coal sales of 558,000 tonnes for the quarter.

•       Large upgrade in coal reserves and resources at
        Sebuku.                                                  Straits Resources Limited
                                                                 ABN 22 056 601 417
•       Highly encouraging initial drill results from Mt
        Muro, Indonesia at the Juking Sopan prospect.            1st Floor
                                                                 35 Ventnor Avenue

•       Completion of purchase of the ex MIM Australian          West Perth WA 6005

        tenement package from Xstrata.
                                                                 PO Box 1641
                                                                 West Perth WA 6872
•       Three high priority North Queensland gold targets        Australia
        acquired through the ex MIM purchase ready for drill
        testing.                                                 Telephone (61 8) 9480 0500
                                                                 Facsimile   (61 8) 9480 0520

•       Investigating the development of a salt project in the   www.straits.com.au

        Exmouth Gulf, WA.

•       Updated reserve announced for Tritton copper
        project - with project development expected in 2004
        subject to finalising funding package.

      Further information can be obtained from our website:

PRODUCTION /                                Quarters Ended                   Year to Date
                                   30 Sep       30 Jun       31 Mar       30 Sep      30 Sep
                                    2003         2003         2003         2003        2002

Copper Cathode
Nifty (Jan & Feb 03)    Tonnes                                3,190        3,190      17,135
Girilambone             Tonnes        0          262           333          595        1,448
Total mine production   Tonnes        0          262          3,523        3,785      18,583
Straits – Total sales   Tonnes        28         262          3,492        3,782      18,580

Sebuku Coal Mine
Coal mined               ‘000t       506         584          560          1,650       1,793
Product coal             ‘000t       457         452          545          1,454       1,494
Sales                    ‘000t       558         357          529          1,444       1,455

Sales revenue           A$’000     16,540       11,077        25,783       53,400    103,437
Other revenue           A$’000     1,080        5,490        159,291      165,861

Girilambone Copper Mine, New South Wales
ML 1280, 1383, MPLs 294 and 295
(Straits Resources Limited - 100%)

Girilambone operations ceased in July 2003. The processing plant is on care- and-maintenance in
preparation for a move to Whim Creek.
Sebuku Coal Mine, Indonesia
(Straits Resources Limited – 80%)
Coal Co-operation Contract

Sebuku coal production was 457,000 tonnes for the September quarter and sales were 558,000 tonnes.
This compares with 579,000 tonnes and 625,000 tonnes respectively for the previous corresponding

The main impact on production for the quarter was due to changing over of the mining contract. The
new contractor mobilised sufficient equipment to commence mining in mid September and mine
production is expected to ramp up to full scale in October concurrent with full mobilisation of
equipment. Expectations are that coal production and sales for 2003 will be approximately 1.9 million
tonnes, slightly less than the 2.0 million tonnes sold in 2002 but still a credible result given the
contractor change out.

Significant cost savings will result from the cost reduction initiatives implemented over the last six
months and this will underpin the financial results for Sebuku in 2004. Further cost savings are
anticipated in 2004 from a review of the coal preparation plant operating arrangements and also coal
barging operations.

At the same time, spot prices have recently recovered in the thermal coal market and this
improvement in prices is expected to continue and should bode well for 2004 price negotiations.
Sebuku was particularly active in the market in the last quarter approaching potential new customers
in the Korean and Japanese markets. This activity was initiated as a result of resource definition work
confirming a trend in future coal quality towards lower sulphur levels. Previously, BCS had been
denied access to the full range of potential customers due to higher than average sulphur levels in its
coal. Production of new, lower sulphur coal opens up the opportunity to put in place longer term, high
quality contracts with new customers. The benefits of this are expected to be seen in 2004.

Coal resources and reserves were updated at 30 September 2003 as a result of the success of the coal
exploration program. As previously advised, significant extensions to the coal resource in the northern
Tanah Putih area have been discovered and these are reported below.

