KORAB RESOURCES LIMITED — Capital/Financing Update 2013

Feb 21, 2013

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KORAB RESOURCES LIMITED

KORAB HOUSE

www.korab.com.au

22 February 2013

PLACEMENT AND SHARE PURCHASE PLAN (SPP)

Korab
Resources
Limited
(ASX:KOR,
“Korab”
or
“the
Company”)
is
pleased
to
announce
it
has
agreed to
place
up
to
8.65
million
shares
to
sophisticated
and
institutional
investors
at
8.5
cents
per
share (“Placement”).
The
placement
price
represents
a
5%
discount
to
Korab’s
closing
share
price
and
7% discount
to
the
5-­‐day
volume
weighted
average
share
price
immediately
preceding
the
placement.

Korab
intends
to
use
the
proceeds
from
the
placement
to
fund
development,
exploration
and evaluation
work
at
the
Company’s
projects
and
to
meet
ongoing
working
capital
requirements.

The
Placement
is
being
completed
pursuant
to
the
Company’s
15
per
cent
capacity
under
ASX
Listing Rule
7.1.

SHARE PURCHASE PLAN

In
addition
to
the
placement,
Korab
will
make
an
offer
to
all
eligible
shareholders
to
participate
in
a Share
Purchase
Plan
(SPP).
The
SPP
offer
will
be
priced
at
8.5
cents
per
share,
which
is
the
same
price as
that
paid
by
sophisticated
and
institutional
investors
who
participated
in
the
placement.
The shares
will
be
issued
at
a
7%
discount
to
the
5-­‐day
volume
weighted
average
share
price
immediately preceding
this
announcement
and
there
is
no
brokerage
payable
on
purchases
of
shares
under
the SPP.

The
SPP
offer
will
be
limited
to
$15,000
worth
of
shares
(a
parcel
of
176,470
ordinary
shares
in Korab)
per
investor
with
a
minimum
subscription
of
$2,125
(25,000
shares).
The
record
date
for
the SPP
is
21
February
2013,
which
is
the
last
business
day
preceding
this
announcement
of
this
SPP
offer (Record
Date).
All
those
shareholders
who
held
Korab
shares
on
the
record
date
are
eligible
to
apply for
up
to
$15,000
worth
of
shares
in
the
SPP
offer
regardless
of
the
number
of
shares
they
held
on the
Record
Date.

Korab
proposes
to
raise
up
to
a
maximum
of
$2,265,000
from
the
SPP
equating
to
26,647,060
new ordinary
fully
paid
shares
in
the
capital
of
the
Company.
Korab
has
proximately
1,350
shareholders eligible
to
participate
in
the
SPP.
Consequently
the
applications
will
be
accepted
on
a
first
come,
first served
basis
and
the
shares
will
be
allotted
as
soon
as
possible
after
the
end
of
the
offer
period.
The SPP
offer
document
is
being
finalised.
It
is
envisaged
that
it
will
be
given
to
ASX
and
despatched
to eligible
shareholders
next
week.

The
Company
is
seeking,
through
the
SPP,
to
enable
eligible
shareholders
of
Korab
to
participate
in the
future
of
the
Company
as
it
continues
the
development
of
its
gold
mining
assets,
explores opportunities
to
develop
its
phosphate
assets
and
expands
exploration
for
gold,
copper
and
nickel. Korab
intends
to
use
the
proceeds
from
the
SPP
to
fund
development,
exploration
and
evaluation work
at
the
Company’s
projects
and
to
meet
ongoing
working
capital
requirements.

Executive
Chairman
commented
that
he
was
excited
by
the
significant
progress
that
these
funds
will enable
the
Company
to
make
towards
the
first
gold
production
in
Ukraine.

Directors
intend
to
take
up
their
full
entitlement
in
the
SPP
offer.

The
offer
to
purchase
shares
under
the
SPP
will
be
made
without
a
product
disclosure
document
in accordance
with
ASIC
Class
Order
allowing
ASX
listed
companies
to
offer
their
existing
shareholders the
opportunity
to
acquire
additional
shares
in
the
Company
without
the
need
for
a
prospectus under
Part
6D.2.

