Dragon Mining Limited Quarterly Activities Report For the Quarter ended 30 September 2015

Transcription

1 Dragon Mining Limited ly Activities Report For the ended 30 September 2015 Overview Improved safety performance continued with a Lost Time Injury ( LTI ) free quarter reducing the Group s 12 month rolling LTI frequency rate per million work hours to 3.08, an 85% reduction compared to Q Management remains focused on continuing to improve safety and to this end have ordered new seismic monitoring equipment at Orivesi and are seeking to obtain approval from Mine Inspectors to replace underground safety ladders with emergency evacuation cages. Gold production of 14,270 ounces included 4,124 ounces produced from external concentrate sources at the Svartliden Production Centre in Sweden. Company receiving the remaining A$750,000 of the A$1.0 million cash consideration payable (plus penalty interest of A$128,773) pursuant to the Share Sale Agreement. Ausinox plc also reimbursed the Company an additional A$33,742 which represented costs incurred, over and above the purchase price, by the Company as a result of the delays in completion. at a Glance Gold Production C1 Cash Cost US/oz (1) 14,270 ounces US$942 Concentrate processing at the Svartliden Production Centre included 100% of the concentrate from Jokisivu. Metallurgical issues prevented the processing of Orivesi concentrate at Svartliden, instead this was delivered to the Boliden refinery. The processing of external concentrates continued to ramp up during the quarter, generating a further benefit to the Group revenue stream. Safety Performance Available Cash (2) ( end) 0 LTI A$18.6m A Group C1 Cash Cost of US$942/oz was achieved during the quarter. This achievement was in line with the C1 Cash Cost from the previous quarter and was again driven by the improved recovery from the Vammala Plant and the reduction in refining costs associated with the processing of Jokisivu concentrate at the Svartliden Production Centre. Statutory Tailings Storage Facility ( TSF ) inspections were conducted by the environmental authorities in Finland and Sweden. The inspections confirmed both TSF s are approved for continued use. Sale and Purchase Agreement to acquire the Fäboliden Gold Project completed, with the Company and the Bankruptcy Estate agreeing to amend the condition relating to the extension of the existing Environmental Permit in consideration for a lower total purchase price of 38 million SEK. 6 million SEK had already been paid, the remaining 32 million SEK was paid on 30 July Results from the Fäboliden infill program were received during the quarter. The results from the drilling program have shown that the high grade zone displays good continuity both down dip and along strike; the grades received from drilling are commensurate with the results from historic drilling. Available cash was depleted by A$3.5 million during the quarter. Available cash (bank accounts plus trade receivables less accounts payable) totalled AU$18.6m at the end of the quarter (details of cash movement are given on page 10). (1) For the Vammala Production Centre, the Group uses the C1 Cash Cost definition as set out by Mackenzie Wood. For the Svartliden Production Centre, the Group calculates C1 Cash Costs by including total production costs (which includes concentrate purchases) divided by total ounces sold from all sources. (2) Available Cash = Cash at bank plus Receivables less Accounts Payable. Ounces 20,000 15,000 10,000 5, , , ,000 0 Dragon Mining ly Gold Production and C1 Cash Cost 3,000 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Ounces Produced (Oz, LHS) C1 Cash Cost (USD/Oz, RHS) Ore Mined vs Ore Milled 2,000 1,000 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Ore Mined (t) 0 Ore Milled (t) USD/Oz The Sale of the Weld Range Metals investment to Ausinox plc was completed during the quarter, with the Page 1

