March 2020 Quarterly Report

RNS Number : 4708L

Aura Energy Limited

30 April 2020

 

AURA ENERGY LIMITED

("Aura" or the "Company")

March 2020 Quarterly Report

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KEY POINTS:

QUARTER SUMMARY

Aura Energy's activities in 2019, particularly in completing the Tiris DFS with low cash cost and low capital, have positioned the Company in an exceptionally strong position given the rise in the uranium price in recent weeks.

The key project outcomes of the study were;

• Low capital cost of US$62.9 million

• Low C1 cash cost of US$25.43/lb U3O8

• All-In Sustaining Cost (AISC) of US$29.81/lb U ₃ O ₈

• Production is 12.4 Mlbs U ₃ O ₈ over 15 years

• Payback period is 3.25 years

• Maiden Ore Reserve Estimate for Tiris is 10.9 Mt @ 336 ppm U ₃ O ₈

(See ASX LR 5.22 and 5.23 compliance at the end of this quarterly report.)

Aura is in the enviable position of possessing a construction-ready uranium project which the board believes is one of the most compelling uranium development projects in the world.

The key focus in the quarter was on financing activities for the Tiris Uranium project via the Export Credit Agency financing process, which was buoyed, subsequent to the quarter end, by the significant rise in the uranium price to over US$33/lb U ₃ O ₈ .

The Company has also initiated inquiries into the long-term uranium contract market to understand its potential to support Aura's Tiris financing.

Aura continues to seek interest for either transactions or separate listings for both its gold assets and the Häggån asset. There has been a positive response which will be pursued in the next quarter.

The Swedish compensation claim remains ongoing and Aura continues to be steadfast in action to recover the value of the confiscated asset.

The concerted shareholder action by a minority group of shareholders to seek control of the Company without making an offer has negatively impacted the Company  The activities of this group of minority shareholders is undermining discussions with mining authorities in Mauritania and Sweden and compliance with new ASX Listing Rules to secure funding in extraordinarily difficult times.

The Aura Board of Directors remains focussed on achieving project developments which create long term value and the board of directors believe this minority group of shareholders do not have the necessary work experience and skills despite their numerous machinations on social media.  The use of social media by this minority group of shareholders simply displays unprofessionalism and the use of a platform to provide misinformation to users.  The postings on social media without disclosing real identities raises serious questions as to whether they are fit and proper individuals to act within the corporate governance principles demanded by regulators. 

This was clearly demonstrated by their proposal to extract a royalty from Aura's Tiris Uranium Project for US$17 million (A$27m) for a financing of only A$3 million. The Board could not countenance such an offer on behalf of shareholders.

This royalty proposal also demanded buy back terms of up to 200%, or US$9 million, should the Company find itself in a position to unwind the facility. Again, the Aura Board is clear that this group does not have the interests of all shareholders in mind with such a proposal.

The group shows their inexperience in mining and mining finance given such a royalty would be crippling to achieving mine development finance in the future and add significantly to the operating cost of the mine. Not one of the proposed Directors has any mining experience.

It also remains highly unlikely in the post Covid-19 economic environment that this royalty financing remains available or has not changed significantly from that originally proposed. Given ASEAN would not disclose the potential counterparties, shareholders have no transparency into the real motivation for this proposal.  It is a fundamental obligation of a board of directors to "know-your-client" and the fact that the ASEAN has never been prepared to identify the party or parties is a fundamental shortcoming of their proposal which any diligent board of directors would have to refuse to negotiate until such information is disclosed.

It is also important to note, the ASEAN letter sent to shareholders displayed its contradictions.  ASEAN states the royalty is only payable if the Tiris project goes ahead; however, the fundamental reason ASEAN has invested in the Company is that it believes there will be a significant recovery in the uranium price and as such the project will proceed.

Additionally, with six Directors proposed to join the board from Panama, Indonesia, and Hong Kong, the Company, and therefore shareholders, have still not been furnished with details of these Directors' experience or backgrounds. This shows the utmost disregard for shareholders and for good governance given this information is required for Aura to comply with ASX and AIM governance recommendations.

The Board remains concerned that the actions of this group could negatively impact both Aura's AIM and ASX listings and seriously damage the Company by being potentially suspended.

The onset of Covid-19 has seen the EGM for election of the proposed Directors deferred until 21 May 2020 conditional on the government's Covid-19 restrictions being lifted. The Company does not accept the criticism by this group regarding the meeting deferral as given the importance of the meeting the Company wishes to conduct a fully convened meeting with Directors and shareholders able to attend.

TIRIS PROJECT, MAURITANIA (AURA 85%)

Aura Energy completed the Tiris Feasibility Study in 2019 (see ASX Announcement, dated 29 July 2019).

