Resources & Energy Group Limited Head Office: Level 33, 52 Martin Place, Sydney, NSW, 2000 ACN 162 869 276 ABN 68 162 869 276 Postal: Level 33, 52 Martin Place, Sydney, NSW, 2000 T: +61 2 9227 8900 | F: +61 2 9227 8901 Twitter: @REZ_GOLD | LinkedIn: REZGROUP | W: www.rezgroup.com.au E: [email protected]ASX Release 28 January 2020 December 2019 Quarterly Activities Report East Menzies - Aggressive Exploration Program Commences Highlights • East Menzies Gold Project (EMGP) in WA: o 26 RC holes for 3,788 metres completed across three zones o 106 bottom of hole geochemical samples submitted for analysis o 15,000m + Regional RAB programme planned Jan 2020; This will test several high-priority targets across three areas. o Studying third-party offers to campaign-mine existing deposits; This could generate cashflow for the Company to invest in wider exploration at EMGP • Mount Mackenzie Gold Project o Scoping study release highlighting robust economics with scope for resource growth. o Mineral Development Licence (MDL) formally granted over the entire resource area. o Reserve conversion drill planning underway as part of internal feasibility study. Resources & Energy Group Limited (ASX: REZ or the Company) is pleased to provide its December 2019 Quarter Activities and Cash Flow Reports.
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Resources & Energy Group Limited Head Office: Level 33, 52 Martin Place, Sydney, NSW, 2000 ACN 162 869 276 ABN 68 162 869 276 Postal: Level 33, 52 Martin Place, Sydney, NSW, 2000 T: +61 2 9227 8900 | F: +61 2 9227 8901 Twitter: @REZ_GOLD | LinkedIn: REZGROUP | W: www.rezgroup.com.au E: [email protected]
ASX Release 28 January 2020
December 2019 Quarterly Activities Report
East Menzies - Aggressive Exploration Program Commences
Highlights
• East Menzies Gold Project (EMGP) in WA: o 26 RC holes for 3,788 metres completed across three zones o 106 bottom of hole geochemical samples submitted for analysis o 15,000m + Regional RAB programme planned Jan 2020; This will test several
high-priority targets across three areas. o Studying third-party offers to campaign-mine existing deposits; This could
generate cashflow for the Company to invest in wider exploration at EMGP • Mount Mackenzie Gold Project
o Scoping study release highlighting robust economics with scope for resource growth.
o Mineral Development Licence (MDL) formally granted over the entire resource area.
o Reserve conversion drill planning underway as part of internal feasibility study.
Resources & Energy Group Limited (ASX: REZ or the Company) is pleased to provide its December 2019 Quarter Activities and Cash Flow Reports.
East Menzies Gold Project (EMGP) – Western Australia
Figure 1 - Menzies Gold Project
Re-evaluation of the Company’s detailed data set coupled with field validation has identified numerous targets for potential gold deposits. Much of the historical drilling is shallow and/or clustered near outcrop while significant areas of highly prospective tenure remain un-tested. In particular, areas under transported cover where soil sampling and shallow auger drilling is ineffective.
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Walk up drill targets at the Southern (Spion Kopp and Lady Kathleen Prospects), Central (Springfield-Venn Corridor) and Eastern (Kore Prospect) Zone were selected for immediate drill testing, completing 26 RC holes for 3,788 metres(32).
Figure 2 - Menzies Gold Project Map
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Gold assay results of note include:
19SVRC005 7m @ 1.33gpt from 39m and 4m @ 1.07gpt from 53m (Oliver Twist)
19SKRC007 2m @ 2.59gpt from 49m (Spion Kopp)
The first three RC drill holes, which are part of a larger RC and RAB programme, at Kore Prospect intercepted 2 to 7 metre zones of massive sulphides (pyrrhotite and minor pyrite) approximately where the VTEM plates were modelled.
Assays indicated the massive sulphides were not the primary source of gold in the area, multi-element assaying will ascertain whether base metals are present. Systematic RAB will be conducted early in the new year to gain further geological and geochemical information aimed at identifying the source of the significant levels of gold in the area.
The remainder of assays indicated no significant intercepts, however multi-element work is ongoing for zones of interest – including Lady Kathleen, which intercepted the prospective VHMS horizon.
