December 2014 QUARTERLY ACTIVITIES REPORT

Transcription

1 December 2014 QUARTERLY ACTIVITIES REPORT 20 Howard Street Perth WA 6000 PO Box Z5207 St Georges Terrace WA 6831 Tel: +61 (0) ASX: ORX ACN: OPERATIONS REPORT Overview Orrex Resources Ltd ( Orrex or the Company ) operates as a mineral explorer in Western Australia. Its principal asset is the Golden Mile South Project ( GMS ). Located in the heart of the Kalgoorlie region, Golden Mile South provides the potential for discovery of various styles of large gold deposits similar to those of the Eastern Goldfields. An aircore drilling program was conducted during September 2014 to test the priority Lakewood target at GMS and assay results were received in mid-october In additional to cautiously advancing the GMS Project the Board is actively reviewing business opportunities in Australia and other favourable investment jurisdictions. During the Quarter Orrex s major shareholder, Mawson West Ltd sold its shareholding to various non-associated parties. Directors Steve Robinson and Jonathan Asquith resigned their positions and Jeremy Bond and Guy Lyons were appointed as directors. Mr Asquith continues as Company Secretary. During the previous quarter, Orrex signed an agreement to acquire exploration claims in North America. The agreement was conditional and subject to due diligence. After a further review of the prospectively and market appetite for the acquisition, directors decided not to proceed. Orrex currently holds a cash position of approximately $1.5m. Golden Mile South As announced to shareholders on the 10 th of October 2014, during the Quarter Orrex received encouraging assay results from the first aircore drilling program completed at the Lakewood Prospect at the Golden Mile South Project ( GMS ) (Figure 1) located 3km from the Kalgoorlie Superpit. The program comprised a total of 27 aircore holes for 1,795m drilled on a nominal 200m x 100m pattern to test a compelling conceptual lithostructural target where the northeast trending Hannans Fault (which controls mineralisation at the historic Hannans South gold mine) intersects the south-southwest trending Gidji Shear system (which north of Kalgoorlie controls the multimillion ounce Paddington gold deposits). This intersection occurs at the margin of an interpreted buried intrusive body that can be seen in the Company s high resolution aeromagnetic data, and represents a potential pressure shadow setting known within the Goldfields to be potentially prospective (Figure 1). Detailed geological logging of the drill holes has shown the entire prospect area is covered by 30-50m of Tertiary palaeochannel sediments over a partially stripped lateritic weathering profile meaning that the vertical drill holes generally only penetrated 5-20m into bedrock beneath the cover-bedrock interface ( CBI ). Despite this limitation, the program has successfully defined an extensive hydrothermal alteration system comprising favourable silica-sericite + albite + pyrite along the contact between a dolerite and intermediate volcaniclastics and sediments (Figure 2).

2 The assay results for all drill samples have been received with 20 of the 27 holes returning anomalous values (>0.10g/t Au). All anomalous intersections are summarised in Table 1. The majority of the gold anomalism is located at the base of complete oxidation ( BOCO ). This mineralisation has been interpreted as a typical goldfields style supergene halo/blanket and was defined over an area of 800m x 350m (Figure 3). Mineralisation remains open to the north, northwest and south. The remainder of the anomalous intersections were located at CBI and represent gold being mobilised into the base of the palaeochannel. Importantly, hole 14LKA041 intersected distinct bedrock mineralisation, including finely quartz veined silica-sericite-pyrite altered sedimentary rocks and returned a best assay of 0.56g/t Au confirming bedrock mineralisation is present beneath the large low grade supergene anomaly. The extent of this bedrock mineralisation is currently unknown. Figure 1 - GMS Project - Lakewood Target Lithostructural Setting on Aeromagnetics Table 1 - GMS Project Lakewood Prospect - AC Drill Results 2

3 The nature of the drill program (broad spaced vertical holes only shallowly penetrating into bedrock 5-20m) in combination with the recognition of the prospective alteration system and extensive, supergene gold anomaly has significantly advanced the Lakewood gold prospect. Orrex has already commenced planning and permitting of follow-up aircore and RC drilling programs. This permitting process is longer than standard due to the Prospect s location within the Lakeside Timber Reserve. Figure 2 - GMS Project Lakewood Prospect Geological Interpretation and AC Drill Results 3

