N@N

Quarterly Activities and Cashflow Report

^{Published on 2011-01-31 23:20:40 - Market Wire}
 

 FORTE ENERGY NL ACN 009 087 852 ASX/AIM CODE: FTE Telephone: +618 9322 4071, Fax: +618 9322 4073 Quarterly Report December 2010 Forte Energy NL ('Forte Energy' or 'the Company') (ASX/AIM: FTE) is an emerging international uranium company focused on the exploration and development of a portfolio of uranium assets in the Republics of Mauritania and Guinea, West Africa. Highlights -------------------------------------------------------------------------------------------------------- Uranium Exploration - Mauritania (West Africa) * Completion of extended 7,000m Reverse Circulation ("RC") component of resource drilling programme at A238 uranium prospect * Assay results received so far from 36 out of 120 RC holes with best intercepts including: - 44m @ 555ppm U - 52m @ 434ppm U - 55m @ 476ppm U - 80m @ 369ppm U * 1,500m diamond core drilling programme nearing completion, with estimation of a preliminary maiden JORC resource for A238 expected in H1 2011, while additional follow-up drilling is undertaken before the end of field season * Several new prospects with high grade uranium at surface identified for drill testing later this field season Uranium Exploration - Guinea (West Africa) * Extensive road and bridge rehabilitation has been carried out to facilitate site access to the Firawa Project * Programme of extension and infill RC drilling commencing this week aiming to increase the current Inferred JORC resource of 17.7Mt grading 296ppm U3O8 for 11.6 million pounds of contained U3O8 at Firawa * 7,000 samples from previous drilling at Firawa to be re-assayed for Rare Earth Elements (REE) for estimation of a JORC resource following discovery of REE in six samples chosen randomly from throughout the deposit * Appointment of contractors for pre-feasibility studies including metallurgical testing and design and environmental and anthropological studies Corporate activity * Announcement of placement to raise A$15m from issue of 120m shares at 12.5c per share Republic of Mauritania, West Africa ----------------------------------- The December quarter saw the commencement of an extensive season of drilling and field exploration across the Company's uranium exploration licences in the Zednes region of northern Mauritania. The primary focus so far has been to follow up previous drilling at the A238 prospect, located 55km south-east of the town of Bir Moghrein and 135km north-west of Bir En Nar. A 7,000m programme of RC drilling comprising 120 holes was completed in December 2010, and a further 1,500m of diamond core drilling is nearing completion. The results from these programmes are expected to enable estimation of an initial JORC code compliant uranium resource for A238 during H1 of 2011. To view "Figure 1 -Exploration targets within Forte Energy's Mauritania permit," please open the following link in a new window: http://media3.marketwire.com/docs/fte_0201_fig_1.pdf A total strike length of 3,500m was drilled, with two distinct mineralised bodies delineated, a large southern body roughly 1,800m in length, and a shorter and thinner northern body some 800m in length. So far assays have been received from 36 of the 120 RC drill holes, including 10 holes from the thick central core of the larger body which revealed wide near-surface intersections of mineralisation. Best intersections so far include: Table 1 - Highlights from RC drillhole assays at A238 -------------------------------------------------------------------------------------------------------- Hole UTM UTM AZIM DIP From To metres ppm U est ppm Easting Northing U3O8 -------------------------------------------------------------------------------------------------------- 238RC101 284147 2771686 55 -70 74 118 44 555 654 -------------------------------------------------------------------------------------------------------- 238RC102 284203 2771726 55 -70 0 52 52 434 512 -------------------------------------------------------------------------------------------------------- 238RC104 284108 2771784 55 -70 29 84 55 476 561 -------------------------------------------------------------------------------------------------------- 238RC105 284080 2771764 55 -70 72 103 31 332 392 -------------------------------------------------------------------------------------------------------- 107 159 52 321 379 -------------------------------------------------------------------------------------------------------- 238RC107 284218 2771617 55 -70 53 133 80 369 435 -------------------------------------------------------------------------------------------------------- 238RC109 284272 2771532 55 -70 14 15 1 337 397 -------------------------------------------------------------------------------------------------------- Note: Lengths reported do not represent true widths. Once all results are received and incorporated into 3-dimensional modelling of the deposit, the Company plans to undertake further RC drilling at A238 based on these results before the end of the current Mauritanian field season. RC drilling will also be undertaken on other prospects where high grade uranium was intersected in the last drilling campaign. Drilling has commenced at the first of these, the A29 prospect, located approximately 20km to the south of A238. Continuing field programmes including mapping, trenching, radiometrics and radon sampling are assisting in the identification and assessment of new prospects and in determining additional drill targets. Republic of Guinea, West Africa ------------------------------- Forte Energy has four exploration permits in Guinea covering its Firawa and Bohoduo prospects which include exploration for both uranium and REEs. The Firawa prospect has an initial JORC compliant Inferred Resource of 17.7Mt at 296ppm for 11.6Mlbs U3O8 (100ppm cut-off), but remains open in all directions. Preliminary metallurgical studies have confirmed the potential for heap leach recovery. Following a field visit to the Firawa prospect after the 2010 wet season, the Company engaged contractors to undertake rehabilitation works on roads and bridges and clearing of local access tracks to improve access for heavy vehicles transporting drilling equipment to site. This work has now finished and drilling equipment is now on site for an initial phase of RC drilling which is to be followed by an extensive programme of infill and extension diamond drilling. Results from these programmes are expected