highlights - investorintel · 2017-04-27 · post quarter end, on 12 april 2017, the company was...

ENABLING LOW CARBON TECHNOLOGIES

Quarterly Activities Report and Appendix 5B

March 2017

Developing the Ngualla Project into an – ethically sustainable – long term – high quality supplier of choice to the global high technology rare earth market

DIRECTORSNon-Executive Chairman: Peter Harold

Managing Director: Darren Townsend

Technical Director: Dave Hammond

Non-Executive Directors: Jonathan Murray John Jetter

Company Secretary: Graeme Scott

CORPORATE DETAILS

AS AT 31 MARCH 2017:

Ordinary Shares on issue: 477.5m

52 week range: 4.2c – 13.0c

Market Cap: $46.3m (at 9.7c)

ASX: PEK

Peak Resources Limited Ground Floor, 5 Ord Street, West Perth, Western Australia 6005. PO Box 603, West Perth 6872.

ASX: PEK ACN: 112 546 700

Telephone: +61 8 9200 5360 [email protected] www.peakresources.com.au

* The BFS and Ore Reserve estimate are detailed in the ASX Announcements “BFS positions Ngualla as one of the world’s lowest cost rare earth projects” and “Ngualla Rare Earth Project - Updated Ore Reserve” of 12 April 2017. The material assumptions and estimates in these studies have not changed and continue to apply.

HIGHLIGHTS:NGUALLA PROJECT BANKABLE FEASIBILITY STUDY• Post Quarter end, Peak was pleased to report the results of the Bankable Feasibility

Study* (the “Study” or “BFS”) for the Ngualla Rare Earth Project in Tanzania and the proposed Tees Valley refinery in the UK.

• The BFS confirms that Ngualla has the potential to become one of the lowest cost and highest quality rare earth projects worldwide after delivering further significant operating cost savings. Key highlights include:

– 30 year life low operating cost open pit, processing plant and refinery project to deliver US $104 million cashflow per annum (post tax and royalties)

– Annual operating costs reduced by US $35 million per annum, or 30%, from PFS

– Pre tax NPV10 of US $676 million and pre tax IRR of 25%

– Production aligned to magnet metal demand through cerium rejection leach process, with 90% of Ngualla’s future revenue to be derived from neodymium and praseodymium (“NdPr”)

MOUNTAIN PASS• Post Quarter end on 26 April Peak was pleased to announce the Company’s participation

in a Consortium that has the aim of acquiring and re-starting the Mountain Pass rare earth operation in California, USA.

ORE RESERVE ESTIMATE• Announced simultaneously with the BFS, a revised Ore Reserve estimate* confirms

Ngualla as one of the highest grade NdPr rare earth deposits in the world.

• The Ore Reserve estimate is high confidence with 91% in the highest Proved JORC 2012 category.

NdPr PRICES RISE• NdPr prices had an exceptional start to 2017 after several years of decline, with a

9% rise after the largest producer – the Chinese company Northern Rare Earth Group (Baotou) – announced and implemented three consecutive price increases from February.

ENVIRONMENTAL CERTIFICATE RECEIVED FOR NGUALLA• The Environmental Certificate for the Ngualla Rare Earth Project in Tanzania was granted

in March following the successful completion of wide ranging environmental and social studies and stakeholder engagement. The Certificate is a pre-requisite for the granting of a mining licence and is a major milestone in the permitting of the project.

WIDE ZONES OF HIGH GRADE FLUORSPAR AND RARE EARTH MINERALISATION DISCOVERED AT NGUALLA• Continuous wide zones of high grade fluorspar up to 78m at 37% CaF2 were returned from

surface trench sampling results received in February from a previously untested area of the Ngualla Carbonatite complex.

• Trenching also identified a new area of rare earth mineralisation with widths of up to 53m at 2.37% rare earth oxide (“REO”).

BARITE INCLUDED IN NGUALLA MINERAL RESOURCE ESTIMATE• The potential for a future barite by-product from Ngualla on completion of further studies

lead to the re-issue of the Mineral Resource estimate to include barite, with no change to rare earth estimates.

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2 ENABLING LOW CARBON TECHNOLOGIES

Quarterly Activities Report March 2017

Peak Resources Limited...

