for personal use only - australian securities · pdf filethe pdp outlines the project proposal...

Quarterly Report

September 2011

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LIBERTY RESOURCES LTD

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Queensland Fertiliser – Urea Corp of Australia 100% owned by LBY

Urea Corp Project broadened to consider above ground coal to urea

opportunities.

Further engineering and technical work completed on below ground coal to

urea.

New coal exploration targets being investigated and prepared for drilling to

support above ground coal to urea.

Government Approvals process commences. Given the importance of food

costs for the Nation, Government support is anticipated.

Off-take Agreement discussions progressed with 6 major global fertiliser

manufacturers and distributors.

The outlook for food and fertiliser demand is promising with Urea prices

remaining around USD500 per metric tonne over the last quarter (Source:

Fertiliserworks.com) after being around USD300 in April 2011. Some softening of

prices has occurred due to the recent weakening of the Euro but this may

lead to an upward swing in demand over the next quarter. 24 month low

USD241.37 (06/10) 24 month high USD535.15 (09/11)

Project Development Plan being finalised. Completion expected in December

Quarter.

Initial Advice Statement (IAS) draft lodged with the State and informal

discussions commenced aimed towards a Significant Project Declaration.

Corporate and Other

Subsequent to the coal lease Auction, negotiations with various parties and

due diligence commences.

Liberty‟s cash position improved with the receipt of another $500,000 from

Blackwood Coal under the tenement Sale Agreement.

Dundee Corporation advises that it holds 10.90% of the Company.

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Urea Corp of Australia – Urea Fertiliser Project

Liberty progressed the Urea Corp of Australia Fertiliser Project during the Quarter.

The Project will be Australia‟s largest urea production facility based on below

ground and possibly above ground coal gasification technology.

The key economic benefits of the Project are:

• Substantial growth in competition within the Australian fertiliser market by

creating a new urea supply.

• Future employment for Queensland peaking at over 2,900 jobs.

• Direct and indirect benefits for communities in the Injune and Gladstone

regions associated with employment opportunities and the demand for goods and

services.

• An increased international focus on Queensland as an area for future

investment.

• Clean, environmentally safe and economical extraction by utilising the

components of the gas stream, including a percentage of the CO2 created during

the gasification process to produce the urea.

The focus during the Quarter has been on commencing Government approvals, as

well as off take arrangements with potential customers. Further technical studies

have also been conducted, confirming the attractiveness of the Project.

Discussions are focussed on fertiliser and ammonia off-take and customer project

finance opportunities with 6 major chemical and fertiliser companies in China, the

United States, Canada and India.

The Fertiliser Project Development Plan (PDP) and the Initial Advice Statement (IAS)

are the next significant steps. These documents form the starting point for project

development and the basis for ongoing discussions for project funding.

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Figure 1. Illustration of the proposed Urea Corp of Australia’s Fertiliser Project, QLD

The Project Development Plan

The Project Development Plan is instrumental for project implementation. It will assist

in establishing the off-take agreements, the partnership and customer finance

arrangements that require this type of detailed information as part of counterparty

due diligence.

The first draft of the PDP is scheduled to be completed by December following the

broadening of the scope of the Project. The PDP sections are now being reviewed

and updated to incorporate data obtained or developed during the current

reporting period. These tasks include project concept development work and

development of project economics.

The PDP outlines the project proposal and demonstrates that the project is practical

and feasible within existing, technical, commercial and environmental constraints.

The PDP includes the Project Execution Plan (PEP), project schedule and other

company policies and procedures that outline the next steps and the way forward

for the project. In doing this, the PDP sets the framework for the critical Bankable

Feasibility Study (BFS) stage of the project.

The Initial Advice Statement (IAS)

The Initial Advice Statement (IAS) draft was completed during the Quarter. This is

an important document, aimed at gaining a Significant Project Declaration from

the State Government and Major Project Facilitation at the Federal Government

level.

Submission of the IAS to the Queensland Co-ordinator General is the first formal step

to progress the Fertiliser Project. Liberty will request that the project be considered a

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„Significant Project‟ which formalises and expedites the approval process. The IAS

was submitted following initial informal discussions and further detailed work is now

underway.

The IAS provides information on the Project, the current environment site, any

anticipated effects it will have on the environment and our proposed measures to

mitigate any adverse effects of the project.

The IAS has been developed with important environmental and technical data

applicable to the project sites. Extensive input from external consultants has been

incorporated to detail the project development proposal.

Figure 2: Proposed plant location (site visit August 2011)

The revised IAS will be submitted during the December Quarter to the Queensland

Co-ordinator General for consideration of the project as a „significant project‟

under Queensland Legislation.

Refer also: http://www.dlgp.qld.gov.au/coordinator-general-projects/initial-advice-

statement.html

It will underpin the framework in the execution of an Environmental Impact

Statement.

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http://www.dlgp.qld.gov.au/coordinator-general-projects/initial-advice-statement.html

http://www.dlgp.qld.gov.au/coordinator-general-projects/initial-advice-statement.html


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Figure 3. Illustration of the Water treatment Plant - Urea Corp of Australia

Ammonia

Two requests for Urea Corp to supply Ammonia FOB Gladstone from the Denison

Project have been received. Ammonia and Ammonium Nitrate (AN) have now

been offered as part of the product sales package.

Pipeline alternative – Site to Port

The transport of ammonia via pipeline from site to Port provides an attractive

alternative to Rail only Urea transport.

Potential sites for Urea production from ammonia and offloading at the Gladstone

Port are being pursued.