The key project outcomes of the study were:

• Low capital cost of US$62.9 million

• Low C1 cash cost of US$25.43/lb U3O8

• All-In Sustaining Cost (AISC) of US$29.81/lb U ₃ O ₈

• Production is 12.4 Mlbs U ₃ O ₈ over 15 years 

• Payback period is 3.25 years

• Maiden Ore Reserve Estimate for Tiris is 10.9 Mt @ 336 ppm U ₃ O ₈

(See ASX LR 5.22 and 5.23 compliance at the end of this quarterly report)

The key financial outcomes of the project were;

• Total project After Tax cash flow is US$289 million (A$413 million)

• Average After Tax cash flow of US$19.2 million pa (A$27.4 million)

• Project IRR of 26%

Project Upside described as:

• Potential for Reserve addition via conversion from Global Resource

• Potential for Resource addition in known mineralised areas

• Exploration of known targets in project area

• Vanadium production from leach solution

• 3 Mlb U ₃ O ₈ pa expansion case potential

• Optimisation of reagent use

• Optimisation of beneficiation in production to increase throughput

• Production optimisation of current Reserve Estimation

Implementation

• Fully Permitted for development

• Exploitation Licence granted

• Environment Approval granted

• Competitive uranium off-take contract in place

• Export Credit Agency Finance achieving a very promising response

• Mincore Engineering acted as overall Project Engineer

• Simulus Engineering performed Leach Plant Engineering

• Adelaide Control Engineering (ACE) - U ₃ O ₈ recovery and packaging

Peer Comparison

• Tiris has one of the lowest uranium development capital costs of the current uranium projects

• Robust capital development estimate with 85% of cost estimated from direct supplier quotes

• Development capital cost very competitive versus LOM capital cost for in-situ leach projects with repeat development capital

• Low development cost enables rapid development relative to peers

• Tiris' AISC is among the lowest in the world

• Many peer companies quote Pre-Tax project financials

The company progressed the Export Credit Agency finance during the quarter with its London based advisors with the process ongoing and buoyed by the recent rise in the uranium price.

The previous significant ECA interest demonstrated by more than 7 ECA's remains strong for the Tiris Project, uranium the commodity and for Mauritania as a jurisdiction.

The next stage is the short listing of ECA's for more detailed project assessment.

Successful financing via the ECA finance process is a precursor to the development of the project and the Board is optimistic of success.

HÄGGÅN BATTERY METALS PROJECT, SWEDEN (AURA 100%)

Activities at the Haggan Battery Metals project remained on care-and-maintenance.

The Swedish compensation claim remains ongoing and Aura continues to be steadfast in action to recover the value of the confiscated asset.

Aura continued discussions with various parties regarding transactions which will allow independent funding for the project in a European market context.

TASIAST SOUTH GOLD PROJECT, MAURITANIA (AURA 100%)

No new work occurred on the Tasiast South Project during the quarter.

Aura continues to pursue transactions which will provide ongoing funding for this significant project with the key focus on an IPO in a relevant market to highlight the value of these exceptional assets.

CORPORATE

Shareholder Action

During the quarter Aura continued to manage the actions of Aura Director, John Bennett and ASEAN Deep Value Fund who have proposed six new Director's to the Aura Board.

The Board rejects many of the allegations made by these parties regarding the CEO's remuneration, reasons for the share price fall and the ability of any of these Directors to contribute meaningfully to the development of a mining company. The Board continues to believe that the actions of this group are not in the best interests of all shareholders.

A key breakdown in the communications between the parties was ASEAN's (an 18% shareholder in Aura) proposal to replace the Lind convertible note with a new convertible note.

Part of their proposal was to extract a royalty from Aura's Tiris Uranium Mine for US$17 million (A$27 million ) for a financing of only A$3 million. The Board could not countenance such an offer on behalf of shareholders. This royalty proposal also demanded buy back terms of up to 200%, or US$9 million, should the Company find itself in a position unwind the facility. Again, the Aura Board is clear this group does not have the interests of all shareholders in mind.

The group shows their inexperience in mining and mining finance given such a royalty would be crippling to achieving mine development finance in the future and add significantly to the operating cost of the mine. Not one of the proposed Directors has any mining experience.

It remains highly unlikely in the post Covid-19 economic environment that this royalty financing remains available or has not changed significantly from that originally proposed. Given ASEAN would not disclose the potential counterparties shareholders have no transparency into the real motivation for this proposal.

The proposed terms of ASEAN's note were as follows:

· Convertible Note - A$3-4 million

· Coupon/Interest rate - 15% p.a.

