Announcement PDF EMU NL ABN 50 127 291 927 QUARTERLY REPORT FOR MARCH 2014 HIGHLIGHTS TONNES PROCESSED MARCH QTR 279,503 DIAMONDS SOLD (CARATS) MARCH QTR 10,617 FUNDS RECEIVED FROM SALES MARCH QTR R17.18 million US$1.57 million AVERAGE PRICE PER CARAT MARCH QTR DIAMONDS SOLD APRIL 14 (CARATS) FUNDS RECEIVED FROM APRIL 14 SALES R1,618 US$148 4,831 R3.27 million US$0.315 Figures are for 100% equity in Superkolong which is owned as to 50% by Emu. SUPERKOLONG DIAMOND OPERATION (50% EMU) Diamonds sold for the quarter totalled 10,617 carats. Sales totalled US$1.57 million. The average price per carat received was US$148. Diamond production continued to be below budget due to continuing plant recovery issues caused by an inadequate supply of reasonable quality of process water. Normal plant operation was suspended on 18th February due to the water supply and employees were redeployed to maintenance duties. The plant was restarted on 5th March on a limited basis and full production resumed on 16th March. During this period routine maintenance and upgrades were completed to all sections of the plant. From 16th March the plant has operated normally with daily throughputs trending upwards to stabilise over 5,000 tpd and recovered grades in line with expected tailings grades (5 to 7 cpht). Most of the work to upgrade the water supply has been completed. The outstanding item is the pipeline from Homevale to the Maturation Ponds. The tender for this work has been awarded and the project will commence once the Municipality has approved the work. As advised in the announcement on 7th March, due to the issues with the water supply and notwithstanding the return to normal production, the next vendor payment (R35 million) due on 1st July will have to be substantially funded by the shareholders of IT243 (Superkolong’s holding company). 1 EMU NL ABN 50 127 291 927 QUARTERLY REPORT FOR MARCH 2014 SALE OF SUPERKOLONG DIAMOND INTEREST Based on a review of the Superkolong operation and discussions regarding ongoing working capital requirements for the operation, the Board of Emu has resolved to accept an offer from its 50% partner (El Nino), to acquire Emu’s interest in the project by the purchase of Emu’s shareholding in the holding company, IT243, and Emu’s loan account. The share (and claims) purchase agreement was signed by all parties today and the essential terms of the transaction are: 1. Total consideration is A$3 million to be paid in six instalments (Instalments) of A$500,000. 2. The Instalments will be partially secured by Euro 600,000 which will be held in escrow upon satisfaction of the conditions precedent pending full payment but reducing in line with the value of the Instalments outstanding. 3. All of El Nino’s obligations are guaranteed by its parent company, Batla Minerals (SA), listed on Euronext (Marche Libre) in France. 4. Upon signing the binding agreement, the first Instalment was placed in escrow pending satisfaction of the conditions precedent (see paragraph 9 below). 5. The first Instalment will be released upon satisfaction of the conditions precedent (see paragraph 9 below). 6. The second Instalment will be paid upon the sooner of 31 July 2014 or delivery of agreed water volumes. 7. The remaining Instalments shall then be paid quarterly. 8. Instalments outstanding shall attract interest calculated and compounded daily at the annual rate of 12%. 9. The transaction is subject to the following conditions precedent: a) Emu shareholder approval (which will be sought forthwith); b) approval of the Takeover Review Panel in South Africa (expected to be forthcoming); and c) any other applicable regulatory approvals, which conditions are to be satisfied by 10th June 2014 or such longer date as is needed to meet regulatory requirements. 10. Should El Nino not pay all the Instalments and interest, in addition to other rights that Emu may have (including to sue for the entire amounts outstanding), the shares and balance of Emu’s loan account shall revert to Emu for no consideration. 2 EMU NL ABN 50 127 291 927 QUARTERLY REPORT FOR MARCH 2014 A Notice of Meeting will be lodged with ASX today seeking approval for the transaction. The Notice of Meeting details the transaction, including the proposed timetable for the transaction, and the effect of the transaction on Emu. The Directors and their associates will vote in favour of the transaction. MT MARMION E30/462 As announced on 28th March, the Company has applied for an exploration tenement north of Southern Cross, WA. The tenement covers part of an Archaean greenstone belt considered prospective for base metal mineralisation. Previous exploration located three airborne electromagnetic conductors which remain untested. 29th April 2014 3 EMU NL ABN 50 127 291 927 QUARTERLY REPORT FOR MARCH 2014 Background to Superkolong’s tailings retreatment operation Kimberley Miners Forum (Pty) Ltd (KMF) has rights to treat certain tailings (KMF Tailings) purchased from De Beers Consolidated Mines (Pty) Ltd (De Beers). Superkolong (Pty) Ltd has a 30.4% shareholding in KMF and, in turn, each of Emu and El Nino Mining (Pty) Ltd (a wholly owned subsidiary of Batla Minerals (SA)) (El Nino) has an indirect 50% interest in Itakane Trading 243 (Pty) Ltd (IT 243) which is the holding company of Superkolong. Each KMF shareholder is entitled to retreat KMF Tailings in proportion to its shareholding. Superkolong’s tailings retreatment operation is situated on land belonging to or controlled by third parties including De Beers and aspects of that operation must conform to certain De Beers’ policies with water and electricity being supplied and controlled by De Beers. For more information on the company visit www.emunl.com.au 4 EMU NL ABN 50 127 291 927 QUARTERLY REPORT FOR MARCH 2014 Emu NL ABN 50 127 291 927 ASX Code: EMU 10 Walker Ave West Perth, WA 6005 T +61 8 9226 4266 E info@emunl.com.au PO Box 1112 West Perth, WA 6872 Issued Capital: Shares - Quoted: 39,693,856 fully paid shares 35,652,856 contributing shares Options – Unquoted: 841,148 exercisable at $0.5874 by 22.12.2014 82,736 exercisable at $0.4266 by 21.12.2015 Directors: Peter Thomas Chairman Greg Steemson