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STRIKE RESOURCES LIMITED Interim / Quarterly Report 2018
65855_rns_2018-03-12_39d1a3b5-18bc-46ea-8c4f-8f73ff50a581.pdf
Interim / Quarterly Report
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HALF YEAR REPORT
31 December 2017
THIS DOCUMENT SHOULD BE READ IN CONJUNCTION WITH THE 30 JUNE 2017 ANNUAL REPORT OF THE COMPANY LODGED ON 17 OCTOBER 2017
Strike Resources Limited A.B.N. 94 088 488 724
Advanced Share Registry Services Western Australia – Main Office 110 Stirling Highway Nedlands, Western Australia 6009 PO Box 1156 Nedlands WA 6909 T | (08) 9389 8033 F | (08) 9262 3723 E | [email protected] W | www.advancedshare.com.au
New South Wales – Branch Office Suite 8H, 325 Pitt Street Sydney, New South Wales 2000 PO Box Q1736 Queen Victoria Building NSW 1230 T | (02) 8096 3502
REGISTERED OFFICE SHARE REGISTRY
Level 2 23 Ventnor Avenue West Perth, Western Australia 6005
T | (08) 9214 9700 F | (08) 9214 9701 E | [email protected] W | www.strikeresources.com.au
| Managing Director |
|---|
| Non-Executive Director |
| Matthew HammondNon-Executive Director |
| COMPANY SECRETARY |
| PRINCIPAL AND REGISTERED OFFICE |
| West Perth, Western Australia 6005 |
| (08) 9214 9700 |
| (08) 9214 9701 |
| www.strikeresources.com.au |
| Chartered Accountants |
| Level 1, Lincoln House |
| West Perth, Western Australia 6005 |
| (08) 9486 7094 |
| www.rothsayresources.com.au |
| Malcolm Richmond23 Ventnor Avenue |
| Market Announcements | Suite 8H, 325 Pitt Street |
|---|---|
CONTENTS CORPORATE DIRECTORY
| Auditor's Independence Declaration | 10 | Farooq KhanChairmanWilliam JohnsonManaging Director |
|---|---|---|
| Victor HoExecutive Director | ||
| Consolidated Statement of Profit or Lossand Other Comprehensive Income | 11 | Malcolm RichmondNon-Executive DirectorMatthew HammondNon-Executive Director |
| Consolidated Statement of | 12 | COMPANY SECRETARY |
| Financial Position | Victor Ho | |
| Consolidated Statement ofChanges in Equity | 13 | PRINCIPAL AND REGISTERED OFFICELevel 223 Ventnor Avenue |
| Consolidated Statement of Cash Flows | 14 | West Perth, Western Australia 6005 |
| Notes to Consolidated FinancialStatements | 15 | Telephone:(08) 9214 9700Facsimile:(08) 9214 9701Email:[email protected] |
| Directors' Declaration | 21 | Website:www.strikeresources.com.au |
| Auditors' Independent Review Report | 22 | AUDITOR |
| List of Mineral Concessions | 23 | Rothsay AuditingChartered Accountants |
| JORC Mineral Resources | 24 | Level 1, Lincoln House4 Ventnor Avenue |
| JORC Code Competent Persons' | 25 | West Perth, Western Australia 6005Telephone:(08) 9486 7094 |
| Statements | Website:www.rothsayresources.com.au | |
| Securities Information | 27 | STOCK EXCHANGEAustralian Securities ExchangePerth, Western AustraliaASX CODESRK |
| Visit www.strikeresources.com.au forMarket AnnouncementsFinancial ReportsCorporate GovernanceFormsEmail Subscription | SHARE REGISTRYAdvanced Share Registry ServicesMain Office:110 Stirling HighwayNedlands, Western Australia 6009Telephone:(08) 9389 8033Facsimile:(08) 9262 3723Email:[email protected]Investor Web:www.advancedshare.com.auSydney Office:Suite 8H, 325 Pitt StreetSydney, New South Wales 2000Telephone:(02) 8096 3502 | |
The Directors present their report on Strike Resources Limited ABN 94 088 488 724 (Company or SRK) and its controlled entities (the Consolidated Entity or Strike) for the financial half year ended 31 December 2017 (Balance Date).
Strike is a company limited by shares that was incorporated in Western Australia and has been listed on the Australian Securities Exchange (ASX) since 7 March 2000 (ASX Code: SRK).
The Company has prepared a consolidated financial report incorporating the entities that it controlled during the financial half year.
OPERATING RESULTS
| December 2017 | December 2016 | |
|---|---|---|
| Consolidated | $ | $ |
| Total revenue | 248,326 | 94,231 |
| Total expenses | (625,820) | (618,015) |
| Loss before tax | (377,494) | (523,784) |
| Income tax expense | - | - |
| Loss after tax | (377,494) | (523,784) |
CASH FLOWS
| December 2017 | December 2016 | |
|---|---|---|
| Consolidated | $ | $ |
| Net cash flow from operating activities | (651,195) | (707,075) |
| Net cash flow from investing activities | (1,626,539) | 70,206 |
| Net change in cash held | (2,277,734) | (634,869) |
| Cash held at half year end | 3,030,144 | 6,334,462 |
FINANCIAL POSITION
| December 2017 | June 2017 | |
|---|---|---|
| Consolidated | $ | $ |
| Cash | 3,030,144 | 5,308,855 |
| Financial assets at fair value through profit or loss | 1,884,401 | - |
| Receivables | 64,992 | 76,584 |
| Other assets | 520,880 | 381,954 |
| Liabilities | (61,527) | (65,390) |
| Net assets | 5,438,890 | 5,702,003 |
| Issued capital | 148,439,925 | 148,439,925 |
| Reserves | 15,298,824 | 15,184,443 |
| Accumulated losses | (158,299,859) | (157,922,365) |
| Total equity | 5,438,890 | 5,702,003 |
During the financial half-year, Strike invested in a portfolio of ASX 200 listed resource stocks pursuant to a capital management strategy. As at 31 December 2017, the investment portfolio was valued at $1.884 million and generated a net gain of $0.195 million for the financial half year.
DIRECTORS' REPORT
REVIEW OF OPERATIONS
Apurimac Iron Ore Project (Peru)
The Apurimac Iron Ore Project is recognised as one of the highest grade, large-scale magnetite deposits in the world, with a JORC Code (2012) compliant Indicated and Inferred Mineral Resource of 269 Mt of iron ore at 57.3% Fe and further exploration potential.1
The exceptionally high grade 57% Fe is almost twice as high as magnetite deposits developed in Australia; ore bodies are coarse grained and relatively soft, resulting in potentially cheaper processing costs once in production.
The Ministry of Transport and Communications in Peru (MOTC) has recently announced the commencement of a formal study to build a ~570km multi-user railway from the inland city of Andahuaylas in southern Peru (20km from Strike's Apurimac Project), to the mineral export Port of San Juan de Marcona on the west coast of Peru (the Andahuaylas Railway)2:
- The railway is contemplated to serve as a multi-user line which is expected to be largely underpinned by Strike's Apurimac Project with its planned production capacity of 20 Mtpa of high grade iron ore.
- The railway if constructed will represent a paradigm shift in project economics for Strike's Apurimac Project, facilitating the development of Strike's long-held objective to develop a 20 Mtpa iron ore mine.
- Previous studies undertaken by Strike indicate that total mining, processing and transportation costs to port of 10 to 15 Mtpa of lump and fines products to be approximately US$16.50 to US$14.60 per tonne (respectively). A production profile of 20 Mtpa is expected to provide even greater operating efficiencies.
- The preliminary railway route proposed by the MOTC almost exactly mirrors the railway route proposed by SKM for Strike in 2008.