2 Operations Review The Group s gold production for the quarter was 14,270 ounces at a C1 Cash Cost of US$942/oz. To compensate for lower production from Orivesi, ore production from Jokisivu was increased. Production at Orivesi will be limited to existing sill pillars until the new stopes are available in December. Drilling and blasting has commenced with some cracking in the rock making progress difficult. The ramp up in concentrate throughput at Svartliden continued during the quarter with 4,124 additional ounces sourced from external concentrate (Q2: 2,370 ounces). This was the first quarter that Svartliden processed concentrate only. Metallurgical issues associated with the processing plant caused precautionary production stoppages in September to ensure discharge limits were maintained. External technical assistance was sought and the resulting metallurgical recommendations are in the process of being implemented, yielding early positive results. Vammala Production Centre, Southern Finland Ore Mined (t) Ore Milled (t) Head Grade (g/t) Recovery (%) Plant Utilisation (%) Total Gold Production (Ounces) C1 Cash Cost 1 USD/oz Dec ,224 73, , Mar ,771 71, Jun ,778 66, , , Sep ,540 75, , For the Vammala Production Centre, the Group uses the C1 Cash Cost definition as set out by Mackenzie Wood. For the September 2015 quarter, the calculation denominator has been changed to gold sold (rather than gold produced). The change was implemented at Vammala to ensure consistency across the Group. 2 The total gold production includes a positive quarterly true up to reconcile the provisional ounces sold to Boliden against the final gold outturn from Boliden. Safety September represented the ninth consecutive month of zero LTI s. The rolling 12 month accident frequency rate per 1 million working hours reduced from 20.3 at the end of Q to 3.9 in Q During the quarter: A two week maintenance shutdown at the Vammala Mill was completed without any accidents or incidents; New blasting procedures were implemented for the Orivesi Mine; A design for emergency evacuation cages has been presented to the Mine Inspectors for approval; Prior to the maintenance shutdown, a safety focus has continued on those issues related to heightened risks surrounding the performance of non-routine tasks; and A total of 11 reportable incidents were reported during the quarter; 3 at Orivesi, 6 at Vammala and 2 at Jokisivu. Production Gold production at the Vammala Production Centre for the quarter was 10,146 ounces, which was 368 ounces below forecast. Mill feed at Vammala comprised 26,783 tonnes from Orivesi at 6.0 g/t gold and 48,521 tonnes from the Jokisivu at 4.2 g/t gold. Orivesi is presently attempting to mine out the remaining sill pillars while the decline is progressing to the new stope are. Overall ore Page 2

3 production volumes have been maintained but with lower grade ore from Jokisivu. Orivesi Gold Mine Production from Orivesi was 16,646 tonnes of ore (57% below forecast). Mining capacity was affected by the difficult condition of the stopes that were in production. The Kutema decline advanced 91 metres by the end of the quarter to the 1,120m level. Development works advanced a total of 456 metres during the quarter, this being 56 metres above forecast. Jokisivu Gold Mine Ore mined totalled 38,894 tonnes (16% above forecast) and development advanced 480 metres (60 metres above forecast) during the quarter. Production from Jokisivu has been ramped up to help compensate for the reduced ore production from the higher grade Orivesi mine. The deepening of the main decline has advanced as planned to the 340m level. Vammala Plant Ore milled totalled 75,304 tonnes and mill recovery averaged 85.9%. The following occurred during the quarter: Follow up work has shown the new cyclones have resulted in a flotation recovery increase of 1% - 3% for Orivesi ore, better size classification and less ultra-fines; The maintenance shutdown began as planned on 27 September Primary tasks involved replacing the conveyor from the cone crusher to the silo, replacing the rotators and stators for the rougher flotations cells, replacement of the transformer for the crusher and repair work for the Larox filter; TSF embankment raising work was completed as planned by the beginning of August 2015; A statutory TSF safety inspection was completed by the relevant authorities. The TSF is being operated and maintained as intended. The inspection confirmed the dams can be raised with minor modifications; and Dust from the TSF resulted in the Company receiving one complaint from neighbours during the quarter. Two sprinkler systems were installed during the quarter. The area has been watered continuously with lime milk and dust binding chemicals (Refer to Environment Vammala Plant Section). Environment Vammala Plant The new Environmental Permit for the Vammala Plant was granted in June 2014 and as detailed in the Company s quarterly announcement on 31 July was later appealed by the Company (and a few other parties). In September, the Vaasa Administrative Court requested the Company s response with regard to statements and opinions it had received concerning the appeal. The Company provided its response on 5 October, after which the Vaasa Administrative Court should have enough information to determine a ruling. During spring and early summer, strong winds combined with work to raise the TSF embankment resulted in the Company receiving dust complaints. As a result, a statement outlining any potential health impacts was requested by the ELY centre and the health inspector for the Sastamala Municipality ( Relevant Authorities ). The statement was completed by the Finnish Institute of Occupational Health and delivered to the Relevant Authorities on 31 August The Company s preventative actions produced positive results and have been continued throughout the quarter. The Relevant Authorities have confirmed that the preventative actions taken by the Company were adequate. The inspection of the TSF embankments, carried out every fifth year, was organised for September. The inspection confirmed the TSF embankments are being operated and maintained as planned and can be raised higher after minor repair work. Page 3