ACHIEVING MAJOR MILESTONES IN 2017: BFS delivered on schedule... …demonstrating one of the world’s highest quality, low cost and long life NdPr projects

90% of Ngualla’s future revenue to be from NdPr

Annual cash flow of US $104 million over a 30 year project life

Revised high confidence Ore Reserve estimate completed

Project permitting advanced with the grant of an Environmental Certificate for Ngualla

Potential for additional commodities from Ngualla highlighted by the discovery of wide new zones of fluorspar and new style of rare earth mineralisation as well as the inclusion of barite in the Mineral Resource estimates

AND AT THE RIGHT TIME NdPr rises 9% from February 2017 as China increases pricing

Demand for NdPr widely predicted to grow further due to rising demand from electric and hybrid vehicles

Increasing recognition that NdPr is linked to the increasing demand for battery raw materials lithium, graphite and cobalt through its use in the permanent magnet motors that are the preferred powertrain technology for electric and hybrid vehicles.

Peak is perfectly positioned with the rising market for NdPr driven by e-mobility and other low carbon technologies.

Ngualla is a large, high quality project with a comprehensive BFS showing lowest quartile Capex and Opex in this exciting sector.

PEAK RESOURCES: NUMBER 1 AMONGST ITS PEERS

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BANKABLE FEASIBILITY STUDYPost Quarter end, on 12 April 2017, the Company was pleased to report the results of the Bankable Feasibility Study for its 75% owned Ngualla Rare Earth Project. The Study components consist of a mine and multi-stage processing plant on-site at Ngualla in Tanzania and a proposed refinery in Tees Valley in the UK.

The BFS is based on detailed engineering studies and extensive pilot planting of the three stage extraction process which was successfully demonstrated using bulk samples of Ngualla’s unique bastnaesite mineralisation. The in depth Study was also guided by real world experience of Peak’s team of rare earth industry mining, processing and marketing specialists in conjunction with global engineering firm Amec Foster Wheeler.

The BFS has delivered significant reductions in operating costs and facilitated access to higher value markets as compared to the Company’s project update ASX announcement “Ngualla Project Study delivers substantial Capex and Opex savings” dated 16 March 2016.

The results of the BFS confirm that the Ngualla Project has the potential to become one of the lowest cost and highest quality rare earth projects worldwide.

Final products from the project planned to be produced annually are:

2,420 tonnes of neodymium and praseodymium oxide (2N min 75% Nd2O3)

6,940 tonnes lanthanum carbonate (equivalent to 3,650tpa oxide)

3,005 tonnes cerium carbonate (equivalent to 1,660tpa oxide)

530 tonnes of mixed SEG and Heavy rare earth carbonate (equivalent to 280tpa oxide)

Relative value contributors

Figure 1: Relative value* contributors by product type and constituent REO’s.

* Relative value of contained REO equivalent product mix based on prices assumed in the BFS for individual rare earth oxide

2% Ce Carbonate

7% La Carbonate

1% Mid-Heavy Carbonate

90% NdPr Mixed Oxide

Neodymium and praseodymium are expected to generate 90% of Ngualla’s future revenue

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Figure 3: A portion of the Ngualla multi stage processing plant: 1. SAG & ball milling. 2. Barite pre-float circuit. 3. Rare earth flotation circuits. 4. Regrind circuit. 5. Concentrate & tailings de-watering

PHYSICALS DRIVE NGUALLA’S FAVOURABLE ECONOMICSNgualla’s low operating costs and favourable project economics are driven by a unique combination of qualities including the high NdPr grade and advantageous mineralogy of the rare earth deposit itself, together with the development of an extraction and purification process that targets the higher value rare earths whilst rejecting impurities and the majority of lower value cerium. The location of the refinery in proximity to sources of inexpensive bulk reagents and existing utilities is also a key driver of lower Opex.

With the alignment of products and value drivers to the high demand magnet metal market the project is in a favourable position in terms of marketing and future demand for its products, which will represent less than 5% of total world demand.

NGUALLA ORE BODY NGUALLA MINE AND PROCESS PLANT TEES VALLEY REFINERY

• High Grade – 4.80%• Large deposit• Bastnaesite mineralogy• Mineralisation from surface• Very low U and Th (14 and 55ppm) • Thick blanket morphology• Low in reagent consuming minerals

• Soft, free dig Ore• Simple, small open pit mine• Low Waste:Ore strip ratio (1:77)• Zero offsite discharge

+ water recycle• High Grade (45% REO),

low mass concentrate• Proven, piloted process

Low Cost ProjectLong life - 30 years

Ethically sustainableHigh value, separated Rare Earth Products

NdPr product drives 90% of RevenueAligned to expanding Permanent Magnet Market

• Selective leach process• Low strength acids - no acid roast• Modular plastic tanks• Small SX separation plant• Bulk, low-cost reagents available• Pre-existing utilities• Existing waste

management facilities

Figure 2: A unique combination of physical attributes and selected processes drive Ngualla low costs and ethically sustainable credentials

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Key Study outcomes include:

...OVER A LONG MINE LIFE OF30 YEARS Based on current Ore Reserve estimate, of 18.5Mt at 4.80% REO of which 92% is the highest Proved JORC category