- Rail transport allows the potential for the Apurimac Project to be one of the lowest cost iron ore mines in the world.
- The MOTC has issued a tender for undertaking the 'pre-investment study' for the proposed Andahuaylas Railway.
- Strike is working closely with MOTC and relevant regional departments to advance towards the ultimate construction of the Andahuaylas Railway.
A Prefeasibility Study completed by Snowden Mining Industry Consultants (Snowden) and SKM in 20083 and updated by Ausenco Sandwell in 20104 indicated clear potential for development of a world class iron ore project:
- JORC Indicated and Inferred Mineral Resource at the main Opaban I/III concessions of 269Mt of iron ore at 57.3% Fe (142 Mt Indicated Resource at 57.84% Fe and 127 Mt Inferred Resource at 56.7% Fe).
- Mineralisation predominantly high-grade, coarse-grained magnetite providing comparatively high mass recoveries (>60%) at coarse grind size (>500 microns).
- Excellent exploration potential within current concessions with several targets containing ironstones grading >60% Fe in similar geological settings to the main Opaban concessions.
1 Refer Strike's ASX Announcement dated 19 January 2015: Apurimac Mineral Resources Updated to JORC 2012 Standard and the JORC Mineral Resources section of this announcement
2 Refer Strike's ASX Announcement dated 8 February 2018: Peru Government Plans Railway Linking Strike's Apurimac Iron Ore Project to Port
3 Refer Strike's ASX Announcement dated 23 July 2008: Prefeasibility Results Confirm World Class Prospects in Peru
4 Refer Strike's ASX Announcement dated 23 November 2010: Apurimac Project Update and Strike's December 2010 Quarterly Report
In February 2018, Strike and Dalian Huarui Heavy Industry Group Co. Ltd. (DHHI) from China, executed a Memorandum of Understanding (MOU) in relation to the development of Strike's Apurimac Iron Ore Project and associated rail and port infrastructure in Peru5:
- The MOU documents the mutual understanding between Strike and DHHI to work jointly on the advancement of the Project, including the proposed Peru Government sponsored multi-user Andahuaylas Railway (Railway) which would link Strike's Apurimac Iron Ore Project with the minerals export Port of San Juan de Marcona on the west coast of Peru, South America.
- DHHI (www.dhhi.com.cn) is a large Chinese manufacturer of bulk material handling machinery, including large scale iron ore mining, handling and processing machinery as well as large scale port machinery. DHHI has a long-established history in China and has delivered major projects around the world, including in Australia where they supplied the bulk handling heavy machinery for the 55 million tonne per annum (Mtpa) Roy Hill Iron Ore Mine in Western Australia.
- The purpose of the MOU is to recognise the intention of both parties to work together to advance Strike's Project and the associated rail and port infrastructure.
- Joint activities contemplated by the MOU include the development of further studies relating to the feasibility of Strike's Project and potentially the creation of a formal joint venture or consortium (to include other major Chinese infrastructure and funding groups introduced by DHHI).
- The MOU is non-binding and does not commit either party to any formal contractual arrangements.
Burke Graphite Project (Queensland)
Strike's Burke Graphite Project6 (in which Strike holds a 60% interest7) is located in the Cloncurry region in North Central Queensland, where there is access to well-developed transport infrastructure to an airport at Mt Isa (~122km) and a port in Townsville (~783km).
During the financial half-year, Strike reported a maiden JORC Inferred Mineral Resource Estimate (MRE) on its Burke Graphite Project in Queensland, confirming the project as one of highest grade natural graphite deposits in the world8:
- 6.3 million tonnes @ 16.0% Total Graphitic Carbon (TGC) for 1,000,000 tonnes of contained graphite;
- Within the mineralisation envelope there is included higher grade material of 2.3 million tonnes @ 20.6% TGC (with a TGC cut-off grade of 18%) for 464,000 tonnes of contained graphite which will be investigated further.
These grades place the Burke deposit as one of the highest-grade deposits of graphite in the world held by an Australian listed company.
In addition to the high-grade nature of the deposit, the Burke Graphite Project:
Comprises natural graphite that has been demonstrated to be able to be processed by standard flotation technology to international bench mark product categories. The flotation tests conducted by Independent Metallurgical Operations Pty Ltd (IMO) have confirmed that a concentrate of purity in excess of 95% and up to 99% TGC can be produced using a standard flotation process.
5 Refer Strike's ASX Announcement dated 19 February 2018: Peru Iron Ore Update – MOU with Chinese Dalian Huarui Heavy Industry Group
6 Refer Strike's ASX announcement dated 9 November 2016: Strike Secures Graphite Project in Queensland
7 In July 2017, Strike completed its earn-in obligations to acquire a 60% interest in the Burke Graphite Project tenements. All expenditure on the project will now be shared in proportion to the owners' interests (with an industry standard dilution to apply if a party elects not to contribute their share).
8 Refer Grade Tonnage Data in Table 2 of CSA Global's Burke Graphite Project MRE Technical Summary dated 9 November 2017 (attached as Annexure A of Strike's ASX Announcement dated 13 November 2017: Maiden Mineral Resource Estimate Confirms Burke Project as One of the World's Highest Grade Natural Graphite Deposits)
- Contains graphite from which Graphene Nano Platelets (GNP) have been successfully extracted direct from the Burke Graphite deposit via Electrochemical Exfoliation (ECE). The ECE process is relatively low cost and environmentally friendly compared to other processes, yet it can produce very high purity Graphene products. The ECE process is however not applicable to the vast majority of worldwide graphite deposits as it requires a TGC of over 20% and accordingly the Burke Deposit has potentially significant processing advantages over other graphite deposits.
- Is located in the relatively safe and mining friendly jurisdiction of Queensland, Australia with welldeveloped transport infrastructure and logistics nearby; and
- Is potentially amenable to low cost open-pit mining.
Given the above highly favourable project characteristics and with the minimum size of the deposit now confirmed, Strike plans to:
- undertake further tests on samples of high purity graphite concentrate to determine its suitability for use in lithium-ion batteries; and
- conduct further test work to optimise the production of Graphene Nano Platelets (GNP) using the Electrochemical Exfoliation (ECE) process.
During the financial half-year, Strike's Managing Director met with a number of major lithium-ion battery manufacturers and graphite companies in China.
The purpose of the visit was to begin developing strategic relationships with potential graphite concentrate offtake partners and other parties who are otherwise active in the Chinese graphite/graphene industry.
Strike notes that China itself is the world's largest producer and consumer of graphite. However, average graphite grades in China are typically much lower than that of the Burke Project and increasing environmental concerns in China are causing companies to look outside of China for stable supplies of high quality graphite concentrate.
The Chinese parties approached expressed keen interest in Strike's graphite deposit and its proposed development activities and discussions with these and other parties will be ongoing with a view to eventually forming binding commercial off-take and development agreements.
In this regard, an experienced Beijing-based Consultant has been retained to facilitate and advance these discussions.
In addition, Strike is currently holding discussions with various Universities and Research Institutions in Australia with regard to partnering with Strike on researching the development of commercial applications for its graphite. Such activities will be focused on areas with the best near-term commercial potential and where, if possible, Australian Government funding support can also be secured.
For further details, refer to Strike's ASX announcements dated:
- 22 January 2018: Burke Graphite Project - Update;
- 13 November 2017: Burke Graphite Project Maiden JORC Mineral Resource; and
- 16 October 2017: Burke Graphite Project Metallurgical Testwork Results.
Lithium Exploration (Western Australia)
During the financial half-year, Strike received the grant of Exploration Licences EL 45-4799 and E45- 4800 totalling ~31,000 hectares in the North Pilbara of Western Australia9. These tenements exist within the extent of the known lithium and tantalum mineral fields in the region, adjacent to licences that have outcropping lithium and tantalum elevated pegmatite occurrences.
