OCTAGONAL RESOURCES LTD No. of Pages: 60
ASX CODE: ORS
Market Cap.: $3.23 m ($0.013 p/s) Shares on issue: 248,331,672
Cash: $0.2 m (30 June 2015)
Debt: $1.0 m (30 June 2015)
ASX Investments 169,672,726 AYC shares
56,557,576 AYCO options
BOARD & MANAGEMENT
Ian Gandel, Chairman
Anthony Gray, Managing Director Bob Tolliday, Director
MAJOR SHAREHOLDERS
Abbotsleigh - 41.1% Alliance Resources - 8.9%
PRINCIPAL OFFICE
Octagonal Resources Limited ABN 38 147 300 418
Suite 3, 51 - 55 City Road
Southbank VIC 3006
T +61 3 9697 9088
F +61 3 9697 9089
E info@octagonalresources.com.au
W www.octagonalresources.com.au
Correcting StatementAnnual Report to Shareholders 2015
Octagonal Resources Limited ('Octagonal' or 'the Company') advises of a number of formatting and transposition errors in its Annual Report to Shareholders following the ASX Announcement dated 30 September 2015 as follows:
Pages 28 to 31 - the references at the top of each of these pages that appear directly under the heading should all have appeared at the bottom of each previous page respectively.
Page 41 - Note 6. Income tax expense - under the heading Tax
losses not recognised the 2015 amount for 'Unused tax losses for which no deferred tax asset has been recognised' appeared as 199,999,820 but should have read 19,999,820.
Page 44 - Note 15. Non-current assets - exploration and evaluation
- in the reconciliations table in the Total column the amount for 'Write off of assets' appeared as (20,893,561) but should have read (18,531,255) with the difference of (2,362,306) appearing in the Impairment line above as per the Exploration column.
Page 47 - Note 23. Financial Instruments - in the Interest rate risk
table in the 2015 Balance column the amount for 'Cash and Cash equivalents' appeared as 205,033 but should have read 205,030 with the same adjustment flowing down to the 'Net exposure to cash flow interest rate risk' line underneath and also with this same change being applied in the second paragraph under the heading Credit Risk below.
Page 48 - Note 23. Financial Instruments - in the Liquidity risk- Remaining contractual maturities table in the 30 June 2015 section '1 year or less' column the amount for 'Trade payables' appeared as 140,541 but should have read 140,451 with the 'Total non- derivatives' thus changing from 1,216,247 to 1,216,157. This same correction also applies to the end column of the Table titled 'Remaining contractual maturities'.
These corrections have now been applied and the updated Annual Report to Shareholders is attached to this Announcement.
For further information regarding this announcement, contact:
Bob Tolliday +61 3 9697 9088 Company Secretary
OCTAGONAL RESOURCES LIMITED
Additional information relating to Octagonal and its various exploration projects can be found on the Company's website: www.octagonalresources.com.au
For the year ended 30 June 2015
Corporate Directory 1 Corporate Overview 1 Chairman's Letter to Shareholders 2 Health, Safety, Environment, & the Community 3 Review of Operations 4 Summary of Tenements 14 Resources & Reserves Statement 15 Compliance Statement 15 Caution Regarding Forward Looking Information 15 Directors Report 16 Auditors Independence Declaration 25 Financial Report 26 Statement of Comprehensive Income 27 Statement of Financial Position 28 Statement of Changes in Equity 29 Statement of Cash Flows 30 Notes to the Financial Statements 31 Directors' Declaration 53 Independent Audit Report 54 Shareholder Information 56
Directors
Ian J Gandel
Chairman
Anthony R Gray
Managing Director
Robert P Tolliday
Non-Executive Director and Company Secretary
Principal & Registered Office
Suite 3
51-55 City Road Southbank Victoria 3006
Telephone +61 3 9697 9088 Website www.octagonalresources.com.au
Facsimile +61 3 9697 9089 Email info@octagonalreasources.com.au
Auditors
BDO East Coast Partnership Level 14
140 William Street Melbourne Victoria 3000
Share Registry
Computershare Investor Services GPO Box 2975
Melbourne Victoria 3001
Telephone 1300 850 505
Facsimile +61 3 9473 2500
ASX Code
ORS
Corporate OverviewCompany History
Octagonal Resources was incorporated in September 2010 to acquire the Victorian gold projects of Alliance Resources Ltd, Matrix Gold Ltd and Highlake Resources Pty Ltd and an emerging Western Australian gold project generated by Newmont Asia Pacific to form a new company that has the drive and energy to successfully develop these assets.