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LEVEL 18, CENTRAL PARK, 152-158 ST. GEORGE’S TERRACE, WA, 6000, AUSTRALIA PO BOX Z5447, PERTH, WA, 6831 AUSTRALIA TEL (08) 9288 4467 FAX (08) 9288 4476 ACN 082 140 252

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KORAB RESOURCES LIMITED

KORAB HOUSE

www.korab.com.au

BUSINESS OVERVIEW

Korab
Resources
Limited
is
a
Perth
based
ASX-­‐listed
(ASX:
KOR)
mining
and
exploration
company
with gold,
phosphate
and
magnesium
mining
and
quarrying
assets
located
in
Australia
and
in
Ukraine.
The Company
also
operates
exploration
projects
where
it
explores
for
gold,
copper,
nickel
and phosphates.

MELROSE GOLD PROJECT (100% KORAB)

Following
the
completion
of
the
extensive
metallurgical
test
work
program
on
samples
from
the Melrose
project,
which
confirmed
amenability
of
the
ore
to
heap
leach
gold
extraction,
Korab commenced
the
review
of
the
development
options
for
the
project.
Column
leach
testing
showed very
good-­‐to-­‐excellent
gold
recovery
rates.
94.07%
of
contained
gold
was
recovered
after
32
days from
the
Bungarra
deposit
samples,
whilst
76.03%
of
contained
gold
was
recovered
after
60
days from
the
Boundary
deposit
samples.
The
Company
is
updating
the
scoping
study
with
the
heap
leach amenability
test
work
results
to
assess
the
estimated
capital
expenditure
and
operating
costs
of
a combined
bulk
mining
and
heap
leaching
operation.
The
results
will
be
reported
to
the
market
when available.

The
Melrose
project
is
located
70km
north
east
of
Leinster
in
the
Eastern
Gold
Fields
of
Western Australia,
within
the
Mt.
Fisher/Wanganoo
greenstone
belt
(previously
called
Mt.
Fisher/Dingo
Range belt).
The
Melrose
project
consists
of
three
deposits
located
in
close
proximity.
Melrose
mineral resource
estimated
in
accordance
with
the
JORC
Code
stands
at
0.339
million
ounces
of
gold
in
6.5 Mln
tonnes
grading
on
average
1.61
g/t
Au
(see
appendix
A
for
detail).
The
deposits
are
open
at depth
and
offer
potential
for
additional
mineralisation
with
more
drilling.

BOBRIKOVO PROJECT (100% KORAB)

In
addition
to
the
Melrose
project,
Korab
holds
Bobrikovo
project,
which
contains
2.04
million
ounces of
gold,
estimated
in
accordance
with
the
JORC
Code
(see
appendix
A
for
detail).
This
mineral resource
is
currently
undergoing
upgrade
to
the
resource
estimate.

The
Bobrikovo
project
has
a stockpile
of
oxide
ore,
which
has
been
mined
for
later
processing
using
gravity
based
extraction process.
Korab
plans
to
build
on
site
a
purpose-­‐designed
extraction
plant,
which
has
an
estimated gold
recovery
of
around
79%.
The
cost
of
the
purpose
designed
processing
plant
will
be approximately
$4
million.
As
announced
on
7
February
2013,
Korab
has
located
suitable
second-­‐hand gravity
circuits,
which
could
be
acquired,
refurbished,
transported
to
site
and
commissioned
for between
$500,000
and
$750,000
(less
than
460oz
of
gold
at
current
gold
price).
Metallurgical
and mineralogical
tests
using
ore
from
Bobrikovo
suggest
that
the
gold
recovery
using
these
second
hand gravity
circuits
can
be
expected
to
exceed
50%.
These
circuits
can
process
up
to
20,000
tonnes
per month,
which
would
translate
into
a
production
profile
of
approximately
1,000oz
of
gold
in concentrate
per
month.
This
offers
an
attractive
potential
additional
revenue
stream
at
a
relatively low
capital
cost.
It
also
offers
an
opportunity
to
commence
production
from
the
ore
already stockpiled
on
site
and
to
generate
early
cash
flow
from
sales
of
gold
concentrate
well
in
advance
of the
completion
of
the
construction
of
the
purpose-­‐designed
plant.
The
second
hand
gravity
plants
do not
include
crushers
and
milling
equipment.
However,
Ukraine
is
a
producer
of
very
high
quality crushers
and
mills
and
Korab
has
commenced
discussions
with
Ukrainian
companies
to
provide crushing
and
milling
services
on
contract
basis.

