asx code syr2012/07/25 · syrah resources ltd (abn 77 125 242 284). level 9 - 356 collins street,...

Syrah Resources Ltd (ABN 77 125 242 284). Level 9 - 356 Collins Street, Melbourne Victoria 3000 Australia

Ph 03 96707264 Fax 03 96420698 1

ASX Code SYR

Current Corporate Structure

Ordinary Shares

Issued Shares: 126,704,521

Options

Exercisable at 26c: 17,000,000

Major Shareholders

Basapa PL 11.27%

Copper Strike Ltd 8.79%

Gasmere PL 8.70%

Kitara Investments PL 8.16%

Board of Directors

Mr Tom Eadie

Non-Executive Chairman

Mr Paul Kehoe

Managing Director

Mr Alistair Campbell

Non-Executive Director

Mr Mike Chester

Non-Executive Director

Ms Melanie Leydin

Company Secretary

Key Projects

Balama Graphite Project

(Mozambique) and Nachingwea

Graphite Project (Tanzania)

Have the potential to be high

tonnage, high grade, flake graphite

projects. Balama is mainly medium

to coarse flake and Nachingwea is

fine to coarse flake. Balama is also

highly anomalous in vanadium with

sample grades up to 1.25%.

Tanzania Mineral Sands

A very prospective portfolio of

mineral sands licence areas , some

of which have drill results up to 28%

heavy minerals.

Website

www.syrahresources.com.au

25 July 2012

QUARTERLY ACTIVITIES REPORT – PERIOD ENDED 30 JUNE 2012

The June 2012 quarter was a very active and exciting quarter for Syrah Resources

(ASX: SYR). Drilling commenced at the Balama Graphite Project in Mozambique.

Extensive horizons of graphite mineralisation were observed in each of the 15 holes

drilled to date. SYR is confident that a large maiden graphite JORC resource will be

delineated at Balama once assays are received. In addition, trench data from Balama

revealed encouraging vanadium results with wide zones assaying around 0.25% V.

Initial field activities also commenced at the Nachingwea Graphite Project in south

Tanzania, where significant graphite outcropping mineralisation is evident.

A drill rig has been secured to drill the Fungoni Heavy Mineral Sands Prospect near Dar

es Salaam (part of the Mineral Sands tenements in northern Tanzania covering over

400km2) and the Wembere Uranium Project in west Tanzania. Drilling is expected to

commence on these projects in September 2012. SYR’s mineral sands portfolio was

enhanced with the acquisition of a further licence area to the north of the Tajiri-

Highlights:

Balama Graphite – Drilling of 15 diamond holes confirms that Balama hosts very thick zones (up to 320m) of graphite mineralisation. The graphite mineralisation has been mapped over a strike distance of 7km.

Drill hole assays are pending and preparation for a JORC resource is in progress.

Wide zones of vanadium revealed in trench assays.

Further metallurgical testwork to begin in 2012.

Scoping Study consultants team expected to be finalised in August 2012.

Nachingwea Graphite – Mapping, trenching and sampling commenced.

Fungoni Mineral Sands - Drill rig secured for detailed drill program to begin in September 2012 to follow up past high grade drill results.

Tongani-Tajiri Mineral Sands – Additional licence application secured. Application area hosts extensive zones of heavy minerals at surface. Magnetic survey to be flown in August 2012.

Wembere Uranium – Drill rig secured for scout drill program to begin in September 2012.

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Tongani trend which secures the remaining available area known to be prospective for heavy mineral sands in north

Tanzania.

BALAMA GRAPHITE PROJECT (100%)

SUMMARY

Drilling commenced at the Balama Graphite Project in May 2012. A total of 15 diamond drill holes have been drilled in

the western area of the Project. Every hole intersected graphite mineralisation over the entire drill hole length (up to

320m), other than hole 11 which encountered a 30m thick pegmatite dyke near surface. Assay results are expected to

start being received in about two weeks. Once all results are received, preparation of a JORC resource estimate by

independent consultants MSA Group will commence.

The Minister for Natural Resources, Her Excellency Dr. Esperança Bias visited the Balama project during July.

Location and Infrastructure

The Balama Graphite Project is a 106 km2 granted prospecting licence located within the Cabo Delgado province in the

District of Namuno of northern Mozambique (Figure 1). The project is approximately 265 km by road (3.5 hours drive)

west of the port town of Pemba. Pemba Port is a deepwater container port and is the third largest port in Mozambique.