CAPEX INTENSITY OFUS $4.96/kg NdPrThe Ngualla Project has the potential to have the lowest Capex intensity per unit output of NdPr over the mine life compared to other integrated development projects

AVERAGE ANNUAL OPPERATING COSTUS $83 MILLION*

POST TAX & ROYALTIES NPV10

US $445 MILLION

POST TAX & ROYALTIES NPV8

US $633 MILLION

POST TAX IRR21%

HIGH CASH FLOW GENERATING... US $104 MILLION P.A. Average annual consolidated cash flow (post Tax and Royalties)

LIFE OF PROJECT CONSOLIDATED OPERATING COST OFUS $34.20/kg NdPrConsidering todays spot pricing of US $42.55/kg and the market projections of increased NdPr demand, Peak is well positioned for the expected increase in pricing

PRE PRODUCTION CAPEXUS $356 MILLION*

PRE TAX & ROYALTIES NPV10

US $676 MILLION

PRE TAX & ROYALTIES NPV8

US $930 MILLION

PRE TAX IRR25%

Notes: See Table 1 for BFS price assumptions. BFS financial highlights are reported on a 100% owned basis. The production target and schedule on which the financial information is based is in turn based on the Ore Reserve and stated Material Assumptions in ASX Announcement “Ngualla Rare Earth Project – Updated Ore Reserve” dated 12 April 2017 and those summarised in the BFS. Rare earth price assumptions on which the financial evaluation is based are derived from forecasts by independent industry experts and are as stated in Section 12 of the BFS Executive Summary.Peak will require new funding for its 75% share in the Ngualla Project in order to achieve the stated financial outcomes, which will result in some dilution of existing shares, the quantum of which will depend on the final debt to equity ratio of the financing package that is yet to be arranged.

*For Ngualla mine, processing plant and the UK refinery combined *For Ngualla mine, processing plant and the UK refinery combined

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Table 1: Key Study Outcomes. Note all costs are in US dollars unless otherwise denoted

PRODUCTION ASSUMPTIONS

Life of Mine 30 years

Average Life of Mine REO Grade 4.80%

Life of Mine Strip Ratio (Waste:Ore) 1.77

Average Mill Throughput 624,000 tpa

Average REO Mineral Concentrate Production 28,300 tpa

Average NdPr Mixed Oxide 2N# Production 2,420 tpa

Average La Oxide Equivalent Production (final product: 6,940 tpa Carbonate) 3,650 tpa

Average Ce Oxide Equivalent Production (final product: 3,005 tpa Carbonate) 1,660 tpa

Average SEG and Mixed Heavy Oxide Equivalent (final product: 530 tpa Carbonate) 280 tpa

OPERATING COSTS

Average Operating Cost to Mine Gate US$ 46m p.a

Average Tees Valley Refinery Operating Cost to Final Product US$ 37m p.a

Total Consolidated Operating Cost to Final Product US$ 83 m p.a

Total Consolidated Operating Cost/kg (NdPr Mixed Oxide 2N) US$ 34.20/kg

CAPITAL COSTS (including growth and contingency)

Ngualla (Mine and Process) US$ 52 million

Ngualla (Infrastructure) US$ 134 million

Tees Valley Refinery US$ 152 million

Owners Costs US$ 18 million

Total Capital Pre-Production US$ 356 million

Average Consolidated Sustaining Capital US$ 5 million

FINANCIAL METRICS

Consolidated Total Revenue over life of mine US$ 6.76 billion

Consolidated Average Annual Revenue US$ 228 m p.a

Total Consolidated (Post Tax) Cash Generation over life of mine US$ 3.01 billion

Annual Average Consolidated (Post Tax) Cashflow US$ 104 m p.a

Average Annual EBITDA US$ 145 m p.a

NPV8 - Pre Tax and Royalties US$ 930 million

NPV8 - Post Tax and Royalties US$ 633 million

NPV10 - Pre Tax and Royalties US$ 676 million

NPV10 - Post Tax and Royalties US$ 445 million

IRR - Pre Tax and Royalties 25%

IRR - Post Tax and Royalties 21%

Operating Margin 64%

Payback Period (from start of Operations) 5 years

COMMODITY PRICE ASSUMPTIONS AVERAGE LoM

NdPr Mixed Oxide 2N Min 75% Nd2O3 US$ 85.00/kg

Lanthanum rare earth oxide equivalent US$ 4.41/kg

Cerium rare earth oxide equivalent US$ 2.25/kg

SEG and Mixed Heavy oxide equivalent US$ 8.00/kg

Figures above are on a 100% Project basis (Peak holds 75%). #2N= 99% purity. Average annual statistics are at steady state, post ramp-up.

