2nd Quarter Activities Report 2016/2017
During the 2nd Quarter (October – December 2016) Hannans:
Fast Facts
Exploration
ASX Code: HNR
Nickel – completed review of geology, geochemistry and geophysics at the 100% owned Queen Victoria Rocks (QVR) nickel sulphide project located south-west of Coolgardie, Western Australia1, planned deep diamond drilling and down hole geophysical survey (DHEM) programs2, completed two diamond holes for total combined depth of 800m, intersected rock units prospective for hosting nickel sulphides, sent core samples to laboratory for analysis (results anticipated during the current Quarter), completed DHEM surveys subsequent to the end of the Quarter (final interpretation pending); re-logged historic reverse circulation (RC) drill holes from within the Stormbreaker Prospect at the Forrestania nickel sulphide project located east of Hyden, Western Australia to enable direct comparison with rock units intersected in diamond drilling completed by Hannans at Stormbreaker in July 2016; completed first pass reconnaissance soil geochemistry program within the North Stormbreaker Prospect, samples sent to the laboratory for analysis subsequent to the end of the Quarter (results anticipated during the current Quarter).
Lithium – submitted diamond core samples of pegmatites intersected at QVR for lithium analysis (results anticipated during the current Quarter); acquired airborne geophysical surveys at Forrestania to assist with mapping regional and prospect scale structures adjacent to the granite dome believed to be the source of the lithium minerals at the high grade Earl Grey lithium deposit.
Capital Structure Shares on issue: 1.68 billion Market cap: $23.5M (at 1.4c)
Non-Executive Chairman Jonathan Murray
Executive Director Damian Hicks
Non-Executive Directors Markus Bachmann Clay Gordon Amanda Scott
Key Projects Sole Funded Forrestania (Nickel & Lithium)
Corporate
New Board Appointments – Jonathan Murray appointed Independent NonExecutive Chairman, Damian Hicks appointed Executive Director and Amanda Scott appointed Non-Executive Director.3
Sold Database – sold the Lake Johnston exploration database to Montezuma Mining Company Ltd (ASX:MZM) in consideration for 15% free-carried interest in MZM’s Lake Johnston nickel-gold-lithium project.4
Exercise of Options – Neometals Ltd (ASX:NMT) exercised 31.25 million options to acquire fully paid ordinary shares in Hannans.
Investor Conferences – presented at the Mining Scout Investor Conference in Frankfurt and attended the International Precious Metals & Commodities Show in Munich to update German investors trading Hannans shares on the Berlin Stock Exchange (HR9.BE).
Settled Outstanding Debts – Shareholders voted to settle all outstanding debts to directors via the issue of shares.
Court Action – Creditor company Mine Builder Pty Ltd made an application to set aside Hannans’ Statutory Demand, this matter will be heard in the Supreme Court of Western Australia on 9 February 2017.
Listing of Critical Metals Ltd on Stock Exchange – continued discussions with parties that have expressed an interest in funding the Company’s growth.
Queen Victoria Rocks (Nickel) Free-Carried Forrestania (Gold) Lake Johnston (Nickel, Gold & Lithium)
1 Refer ASX announcement dated 25 November 2016 2 Refer ASX announcement dated 2 December 2016 3 Refer ASX announcement dated 29 November 2016 4 Refer ASX announcement dated 21 December 2016
31 January 2017
HANNANS 2 N D QUARTER ACTIVITIES REPORT 2016/2017
PLANS FOR 3rd QUARTER During the 3rd Quarter (January – March 2017) Hannans aims to: Exploration
Lithium – subject to receipt of government approvals, commence an aircore drilling program (approximately 6,000 metres) targeting rocks prospective for lithium mineralisation at the Forrestania Project. Drilling will be located approximately 4km west of two granite intrusions mapped within Hannans’ tenure. The high grade Earl Grey lithium deposit (owned by Kidman Resources Ltd, ASX:KDR) is located approximately 4km east of the same granite intrusions. This distance (i.e. 4km) appears to be the distance necessary to allow for cooling of the intruding pegmatites sourced from the granite intrusions and for differential crystallization of exotic minerals including spodumene (an important lithium mineral). The exploration approach proposed is to use broad reconnaissance traverses of air core drilling to help define the geology and to provide improved geochemical information. Further information will be provided when drilling approvals have been received.