Balama is accessed by an excellent sealed road from Pemba to Montepuez, a regional township, and then via 45 km of

unsealed road which is in the process of being upgraded by the Government. The project area is only 7 km east of the

small regional township of Balama. Ample labour can be accessed from Balama. The town hosts a primary school and

secondary school, provincial government offices, a community medical clinic, police station and numerous local

businesses. Electricity is available in Balama town, along with internet and mobile phone services. A large regional dam

is located only 14 km northwest of the project site.

Figure 1 – Balama diamond drill core (BMDD0008)

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Exploration Activities

Syrah has completed 15 diamond drill holes in the western part of the Balama Graphite Project in north Mozambique

over an initial strike length of over 1km. This area was selected for initial drilling as the mineralisation was expected to

be relatively high grade based on the reconnaissance trenches in this area which ranged from 11% total graphitic carbon

(TGC) in Trench 6 to 23.3% TGC in Trench 2 (Figure 2). Also, the geological complexity of this area was likely to be low as

surface outcrop showed good continuity and low levels of pegmatite intrusion or evidence of faulting.

Each of the 15 holes which ranged from 250 to 320m in length, began and ended in graphite mineralisation. Every hole

returned graphite mineralisation down the entire length other than BMDD0011 which encountered a 30m thick

pegmatite dyke near surface. Assay results are expected to start being received in approximately two weeks time. Delays

were experienced in preparing the samples for assay, but these constraints have been resolved. Once all the drill assay

results are in hand a maiden JORC resource will be calculated. MSA Group, an independent South African resource

consulting group, has been retained to provide a resource estimate.

Figure 1 – Balama Graphite Project Location Map

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Figure 3 - Graphite rich drill core from hole 8

Figure 2 – Completed drilling and trenching map at Balama West

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Drilling has now commenced on the eastern part of the Balama Graphite Project, near Mount Coronge, a granite

intrusion (Figures 4 & 5). Visual observations suggest that the graphite in this region is very coarse flake with zones of

possibly greater than 20% graphite content. Thirteen holes are planned with a depth of between 250-320m.

An RC rig is due to arrive on site within the next few weeks. The RC rig will be used for scout drilling to identify other

areas for a follow up diamond drilling campaign. These may be other high grade areas or zones with graphite that

appear different in character to that already drilled. Such graphite may serve end market uses. The RC rig will also be

used to delineate the margins of the ore body for future project development planning.

Figure 4 – Planned drilling and completed trenching map at Balama East

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The western area drilled to date and the eastern area to be drilled are shown on the map below (Figure 5):

Petrology

Samples of fresh graphitic schists from the western area were sent for petrographic analysis by microscope. The samples

are dominated by quartz (55-70%) with graphite (14-19%), mica–roscoelite (15-25%) and traces (<1%) of rutile and

tourmaline. This simple assemblage bodes well for achieving a high graphite concentrate during flotation testwork.

Earlier metallurgical testwork on weathered samples resulted in a graphite concentrate of greater than 95%.

Figure 5 – Map of Balama showing Balama West and new Balama East drilling area

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orientation of mica and graphite flakes. There is no evidence for the presence of sincosite or any other V-bearing mineral.

Fig. 2: Schist containing abundant quartz (clear), very pale green flaky mica, graphite flakes (black) and a porphyroblast of pale khaki tourmaline (upper right). Plane polarised transmitted light, field of view 2 mm across.

Fig. 3: Oriented flakes of graphite (pale copper-brown), within abundant quartz and a few small flakes of mica The small whitish grain at right is rutile . Plane polarised reflected light, field of view 2 mm across.

Scoping study

Discussions are well advanced with prospective consultants for the commencement of a Scoping Study on Balama. The

Scoping Study team is expected to be finalised in August 2012.

NACHINGWEA GRAPHITE PROJECT (Syrah has rights to acquire 100%)

At Nachingwea, which is located in southeastern Tanzania, graphite outcrops in a series of hills stretching over at least

2.8 km and rising 200 m above the surrounding plain.

Field activities commenced at Nachingwea Graphite project in Tanzania involving mapping, trenching and collection of

samples for metallurgical testwork.

Figure 6 - Oriented flakes of graphite (pale copper brown) within abundant quartz and small flakes of green mica (roscoelite). The whitish mineral is rutile. Plane polarised reflected light. Field of view is 2mm across which suggests most graphite grains are about 500 microns in this slide.