Paulsens-East Project (Western Australia)
Strike's Paulsens East tenement, which is located ~7km east of the Paulsens Gold Mine operated by Northern Star Resources Ltd (ASX:NST), has been held by Strike for many years for its deposit of high grade hematite. Strike has historically conducted extensive drilling on the tenement for iron ore.
During the financial half-year, a review of the historical data within the tenement for other mineralisation indicated the presence of a historical gold occurrence, hosted within conglomerate rocks. The geological setting with mineralised conglomerates is similar to the Novo Resources Corp. (TSX-V:NVO)/ Artemis Resources Limited (ASX:ARV) gold discoveries, with these discoveries having opened up fresh geological models for gold prospectivity compared with traditional paradigms
Strike is undertaking a review of available historical data relating to all its Pilbara tenements and planning further exploration, with the primary targeted minerals being gold, lithium, tantalum and rare earth elements.
For further details, refer to Strike's ASX announcement dated 20 November 2017: Gold Potential of Strike's Pilbara Tenements.
DIVIDENDS
The Directors have not declared a dividend in respect of the financial half year ended 31 December 2017.
SECURITIES ON ISSUE
The Company has the following total securities on issue as at 31 December 2017 (and as at the date of this report):
| Quoted on ASX | Unlisted | Total | |
|---|---|---|---|
| Fully paid ordinary shares | 145,334,268 | - | 145,334,268 |
| $0.30 (17 June 2018) Unlisted Managing Director's Options10 | - | 3,000,000 | 3,000,000 |
| Total | 145,334,268 | 3,000,000 | 148,334,268 |
9 Refer Strike's ASX Announcement dated 18 August 2016: New Lithium Projects in Chile and Western Australia
10 Refer Strike's ASX announcement dated 18 June 2013: Appendix 3B – Grant of Options and Cancellation of Options and Strike's Notice of General Meeting lodged on ASX on 17 May 2013
BOARD OF DIRECTORS
| Farooq Khan | Chairman |
|---|---|
| Appointed | 18 December 2015; Director since 1 October 2015; |
| Qualifications | BJuris, LLB (Western Australia) |
| Experience | Mr Khan is a qualified lawyer having previously practised principally in the field of corporate law.Mr Khan is a previous Director of Strike Resources (September 1999 to February 2011, includingas the founding Executive Chairman and Managing Director after the Company's IPO in March2000) and has extensive experience in the securities industry, capital markets and the executivemanagement of ASX-listed companies. In particular, Mr Khan has guided the establishment andgrowth of a number of public listed companies in the investment, mining and financial servicessectors. He has considerable experience in the fields of capital raisings, mergers and acquisitionsand investments. |
| Special responsibilities | Member of the Audit CommitteeMember of the Remuneration and Nomination Committee |
| Relevant Interests inshares and options | 530,010 Shares (directly) |
| Other currentdirectorships in listedentities | Executive Chairman of:Orion Equities Limited (ASX:OEQ) (since October 2006)Bentley Capital Limited (ASX:BEL) (Director since December 2003) |
| Executive Chairman and Managing Director of:Queste Communications Ltd (ASX:QUE) (since March 1998) | |
| Former directorshipsin other listed entitiesin past 3 years | Nil |
| William Johnson | Managing Director |
|---|---|
| Appointed | 25 March 2013; Director since July 2006 |
| Qualifications | MA (Oxon), MBA |
| Experience | Mr. Johnson holds a Masters degree in engineering science from Oxford University, England andan MBA from Victoria University, New Zealand. His 30-year business career spans multipleindustries and countries, with executive/CEO experience in oil and gas exploration (North Africaand Australia), mineral exploration and investment (Australia, Peru, Chile, Saudi Arabia, Oman andIndonesia), telecommunications infrastructure investment (New Zealand, India, Thailand andMalaysia) and information technology and Internet ventures (New Zealand, Philippines andAustralia). Mr Johnson is a highly experienced public company director and has considerable depthof experience in business strategy, investment analysis, finance and execution. |
| Specialresponsibilities | None |
| Relevant Interests inshares and options | 3,000,000 Unlisted Managing Director's Options ($0.30, 17 June 2018)11249,273 Shares (directly) |
| Other currentdirectorships in listedentities | Executive Director of:Bentley Capital Limited (ASX:BEL) (since 1 January 2016; Director since March 2009)Director of:Keybridge Capital Limited (ASX:KBC) (since 29 July 2016)11 |
| Former directorshipsin other listed entitiesin past 3 years | Nil |
11 Refer KBC's ASX announcement dated 29 July 2016: Results of General Meeting and Board Changes.
| Malcolm Richmond | Non-Executive Director |
|---|---|
| Appointed | Director since 25 October 2006; previously Chairman (3 February 2011 to 18 December 2015) |
| Qualifications | BSc Hons (Metallurgy) and B. Comm. Merit (Econs) (New South Wales) |
| Experience | Mr Richmond has 30 years' experience with the Rio Tinto and CRA Groups in a number of positionsincluding: Vice President, Strategy and Acquisitions; Managing Director, Research and Technology;Managing Director, Development (Hamersley Iron Pty Limited) and Director of Hismelt CorporationPty Ltd.He was formerly Deputy Chairman of the Australian Mineral Industries ResearchAssociation and Vice President of the WA Chamber of Minerals and Energy. Mr Richmond hasalso served as a Member on the Boards of a number of public and governmental bodies and otherpublic listed companies. |
| He is a qualified metallurgist and economist with extensive senior executive and board experiencein the resource and technology industries both in Australia and internationally. His special interestsinclude corporate strategy and the development of markets for internationally traded minerals andmetals - particularly in Asia. | |
| Mr Richmond served as Visiting Professor at the Graduate School of Management and School ofEngineering, University of Western Australia until January 2012 and is a Fellow of the AustralianAcademy of Technological Sciences & Engineering, a Fellow of Australian Institute of Mining andMetallurgy and a Member of Strategic Planning Institute (US). | |
| Specialresponsibilities | Chairman of the Audit CommitteeMember of the Remuneration and Nomination Committee |
| Relevant Interests inshares and options | Nil |
| Other currentdirectorships in listedentities | Non-Executive Director of:Argonaut Resources NL (ASX:ARE) (since 14 March 2012) |
| Former directorshipsin other listed entitiesin past 3 years | Nil |
| Matthew Hammond | Non-Executive Director |
|---|---|
| Appointed | 25 September 2009 |
| Qualifications | BA (Hons) (Bristol) |
| Experience | Mr Hammond is Group Managing Director and CFO of Mail.ru, a leading European Internetcommunication and entertainment services group, which is listed on the London Stock Exchange.Prior to that he was Group Strategist for Metalloinvest Holdings, where he had broad-rangingresponsibilities for part of the non-core asset portfolio and advised the Metalloinvest Board onstrategic acquisitions and investments. He began his career at Credit Suisse and was Sector Headin Equity Research and in Private Bank Ultra High Net Worth Client Advisory advising on portfolioallocation, strategic M&A and individual investments. As a Technology Analyst at Credit Suisse, hewas ranked #1 in the Extell and Institutional Investor surveys 8 times. |
| Specialresponsibilities | Chairman of the Remuneration and Nomination CommitteesMember of the Audit Committee |
| Relevant Interests inshares and options | Nil |
| Other currentdirectorships in listedentities | Managing Director and Chief Financial Officer of:Mail.Ru Group Limited (LSE:MAIL)(since April 2011; Director since May 2010; CFO since June 2013) |
| Former directorshipsin other listed entitiesin past 3 years | Non-Executive Director of:Realm Therapeutics plc (formerly PuriCore plc) (LSE:RLM) (May 2010 to 17 November 2017) |
| Victor Ho | Executive Director and Company Secretary |
|---|---|
| Appointed | Director since 24 January 2014; Company Secretary since 30 September 2015 |
| Qualifications | BCom, LLB (Western Australia), CTA |
| Experience | Mr Ho is a previous Director and Company Secretary of Strike Resources (2000 to 2010) and hasbeen in Executive roles with a number of ASX listed companies across the investments, resourcesand technology sectors over the past 18+ years. Mr Ho is a Chartered Tax Adviser (CTA) andpreviously had 9 years' experience in the taxation profession with the Australian Tax Office andin a specialist tax law firm. Mr Ho has been actively involved in the structuring and execution ofa number of corporate, M&A and international joint venture (in South America, Indonesia and theMiddle East) transactions, capital raisings and capital management initiatives and has extensiveexperience in public company administration, corporations' law and stock exchange complianceand investor/shareholder relations. |
| Specialresponsibilities | Secretary of Audit Committee and Remuneration and Nomination Committee |
| Relevant Interests inshares and options | Nil |
| Other currentdirectorships in listedentities | Executive Director (also Company Secretary) of:Orion Equities Limited (ASX:OEQ) (Secretary since 2 August 2000 and Director since 4 July2003)Queste Communications Ltd (ASX:QUE) (Secretary since 30 August 2000 and Director since3 April 2013)Company Secretary of:Bentley Capital Limited (ASX:BEL) (since 5 February 2004) |
| Former positions inother listed entities inpast 3 years | Keybridge Capital Limited (ASX:KBC) (since 13 October 2016)Company Secretary of:Alara Resources Limited (ASX:AUQ) (4 April 2007 to 31 August 2015) |
AUDITOR'S INDEPENDENCE DECLARATION
A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2001 (Cth) forms part of this Directors Report and is set out on page 10. This relates to the Auditor's Independent Review Report, where the Auditors state that they have issued an independence declaration.