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MOUNTAIN PASSPost Quarter end on 26 April, Peak was pleased to announce the Company’s participation in a Consortium that has the aim of acquiring and re-starting the Mountain Pass rare earth operation in California, USA.

The Mountain Pass mine, located 80 kilometres south of Las Vegas, Nevada, is the only mine and processing facility for rare earth minerals in the United States. The mine has an operating history dating back to the 1950s and is currently on care and maintenance after the Debtors filed for Chapter 11 bankruptcy protection in 2015.

The Company will provide further information in due course when it becomes available.

ORE RESERVE ESTIMATEAn updated Ore Reserve estimate was announced simultaneously with the BFS after Quarter end on 12 April 2017.

The Ore Reserve estimate for the Ngualla Project is 18.5 million tonnes at 4.80% REO (total rare earth oxide plus yttrium) for 887,000 tonnes contained REO and is classified as shown in Table 2 below:

Table 2: Ngualla Project Ore Reserve estimate.

CATEGORY ORE TONNES (MT) REO % CONTAINED REO (TONNES)

Proved 17.0 4.78 813,000

Probable 1.5 5.10 74,000

Total 18.5 4.80 887,000

A multi element cut-off grade is applied. See Table 4 for breakdown of individual REO’s

The Ore Reserve is reported in accordance with the JORC Code 2012, is estimated by Mr. Ryan Locke of independent mining consultancy Orelogy Consulting Pty Ltd, and accompanies the announcement by the Company of the positive Bankable Feasibility Study (BFS) into the development of the Ngualla Project (ASX Announcement “BFS positions Ngualla as one of the world’s lowest cost rare earth projects” of 12 April 2017.

Further details of the Material Assumptions and technical parameters underpinning the Ore Reserve estimate are summarised in ASX Announcement “Ngualla Rare Earth Project – Updated Ore Reserve” of 12 April 2017, continue to apply and have not materially changed.

The Ore Reserve estimate confirms Ngualla as one of the highest grade NdPr rare earth deposits in the world. In addition to also being one of the world’s largest, the Ore Reserve estimate is high confidence with 91% in the highest Proved JORC 2012 category. The mineralisation style also offers advantages over other rare earth deposits in a number of key areas (see Figure 2).

NdPr prices rise 9% in 2017

After 6 years of decline, NdPr prices had an exceptional start to 2017 with a 9% rise after the largest producer – the Chinese company Northern Rare Earth Group (Baotou) – announced and implemented three consecutive price increases from February 2017 (see Figure 4 on following page).

The Company believes that this reversal, together with the widespread projections of increasing demand from the electric, hybrid automobile and green energy industries, combined with China’s internal policies and restrictions on rare earth production and export, could be the starting point for a more prolonged turnaround in prices for the magnet metals neodymium and praseodymium.

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PROJECT PERMITTING - ENVIRONMENTAL CERTIFICATE RECEIVED FOR NGUALLAThe Environmental Certificate for the Ngualla Rare Earth Project in Tanzania was granted by the Minister of State of the Vice President’s Office in March 2017 and represents a major step in the permitting of the project. The Environmental Certificate is a pre-requisite for the granting of a mining licence.

The Environmental Certificate marks the successful completion of the regulatory Environmental Impact Statement. The two year study that supported the EIS Report was led by Tanzanian environmental consulting specialists Align Environment and Risk and Paulsam Geoengineering Co Ltd. The study included multi-disciplined wet and dry season environmental and social baseline studies and extensive stakeholder consultation as well as a site visit and a review board meeting with the regulators, the National Environment Management Council.

Strong support for the development of the Ngualla Rare Earth Project was received at a local village, District, Regional and National level during the stakeholder meetings. The project area has no human habitation, farming, grazing or reserves.

DISCOVERY OF WIDE ZONES OF HIGH GRADE FLUORSPAR AND NEW STYLE OF RARE EARTH MINERALISATIONIn February 2017 the Company was pleased to report the results of trench sampling within the alteration zone that forms a ring of hills surrounding the Ngualla Carbonatite proper (Figure 5). The trenches were designed to follow-up high grade fluorspar results received from reconnaissance rock sampling in this largely soil covered area.

Fluorspar is an industrial mineral important as a flux in iron and aluminium smelting and also has a range of applications in the chemical industry. It is also known as fluorite or calcium fluoride (CaF2).

Wide and continuous zones of high grade mineralisation up to 78m at 37% fluorspar were identified by the trenching program within a breccia zone that can be traced for 3.8 kilometres (ASX Announcement “Wide Zones of high grade fluorite identified at Ngualla” of 20 February 2017). Two of the three trenches completed to date are continuously mineralised along their entire length, with the mineralisation remaining open in all directions.