Regional ‘Bottom of hole’ Geochemical Sampling Programme
To date 106 samples have been collected from historical RAB holes across the project, where the fresh rock interface has been identified in relic sample piles (Figure 2).
Samples have been submitted for full-digest 48 element and low-level gold analysis, with partial results received to date.
Analysis of data has commenced and used in conjunction with geophysical data sets for drill planning scheduled in the March Quarter.
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Figure 3: EMPG Phase 1 Drilling and Geochem Sample Location
Mount Mackenzie Gold Project (MMGP) – Bowen Basin, Queensland
The Company released the updated scoping study for the MMGP in the Bowen Basin, Queensland on 5th of December 2019(28), confirming a potential low-cost gold project, generating a possible $30.5M EBITDA for a $13M capital spend.
The scoping study investigated a range of production and processing options and identifies a 300,000tpa open cut development with an onsite gold plant as the most appropriate case for the progression of the project to Feasibility Study. The processing plant is proposed to be a low-cost modular crushing, grinding and CIL circuit.
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An evaluation of the 300,000tpa option using a gold price of $2000 indicates the project would be a technically low risk operation supported by strong economic performance. The scoping study has also identified opportunity for a staged increase in plant capacity to 500,000tpa, and introducing a flotation circuit for recovery of a gold concentrate from the treatment of primary ore. This option requires further investigation but has potential to recover a larger part of the primary resource than currently envisaged.
The Mineral Resources in the proposed Life-of-Mine (LOM) schedule are estimated to be approximately 1Mt at 1.86 g/t gold (Equivalent) with gold production of 45,500 oz over 43 months. In parallel with feasibility studies, further exploration work directed at upgrading and expanding the current JORC Resource of 2.37Mt at 1.31gpt gold and 8.2gpt silver will be implemented.
The Company also advised that a Mineral Development Licence (MDL) has been formally granted over the entire Mount Mackenzie Mineral Resource area, which encompasses the current project area and all land required for its development.
Further details of the study can be found in the ASX release dated 5th of December 2019.
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Figure 4: MMGP Preliminary Pit Layout
Radio Gold Mine – Western Australia
Radio Gold is located 400km east of Perth and 40km north of Southern Cross, within the Southern Cross Greenstone Belt in the Yilgarn Craton. The Southern Cross province is estimated to have produced +15m oz of gold. Underground samples of up to 0.5m @ 522gpt(4). Radio Gold is 7km north of the +1Moz Au Copperhead Mine.
Radio Gold has a 28,000oz JORC 2012 Resource and has historically produced 72,000oz averaging 38.5gpt.
As previously announced the farm-in of the Radio Gold Project (1) by Bullfinch One Pty Limited (Bullfinch) and the subsequent potential vend of this deal to Valor Resources ASX:VAL (2) was completed during the previous quarter. Settlement of the remaining $300,000 of the total of $500,000 for the sale of an initial 6.25% interest in the Radio Gold tenements was received in
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the December quarter. Expenditure for further developing Radio Gold will now be borne by Bullfinch in accordance with the terms of the farm-in agreement.
REZ management continues to be in discussions with Bullfinch management on how to best progress development at Radio Gold for the benefit of all stakeholders.
Planned Activities for the March Quarter
• East Menzies Gold Project o Extensive +15,000m regional RAB drilling programme o Evaluation of results and further drill planning o Progress third party offers for campaign mining
• Mount Mackenzie Gold Project o Planning reserve conversion drill programme
• Project Evaluation Review opportunities that fit the company’s technical and commercial criteria
Cash Flow
REZ held cash of $1,593,000 at the end of the December quarter. Operating outgoings of $739,000 were recorded, along with a further $746,000 invested in exploration.
Cash inflows for the quarter consisted of $300,000 from the finalisation of the sale of 6.25% to Bullfinch (as noted above). REZ also finalised a recapitalisation commenced in the 2019 financial year, with the receipt of $1.9 million from the issue of ordinary shares following shareholder approval.
The Company has $348,000 remaining of the prepayment to its drilling partner, National Geotech. The prepayment was put in place to via an issue of the Company’s ordinary shares. This amount will be progressively offset against drilling costs at the East Menzies tenements.
