zambezi resources limited arbn: bermuda ...2013/01/29 · quarterly report december 2012.docx| zrl...

Quarterly Report December 2012.docx| ZRL 1

ZAMBEZI RESOURCES LIMITED ARBN: 124 462 826 BERMUDA ZAMBIA AUSTRALIA CANON’S COURT PLOT 5697 LEVEL 1, 17 ORD STREET 22 VICTORIA STREET BEU CRESCENT WEST PERTH, WESTERN AUSTRALIA HAMILTON HM12 KALUNDU AUSTRALIA 6005 LUSAKA TEL: +61 8 6555 1879 TEL: +260 211 292101 FAX: +61 8 9398 4104 EMAIL: [email protected] PO BOX 1796, WEST PERTH WWW.ZAMBEZIRESOURCES.COM WESTERN AUSTRALIA, 6872 ASX Announcement

Tuesday, 29 January 2013

December 2012 Quarterly Operations Report & Appendix 5B

1.0 Summary of December Quarter 2012 Activities

Kangaluwi Copper Project awaits green light from Zambian Government to proceed

following the submission of a detailed Environmental Management Strategy

(“EMS”).

Drilling results from the Mpande Limestone Project confirms a large limestone

deposit of a high quality and suitable for cement production.

The Company entered into a funding agreement with New York-based Bergen Global

Opportunity Fund, LP for up to $5,850,000 over two years.

All resolutions before the Company’s Annual General Meeting held on 20 December

2012 were passed.

FIGURE 1: PROJECT LOCATIONS

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mailto:[email protected]

http://www.zambeziresources.com/

Quarterly Report December 2012.docx | ZRL 2

2.0 Kangaluwi Copper Project

Under the Environmental Management Act 2011, which was enacted in Zambia after

MRL was granted a Large Scale Mining Licence for its Kangaluwi Copper Project

(“Project”) located in the Lower Zambezi National Park, all new mining projects

require an EIS to be lodged with and approved by the Zambia Environmental

Management Agency (“ZEMA”) as part of the approval process.

On 7 September 2012 MRL was informed by ZEMA that it had not approved the EIS.

MRL lodged an appeal on 19 September 2012 to seek a review of the ZEMA decision

as provided for in the Environmental Management Act 2011.

The appeal was considered by the Minister of Land, Natural Resources and

Environmental Protection on 10 October 2012 during the first appeal hearing

attended by all stakeholders.

The meeting resulted in the Minister requesting a more detailed Environmental

Management Plan.

An Environmental Management Study (“EMS”) including detailed Environmental

Management Plans and Procedures was submitted to the Minister on 6 November

2012.

The Company is awaiting the response from the Minister of Land, Natural Resources

and Environmental Protection.

3.0 Mpande Limestone Project

3.1 Introduction

Mpande Limestone Limited (“MLL”), 100% controlled by ZRL is a Zambian registered

company that was formed in June 2008.

MLL proposes to construct and operate a cement and quick/hydrated lime facility

within its 143.5 km2 Licence Area 13173-HQ-LPL, in Kafue District, Lusaka Province of

Zambia.

The project is located on a green field site (FIGURE 2) and is situated in the south-east

direction, 80 km by road from Lusaka city centre.

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FIGURE 2: LOCATION MAP

3.2 Project Objectives

The main purpose of the project is to produce lime and cement of various

specifications for supply to meet national and regional demand for the commodity

by the construction industry.

Specific objectives include:

Mining, transportation and preparation of limestone and shale for use in the

cement manufacturing process.

Procurement and preparation of sand, coal and gypsum for use in the

cement manufacturing process.

Cement manufacturing and bagging.

Supply of cement to customers in the construction industry.

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The projected mine life for the facility is over 50 years. The proposed project

implementation will be subject to all relevant approvals and appropriate feasibility

studies and associated project funding.

3.3 Project Exploration

3.3.1 Geology

Lusaka and its surrounding environs are underlain by a Basement Complex

composed of granitic gneiss, pegmatite, amphibolite and lesser metadolerite. This is

variably overlain by rocks of the Katangan Super Group together with Chunga, Cheta

and the Lusaka Dolomite Formations.