Source: Asian Metal

290,000

285,000

280,000

275,000

270,000

265,000

260,000

255,000

RMB/

T

3 Jan2017

NdPr RMB/t min 75% Nd & 99% purity Domestic China Year to Date Price Increase 9% (10 Apr 2017)

11 Jan2017

22 Jan2017

10 Feb2017

22 Feb2017

6 Mar2017

16 Mar2017

10 Apr2017

Figure 4: Increasing NdPr price trend in early 2017

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Figure 5: Location of the three trenches and recent rock samples within the alteration zone surrounding the Ngualla Carbonatite in relation to the Bastnaesite Zone rare earth mineralisation. Geological interpretation draped over topography.

Higher grade intervals include 12m at 54% fluorspar in trench NCS010 and 8m at 62% fluorspar in NCS011, with the maximum 2m sample returning a maximum grade of 82% fluorspar.

In addition a new zone and geological style of rare earth mineralisation up to 53m at 2.37% rare earth oxide (“REO”) was also identified by the trench sampling.

The wide zones of mineralisation confirmed by this initial trenching program, together with the widespread mineralised rock samples returned from reconnaissance work are encouraging. Further work is planned to investigate the potential for a significant and high grade fluorspar deposit at Ngualla, as well as evaluate the potential for additional rare earth mineralisation in this new geological setting.

These first trench sampling results also reinforce the multi commodity endowment of the Ngualla Carbonatite and the potential for future, supplementary value add products once a rare earth operation is established at Ngualla. In addition to the recent fluorspar discovery, additional commodity occurrences confirmed at Ngualla also include niobium, phosphate and barite (see Table 3).

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BARITE INCLUDED IN NGUALLA MINERAL RESOURCE ESTIMATEThe potential for a barite by-product from Ngualla was identified during BFS work programs through the production of a high grade barite stream during rare earth mineral processing. The Mineral Resource estimate for Ngualla was therefore re-issued to report the industrial mineral barite (barium sulphate, BaSO4) within the rare earth Mineral Resource, with no change to rare earth estimates (Table 3).

The Mineral Resource estimate was updated to include barite by SRK Consulting (Australasia) Pty Ltd to include the reporting of barite as a by-product within the rare earth Mineral Resource estimate at a 1% lower grade cut off REO (see ASX Announcement Ngualla Mineral Resource estimate re-stated to include barite” of 2 March 2017 for further details). There has been no change to the Mineral Resource estimate or assumptions since this report.

The Company plans to complete further technical and marketing studies to evaluate this potential future opportunity but barite production is excluded from the current BFS.

The Mineral Resource estimate for the Weathered bastnaesite Zone mineralisation at a 1% REO lower grade cut-off is:

21.3 million tonnes at 4.75% REO* and 37.7% barite for 1,010,000 tonnes of contained REO and 8.03 million tonnes of contained barite.* total rare earth oxides plus Y2O3. See Tables 3 and 5 for JORC classification of Mineral Resource estimates

Table 3: Mineral Resource estimate summary – Weathered Bastnaesite Zone +1% REO

Lower cut-off grade

JORC Resource Category

Tonnage (Mt)

REO (%)*

Contained REO tonnes BaS04

1.0% REO

Measured 18.9 4.75 900,000 37.8

Indicated 1.9 4.85 90,000 38.3

Inferred 0.5 4.43 20,000 31.5

Total 21.3 4.75 1,010,000 37.7

* The weathered Bastnaesite Zone Mineral Resource +1% REO is contained within and is a subset of the total All Resources Ngualla Mineral Resources +1% REO. See Table 5 for relative distributions of individual rare earths as a proportion of total REO. Figures may not sum due to rounding. Barite grade is derived from geochemical assays for barium and the assumption, supported by extensive mineralogical studies, that barium is present as barite.

ENGAGEMENT WITH POTENTIAL STRATEGIC PARTNERSDuring the quarter the Company had further discussions with potential strategic partners evaluating a number of options from direct sale of rare earth concentrate and toll treatment through third party facilities in addition to the base case of the establishment of a Refinery in Tees Valley. Joint technical evaluation of these options is continuing.

NEXT STEPSWith the completion of the BFS, the Company is well placed to ramp up discussions with potential debt financers, offtake partners and strategic investors to take the project through the Front End Engineering and Design (“FEED”) stage and beyond.

The receipt of the Environmental Certificate for Ngualla this Quarter, together with the completion of the BFS, will allow the Company to progress through the mining licence process as both documents are major requirements for a mining licence application.