Korab
is
considering
the
second-­‐hand
plant
not
as
an
alternative
to
the
purpose-­‐designed
plant
but as
an
additional
processing
capacity,
which
could
offer
dual
benefits.
The
first
benefit
would
be
an early
cash
flow,
well
in
advance
of
the
completion
of
the
construction
and
commissioning
of
the purpose–designed
plant.
The
second
benefit
would
be
the
ability
to
run
the
second-­‐hand
plant
in

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LEVEL 18, CENTRAL PARK, 152-158 ST. GEORGE’S TERRACE, WA, 6000, AUSTRALIA PO BOX Z5447, PERTH, WA, 6831 AUSTRALIA TEL (08) 9288 4467 FAX (08) 9288 4476 ACN 082 140 252

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®

KORAB RESOURCES LIMITED

KORAB HOUSE

www.korab.com.au

parallel
with
the
purpose–designed
plant
thus
doubling
the
production
rate
at
a
relatively
low
capita cost.
The
market
will
be
advised
of
the
progress
of
this
proposal.

NEW COMPANY STRATEGY TO BUILD AND GROW SHAREHOLDER VALUE EXPRESSED IN OUNCES OF GOLD

The
board
has
acknowledged
the
disconnect
between
gold
and
gold
equities;
whilst
Korab
has
over 2moz
of
gold
in
resources,
at
current
gold
prices
the
capitalisation
of
Korab
is
the
equivalent
of
only 6,650oz.
In
an
effort
to
address
this
mismatch
Korab
will
endorse
a
new
strategy
aimed
at
building and
growing
shareholder
value
expressed
in
ounces
of
gold.
The
company
has
also
decided
to
adopt an
additional
reporting
methodology,
which
will
be
used
in
parallel
with
the
accounting
standards applicable
to
financial
reporting
by
ASX
listed
entities.
Once
Korab
becomes
a
gold
producer,
in addition
to
“dollar”
based
reporting,
Korab
will
report
its
production
results
in
terms
of
ounces produced,
and
net
ounces
retained
after
cost
of
production.

Profits
from
mining
will,
where applicable,
be
held
in
gold
and
together
with
the
gold
reporting
should
give
management
greater clarity
and
focus
in
regards
to
the
new
strategy
of
building
and
growing
shareholder
value
expressed in
ounces
of
gold. The
board
sees
this
as
an
exciting
initiative
and
a
new
era
for
Korab.

GOLD DIVIDEND

As
announced
on
7
February
2013,
in
light
of
this
new
strategic
direction,
Korab
has
been
reviewing how
it
can
provide
shareholders
with
direct
exposure
to
gold
once
the
Company
becomes
a
gold producer.
After
reviewing
numerous
alternatives
the
board
has
resolved
that
if
and
when
Korab declares
a
dividend
in
the
future,
shareholders
may
elect
to
receive
the
dividend
in
gold.
Korab shareholders
who
are
eligible
to
receive
a
dividend
and
who
make
the
election
would
receive
the gold
in
a
Perth
Mint
depositary
account
opened
on
behalf
of
each
electing
shareholder
for
this purpose.
The
elections
to
receive
gold
will
be
capped
at
5%
of
the
gold
produced
by
Korab
in
any financial
year,
and
the
payment
of
the
dividend
in
gold
will
be
conditional
on
electing
shareholders agreeing
to
be
bound
by
the
terms
of
Perth
Mint
depository
accounts. This
will
essentially
amount to
shareholders
receiving
a
5%
“royalty”
on
gold
produced
by
the
Company. Where
elections
to receive
gold
will
exceed
5%
of
the
gold
produced
in
any
one
financial
year,
the
dividend
payments
in gold
would
be
scaled
back
on
a
pro
rata
basis
and
electing
shareholders
would
receive
a
combined gold
and
cash
dividend
payment.
This
right
to
receive
declared
dividends
in
gold
or
in
cash
remains subject
to
the
Board’s
powers
to
pay
a
dividend
under
Part
2H.5
of
the
Corporations
Act.