The Chunga Formation is composed largely of psammitic and pelitic schists and

lesser limestone, with the overlying Cheta formation comprising quartzite and

schists. Two upper carbonate rich units, including the Mampompo Limestones and

Lusaka Dolomite.

The target Mampompo unit is a banded, medium or coarse grained limestone with

variably intercalated schist, quartzite and amphibolite.

Its mineralogy is dominated by calcite, scapolite, muscovite, biotite and lesser

microcline.

3.3.2 Lithogeochemistry Sampling Program

The Company conducted rock chip sampling survey over the Mampompo

Limestones, during which 102 samples were collected for geochemical

analysis at a SGS Laboratory in South Africa.

3.3.3 Drilling

A total of 29 RC holes were drilled over a 500 m x 500 m grid which

previously underwent rock chip sampling (FIGURE 3). All were drilled

vertically to an average depth of 40 metres. From the 18 holes which

returned limestone intersections, 451 samples were dispatched to SGS for

analysis. Three varieties of dolomitic limestone were observed,

distinguishable largely by their colour/alteration.

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FIGURE 3: RC DRILL HOLES

3.3.4 Assay Results

Table 1: Mpande CaO and MgO Intercepts

Hole_ID Northing Easting RL EOH

Depth Inclination mFrom mTo mWidth Intercept

MPLRC0001 8266495 660285 1171 50 90 18 48 30 30.0m @ 51.8% CaO and 0.97% MgO




28 40 12 12.0m @ 50.9% CaO and 1.13% MgO


MPLRC0013 8269102 659628 1200 40 90 10 40 30 30.0m @ 50.9 % CaO and 1.78 % MgO




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With the majority of assay results contained over 50% CaO and less than 2% MgO,

this limestone was considered of good quality feedstock for cement and/or

quicklime production.

3.4 ML Application

During the quarter the Company engaged MVC Consulting Engineers to

prepare the Environmental Impact Study (EIS) on part of the Mining Licence

Application process.

The Company lodged the EIS with ZEMA on the 17th January 2013.

Following the approval of the terms of reference by ZEMA the Company will

apply for the Mining Licence.

3.5 Corporate

Limestone Ventures Pty Ltd, under the terms of the Joint Venture Agreement had

spent $400,000 on exploration and other works on the Mpande Limestone Licence

to assist in funding the conversion of the tenement to a Mining Licence. Under the

terms of this arrangement, and the funding spent, Limestone Ventures Pty Ltd now

has a 50% participating interest in the Joint Venture.

4.0 Corporate

4.1 Bergen Funding Facility

The Company entered into a funding agreement with Bergen Global Opportunity

Fund, LP (“Bergen”) on 18 October 2012 that will provide up to A$5,850,000 over

two years towards progressing the 100% owned Project to feasibility study stage and

to provide funds for general working capital and servicing of Zambezi’s existing debt.

The Facility is in the form of a Share Purchase Agreement with Bergen in respect of

the issue of up to A$5,850,000 worth of fully paid ordinary shares (“Shares”) over a

24-month period, from the date of the Agreement.

The Facility is to be made available to the Company in monthly tranches of

A$50,000, which can be increased to A$250,000 by mutual agreement.

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Key aspects of, and rationale for, the Bergen Funding Agreement:-

Validation of the business model by a US Institutional Investor.

Certainty of access to funding.

Minimises dilution.

Maximises flexibility.

4.2 AGM Results

At the Annual General Meeting held on 20 December 2012, all the resolutions

before the meeting were passed in favour of.

5.0 Competent Persons Statement

The information in this announcement that relates to Exploration Results is based on information

compiled by Robert McPherson, Country Manager – Geology, Zambia. Robert McPherson is employed

as a Geologist for Zambezi Resources and is also a member of the Australasian Institute of Mining and

Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of

deposit under consideration and to the activity which he is undertaking to qualify as a Competent

Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results,

Mineral Resources and Ore Reserves”. Robert McPherson consents to the inclusion in the report of the

matters based on his information in the form and context in which it appears.

