Highlands Natural Resources Regulatory News (HNR)

26 Oct 2006 07:00

Hardman Resources Limited26 October 2006 26 October 2006For Immediate Release REPORT TO SHAREHOLDERS FOR THE QUARTER ENDED 30 SEPTEMBER 2006 Third Quarter Highlights • Production: Hardman's net production for the quarter on an entitlement basis was 458,152 barrels (bbls) or 4,980 barrels of oil per day (bopd). On a gross basis, Chinguetti field production was 30,999 bopd for the quarter. Review of estimated recoverable reserves of the Chinguetti field is ongoing; • Revenue: sales revenue for the quarter from two crude liftings of A$44.2 million at an average realised price of US$60.30 per barrel; • Exploration, Uganda: successful production test of Mputa-1 well, with a sustained rate of 810 bopd achieved from two intervals on a 24/64" choke and a maximum rate of over 1,000 bopd, confirming excellent reservoir quality and potentially commercial flow rates. Initial estimate of oil in place from discoveries so far of 100-300 mmbbls, and initial estimate of recoverable volumes at Mputa-Waraga of 30 mmbbls, with near term upside potential from Nzizi well later this year; • Exploration, Mauritania: exploration offshore Mauritania resumed with Colin-1 and Flamant-1 wells drilled to date; no significant hydrocarbons found; • Developments, Chinguetti phase 2: joint venture approval for infill well (phase 2a) to commence drilling late 2006 to increase field deliverability, with high resolution 3D seismic to be acquired to create 4D dataset and optimise well locations for phase 2b drilling starting second half 2007; • Developments, Tiof: concept definition studies for phase 1 development using a tension leg platform (TLP) continue. Notwithstanding some delay and potential cost growth, project sanction remains scheduled for mid 2007, subject to joint venture approval. High resolution 3D seismic to be acquired in early 2007 to optimise TLP location and well targets; • Development, Uganda: Memorandum of Understanding signed with Uganda Government for concept evaluation of early production scheme in respect of Mputa-Waraga; • Net cash: as at 30 September 2006, net cash was A$139.4 million; • Corporate: announcement of agreement with Tullow Oil plc for the proposed acquisition by Tullow of all of the shares in Hardman via a Scheme of Arrangement, subject to a number of conditions, including Hardman shareholder approval. Under the Tullow offer, Hardman shareholders will receive A$2.02 cash per share, valuing Hardman at A$1.471 billion (respectively £0.7979 per share and £581 million, as at the date of announcement of the transaction), with a Share Alternative also available. Outlook • Chinguetti: production over the remainder of 2006 expected to show periods of continued stability with slow decline over a longer period, augmented by the first increment from phase 2 drilling anticipated early in 2007; • Uganda: Nzizi well expected to spud in November to test up-dip potential of Mputa structure. Active 2D and 3D seismic acquisition, conceptual development studies and offshore drilling planning will follow the highly encouraging onshore discoveries; • Tullow Offer: Explanatory Memorandum for Scheme of Arrangement expected to be sent to shareholders in mid November, with Hardman shareholders' general meeting in Perth in December. Mr. Simon Potter, Hardman's CEO and Managing Director, commented: "The third quarter's news is dominated by the announcement that the HardmanBoard has unanimously agreed to recommend to shareholders, in the absence of asuperior proposal, a Scheme of Arrangement involving the acquisition of theCompany by Tullow, at a very attractive premium to the Hardman share pricepre-announcement. We are pleased with the positive response from shareholdersand the documentation for the Scheme of Arrangement is progressing well. We lookforward to the Scheme completion around the end of the year. Operationally, production at Chinguetti has remained relatively stable throughthe third quarter, and progress has been made in implementing measures toimprove field performance. In Uganda we are looking to drive the pace ofappraising upside in our discoveries following the successful Mputa test resultsas well as accelerating further exploration and evaluating early productionoptions." For more information: Simon Potter CEO / MD +61 8 9261 7600 Peter Thomas CFO +61 8 9261 7600 Australian Media contact Jim Kelly