Signed for and on behalf of the Directors in accordance with a resolution of the Board,
13 March 2018
William Johnson Malcolm Richmond Managing Director Non-Executive Director and Chairman of Audit Committee
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the half year ended 31 December 2017
| Note | 31 Dec 17 | 31 Dec 16 | |
|---|---|---|---|
| REVENUE | 2 | $ | $ |
| Interest revenue | 50,606 | 94,228 | |
| Other | |||
| Other income | 197,720 | 3 | |
| TOTAL REVENUE AND INCOME | 248,326 | 94,231 | |
| EXPENSES | 3 | ||
| Exploration and evaluation expenses | (11,990) | (18,649) | |
| Personnel expenses | (305,439) | (315,916) | |
| Corporate expenses | (234,403) | (219,565) | |
| Occupancy expenses | (21,293) | (13,762) | |
| Finance expenses | (3,458) | (1,879) | |
| Foreign exchange loss | (9,780) | (15,199) | |
| Administration expenses | (39,457) | (33,045) | |
| LOSS BEFORE INCOME TAX | (377,494) | (523,784) | |
| Income tax expense | - | - | |
| LOSS FOR THE HALF YEAR | (377,494) | (523,784) | |
| OTHER COMPREHENSIVE INCOME | |||
| Other Comprehensive Income, Net of Tax | |||
| Exchange differences on translation of foreign operations | 114,381 | (37,463) | |
| TOTAL COMPREHENSIVE LOSS FOR THE HALF YEAR | (263,113) | (561,247) | |
| LOSS PER SHARE FOR LOSS ATTRIBUTABLE TO THEORDINARY EQUITY HOLDERS OF THE COMPANY: | |||
| Basic and diluted loss per share (cents) | 5 | (0.18) | (0.39) |
The accompanying notes form part of these consolidated financial statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2017
| Note | 31 Dec 17 | 30 Jun 17 | |
|---|---|---|---|
| $ | $ | ||
| CURRENT ASSETS | |||
| Cash and cash equivalents | 6 | 3,030,144 | 5,308,855 |
| Financial assets at fair value through profit or loss | 7 | 1,884,401 | - |
| Receivables | 64,992 | 76,584 | |
| Other current assets | 10,696 | 10,230 | |
| TOTAL CURRENT ASSETS | 4,990,233 | 5,395,669 | |
| NON-CURRENT ASSETS | |||
| Exploration and evaluation expenditure | 8 | 508,095 | 369,902 |
| Property, plant and equipment | 2,089 | 1,822 | |
| TOTAL NON-CURRENT ASSETS | 510,184 | 371,724 | |
| TOTAL ASSETS | 5,500,417 | 5,767,393 | |
| CURRENT LIABILITIES | |||
| Payables | 59,973 | 53,336 | |
| Provisions | 1,554 | 12,054 | |
| TOTAL CURRENT LIABILITIES | 61,527 | 65,390 | |
| TOTAL LIABILITIES | 61,527 | 65,390 | |
| NET ASSETS | 5,438,890 | 5,702,003 | |
| EQUITY | |||
| Issued capital | 148,439,925 | 148,439,925 | |
| Reserve | 15,298,824 | 15,184,443 | |
| Accumulated losses | (158,299,859) | (157,922,365) | |
| TOTAL EQUITY | 5,438,890 | 5,702,003 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the half year ended 31 December 2017
| Issued capital | Currencytranslationreserve | Share-basedpaymentsreserve | Accumulatedlosses | Total | |
|---|---|---|---|---|---|
| $ | $ | $ | $ | $ | |
| BALANCE AT 1 JUL 2016 | 148,439,925 | 2,074,804 | 13,233,026 | (156,774,436) | 6,973,319 |
| Loss for the half year | - | - | - | (523,784) | (523,784) |
| Other comprehensive income | - | (37,463) | - | - | (37,463) |
| Total comprehensive loss for thehalf year | - | (37,463) | - | (523,784) | (561,247) |
| BALANCE AT 31 DEC 2016 | 148,439,925 | 2,037,341 | 13,233,026 | (157,298,220) | 6,412,072 |
| BALANCE AT 1 JUL 2017 | 148,439,925 | 1,951,417 | 13,233,026 | (157,922,365) | 5,702,003 |
| Loss for the half year | - | - | - | (377,494) | (377,494) |
| Other comprehensive income | - | 114,381 | - | - | 114,381 |
| Total comprehensive loss for thehalf year | - | 114,381 | -- | -(377,494) | -(263,113) |
| BALANCE AT 31 DEC 2017 | 148,439,925 | 2,065,798 | -13,233,026 | (158,299,859) | 5,438,890 |
CONSOLIDATED STATEMENT OF CASH FLOWS
for the half year ended 31 December 2017
| 31 Dec 17 | 31 Dec 16 | |
|---|---|---|
| $ | $ | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Payments to suppliers and employees | (501,012) | (686,426) |
| Payments for exploration and evaluation expenses | (150,183) | (18,649) |
| NET CASH USED IN OPERATING ACTIVITIES | (651,195) | (705,075) |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Interest received | 60,807 | 70,206 |
| Dividends received | 2,912 | - |
| Payment for share investments | (2,097,590) | - |
| Proceeds from share investments | 407,994 | - |
| Payment for purchases of plant and equipment | (662) | - |
| NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES | (1,626,539) | 70,206 |
| NET DECREASE IN CASH HELD | (2,277,734) | (634,869) |
| Cash and cash equivalents at beginning of financial year | 5,308,855 | 6,970,738 |
| Effect of exchange rate changes on cash held | (977) | (1,407) |
| CASH AND CASH EQUIVALENTS AT END OF FINANCIAL HALF YEAR | 3,030,144 | 6,334,462 |
1. SIGNIFICANT ACCOUNTING POLICIES
Statement of Compliance
The half year financial statements are a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 'Interim Financial Reporting'. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. These half year financial statements do not include notes of the type normally included in the annual financial statements and should be read in conjunction with the most recent annual financial statements and the Company's ASX announcements released from 1 July 2017 to the date of this report.