In June 2015 Octagonal sold its Victorian Gold Operations (including the Union Hill Underground Mine and the Maldon gold processing facility) to A1 Consolidated Gold Limited (ASX: AYC) for 169,672,726 AYC shares and 56,557,576 AYCO options. This transaction provided access to substantial resources at the A1 Gold Mine for processing at the Maldon gold processing facility and made Octagonal A1 Gold's largest shareholder.
Corporate Strategy
Octagonal's aim is to build shareholder wealth through the discovery and development of major gold or base metal operations in underexplored areas of world class gold producing terrains.
The Company is currently focussed on exploration within the Eastern Goldfields Province of the Yilgarn Craton in Western Australia, which is one of the largest gold and nickel producing regions in Australia.
On behalf of the Board of Directors, it is my pleasure to present to you the fifth Annual Report for Octagonal Resources Limited ('Octagonal').
This year has been a transitional period for our Company as we have moved from a gold miner and producer to explorer with the sale of our Maldon Gold Operation to A1 Consolidated Gold Limited ('A1 Gold').
During the first half of the year your Company continued to focus on developing the Alliance South Deposit in Maldon, with a view to establishing a long-life and sustainable gold producing operation in Central Victoria. This work included extending the Union Hill Decline from the 1100 level to the 1080 level and developing the Eaglehawk and Western reefs on the 1080 level in preparation for stoping.
High-grade gold shoots were intersected in mine development on the 1080 level including 12 metres of reef grading 15.6 g/t Au over 1.7 metres width and 26.5 metres of reef grading 10.2 g/t Au over 3.1 metres width, however ore processing operations were suspended in late-September with insufficient ore available for immediate processing.
Recognising the need to provide certainty of ore supply to the Maldon gold processing facility, in November 2014 Octagonal entered into a binding Heads of Agreement with A1 Gold to sell the Maldon Gold Operation.
This transaction provided the Maldon gold processing facility with access to the substantial mineral resource at the A1 Gold Mine and returned to Octagonal 169,672,726 A1 Gold shares and one A1 Gold option for every three A1 Gold shares received with an exercise price of 3.0 cents each and five year vesting period.
A formal Share Sale Agreement was executed during December 2014 and in February 2015 the two companies entered into a Management Agreement whereby A1 Gold commenced early management control of the Maldon Gold Operation pending completion of the sale. This agreement effectively ended Octagonal's financial obligation to maintain the Maldon Gold Operation prior to settlement, which subsequently occurred during June 2015.
Octagonal is now the largest shareholder in A1 Gold, with a 38.0% holding, and Mr Anthony Gray has been appointed to the A1 Gold board as a non-executive director and Octagonal's representative.
In Western Australia, we continued to assess the potential of the Burns Prospect to host a major copper-gold deposit. One diamond hole was drilled to 401.5 metres depth to test for copper and gold mineralisation associated with a high-magnetic anomaly defined by 3D inversion modelling of ground magnetic data.
This hole intersected high-magnetic rocks interpreted to be the source of the anomaly and returned 38.5 metres @ 0.5 g/t Au &
0.2 % Cu from 184.5 metres, 0.9 metres @ 4.5 g/t Au & 2.6 % Cu from 256.4 metres, and 10.35 metres @ 1.2 g/t Au & 0.6 % Cu from 273.3 metres.
Significantly, a 3.6 metre wide very high magnetic breccia zone was intersected from 286.25 metres depth that is interpreted to be the main feeder structure or primary conduit of mineralising fluids at the prospect. This structure is near-vertical, strikes northwest, and correlates with both the main magnetic trend at the prospect and a two kilometre long copper in regolith anomaly defined by aircore drilling.