Third Person +61 2 8298 6100 London Media contact Patrick Handley Brunswick Group +44 207 404 5959 CORPORATE On 25 September Hardman announced it had entered into an agreement with TullowOil plc for the proposed acquisition by Tullow of all of the shares in Hardmanvia a Scheme of Arrangement. The proposed transaction is subject to a number ofconditions, including Hardman shareholders' approval. Under the Tullow offer,Hardman shareholders will receive A$2.02 cash per share, valuing Hardman atA$1.471 billion (respectively £0.7979 per share and £581 million, at exchangerates at the date of announcement of the transaction). Tullow will also provide a Share Alternative to Hardman shareholders who wish toparticipate in the combined group. Hardman shareholders may elect to receive0.22289 new Tullow shares for each Hardman share, subject to a maximum aggregateof 65 million new Tullow shares. The Hardman Board believes that the Tullowoffer is in the best interests of Hardman shareholders. In the absence of asuperior proposal, the Directors unanimously recommend that Hardman shareholdersvote in favour of the Scheme of Arrangement and each of the Directors intends tovote any shares they hold in favour of the Tullow offer at the Scheme meetingwhich is expected to occur in December 2006 in Perth. Full details of theproposed Scheme will be set out in an Explanatory Memorandum expected to be sentto all shareholders around mid November. FINANCE September June Quarter 2006 Quarter 2006PRODUCTION & SALES DATA Crude oil production ('000 barrels)- Gross 2,852 3,832- Hardman share, entitlement basis 458 622 Sales volume ('000 barrels) 563 856(Increase)/ decrease in net over /under-lift (105) (234)volume and inventory REVENUE DATA Sales revenue from operations (A$000's) 44,208 73,900Cash revenue from operations (A$000's) 49,259 50,000 Realised oil price (US$ per barrel) 60.30 63.90Average oil price including hedging (US$ per barrel) 58.34 63.75 BALANCE SHEET DATACash (AUD$ million) 225.0 223.7Debt (AUD$ million) 85.6* 88.0*Net cash/(debt) (AUD$ million) 139.4* 135.7**before offsetting arrangement feesagainst debt The operating cash inflow for the quarter was A$34.4 million. Hardman shared intwo oil liftings sold by the pooled marketing group in which it participates,although cash revenues for the quarter related to the proceeds from liftings inJune and August, with the proceeds from the September lifting receivedsubsequent to the end of the quarter. The average oil price for the quarter wasUS$60.30 per barrel. This represented a differential to dated Brent of aroundUS$7 per barrel, reflecting the uncertain production levels for Chinguetti andthe discount for a new crude supply until it is more established in the market.Revenue per barrel was reduced by US$1.96, or A$1.6 million in total for theperiod, in respect of earlier payments to amend hedges relating to third quarterproduction. The hedges were originally arranged in 2005, when oil prices weresignificantly weaker, to lock-in realisations for a proportion of productionbetween specified floor and cap prices. Cash expenditure for the quarter included A$27.1 million spent on explorationand appraisal activities and A$1.7 million on development activities. Resulting net cash flows before financing for the quarter ended 30 September2006 were broadly neutral, with a A$5.3 million net inflow. Net cash at the endof the quarter was A$139.4 million (30 June: A$135.7 million). There were nochanges to the amount of debt drawn down except for foreign currency re-translation; at the end of the quarter borrowings were A$85.6 million. As theseborrowings are, with effect from early October, fully covered by cumulative netcash receipts from Chinguetti, Hardman may elect to reduce the size of the debtfacility, which was originally arranged to provide funding for the Chinguettidevelopment. Forecast cash expenditure for the quarter ended 31 December 2006 isapproximately A$30 million for exploration and appraisal and A$8 million fordevelopment. During the quarter Hardman amended its hedging contracts currently in place bycancelling certain call options forming part of the original options collars,with the result that the hedging arrangements as at 30 September were as set outin the table below. As at 30 September the mark to market valuation of thishedge position was negative A$4.8 million. Purchased and sold options Period Put options at Sold call