FinnAust Mining LON:FAM CEO Roderick McIllree said, “This has been a transformational year for FinnAust, defined by the acquisition of the highly prospective Pituffik titanium project in Greenland. With multiple prospects identified and results to date underpinning our belief that Pituffik has the potential to be in the top percentile of titanium projects globally in terms of grade, we believe this deposit has the potential to become a significant value driver for the Company. Our focus is now on strengthening our knowledge of the asset, and we expect to be in a position to publish a JORC compliant resource by the end of 2016, ahead of commencing a proof-of-concept bulk sampling programme in 2017.
“With Greenland only just beginning to reveal its resource potential we are delighted to have a first-mover position in this prospective region, and in line with this, post-period end we expanded our geographical footprint through the acquisition of two polymetallic assets in the south-west of the country. Both projects boast multiple, large, high-grade polymetallic targets that are drill ready. With near term development potential at Pituffik and additional upside opportunity available at these news assets, we believe the coming year will be extremely active for the Finnaust. We look forward to keeping shareholders updated with our progress as we look to deliver on these value accretive milestones.”
FinnAust Mining plc, the AIM and FSE listed company with projects in Greenland, Finland and Austria, has given DirectorsTalk its Final Results for the year ended 30 June 2016.
The Company also announces that its Annual General Meeting (‘AGM’) will be held at 10am on 12 October 2016 at The Washington Mayfair Hotel, 5 Curzon Street, London, W1J 5HE. A notice convening the AGM, proxy form and Report and Accounts for the year ended 30 June 2016 will be posted to shareholders today and will also be available to download from the Company’s website at www.finnaust.com shortly.
Highlights
— Published exploration results successfully demonstrating the potential for the Pituffik Project to be in the top percentile of titanium projects globally in terms of grade
-- Granted the first offshore minerals licence in Greenland
— Appointed key consultants in line with strategy to deliver production at low cost in the relative near term via a dredging operation within the marine environment
— Strong progress made to support application for an exploitation licence in Q1 2017 ahead of delivering a proof-of-concept bulk sampling programme in 2017
o Post period end, work programme commenced to generate a maiden JORC code compliant resource
o Prepared and shipped a large metallurgical sample to metallurgical consultants to produce a high purity ilmenite concentrate for analysis and distribution
— Broadened Greenland footprint via the all-share acquisition of polymetallic licences, which position FinnAust as a dominant player in this emerging resource destination
— Cash position at 30 June 2016 was GBP425,046 (30 June 2015: GBP795,368) – raised GBP500,000 by way of a placing post period end
Chairman’s Statement
The year under review for FinnAust Mining plc (the ‘Company’ or ‘FinnAust’) has been characterised by rapid transformation and progress, thanks to our successful acquisition of the Pituffik Titanium Project (‘Pituffik’ or the ‘Project’) in Greenland in December 2015. We believe that this significant and unusually pure titanium deposit, which is spread across both beaches and the shallow marine environment, has the potential to be in the top percentile of projects worldwide in terms of heavy mineral grade. I sit on the FinnAust Board as a representative of the Company’s supportive cornerstone investor, Western Areas Limited, and in assessing this Project, we were attracted to the opportunity to deliver production at low cost in the relative near term via a dredging operation within the marine environment using industry normal equipment and practices.
FinnAust has big ambitions for this distinctive and exciting Project and is committed to effectively delivering on our strategy for the benefit of all stakeholders. We anticipate dredging a small amount of material next year to demonstrate that the logistics and processing routes currently being developed are precise before ramping up our operation towards a full production scenario. Significant milestones have been achieved since December 2015: we were granted the first offshore minerals licence in Greenland; appointed consultants with the right experience to develop this project; received very positive results from the 2015 study programme which demonstrated that the shallow marine environment hosts very large volumes of potentially high grade titanium; and commenced a work programme to generate a maiden JORC code compliant resource which, when defined, will support the Company in its application for an exploitation licence during 2017. I am pleased to report that the initial findings of the activities support our belief that Pituffik has the potential to be a significant global titanium project.