Zambezi Resources Limited Frank Vanspeybroeck CEO Tel: +61 8 6555 1879

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Appendix 5B Mining exploration entity quarterly report

+ See chapter 19 for defined terms. 17/12/2010 Appendix 5B Page 1

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

Name of entity

ZAMBEZI RESOURCES LIMITED

ARBN Quarter ended (“current quarter”)

124 462 826 31 DECEMBER 2012

Consolidated statement of cash flows

Cash flows related to operating activities

Current quarter $A’000

Year to date

(6 months)

$A’000

1.1 Receipts from product sales and related debtors

- -

1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration

(290)

(814)

(1,944)

(2,510)

1.3 Dividends received

1.4 Interest and other items of a similar nature received

2 32

1.5 Interest and other costs of finance paid

1.6 Income taxes paid

1.7 Other (VAT & GST Refunds) 51 184

Net Operating Cash Flows

(1,051)

(4,238)

Cash flows related to investing activities

1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets

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

-

-

1.13 Total operating and investing cash flows (carried forward)

(1,051)

(4,238)

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+ See chapter 19 for defined terms. Appendix 5B Page 2 17/12/2010

1.13 Total operating and investing cash flows

(brought forward)

(1,051)

(4,238)

Cash flows related to financing activities

1.14 Proceeds from issues of shares, options, etc. 224 1,340

1.15 Proceeds from sale of forfeited shares - -

1.16 Proceeds from borrowings - -

1.17 Repayment of borrowings - (249)

1.18 Dividends paid - -

1.19 Other (Costs in respect of Rights Issue and Placement)

- -

Net financing cash flows

224

1,091

Net increase (decrease) in cash held

(827)

(3,147)

1.20 Cash at beginning of quarter/year to date 1,486 3,827

1.21 Exchange rate adjustments to item 1.20 (4) (25)

1.22 Cash at end of quarter

655

655

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

32

1.24

Aggregate amount of loans to the parties included in item 1.10

-

1.25

Explanation necessary for an understanding of the transactions

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

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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

6,500 5,000

3.2 Credit standby arrangements

Estimated cash outflows for next quarter

$A’000

4.1 Exploration and evaluation

100

4.2 Development

-

4.3 Production

-

4.4 Administration

350

Total

450

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 5 65

5.2 Deposits at call 650 1,421

5.3 Bank overdraft - -

5.4 Other (provide details) - -

Total: cash at end of quarter (item 1.22) 655 1,486

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

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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

2,071,392,216

1,678,063,313

7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs

393,328,903

393,328,903

-

-

7.5 +Convertible debt securities (description)

7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted

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7.7 Options (description and conversion factor)

5,000,000

30,000,000

10,000,000

10,000,000

2,500,000

2,000,000

2,000,000

2,000,000

2,500,000

30,000,000

Exercise price

AUD$0.02

AUD$0.02

AUD$0.025

AUD$0.03

AUD$0.04

AUD$0.03

AUD$0.04

AUD$0.05

AUD$0.01

AUD$0.0044

Expiry date

5 May 2013

31 May 2013

30 September 2013

30 September 2013

1 June 2013

11 January 2013

11 January 2014

11 January 2014

30 June 2014

17 October 2015

7.8 Issued during quarter

30,000,000 - AUD$0.0044 17 October 2015

7.9 Exercised during quarter

- - - -

7.10 Expired during quarter 99,500,000 -

AUD$0.01

30 November 2012

7.11 Debentures (totals only)

- -

7.12 Unsecured notes (totals only)

- -

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 5).

2 This statement does /does not* (delete one) give a true and fair view of the

matters disclosed.

Sign here: Chief Financial Officer Date: 29 January 2013

Print name: Pierre Malherbe

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.

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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 6: Exploration for and Evaluation of

Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International

Financial Reporting 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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