The multi commodity endowment of the Ngualla Carbonatite demonstrated by the fluorspar discovery and occurrences of barite, phosphate and niobium in addition to rare earths suggests the potential for supplementary value add commodities to be produced from Ngualla, especially once on site infrastructure and an access road have been established for the rare earth operation. The Company will continue to assess the economic potential of these other commodities in addition to the main focus of rare earths. With the Ngualla Camp set to re-open after the rains in early May, field programs and sampling will continue to evaluate the new fluorspar and rare earth discoveries.

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* From 01 April 2016 to 31 March 2017 ** Average from 1 January 2017 to 31 March 2017# some subject to performance and vesting criteria ^PAM, 75% PEK ownership, also retained cash at bank of US$745k at the end of the Quarter.

Darren Townsend, Managing Director

Competent Person’s Statements:

The information in this report that relates to exploration results is based on information compiled and/or reviewed by David Hammond, who is a Member of the Australasian Institute of Mining and Metallurgy. David Hammond is the Technical Director of the Company. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and the activity which he is undertaking to qualify as a Competent Person in terms of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012 edition). David Hammond consents to the inclusion in the report of the matters based on his information in the form and contest in which it appears.

The information in this report that relates to the Mineral Resource estimates is based on work conducted by Rod Brown of SRK Consulting (Australasia) Pty Ltd, and the work conducted by Peak Resources, which SRK has reviewed. Rod Brown takes responsibility for the Mineral Resource estimate. Rod Brown is a Member of the Australasian Institute of Mining and Metallurgy and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the activities undertaken, to qualify as competent Person in terms of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012 edition). Rod Brown consents to the inclusion of such information in this report in the form and context in which it appears.

The information in this report that relates to Ore Reserve estimates was based on information compiled by Ryan Locke, a Principal Consultant with Orelogy Consulting Pty Ltd, Orelogy are an independent consultant to Peak Resources. Ryan Locke, who is a Member of the Australasian Institute of Mining and Metallurgy, has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity being undertaken to qualify as a competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Ryan Locke consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to metallurgical test work results is based on information compiled and / or reviewed by Gavin Beer who is a Member of the Australasian Institute of Mining and Metallurgy and a chartered Professional. Gavin Beer is a Metallurgical Consultant and has sufficient experience relevant to the activity which he is undertaking to be recognised as competent to compile and report such information. Gavin Beer consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to infrastructure, project execution and cost estimating is based on information compiled and / or reviewed by Lucas Stanfield who is a Member of the Australasian Institute of Mining and Metallurgy. Lucas Stanfield is the General Manager - Development for Peak Resources Limited and is a Mining Engineer with sufficient experience relevant to the activity which he is undertaking to be recognised as competent to compile and report such information. Lucas Stanfield consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

ASX: PEK

Ordinary Shares on Issue: 477.5 million

Cash at hand: $3 million^ (Peak Resources Limited only)

Appian Debt (due September 2019): US$3.4 million

52 week range: 4.2c – 13.0c*

Market Cap: $46.3m (at 9.7c)

Unlisted Performance Rights: 8 million#

Unlisted Options outstanding: 23.1 million# (exercise prices A$0.15 to A$0.55)

Liquidity: 0.327 million shares per day (average over 3 months**)

CORPORATE STRUCTURE AND CASH ON HANDDuring the Quarter the Company invested A$4.588m into majority owned associated company Peak African Minerals (PAM) to fund Peak’s 75% share of the Ngualla Project costs. Concurrently, Appian and IFC also invested A$1.529m into PAM for their combined 25% share.

6,383,334 $0.10 options and 6,250,000 $0.55 options expired unexercised during the Quarter. In addition a further 633,332 $0.20 options were cancelled following failure to meet the vesting criteria.

The corporate structure as at the 31 March 2017 was:

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Summary of Mining Tenements and Areas of Interest

As at 31 March 2017

Project Tenement End of December 2016 Quarter

End of March 2017 Quarter

Status Arrangement/Comment

Ngualla PL6079/2009 75%* 75% GrantedHeld by 100% Tanzanian associate company PR NG Minerals Ltd

Mikuwo PL 9157/2013 75%* 75% GrantedHeld by 100% Tanzanian associate company PR NG Minerals Ltd

Mlingi PL10897/2016 75%* 75% GrantedHeld by 100% Tanzanian associate company PR NG Minerals Ltd

* On 26 July 2015, the Company announced the closing of Stage 1 of the financing transaction with Appian and IFC. On 15 August 2016 the closing of Stage 2 with Appian occurred and on 22 September 2016 with IFC. As a result, Peak holds a 75% beneficial interest in the above three licences with Appian and IFC holding a 20% and 5% interest respectively through their equity interest in Peak African Minerals.