Pituffik is located within the broader “Thule black sand province” in North West Greenland, comprising coastlines several hundred kilometres long that contain both ilmenite and magnetite-rich regions. These regions host localised higher concentrations of ilmenite, and it is these areas that FinnAust is targeting. The Company has focused its attention on three primary target types along more than 30km of prospective coastline, Raised, Active, and Drowned beaches. Work undertaken prior to our acquisition of the Project identified two project areas within the Pituffik tenure. Moriusaq is the most advanced and has returned the highest ilmenite grades to date, whilst Interlak offers the largest volume of heavy mineral sands with grade upside potential. Importantly, the highest-grade material from the entire region to date has been identified within FinnAust’s licences.
Photogrammetry, marine bathymetry and onshore and offshore sampling was completed by the previous owners, Bluejay Mining Limited (‘Bluejay’), during 2015 and initial results gave an indication that it could become one of the highest grade in situ deposit of ilmenite anywhere in the world. Shortly after the transaction we delivered the results from these campaigns which positively strengthened this belief by demonstrating that the shallow marine environment hosts very large volumes of potentially high grade titanium within shallow, extensive and thick ilmenite rich sediments extending for >30km in length and 1,000m in width. With the sedimentary horizons on average more than 5m in thickness (up to a maximum thickness of 27m), the amount of known titanium mineralisation understood by the Company to be in existence at Pituffik was multiplied significantly. Three sedimentary units were identified in total with the two shallowest sequences showing visual concentrations of ilmenite. Sampling in the “Moriusaq bay” gave us an indication of the phenomenal grade potential of this area, returning opaque fractions (magnetite and ilmenite) of up to 95% of sample with 73% of that being ilmenite. Sampling was not limited to the marine environment and on the active beaches at Moriusaq, average grades of +/-40% were returned. In addition to these areas are the far more expansive uplifted beaches which are on average around 17% ilmenite. The third or “high stand” sequence wasn’t sampled during 2015, however continues to represent an attractive exploration target even if in slightly deeper water.
These results make it clear that we have ownership of a very pure and expansive ilmenite deposit. Bearing in mind our plans to dredge the marine environment, we were naturally delighted to receive an extension to our existing onshore licences to include all minerals within the shallow marine environment at Pituffik. This is the first time that the Self Rule Government of Greenland has granted a marine based exploration licence, which is testament to our strong relationship with the authorities and the potential of our Project. This was a milestone moment for FinnAust, providing us not only with title over the marine bearing sediments at Pituffik but more importantly, providing us a clear permitting pathway for the Project as a whole. Our positive relationship with the Greenlandic authorities endorses our strong geographic focus on European natural resource projects, mostly due to the Board’s aversion to sovereign risk. With this licence in hand we are ideally positioned to look ahead and commence a new work programme to support our production strategy.
In order to successfully commercialise this exciting asset, it is imperative that we deliver a viable development and logistics solution. With this in mind we appointed Royal IHC (‘IHC’), a world leader in the provision of cost-effective wet mining solutions, dredging equipment supply, training, maintenance and support to work with us in defining an effective scenario for both our ‘proof of concept’ bulk sampling programme planned within the marine environment at Moriusaq (also known as Moriusaq Bay) in H2 2017, and for our full scale production operation. We anticipate using their in house wet mining equipment and look forward to receiving a high level cost estimation for our Project. I am excited to be working with IHC, who stood out during the evaluation process as the best and most qualified to provide all marine dredging and wet mining services as we move Pituffik towards development.