Looking to the year ahead, our company continues to be plagued by the difficult equity market conditions currently being experienced by junior exploration and mining companies. While the sale of the Maldon Gold Operation has generated a substantial return for our shareholders, equity raising is difficult, and Octagonal's current market capitalisation does not reflect the underlying value of its ASX investments and Western Australian tenement holding.
Your Company is currently investigating means to realise the maximum value in these assets for our shareholders and we will provide further updates as matters progress.
Yours sincerely, Ian Gandel Chairman
Octagonal recognizes that the success of its operations is intrinsically linked with the aspirations and concerns of the people affected by them. Our activities are not only regulated by local, state, and federal authorities, but also the broader community within which we operate. Our social licence to operate comes from establishing and maintaining positive relationships with our employees, business partners, government authorities, suppliers, shareholders, and neighbors.
Health & Safety
Throughout the year Octagonal worked with all people directly involved in or affected by its operations to develop and practice a healthy and transparent safety culture.
Identification and control of hazards forms the foundation of our Safety Management System. Hazards are identified, risks assessed, and critical controls implemented and audited. This System is further supported by well-developed systems, procedures, supervision, instruction, and training.
No Lost Time Injuries or Medically Treated Injuries occurred during the year at the Company's Victorian and Western Australian operations.
Environment
The Company's Maldon Environmental Management Plan is designed to demonstrate regulatory compliance in the areas of environment and community such as water, dust, noise, and vibration. Monitoring of these features is reported quarterly to an Environmental Review Committee ('ERC'). The ERC is made up of regulators, special interest groups and community members who review and ensure the environmental and community compliance and performance of the Maldon operation.
No reportable environmental incidents occurred at the Company's Victorian operation during the year.
Land Management
Octagonal's exploration and mining activity is designed to minimise ground disturbance and to prevent the destruction of flora, fauna, and sites of Aboriginal and European cultural heritage. Where possible the Company locates drill sites on disturbed ground or less vegetated areas.
During the year the Company completed rehabilitation work and monitoring at the Eaglehawk open pit site near Maldon. Management of the site has been returned to Parks Victoria.
Water Management
Water from the Union Hill Decline at Maldon is provided to a group of local farmers referred to as the Nuggetty Water Group ('NWG') and to periodically top up the South German Dam in Maldon. The quality of the water pumped from the decline is monitored on a regular basis and reported to both the ERC and NWG.
Community
Octagonal seeks to provide economic return to the local communities within which we operate. Where possible we recruit employees locally, or employ residential staff, and use local contractors and suppliers. This ensures that most of the money that we spend on employment and goods and services flows directly into the local economy.
Sponsorship
Octagonal is in support of creating a strong local economy at Maldon for the benefit of the broader community and recognises that the local tourist industry is important in both attracting business to town and creating employment.
During the year the Company continued to provide support to a number of community events and sporting clubs in the Maldon area and during the sale process of the Maldon Gold Operation provided details to A1 Gold of its sponsorship commitments to the community.
Maldon Gold Operation (Victoria)
The Maldon Gold Operation is located 140 kilometres northwest of Melbourne in Central Victoria. The operation is centred around the Porcupine Flat gold processing facility at Maldon and consists of sixteen exploration and mining licences overlying the historic Maldon, Wehla, Campbelltown, Amherst, Dunolly, Rheola, and Maryborough goldfields.
The Maldon Goldfield was historically a large primary gold producer in Central Victoria (with recorded production of more than
1.7 million ounces of primary gold at an average grade of 28 g/t). Ninety percent of this production was derived from five reefs located within the Central Maldon Shear Zone; the Nuggetty, Eaglehawk, Beehive, Derby and German reefs (Figure 1).
During the first half of the year Octagonal continued to focus on developing the Alliance South Deposit in Maldon, with a view to establishing a long-life and sustainable gold producing operation in Central Victoria. This work included extending the Union Hill Decline from the 1100 level to the 1080 level and developing the Eaglehawk and Western reefs on the 1080 level in preparation for stoping.
High-grade gold shoots were intersected in mine development on the 1080 level, however ore processing operations were suspended in late-September with no ore sources immediately available for processing.