Basis of Preparation
The financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.
The accounting policies and methods of computation adopted in the preparation of the half year financial statements are consistent with those adopted and disclosed in the Consolidated Entity's financial statements for the financial year ended 30 June 2017.
2. REVENUE
| 31 Dec 17 | 31 Dec 16 | |
|---|---|---|
| TheConsolidatedEntity'soperatinglossbeforeincometaxincludesthefollowing items of revenue: | $ | $ |
| Revenue | ||
| Interest revenue | 50,606 | 94,228 |
| 50,606 | 94,228 | |
| Other | ||
| Net gain on financial assets at fair value through profit or loss | 194,805 | - |
| Dividend revenue | 2,912 | - |
| Other income | 3 | 3 |
| 248,326 | 94,231 | |
3. EXPENSES
The Consolidated Entity's operating loss before income tax includes the following items of expenses:
| Exploration and evaluation expenses | ||
|---|---|---|
| Impairment loss | 1,482 | 2,185 |
| Other exploration and evaluation expenses | 10,508 | 16,464 |
| Personnel expenses | ||
| Salaries, fees and employee benefits | 305,439 | 315,916 |
| Corporate expenses | ||
| Professional fees | 178,187 | 175,459 |
| ASX fees | 22,687 | 21,199 |
| Accounting, taxation and related administration | 15,998 | 12,416 |
3. EXPENSES (continued) 31 Dec 17 31 Dec 16
| $ | $ | |
|---|---|---|
| Corporate expenses (continued) | ||
| Audit | 4,000 | 4,400 |
| Share registry | 3,233 | 3,930 |
| Other corporate expenses | 10,298 | 2,161 |
| Occupancy expenses | 21,293 | 13,762 |
| Finance expenses | 3,458 | 1,879 |
| Foreign exchange loss | 9,780 | 15,199 |
| Administration expenses | ||
| Insurance | 9,402 | 9,619 |
| Travel, accommodation and incidentals | (4,563) | 6,176 |
| Depreciation | 396 | 318 |
| Other administration expenses | 34,222 | 16,932 |
| 625,820 | 618,015 |
4. SEGMENT INFORMATION
The operating segments are reported in a manner consistent with the internal reporting provided to the Managing Director. The Managing Director is responsible for allocating resources and assessing performance of the operating segments and has considered the business and geographical perspectives of the operating results and determined that the Consolidated Entity operates only in Australia and Peru.
| Peru | Australia | Total | |
|---|---|---|---|
| 31 Dec 17 | $ | $ | $ |
| Revenue | - | 50,606 | 50,606 |
| Other | 3 | 197,717 | 197,720 |
| Total segment revenues | 3 | 248,323 | 248,326 |
| Exploration and evaluation expenses | 1,482 | 10,508 | 11,990 |
| Personnel expenses | - | 305,439 | 305,439 |
| Corporate expenses | 189,867 | 44,536 | 234,403 |
| Finance expenses | 2,570 | 888 | 3,458 |
| Depreciation expense | - | 396 | 396 |
| Other expenses | 25,892 | 44,242 | 70,134 |
| Total segment loss | (219,808) | (157,686) | (377,494) |
| Adjusted EBITDA | (219,808) | (157,289) | (377,097) |
| Total segment assets | 73,376 | 5,427,041 | 5,500,417 |
| Total segment liabilities | 59,964 | 1,563 | 61,527 |
4. SEGMENT INFORMATION (continued)
| Peru | Australia | Total | ||
|---|---|---|---|---|
| 31 Dec 2016 | $ | $ | $ | |
| Revenue | - | 94,228 | 94,228 | |
| Other | 3 | - | 3 | |
| Total segment revenues | 3 | 94,228 | 94,231 | |
| Exploration and evaluation expenses | 2,185 | 16,464 | 18,649 | |
| Personnel expenses | - | 315,916 | 315,916 | |
| Corporate expenses | 155,158 | 64,407 | 219,565 | |
| Finance expenses | 1,014 | 865 | 1,879 | |
| Foreign exchange loss | 13,791 | 1,408 | 15,199 | |
| Depreciation expense | - | 318 | 318 | |
| Other expenses | 7,499 | 38,990 | 46,489 | |
| Total segment loss | (179,644) | (344,140) | (523,784) | |
| Adjusted EBITDA | (179,644) | (343,822) | (523,466) | |
| 30 Jun 17 | ||||
| Total segment assets | 70,184 | 5,697,209 | 5,767,393 | |
| Total segment liabilities | 59,190 | 6,200 | 65,390 | |
| 5. | LOSS PER SHARE | 31 Dec 17 | 31 Dec 16 | |
| cents | cents | |||
| Basic and diluted loss per share | (0.18) | (0.39) | ||
| The following represents the loss and weighted average number of shares used | 31 Dec 17 | 31 Dec 16 | ||
| in the EPS calculations: | $ | $ | ||
| Net loss after income tax | (263,113) | (561,247) | ||
| Shares | Shares | |||
| Weighted average number of ordinary shares | 145,334,268 | 145,334,268 |
Under AASB113 (Earnings per share), potential ordinary shares such as options will only be treated as dilutive when their conversion to ordinary shares would increase the loss per share from continuing operations. Diluted loss per share has not been calculated as the Company's options do not increase the basic loss per share.
| 6. | CASH AND CASH EQUIVALENTS | 31 Dec 17 | 30 Jun 17 |
|---|---|---|---|
| $ | $ | ||
| Cash at bank | 404,241 | 883,855 | |
| Term deposits | 2,625,903 | 4,425,000 | |
| 3,030,144 | 5,308,855 |
| 7. | FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS | 31 Dec 17 | 30 Jun 17 |
|---|---|---|---|
| $ | $ | ||
| Listed securities at fair value | 1,884,401 | - | |
| 8. | EXPLORATION AND EVALUATION EXPENDITURE | 31 Dec 17 | 30 Jun 17 |
| $ | $ | ||
| Opening balance | 369,902 | - | |
| Exploration and evaluation costs | 139,675 | 575,797 | |
| Impairment loss | (1,482) | (205,895) | |
| Closing balance | 508,095 | 369,902 |
9. COMMITMENTS
(a) Lease Commitments
The Consolidated Entity has no lease commitments at balance date
(b) Mineral Tenement/Concession - Commitments for Expenditure
(i) Australian tenements
In order to maintain current rights of tenure to exploration tenements, the holders of Australian mineral tenements are required to outlay lease rentals and meet minimum expenditure commitments. The Consolidated Entity does not currently have any material commitments for expenditure relating to Australian tenements.
(ii) Peruvian concessions
The Consolidated Entity is required to pay annual licence fees by 30 June of each year, at rates which vary on an amount per-hectare basis. The total amount of this commitment will depend upon the number and area of concessions retained, relinquished or granted (if any) and cannot therefore be reliably estimated.
10. CONTINGENCIES
(a) Australian Native Title
The Consolidated Entity's tenements in Australia may be subject to native title applications in the future. At this stage, it is not possible to quantify the impact (if any) that native title may have on the operations of the Consolidated Entity.
(b) Government Royalties
The Consolidated Entity is liable to pay royalties on production obtained from its mineral tenements/concessions.