Defining a processing route is also key to delivering production and we have made excellent progress here. KeyPointE Pty Ltd (‘KeyPointE’) and QuedTech Pty Ltd (‘QuedTech’), both leaders in the mineral sands space, have been appointed to complete the next phase of metallurgical test work programme at Pituffik. As part of our 2016 work programme, a large metallurgical sample has been prepared and shipped to our metallurgical consultants with the aim of producing a high purity ilmenite concentrate for analysis and distribution. Once this has been completed, attention will turn to scaling up and optimising the processing route identified in order to support large-scale production of a similar high purity ilmenite concentrate from the Pituffik black sands. This will ultimately evolve to include pilot scale continuous testing later this year. Following this, both KeyPointE and QuedTech will confirm the processing flowsheet, which will form the basis for plant design and optimisation, and will advise on processing routes in order to optimise concentrate production rates and operating efficiencies.
We are also pleased to be working with Mr. Peter Waugh as we focus on finalising our route to market and we expect to benefit from his broad industry management experience as well as his valuable knowledge of the international titanium dioxide pigment industry.
We are optimistic that our product will be in strong demand given the results of the market analysis conducted by TZ Minerals International Pty Ltd (‘TZMI’), which covered all aspects of the titanium sector and identified two prospective end-sale markets for product taken from Pituffik. Initial analytical results indicate that the ilmenite concentrate from Pituffik in its current non optimised form is well suited for direct use in the sulphate production process of Titanium Dioxide pigment (‘TiO2’)
This non-optimised ilmenite concentrate from Pituffik gives the Company a high degree of confidence that with a very small amount of further purification on larger samples from the main zones at the Project, the concentrate could also be suitable for chloride slag manufacture to produce either TiO2 pigment or titanium metal.
Detailed market analysis from TZMI confirms chloride slag and sulphate markets are both large & growing globally and potential end-sale customers have been identified in both Europe and Asia. TZMI has also forecast that supply deficits will increase into the medium and longer term, thereby presenting the Company with an excellent opportunity to deliver Pituffik product into this market shortfall.
We plan to submit our application for an exploitation licence in Q1 2017. There are a number of pre-requisite tasks to complete ahead of applying for this licence which are:
-- a resource definition programme; -- an Environmental Impact Assessment; and -- a Social Impact Assessment.
To ensure that we complete these rapidly and successfully, we have appointed a number of world class consultants to assist in delivering these results.
The Geological Survey of Greenland and Denmark (‘GEUS’) is playing a key role in our campaign to deliver a resource. Exploitation is now possible due to the dramatic climatic changes being experienced in this part of the world. GEUS has worked on the Project in one form or another for more than 40 years and has an intimate understanding of the Project. We have leveraged off this knowledge base with the design and execution of the 2016 work programme at Pituffik which is comprised of:
-- Vibracore drilling in the shallow marine environment; -- Ground penetrating radar over the raised beaches; and -- Extensive pit sampling and auger drilling.
The mild weather conditions allowed us to quickly complete our planned campaign, which focussed on both Moriusaq and Interlak. GEUS is now working with SRK Exploration Services Limited to deliver a JORC compliant resource for the marine and broader environment and pleasingly, the initial findings support the Company’s belief that Pituffik represents a globally significant titanium project. Extensive trenching over main project areas has identified large volumes of ilmenite-rich sand across many square kilometres while ground penetrating radar has identified buried layers of what is expected to be high concentrations of heavy minerals. Additionally, all 260 auger drill holes completed on the raised and active beach targets show significant horizons of ilmenite-rich sands. We expanded the programme to include infill drilling focused on the regional extent of raised beaches between Moriusaq and Interlak (+/-15km) which will define deeper drilling targets for future work as is common in this type of coastal system.
We have also drilled 150 offshore vibracore holes to date from a support vessel (designed to penetrate up to 3m). Vibra-coring (or vibro-coring) is a technique for collecting core samples of underwater sediments and soils using a rod and a vibrating drill head. Vibra-coring, utilising a second unit, was also completed from a raft in shallower, protected waters. Some holes in the Moriusaq Bay area encountered compacted layers of ilmenite bearing sediments and cobble, reducing penetration.