· Term - 24 months

· Conversion Price - 1-month VWAP at 24 months

· Aura to have a right to buy back the Convertible Note after:

o 1 year for A$6 million (100% of face value); or

o 2 years for A$9 million (200% of face value)

· Royalty - US$1 per pound royalty on each pound of Tiris production, which based on the current mining plan would be equivalent to US$17m over the current life-of-mine

· Majority board representation for ASEAN for arranging the convertible note when ASEAN's holding in Aura is only 18%.

· Finder's fee payable to ASEAN of 5% of the value of the replacement note raised, equivalent to 23 million AEE options at 0.7c

The Aura Board rejected the offer on these terms which it considered to be unacceptable and well in excess of terms for comparable transactions. In particular the US$17 million royalty to be granted was disproportionate to the A$3-4 million funding being provided from the convertible note. This royalty would force the overall cost of the ASEAN convertible note to be several orders of magnitude more expensive than the existing convertible note .

Additionally, ASEAN would not reveal the counterparties behind the funding to be provided for the proposed convertible note and the Board considered this to be vital information for a proper assessment of the offer. Accordingly, Aura did not believe the overall terms of the convertible note proposed by ASEAN were in the best interests of the Company or its shareholders. Negotiations on the note were then suspended.

Whilst the existing convertible note supplied critical funds for Aura at an important time for the Company the Aura Board has been open to replacing the existing convertible note but only on reasonable financial terms.

Additionally, Aura notes other elements of ASEAN requests, anomalies from the notices and important implications of the proposed changes. These are:

· Prior to John Bennett's election ASEAN requested Aura appoint Mr Bennett to the Board with immediate effect.

· ASEAN also requested Aura discontinue legal proceedings against Mr Bennett for the alleged non-payment of subscription monies in the February 2019 placement. Aura's directors maintain they have a fiduciary duty to continue this action.

· No details of the experience or qualifications of the three directors proposed by John Bennett has been provided, and limited information on the ASEAN nominees, have been provided to Aura.

· Under AIM regulations there is serious potential for disruption to Aura's AIM listing with significant Board changes not approved by the AIM Nomad.

· The existing convertible note also contains an event of default triggered by a change of more than 50% of the Company's directors. This event of default gives the holder the right to request repayment of all outstanding amounts, currently approximately $1 million under the convertible note as at the 28^th April 2020. The overhang has reduced significantly and as such the need for a replacement note as proposed by ASEAN is greatly diminished.

· The potential appointment of 6 new directors, all apparently without relevant or useful skills or experience of governance or the mining industry, will undermine relations with government authorities, structurally and financially unsustainable and it is unclear what are the proponents' intentions as to the future shape and composition of your Board

· The holders of the existing convertible have expressed concern that they have no knowledge regarding the proposed board members by John Bennett.

For more information please visit www.auraenergy.com.au or contact the following:

Aura Energy Limited Peter Reeve (Executive Chairman) SP Angel Corporate Finance LLP (Nominated Advisor and Joint Broker) Ewan Leggat Caroline Rowe WH Ireland Limited (Joint Broker) Adrian Hadden James Sinclair-Ford Yellow Jersey PR Limited Felicity Winkles Joe Burgess

Telephone: [phone] [e-mail] Telephone: [phone] Telephone: [phone] Telephone: [phone]

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

ASX LR 5.22 and 5.23

The board of directors wish to confirm that it is not aware of any new information or data that materially affects the information disclosed in this quarterly report on the Tiris project and the estimate of mineral resources and ore reserves as well as all material assumptions and technical parameters underpinning estimates on capital and operating costs continue to apply and have not materially changed since the release of the feasibility study.

Competent Persons for Tiris Project

The Competent Person for the information in this report that relates to Tiris Mineral Reserves is based on information compiled and reviewed by Mr Andrew Hutson, a Competent Person who is a Fellow of the Australian Institute of Mining and Metallurgy (AusIMM) and a full-time employee of Mining Plus Pty Ltd. Mr Hutson has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the JORC Code 2012. Mr Hutson has no economic, financial or pecuniary interest in the company and consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

The Competent Person for drill hole data and for aggregating the 2018 and 2011 resource estimates is Mr Neil Clifford. The information in the report to which this statement is attached that relates to drill hole data and to aggregation of the resource estimates is based on information compiled by Mr Neil Clifford. Mr Clifford has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking. This qualifies Mr Clifford as a Competent Person as defined in the 2012 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Clifford is an independent consultant to Aura Energy. Mr Clifford is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Clifford consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The Competent Person for the Tiris Metallurgical Testwork is Dr Will Goodall. The information in the report to which this statement is attached that relates to the testwork is based on information compiled by Dr Will Goodall. Dr Goodall has sufficient experience that is relevant to the testwork program and to the activity which he is undertaking. This qualifies Dr Goodall as a Competent Personas defined in the 2012 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Dr Goodall is a Member of The Australasian Institute of Mining and Metallurgy (AusIMM). Dr Goodall consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Competent Persons for Haggan Project