4 According to monthly water analyses, the discharge amount of nickel and sulphate continued to decrease by comparison to previous years. This is mainly the result of seepage waters being pumped successfully back to the TSF. Orivesi Gold Mine In August, as part of the review process associated with renewing the Orivesi Environmental Permit the permit setting authority, The Regional State Administrative Agency ( AVI ), asked the Company s opinion on the statements provided by the ELY Centre and Metsähallitus, the state land owner, regarding the Natura assessment that was completed in late The statements are not binding on AVI and, as expected, both questioned the granting of a new Environmental Permit. The Company responded accordingly to both statements on 16 October. Noise mitigation work continued during the quarter. The noise silencers were inspected and found that some lamellas in the fan were damaged. New lamellas have been ordered and are to be installed as soon as possible. Noise measurements will be carried out after the installation has been completed. Orivesi operated according to its permit conditions in August and September. In July, monthly water analyses showed that aluminium concentration (6,900µg/l) exceeded the Environmental Permit s limit (3,000µg/l). The ELY Centre requested a report of the reasons for the breach and planned future preventative actions. The report was submitted in August and was approved by the ELY Centre by late September, no remedial actions were required. As a result of test fishing, carried out in the lakes downstream every third year, a number of fish were caught in the lake Ala-Jalkajärvi (within the immediate vicinity of the site). In 2009 and 2012, previous test fishing occasions, no fish were caught in the lake. Jokisivu Gold Mine The Environmental Permit application for crushing waste rock at the Jokisivu mine site was submitted to AVI in July. The permit will allow the crushing of a maximum 100,000 TPA. The waste rock is considered inert and therefore is suitable for using as an aggregate. Discharge water limit monthly analyses confirmed the mine continues to operate according to its permit conditions. The analyses sampled in August showed anomalous concentrations of e.g. sulphate and nitrogen in the ditch downstream when compared to previous water analyses. Concentrations are related to seasonally low water flows. Kaapelinkulma Gold Project In April 2015, the Supreme Administrative Court handed down its decision to dismiss the appeal of the Nature Conservation Organization of Pirkanmaa, which was concerned with the possible threat to a local protected butterfly s habitat, by the Company s mining activities. The decision by the mining authority Tukes, to issue a Mining Concession for Kaapelinkulma is now final and the process for ordering the Mining Concession is proceeding. Consequently, a meeting with local land owners providing information regarding the land purchase was organised by the Company in September with follow up negotiations planned for the coming quarter. Page 4