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Early indications suggest that Nachingwea has the potential to be a significant graphite project. These indicators include

extensive outcropping graphite exposures over hills extending for 5 km, high graphite grades up to 60% reported by past

explorers and historical metallurgical testwork showing that the graphite can be upgraded to a 98% concentrate from a

single phase flotation circuit. The project has excellent infrastructure with a deepwater port located only 180km away

and with water, electricity and good roads available.

At the conclusion of this field work, Syrah expects to be in a position to make a decision on a drilling program for

Nachingwea scheduled for the next field season in 2013.

Wembere

A total of 3,000m will initially be drilled at the Wembere Uranium Project in west Tanzania scheduled for September

2012 using a Wallis drill rig. Wembere is a calcrete hosted uranium target. The target was identified by an airborne

radiometric survey which revealed a uranium radiometric anomaly with a strike distance of approximately 30km (Figure

7). The anomaly was subsequently verified on the ground by handheld spectrometer. In addition, extensive calcrete was

observed just below a surficial cover of up to 1 metre (Figure 8). A test pitting program revealed the following counts per

second (CPS) values by handheld spectrometer:

Pit From To CPS readings

WBPP0001 0 1 441

1 2 2300

WBPP0002 0 1 450

1 2 950

WBPP0003 0 1 513

1 2 710 Table 1 – Spectrometer readings taken on the walls of three pits

Given that the background readings away from the anomaly were only 20-30 CPS, these figures are encouraging.

Historical data suggests that there is an additional calcrete horizon at approximately 50m deep. The proposed drill

program is designed to test both calcrete horizons. If a uranium ore deposit discovery is made, it is likely to be

significant in scale given the strike extent of the radiometric anomaly.

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Mineral Sands Portfolio, Tanzania

Syrah now controls a 100% interest in eight Prospecting Licences and one Prospecting Licence Application focused

on mineral sands exploration in the northern and central coastal areas of Tanzania. This significant portfolio of

licences covers an area of over 1,000km2 and strike extent of greater than 100km. Most of the Tanzanian coast

known to be prospective for heavy mineral sands is now secured either by a Syrah application or granted licence. All

projects have significant mineral sands anomalies identified by past explorers with minimal exploration follow up.

Fungoni Mineral Sands Prospect

An initial 3,000m drilling program utilising a Wallis drill rig is planned for September 2012 and will focus on the high

grade Fungoni Prospect where historical auger drilling revealed the following intercepts:

4m containing 27.8% heavy minerals



20km

Figure 7 – Wembere radiometric anomaly

Figure 8 – Calcrete rich pit at Wembere

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The previous drilling stopped at 4m because the auger was not able to penetrate below the water table. These high

heavy mineral grades are particularly interesting because the composition of the heavy minerals is 25% zircon, 5% rutile

and 44% ilmenite. Syrah has contracted a drill rig which will be able to penetrate beneath the water table. Historical

data records that the depth to the basement in this area is around 30 metres. Syrah believes the heavy minerals are

likely to extend to a much greater depth than the 4m previously recorded.

These intersections all occur within a 300 m by 150 m high grade zone at the Fungoni prospect itself which is located in Figure 8. This prospect has not been closed off in any direction, particularly at depth because of the drilling method noted above. It lies within a larger underexplored anomalous area which comprises two 20 km long, arcuate belts of >1% heavy minerals.

Figure 9 – Fungoni project licences showing known the known high grade area at Fungoni and the surrounding underexplored anomalous areas (>1% HM)

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ADDITIONAL TANZANIAN MINERAL SANDS LICENCE AREA APPLICATION ACQUIRED

Syrah has acquired an additional mineral sand application in northern Tanzania (Tongani North). Consideration for the

acquisition is $200,000 (which has been paid) plus 18,500 shares in Syrah. The licence area is at the far north of the

Tongani-Tajiri trend and only 5 km south of the port town of Tanga (Figure 10).

Historical sampling data indicates that the acquired licence area contains a 7km strike zone comprising 3% heavy

minerals within a much wider zone comprising 1-3% heavy minerals. Although the area is mainly dominated by

ilmenite, a field reconnaissance trip to the area by Syrah showed areas of up to 20% rutile and 10% zircon. Syrah now

controls virtually all the northern Tanzanian coastline that is known to be prospective for heavy minerals.

Figure 10 – Tongani-Tajiri mineral sands project areas

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Given the strike distance of the northern licence area and the high ilmenite content, Syrah has decided to fly a magnetic

survey to better define target areas for follow up drilling. The survey will be flown in August 2012.

