June Quarter Activity and Cashflow Reports
31 JULY 2007
MONTO MINERALS LIMITED (the "Company")
FOURTH QUARTER ACTIVITIES AND CASHFLOW REPORT 2006/2007 FOR THREE MONTHS TO 30 JUNE 2007
COUNTDOWN TO PRODUCTION..
* Dry commissioning under way * Commercial production and sales expected during the current September quarter
The Goondicum multi-product industrial minerals project in Queensland entered the production phase in June 2007 with the commencement of dry commissioning of the processing plant.
Wet commissioning of the plant is expected to commence later this week, subject to the integrity of the water pipeline which recommenced pumping this week after the discovery of initial leakages earlier this month.
Assuming no further delays to the completion of commissioning, the project is scheduled to commence commercial production at the end of August with first sales deliveries expected during September.
The project remains within budget.
Construction and commissioning
Construction at Goondicum progressed significantly during the quarter with the completion of the tailings dam walls and the processing plant. Outstanding pipework and electrical installations at the plant are expected to be completed in August. Electrical and other dry commissioning at the plant is also at an advanced stage.
Pumping of water from the borefield at Mulgildie was suspended in early July due to the discovery of 15 small leaks in the pipeline. The Queensland Government owned corporation SunWater is responsible for the development of the water pipeline and the supply of water. These initial leaks have been repaired and pumping has resumed. The operation of the pipeline is being closely monitored to confirm its integrity. Further leaks have been identified however the Company is advised that they are not expected to delay water delivery for wet commissioning of the Goondicum plant. Assuming no further interruption to water deliveries, wet commissioning of the processing plant is scheduled to commence in early August. Commercial production is expected to commence in late August, subject to any further repairs, successful pressure testing and commissioning of the water pipeline.
Mining continued during the quarter, providing stockpiled ore for commissioning of the process plant. The sand-clay ore is easily accessible and being mined by excavator and truck without the need for drilling and blasting.
Construction progressed on schedule at Dakiel, 25 km by road from Goondicum, where a washing plant to upgrade the feldspar is being built. The plant, together with storage facilities for feldspar and ilmenite, is due for completion in October.
Upgrading of the road from Goondicum to Dakiel continued during the quarter with further bitumen sealing scheduled.
The interim diesel generators were installed and are operational at Goondicum. Construction commenced on the power line which will bring mains power to the project.
All 30 employees required at Goondicum have been engaged.
The application made in April for an additional Mining Lease covering 2900 hectares within the company's Goondicum exploration permit area (EPM 9100) is proceeding through the various approval processes. Together with the Company's existing Mining Lease (ML 80044), the mining lease area sought covers all known industrial mineral resources within the Goondicum crater.
The Company has finalised a road transport contract for conveying mineral products to the port of Gladstone for an initial period of up to 12 months whilst continuing to evaluate a longer term rail transportation option, the terms of which will be subject to expected volume levels and applicable rail freight rates.
Completion of commercial arrangements for stockpiling and shipping through Auckland Point at the port of Gladstone is pending finalisation of environmental and community impact plans by the port authority. This is not expected to affect the Company's shipping program.
Marketing continues to take high priority in the early production phase of the project which has the unique benefit of having five industrial mineral products to sell - ilmenite, apatite, glass feldspar, ground feldspar and titanomagnetite.
First deliveries of Goondicum products are scheduled to commence during the September quarter. As previously reported, the Company has secured contracts and letters of intent for more than 40% of its first year's production and is negotiating with additional customers.
Ilmenite (paint, paper and plastic pigment) - Global demand for ilmenite is presently strong and Monto expects to contract all of its planned production to large pigment manufacturers following initial customer trial shipments. The Company's sulphateable ilmenite is very low in contaminants and suited to Asian and European markets.
Feldspar (glass and paint/powder coating) - Marketing of feldspar for use in glass manufacture and in finely ground form for paint and powder coating continued during the quarter. The Goondicum feldspar will be upgraded at the Dakiel washing plant which will initially operate on a restricted basis to process sufficient product to meet current domestic sales commitments. Subsequently, production from the mine and through the plant will be demand driven in line with the development of export markets for both ground and glass feldspar.
The Company expects to finalise contractual arrangements in the September quarter with a global glass manufacturer with whom it currently has a conditional agreement to supply 5000 tonnes a year for three years in Australia. Additional sales of Monto's feldspar as a high quality source of alumina for glass making continue to be pursued.
Ground feldspar continues to be the subject of negotiations by Monto with several companies in Europe and the United States. A US company is currently conducting an evaluation of the product
Titanomagnetite (coal washing) - A 10-day trial of the Company's titanomagnetite under supervised operating conditions is now under way at a central Queensland coal washing plant. The product appears to be performing efficiently. Installation of grinding equipment at the Goondicum plant for the preparation of the titanomagnetite product has been deferred pending the successful completion of the commercial test and further development of the marketing strategy.
Apatite (organic fertiliser) - A fertiliser company has contracted to purchase the whole of the Goondicum project's production of apatite for organic fertiliser. The company, Ausmin Australia, announced this month its plans to construct a phosphate fertiliser processing facility at Dakiel to service the region's farmers and graziers, commencing in October.
On 28 May 2007, shareholders approved a $35 million fundraising that will take the project through to full production. The use of the proceeds include $15.7 million in guarantees required by the infrastructure providers to the project and $6.5 million for the capital cost of the power line (the Company will achieve long term benefits in lower power costs by building the power line itself). The fundraising comprised a $23 million ordinary share placement to Australian and UK investors and a $12 million convertible note.
A further $6 million loan facility will provide for planned expansion to 2009.
During the quarter the Company announced the appointment of Chris Barrington as a non-executive Director. Chris was until recently the Managing Director and majority owner of Raw Material Solutions Ltd., a UK-based distributor and merchant of industrial raw materials, representing a number of international mining companies, including a major Australian producer of mineral sands.
Chris' knowledge of the natural resources and raw materials markets and extensive experience of business development strategies, marketing plans and contract negotiation, will be of great benefit to Monto as it establishes itself as a producer and supplier of industrial minerals.
The Goondicum project is on track to begin commercial production during the current September quarter. Mining is continuing and the process plant will undergo commissioning during the quarter. First sales revenue is expected to be received during the September quarter as sales and initial deliveries to customers commence.
The power line is scheduled to be completed and transmitting first grid electricity in October 2007.
Construction work will continue on the washing plant to upgrade the feldspar at Dakiel and is also expected to be completed in October 2007.
+-----------------------------------------------+ | Geoffrey Moore | | |--------------------------+--------------------| | Monto Minerals Ltd | +61 (0)7 3034 3100 | |--------------------------+--------------------| | | | |--------------------------+--------------------| | Richard Brown | | |--------------------------+--------------------| | Ambrian Partners Limited | 020 7776 6400 | +-----------------------------------------------+
For further information on Monto Minerals and recent photographs of work at the mine site please visit the Company's website at http://www.montominerals.com
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