29 October 2007
AIM ANNOUNCEMENT
MONTO MINERALS LIMITED (the "Company")
FIRST QUARTER ACTIVITIES AND CASHFLOW REPORT
FOR THREE MONTHS TO 30 SEPTEMBER 2007
GOONDICUM INDUSTRIAL MINERALS PROJECT IN PRODUCTION
* Construction completed at Goondicum
* First production and sales delivery achieved October 2007
Construction of the processing plant at the Goondicum industrial
minerals project in Queensland was completed during the September
quarter. The final capital cost of the Goondicum plant and
downstream Dakiel plant are expected to be within the original
Project Budget of $38.5 million. The multi-product project has been
developed to
produce ilmenite (for paint, paper and plastic pigment), glass
feldspar (for glass manufacture), ground feldspar (for paint and
powder coating), apatite (for organic fertiliser) and titanomagnetite
(for coal washing) for Australian and international markets.
Production from the Goondicum plant commenced in mid-October and the
first sales delivery, a consignment of apatite, was made last week.
The project is now ramping up to full-scale production.
Commissioning and production
The final construction stages at Goondicum were completed during the
quarter. Commissioning of the multi-stream processing plant
continued throughout the quarter and into October, having entailed
more modification and rectification work than anticipated. The feed
preparation equipment has been augmented to improve the feed rate of
ore entering the processing plant, resulting from vegetation and
oversize material encountered in the initial mining area. The plant
is now functioning satisfactorily for regular extended operating
periods. The tonnage of ore being processed is being gradually
increased towards full capacity and plant settings modified to suit
the increasing throughput.
Water is now being supplied as required for operations, and dams at
Goondicum are being maintained at acceptable levels. The 35 km
pipeline, developed and operated by the Queensland Government-owned
corporation, SunWater, was previously the subject of supply
interruptions caused by leaks during commissioning. Leaks in
defective sections of pipes continue to be repaired as they are
detected, with additional costs of rectification being met by the
pipeline manufacturer.
Construction continued throughout the quarter on the power line which
will bring mains power to Goondicum. Mains supply is expected to be
connected in November 2007, when two of the four interim diesel
generators will be removed. It is proposed to remove the other two
generators in January 2008 when the project's full power load is
expected to be available via mains power.
At Dakiel, 25 km by road from Goondicum, construction of the washing
plant to upgrade the feldspar prior to sale is expected to be
completed in November, a month later than previously expected due to
a quality issue with steel fabrication.
Sales and marketing
There are now stockpiles of ilmenite, apatite, feldspar and
titanomagnetite mineral concentrates at Goondicum. The first
consignment of apatite was delivered to the fertiliser company,
Ausmin Australia, on 23 October.
Ausmin Australia has contracted to purchase all of the Goondicum
project's production of apatite for fertiliser. Ausmin advises that
it is progressing planning approvals to construct a phosphate
fertiliser processing facility adjacent to the Dakiel Plant. This
may result in some synergies and cost saving initiatives for both
parties.
Initial road haulage of ilmenite to the Port of Gladstone is expected
to commence early in November and the first export shipment is likely
before the end of the calendar year. With demand from pigment
manufacturers at high levels for sulphateable ilmenite, a number of
trial shipments are being scheduled for delivery in 2008 and the
Company expects to contract all of its planned production of
ilmenite.
The supply of feldspar for domestic glass manufacture is expected to
commence as soon as it can be upgraded in the new plant at Dakiel,
now due for completion in November 2007.
Titanomagnetite is being stockpiled for future grinding prior to
supply for coal washing to the very large coal mining industry
located nearby in central Queensland. Initial design for the
proposed titanomagnetite refining and grinding plant at Goondicum has
commenced.
Funding
As reported above, the capital cost of the Goondicum and Dakiel
plants is expected to be delivered within budget of $38.5 million, a
significant achievement in the current environment of increasing
costs. The total project development cost, including cash-backed
infrastructure guarantees and working capital requirements during the
first year is forecast at $72 million.
The $35 million fundraising approved by shareholders last May is
taking the project through to full production. A further $6 million
loan facility will provide for planned expansion to 2009.
Board changes
Mr Mark McCauley was appointed to the Board of the Company with
effect from 25 September 2007. Mr McCauley is Managing Director of
RMM Capital Pty Ltd, a Queensland-based private equity firm. A
qualified mining engineer with a strong financial background, he
worked for M.I.M. Holdings Limited and later as Chief Financial
Officer of Felix Resources Limited during that company's period of
substantial growth. Mr McCauley brings appropriate new experience to
Monto as it moves into the full-scale commercial production phase.
He has joined the Audit Committee.
The resignation of Mr Peter Dowling AM from the Board of the Company
as of 12 November, the date of the Company's Annual General Meeting,
was also announced during the quarter. Mr Dowling is the Company's
longest serving Director having been on the Board for eight years.
An experienced accountant and professional company director, he made
a significant contribution to the Company throughout the development
of the Goondicum Project. Mr Dowling has agreed to remain on the
Audit Committee until the 2008 Annual General Meeting and will chair
the Audit Committee until a new Chairman is selected.
Outlook
The Goondicum project has now emerged from the development phase into
commercial production and sales. The Company is looking forward to
welcoming approximately 150 shareholders and other invited guests to
the official opening ceremony on 12 November.
Over the coming months, the Company expects production at Goondicum
to move towards full design capacity. Deliveries of apatite will
continue, and be despatched to Ausmin's Dakiel plant when it is ready
to receive them in early 2008. Export sales of ilmenite and domestic
sales of glass feldspar are expected to commence before year's end,
the glass feldspar sales being contingent on the completion of the
Dakiel upgrading plant now due in November 2007. Titanomagnetite
production is scheduled for the first quarter of calendar 2008
subject to final decision to build a grinding plant at Goondicum.
Transmission of mains power to Goondicum is due to commence in
November 2007 upon completion of the power line.
Following the achievement of full production within the initial
project, the Company will move to implement the planned expansion in
2008/09.
Enquiries to:
+-----------------------------------------------+
| Geoffrey Moore | |
|--------------------------+--------------------|
| Monto Minerals Ltd | +61 (0)7 3034 3100 |
|--------------------------+--------------------|
| | |
|--------------------------+--------------------|
| Richard Brown | |
|--------------------------+--------------------|
| Ambrian Partners Limited | 020 7776 6400 |
+-----------------------------------------------+
For further information on Monto Minerals please visit the Company's
website at http://www.montominerals.com
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