CASH AT BANK

As at 30 June 2012, Syrah had approximately $3.9 million cash on deposit. Syrah anticipates receiving $800,000 from

the sale of its Saudi Arabian interests in the next few months. The Company has sufficient cash to fund its activities for

the foreseeable future.

Figure 11 – Mineral rich sands at Tongani area

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It is likely that the mineral sands portfolio will be spun out in 2013 to a dedicated mineral sands vehicle in order for

Syrah to concentrate on its potentially world class graphite projects. In the meantime the limited exploration programs

on the mineral sands portfolio are expected to add considerable value to Syrah at minimal cost.

EMPLOYEE OPTIONS

A total of 500,000 options exercisable at $2.21 per share by 16 July 2016 have been issued to Syrah personnel working in

Mozambique and Tanzania. This is to recognise the excellent job and substantial contribution in advancing our projects

above and beyond job requirements.

The information in this report as it relates to geology, geochemical, geophysical and exploration results was compiled by Mr. Tom Eadie, FAusIMM, who is a Competent Person and Chairman of Syrah Resources Limited. Mr. Eadie has more than 20 years experience in the activities being reported on and has sufficient expertise which is relevant to the style of mineralisation and type of deposit under consideration. He consents to the inclusion of this information in the form and context in which it appears in this report.

Paul Kehoe

Managing Director

Syrah Resources Ltd

Mobile contact - +61 3 414156288

Email – [email protected]

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Appendix 5B

Mining exploration entity quarterly report

+ See chapter 19 for defined terms.

30/06/2012 Appendix 5B Page 1

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

SYRAH RESOURCES LIMITED

ABN Quarter ended (“current quarter”)

77 125 242 284 30 JUNE 2012

Consolidated statement of cash flows

Cash flows related to operating activities

Current quarter

$A

Year to date

(12 months)

$A

1.1 Receipts from product sales and related debtors

- -

1.2 Payments for

(a) exploration and evaluation

(b) development

(c) production

(d) administration *

(1,023,627)

-

-

(719,040)

(1,612,579)

-

-

(1,588,656)

1.3 Dividends received - -

1.4 Interest and other items of a similar nature

received

21,375 53,525

1.5 Interest and other costs of finance paid - -

1.6 Income taxes paid - -

1.7 Other - 72,475

Net Operating Cash Flows

(1,721,292)

(3,075,235)

Cash flows related to investing activities

1.8 Payment for purchases of:

(a)prospects/farmins

(b)equity investments

(c) other fixed assets

(200,733)

-

(484,848)

(1,428,386)

-

(608,184)

1.9 Proceeds from sale of:

(a)prospects

(b)equity investments

(c)other fixed assets

-

-

-

-

-

-

1.10 Loans to other entities - -

1.11 Loans repaid by other entities - -

1.12 Other (provide details if material) - -

Net investing cash flows

(685,581)

(2,036,570)

1.13 Total operating and investing cash flows

(carried forward)

(2,406,873)

(5,111,805)

* The major administration costs during the quarter included once off legal fees, company secretarial and

accounting fees, and an increase in general administrative costs at the Balama Graphite Project in

Mozambique.

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Appendix 5B



Appendix 5B Page 2 30/06/2012

1.13 Total operating and investing cash flows (brought

forward)

(2,406,873)

(5,111,805)

Cash flows related to financing activities

1.14 Proceeds from issues of shares 6,177,709 8,365,709

1.15 Proceeds from sale of forfeited shares - -

1.16 Proceeds from borrowings - -

1.17 Repayment of borrowings - -

1.18 Dividends paid - -

1.19 Other – Capital raising costs (357,222) (490,212)

Net financing cash flows 5,820,487 7,875,497

Net increase (decrease) in cash held

3,413,614 2,763,692

1.20 Cash at beginning of quarter/year to date 474,429

1,079,337

1.21

Consolidation of Jacana Resources Limited cash as a

result of the acquisition of Jacana Resources Limited

- 43,293

1.22 Exchange rate adjustments to item 1.20 (13,322) (11,601)

1.23 Cash at end of quarter 3,874,721 3,874,721

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities Current quarter

$A

1.23

Aggregate amount of payments to the parties included in item 1.2 $228,116

1.24

Aggregate amount of loans to the parties included in item 1.10 -

1.25

Explanation necessary for an understanding of the transactions

The above related party payments include Salaries, Superannuation, Rent, and Consultancy fees

paid to director related entities during the June 2012 quarter. It also includes payments to OptiRes

Pty Ltd of $9,710 for consultancy and administration services, and Axiom Advisory Pty Ltd for

$8,800. OptiRes Pty Ltd is controlled by a director, Mr Alistair Campbell, and Axiom Pty Ltd is

controlled by a director, Mr Michael Chester. Payments were also made to Copper Strike Limited

for part rental of the principal place of business for $8,800. A further $70,000 was paid to Mr Paul

Kehoe for part re-payment of the loan owing to him acquired as part of the Jacana Acquisition in

December 2011.