Open Cut Coal Resource and Reserve Sebuku Coal Mine
                                                                                Coal Reserves t’000
                               Coal Resources t’000
                                                                        Recoverable (ROM)           Marketable
                      Measured in   Indicated in      Total in   Proven    Probable      Total
                      situ          situ              situ
Main Pit               3,184                           3,184      3,066                   3,066     2,666
Tanah Putih           19,140                          19,140     17,110                  17,110    14,268
ROM                                                                                          74        67
Port                                                                                        123       123
GRAND TOTAL           22,324                          22,324     20,176                  20,373    17,124

(As of 30 September 2003)

The life-of-mine plan is currently being revised on the basis of the new resources. Preliminary
indications are that mine life has been extended by an additional 5 or 6 years to 2011 from the original
mine closure date of 2005. Further prospective exploration targets on Sebuku Island still require
drilling and the current exploration program envisages this work being concluded in 2004.

Whim Creek
(Straits Resources Limited – 100%)
M47/236, M47/237, M47/238, M47/443, L47/36,
E47/916 and E47/976 (applications)

Straits has updated the Whim Creek feasibility study incorporating the use of the Girilambone plant.
The project is now being considered for development in early 2004.

Mt Muro Gold Project
Contract of Work 70%

A review of the remnant resources around the existing plant has shown there to be some potential to
produce supplementary feed from this source. Resources are summarised in the table below.

Mt Muro Resources September 30, 2003 (at a 1.4 g/t gold equivalent Cut-off)

Measured               Indicated               Inferred               Total
Tonnes     Grade Au    Tonnes      Grade Au    Tonnes     Grade Au    Tonnes      Grade Au
           equiv                   equiv                  equiv                   equiv
185,817    4.9         1,270,172   3.5         259,930    4.3         1,715,919   3.8

Drilling has commenced in the Juking Sopan region, a virgin prospect 25 kilometres to the west of the
Mt Muro minesite. The prospect area had previously been defined by mapping, geochemical and
geophysical surveys and found to contain numerous vein systems covering an area of over 5 by 5
kilometres. Outcropping veins up to 6m wide occur and are individually interpreted to be up to 700m
long with many kilometres of vein strike outlined, with Channel samples of up to 4m @ 23 g/t Au

The first drill holes in the area have targeted the Tasat and Mandi vein system over a 400m strike
length (see Fig. 1). Initial drilling results on the Tasat vein are very encouraging and have confirmed
the width and grade of the surface sampling with a number of intercepts encountered down hole (see
Table 1, Fig. 2). Drilling at the Mandi vein has confirmed the high grade surface trench results were
from large boulders sourced from nearby.
 Hole   East   North              RL        Dip      Azi   from (m)    to (m)      intercept g/t Au
JUS001 188516 9928810                  71     -45       90     25.27       26.05    0.78m @ 1.70
                                                               42.15        47.1   4.95m @ 17.25
                                                                53.4        60.2      6.8m @ 2.69
JUS002 188497 9928860                  87     -45       90      15.1       20.75    5.65m @ 2.87
                                                               23.75       24.75        1m @ 1.60
                                                                39.9          41      1.1m @ 1.67
                                                                53.4        56.5      3.1m @ 4.09
                                                               58.65        71.1   12.45m @ 8.25
                                                                74.2        76.2        2m @ 1.48
JUS003 188481 9928840                  74     -60       90      26.3       26.85    0.55m @ 3.64
                                                                  75        75.9    0.9m @ 14.60
                                                                  79        80.2      1.2m @ 1.08
                                                              107.55      110.55        3m @ 3.80
                                                              113.45      116.45        3m @ 1.79
JUS004 188461 9928960               124       -45       90      87.4       100.8    13.4m @ 3.22
JUS008 188539 9928850                65       -45       90      37.7        38.7        1m @ 1.71
                                                                58.1        59.1        1m @ 2.70
Results at a 1ppm cut off with 2m internal cut-off
Table 1. Intercepts from drilling at Juking Sopan

Fig. 1 Juking Sopan region vein interpretation pre-drilling, with inset location of current holes.
Fig. 2 Cross Section of Hole JUS1 at Juking Sopan showing drill results.

The drill results are highly encouraging for the discovery of a substantial shallow gold system that can
be a new mining centre to produce ore for treatment at the Mt Muro plant. Three rigs are currently
drilling at the Juking Sopan system and continue to define the vein systems with results pending.