to enable a revised JORC code compliant resource to be calculated for Firawa. To view "Figure 2 -Guinea exploration projects," please open the following link in a new window: http://media3.marketwire.com/docs/fte_0201_fig_2.pdf During routine metallurgical analysis of a sample of Firawa ore, standard XRF analysis found a mass balance deficit (a proportion of the ore that could not be identified). A more detailed ICP analysis of this sample showed that it contained a total REE grade of 1.3%. Encouraged by this find, a further five RC drilling samples from throughout the deposit were also assayed for REEs. These five samples all returned higher REE grades than the initial sample. Table 2 - Firawa, REE assays -------------------------------------------------------------------------------------------------------- Element Units Original FRW12: FRW12: FRW14: FRW30: FRW31: Sample 44-45 46-47 42-43 32-33 4-5 -------------------------------------------------------------------------------------------------------- Cerium ppm 5330 11650 13900 11600 10150 9740 -------------------------------------------------------------------------------------------------------- Dysprosium ppm 235 406 480 331 356 333 -------------------------------------------------------------------------------------------------------- Erbium ppm 80 114 132.5 107 100 113.5 -------------------------------------------------------------------------------------------------------- Europium ppm 154 287 346 245 270 236 -------------------------------------------------------------------------------------------------------- Gadolinium ppm 448 550 672 477 590 444 -------------------------------------------------------------------------------------------------------- Holmium ppm 31.6 51.5 60.9 45.6 49.7 46.2 -------------------------------------------------------------------------------------------------------- Lanthanum ppm 2409 5070 6050 4510 4210 4160 -------------------------------------------------------------------------------------------------------- Lutetium ppm 5.6 8.52 8.28 7.91 6.76 7.23 -------------------------------------------------------------------------------------------------------- Neodymium ppm 2953 5770 6880 6080 5490 4890 -------------------------------------------------------------------------------------------------------- Praseodymium ppm 760 1450 1725 1530 1315 1230 -------------------------------------------------------------------------------------------------------- Samarium ppm 530 1050 1255 981 879 883 -------------------------------------------------------------------------------------------------------- Terbium ppm 54.8 82.9 99.7 67.9 71 66.4 -------------------------------------------------------------------------------------------------------- Thulium ppm 8 12.6 14.7 83 19 18.2 -------------------------------------------------------------------------------------------------------- Ytterbium ppm 44 68.5 71.8 61.4 55 62.8 -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- Total REE % 1.30% 2.66% 3.17% 2.61% 2.36% 2.22% -------------------------------------------------------------------------------------------------------- Following these successful intermediate REE results, the Company has decided to re-assay approximately 7000 drill samples stored on site at Firawa that were used to estimate the initial uranium resource, with the objective of calculating a JORC compliant REE resource at Firawa in addition to the existing uranium resource. Retrieval of these samples has now commenced and assay results will be reported in due course. The Company has appointed UK based mineral engineering consultants, GBM Engineering, to lead the metallurgical testing and process design project for the Firawa Uranium Project. The presence of REEs requires a more comprehensive testing regime aimed at developing a full Uranium/ REE process design. The Company has also announced the appointment of global engineering firm SGS to undertake the associated environmental and anthropological surveys in the region of the Firawa deposit as part of the pre- feasibility studies. Corporate --------- On 18 January 2011 the Company announced plans for a placement to sophisticated and institutional investors. The placement is expected to raise A$15 million via the issue of 120 million fully paid ordinary shares at 12.5 cents per share. The placement is being conducted in two instalments with the first tranche of 87,098,704 shares allotted on 27 January 2011 pursuant to the Company's 15% placement authority. The second tranche of 32,901,296 shares is to be placed subject to obtaining shareholder approval at a general meeting. In this regard, a Notice of Meeting (NOM) will be forwarded to shareholders shortly. Conclusion ---------- Forte Energy is extremely positive about its exploration programmes in both Mauritania and Guinea and their potential for increasing the existing uranium resources in both countries and a maiden REE resource for Firawa during 2011. Successful completion of the current capital raising will place the Company in a strong financial position to pursue these exploration programmes and progress pre-feasibility studies for the Firawa prospect. Mark Reilly Managing Director 31 January 2011 For further information contact: Mark Reilly, Managing Director Forte Energy N.L. Tel: +44 (0) 203 300 0187 Stuart Laing RFC Corporate Finance - Nomad Tel: +61 (0) 8 9480 2506 Robin Henshall/Tim Graham Matrix Corporate Capital LLP Tel: +44 (0) 203 206 7000 Jos Simson/Emily Fenton Tavistock Communications Tel: +44 (0) 207 920 3150 Nicholas Read/Paul Armstrong Read Corporate Tel: +61 (0) 8 9388 1474 Note: The information in this report that relates to Exploration Results is based on information compiled by Mr. Bosse Gustafsson, who is a Member of the European Federation of Geologists, a 'Recognised Overseas Professional Organisation' ('ROPO') included in a list promulgated by the ASX from time to time. Mr Gustafsson is a full time Technical Director of Forte Energy NL and is responsible for exploration activities in Mauritania and Guinea. Mr. Gustafsson 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'. The information in this report that relates to the Mineral Resource at Firawa in Guinea is based on information compiled by Mr. Bosse Gustafsson of Forte Energy NL and Mr. Doug Corley of Coffey Mining Ltd. Mr. Gustafsson and Mr. Corley have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they have undertaken 