5 Svartliden Production Centre, Sweden Con Milled (t) Ore Milled (t) Head Grade (g/t) Recovery (%) Plant Utilisation (%) Total Gold Production (Ounces) Dec , ,669 C1 Cash Cost USD/oz Mar , Jun , ,518 1, ,536 1,170 Sep , , ,269 1 The C1 Cash Cost was negatively impacted by an out of court settlement of a claim arising from the underground mining contract in addition to lower ore grades and lower recovery. 2 Since transitioning to concentrate processing (Q3 2015), the Group has amended the calculation of the Svartliden C1 Cash Cost to include all costs of production (includes purchase cost of internal and external concentrate) divided by the total ounces sold (from internal and external concentrate). 3 Plant Utilisation is expressed as the percentage of total calendar time utilised for processing Ore. Processing of concentrate is not reflected in the figure. 4 Represents external concentrate tonnes and ounces produced from external concentrate only. Safety The Svartliden Production Centre ( Svartliden ) was again free from LTI s during the quarter and is currently 559 days LTI free. Production This was the first quarter of concentrate only processing at Svartliden and saw a step up in the concentrate ounces produced, especially from third party sources. All of the Jokisivu concentrate continued to be processed at Svartliden while Orivesi concentrate was delivered to the Boliden Harjavalta refinery in southern Finland. Technical assistance was provided by an external consultant to resolve issues with the conversion of the plant from ore to concentrate leaching Processing internal concentrate from Jokisivu at Svartliden generates a benefit of approximately US$50/oz to US$70/oz. It is envisaged that Svartliden will be able to process Orivesi concentrate shortly, which will provide further benefit to the Company. Environment As part of Dragon s commitment to progressive rehabilitation, cover of the tailings beach with waste rock is progressing well and reparation work to the damaged sedimentation pond was finalised. Statutory TSF inspections were completed by the environmental authorities at Svartliden. The inspection resulted in no breaches and only minor notifications relating to clearing, broadening of the spillway from the clarification pond and clearing the emergency spillway from the TSF. A contractor has been engaged to fix these minor notifications in October. In July, daily measurements of the Clarification Pond site discharge points were taken to assist with better control over the ph value. A ph meter was installed in August, all ph levels at the Clarification Pond discharge point have stabilised below the permit threshold. The investigation regarding finalisation of discharge conditions from the Clarification Pond was submitted to the Environmental Court in September. The investigation includes a recommendation to increase the permit levels at the Clarification Pond site discharge point. Production was stopped, on a number of occasions, to avoid a potential breach of the allowable 14 day averages of Weak Acid Dissoluble Cyanide ( WAD CN ) discharge to the TSF. Changed operational procedures when running concentrate and technical modifications including the installation of a more robust ph metre to make the detox process easier to control and reduce the risk of any future discharge issues have been implemented. Page 5

6 Advanced Projects Drilling activities continued to advance during the September quarter with the completion of 54 diamond core drill holes, 10, metres from both surface and underground positions at the Orivesi and Jokisivu gold mines in Finland. The drilling was undertaken with the objective of identifying new mineralised zones and extensions to known mineralised zones, as well as providing information to support mine planning and mine development. No drilling was completed at the Kaapelinkulma Gold Project in southern Finland or at the Fäboliden Gold Project in northern Sweden. Assays results received during the quarter have returned a number of encouraging intercepts including: g/t gold from Orivesi; g/t gold, g/t gold, g/t gold, g/t gold, g/t gold, g/t gold g/t gold, g/t gold and g/t gold from Jokisivu; g/t gold, g/t gold, g/t gold, g/t gold and g/t gold from Kaapelinkulma; and g/t gold, g/t gold, g/t gold, g/t gold and g/t gold from Fäboliden. Southern Finland Orivesi Gold Mine Underground diamond core drilling advanced at Orivesi during the quarter with 12 holes completed for an advance of 3, metres. Details of this drilling have previously been released to the ASX, subsequent to the end of the quarter on 21 October 2015 Southern Finland returns Further Encouraging Results from Drilling. This announcement can be found at (Code: DRA). The drilling of an 18 hole exploration drill program targeting the areas, west and east of both the Kutema and Sarvisuo lode systems continued, with the completion of a further 5 holes (total 12 holes). Assay results have been received for 6 holes returning a best intercept of g/t gold (Appendix 1). Results for 6 holes are pending and 6 holes remain to be drilled. The drilling of the final 7 holes of a 10 hole exploration program from the 710m exploration drive has been completed. This program was designed to further evaluate several historic gold intercepts and promising host rock units in the hydrothermally altered domain. Results have been received for 8 holes, yielding a significant intercept of g/t gold (Appendix 2). This result is located approximately 100 metres north of Kutema Pipe 5 at the 670m level. Follow-up drilling to determine the merit of this newly identified zone of gold mineralisation is now underway. Jokisivu Gold Mine Underground diamond core drilling progressed at the Jokisivu Mine during the quarter, with 23 holes completed for an advance of 3, metres. Diamond core drilling from the surface also continued with 19 holes completed for 3, metres. Details of this drilling have previously been released to the ASX, subsequent to the end of the quarter on 21 October 2015 Southern Finland returns Further Encouraging Results from Drilling. This announcement can be found at (Code: DRA). Results were received for the final 5 holes in an 18 hole program that were drilled during the June 2015 targeting the Kujankallio deposit between the 65m and 100m levels. Better recent intercepts include g/t gold, g/t gold and Page 6