A field program has begun at the Tumbang Lahung region, 12 kilometres west of the mine site where
a further multiple vein system has been outlined. Work will focus on developing drill targets for
early testing of the potential of the region.

Exmouth Salt Project
During the quarter the company announced it is investigating the development of a new solar salt
project in Western Australia. Straits has applied for exploration licenses on the eastern margin of the
Exmouth Gulf, an area identified as a potential solar salt field. It is expected that exploration licenses
will be granted early in 2004.

Investigations are proceeding as planned and it is expected that a scoping study will be completed by
the end of the year.

Bushranger, New South Wales
(Straits Exploration (Australia) Pty Ltd – 100%)
EL 5574

No work was undertaken on this project during the quarter

Cowra Project
(Straits Exploration (Australia) Pty Ltd- earning 70%)

Work has continued on the joint venture with Gateway Mining over the Cowra Project in the Molong
Volcanic Belt in the Lachlan Fold Belt in New South Wales.

During the quarter a drilling programme of 22 holes for 2,854m was undertaken in the Kiola region
which has tested a number of geological, geochemical and geophysical targets. During the initial 18
hole program further skarn alteration and mineralisation was intersected at a number of anomalies.
Anomalous intercepts from the initial program include :

 Hole      Easting    Northing     Dip    Azi      Depth    Depth   Interval    Au       Cu     Zn
Name                                               From      To        m       ppm       %      %
KRC5       6218415     660075      60      60       12       36        24                0.2    2.4
KRC11      6215600     659100      60     256       52       82        30                0.6    0.5
KRC16      6213200     660750      60      26       34       38         4       1.0

Results are pending from the four follow up drill holes to test the anomalous zones. A program is
underway to assess the regional prospectivity focussing on mineralised skarn outcrops and covered
aeromagnetic skarn targets.

Kuda Gold Project
(Straits Resources- 75%)

A drilling program is currently in progress at the Kuda Joint Venture with PT Aneka Tambang in
West Java. Six holes of a ten hole program have so far been completed and results are pending. The
holes are testing a number of vein systems at Cibaliung and a strongly anomalous silica cap at

Xstrata Exploration Assets (formerly MIM’s Exploration Portfolio) in Australia

During the quarter agreement was reached with Xstrata to purchase the former MIM’s exploration
portfolio in Australia including the technical databases but excluding the tenements associated with
Xstrata’s existing operations.

A sales agreement has been finalised and the 100% held tenements and databases are being
transferred. Agreement for assignment has been reached with a number of the joint venture parties
and transfer of rights is underway.

Priority areas for exploration are being highlighted and drilling targets being defined for testing
during the next quarter. High priority projects which are predominantly in north east Queensland are
as follows :
Clermont/Capella, Queensland
Straits Exploration (Australia) Pty Ltd 100%
EPMA’s 14116, 14117

The tenements cover the southern end of the prospective Drummond Basin with a window of
Devonian volcanics exposed under shallow Tertiary cover. Previous exploration has defined the
Ayers rock prospect with outcropping anomalous gold in low sulphidation veins exposed over 600m
strike. Previous drilling has intersected anomalous gold over 1 g/t in six of fifteen holes in fences
spaced over 100m apart. Best results include 30m @ 3.9 g/t Au from 20m depth in hole ARC9 which
includes 2m @ 33 g/t and 2m @ 19 g/t Au. A further program of IP and drilling was completed
adjacent to the prospect by Australian Goldfields. These data were never reported and are not
currently available due to the company going into receivership.

Six Mile Creek/Kokomo, Queensland
Straits Exploration (Australia) Pty Ltd earning 70%
EPM 10699 sub-block, EPMA 13873

Agreement has been reached with Metallica Minerals Ltd to assign MIM’s interest and to earn a 70%
interest in the tenements. The tenements lie north-east of Greenvale and cover a large hydrothermal
system with intense silicification and quartz veining with highly anomalous gold and base metals. A
number of prospects are defined including the Black Dingo prospect where numerous rockchips
samples yield greater than 2 g/t Au over 3 kilometres of strike. Geochemical data is being compiled to
define drill targets for testing as soon as possible.