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Drilling and environmental companies were approached during the quarter and

costings for future programs are now being sought.

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Urea Fertiliser Market – Research and Outlook

Demand for food and in turn, Urea fertiliser, continued to firm during the first half of

2011.

Queensland Coal Permits

Liberty currently holds 20 granted Exploration Permits for Coal (EPC‟s), 4 Exploration

Permits for Coal Applications (EPCAs) and 4 Mining Development Licence

Applications (MDLAs) in Queensland.

This represents 8,449 km2 in granted tenure and 1568 km2 in applications within the

Surat and Galilee Basins and the Denison Trough.

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Figure 5. Liberty Resources Land position – Infrastructure and leases

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Galilee Project

As a result of further investigation, the Galilee Project will be evaluated for its

potential to support a Power (electricity) generation and ammonia production

Project.

Figure 6. Galilee Project

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SURAT BASIN Geological interpretation and modelling has been conducted in conjunction with

Dragon Coal‟s review of the Surat Basin.

South Australia

There were no further developments in South Australia.

Western Australia

There were no further developments in Western Australia.

Canada

There were no further developments in Canada.

Competent Persons Statements

The information in the report to which this statement is attached relates to Exploration Results, Mineral

Resources or Ore Reserves compiled by Mr. D. J. Holden, who is a Member of The Australian Institute of

Mining and Metallurgy, with over 20 years experience in the mining and resource exploration industry.

Mr. Holden has had previous relevant experience and qualifies as a Competent Person as defined in

the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore reserves”.

Mr. Holden consents to the inclusion in the report of the matters based on this information in the form

and context in which it appears.

About Liberty

Liberty Resources is developing a world class Urea Project in Queensland by converting un-mineable coal into hydrogen

syngas, which is used to produce low cost Urea. The Urea Corp fertilizer Project promises to be the World’s largest and

lowest cost producer of Urea Fertiliser. Australia is currently a net importer of fertiliser and this Project has the potential

to reverse this trade imbalance.

Urbanization, especially in China and India, is driving demand for food production and presents an immediate market for

urea.

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FINANCIAL REPORT

Appendix 5B

Mining exploration entity quarterly report

Quarter ended 30 September 2011

Consolidated statement of cash flows

Cash flows related to operating activities

Current quarter

$A‟000

Year to date

$A‟000

1.1 Receipts from product sales and related debtors

- -

1.2 Payments for

(a) exploration and evaluation

(b) development

(c) production

(d) administration

(464)

(158)

-

(486)

(464)

(158)

-

(486)

1.3 Dividends received - -

1.4 Interest and other items of a similar nature

received

19

19

1.5 Interest and other costs of finance paid - -

1.6 Income taxes paid - -

1.7 Other (provide details if material) - -

Net Operating Cash Flows

(1,089)

(1,089)

Cash flows related to investing activities

1.8 Payment for purchases of:

(a) prospects

(b) equity investments

(c) other fixed assets

-

-

(74)

-

-

(74)

1.9 Proceeds from sale of:

(a) prospects

(b) equity investments

(c) other assets

550

-

-

550

-

-

1.10 Loans to other entities

1.11 Loans repaid by other entities

1.12 Other (provide details if material)

Net investing cash flows

476

476

1.13 Total operating and investing cash flows (carried

forward)

(613)

(613)

1.13 Total operating and investing cash flows (brought

forward)

Cash flows related to financing activities

1.14 Proceeds from issues of shares, options, etc. - -

1.15 Shares issued in lieu of debt 41 41

1.16 Proceeds from borrowings - -

1.17 Repayment of borrowings - -

1.18 Share issue costs - -

1.19 Other (provide details if material) - -

Net financing cash flows 41 41

Net increase (decrease) in cash held

(572)

(572)

1.20 Cash at beginning of quarter/year to date 2,070 2,070

1.21 Exchange rate adjustments to item 1.20

1.22 Cash at end of quarter 1,492 1,492

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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‟000

1.23

Aggregate amount of payments to the parties included in item 1.2

93

1.24

Aggregate amount of loans to the parties included in item 1.10

-

1.25

Explanation necessary for an understanding of the transactions

Payments include directors‟ salaries and directors‟ fees

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

-

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

-

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

300

4.2 Development

300

4.3 Production

4.4 Administration 450

Total 1,050

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 168 11

5.2 Deposits at call

1,324

2,059

5.3 Bank overdraft

-

5.4 Other (provide details)

-

Total: cash at end of quarter (item 1.22)

1,492

2,070

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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

6.2 Interests in mining

tenements acquired or

increased

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 197,193,739 197,193,739

7.4 Changes during

quarter


issues

(b) Decreases

through returns of

capital, buy-backs

414,944

414,944

0.102

0.102

7.5 +Convertible debt

securities (description)

7.6 Changes during

quarter


issues

(b) Decreases

through securities

matured, converted

-

-

-

-

-

-

-

- 7.7 Options (description

and conversion

factor)

-

-

-

Expiry Date

7.8 Issued during quarter 1,400,000 - 0.10 31/12/2013

7.9 Exercised during

quarter

-

-

-

-

7.10 Expired/Cancelled

during quarter

(500,000)

(1,000,000)

(1,000,000)

(1,000,000)

-

-

-

-

0.450

0.125

0.125

0.150

15/11/2013

19/07/2015

30/06/2013

4/04/2014

7.11 Debentures

(totals only)

-

-

-

-

7.12 Unsecured notes

(totals only)

-

-

-

-

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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.

Signed Catherine Anderson Date: 27 October 2011

Company Secretary

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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