7 g/t gold. Results for all 18 holes are provided in Appendix 3. Final assays were received for 4 holes that were drilled from the 245m level during the June This short program was designed to increase the drilling density of the Kujankallio Hinge Zone at the 310m level. A best intercept of g/t gold was returned. Results for all holes are provided in Appendix 4. The final 7 holes in an 8 hole program that is targeting the Kujankallio Main Zone from the 280m level have been drilled. Results have been received for 6 holes returning an encouraging intercept of g/t gold, g/t gold and g/t gold (Appendix 5). Assays for 2 holes are pending. Two holes of a 5 hole program were completed targeting the area behind the Kujankallio Hinge Zone where several historic intercepts had been previously obtained from the diorite mica gneiss contact. Drilling was also completed on a 6 hole program that targeted the Kujankallio Hinge Zone below the 305m level. Results are pending for all holes drilled from these two programs. The drilling of an 8 hole program of underground diamond core drilling from the 120m level at Arpola was completed. This program had been designed to improve the confidence in the Arpola resource model, providing additional information for footwall stoping and development planning. Results are pending for all holes. The drilling phase of a 21 hole surface diamond core program targeting the Arpola Main Zone has been completed. This program was designed to improve the drill density of the area east of the Arpola open pit in preparation for underground mine planning. Results have been received from 8 holes, yielding a number of significant results including g/t gold, g/t gold, g/t gold, g/t gold, g/t gold, g/t gold, g/t gold and g/t gold. Available results are provided in Appendix 6. Kaapelinkulma Gold Project Final assay results were received for the 34 hole, 2, metre Phase 2 diamond core drilling program completed at Kaapelinkulma. This program was planned to evaluate the extension of the main lodes of the southern deposit, south of the conceptual open-pit area. Better intercepts received from the program include g/t gold, g/t gold, g/t gold, g/t gold and g/t gold (Appendix 7). Results from the Phase 1 and Phase 2 programs will be incorporated into an update Mineral Resource estimate as Dragon Mining continues to evaluate the viability of establishing the Company s third operating gold mine in the southern Finland region. Details of the Kaapelinkulma drilling results have previously been released to the ASX, subsequent to the end of the quarter on the 21 October 2015 Southern Finland Returns Further Encouraging Results from Drilling. This announcement can be found at (Code: DRA). Northern Sweden Fäboliden Gold Project Assay results for the final 20 holes were received during the September 2015 quarter for the 34 hole, 2, metre diamond core infill program at the Fäboliden Gold Project in northern Sweden. This program was designed to evaluate the near surface, higher grade zone of gold mineralisation in the southern portion of the Fäboliden deposit. Better intercepts received during the quarter include g/t gold, g/t gold, g/t gold, g/t gold and g/t gold (Appendix 8). These results are in addition to the previously released intercepts g/t gold, g/t gold, g/t gold, g/t gold and g/t gold, which were first reported to the ASX on the 29 July 2015 High Grade Results Received from the Fäboliden Gold Project. This announcement can be found at (Code: DRA). Page 7