options at Purchased call options at US$42 - 46/bbl US$68.84 - US$76.25 US$85.00 (barrels per day) (barrels per day) (barrels per day)October-December 2006 4,200 1,900 500January-March 2007 3,400 2,550 500April- June 2007 3,400 1,750 500July -December 2007 3,400 1,700 -January-June 2008 2,600 2,600 - REVIEW OF OPERATIONS Mauritania - West Africa Chinguetti Field (Hardman 19.008% working interest, Woodside operated) Average daily production was 35,068 barrels of oil per day ("bopd") in July;28,334 bopd in August and 29,547 bopd in September (gross), making the dailyaverage for the quarter 30,999 bopd (gross). On an economic entitlement basis, Hardman net production for the quarter was458,152 bbls or 4,980 bopd (provisional estimate subject to profit sharingadjustment). Reservoir deliverability was fairly stable during the quarter after the declineseen in the previous quarter. Surface oil facilities availability was generallyhigh for the quarter, although around 1,000 bopd gross production was lost fromthe quarterly average following a lengthy unplanned production shutdown in lateAugust and early September which impacted those months' output. Gas compressioncontinues to suffer from unplanned downtime with a long term solution currentlybeing investigated. However, production continues to be contributed principally by four wells in thesouth of the field with minimal contribution from the two producers in thenorthern segment. There continues to be little evidence of support from thewater injection to the reservoir. As previously announced, following the unpredicted production decline afterfirst oil, estimated reserves of the Chinguetti field are under review. Theoperator has been re-building its structural models of the field based oninterpretation of a re-processed 3D seismic dataset, and creating a newreservoir model to which the production history can be matched. The results ofthis work, together with a re-assessment of the reservoir development plan andconsequently the revised estimates of recoverable reserves for the field, areexpected to be made available by the operator towards the end of this year. The joint venture has meanwhile agreed to acquire additional high resolution 3Dseismic data over the field early in 2007 with the intention to create a 4Ddataset to understand the reservoir fluid flows better and to optimise locationof future wells. The venture has also now approved the acceleration of infilldrilling to improve production levels, with one well, Chinguetti-18, to bespudded in late 2006 to target a currently undrilled segment of the reservoir.Further infill drilling at this stage is most likely to be deferred to await the4D seismic interpretation. The near term production outlook is for continued periods of stability with slownatural decline in rates over a longer period, augmented by an initial incrementof around 10,000 bopd (gross) to be expected from the first new production wellearly in 2007. Chinguetti area development opportunities (PSC Area B: Hardman 21.6% equity,Woodside operated) During the quarter the joint venture decided that further evaluation of thedevelopment options for the Tevet discovery was needed in the context of abroader strategy for the optimal use of the Chinguetti production facilities,including the Tiof project, Chinguetti phase 2 infill drilling and potentialdevelopment of near-Chinguetti oil discoveries at Tevet, Labeidna and the oilrim of the nearby Banda gas field. A development decision for Tevet will wait onprioritisation of the different projects and evaluation of benefits from anintegrated approach to these developments. Tiof (Hardman 21.6% equity, Woodside operated) Concept definition studies progressed through the quarter following theselection of a dry tree concept as the preferred Tiof phase 1 developmentscenario. This included more detailed evaluation of a tension leg platform (TLP)concept by contractors in Houston, USA as well as a well engineering team taskedwith the drilling rig component of the design, a subsurface team tasked withlocating the wells and an environmental team. These studies were discussed with the joint venture in October and arecontinuing in the current quarter, with optimisation of reservoir developmentplans and significant project cost challenges, leading to a joint venturedecision scheduled for January 2007 to proceed with the more detailed designtender. Assuming the results are satisfactory, the