INDOCHINE MINING LIMITED Company Announcements Office 3 November 2015
Administrators of the Deed of Company Arrangement
Martin Jones Darren WeaverChairman
Craig DawsonNon-Executive Director
Keith MurrayNon-Executive Director
Management
George Niumataiwalu PNG Country Manager Anthony W BurgessTechnical Geological Consultant
Ashok JairathChief Financial Officer & Coy Sec
Major Shareholders
Rodan Group 10.2%
Ruffer LLP 5.9%
Capital Group 5.4% Genesis Asset Mgmt. 4.8%
Corporate
Market Cap (16/3/15) ~$8.2M Shares Issued 1,363M
Corporate Address
C/- Ferrier Hodgson
Level 28, 108 St Georges Tce Perth WA 6000 Australia
info@indochinemining.comwww.indochinemining.com
Indochine Mining (Subject to Deed of Company Arrangement) (ASX and POMSoX: IDC, the Company) is pleased to provide the following update:
On 17 August 2015 the Company completed the court-ordered mediation process at Mt Kare with all Mt Kare landowners identified in the Landowner Investigation Report (LIR) signing a Landowners Agreement in the presence of the mediators, including Justice Kandakasi of the PNG National Court of Justice. This is the first Agreement signed by all Mt Kare landowners since the original gold rush began at Mt Kare in 1986.
A Notice of Appeal filed by Mr Stephen Promnitz against a judgement made by Justice Foster of the Federal Court of Australia on 17 August 2015 has been dismissed and the appeal process is now at an end.
The proponent of the Deed of Company Arrangement (DOCA), Kandahar Holdings Pty Ltd, extended the date for the satisfaction of the conditions precedent in the DOCA from 30 September 2015 to 30 November 2015 to allow Kandahar further time to complete the DOCA.
The Secured Creditor confirmed its continuing support for the Company by agreeing to renegotiate and extend the loan facility to provide ongoing funding to maintain exploration licence EL1093 (EL1093) (subject to Application for Renewal) and the infrastructure at Mt Kare in good standing.
Landowner groups continued to evidence their strong support for Summit Development Limited (Summit), the Company's 100% owned subsidiary in PNG which has applied for the extension of EL1093.
Crowe Horwath was engaged to complete the audit of financial statements.
Legal advisers have been appointed by Indochine to prepare the Notice of Meeting for the upcoming Shareholders Meeting to consider and approve the restructure of the Company's capital structure.
Indochine has commenced discussions with relevant parties such that once the Company has complied with its statutory obligations and satisfied (or waived) the Conditions Precedent under the DOCA that it can proceed to fully effectuate the DOCA, prior to seeking to recapitalise and relist Indochine on the Australian Securities Exchange (ASX).
Background: Mt Kare Gold Silver Project in PNGDiscovered by CRA in 1986, Mt Kare is a high grade epithermal gold / silver advanced exploration prospect. Epithermal refers to veins of gold and silver originally formed deep within the Earth's crust and transported by ascending hot solutions.
Mt Kare is located 15km southwest of the Porgera Gold Mine in the Enga Province of PNG. The Project comprises one exploration licence EL1093 which covers an area of 220km2 within the central New Guinea Mobile Belt, host to some of the world's largest gold / copper deposits.
Figure 1: Location Map
The overall JORC (2004) mineral resource, including high grade zones, is 42.5M tonnes @ 1.5 g/t Au and 13.5 g/t Ag for 2.11Moz Au and 18.4Moz Ag. Significant high grades have been intersected in drilling at Mt Kare, including:
49m @ 22.3g/t Au from 63 metres
21m @ 13.6 g/t Au from 61 metres
14m @ 20.4 g/t Au from 0 metres
38m @ 20.8 g/t Au from 78 metres
18m @ 100.3 g/t Au from 59 metres
The geology at Mt Kare mirrors that of the nearby 28Moz Porgera Gold Mine. The Company considers the comparison with Porgera at Figure 2 relevant because (1) Mt Kare is an epithermal deposit that is located on the same Transfer Structure as the Porgera mineralisation; and (2) Mt Kare has only been drilled to 350 metres; however, it sits 500 metres higher than Porgera with most of the overlying geological structure still intact unlike Porgera; inferring a possible deep-seated system..
