BAUBA RESOURCES LIMITED Further to the acquisition of chrome assets and renewal of cautionary announcement dated 19 March 2014 and the circular to Bauba shareholders dated 22 August 2014, and using the terms defined therein unless otherwise stated, the Board is pleased to announce that the DMR has issued Bauba's major subsidiary, Bauba A Hlabirwa, with a mining permit and accordingly, the last condition precedent to the Acquisition has been fulfilled.
Mining Permit
The mining permit allows for approximately 240 000 metric tonnes of run of mine chrome ore to be mined at a planned 20 000 metric tonnes per month at full production.
Furthermore, the receipt of the mining permit affords Bauba A Hlabirwa the opportunity to apply for a mining license, which application will be submitted to the DMR by no later than the first week of December 2014. The DMR has indicated that the mining license will be issued before the completion of the current mining schedule, which will enable Bauba A Hlabirwa to continue producing chrome ore for sales purposes. This ought to ensure continued open-cast mining operations and commensurate positive cash flows for both Bauba A Hlabirwa and the Company over the next five years. Management is currently evaluating the underground resources in terms of its future development, which would have a substantial influence on the life of mine.
A report by an independent geological consultant with extensive experience in the immediate area of the farm Moeijelijk 412 KS indicates that the total ore body of the chrome resource amounts to 9.3 million metric tonnes, of which approximately 1.3 million metric tonnes have been identified as suitable for open-cast mining operations up to a high wall of 50 metres.
As announced on SENS on 27 March 2014, Bauba A Hlabirwa also entered into a chrome ore supply agreement with ASA and a lease and option agreement with Jibeng Investment Proprietary Limited, the land owners of the farm Moeijelik 412 KS, on which the chrome deposit occurs. This agreement also provides an option to acquire the portion of the farm on which the mining operations will be established.
The agreement with ASA has, for the time being, been capped by Bauba A Hlabirwa at a run of mine off-take total of 480 000 metric tonnes. However, ASA has expressed an interest to materially increase the aforesaid quantity at some future date, should Bauba A Hlabirwa be agreeable thereto.
Following the receipt of the mining permit, Zizwe Opencast Mining Proprietary Limited ("Zizwe") will be commissioned to commence site establishment and the extraction of the chrome ore. The first run of mine chrome ore is expected to be collected by ASA towards the third week of January 2015.
The Company is also currently investigating various underground mining options, with a focus on identifying a suitable turnkey underground mining contractor with whom it can engage on the same principle basis as has been established with Zizwe. This will allow for minimum capital outlay and early additional net positive cash flow from the underground operations.
Drilling on the northern cluster of the platinum project will commence in early 2015.
The main focus of Bauba, which was established in July 2010, is the development of its platinum projects on the eastern limb of the Bushveld Igneous Complex. To date, these projects were entirely reliant on shareholder funding. The Acquisition and the signing of the off-take agreement with ASA however, secures a steady cash flow stream which is intended to satisfy the short- to medium-term financial requirements of the Company so as to advance its projects for the foreseeable future and potentially generate sufficient cash to allow for the commencement of interim dividend distributions in the near future.
Chief Executive Officer of Bauba, Syd Caddy, commented: "I am very pleased to announce the fulfilment of the conditions precedent to the Acquisition and the subsequent issue of the mining permit as this repositions the Company from pure exploration to a cash generating chrome producer and exploration company. This positively distinguishes Bauba from many of its peers in that its current exploration program will become substantially self-funded, thereby avoiding early dilution of shareholder value."
This announcement includes certain forward-looking statements and forward-looking information. All statements other than statements of historical fact included in this announcement including, without limitation, statements regarding future plans and objectives of Bauba, are forward-looking statements (or forward-looking information) that involve various risks, assumptions and uncertainties. There can be no assurance that such statements will prove to be accurate and actual values, results and future events could differ materially from those anticipated in such statements.
Any forward-looking information in this announcement speaks only at the time of issue and there can be no assurance that such statements will prove to be accurate as actual values, results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Bauba does not undertake to update any forward-looking statements that are included herein, or revise any changes in events, conditions or circumstances on which any such statement is based, except in accordance with applicable securities laws and JSE Listings Requirements.
Johannesburg
11 November 2014
Merchantec Capital
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