4 Figure 3 Schematic Drill Cross-Section Showing Development and Position of Typical Eastern Goldfields Supergene Gold Mineralisation Within the Weathering Profile AusIndustry Research & Development Tax Incentive During the Quarter Orrex received a refund under the AusIndustry Research & Development ( R&D ) Tax Incentive Scheme for research and development activities conducted at the GMS Project since December The net amount of the refund was $0.345m. Business Development Through prudent financial management, the company remains in a strong position with an existing quality, albeit early stage, project in GMS and a strong cash position providing the ability to review and act upon business development opportunities. Jonathan Asquith Company Secretary Competent Persons Statement The information in this announcement that relates to Exploration Results is based on information compiled by Mr Simon Rigby who is a Member of the Australian Institute of Geoscientists and a Consultant Geologist to Orrex Resources Limited. Mr Rigby has sufficient experience which is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves. Mr Rigby consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 4

5 Criteria Section 1: Sampling Techniques and Data JORC Code Explanation Commentary Sampling Technique Drilling Drill Sample Recovery Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as downhole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used. Aspects of the determination of mineralisation that are Material to the Public Report. In cases where industry standard work has been done this would be relatively simple (eg reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay ). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information. Drill type (eg core, reverse circulation, openhole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face sampling bit or other type, whether core is oriented and if so, by what method, etc). Method of recording and assessing core and chip sample recoveries and results assessed. Measures taken to maximise sample recovery and ensure representative nature of the samples. Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material. Aircore drilling was used to collect samples on one metre intervals. These samples were then geologically logged and on the basis of lithology changes, final sampling composite intervals were selected. Sampled intervals varied between 1 3m to a maximum 4m composite interval. Samples for assay were composited using a spear/sco0p technique through the individual 1m samples to generate an approximately 3kg sample. The collected samples were then sent to the laboratory where they were dried before being pulverised to 75um. A 40gm subsample was taken for low level fire assay for gold only. All holes were drilled by aircore techniques using a reputable drilling contractor. Due to the nature of the highly oxidised material being drilled, sample recovery for aircore drilling can be variable. Sample recoveries are not recorded. Logging Whether core and chip samples have been geologically and geotechnical logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies. Whether logging is qualitative or quantitative in nature. Core (or costean/trench, channel, etc) photography. The total length and percentage of the relevant intersections logged. Each drilled metre was geologically logged for colour, lithology, alteration, veining and sulphide content. Aircore samples are powder/chips and thus no detailed geological information could be collected. Sub Sampling Technique and Sample Preparation If core, whether cut or sawn and whether quarter, half or all core taken. If non core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry. For all sample types, the nature, quality and appropriateness of the sample preparation technique. Quality control procedures adopted for all sub sampling stages to maximise representivity of samples. Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field Samples for assay were composited using a spear/scoop technique through the individual 1m samples to generate an approximately 3kg sample. A total of 4% QAQC samples were included in the sample run including 7 standard samples using certified reference material and 4 field duplicates. 5

6 Quality of Assay Data and Laboratory Tests duplicate/second half sampling. Whether sample sizes are appropriate to the grain size of the material being sampled. The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total. For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc. Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established. Samples were assayed using a 40gm charge fire assay with gold grades read using AAS to a LLD of 0.01g/t Au. This technique is considered a total digestion and analysis. A total of 4% QAQC samples were included in the sample run including 7 standard samples using certified reference material and 4 field duplicates. Both standards and duplicates reported within expected tolerances. Verification of Sampling and Assaying The verification of significant intersections by either independent or alternative company personnel. The use of twinned holes The verification of significant intersections by either independent or alternative company personnel. Discuss any adjustment to assay data Assay results were checked by two separate consultant geologists. Location of Data points Data Spacing and Distribution Orientation of Data in Relation to Geological Structure Sample Security Accuracy and quality of surveys used to locate drill holes (collar and down hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation. Specification of the grid system used Quality and adequacy of topographic control Data spacing for reporting of Exploration Results Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied. Whether sample compositing has been applied Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type. If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material. The measures taken to ensure sample security Drill hole collar positions were located using handheld GPS equipment with sub 3m accuracy. Due to the type of drilling involved (aircore), accuracy greater than this is not required at this time. Hole spacing used is roughly 200m x 100m with some 100m x 100m. No resources or reserves are being quoted. Sample compositing has been applied as described above. Due to the nature and thickness of the transported palaeochannel sediments above the targeted basement, vertical drilling was used for all but two holes. This orientation is not ideal for testing the bedrock mineralisation, but aircore drilling is not intended to be anything other than a geochemical test and appropriately orientated follow up RC drilling will be subsequently used. All samples were collected by the Company s consultants, stored in a secured compound and delivered directly by said consultant to the assay laboratory. Mineral Tenement and Land Tenure Status Section 2 Reporting of Exploration Results Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings. The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area. The Golden Mile South Project tenure comprises granted Prospecting Licences held between 95% and 100% by Orrex Resources Limited. The Lakewood Prospect falls on the Lakewood Group of tenements in which Orrex holds 95% equity and which is subject to a royalty of up to 2.5% or claw back of 40% equity (for payment of approx. 2x total exploration and feasibility expenditure) pursuant to an agreement with Newmont Australia Investment Limited ( Newmont ) dated February Equity after clawback would be 57% Orrex, 40% Newmont, 3% minority partner. The Lakewood timber reserve is located on part 6