Managing Director Gavin Rutherford NonExecutive Director COMPETENT PERSON’S STATEMENT The details contained in this report that pertain to exploration results, mineral resources and mineral reserves are based upon information compiled by Mr. Greg Steemson, Managing Director of Emu NL. Mr. Steemson is a Fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM) and has sufficient experience in the activity which he is undertaking 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. Steemson consents to the inclusion in the report of the matters based upon his information in the form and context in which it appears. FORWARD LOOKING STATEMENT This report contains forward looking statements concerning the projects owned by Emu NL. Statements concerning mining reserves and resources may also be deemed to be forward looking statements in that they involve estimates based on specific assumptions. Forward-looking statements are not statements of historical fact and actual events and results may differ materially from those described in the forward looking statements as a result of a variety of risks, uncertainties and other factors. Forward looking statements are based on management’s beliefs, opinions and estimates as of the dates the forward looking statements are made and no obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should change or to reflect other future developments. 5 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 Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/2013 Name of entity Emu NL ABN Quarter ended (“current quarter”) 50 127 291 927 31 March 2014 Consolidated statement of cash flows Cash flows related to operating activities 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 Current quarter $A’000 Year to date (9 months) $A’000 (149) (297) 16 Receipts from product sales and related debtors Payments for (a) exploration & evaluation (b) development (c) production (d) administration Dividends received Interest and other items of a similar nature received Interest and other costs of finance paid Income taxes paid Other (provide details if material) (44) (92) 5 - - Net Operating Cash Flows (131) (430) Cash flows related to investing activities Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets Loans to other entities Loans repaid by other entities Other (provide details if material) 10 (208) - 11 15 (808) - (198) (782) (329) (1,212) Net investing cash flows Total operating and investing cash flows (carried forward) + See chapter 19 for defined terms. 01/05/2013 Appendix 5B Page 1 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report 1.13 Total operating and investing cash flows (brought forward) (329) (1,212) Cash flows related to financing activities Proceeds from issues of shares, options, etc. Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid Other (provide details if material) (1) 505 (6) Net financing cash flows (1) 499 Net increase (decrease) in cash held (330) (713) 1.20 1.21 Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20 759 - 1,142 - 1.22 Cash at end of quarter 429 429 1.14 1.15 1.16 1.17 1.18 1.19 Payments to directors of the entity, associates of the directors, related entities of the entity and associates of the related entities Current quarter $A'000 1.23 Aggregate amount of payments to the parties included in item 1.2 130 1.24 Aggregate amount of loans to the parties included in item 1.10 208 1.25 Explanation necessary for an understanding of the transactions Item 1.23 includes aggregate amounts paid to directors including salary, directors’ fees, consulting fees, superannuation and geological consulting services. 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. Appendix 5B Page 2 01/05/2013 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report Financing facilities available Add notes as necessary for an understanding of the position. 3.1 Loan facilities 3.2 Credit standby arrangements Amount available $A’000 Nil Amount used $A’000 Nil Nil Nil Estimated cash outflows for next quarter $A’000 50 4.1 Exploration and evaluation 4.2 Development - 4.3 Production - 4.4 Administration 150 Total 200 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. 5.1 Cash on hand and at bank 5.2 Current quarter $A’000 Previous quarter $A’000 429 759 Deposits at call - - 5.3 Bank overdraft - - 5.4 Other (provide details) - - 429 759 Total: cash at end of quarter (item 1.22) Changes in interests in mining tenements and petroleum tenements Tenement reference and location 6.1 6.2 Nature of interest (note (2)) Interest at beginning of quarter Interest at end of quarter Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed Interests in mining tenements and petroleum 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. + See chapter 19 for defined terms. 01/05/2013 Appendix 5B Page 3 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report Total number 7.1 7.2 7.3 7.4 7.5 7.6 7.7 Preference +securities (description) Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions +Ordinary securities Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks +Convertible debt securities (description) Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter Expired during quarter Debentures (totals only) Unsecured notes (totals only) 7.10 7.11 7.12 Number quoted 39,693,856 35,652,856 39,693,856 - 841,148 82,736 - Issue price per security (see note 3) (cents) Amount paid up per security (see note 3) (cents) Fully paid 6 cents Fully paid 3 cents Exercise price $0.5874 $0.4266 Expiry date 22 December 2014 21 December 2015 + See chapter 19 for defined terms. Appendix 5B Page 4 01/05/2013 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5). 2 This statement does /does not* (delete one) give a true and fair view of the matters disclosed. Sign here: Date: 29 April 2014 (Company secretary) Print name: Dennis Wilkins 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 and petroleum 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 or petroleum tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2. 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. == == == == == + See chapter 19 for defined terms. 01/05/2013 Appendix 5B Page 5