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". Mr. Gustafsson, Mr. Inwood and Mr. Corley consent to the inclusion in this report of the matters based on their information in the form and context in which it appears. Appendix 5B Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10. Name of entity -------------------------------------------------------------------------------------------------------- FORTE ENERGY NL -------------------------------------------------------------------------------------------------------- ABN Quarter ended ("current quarter") --------------------------- --------------------------------- 59 009 087 852 31 December 2010 --------------------------- --------------------------------- ---------------------------------- Current quarter Year to date Cash flows related to operating activities A$'000 (6 months) A$'000 ---------------------------------- 1.1 Receipts from product sales and related debtors - - 1.2 Payments for (a) exploration and evaluation (1,034) (1,993) (b) development - - (c) production - - (d) administration (667) (1,244) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature received 77 107 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 (1,624) (3,130) ---------------------------------------------------------------------------------------------- Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects - - (b) equity investments - - (c) other fixed assets - (8) 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 - (8) ---------------------------------- 1.13 Total operating and investing cash flows (1,624) (3,138) (carried forward) ---------------------------------------------------------------------------------------------- Consolidated statement of cash flows ---------------------------------------------------------------------------------------------- 1.13 Total operating and investing cash flows (1,624) (3,138) (brought forward) ---------------------------------------------------------------------------------------------- Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 108 108 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 - Settlement of Guarantee ---------------------------------- Net financing cash flows 108 108 ---------------------------------------------------------------------------------------------- Net increase (decrease) in cash held (1,516) (3,030) 1.20 Cash at beginning of quarter/year to date 2,571 4,092 1.21 Exchange rate adjustments to item 1.20 2 (5) ---------------------------------- 1.22 Cash at end of quarter 1,057 1,057 ---------------------------------------------------------------------------------------------- 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 ------------------ Aggregate amount of payments to the parties included in item 220 1.2 ------------------ Aggregate amount of loans to the parties included in item 1.10 0 ---------------------------------------------------------------------------------------------- Explanation necessary for an understanding of the transactions ---------------------------------------------------------------------------------------- Salaries and rental of office premises ---------------------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------------------- 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 Amount used $A'000 $A'000 ------------------------------------------------- 3.1 Loan facilities Nil N/A ------------------------------------------------- 3.2 Credit standby arrangements Nil N/A ---------------------------------------------------------------------------------------------- Estimated cash outflows for next quarter -------------- $A'000 -------------- 4.1 Exploration and evaluation 1,150 -------------- 4.2 Development - -------------- 4.3 Production - -------------- 4.4 Administration 550 --------------------------------------------------------------------------------------------- Total 1,700 --------------------------------------------------------------------------------------------- Reconciliation of cash ---------------------------------------- Reconciliation of cash at the end of the quarter Current quarter Previous quarter (as shown in the consolidated statement of cash $A'000 $A'000 flows) to the related items in the accounts is as follows. --------------------------------------------------------------------------------------------- 5.1 Cash on hand and at bank 1,057 571 ---------------------------------------- 5.2 Deposits at call - 2,000 ---------------------------------------- 5.3 Bank overdraft - - ---------------------------------------- 5.4 Other (provide details) - - --------------------------------------------------------------------------------------------- Total: cash at end of quarter (item 1.22) 1,057 2,571 --------------------------------------------------------------------------------------------- Changes in interests in mining tenements ------------------------------------------------------------------ Tenement Nature of interest Interest at Interest at reference (note (2)) beginning of end of quarter 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 Amount per security paid up per (see note 3) security (cents) (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 582,658,031 582,658,031 2,250,000 - 25 1 ----------------------------------------------------------- 7.4 Changes during quarter (a) Increases through issues Conversion of options 2,000,000 2,000,000 5.5 5.5 (b) Decreases through returns of capital, buy- backs ------------------------------------------------------------------------------------------------- 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 Exercise Expiry conversion factor) price date 5,000,000 - 11.0 cents 21/12/12 3,000,000 - 10.0 cents 17/12/13 6,000,000 - 20.0 cents 23/12/12 1,000,000 - 6 pence 26/11/13 ----------------------------------------------------------- 7.8 Issued during quarter ----------------------------------------------------------- 7.9 Exercised during quarter 2,000,000 - 5.5 29/11/10 ----------------------------------------------------------- 7.10 Expired during quarter ------------------------------------------------------------------------------------------------- 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 4). 2 This statement does give a true and fair view of the matters disclosed. Sign here: ................................................. Date: 31 January 2011. Company Secretary Print name: Murray Wylie............................... 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.