Recognising the need to provide certainty of ore supply to the Maldon gold processing facility, in November 2014 Octagonal entered into a binding Heads of Agreement with A1 Gold to sell the Maldon Gold Operation.
This transaction provided the Maldon gold processing facility with access to the substantial mineral resource at the A1 Gold Mine and returned to Octagonal 169,672,726 A1 Gold shares and one A1 Gold option for every three A1 Gold shares received with an exercise price of 3.0 cents each and five year vesting period.
A formal Share Sale Agreement was executed during December 2014 and in February 2015 the two companies entered into a Management Agreement whereby A1 Gold commenced early management control of the Maldon Gold Operation pending completion of the sale. This agreement effectively ended Octagonal's financial obligation to maintain the Maldon Gold Operation prior to settlement, which subsequently occurred during June 2015.
This section discusses Octagonal's activities at the Maldon Gold Operation prior to the change in management control. Development
Underground development of 300 metres was completed at the Alliance South Deposit and comprised 40 metres of reef
development on the 1100 level, 127 metres of waste development (decline and 1080 level cross-cut) and 133 metres of reef development on the 1080 level.
Development on the 1080 level defined two areas of high-grade gold associated with the Eaglehawk and Western reefs (Figure 2). At the northern end, near the cross-cut, face channel sampling returned 12 metres of reef grading 15.6 g/t Au over 1.7 metres width from the Eaglehawk Reef while sludge hole drilling defined 18 metres of reef grading 4.4 g/t Au over 5.85 metres width associated with the Western Reef (refer to ASX Announcement dated 11 November 2014).
Twenty metres further to the south face channel sampling returned 26.5 metres of reef grading 10.2 g/t Au over 3.1 metres width, including 9 metres of reef grading 30.9 g/t Au over 2.3 metres width, associated with the Western Reef (refer to ASX Announcement dated 15 January 2015).
During and following the completion of mine development on the 1080 level a total of 53 sludge holes, for 241 samples, were drilled into the west wall of the 1080 and 1100 levels to better define the distribution of high-grade gold associated with the Western Reef (refer to ASX Announcement dated 15 January 2015).
The sludge holes were designed to test 90 metres strike length of reef with approximately 5 metre spaced holes (Figure 3). On the 1080 level two holes were drilled on each traverse, with one oriented horizontal and the second at a 40 degree inclination, whereas on the 1100 level only one hole was drilled on each traverse at a 40 degree inclination because the area had previously been tested with horizontal sludge holes (refer to ASX Announcement dated 13 March 2014).
This work continued to intersect high-grade gold associated with the Western Reef with significant results including 2 metres @
g/t Au, 2 metres @ 14.8 g/t Au, 6 metres @ 15.9 g/t Au, 2 metres @ 22.2 g/t Au, 4 metres @ 26.7 g/t Au, 6 metres @ 12.1 g/t Au, 4 metres @ 14.8 g/t Au, and 2 metres @ 28.3 g/t Au.
Figure 1. Reefs of the Central Maldon Shear Zone
1100 L
1080 L
Figure 2. Eaglehawk Reef: Longsection showing position of Union Hill Decline relative to the Alliance South Shoot
Figure 3. Plan of 1080 level reef development with diluted horizontal sludge hole sample assay results and undiluted face channel sample assay results
Legend-
Dots: face channel samples Horizontal lines: sludge holes
White: awaiting assay result Blue: no significant assay result Green: 1 - 5 g-m Au
Yellow: 5 - 10 g-m Au
Orange: 10 - 20 g-m Au
Red: 20 - 50 g-m Au Purple: > 50 g-m Au
Red lines: quartz reef and spurry veins
Ore Processing
The Porcupine Flat gold processing facility operated between July and September 2014. 18,295 dry tonnes of ore was processed to recover 1.5 g/t Au and produce 1,023 ounces of gold that was sold to achieve an average gold price of A$1,385/oz. Ore processed consisted of low-grade ore from the Union Hill open pit and Alliance South Deposit.
The majority of ore processed during the year was sourced from the Union Hill open pit, while decline development was completed towards the 1080 level of the Alliance South Deposit.
During late September the mill was shut down with no further ore sources available for processing until a bulk sample could be collected from the 1080 level. Ore processing did not recommence due to the pending sale of the Maldon Gold Operation announced in November 2014.