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a material effect on consolidated

assets and liabilities but did not involve cash flows

Nil

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Appendix 5B




2.2 Details of outlays made by other entities to establish or increase their share in projects in which the

reporting entity has an interest

Nil

Financing facilities available Add notes as necessary for an understanding of the position.

Amount available

$A’000

Amount used

$A’000

3.1 Loan facilities

- -

3.2 Credit standby arrangements

- -

Estimated cash outflows for next quarter $A’000

4.1 Exploration and evaluation

1,700

4.2 Development

-

4.3 Production -

4.4 Administration 400

Total

2,100

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as

shown in the consolidated statement of cash flows) to

the related items in the accounts is as follows.

Current quarter

$A’000

Previous quarter

$A’000

5.1 Cash on hand and at bank 3,813 412

5.2 Deposits at call - -

5.3 Bank overdraft - -

5.4 Other – Bank Term Deposits 62 62

Total: cash at end of quarter (item 1.22) 3,875 474

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Appendix 5B




Changes in interests in mining tenements

Tenement

reference

Nature of interest

(note (2))

Interest at

beginning

of quarter

Interest at

end of

quarter

6.1 Interests in mining

tenements relinquished,

reduced or lapsed

Sena 3456L 100% Nil

6.2 Interests in mining

tenements acquired or

increased

7666/2012

7752/2012

7753/2012

7754/2012

5738/2009

6562/2010

6737/2010

Nil

Nil

Nil

Nil

Nil

Nil

Nil

100%

100%

100%

100%

100%

100%

100%

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Appendix 5B




Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.

Total number Number quoted Issue price per

security (see note

3) (cents)

Amount paid up per

security (see note 3)

(cents)

7.1 Preference +securities

(description)

- - - -

7.2 Changes during

quarter

(a) Increases

through issues

(b) Decreases

through returns of

capital, buy-backs,

redemptions

- - - -

7.3 +Ordinary

securities

125,204,521 125,204,521 FP FP

7.4 Changes during

quarter

(a) Increases

through issues

(b) Decreases

through returns of

capital, buy-backs

10,296,182

10,296,182

$0.60 (60 cents)

$0.60 (60 cents)

7.5 +Convertible debt

securities

(description)

- - - -

7.6 Changes during

quarter

(a) Increases

through issues

(b) Decreases

through securities

matured, converted

7.7 Options

(description and

conversion factor)

1,500,000

17,000,000

-

-

Exercise price

$0.25

$0.26

Expiry date

31 July 2012

15 December 2015

7.8 Issued during

quarter

7.9 Exercised during

quarter

7.10 Expired during

quarter

7.11 Debentures

(totals only)

7.12 Unsecured notes

(totals only)

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Appendix 5B




Compliance statement

1 This statement has been prepared under accounting policies which comply with

accounting standards as defined in the Corporations Act or other standards acceptable

to ASX (see note 4).

2 This statement does give a true and fair view of the matters disclosed.

Sign here:

Date: 25 July 2012

Company Secretary

Print name: MELANIE LEYDIN

Notes

1 The quarterly report provides a basis for informing the market how the entity’s

activities have been financed for the past quarter and the effect on its cash position.

An entity wanting to disclose additional information is encouraged to do so, in a note

or notes attached to this report.

2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in

mining tenements acquired, exercised or lapsed during the reporting period. If the

entity is involved in a joint venture agreement and there are conditions precedent

which will change its percentage interest in a mining tenement, it should disclose the

change of percentage interest and conditions precedent in the list required for items

6.1 and 6.2.

3 Issued and quoted securities. The issue price and amount paid up is not required in

items 7.1 and 7.3 for fully paid securities.

4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive

Industries and AASB 1026: Statement of Cash Flows apply to this report.

5 Accounting Standards ASX will accept, for example, the use of International

Accounting Standards for foreign entities. If the standards used do not address a

topic, the Australian standard on that topic (if any) must be complied with.

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asx code syr2012/07/25 · syrah resources ltd (abn 77 125 242 284). level 9 - 356 collins street,...

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