The Company has also recently acquired Avannaa Exploration Limited (a subsidiary of Cairn Energy Ltd). The transaction is yet to settle and remains conditional on Greenlandic approval; however the portfolio consists of exciting projects that the Company believes will create significant shareholder value in the near and long term future.
Accordingly, we look forward to generating a maiden resource for the Project and thereby defining both the grade and volume characteristics of Pituffik, with a particular emphasis on defining optimal “wet mining” areas. This will be a major value milestone to look forward to in the coming months.
We would like to thank shareholders for their continued support and conclude we are looking forward to a productive 2017.
Financial and Corporate Review
The loss before taxation of the Group for the year ended 30 June 2016 amounted to GBP620,059 (30 June 2015: GBP561,381).
The Group’s cash position at 30 June 2016 was GBP425,046 (30 June 2015: GBP795,368). Post period end the Company announce that it has raised GBP500,000 by way of a placing of 10,000,000 new ordinary shares of 0.01 pence each in the capital of the Company at a price of 5 pence per Placing Share.
In February 2016, we were pleased to commence trading on the Frankfurt Stock Exchange (‘FSE’) under the symbol ‘S5WA’. This dual listing was in response to strong demand from European investors given that the Company’s core operations are located across Europe.
We also strengthened our Board considerably during the period in tandem with the Bluejay acquisition. During December, Rod McIllree, a Board member of Bluejay and having intimate knowledge of the Pituffik project and strong relationships in Greenland, joined the Company as Managing Director and at the same time, I moved to the position of Non-Executive Chairman. Daniel Lougher moved to Non-executive director and then in March retired from the Board. Like me, he is also an Executive of Western Areas Limited (Australia’s leading nickel producer), which has a 37.14% holding in FinnAust. His retirement from the FinnAust Board was a reflection of our belief that the new management team has control of an exciting project with serious growth potential and with the right know-how to deliver value. Importantly, FinnAust continues to have access to Western Areas’ resources and expertise.
‘Brexit’ Implications
Following the result of the recent EU referendum in the UK, the Directors acknowledge that this may have an impact on the Company’s future trading and performance. They cannot say with any certainty as to what this impact will be, given the uncertainty surrounding the UK’s withdrawal from the EU but they will continue to monitor the situation closely and take action as and where deemed appropriate.
Wider Portfolio
Greenland is our primary focus of activity; however the Group has a wider portfolio of prospective assets situated in Finland and Austria. In Finland, the Group owns 100% of a portfolio of copper, zinc and nickel projects; the Hammaslahti Copper-Gold-Zinc Project, the Outokumpu Copper Project and the Kelkka Nickel Project. In January 2016 we increased licence coverage across these project areas by approximately 50%. We continue to see value in these project areas but we will be focusing our resources and activities over the next six to twelve months on our Greenlandic portfolio due to the exceptional results from our preliminary work.
Naturally, we always evaluate potentially value accretive projects but are mindful of preserving shareholder value.
Outlook
I am confident that Pituffik has the potential to be a globally significant titanium project with a low cost route to market, and our team is incredibly excited to deliver on the objectives required to facilitate cash generative production. The remainder of 2016 will see us deliver a maiden resource for the area and strengthen our understanding of the processing requirements for this unusually pure mineralisation, which will in turn aid our end user / offtake discussions. We feel confident that we are well placed to make the right decisions for the Project given our working relationships with leaders in their respective fields and we look forward to clarifying our development scenario as it becomes defined. We also feel that we have the right asset at the right time following the report from TZMI which highlights the dynamic current and forecast market fundamentals. I speak both as a representative of the Company’s cornerstone stakeholder and as FinnAust Chairman when I say that I hope investors share in our excitement regarding this expansive project and look forward to updating you all as we progress.
I would like to thank all our investors, partners, advisers and management team for their support during the period and look forward to a very busy future.
Graham Marshall
Chairman