(c) Directors' Deeds
The Consolidated Entity has entered into deeds of indemnity with Strike Resources Limited Directors, indemnifying them against liability incurred in discharging their duties as Directors/officers of the Consolidated Entity. As at the reporting date, no claims have been made under any such indemnities and, accordingly, it is not possible to quantify the potential financial obligation of the Consolidated Entity under these indemnities.
10. CONTINGENCIES (continued)
(d) Deferred Payments from Settlement Agreement Relating to Apurimac Ferrum SAC
Pursuant to a settlement agreement dated 30 December 2012 whereby the Consolidated Entity acquired the (50%) balance of equity interest in Apurimac Ferrum SAC (AF) (the holder of the Apurimac and Cusco Projects) from D&C Pesca SAC, the Consolidated Entity has a series of deferred payment obligations as outlined below.
The Consolidated Entity has payment obligations if certain milestones are achieved as follows:
- (i) Resource Milestone Payment: US$2 million on the delineation of at least 500 Mt of JORC Mineral Resources at an average grade of at least 55% Fe with at least 275 Mt of contained iron having an average grade of at least 52.5% Fe, on the Apurimac Project mineral concessions.
- (ii) Approvals Milestone Payment: Up to US$3 million on AF receiving all formal government environmental and community approvals for the construction and operation of an iron ore mine and required infrastructure with a design capacity of at least 10Mtpa of iron ore product, relating to the Apurimac Project mineral concessions.
- (iii) Construction Milestone Payment: Up to US$5 million on formal approval of the AF Board to commence construction of an iron ore project or the commencement of bulk earthworks for an iron ore mine or processing plant, in either case with a design capacity of at least 10Mtpa of iron ore product, relating to the Apurimac Project mineral concessions.
The Consolidated Entity has royalty payment obligations as follows:
- (i) 1.5% of the net profits from sales of iron ore mined and iron ore products produced from the Apurimac and Cusco Project mineral concessions.
- (ii) 2% of the proceeds of sales of other metals (on a net smelter return basis) mined from the Apurimac and Cusco Project mineral concessions.
AF may extinguish the royalties (save for royalties on other metals up to a cap of US$0.5 million per annum) by making an Extinguishment Payment as follows - US$30 million, if paid 4 years from 20 December 2012 but before the Construction Milestone occurs or the 15th anniversary of the settlement agreement (whichever is sooner).
Due to the inherent uncertainty surrounding the achievement and timing of the above milestones/royalty triggers, the Consolidated Entity regards these future payment obligations as contingencies.
For further background details, refer also to Strike's ASX Announcement dated 31 December 2012: Strike Moves to 100% Ownership of AF
(e) Legal Disputes Over Peru Mineral Concessions
The Consolidated Entity has successfully defended against a number of legal actions and claims made by several Peruvian parties (that have had a contractual relationship with AF) relating to the Consolidated Entity's mineral concessions in Peru. Whilst there still remain some outstanding claims and appeals, the Consolidated Entity believes that they will all eventually be dismissed, consistent with previous decisions by the relevant Peruvian authorities.
For further background details, refer also to Strike's ASX Announcement dated 1 May 2014: Strike Wins Millenium Arbitration Case in Peru
10. CONTINGENCIES (continued)
(f) Peruvian Withholding Tax Matter
AF has an obligation (which the Consolidated Entity believes it has historically complied with) to withhold and remit Non-Resident Income Tax Withholding Tax (WHT) to SUNAT (the Peruvian Tax Administration) in respect of certain payments to overseas suppliers. SUNAT has previously advised that it may undertake a new audit of some historical WHT obligations and payments of AF. Given the lack of any such action by SUNAT since April 2015 and after receipt of advice from its Peruvian tax advisors, the Consolidated Entity has determined not to recognise any provision for any potential future findings by SUNAT. If SUNAT was to undertake a new audit as above and claim that additional WHT was payable by AF on its historical payments to overseas suppliers, the Consolidated Entity will appeal any final WHT determination by SUNAT to the Tax Administration Court (as applicable).
11. EVENTS OCCURRING AFTER THE REPORTING PERIOD
No matter or circumstance has arisen since the end of the financial half year that significantly affected, or may significantly affect, the operations of the Consolidated Entity, the results of those operations, or the state of affairs of the Consolidated Entity in future financial periods.
DIRECTORS' DECLARATION
In accordance with a resolution of the Directors of Strike Resources Limited made pursuant to sub-section 303(5) of the Corporations Act 2001 (Cth), we state that:
In the opinion of the Directors:
- (1) The financial statements and notes of the Consolidated Entity are in accordance with the Corporations Act 2001 (Cth), including:
- (a) giving a true and fair view of the Consolidated Entity's financial position as at 31 December 2017 and of its performance for the financial half year ended on that date; and
- (b) complying with Accounting Standards AASB 134 "Interim Financial Reporting", Corporations Regulations 2001 and other mandatory professional reporting requirements; and
- (2) There are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable.
On behalf of the Board,
13 March 2018
William Johnson Malcolm Richmond Managing Director Non-Executive Director and Chairman of Audit Committee
LIST OF MINERAL CONCESSIONS
The following mineral concessions were held as at the end of the financial half year (31 December 2017) and currently:
Apurimac Iron Ore Project (Peru) (Strike – 100%)
| ConcessionName | Area(Ha) | Province | Code | Title | File No |
|---|---|---|---|---|---|
| Opaban I | 999 | Andahuaylas | 5006349X01 | No 8625-94/RPM Dec 16, 1994 | 20001465 |
| Opaban III | 990 | Andahuaylas | 5006351X01 | No 8623-94/RPM Dec 16, 1994 | 20001464 |
| Ferrum 1 | 965 | Andahuaylas | 010298304 | No 00228-2005-INACC/J Jan 19, 2005 | 11053798 |
| Ferrum 4 | 1,000 | Andahuaylas/Aymaraes | 010298604 | No 00230-2005-INACC/J Jan 19, 2005 | 11053810 |
| Ferrum 8 | 900 | Andahuaylas | 010299004 | No 00232-2005-INACC/J Jan 19, 2005 | 11053827 |
| Cristoforo 22 | 379 | Andahuaylas | 010165602 | RP2849-2007-INGEMMET/PCD/PM Dec 13, 2007 | 11067786 |
| Ferrum 31 | 327 | Andahuaylas | 010552807 | RP 1266-2008-INGEMMET/PCD/PM May 12, 2008 | 11076509 |
| Ferrum 37 | 695 | Andahuaylas | 010621507 | RP 1164-2008-INGEMMET/PCD/PM May 12, 2008 | 11076534 |
| Wanka 01 | 100 | Andahuaylas | 010208110 | RP 3445-2010-INGEMMET/PCD/PM Oct 18,2010 | 11102187 |
| Sillaccassa 1 | 700 | Andahuaylas | 010212508 | RP 5088-2008-INGEMMET/PCD/PM Nov 19, 2008 | 11084877 |
| Sillaccassa 2 | 400 | Andahuaylas | 010212608 | RP 3183-2008-INGEMMET/PCD/PM Sept 8, 2008 | 11081449 |
Cusco Iron Ore Project (Peru) (Strike – 100%)
| ConcessionName | Area(Ha) | Province | Code | Title | File No. |
|---|---|---|---|---|---|
| Flor de María | 907 | Chumbivilcas | 05006521X01 | No 7078-95-RPM Dec 29, 1995 | 20001742 |
| Delia Esperanza | 1,000 | Chumbivilcas | 05006522X01 | No 0686-95-RPM Mar 31, 1995 | 20001743 |
| El Pacífico II | 1,000 | Chumbivilcas | 05006524X01 | No 7886-94/RPM Nov 25, 1994 | 20001746 |
Paulsens East Project (Western Australia) (Strike – 100%)
| Tenement No. | Status | Grant Date | Expiry Date | Area (blocks/Ha) | Area (km²) |
|---|---|---|---|---|---|
| Retention Licence RL 47/7 | Granted | 4/12/2014 | 4/12/2019 | ~381 Ha | ~3.81 |
Burke Graphite Project (Queensland) (Strike – 60%)
| Tenement No. | Status | Grant Date | Expiry Date | Area (blocks/Ha) | Area (km²) |
|---|---|---|---|---|---|
| Burke EPM 25443 | Granted | 4/9/2014 | 3/9/2019 | 5 sub-blocks | ~16 |
| Corella EPM 25696 | Granted | 2/4/2015 | 1/4/2020 | 11 sub-blocks | ~36 |
Lithium Project (Western Australia) (Strike – 100%)
| Tenement No. | Status | Grant Date | Expiry Date | Area (blocks/Ha) | Area (km²) |
|---|---|---|---|---|---|
| EL 45/4799 | Granted | 4/7/2017 | 4/7/2022 | 26 blocks (8,292ha) | ~83 |
| EL 45/4800 | Granted | 10/8/2017 | 10/8/2022 | 70 blocks (22,422ha) | ~224 |
JORC MINERAL RESOURCES
Apurimac Iron Ore Project (Peru) (Strike – 100%)
The Apurimac Project has a JORC Code (2012 Edition) compliant Mineral Resource of 269.4 Mt, consisting of:
- a 142.2 Mt Indicated Mineral Resource at 57.8% Fe; and
- a 127.2 Mt Inferred Mineral Resource at 56.7% Fe.