Nickel – receive assay results from the diamond drilling at QVR, receive final interpretation of DHEM survey results, compile the latest information and plan follow up drilling to test nickel targets; prepare and release to ASX a summary presentation of exploration results from Forrestania and outline the proposal for the next round of focussed nickel sulphide exploration activity along strike from the high grade Flying Fox and Spotted Quoll mines owned by Western Areas Ltd (ASX: WSA).
Exploration Manager – commence the search for an Exploration Manager to join the existing high quality consulting exploration team incorporating Gordon Kelly, Ben Jones, Bryan Smith, Richard Stuart, John Chellew, Jon Hronsky, Adrian Black and Bill Amann.
Corporate
New opportunities – Hannans is constantly seeking new opportunities located in Western Australia with the potential to add value to shareholders and welcomes unsolicited approaches from third parties.
Critical Metals Ltd – this company is now an independently funded and managed company owned by Hannans shareholders5. Management is seeking to ensure that the listing of Critical Metals on a stock exchange, and the drill testing of the Varuträsk lithium project, occurs as soon as practical. For further information please refer to the Critical Metals’ web site (criticalmetals.eu) and sign up for email alerts.
Court Action – a Statutory Demand was issued by Hannans against Mine Builder on 21 October 2016 for a debt in the sum of approximately $1.16 million. Mine Builder’s application to set aside Hannans’ Statutory Demand will be heard in the Supreme Court on 9 February 2016.
ATO Class Ruling – Hannans anticipates receiving the Australian Taxation Office’s decision shortly with respect to Hannans’ application for concessional tax treatment under the demerger relief provisions of the Income Tax Assessment Act. Hannans lodged its application with the ATO in August 2016 as it related to the demerger of Critical Metals Ltd (criticalmetals.eu) approved by Hannans Shareholders in September 2016. Once the ATO decision has been received, Hannans will notify Shareholders and provide information that will assist Shareholders with calculating the tax cost base to be allocated to their Hannans shares and the Critical Metals shares. For further information please refer to the Hannans Notice of Meeting, Section 2.20, lodged with the ASX on 26 July 2016.
5 Refer ASX announcement dated 27 September 2016
2
HANNANS 2 N D QUARTER ACTIVITIES REPORT 2016/2017
Figure 1 Project location map
Figure 2 Yellow ellipse shows area of interest for lithium exploration, red ellipse shows area of interest for nickel exploration, Hannans holds a 20% free-carried interest in gold rights in its tenure
3
HANNANS 2 N D QUARTER ACTIVITIES REPORT 2016/2017
ASX ANNOUNCEMENTS FOR 2nd QUARTER 2016/2017 Date
Announcement
21 Dec 2016
Interest in Nickel-Gold-Lithium Project
13 Dec 2016
Exercise of option
8 Dec 2016
Updated capital structure
2 Dec 2016
Change in substantial holding – MCA Nominees Pty Ltd
2 Dec 2016
Drilling at Spargos Prospect for Nickel
29 Nov 2016
Board changes
21 Nov 2016
Ceasing to be a substantial holder – Equity & Royalty Investments Ltd
16 Nov 2016
New share issue
3 Nov 2016
Ceasing to be a substantial holder – Anglo American Group
3 Nov 2016
International Precious Metals & Commodities Show
1 Nov 2016
1st Quarter Activities Report
1 Nov 2016
1st Quarter Cashflow Report
22 Oct 2016
Notice of Annual General Meeting
10 Oct 2016