-ENDS-

FOR FURTHER INFORMATION, CONTACT:

Andrej
Karpinski Executive
Chairman (08)
9474
6166 (08)
9288
4467

Competent
Person:
The
information
in
this
report
that
relates
to
Exploration
Results,
Mineral Resources
or
Ore
Reserves
is
based
on
information
compiled
by
Andrew
Hawker,
who
is
an independent
geological
consultant
and
is
a
member
of
The
Australasian
Institute
of
Mining
and Metallurgy.
Andrew
Hawker
has
in
excess
of
5
years
experience
which
is
relevant
to
the
style
of mineralisation
and
type
of
deposit
under
consideration
and
to
the
activity
which
he
is
undertaking
to qualify
as
a
Competent
Person
as
defined
in
the
2004
Edition
of
the
‘Australasian
Code
for
Reporting of
Exploration
Results,
Mineral
Resources
and
Ore
Reserves’.
Andrew
Hawker
consents
to
the

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LEVEL 18, CENTRAL PARK, 152-158 ST. GEORGE’S TERRACE, WA, 6000, AUSTRALIA PO BOX Z5447, PERTH, WA, 6831 AUSTRALIA TEL (08) 9288 4467 FAX (08) 9288 4476 ACN 082 140 252

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KORAB RESOURCES LIMITED

KORAB HOUSE

www.korab.com.au

inclusion
in
the
report
of
the
matters
based
on
his
information
in
the
form
and
context
in
which
it appears.

APPENDIX A

- BOBRIKOVO MINERAL RESOURCE STATEMENT (ABOVE 0.5 G/T AU CUT OFF GRADE)

Resource by category	Resource by category
At 0.5 g/t Au cut-off	VOLUME	ORE_MASS	AU_CONTENT	AU_MASS	AU_MASS
	[1000m3]	[1000t]	[g/t]	[t]	[Mln oz.]
Measured	664.130	1,660.321	2.053	3.409	0.110
Indicated	2,909.636	7,274.089	2.792	20.313	0.653
Inferred	11,263.358	28,158.399	1.412	39.749	1.278
Total	14,837.124	37,092.809	1.711	63.471	2.041

Totals may differ due to rounding

- BOBRIKOVO MINERAL RESOURCE STATEMENT (ABOVE 2 G/T AU CUT OFF GRADE)

Resource by category	Resource by category
At 2 g/t Au cut-off	VOLUME	ORE_MASS	AU_CONTENT	AU_MASS	AU_MASS
	[1000m3]	[1000t]	[g/t]	[t]	[Mln oz.]
Measured	188.577	471.443	4.720	2.225	0.072
Indicated	1,289.213	3,223.033	4.559	14.694	0.472
Inferred	1,409.386	3,523.466	5.118	18.034	0.580
Total	2,887.177	7,217.942	4.843	34.953	1.124

Totals may differ due to rounding

MINERAL RESOURCE AT MELROSE PROJECT (ABOVE 0.5 G/T AU CUT-OFF GRADE)

Category	Tonnes	Gradeg/t Au	Gold Ounces
Measured
Boundary	652,154	1.73	36,262
Indicated
Boundary	2,662,763	1.73	148,506
Inferred
Boundary	703,209	1.36	30,822
Bungarra	2,144,332	1.56	107,385
Stirling	404,000	1.31	17,000
Total Resource	6,566,458	1.61	339,975

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LEVEL 18, CENTRAL PARK, 152-158 ST. GEORGE’S TERRACE, WA, 6000, AUSTRALIA PO BOX Z5447, PERTH, WA, 6831 AUSTRALIA TEL (08) 9288 4467 FAX (08) 9288 4476 ACN 082 140 252

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