| Category | Concession | Density t/m3 | Mt | Fe% | SiO2% | Al2O3% | P% | S% |
|---|---|---|---|---|---|---|---|---|
| Indicated | Opaban 1 | 4 | 133.71 | 57.57 | 9.46 | 2.54 | 0.04 | 0.12 |
| Indicated | Opaban 3 | 4 | 8.53 | 62.08 | 4.58 | 1.37 | 0.07 | 0.25 |
| Inferred | Opaban 1 | 4 | 127.19 | 56.7 | 9.66 | 2.7 | 0.04 | 0.2 |
| Total Indicated and Inferred | 269.4 | 57.3 | 9.4 | 2.56 | 0.04 | 0.16 |
The information in this JORC Resource table was prepared and first disclosed under the 2004 JORC Code (in Strike's ASX announcement dated 11 February 2010: Peruvian Apurimac Iron Ore Project Resource Increased to 269 Million Tonnes) and has subsequently been upgraded to comply with the 2012 JORC Code and disclosed in Strike's ASX Announcement dated 19 January 2015: Apurimac Mineral Resources Updated to JORC 2012 Standard.
Cusco Iron Ore Project (Peru) (Strike – 100%)
The Cusco Project has a JORC Code (2004 Edition) compliant Mineral Resource of 104.4 Mt Inferred Mineral Resource at 32.62% Fe.
| Category | Concession | Density t/m3 | Mt | Fe% | SiO2% | Al2O3% | P% | S% |
|---|---|---|---|---|---|---|---|---|
| Inferred | Santo Tomas | 4 | 104.4 | 32.62 | 0.53 | 3.19 | 0.035 | 0.53 |
The information in this JORC Resource table was prepared and first disclosed under the 2004 JORC Code (in Strike's ASX announcement dated 17 June 2011: Cusco Project – Resource Estimate). It has not been updated since to comply with the 2012 JORC Code on the basis that the information has not materially changed since it was last reported.
Burke Graphite Project (Queensland, Australia) (Strike – 60%)
The Burke Graphite Project has a JORC Code (2012 Edition) compliant Mineral Resources Estimate (MRE).
| Category | Weathering State | Mt | TGC (%) | Contained Graphite (Mt) | Density (t/m) |
|---|---|---|---|---|---|
| Inferred | Oxide | 0.5 | 14.0 | 0.1 | 2.5 |
| Fresh | 5.8 | 16.2 | 0.9 | 2.4 | |
| Inferred | Total Oxide + Fresh | 6.3 | 16.0 | 1.0 | 2.4 |
Note: The Mineral Resource was estimated within constraining wireframe solids defined above a nominal 5% TGC cut-off. The Mineral Resource is reported from all blocks within these wireframe solids. Differences may occur due to rounding.
Refer also Grade Tonnage Data in Table 2 of CSA Global Pty Ltd's Burke Graphite Project MRE Technical Summary dated 9 November 2017 (attached as Annexure A of Strike's ASX Announcement dated 13 November 2017: Maiden Mineral Resource Estimate Confirms Burke Project as One of the World's Highest Grade Natural Graphite Deposits).
JORC CODE COMPETENT PERSONS' STATEMENT
JORC Code (2012) Competent Person Statement - Apurimac Project Mineral Resources
The information in this document that relates to Mineral Resources in relation to the Apurimac Iron Ore Project (Peru) is extracted from the following ASX market announcement made by the Strike Resources Limited on:
19 January 2015: Apurimac Mineral Resources Updated to JORC 2012 Standard
The information in the original announcement that relates to Mineral Resources and other Exploration Results (as applicable) in relation to the Apurimac Iron Ore Project (Peru) is based on, and fairly represents, information and supporting documentation prepared by Mr Ken Hellsten, B.Sc. (Geology), who is a Fellow of The Australasian Institute of Mining and Metallurgy (AusIMM). Mr Hellsten was a principal consultant to Strike Resources Limited and was also formerly the Managing Director of Strike Resources Limited (between 24 March 2010 and 19 January 2013). Mr Hellsten has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Mineral Resources and Ore Reserves" (JORC Code). The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.
JORC Code (2004) Competent Person Statement – Cusco Project Mineral Resources
The information in this document that relates to Mineral Resources and other Exploration Results (as applicable) in relation to the Cusco Iron Ore Project (Peru) is based on, and fairly represents, information and supporting documentation prepared by Mr Ken Hellsten, B.Sc. (Geology), who is a Fellow of The Australasian Institute of Mining and Metallurgy (AusIMM). Mr Hellsten was a principal consultant to Strike Resources Limited and was also formerly the Managing Director of Strike Resources Limited (between 24 March 2010 and 19 January 2013). Mr Hellsten has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the JORC Code. Mr Hellsten approves and consents to the inclusion in this document of the matters based on this information in the form and context in which it appears.
JORC Code (2012) Competent Person Statement – Burke Graphite Project Mineral Resources
The information in this document that relates to Mineral Resources in relation to the Burke Graphite Project is extracted from the following ASX market announcement made by the Strike Resources Limited on:
13 November 2017: Maiden Mineral Resource Estimate Confirms Burke Project as One of the World's Highest Grade Natural Graphite Deposits
The information in the original announcement (including the CSA Global MRE Technical Summary in Annexure A) that relates to in situ Mineral Resources for the Burke Graphite Project is based on information compiled by Mr Grant Louw under the direction and supervision of Dr Andrew Scogings, who are both full-time employees of CSA Global Pty Ltd. Dr Scogings takes overall responsibility for this information. Dr Scogings is a Member of the Australian Institute of Geoscientists (AIG) and the Australasian Institute of Mining and Metallurgy (AusIMM) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Mineral Resources and Ore Reserves" (JORC Code). The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.