Ceasing to be a substantial holder – Craton Capital Funds
5 Oct 2016 Corporate update Table 1: ASX Announcements for 2nd Quarter 2016/2017 CONTACTS For further information, please contact: Damian Hicks Executive Director +61 419 930 087
[email protected] Tel: +61 8 9324 3388 Web: www.hannansreward.com Email:
[email protected] Twitter: @hannansreward Facebook: Hannans Reward
4
HANNANS 2 N D QUARTER ACTIVITIES REPORT 2016/2017
5
APPENDIX A – TENEMENT STATUS FOR 2nd QUARTER 2016/2017 CURRENT TENEMENTS Tenement number
Interest 2nd Quarter 2016/2017 Start End
Note
Tenement number
Interest 2nd Quarter 2016/2017 Start End
Note
HANNANS LTD Location: Lake Johnston, Australia E63/1365
20%
20%
1
80%
1
REED EXPLORATION PTY LTD 2 Location: Lake Johnston, Australia E63/1365
80%
Location: Queen Victoria Rocks, Australia E15/1416
100%
100%
E77/2303 P77/4290 P77/4291
100% 100% 100%
100% 100% 100%
Location: Forrestania, Australia E77/2207-I E77/2219-I E77/2220-I E77/2239-I
100% 100% 100% 100%
100% 100% 100% 100%
Note: 1 Hannans Ltd holds 20% interest and Reed Exploration Pty Ltd holds 80% interest. 2 Reed Exploration is a wholly owned subsidiary of Hannans Ltd
TENEMENTS UNDER APPLICATION None.
RELINQUISHED, REDUCED OR LAPSED TENEMENTS None
COMPLIANCE STATEMENTS The information in this document that relates to exploration results is based on information compiled by Mr Gordon Kelly, a Competent Person who is a Member of the Australian Institute of Geoscientists. Mr Kelly is a consultant to Hannans Ltd and its subsidiary companies. Mr Kelly has sufficient experience, which is relevant to the style of mineralisation and types of deposits under consideration and to the activity which has been undertaken to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mr Kelly consents to the inclusion in the report of the matters based on her information in the form and context in which it appears.
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
Rule 5.5
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report Name of entity HANNANS LTD ABN
Quarter ended (“current quarter”)
52 099 862 129
31 December 2016
Consolidated statement of cash flows 1.
Cash flows from operating activities
1.1
Receipts from customers
1.2
Payments for
Year to date (6 months) $A’000
Current quarter $A’000 –
–
(275)
(335)
(b) development
–
–
(c) production
–
–
(d) staff costs
(31)
(192)
(232) b
(487) b
(a) exploration & evaluation
(e) administration and corporate costs 1.3
Dividends received (see note 3)
–
–
1.4
Interest received
7
14
1.5
Interest and other costs of finance paid
–
–
1.6
Income taxes paid
–
–
1.7
Research and development refunds
–
–
1.8
Other (provide details if material)
–
–
1.9
Net cash from / (used in) operating activities
(531)
(1,000)
2.
Cash flows from investing activities
2.1
Payments to acquire: (a) property, plant and equipment
–
(1)
(b) tenements (see item 10)
–
–
(c) investments
–
–
(d) other non-current assets
–
–
+ See chapter 19 for defined terms. 01/09/2016
Appendix 5B Page 1
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
Consolidated statement of cash flows 2.2
Year to date (6 months) $A’000
Current quarter $A’000
Proceeds from the disposal of: (a) property, plant and equipment
–
–
(b) tenements (see item 10)
–
–
(c) investments
–
–
(d) other non-current assets
–
–
(4)
(95)
–
–
1,000 a
750 a
996
654
2.3
Cash flows from loans to other entities
2.4
Dividends received (see note 3)
2.5
Other (provide details if material)
2.6
Net cash from / (used in) investing activities
3.