8 The results from the drilling program have shown that the high grade zone displays good continuity both down dip and along strike, the grades received from drilling commensurate with the results from historic drilling. Details of the recent Fäboliden drilling results have previously been released to the ASX on the 15 September 2015 Robust Results Highlight Potential at Fäboliden. This announcement can be found at (Code: DRA). Exploration Northern Finland Hanhimaa Gold Project (Diluting to 30% Interest) Agnico Eagle Mines Limited (NYSE:AEM) (TSX:AEM) ( Agnico Eagle ) advised Dragon Mining that a Titan 24 geophysical survey was completed late in the September 2015 quarter. The survey comprised three profiles that were planned to intersect the Hanhimaa Shear Zone. A final report on the results of the survey will be available during the December 2015 quarter. Agnico Eagle are earning up to 70% interest in the Hanhimaa Gold Project in northern Finland with the staged expenditure of 9 million over 9 years. Agnico Eagle are the managers during the earn-in period and can now withdraw at any time, having achieved the minimum expenditure level of 1.5 million. Page 8

9 Corporate Share Sale Agreement with Ausinox plc On 2 January 2015, the Company announced it had executed a Share Sale Agreement ( Agreement ) with Ausinox plc ( Ausinox ) to sell the Company s 39.95% interest in Weld Range Minerals Limited ( Weld Range ). The Agreement superseded the Share Buy Back Agreement executed with Weld Range, as previously announced. Pursuant to the Agreement, Ausinox agreed to buy 10.3 million Weld Range shares from the Company. In addition, the debt Weld Range owed the Company ($3.8 million comprising principal and accrued interest to 30 June 2014) would be assigned to Ausinox. Consideration payable to the Company by Ausinox would be A$1 million (less any costs and the A$250,000 part payment made 30 June 2015) ( Purchase Price ). On 11 September 2015, the Company announced the Agreement with Ausinox had completed with the Company receiving the remaining A$750,000 of the A$1.0 million cash consideration payable (plus penalty interest of A$128,773). Ausinox also agreed to reimburse the Company an additional $33,742 representing the costs incurred, over and above the Purchase Price, as a result of delays in completion. Shares in Aurion Resources Limited Received On 23 May 2014, the Company signed a Definitive Purchase Agreement with listed Canadian entity Aurion Resources Limited (TSX- V:AU) ( Aurion ), whereby Aurion can acquire a 100% interest in two of the Company s non-core projects, Kutuvuoma and Silasselkä Projects in Northern Finland. At 30 September 2015, the Company s Common Share interest ( Shares ) in Aurion remained at 4,250,000 Shares, being 9.67%, on an undiluted basis. No additional Shares were issued to the Company during the quarter. The Shares already issued are escrowed for 18 months from the date of issuance of the initial Tranche of Shares in Aurion on 8 September Acquisition of Fäboliden Gold Project On 4 February 2015, the Company announced that it had executed a conditional Sale and Purchase Agreement ( Agreement ) with the Bankruptcy Estate of Lappland Goldminers Fäboliden AB ( Bankruptcy Estate ) to acquire the Fäboliden Gold Project in Northern Sweden. Subject to the conditions precedent being met, including a condition relating to the extension of the existing Environmental Permit for a period of at least four years, the acquisition will deliver ownership of the Fäboliden Gold Deposit to the Company which will provide a potential source of open pittable material that could be processed at the Svartliden Production Centre. On 12 June 2015, the Land and Environmental Court in Sweden rejected the application for an extension to the start-up time as set out in the original Environmental Permit. The Bankruptcy Estate has appealed the decision to the Land and Environment Court of Appeal ( Appeal ). On 28 July 2015 (after reviewing various options), the Company and the Bankruptcy Estate agreed to amend the Agreement, whereby the condition relating to the extension of the existing Environmental Permit for a period of at least four years was waived, in consideration for a lower total purchase price of 38 million SEK (approximately A$6 million), being a discount of 2 million SEK. 6 million SEK (A$0.95 million) of this total purchase price had already been paid to the Bankruptcy Estate, the remaining 32 million SEK (approximately A$5.05 million) was paid on 30 July The Bankruptcy Estate will hold these funds on trust until the Completion Date, being the seventh day following the fulfilment of the final condition: i. a final, legally binding and unappealable approval from the Mining Inspectorate of Sweden or an approval from the Swedish Government of the transfer of the Exploitation Concession to Dragon Mining. The parties have agreed to vary the timing for achievement of this final condition from two years to one year. Following the Completion Page 9