Table 4: Relative components of individual rare earth oxides (including yttrium) as a percentage of total REO for the Ngualla Project Ore Reserve estimate (refer to Table 2).

Rare earth oxidesREO Grade (%) % of Total REO

PROVED PROBABLE ALL PROVED PROBABLE ALL

Lanthanum La2O3 1.318 1.418 1.326 27.59 27.80 27.61

Cerium CeO2 2.305 2.456 2.317 48.25 48.15 48.24

Praseodymium Pr6O11 0.228 0.243 0.229 4.77 4.77 4.77

Neodymium Nd2O3 0.788 0.838 0.792 16.49 16.43 16.49

Samarium Sm2O3 0.077 0.082 0.077 1.61 1.61 1.61

Europium Eu2O3 0.014 0.015 0.014 0.30 0.28 0.30

Gadolinium Gd2O3 0.029 0.031 0.030 0.62 0.60 0.62

Terbium Tb4O7 0.002 0.002 0.002 0.05 0.05 0.05

Dysprosium Dy2O3 0.004 0.004 0.004 0.07 0.07 0.07

Holmium Ho2O3 0.00 0.000 0.000 0.01 0.01 0.01

Erbium Er2O3 0.001 0.002 0.002 0.03 0.03 0.03

Thulium Tm2O3 0.000 0.000 0.000 0.00 0.00 0.00

Ytterbium Yb2O3 0.001 0.001 0.001 0.01 0.01 0.01

Lutetium Lu2O3 0.000 0.000 0.000 0.00 0.00 0.00

Yttrium Y2O3 0.010 0.010 0.010 0.20 0.19 0.20

Total REO* REO 4.78 5.10 4.80 100 100 100

*Values may not balance due to rounding to 0.01%.

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Table 5: Weathered Bastnaesite Zone Mineral Resources >=1% REO – Individual REO grades and percentage of Total REO.

Rare earth oxidesREO Grade (%) % of Total REO

Measured Indicated Inferred All Measured Indicated Inferred All

Lanthanum La2O3 1.309 1.345 1.200 1.310 27.57 27.72 27.09 27.58

Cerium CeO2 2.292 2.339 2.128 2.293 48.28 48.18 48.04 48.27

Praseodymium Pr6O11 0.227 0.231 0.213 0.227 4.77 4.75 4.82 4.77

Neodymium Nd2O3 0.783 0.799 0.763 0.784 16.48 16.45 17.23 16.50

Samarium Sm2O3 0.076 0.078 0.071 0.076 1.60 1.61 1.60 1.60

Europium Eu2O3 0.014 0.014 0.013 0.014 0.30 0.29 0.29 0.29

Gadolinium Gd2O3 0.029 0.030 0.027 0.029 0.62 0.61 0.61 0.61

Terbium Tb4O7 0.002 0.002 0.002 0.002 0.05 0.05 0.05 0.05

Dysprosium Dy2O3 0.004 0.004 0.003 0.004 0.07 0.07 0.07 0.07

Holmium Ho2O3 0.000 0.000 0.000 0.000 0.01 0.01 0.01 0.01

Erbium Er2O3 0.002 0.002 0.002 0.002 0.03 0.04 0.04 0.03

Thulium Tm2O3 0.000 0.000 0.000 0.000 0.00 0.00 0.00 0.00

Ytterbium Yb2O3 0.001 0.001 0.000 0.001 0.01 0.01 0.01 0.01

Lutetium Lu2O3 0.000 0.000 0.000 0.000 0.00 0.00 0.00 0.00

Yttrium Y2O3 0.010 0.010 0.007 0.010 0.20 0.20 0.16 0.20

Total REO* REO 4.75 4.85 4.43 4.75 100.00 100.00 100.00 100.00

*Figures may not sum due to rounding.

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

+ See chapter 19 for defined terms 1 September 2016 Page 1

+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, 01/05/13, 01/09/16

Name of entity

PEAK RESOURCES LIMITED

ABN Quarter ended (“current quarter”)

72112546700 MARCH 2017

Consolidated statement of cash flows Current quarter $A’000

Year to date (9 months)

$A’000

1. Cash flows from operating activities - - 1.1 Receipts from customers

1.2 Payments for

- - (a) exploration & evaluation

(b) development (930) (3,265)

(c) production - -

(d) staff costs (net of development allocations)

(176) (661)

(e) administration and corporate costs (270) (603)

(f) development costs recovered - 1,152

(g) administration costs recovered 52 193

1.3 Dividends received (see note 3) - -

1.4 Interest received 10 17

1.5 Interest and other costs of finance paid (158) (339)

1.6 Income taxes paid - -

1.7 Research and development refunds - 1,814

1.8 Other (provide details if material) - -

1.9 Net cash from / (used in) operating activities

(1,472) (1,692)