As discussed above, REZ will be focused on its exploration activities in the period to 30 June 2020 and as a result we expect that the Company will continue to incur operating and investing cash out flows. Operational cash flow from the Radio Gold farm-in arrangements are not expected to occur during the balance of the financial year, although $250,000 is expected to be received from the sale of a further 3.125% of the Radio Gold tenements to Bullfinch.
The Board considers that the cash held, and the prepayment, represent enough financial resources to meet its current business objectives. Further capital raisings will be considered as the exploration program progresses.
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Announcements (1) 17th July 2019 – (ASX:REZ)- East Menzies - Outstanding Bedrock Gold Anomaly Identified (2) 25th July 2019 (ASX:REZ) - East Menzies Update - Drilling at Goodenough (3) 1st of August 2019 – (ASX:REZ) - Radio Gold $4m Farm-in Partnership (4) 21st August 2019 – (ASX:REZ) - $3 million Raised - Placement Oversubscribed (5) 4th September 2019– (ASX:VAL) - Acquisition of Radio Gold Project Farm-In (6) 4th September 2019 – (ASX:REZ) - Acquisition of Radio Gold Project Farm-in (7) 19th September 2019 – (ASX:REZ) - Highly Promising Drill Targets at Menzies Gold Project (8) 26th of September 2019 – (ASX:REZ) Hits of up to 9gpt to Underpin Resource Update at Goodenough (9) 30th of September 2019 - (ASX:REZ) Annual Report to shareholders (10) 30th of September 2019 - (ASX:REZ) Appendix 4G and Governance Statement 2019 (11) 3rd of October 2019 - (ASX:REZ) New Drilling Program Underway at Menzies (12) 4th of October 2019 - (ASX:REZ) Results of Meeting (13) 8th of October 2019 - (ASX:REZ) Additional 20sqkm of Ground at Menzies (14) 14th of October 2019 - (ASX:REZ) Appendix 3B (15) 17th of October 2019 - (ASX:REZ) Radio Gold Farm-in (16) 18th of October 2019 – (ASX:REZ) Change in substantial holding (17) 18th of October 2019 – (ASX:REZ) Change in substantial holding (18) 22nd of October 2019 - (ASX:REZ) Appointment of New Management Team (19) 23rd of October 2019 – (ASX:REZ) Appendix 3Y (20) 30th of October 2019 - (ASX:REZ) Quarterly Cash Flow Report September 2019 (21) 30th of October 2019 - (ASX:REZ) Quarterly Activities Report September 2019 (22) 31st of October 2019 – (ASX:REZ) Notice of Annual General Meeting/Proxy Form (23) 2nd of November 2019 – (ASX:REZ) Results of Annual General meeting (24) 11TH of November 2019 - (ASX:REZ) Drilling Program at East Menzies (25) 3rd of December 2019 - (ASX:REZ) Resources Rising Stars Investor Presentation (26) 3rd of December 2019 - (ASX:REZ) ASIC Form 484 - Cancellation and Buy-Back of Shares (27) 3rd of December 2019 – (ASX:REZ) Change of Auditor (28) 5th of December 2019 – (ASX:REZ) Mount Mackenzie Scoping Study (29) 18th of December 2019 – (ASX:REZ) Appendix 3B (30) 18th of December 2019 – (ASX:REZ) Change of Director’s Interest Notice (31) 18th of December 2019 – (ASX:REZ) Change of Director’s Interest Notice (32) 27th of December 2019 – (ASX:REZ) East Menzies Exploration Results Update (33) 27th of December 2019 – (ASX:REZ) Appendix 3B (34) 14th of January 2020 – (ASX:REZ) East Menzies – Extensive Drilling Program Underway
Mr Christian Price – REZ Investors: David Frances - Chief Executive Officer E: [email protected] P: +61 2 9227 8900
Name of entity Resources & Energy Group Limited ABN Quarter ended (“current quarter”) 12 110 005 822 31 December 2019
Consolidated statement of cash flows Current quarter
(3 months) $A’000
Year to date (6 months)
$A’000 1. Cash flows from operating activities
- - 1.1 Receipts from customers 1.2 Payments for
(484) (1,192) (a) exploration & evaluation (b) development - - (c) production - - (d) staff costs (64) (228) (e) administration and corporate costs (188) (288) 1.3 Dividends received (see note 3) - - 1.4 Interest received - - 1.5 Interest and other costs of finance paid (3) (12) 1.6 Income taxes paid - - 1.7 Research and development refunds - - 1.8 Other (provide details if material) - -
1.9 Net cash from / (used in) operating activities
(739) (1,720)
2. Cash flows from investing activities
2.1 Payments to acquire: (a) property, plant and equipment (b) tenements (see item 10) (c) investments (d) other non-current assets (746) (746)