10 Date, the Company will advise the Bankruptcy Estate to discontinue the Appeal against the Swedish Land and Environmental Court s decision to reject the application for an extension to the start-up time as set out in the Environmental Permit. It is the Company s intention to immediately commence work on an application for a new Environmental Permit for a mining operation at Fäboliden. This application will be for an operation that has a significantly smaller environmental footprint than the operation previously proposed. In conjunction with this the Company will also compile an application for a Permit to undertake a program of test mining at Fäboliden. Cash Generation At the end of the quarter, the Group had A$12.9 million in the bank, trade receivables of A$14.6 million and accounts payable of A$8.9 million. Available cash (cash at bank plus trade receivables less accounts payable) was A$18.6 million. The Company s available cash has reduced by A$3.5 million during the quarter. Receivables includes the last gold shipment from Svartliden of approximately USD$1.4 million and the September concentrate deliveries from Vammala to the Boliden refinery of approximately 3.0 million, proceeds of which will be received in November. Cash Flows Operating Cash Flows A$ Revenue 19.7 Operating Costs Cash outflows for taxation, rehabilitation bonds, overhead and operational support costs 1 (21.1) (0.4) Exploration (0.9) Net operating cash flows (2.7) Investing Cash Flows Development expenditure (1.3) Capital purchases 2 (6.1) Other (0.0) Net investing cash flows (7.4) Financing Cash Flows Drawdown/(Repayment) of gold concentrate factoring facility (0.0) Foreign exchange gains 1.2 Net financing cash flows 1.2 Increase in Cash 1 (8.9) 1 The receipt of the WRM share sale funds of $912,515 during the quarter are captured in the operating costs to offset the previously recognised impairment. This treatment is consistent with the statutory treatment from the 30 June 2015 half year financial statements. 2 Includes the purchase price Fäboliden Gold Project purchase (32 million SEK, approximately A$5.1 million). Page 10

11 Competent Persons Statement: The information in this report that relates to Exploration Results has previously been released to the ASX on the 29 July 2015 High Grade Results Received from the Fäboliden Gold Project, 15 September 2015 Robust Results Highlight Potential at Fäboliden and 21 October 2015 Southern Finland Returns Further Encouraging Results from Drilling. These announcements can be found at (Code:DRA). The releases fairly represent information and supporting documentation that was compiled by Mr. Neale Edwards BSc (Hons), a Fellow of the Australian Institute of Geoscientists, who is a full time employee of the company 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 Competent Persons as defined in the 2012 Edition of the Australasian Code of Reporting for Exploration Results, Mineral Resources and Ore Reserves. Written consent was previously provided by Mr. Neale Edwards for the releases dated the 29 July 2015, 15 September 2015 and 21 October Mr. Neale Edwards BSc (Hons), a Fellow of the Australian Institute of Geoscientists, confirms that the form and context in which the Exploration Results are presented in this report have not been materially modified from the releases dated 29 July 2015, 15 September 2015 and 21 October Mr. Neale Edwards has provided written consent approving the inclusion of the Exploration Results in the report in the form and context in which they appear. Page 11

12 Appendix 1 Results from the underground diamond core drilling program targeting areas west and east of both the Kutema and Sarvisuo lode systems from the 550m and 265m levels, respectively at the Orivesi Gold Mine. All intercepts reported at a 1 g/t gold cut-off. (ASX Release - 21 October 2015) North East Elevation Azimuth Dip Length From Down Interval KU No significant intercepts KU No significant intercepts KU No significant intercepts KU ` KU KU Appendix 2 Results from the underground diamond core drilling program from the 710m level the hydrothermally altered domain at Orivesi. All intercepts reported at a 1 g/t gold cut-off. (ASX Release - 21 October 2015) North East Elevation Azimuth Dip Length From Down Interval KU KU Includes g/t gold from metres KU No significant intercepts KU No significant intercepts KU No significant intercepts KU KU No significant intercepts KU No significant intercepts Appendix 3 Results from the underground diamond core drilling program that is targeting the Kujankallio deposit between the 65m and 100m levels at the Jokisivu Gold Mine. All intercepts reported at a 1 g/t gold cut-off. (ASX Release - 21 October 2015) North East Elevation Azimuth Dip Length From Down Interval HU/JS Gold (g/t) Gold (g/t) Gold (g/t) Page 12