The Competent Person for the Häggån Metallurgical Testwork is Dr Will Goodall. The information in the report to which this statement is attached that relates to the testwork is based on information compiled by Dr Will Goodall. Dr Goodall has sufficient experience that is relevant to the testwork program and to the activity which he is undertaking. This qualifies Dr Goodall as a Competent Personas defined in the 2012 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Dr Goodall is a Member of The Australasian Institute of Mining and Metallurgy (AusIMM). Dr Goodall consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The Competent Person for the 2012 Häggån Mineral Resource Estimate and classification, updated in 2018, is Mr Rupert Osborn MSc of H&S Consultants Pty Ltd. The information in the report to which this statement is attached that relates to the 2018 Resource Estimate is based on information compiled by Mr Rupert Osborn, who has sufficient experience that is relevant to the resource estimation.  This qualifies Mr Osborn as a Competent Person as defined in the 2012 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Osborn is an employee of H&S Consultants Pty Ltd, a Sydney based geological consulting firm. Mr Osborn is a Member of The Australian Institute of Geoscientists (AIG) and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The Competent Person for drill hole data, cut-off grade and prospects for eventual economic extraction is Mr Neil Clifford. The information in the report to which this statement is attached that relates to drill hole data, cut-off grade and prospects for eventual economic extraction is based on information compiled by Mr Neil Clifford. Mr Clifford has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking.  This qualifies Mr Clifford as a Competent Person as defined in the 2012 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Clifford is an independent consultant to Aura Energy.  Mr Clifford is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Clifford consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Competent Person for Tasiast South Project

The Competent Person in relation exploration results and potential at the Tasiast South gold and base metals project is Mr Neil Clifford.  Mr Clifford was a consultant to Drake Resources Ltd and conducted field exploration programmes for Drake whilst it conducted gold exploration in Mauritania.  Mr Clifford is also retained by Aura Energy Limited as a consultant and as the Competent Person for Aura Energy Limited, Mr Clifford has advised that the information in the market announcement released to the market on 3 April 2019 and 8 April 2019 are an accurate representation of the available data and studies of the tenements.

Mr Clifford has updated all data from the former tenement holder to the 2012 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' Code and sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he performed for the previous holder of the tenements granted to the Company. 

Mr Clifford is an independent consultant to Aura Energy Limited.  Mr Clifford is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM).  Mr Clifford consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Top 20 Shareholders							29 January 2020
	Rank		Name			Units			% of Units
1.		BNP PARIBAS NOMINEES PTY LTD <IB AU NOMS RETAILCLIENT DRP>			336,119,907			21.98
2.		COMPUTERSHARE CLEARING PTY LTD <CCNL DI A/C>			170,856,160			11.17
3.		J P MORGAN NOMINEES AUSTRALIA PTY LIMITED			80,704,126			5.28
4.		PRE-EMPTIVE TRADING PTY LTD			76,600,000			5.01
5.		LIND GLOBAL MACRO FUND LP			51,872,016			3.39
6.		CITICORP NOMINEES PTY LIMITED			30,234,952			1.98
7.		MR LUKE PETER DALE + MRS MARIEANNE ERIKA DALE			30,169,234			1.97
8.		MR PETER DESMOND REEVE			27,218,304			1.78
9.		GEOGRUPPEN I GOTEBORG AB			26,890,922			1.76
10.		MET FORAGES SARL			18,811,250			1.23
11.		YARANDI INVESTMENTS PTY LTD <GRIFFITH FAMILY NO 2 A/C>			16,143,682			1.06
12.		SAMBOLD PTY LTD <SUNSHINE SUPER FUND A/C>			15,364,895			1.00
13.		MR THOMAS IAN BARRETT			15,000,000			0.98
14.		KAJUN DESIGNS PTY LTD			11,999,999			0.78
15.		MR MALCOLM ALEXANDER BRIODY			10,938,094			0.72
16.		MRS LISA GORDON			10,000,000			0.65
17.		CS FOURTH NOMINEES PTY LIMITED <HSBC CUST NOM AU LTD 11 A/C>			9,952,386			0.65
18.		SERVICO SARL			9,828,718			0.64
19.		MR STEVEN ALLAN WEBSTER			7,400,000			0.48
20.		MR BASIL CATSIPORDAS			7,000,000			0.46
	Total Top 20 Shareholders			963,104,645						62.97
	Remaining Shareholders			566,252,577						37.03
	GRAND  TOTAL			1,529,357,222						100.00

 

END

 

 

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