JORC CODE COMPETENT PERSONS' STATEMENT
The information in this document that relates to metallurgical test work in relation to the Burke Graphite Project is extracted from the following ASX market announcements made by the Strike Resources Limited on:
- 16 October 2017: Test-work confirms the potential suitability of Burke graphite for Lithium-ion battery usage and Graphene production
- 13 November 2017: Maiden Mineral Resource Estimate Confirms Burke Project as One of the World's Highest Grade Natural Graphite Deposits
The information in the original announcements that relates to these metallurgical test work is based on, and fairly represents, information and supporting documentation prepared by Mr Peter Adamini, BSc (Mineral Science and Chemistry), who is a Member of The Australasian Institute of Mining and Metallurgy (AusIMM). Mr Adamini is a full-time employee of Independent Metallurgical Operations Pty Ltd, who has been engaged by Strike Resources Limited to provide metallurgical consulting services. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcements.
The information in this document that relates to Exploration Results in relation to the Burke Graphite Project is extracted from the following ASX market announcements made by the Strike Resources Limited on:
- 21 April 2017: Jumbo Flake Graphite Confirmed at Burke Graphite Project, Queensland
- 13 June 2017: Extended Intersections of High Grade Graphite Encountered at Burke Graphite Project
- 21 June 2017: Further High Grade Intersection Encountered at Burke Graphite Project
- 16 October 2017: Test-work confirms the potential suitability of Burke graphite for Lithium-ion battery usage and Graphene production
- 13 November 2017: Maiden Mineral Resource Estimate Confirms Burke Project as One of the World's Highest Grade Natural Graphite Deposits
The information in the original announcements that relates to these Exploration Results is based on, and fairly represents, information and supporting documentation prepared by Mr Peter Smith, BSc (Geophysics) (Sydney) AIG ASEG, who is a Member of The Australasian Institute of Geoscientists (AIG). Mr Smith is a consultant to Strike Resources Limited. Mr Smith has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Mineral Resources and Ore Reserves" (JORC Code). The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcements.
The Strike ASX market announcements referred to above may be viewed and downloaded from the Company's website: www.strikeresources.com.au or the ASX website: www.asx.com.au under ASX code "SRK".
FORWARD LOOKING STATEMENTS
This document contains "forward-looking statements" and "forward-looking information", including statements and forecasts which include without limitation, expectations regarding future performance, costs, production levels or rates, mineral reserves and resources, the financial position of Strike, industry growth and other trend projections. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "is expecting", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes", or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might", or "will" be taken, occur or be achieved. Such information is based on assumptions and judgements of management regarding future events and results. The purpose of forward-looking information is to provide the audience with information about management's expectations and plans. Readers are cautioned that forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Strike and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, changes in market conditions, future prices of minerals/commodities, the actual results of current production, development and/or exploration activities, changes in project parameters as plans continue to be refined, variations in grade or recovery rates, plant and/or equipment failure and the possibility of cost overruns.
SECURITIES INFORMATION as at 31 December 2017
Issued Capital
| Class of Security | Quoted on ASX | Unlisted | Total |
|---|---|---|---|
| Fully paid ordinary shares | 145,334,268 | - | 145,334,268 |
| $0.30 (17 June 2018) Unlisted Managing Director's Options12 | - | 3,000,000 | 3,000,000 |
| TOTAL | 145,334,268 | 3,000,000 | 148,334,268 |
Distribution of Fully Paid Ordinary Shares
| Spread | of | Holdings | Number ofHolders | Number ofShares | % of TotalIssued Capital |
|---|---|---|---|---|---|
| 1 | - | 1,000 | 356 | 147,274 | 0.101 % |
| 1,001 | - | 5,000 | 623 | 1,854,846 | 1.276 % |
| 5,001 | - | 10,000 | 264 | 2,136,300 | 1.470 % |
| 10,001 | - | 100,000 | 363 | 12,187,735 | 8.386 % |
| 100,001 | - | and over | 78 | 129,008,113 | 88.766 % |
| TOTAL | 1,684 | 145,334,268 | 100 % |
Unmarketable Parcels
| Spread | of | Holdings | Number ofHolders | Number ofShares | % of TotalIssued Capital |
|---|---|---|---|---|---|
| 1 | - | 8,333 | 1,120 | 2,943,179 | 2.025 % |
| 8,334 | - | over | 564 | 142,391,089 | 97.975 % |
| TOTAL | 1,684 | 145,334,268 | 100 % |
An unmarketable parcel is considered, for the purposes of the above table, to be a shareholding of 8,333 shares or less (being a value of $500 or less in total), based upon the Company's closing share price of $0.060 on 31 December 2017.
12 Refer Strike's ASX announcement dated 18 June 2013: Appendix 3B – Grant of Options and Cancellation of Options and Strike's Notice of General Meeting lodged on ASX on 17 May 2013 and Strike's Lapse of Unlisted Options lodged on 25 November 2016
SECURITIES INFORMATION as at 31 December 2017
Top Twenty, Ordinary Fully Paid Shareholders
| Rank | Holder name | Shares Held | % Issued Capital |
|---|---|---|---|
| 1 | BENTLEY CAPITAL LIMITED | 52,553,493 | 36.160% |
| 2 | HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED | 26,525,681 | 18.251% |
| 3 | DATABASE SYSTEMS LTD | 12,537,090 | 8.626% |
| 4 | ORION EQUITIES LIMITED | 10,000,000 | 6.881% |
| 5 | ACN 139 886 025 PTY LTD | 2,110,261 | 1.452% |
| 6 | JP MORGAN NOMINEES AUSTRALIA LIMITED | 2,081,619 | 1.432% |
| 7 | MR IANAKI SEMERDZIEV | 1,379,000 | 0.949% |
| 8 | MR JON FAZZALORI | 1,102,379 | 0.759% |
| 9 | D&C PESCA S.A.C. | 1,081,027 | 0.744% |
| 10 | MRS LILIANA TEOFILOVA | 947,000 | 0.652% |
| 11 | MR CHI MAU PHUONG | 923,437 | 0.635% |
| 12 | MR VU QUANG MINH DANG & MRS THI KIM DAU NGUYEN | 772,319 | 0.531% |
| 13 | CONCORDE SECURITIES PTY LTD | 700,000 | 0.482% |
| 14 | EMPIRE HOLDINGS WA PTY LTD | 700,000 | 0.482% |
| 15 | CLASSIC CAPITAL PTY LTD | 600,000 | 0.413% |
| 16 | MR TIN SONG LE | 600,000 | 0.413% |
| 17 | MR FAROOQ KHAN | 530,010 | 0.365% |
| 18 | PRINT LOGIC WA PTY LTD | 500,000 | 0.344% |
| 19 | MR TRAVIS CHRISTIAN HANSEN & MISS CARYSS FRANCES BIDESI | 500,000 | 0.344% |
| 20 | RENMUIR HOLDINGS LIMITED | 487,428 | 0.335% |
| TOTAL | 116,630,744 | 80.250% |
Substantial Shareholders
| Registered Shareholder | Shares Held | % Voting Power |
|---|---|---|
| Bentley Capital Limited | 52,553,493 | 36.16% |
| HSBC Custody Nominees(Australia) Limited | 25,825,000 | 17.77% |
| Database Systems Ltd | 12,537,090 | 8.63% |
| Orion Equities Limited | 10,000,000 | 6.88% |
| Orion Equities Limited | 10,000,000 | 6.88% |
13 Refer Bentley's ASX announcement dated 4 September 2015 Notice of Change in Interests of Substantial Holder
14 Refer Notice of Initial Substantial Holder dated 21 December 2012
15 Based on Notice of Change in Interests of Substantial Holder dated 4 June 2013
16 Refer Orion's ASX announcement dated 4 September 2015: Notice of Change in Interests of Substantial Holder
17 Refer Queste's ASX announcement dated 4 September 2015: Notice of Change in Interests of Substantial Holder; Orion is the registered holder of Strike shares and Queste is taken under section 608(3)(b) of the Corporations Act to have a relevant interest in securities in which Orion has a relevant interest by reason of having control of Orion