Exploration
No exploration work was completed at the Maldon Gold Operation during the year.
Hogan's Project (Western Australia)
The Hogan's Project is located within the Eastern Goldfields Province of Western Australia. The project is situated 70 kilometres southeast of Kalgoorlie and 20 kilometres east of the world-class St Ives Goldfield (+13M oz Au) and Kambalda Nickel District (+1.4Mt Ni) (Figure 4). This area is an emerging gold producing district, being positioned immediately south of the +0.8Moz Daisy Milano Mine and +0.4Moz Salt Creek Mine owned by Silver Lake Resources.
The project consists of four exploration licences that overlie a highly prospective but underexplored area of greenstone.
The Hogan's Project is positioned in the southern part of the Norseman - Wiluna Greenstone Belt and straddles the triple junction of three crustal units; the Parker and Boorara domains of the Kalgoorlie Terrane and the Bulong Domain of the Kurnalpi Terrane, each of which is bounded by regionally persistent faults with long histories of reactivation.
Most of the Hogan's Project area is overlain by shallow transported cover. The area is considered to be prospective for gold, copper-gold, and nickel sulphide deposits.
Exploration work completed during the year focused on the Burns Prospect and consisted of drilling one diamond hole to test a high priority target defined by 3D inversion modelling of ground magnetic data.
A program of tenement rationalisation was also completed and three new exploration licences acquired overlying the Quimby gold Prospect, Lisa's Dune nickel sulphide Prospect, and Yalca Hill nickel sulphide Prospect.
Figure 4. Hogan's Project: Tenement location plan
Legend-
Yellow dots: gold deposits
Grey dots: nickel sulphide deposits
Burns Prospect
The Burns Prospect is characterised by a discrete granite intrusive with associated low magnetic and gravity signatures that intrudes a thrust package of mafic, intermediate and meta-sedimentary rocks. The granite has caused doming of the greenstone sequence, creation of dilational jogs associated with northwest trending structures, and localised lithological and structural complexity that forms ideal sites for the deposition of gold. Evidence of intense fluid flow is further supported by a high-magnetic alteration halo that surrounds the granite.
In May 2011 Octagonal discovered significant gold and copper in regolith (weathered Archaean rock) anomalism at the Burns Prospect, with aircore drilling used to define a one square kilometre area of gold anomalism and a two kilometre long copper anomaly using a 40 metre by 160 metre spaced grid (Figure 5). The gold anomalism is unconstrained by drilling where it trends beneath salt lake cover to the north and east.
During 2012 Octagonal completed 33 reverse circulation ('RC') holes, on four 40 metre spaced traverses in the southeast corner of the target area. This drilling intersected broad zones of gold and copper associated with magnetite-biotite alteration and hosted in fractured high-magnesian basalt and intermediate intrusive rocks.
Significant assay results included:
9 metres @ 1.5 g/t Au & 1.0 % Cu from 58 metres in OBURC002 inc. 2 metres @ 1.5 g/t Au & 4.2 % Cu from 65 metres
6 metres @ 4.9 g/t Au & 0.4 % Cu from 23 metres in OBURC003
12 metres @ 0.8 g/t Au & 1.7 % Cu from 48 metres in OBURC004 inc. 3 metres @ 2.1 g/t Au & 4.8 % Cu from 53 metres
4 metres @ 0.7 g/t Au & 2.0 % Cu from 40 metres in OBURC005
1 metre @ 8.5 g/t Au & 6.7 % Cu from 123 metres in OBURC007
32 metres @ 1.7 g/t Au & 0.6 % Cu from 76 metres in OBURC011 inc. 6 metres @ 4.9 g/t Au & 2.1 % Cu from 83 metres
6 metres @ 4.9 g/t Au & 0.9 % Cu from 24 metres in OBURC012
50 metre @ 0.9 g/t Au & 0.5 % Cu from 24 metres in OBURC016
12 metres @ 1.5 g/t Au & 0.5 % Cu from 27 metres in OBURC021
19 metres @ 0.5 g/t Au & 1.0 % Cu from 44 metres in OBURC022
9 metres @ 1.0 g/t Au & 0.7 % Cu from 28 metres in OBURC025
3 metres @ 16.1 g/t Au & 0.5 % Cu from 35 metres in OBURC028
9 metres @ 1.0 g/t Au & 1.5 % Cu from 115 metres in OBURC031
12 metres @ 1.3 g/t Au & 0.8 % Cu from 163 metre in OBURC032
Diamond Drilling
One diamond hole (OBUDD001), totalling 401.5 metres, was drilled at the Burns Prospect during July 2014 to test a high- magnetic anomaly defined by the 3D inversion magnetic modelling (refer to ASX Announcement dated 29 August 2014).
