Delta Minerals Interim report April-June 2014

Delta Minerals: Interim report April-June 2014

This is the company's first quarterly report. Comparative figures are not reported, because the company did not report in the corresponding period in 2013.

Second quarter April to June 2014
• Net sales for the second quarter amounted to 0 SEK
• Operating profit for the second quarter amounted to -2 107 313 SEK
• Profit after tax for the period April-June amounted to -2 107 298 SEK
• Earnings per share amounted to -0.05 SEK
• Equity per share amounted to 0.32 SEK

The period from January to June
• Net sales for the period amounted to 0 SEK
• Operating income totaled -3 634 698 SEK
• Profit after tax for the period amounted to -3 654 472 SEK
• Earnings per share amounted to -0.10 SEK
• Equity per share amounted to 0.32 SEK
Important events during the period
• The company pursued two new issues, which brought 10 401 814 SEK to the company
• The company signed a contract with the Cagayan province to pursue geological surveys
• Good results from the geological study in Vigan
• Encouraging results from initial surveys in Cagayan
• The company signed a LOI with Nova International to operate its plant in Cagayan

Events after the reporting period
• The company's shares were listed on Aktietorget on July 28
• The company signed the final agreement with Nova International to operate its plant in Cagayan
• The company has estimated mineral resources for the Cagayan River and the Appari site. The total mineral assets are calculated to 2,000,720,000 MT (Metric tons), with an average concentration of 3%.

The company operations during the period

Cagayan province

Agreement with the Cagayan province
The company has agreed with the Provincial Governor of Cagayan to investigate the future extraction of minerals and sand in the Cagayan River.

The agreement gives the right to explore the Cagayan River from Magapit and upstream; furthermore also for rivers Sta. Ana, Abolog, Pamplona, Claveria and other tributaries. The company has initiated investigations in appropriate areas.

Cagayan River is the largest river in the Philippines, located in Northern Luzon and North of Vigan. It has a catchment area of 27,281 km² and a length of 520 kilometers, and flows in a northerly direction from the inflow of Nueva Vizcaya to the estuary of the Babuyan channel in Aparri, Cagayan. Cagayan River has accumulated sand and sediment that drastically worsened the transport capacity. Although there are no typhoons in the province of Cagayan, flooding will occur, during heavy raining in nearby upstream areas. The area flooded in the Cagayan River and its tributaries are an estimated 186,000 hectares and include 52 villages in the region. In the province particularly villages and agricultural areas are hit. This has led to unbearable situation with flooding along the Cagayan River with its tributaries with loss of life, livestock and crops.

The company will get synergies adding another river area in our projects portfolio, reducing vulnerability if the company would encounter problems in a specific area. The Cagayan River is larger than the Abra River in Vigan area and we think this/these projects will make an important contribution to the company in the future.

First results from the Cagayan province

Delta Minerals has received the first result from the Cagayan province. The samples are too few to work out ore calculations, but they are a good indicator for future work. The results are positive and give good reason for further investigation.

Summary of results at various test sites
No. 3, Cagayan River, Appari, Fe 4.92%
No. 4, Cagayan River, Appari, Fe 4.82%
Delta A, Cagayan River, Magapit, Fe 6.94%
Part B, Cagayan River, Gattaran, Fe 7.94%
Delta C, Cagayan River, Alcala, Fe 6.62%

Fe, i.e. the iron content was analyzed by the CCMI Philippines, Inc. in Manila. The analysis was pursued through volumetric. The samples were taken from the test pits 1 x 1 meter wide and 5 meters deep.

The company signs a contract with Nova International
The company has signed a final agreement with Nova International, a Korean company to act as operators of Nova's process plant at Cagayan River.

This will give Delta Minerals access to a pilot plant for production, which allows operation in a few months. Delta Minerals will build the plant according to the Delta process. The agreement allows the company to fine-tune production and supplying sand and gravel specification as well as magnetite of high quality. The agreement also includes valid permits.

Delta Minerals has reached an agreement with Nova of a monthly fee that is deducted from the final amount at the production start. Nova also receives a royalty on magnetite and the parties have also agreed on a profit split formula. The results will be published as Delta Minerals gets more experience from the pilot production. Delta Minerals also has the right to acquire 50% of the plant within three years. Payments or investments that Delta Minerals makes will be deducted from the final purchase price. Nova International is responsible for ensuring that all permits are valid. Through this agreement, Delta Minerals will be able to commence deliveries before year-end and the timetable will be shortened significantly. The Delta Process, which is being developed on this production facility, will also be used on additional production facilities.

Delta Minerals has estimated mineral resources for the Cagayan River and the Appari site. The total mineral assets are calculated to 2.000.720.000 MT (Metric tons), with an average concentration of 3%.

Calculation of mineral resources:
Stock pile: 200,000 MT Content 5% Fe
Name: 520,000 MT Content 3% Fe
Indicated: 2,000,000,000 MT Content 3% Fe
Total: 2,000,720,000 MT Content 3% Fe

The Vigan area
Good results from geological study in the Vigan area.

The first results from the analyses of the Abra River in the Vigan area came during the period. The average iron content (Fe) in the river material was 6.6% with values between 5.78% and 8.56% Fe. The results are in line with and even slightly better than previous assumptions.

The test results were analyzed from representative test holes and cores from a grid of 50 x 50 meters. The samples were analyzed in the CCMI Philippines, Inc. Laboratories in Manila.

Findings from the detailed topographic study have been used to estimate the initial volume reserve of at least 7 million m³. The results are very encouraging and confirm the assumption of total resources/volumes that have been calculated.

Datas show that the sand is more or less homogeneous. Although the work of Cagayan currently is very successful, the company will continue its work in Vigan area for alternative areas and as the material in Vigan is high class.

Prospects for the future
The successful negotiations in Cagayan enable production of magnetite and sand during the autumn. It is now important that the company is able to tie up attractive and long-term customers. When this is the case, the company can duplicate the process that we develop in Cagayan to increase production with additional production sites.

The company's next step is to build up production, logistics, hiring staff, and also build up a corporate financial structure for full production.
 

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