operator's current plantargets a final investment decision and EPIC contract award by July 2007. Thisreflects a short delay and a different contracting strategy from earlier plans,but a similar target for Final Investment Decision. In addition, the PSC Area B joint venture has agreed to acquire high resolutionseismic over Tiof at the same time as the Chinguetti survey noted above, therebyreducing costs, in order to assist with locating the TLP and the developmentwells. Mauritania Exploration PSC A (Hardman 24.3% equity, Woodside operated) The Colin-1 well encountered excellent quality reservoir sands in the targetinterval but no significant hydrocarbons. While the sand quality was much higherthan for the corresponding sands intersected at Chinguetti, the reason forfailure is attributed to a lack of seal at the head of the Colin channel. Following the Aigrette-1 well, the Atwood Hunter drilling rig is now expected todrill the Chinguetti-18 production well, with this well being prioritised overthe Kibaro-1 exploration well in PSC A, which is now expected to be deferred forsubsequent drilling. PSC B (Hardman 21.6% equity, Woodside operated) The operator is in the process of reviewing drilling candidates for 2007 and2008 wells, focusing on near Tiof and near Chinguetti potential tie backprospects, such as Patudo, a 40 mmbbl prospect located 6 km west of Chinguettiand Batrachus, a 35 mmbbl prospect located 15 km to the south west of Tiof. Block 8 (Hardman 18% equity, Dana operated) In September the Atwood Hunter drilled the Flamant-1 exploration well to a totaldepth of 3,299 metres, targeting a large Cretaceous gas prospect. Analysis ofthe wire line and drill data indicated the well did not encounter anysignificant hydrocarbons. Block 7 (Hardman 16.2% equity, Dana operated) The current well in the Mauritanian exploration campaign is Aigrette-1, which isprimarily a gas prospect on trend from the 2003 Pelican-1 gas discovery. Theprimary targets are stacked Cretaceous sandstones with some 0.7 TCF potential.The well is located in a water depth of 1,380 metres approximately 43 km northwest of Pelican-1. The planned total depth is 4,925 metres. At the date of thisreport, the well had been drilled to a depth of 2,809 metres. Mauritania Commercial In early August 2006 representatives of Hardman, Woodside, Premier, BG Group andROC Oil attended a private mediation of the Supreme Court Action initiated byHardman in April 2005 involving cost recovery entitlements of the jointventurers in Mauritania Area B in terms of certain farm-in costs incurred byWoodside and British-Borneo International during 1996. The mediation did notresolve the dispute. The Action will proceed to trial which is not expected tooccur before the latter half of 2007. Uganda - East Africa (Hardman 50% equity and operator) Results from the exploration of Block 2 continue to be highly encouraging, withcurrent or near term activity on several fronts - seismic acquisition, appraisaldrilling and commercial and technical evaluation of early production options. Inthe limited portion of the block explored to date (approximately 6%) Hardman hasalready established oil in place of 100-300 mmbbls, and potential recoverablevolumes of the order of 30 mmbbls. There is near term upside potential fromsuccess at the Nzizi appraisal well to be drilled in November, up-dip fromdiscovered oil at Mputa. However, the main target remains the larger prospectsoffshore Lake Albert and planning is underway for future drilling of the Ngassaprospect by the end of 2007. During the quarter, the Mputa-1 discovery well drilled earlier in 2006 wassuccessfully tested. The first of three tests was a speculative test of thefractured basement; oil was recovered but failed to flow to surface. The secondtest was of thin sands near basement which flowed at 300 bopd while the thirdtest of the main sand at 966.5m - 974.5m flowed at a maximum rate of 820 bopd.The oil from the two zones was essentially the same quality, with a 33 degreeAPI, which in turn is similar to the oil in the lower two tested zones inWaraga-1 in the previous quarter. A summary of the test results is shown below: Mputa-1 Test Perforated Interval Depth choke Flow Oil quality#2. Lower Zone 1,118-1,126 metres 32/64" 300 bopd 32degrees API#3. Upper Zone 966.5-974.5 metres 40/64" 820 bopd 33degrees API TOTAL 1,120 bopd These test results prove not only that the oil at Mputa is