The work program proposed by the Company in its Application for the Renewal of EL1093 comprises the preparatory work for completion of a Definitive Feasibility Study and includes deep drilling from surface to identify the main intrusive body with its associated Zone 7 type orebody/ies. Once that intrusive body is located and identified then construction of an exploration adit is to commence to enable an extensive diamond drilling program to define the resource.
The exploration program will target deeper structures highlighted in the following comparison:
Figure 2: Geology Comparison - Mt Kare v Porgera
Voluntary Administration/ Deed of Company ArrangementThe directors of Indochine resolved to appoint Voluntary Administrators to Indochine on 27 March 2015 with the intention that DOCA to be put to Indochine's creditors to restructure the Company's debts. The DOCA was approved by creditors on 13 May 2015 and the Voluntary Administrators became the Deed Administrators on 4 June 2015.
Since 27 March 2015 all the funding required by the Administrators to maintain EL1093 and the infrastructure at Mt Kare in good standing has been provided by the Secured Creditor.
Summit Development Limited (Summit), the Company's 100% owned subsidiary in PNG which holds EL1093 is not subject to Administration.
Creditors of Summit are therefore not subject to the debt restructure and, as advised to creditors on 1 September 2015, it remains Indochine's intention to adequately fund Summit such that all of its creditors receive repayment in full for their outstanding debts, subject to confirmation that EL1093 has been renewed which will provide certainty for funding of the Project to be completed.
Secured Loan FacilityThe Deed Administrator, Summit and the Secured Creditor signed a Deed of Variation to the original Loan Agreement .
The purpose of the variation is to increase the facility limit to provide funding to maintain EL1093 and the infrastructure at Mt Kare in good standing pending completion of overall funding arrangement now underway.
The variation evidences the Secured Creditors continuing support for Indochine.
Figure 3: Camp Infrastructure at Mt Kare maintained in good standing
Funding provided by the Secured Creditor to date has enabled the Company to:
Maintain EL1093 and infrastructure at Mt Kare in good standing
Defend and resolve the various legal issues confronting the Company in PNG and Australia
Complete Warden's Hearing at Mt Kare
Complete the Mediation Hearing at Mt Kare from 18 to 20 July 2015 and reconvened at Mt Kare on 17 August 2015
Payment of the Company's insurances and statutory obligations, including ASX Listing Fees
Appointment of Crowe Horwath to audit the financial statements
Engaging with lawyers to effectuate the DOCA
Pursuant to the announcement dated 19 August 2015, the Company advises that Mr Stephen Promnitz filed a Notice of Appeal on 4 September 2015 against the judgement made by Justice Foster of the Federal Court of Australia on 17 August 2015. The appeal, which was scheduled to be heard on 19 October 2015, has been dismissed and the appeal process is now at an end
Completion of a Landowner Investigation Study (LIS) was a condition of the 2012 - 2014 Licence renewal approved by the Minister for Mining. The LIS is a full scale social mapping study, the primary objective of which is to properly identify legitimate landowning clans as required by social mapping and customary criteria to ensure the benefits derived from the future development of Mt Kare are distributed fairly amongst the identified landowner clans.
The LIS is a precursor to the Landowner Investigation Report (LIR). The LIR was prepared by consultants engaged by Summit to fulfil Summit's statutory obligations, primarily under the PNG Land Act (1996) and Sections of the Mining Act (1992) regarding compensation for occupation and disruption of the land.
The LIR dated October 2014 was submitted to the Lands Department for registration; however, registration could not proceed due to various injunctions received by the Company.
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