Gill Creek, Queensland
Straits Exploration (Australia) Pty Ltd earning 100 %
EPM’s 11836, 11699

Agreement has been reached with Depuro and P.W. English to assign MIM’s interest to purchase
100% of the tenements. The project contains a number of outcropping low sulphidation epithermal
veins including the untested 700m long Spencers Ridge vein where rock chips have reported up to 4.3
g/t Au. The tenement has recently been granted for low impact exploration and a drill program is
planned during the next quarter to test the vein system at depth.

Tick Hill, Queensland
Straits Exploration (Australia) Pty Ltd 100 %
EPM’s 11013, 9083

The tenements surround the closed Tick Hill operation that produced over 500,000 oz of gold at a
head grade of 23 g/t. Potential for further short strike length, high grade veins will be re-evaluated
during the quarter with a detailed review of all the previous work to assess the potential for any
further high priority drill targets.
Quartz Circle, Western Australia
Straits Exploration (Australia) Pty Ltd earning 70 %

Agreement has been reached with International Goldfields for the transfer of MIM’s interest to earn
70 % of the tenement in the Pilbara of West Australia. Previous exploration has defined a small
copper resource, strong zinc intersections and outcropping gold veins. The tenement encompasses a
large alteration system with a plus 1km2 geochemical copper-gold anomaly co-incident with a
significant chargeable and resistive anomaly generated by MIM’s in-house MIMDAS geophysical

A drill program is planned as soon as agreement is reached on a heritage survey.

Further ex-MIM Interests
Straits Exploration (Australia) Pty Ltd 100 %
EPM 13883, ML6750, ML5631 Qld
EL5973, 5914, 5997, 6029, NSW
EL3055 S.A.

Exploration programs are being planned for the remaining 100% held tenements in Queensland, New
South Wales and South Australia.

Negotiations are continuing on transferring MIM’s interest in the other projects and the situation will
be clarified during the December quarter.

Fig. 3 Location of Straits Projects

Exploration Expenditure

Total exploration expenditure during the quarter amounted to $254,043


A new reserve and resource estimate was announced for the Tritton Project (Straits 58%) during the
quarter A feasibility study was independently audited by RSG Global who agreed with the findings.
Subject to concluding a financing package (debt and equity) which is expected to be completed by the
end of the year, development of the Tritton Project will proceed early in 2004.

The Tritton Project is located 17 kilometre from Straits’ Girilambone Copper Mine in New South
The feasibility study indicates a mine life of 11.5 years yielding approximately 22,000 tonnes per
annum (tpa) of copper-in-concentrate.

Mining will be by underground methods (access via decline) supplemented by a small open pit
(Murrawombie). Tonnes of ore mined are forecast at 660,000 tpa initially, ramping up to 900,000 tpa
from year 5. Processing will yield a copper concentrate (25% copper) which will be trucked 18
kilometres and then railed to Newcastle. A concentrate off-take agreement has been signed.

Capital start up costs are estimated at $38.5 million, including a 10 per cent contingency. The
company is also evaluating potential cost reductions to the project through the use of second hand

The project is financially sound with payback of capital forecast to be in less than two years from first
production. Indicated cash costs average approximately US$60 cents per pound of copper produced
and taking an Australian dollar copper price of A$1.31/lb, pre-tax cash flow of $102 million is
forecast over the life-of-mine, after payment of all capital and operating costs. The project has a pre-
tax internal rate of return of 44%.

Exploration potential is excellent both in areas close to the Tritton ore body, and regionally within the
1300km2 of granted exploration licenses.

                                                    RISK MANAGEMENT

All currency and commodity hedge contracts were discharged with the sale of Nifty. No new contracts
were entered into during the June quarter.

By Order of the Board

Milan Jerkovic
Chief Executive
14 October 2003

References in this report to “Straits Resources Limited”, “Straits” and “Company” include, where applicable, its subsidiaries.

This report notes, and contains a table referring to, resources and/or reserve estimates. The information is based on, and accurately reflects,
information compiled by a Competent Person as defined in the 1999 Edition of the "Australasian Code for Reporting Mineral Resources
and Ore Reserves", being, Mr Peter Storey, who is a Member of the Australasian Institute of Mining and Metallurgy and has more than five
years relevant experience.

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