mobile but also thatthe reservoir sandstones are capable of producing oil under natural flow atpotentially commercial rates. The latter aspect is particularly significant,given that the Mputa reservoirs are at shallower depth, and are hence at lowerpressure and temperature than the corresponding reservoir units at Waraga. Thispositive test result therefore expands the operating envelope over which typicalWaraga and Mputa crudes can be produced and eliminates pre-test concerns overoil viscosity and fluid properties at these shallower depths. The oil columnextends approximately 170 metres below the Mputa-1 reservoir intersection as well as up-dip to the crest of the structure. The joint venture has recently signed a Memorandum of Understanding (MOU) withthe Ugandan Government which includes commitments by both the joint venture andthe Government to advance exploration, appraisal and development activities torealise the full potential of the existing Block 2 discoveries and to providetime for the full evaluation of the exploration potential in the block. The joint venture and Government have agreed to determine the optimal earlydevelopment potential of the oil already discovered by commencing commercial andtechnical concept studies for an Early Production System. Subject to thesestudies, the demands of the local power market suggest an early productionscheme would be both feasible and commercial, as well as a high priority for theUgandan Government. The first steps of any such development could compriseproduction and processing facilities to fuel a local power station (of around50MW capacity) and potentially also supplying a mini-refinery. The joint venture will also continue its extensive exploration programme inBlock 2 including the Nzizi well noted above and a 2D seismic survey commencingin Q4 2006 on the northern area of the block with the expectation of identifyingprospects for drilling in 2007 and 2008. This area to the East of Butiaba hasnot been extensively explored previously. However, there are numerous oil seepswithin the area and oil shows were noted in the 1938 Waki-1 well. A gravitysurvey recently completed by the Ugandan Government's Petroleum Exploration andProduction Department suggests significant potential for structural traps in thearea and these data have been used in the planning of the layout of the 2Dseismic. In addition, a 3D seismic survey is planned to better define reservevolumes of existing discoveries at Mputa and Waraga and locate further appraisalwells and infill locations, with data acquisition to commence early in 2007. Tanzania - East Africa (Hardman 50% equity and operator, subject to farm-inobligations) During the last quarter the company has been planning a marine-to-shoretransition 2D seismic survey in the Lindi Licence, to be operated by Hardman.The transition survey is targeting a large prospect which straddles the coastline and was initially mapped on vintage seismic data. The marine 2D seismicdata acquired in late 2005 supports the original interpretation. Planning isalso underway for a land 2D seismic survey in the Mtwara Licence, againaddressing structures mapped on vintage data. Guyane - South America (Hardman 97.5% equity and operator) Hardman's proposed farm-out of equity in this very large Licence is progressing,preparatory to exploration drilling. Discussions are close to a conclusion withthe first farm-in partner to take an equity stake on a promoted basis. Discussions continue with other potential farm-in parties and also inconnection with drilling rig availability, potentially for a 2007 rig slot, todrill the large Matamata prospect. Well planning and permitting are currentlyunderway to be ready for mid 2007 drilling. The second five year explorationperiod of the Licence, which commenced 1 June 2006, remains subject to officialrendering of title by the Government authorities. Suriname - South America (Hardman 40%, subject to farm-In obligations and thirdparty participation. Paradise Oil operated) Signing of the production sharing concessions for the Uitkijk and Coronieconcessions onshore Suriname is anticipated early in 2007, following completionof commercial negotiations. Planning continues for drilling activity in both theUitkijk and Coronie Production Sharing Contracts, with drilling commencingmid-2007. Two drilling rigs have been selected for the exploration drillingcampaigns, which are expected to commence in