This drill hole is considered to have effectively tested the target and intersected 90 metres of strong magnetism hosted within high-magnesian pillow basalts and intermediate intrusive rocks (Figure 6).
A 3.6 metre wide zone of very high magnetism between 253.7 and 257.3 metres depth is associated with a mafic-dominant (magnetite-chlorite) breccia zone that is interpreted to be the feeder structure for copper and gold mineralisation observed at the deposit. This structure appears to strike northwest and correlates with the high-magnetic trend observed in ground magnetic data.
Within this breccia zone a narrow section of massive magnetite-chalcopyrite mineralisation returned 0.9 metres @ 4.5 g/t Au & 2.6% Cu.
Other significant assay results returned from this drill hole included:
38.5 metres @ 0.5 g/t Au & 0.2 % Cu from 184.5 metres
55.95 metres @ 0.5 g/t Au & 0.2 % Cu from 229.85 metres inc. 10.35 metres @ 1.2 g/t Au & 0.6 % Cu from 273.3 metres
A down hole electromagnetic ('EM') survey completed in the drill hole identified six localised EM sources that clearly correlate/coincide with magnetite and or sulphide bearing units.
Figure 5. Burns Prospect: Gold and copper in regolith anomalism defined by aircore drilling on an aeromagnetic image
Legend-
Light green contour: + 0.1 % copper in regolith anomalism Orange contour: + 0.1 g/t gold in regolith anomalism
Drill Holes
Black dots: aircore holes White dots: RC holes
Red dot: diamond hole OBUDD001 Black dashed line: salt lake margin
Reinterpretation of RC drilling data, having recognised the geometry of the primary feeder structure, located this structure on all four traverses (Figure 7) and revealed an apparent southerly plunge to the copper and gold mineralisation hosted within this structure coincident with the margin of the magnetic anomaly.
Significant assay results returned from this structure include:
9 metres @ 1.5 g/t Au & 1.0 % Cu from 58 metres in OBURC002
11 metres @ 2.8 g/t Au & 0.7 % Cu from 24 metres in OBURC012
15 metres @ 1.4 g/t Au & 0.2% Cu from 43 metres in OBURC016
12 metres @ 1.5 g/t Au & 0.5 % Cu from 27 metres in OBURC021
30 metres @ 0.5 g/t Au & 0.8% Cu from 44 metres in OBURC022
19 metres @ 0.9 g/t Au & 0.5% Cu from 28 metres in OBURC025
9 metres @ 1.0 g/t Au & 1.5 % Cu from 115 metres in OBURC030
15 metres @ 1.1 g/t Au & 0.7% Cu from 160 metres in OBURC032
A number of potential exploration targets have been identified in the immediate vicinity of the previous RC and diamond drilling completed at the Burns Prospect, however due to the size of the target area and the limited funds available for exploration, target prioritisation is focused on testing for the largest and greatest value deposit styles first.
The greatest value exploration target possible at the Burns Prospect is a massive sulphide copper-gold deposit. This style of mineralisation is able to be detected using EM techniques.
In 2013 a moving loop surface EM survey completed at the prospect failed to identify any significant conductors potentially related to massive copper-sulphide mineralisation, however the highly conductive nature of the transported cover and regolith may have impacted on the effectiveness and depth penetration of this survey.
The next phase of exploration planned at the Burns Prospect is designed to systematically test for a massive sulphide copper- gold deposit using down-hole EM techniques, while at the same time testing for other potential controls on the distribution of mineralisation.
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