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LATEST UPDATE
TO ALL SHARE/OPTION HOLDERS
EXERCISE OF LAVERTON OPTIONS
Since sending out the newsletter to shareholders and optionholders in February the Rawas project has moved inexorably forward. The first quarter figures were released to the ASX in late April.
The team at the mine site had milled 16% more tonnage than was budgetted, the project had produced 10,698oz of gold for the quarter which was 1,023oz over the budget at a cash operating cost per ounce 2% below budget. This would be a good result for any established mine but for a mine in its first quarter of production when many delays and teething problems could be expected, this really is an outstanding start. Why was this not recognised?
I believe that a number of factors may have mitigated against our project and company:
the gold price at $US330 to $US350/oz is historically very low. the Bre-X/Busang debacle has shaken the confidence of investors in gold projects generally, and in Indonesia exploration projects particularly, with many investors not realising that Laverton is already a producer. the impending Indonesian election. many investors not wanting to pay the 20› per option and selling the options. This has resulted in the price of the fully paid stock also dropping.
In addition, a further positive point is that on 28 April 1997 Laverton's second Contract of Work (COW) passed into law when President Suharto signed over 70 new sixth generation Contracts of Work.
In addition to the 117km2 of our first COW, the COW2 covers an area of 1,627km2 surrounding Rawas and off to the west in an area of territory which our geological exploration specialists regard as "as good as anywhere on earth". While awaiting its signature into law, we have conducted a large literature search of the area in Holland (the old colonial power) and in the Mines Department Library in Indonesia. We have discovered that gold production started in this area in 1690 - gold bearing rocks were taken back to Holland as ballast in the sailing galleons and then treated in Holland. We have located a mass of old mining records pre-dating the 1914 to 1918 war when alluvial workings were operating in the area worked by the Dutch colonialists. We have also obtained all of the stream and soil sample results taken by CRA in 1984 to 1990, Kennecott in the 1970s and a Japanese aid project in the 1980s. This database comprises upwards of 7,000 samples. In addition, we located a coloured Landsat image of the area and last year (April 1996) we have booked time on a new Canadian radar satellite (Radarsat) which recorded an image of the whole of our Contracts of Work.
The one remaining thing that remains to be done is to fly an aero-magnetic survey over the Contracts of Works. We know what Rawas looks like on the ground, we will then know what its fingerprint looks like from satellite and aeromag. We already have three good targets to aim for which "look like Rawas", there could be more.
We have been advised by the Indonesian Department of Mines that the third Contract of Work which we have applied for and is contiguous with the second one is likely to be granted in June or July. That will give us a total of +2,000km2 of probably the most prospective property on earth with an actual gold mine in the middle.
I chaired a major planning meeting in mid-May at the mine site at Rawas. All key operational and explorational personnel were present. At this meeting it was agreed the original design tonnage of 700,000 tpa would be comfortably achieved and that a budget tonnage of 800,000 tpa be accepted and used in future. With effect from 1 July, therefore Rawas' throughput will be a budget of 800,000 tpa instead of the original 700,000 tpa.
I also gave them the goal of working towards a target date of June 1999 to be in a position whereby the project would have sufficient reserves proved up that the present capacity could be doubled from 800,000 tpa to 1.6Mtpa.
During late April, the Chairman Tony Trevisan, together with John Stratton of Continental Goldfields Limited and myself representing Laverton, visited a number of brokers and institutional investors in the City of London. The potential of Rawas was explained to them, the potential of Continental and the future of the merged entity explained. It received enthusiastic support from all quarters.
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