the Uitkijk block around June 2007and in the Coronie block around September 2007. Both campaigns will targetstratigraphic traps similar to the adjacent Tambaredjo and Calcutta oilfields,which collectively represent an in-place volume of greater than 1 billionbarrels. Falkland Islands (Hardman 22.5% equity, FOGL operated) The forward work programme includes acquisition of 5,150km 2D seismic data and a550km Controlled Source Electro-Magnetic (CSEM) survey, commencing later in thecurrent quarter. These surveys are planned to high-grade the extensiveinventory of stratigraphic and structural leads mapped in the seven licences, todetermine the best prospects for exploration drilling in the next licence phase. SIMON POTTERCEO & MANAGING DIRECTOR Notes: (1) In accordance with ASX Listing Rules and AIM Rules, the hydrocarbon reservesand / or drilling update information included in this Report are based uponinformation compiled, reviewed and signed off by Mr Ian Bulley MSc (Geology)Principal Geologist at Hardman, who is a Fellow of the Geological Society ofLondon and has at least 5 years relevant experience within the sector. Heconsents to that information in the form and context in which it appears. Rule 5.3 Appendix 5B Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001. Name of entityHARDMAN RESOURCES LTD ABN Quarter ended ("current quarter")------------------- ------------------98 009 210 235 30 SEPTEMBER 2006------------------- ------------------ Consolidated statement of cash flows ------------ ------------Cash flows related to operating activities Current Year to quarter date $A'000 (9 months) $A'000 ------------ ------------ 1.1 Receipts from product sales and related 49,259 100,069 debtors 1.2 Payments for (a) production (5,228) (11,090) (b) administration (4,806) (11,677) (c) other (1,708) (3,874) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature 3,170 6,515 received 1.5 Interest and other costs of finance paid (3,125) (7,348) 1.6 Income taxes paid - (910) 1.7 Other (Income tax refund) - 988 (Payment in connection with hedging (3,118) (7,344) contracts) ------------ ------------ Net Operating Cash Flows 34,444 65,329 ----- ----------------------- ------------ ------------ Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects - - (b) equity investments - - (c) other fixed assets (123) (776) 1.9 Proceeds from sale of: (a) prospects - 1,350 (b) equity investments 37 4,731 (c) other fixed assets - -1.10 Loans to other entities - -1.11 Loans repaid by other entities - -1.12 Other (a) exploration and evaluation (27,133) (67,224) (b) development (1,698) (24,705) (c) other licence payments - (29,300) (d) other (245) 408 ------------ ------------ Net investing cash flows (29,162) (115,516) ----- ----------------------- ------------ ------------1.13 Total operating and investing cash flows 5,282 (50,187) (brought forward) ----- ----------------------- ------------ ------------ Cash flows related to financing activities1.14 Proceeds from issues of shares, options, etc. 929 151,291 (Net)1.15 Proceeds from sale of forfeited shares - -1.16 Proceeds from borrowings - 3,4361.17 Repayment of borrowings - (345)1.18 Dividends paid - -1.19 Other (provide details if material) - - ------------ ------------ Net financing cash flows 929 154,382 ----- ----------------------- ------------ ------------ Net increase (decrease) in cash held 6,211 104,1951.20 Cash at beginning of quarter/year to date 223,676 120,8241.21 Exchange rate adjustments to item 1.20 (4,890) (22) ------------ ------------1.22 Cash at end of quarter 224,997 224,997 ----- ----------------------- ------------ ------------ Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the relatedentities ------------- Current quarter $A'000 -------------1.23 Aggregate amount of payments to the parties included in 1,354 item 1.2 -------------1.24 Aggregate amount of loans to the parties included in item - ----- 1.10 ------------- ---------------------------------1.25 Explanation necessary for an understanding of the transactions -------------------------------------------- Payments in item 1.23 are consulting and related costs (excluding GST) paid during the quarter to directors of the entity and their associates, including accrued retirement benefits of the former chairman. -------------------------------------------- Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows -------------------------------------------- Nil -------------------------------------------- 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest -------------------------------------------- Nil -------------------------------------------- Financing facilities available Add notes as necessary for an understanding of the position. ------------- ------------- Amount available Amount used $A'000 $A'000 ------------- -------------3.1 Loan facilities 133,905 85,587 ------------- -------------3.2 Credit standby arrangements - ------ ----------------------- ------------- ------------- Estimated cash outflows for next quarter $A'000 ------------------4.1 Exploration and evaluation 30,000 ------------------4.2 Development 8,000----- ----------------------------- ------------------ Total 38,000----- ----------------------------- ------------------ Reconciliation of cash------------------------- ------------- -------------Reconciliation of cash at the end of the quarter (as Current Previousshown in the consolidated statement of cash flows) quarter quarterto the related items in the accounts is asfollows. $A'000 $A'000 ------------------------- ------------- ------------- 5.1 Cash on hand and at bank 77,683 44,832 ------------- -------------5.2 Deposits at call - - ------------- -------------5.3 Bank overdraft - - ------------- -------------5.4 Other (provide details) 147,314 178,844----- ---------------------- ------------- ------------- Total: cash at end of quarter (item 1.22) 224,997 223,676----- ---------------------- ------------- ------------- Other cash balances comprise amounts held either on overnight or 30 day deposit. Changes in interests in mining tenements ------------- ---------- -------- -------- Tenement Nature of Interest at Interest reference interest beginning of at end of (note (2)) quarter quarter ------------- ---------- -------- --------6.1 Interests in mining - - - - tenements relinquished, ------------- ---------- -------- -------- reduced or lapsed6.2 Interests in mining - - - - tenements acquired or ------------- ---------- -------- -------- increased Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rightstogether with prices and dates. Total Number Issue price per Amount paid -------------- number quoted security (see up per ---------- ---------- note 3) (cents) security (see note 3) ----------- (cents) ----------- 7.1 +Preference - - securities (description) ---------- ---------- ----------- ----------- 7.2 Changes during quarter (a) Increases - - through issues (b) Decreases - - through returns of capital, buy-backs, redemptions ---------- ---------- ----------- ----------- 7.3 +Ordinary 726,751,905 726,751,905 - - securities ----- ----------- ---------- ---------- ----------- ----------- 7.4 Changes during 845,000 845,000 $1.10 $1.10 quarter (a) Increases through issues (b) Decreases ----- through returns of capital, buy-backs ----------- ---------- ---------- ----------- ----------- 7.5 +Convertible - - debt securities (description) ---------- ---------- ----------- ----------- 7.6 Changes during quarter (a) Increases through issues (b) Decreases ----- through securities matured, converted ----------- ---------- ---------- ----------- ----------- 7.7 Options Exercise price Expiry date (description and conversion factor) 750,000 - $1.10 31/12/06 ---------- ---------- ----------- ----------- 7.8 Issued during - - - - quarter ---------- ---------- ----------- ----------- 7.9 Exercised during 845,000 - $1.10 31/12/06 quarter - ---------- ---------- ----------- -----------7.10 Cancelled during - - - - ----- quarter ---------- ---------- ----------- ----------- -----------7.11 Debentures - - (totals only) ----- ----------- ---------- ----------7.12 Unsecured - - notes (totals only) ---------- ---------- Compliance statement 1 This statement has been prepared under accounting policies whichcomply with accounting standards as defined in the Corporations Act or otherstandards acceptable to ASX (see note 4). 2 This statement gives a true and fair view of the matters disclosed. Sign here: ................................Date: ............................Chief Executive Officer & Managing Director Print name: SIMON POTTER Notes 1 The definitions in, and provisions of, AASB 6: Exploration for andEvaluation of Mineral Resources and AASB 107: Cash Flow Statements apply to thisreport. == == == == == This information is provided by RNS The company news service from the London Stock Exchange