2. Cash flows from investing activities

(1) (5)

2.1 Payments to acquire:

(a) property, plant and equipment

(b) tenements (see item 10) - -

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$A’000

(c) investments in associate companies (4,588) (4,588)

(d) other non-current assets - -

2.2 Proceeds from the disposal of:

- - (a) property, plant and equipment

(b) tenements (see item 10) - -

(c) investments - -

(d) other non-current assets - -

2.3 Cash flows from loans to / from other entities – associate companies

3,810 1,773

2.4 Dividends received (see note 3) - -

2.5 Other (provide details if material)

2.6 Net cash from / (used in) investing activities

(779) (2,820)

3. Cash flows from financing activities - 1,503 3.1 Proceeds from issues of shares

3.2 Proceeds from issue of convertible notes - -

3.3 Proceeds from exercise of share options - -

3.4 Transaction costs related to issues of shares, convertible notes or options

(1) (80)

3.5 Proceeds from borrowings – Appian loan 158 4,519

3.6 Repayment of borrowings - -

3.7 Transaction costs related to loans and borrowings

- (150)

3.8 Dividends paid - -

3.9 Other (provide details if material) - -

3.10 Net cash from / (used in) financing activities

157 5,792

4. Net increase / (decrease) in cash and cash equivalents for the period

5,080 1,706 4.1 Cash and cash equivalents at beginning of

period

4.2 Net cash from / (used in) operating activities (item 1.9 above)

(1,472) (1,692)

4.3 Net cash from / (used in) investing activities (item 2.6 above)

(779) (2,820)

4.4 Net cash from / (used in) financing activities (item 3.10 above)

157 5,792

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$A’000

4.5 Effect of movement in exchange rates on cash held

- -

4.6 Cash and cash equivalents at end of period

2,986 2,986

5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts

Current quarter $A’000

Previous quarter $A’000

5.1 Bank balances 2,192 4,330

5.2 Call deposits 794 750

5.3 Bank overdrafts - -

5.4 Other (provide details) - -

5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)

2,986# 5,080#

#figure excludes cash at end of the Quarter retained by Peak’s majority (75%) owned associate company Peak African Minerals (PAM). PAM had cash at bank at the end of Quarter of US$745k (previous quarter US$22k).

6. Payments to directors of the entity and their associates Current quarter $A'000

6.1 Aggregate amount of payments to these parties included in item 1.2 196

6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3

-

6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2

6.1 includes salaries, directors fees paid to Directors and payments to Steinepreis Paganin Lawyers & Consultants, an entity related to Non-executive Director Jonathan Murray.

7. Payments to related entities of the entity and their associates

Current quarter $A'000

7.1 Aggregate amount of payments to these parties included in item 1.2 -

7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3

-

7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

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8. Financing facilities available Add notes as necessary for an understanding of the position

Total facility amount at quarter end

$A’000

Amount drawn at quarter end

$A’000

8.1 Loan facilities 4,449 4,449

8.2 Credit standby arrangements - -

8.3 Bank Guarantee re office rent 55 55

8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.

Loan facilities are a fully drawn 3 year unsecured term loan provided by Appian Pinnacle Holdco Limited. The loan principal is denominated as US$3.146m (1A$=0.7526US$) with interest of 15% per annum calculated daily and capitalised at the end of each calendar quarter payable at time of the loan repayment. $157k (US$1118k) interest has been capitalised to the loan at the end of the Quarter bringing the total loan outstanding to US$3.401m.

9. Estimated cash outflows for next quarter $A’000

9.1 Exploration and evaluation -

9.2 Development 296

9.3 Production -

9.4 Staff costs (net of recoveries) 201

9.5 Administration and corporate costs (net of recoveries) 194

9.6 Other – Company’s share of PAM project evaluation and development costs

1,003

9.7 Total estimated cash outflows 1,694*

* The above figures are for Peak’s costs and its share of the project development and evaluation expenditure only. Additional project development and evaluation expenditure will be incurred and funded by the other PAM investors.

10. Changes in tenements (items 2.1(b) and 2.2(b) above)

Tenement reference and location

Nature of interest Interest at beginning of quarter

Interest at end of quarter

10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced

Refer Quarterly Activities Report

10.2 Interests in mining tenements and petroleum tenements acquired or increased

Refer Quarterly Activities Report

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Compliance statement

1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2 This statement gives a true and fair view of the matters disclosed.

Sign here: ......Graeme Scott.......................... Date: ...27 April 2017............... Company secretary

Print name: ....Graeme Scott............................

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

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highlights - investorintel · 2017-04-27 · post quarter end, on 12 april 2017, the company was...

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