13 Includes g/t gold from metres HU/JS HU/JS Includes g/t gold from metres HU/JS HU/JS HU/JS HU/JS Includes g/t gold from metres Page 13

14 HU/JS HU/JS HU/JS HU/JS HU/JS HU/JS HU/JS HU/JS HU/JS Page 14

15 HU/JS HU/JS Appendix 4 Results from the underground diamond core drilling program that is targeting the Kujankallio Hinge Zone at the 310m level at the Jokisivu Gold Mine. All intercepts reported at a 1 g/t gold cut-off. (ASX Release - 21 October 2015) North East Elevation Azimuth Dip Length From Down Interval HU/JS HU/JS HU/JS HU/JS Gold (g/t) Appendix 5 Results from the underground diamond core drilling program that is targeting the Kujankallio Main Zone from the 280m level at the Jokisivu Gold Mine. All intercepts reported at a 1 g/t gold cut-off. (ASX Release - 21 October 2015) North East Elevation Azimuth Dip Length From Down Interval HU/JS HU/JS Gold (g/t) Page 15

16 HU/JS Includes g/t gold from metres HU/JS Includes g/t gold from metres HU/JS HU/JS Appendix Results from the surface diamond core drilling program that is targeting the Arpola deposit at the Jokisivu Gold Mine. All intercepts reported at a 1 g/t gold cut-off. (ASX Release - 21 October 2015) North East Elevation Azimuth Dip Length From Down Interval HU/JS HU/JS Includes g/t gold from metres HU/JS Includes g/t gold from metres Gold (g/t) Page 16

17 HU/JS HU/JS Includes g/t gold from metres HU/JS HU/JS HU/JS Includes g/t gold from metres HU/JS HU/JS HU/JS Appendix 7 Results from the Phase 2 surface diamond core drilling program that is targeting the southern deposit at the Kaapelinkulma Gold Project. All intercepts reported at a 1 g/t gold cut-off. (ASX Release - 21 October 2015) North East Elevation Azimuth Dip Length From Down Interval No significant intercepts Gold (g/t) No significant intercepts No significant intercepts No significant intercepts No significant intercepts No significant intercepts Page 17

18 No significant intercepts No significant intercepts Includes g/t gold from metres No significant intercepts No significant intercepts Includes g/t gold from metres No significant intercepts No significant intercepts No significant intercepts Page 18

19 Appendix 8 Results from the surface diamond core drilling program that targeted the FFäboliden Gold Deposit at the Fäboliden Gold Project. All intercepts reported at a 1 g/t gold cut-off. (ASX Release - 29 July 2015 and 15 September 2015) North East Elevation Azimuth Dip Length From Down Interval FB Gold (g/t) Silver (g/t) Includes g/t gold from metres FB FB FB FB FB FB Includes g/t gold from metres FB Includes g/t gold from metres FB FB FB FB Page 19

20 FB FB FB FB FB Includes g/t gold from metres and g/t Au from metres FB FB FB Includes g/t gold from metres FB FB FB Includes g/t gold from Page 20

21 metres FB FB FB FB FB FB Includes g/t gold from metres FB Includes g/t gold from metres and g/t gold from 50 metres FB FB FB FB Appendix 9 Company Tenement Holding Mining Tenements Project SWEDEN Svartliden Fäboliden FINLAND Orivesi Tenements Held at end of the Acquired during the Disposed during the ID Name Type % % % Svartlidengruvan K nr 1 EC :351 Pauträsk nr 4 EP :67 Tallberget nr 4 EP Fäboliden K nr 1 EC :75 Fäboliden nr 10 EP :1 Fäbodliden nr 72 EP :2 Fäbodliden nr 82 EP :4 Svannäs nr 12 EP :144 Råberget EP Seri MC ML2013:0006 Sarvisuo 1-2 EL Page 21