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
+ See chapter 19 for defined terms 1 September 2016 Page 2
Consolidated statement of cash flows Current quarter (3 months)
$A’000
Year to date (6 months)
$A’000 2.2 Proceeds from the disposal of:
(a) property, plant and equipment (b) tenements (see item 10) 300 500 (c) investments (d) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other – deposits returned
2.6 Net cash from / (used in) investing activities
(446) (246)
3. Cash flows from financing activities
1,881 3,000 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible
notes
3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of
shares, convertible notes or options (117) (294)
3.5 Proceeds from borrowings 3.6 Repayment of borrowings 9 (183) 3.7 Transaction costs related to loans and
borrowings
3.8 Dividends paid 3.9 Other (provide details if material)
3.10 Net cash from / (used in) financing activities
1,773 2,523
4. Net increase / (decrease) in cash and cash
equivalents for the period
1,005 1,036 4.1 Cash and cash equivalents at beginning
of period 4.2 Net cash from / (used in) operating
activities (item 1.9 above)
(739)
(1,720)
4.3 Net cash from / (used in) investing activities (item 2.6 above)
(446)
(246)
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
+ See chapter 19 for defined terms 1 September 2016 Page 3
Consolidated statement of cash flows Current quarter (3 months)
$A’000
Year to date (6 months)
$A’000 4.4 Net cash from / (used in) fin715*2
ancing activities (item 3.10 above) 1,773 2,523
4.5 Effect of movement in exchange rates on cash held
4.6 Cash and cash equivalents at end of period
1,593 1,593
5. Reconciliation of cash and cash
equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts
Current quarter $A’000
Previous quarter $A’000
5.1 Bank balances 1,593 1,593 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details)
5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)
1,593 1,593
6. Payments to directors of the entity and their associates Current quarter
$A'000
6.1 Aggregate amount of payments to these parties included in item 1.2
171
6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3
-
6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
+ See chapter 19 for defined terms 1 September 2016 Page 4
7. Payments to related entities of the entity and their associates Current quarter $A'000
7.1 Aggregate amount of payments to these parties included in item 1.2
-
7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3
-
7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2
8. Financing facilities available
Add notes as necessary for an understanding of the position
Total facility amount at quarter
end $A’000
Amount drawn at quarter end
$A’000
8.1 Loan facilities (refer 8.4) Unsecured loan from unrelated private individual, repayable on demand, interest rate of 10%pa
100 100
8.2 Credit standby arrangements - -
8.3 Other (please specify) - -
8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.
9. Estimated cash outflows for next quarter (ongoing costs only) $A’000
9.1 Exploration and evaluation 500 9.2 Development - 9.3 Production - 9.4 Staff costs 65 9.5 Administration and corporate costs 150 9.6 Other (provide details if material) -
9.7 Total estimated cash outflows 715
Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report
+ See chapter 19 for defined terms 1 September 2016 Page 5
10. Changes in tenements (items 2.1(b) and 2.2(b) above)
Tenement reference and location
Nature of interest Interest at beginning of quarter
Interest at end of quarter
10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced
Radio Gold M77/633
Change in Radio Gold tenement ownership occurred on receipt of $500,000 in September/October 2019 (refer ASX release dated 4 September 2019)
100.00%
93.75%
10.2 Interests in mining tenements and petroleum tenements acquired or increased
Compliance statement 1 This statement has been prepared in accordance with accounting standards and policies
which comply with Listing Rule 19.11A. 2 This statement gives a true and fair view of the matters disclosed.
Sign here: Date: 28 January 2020 Print name: Warren Kember Company Secretary