7 Exploration Done by Other Parties Acknowledgment and appraisal of exploration by other parties. Geology Drill Hole Information Data Aggregation Methods Relationship Between Mineralisation Widths and Intercept Lengths Diagrams Balanced Reporting Other Substantive Exploration Data Further Work Deposit type, geological setting and style of mineralisation. A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: easting and northing of the drill hole collar elevation or RL (Reduced Level elevation above sea level in metres) of the drill hole collar dip and azimuth of the hole down hole length and interception depth hole length If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case. In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut off grades are usually Material and should be stated. Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail. The assumptions used for any reporting of metal equivalent values should be clearly stated. These relationships are particularly important in the reporting of Exploration Results If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported. If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg down hole length, true width not known ). Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views. Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results. Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances. The nature and scale of planned further work (eg tests for lateral extensions or large scale step out drilling. Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive. of the tenements. The Golden Mile South Project area has had a long history of shallow prospecting but very little deep drilling, The Company has made a concerted effort to digitally capture all material historic data and use this to formulate its exploration activities. Mineralisation defined to date at Lakewood comprises quartz sericite pyrite veining within sericite silica altered intermediate volcanics of the Black Flag Fm. Refer table in body of report. The aircore anomalous result intersections have been reported using a 0.10g/t Au lower cut off with assays weighted by their composite sample length. No upper cut off grade has been used. Mineralised intervals are down hole. At this stage the orientation of mineralisation is unknown (and thus the true width is unknown), but is most likely to be steep rather than flat. Not applicable at this stage. All results have been reported. Not applicable Yet to be determined. 7

8 Appendix 5B Appendix 5B Rule 5.3 Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10. Name of entity Orrex Resources Ltd ABN Quarter ended ( current quarter ) Dcember2014 Consolidated statement of cash flows Cash flows related to operating activities Current quarter Year to date ( months) 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration (91) (43) (159) (65) 1.3 Dividends received 1.4 Interest and other items of a similar nature received Interest and other costs of finance paid 1.6 Income taxes paid Other (provide details if material) Net Operating Cash Flows 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) See chapter 19 for defined terms. 30/9/2001 Appendix 5B

9 Appendix 5B 1.13 Total operating and investing cash flows (brought forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Net financing cash flows Net increase (decrease) in cash held Cash at beginning of quarter/year to date 1,268 1, Exchange rate adjustments to item Cash at end of quarter 1,500 1,500 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' Aggregate amount of payments to the parties included in item Aggregate amount of loans to the parties included in item 1.10 None 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 + See chapter 19 for defined terms. 30/9/2001 Appendix 5B

10 Appendix 5B Financing facilities available Add notes as necessary for an understanding of the position. 3.1 Loan facilities 3.2 Credit standby arrangements Amount available Amount used Estimated cash outflows for next quarter 4.1 Exploration and evaluation Development 4.3 Production 4.4 Administration 30 Total 80 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 Previous quarter 5.1 Cash on hand and at bank Deposits at call 5.3 Bank overdraft 5.4 Other (provide details) 1,300 1,260 Total: cash at end of quarter (item 1.22) 1,500 1,268 + See chapter 19 for defined terms. 30/9/2001 Appendix 5B

11 Appendix 5B Changes in interests in mining tenements 6.1 Interests in mining tenements relinquished, reduced or lapsed Tenement reference Nature of interest (note (2)) Interest at beginning of quarter Interest at end of quarter 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. 7.1 Preference + securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks Convertible debt securities (description) Total number Number quoted Issue price per security (see note 3) (cents) 36,685,000 36,685,000 Amount paid up per security (see note 3) (cents) + See chapter 19 for defined terms. 30/9/2001 Appendix 5B

12 Appendix 5B 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options (description and conversion factor) 5,000,000 1,500,000 Exercise price $0.30 $0.05 Expiry date 12 April November Issued during quarter 7.9 Exercised during quarter 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 gives a true and fair view of the matters disclosed. 30/01/2015 Sign here:... Date:... (Director/Company secretary) Print name:...jonathan Asquith... 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 + See chapter 19 for defined terms. 30/9/2001 Appendix 5B

13 Appendix 5B 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 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. = == == == == + See chapter 19 for defined terms. 30/9/2001 Appendix 5B