Cash flows from financing activities
3.1
Proceeds from issues of shares
–
–
3.2
Proceeds from issue of convertible notes
–
–
3.3
Proceeds from exercise of share options
125
271
3.4
Transaction costs related to issues of shares, convertible notes or options
(20)
(25)
3.5
Proceeds from borrowings
–
–
3.6
Repayment of borrowings
–
–
3.7
Transaction costs related to loans and borrowings
–
–
3.8
Dividends paid
–
–
3.9
Other (provide details if material)
–
–
3.10
Net cash from / (used in) financing activities
105
246
4.
Net increase / (decrease) in cash and cash equivalents for the period
4.1
Cash and cash equivalents at beginning of period
1,005
1,675
4.2
Net cash from / (used in) operating activities (item 1.9 above)
(531)
(1,000)
4.3
Net cash from / (used in) investing activities (item 2.6 above)
996
654
4.4
Net cash from / (used in) financing activities (item 3.10 above)
105
246
4.5
Effect of movement in exchange rates on cash held
–
–
4.6
Cash and cash equivalents at end of period
1,575
1,575
+ See chapter 19 for defined terms 1 September 2016
Page 2
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
5.
Reconciliation of cash and cash equivalents
Current quarter $A’000
Previous quarter $A’000
at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts
5.1
Bank balances
792
87
5.2
Call deposits
783
918
5.3
Bank overdrafts
–
–
5.4
Other (provide details)
–
–
5.5 a
b
Cash and cash equivalents at end of quarter 1,575 1,005 (should equal item 4.6 above) The acquisition of Reed Exploration Pty Ltd was completed on 29 September 2016. Pursuant to the agreement with Neometals Ltd, Reed Exploration Pty Ltd transferred a cash balance of $1 million less the costs of the nickel exploration drilling completed in October 2016 with no liabilities. Approximately $94,000 (Jul – Dec 2016: $224,000) was associated with one-off transaction costs relating to implementation of the Neometals transactions and the in-specie distribution of Critical Metals Ltd. Current quarter $A'000
6.
Payments to directors of the entity and their associates
6.1
Aggregate amount of payments to these parties included in item 1.2
6.2
Aggregate amount of cash flow from loans to these parties included in item 2.3
6.3
Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2
6.1
31 –
Payments of Managing Director’s salary, superannuation, taxes and Non-Executive Directors’ fees for the quarter. During the quarter, the Company issued shares and unlisted options in lieu of the outstanding Managing Director’s salary and Non-Executive Directors’ fees as approved at Hannans’ shareholder meeting on 15 September 2016. Refer to ASX announcement dated 15 November 2016 for further information.
Current quarter $A'000
7.
Payments to related entities of the entity and their associates
7.1
Aggregate amount of payments to these parties included in item 1.2
–
7.2
Aggregate amount of cash flow from loans to these parties included in item 2.3
–
7.3
Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2
+ See chapter 19 for defined terms. 01/09/2016
Appendix 5B Page 3
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
Total facility amount at quarter end $A’000
Amount drawn at quarter end $A’000
8.
Financing facilities available
8.1
Loan facilities
–
–
8.2
Credit standby arrangements
–
–
8.3
Other (please specify)
–
–
8.4
Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.
9.
Estimated cash outflows for next quarter
9.1
Exploration and evaluation
9.2
Development
–
9.3
Production
–
9.4
Staff costs
48
9.5
Administration and corporate costs
49
9.6
Other (provide details if material)
–
9.7
Total estimated cash outflows
437
10.
Changes in tenements
Add notes as necessary for an understanding of the position
(items 2.1(b) and 2.2(b) above) 10.1
Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced
10.2
Interests in mining tenements and petroleum tenements acquired or increased
+ See chapter 19 for defined terms 1 September 2016
$A’000 340
Nature of interest
Tenement reference and location
Interest at beginning of quarter
Interest at end of quarter
Page 4
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
Compliance statement 1
This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
2
This statement gives a true and fair view of the matters disclosed.
27 January 2017 Damian Hicks Executive Director 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 that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.
2.
If this quarterly report has been prepared in accordance with Australian Accounting Standards, 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. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.
3.
Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.
+ See chapter 19 for defined terms. 01/09/2016
Appendix 5B Page 5
