strong exploration results at menzies gold project and ... · estimated to have produced +15m oz of...

Resources & Energy Group Limited Head Office: Level 33, 52 Martin Place, Sydney, NSW, 2000 ACN 162 869 276 ABN 68 162 869 276 Postal: Level 33, 52 Martin Place, Sydney, NSW, 2000 T: +61 2 9227 8900 | F: +61 2 9227 8901 Twitter: @REZ_GOLD | LinkedIn: REZGROUP | W: www.rezgroup.com.au E: [email protected]

ASX Release 30 October 2019

September 2019 Quarterly Activities Report

Strong exploration results at Menzies gold project and successful capital raising

Highlights

• Successful $3m capital raising • Menzies Gold Project in WA:

o Western Zone - Successful drill campaign at Goodenough o Northern Zone – Drill targets identified within the corridor o Eastern Zone – Consolidation of outstanding drilling results o Southern Zone – Commencement of site preparation for drilling activities

at Spion Kopp and Lady Kathleen o Central Zone – Commencement of geological information consolidation

and target generation – Large high-grade intercepts to drill target. • Radio Gold Mine

o Initial Farm-Out Deal over the Radio Gold Mine o Initial $200,000 cash payment received as part of the Farm-out

Agreement • Mount Mackenzie Gold Project

o Mineral Development Licence (MDL) granted over Mount Mackenzie o Ongoing scoping study update based on current gold prices

Resources & Energy Group Limited (ASX: REZ or the Company) is pleased to provide its September 2019 Quarter Activities and Cash Flow Reports.

Capital Raising

Successful placement of $3.0million to new and existing sophisticated investors and small cap funds. The funds will be used for exploration drilling and resource development at the Menzies Gold Project.

http://www.rezgroup.com.au/

mailto:[email protected]

Menzies Gold Project

Figure 1 - Menzies Gold Project Map

Western Zone -Goodenough drill results

A series of encouraging results released from the maiden drilling program at the Goodenough gold deposit within the Menzies Project, 130km north of Kalgoorlie in Western Australia.

The results include:

• 19GERC017 – 4m @ 4.21gpt Au from 124m o Including 1m @ 8.34 gpt Au

• 19GERC005 – 2m @ 5.51gpt from 61m o Including 1m @9.17gpt Au

• 19GERC001 1m @ 6.76gpt Au from 27m • 19GERC010 1m @ 4.68gpt Au from 38m

Eastern Zone – Gigante Grande prospect targeting.

Evaluation of historic drilling and exploration information has been completed. The Gigante Grande tenement and contiguous Kota Paki prospect represent over 3.5km of gold anomalous zone.

Previous project owners initially followed up historical auger soil sampling targets with RAB hole drilling. In addition, two lines 250m of RC drilling and RC with diamond drill tails were undertaken to follow up the initial anomalies. Both returned significant intersections.

Target highlights:

• MZR402 - 21m at 7.11gpt from 36m DH o Including - 5m at 29.19gpt from 52m DH o EOH sample is 13.84gpt at 57m

• MER008 - 8m at 6.96gpt from 72m DH o Including - 1m at 49.9gpt from 135m DH o MERC024D (Diamond Hole) 1m at 26.7gpt from 186m DH

Further drilling is planned following ground truthing and potential geophysical surveys in Q2.

Northern Zone – high-grade trend identified

Modelling of historic soil and rock chip geochemistry over the Northern Zone at Menzies identified a significant gold-in-soil anomaly measuring 1.2km by 500m.

The anomaly, which is represented by strong grades of over 40ppb with a peak of 1080ppb gold, is located within the Springfield Venn Gold Corridor. This corridor is host to a productive

greenstone sequence which has supported a number of mines further south in the Menzies Goldfield tenement package, including the Granny Venn, Caesar, and Aunt Nellie open pits.

The anomaly is supported by rock chip geochemistry which indicates potential for commercial gold occurrences along the entire 11km strike length of the Springfield-Venn Corridor. Peak Rock Chip assays from within the anomalous area include:

o RSP363 - 17.2 gpt Au o RSP143 - 14.3 gpt Au o RSP342 - 10.4 gpt Au o RSP133 - 8.93 gpt Au o RSP411 - 8.25 gpt Au

In many cases, elevated zinc, copper and lead accompany the gold mineralisation, with a peak result in RSP174 of 2.65gpt Au, 0.12% Cu, 0.22% Zn and 0.66% Pb. The sample locations and complete details are presented in Table 1 and Figure 2 of this release.

Mount Mackenzie Gold Project

Works were undertaken to update the Scoping Study findings for a contemporary gold price of the Mount Mackenzie Gold Project (MMGP) in the Bowen Basin, Queensland. The Scoping study is due for release in the December quarter, 2019.

The Company also would like to advise that a Mineral Development Licence (MDL) has been formally granted over the entire Mount Mackenzie mineral resource area. The effective grant date for the MDL is 1st November 2019. The MDL encompasses the current project area and all land required for its potential development.

Radio Gold Mine

As previously announced the farm-in of the Radio Gold Project (1) by Bullfinch One Pty Limited (Bullfinch) and the subsequent potential vend of this deal to Valor Resources ASX:VAL (2) was completed during the quarter. $200,000 of the total $500,000 for the sale of an initial 6.25% interest in the Radio Gold tenements was received in the September quarter. Expenditure for further developing Radio Gold will now be undertaken by Bullfinch in accordance with the terms of the farm-in agreement.

Radio Gold is located 400km east of Perth and 40km north of Southern Cross, within the Southern Cross Greenstone Belt in the Yilgarn Craton. The Southern Cross province is estimated to have produced +15m oz of gold. Underground samples of up to 0.5m @ 522 gpt(4). Radio Gold is 7km north of the +1Moz Au Copperhead Mine.

Radio Gold has a 28,000oz JORC 2012 Resource and has historically produced 72,000oz averaging 38.5gpt.

December Quarter Activities

• Central Zone o Consolidation of geological information o Targeting and commencement of drilling

• Eastern Zone o Broad geochemical field sampling o Review of geophysical data set to assist with future drilling programmes.

Cash Flow

During the September quarter REZ continued the process of restructuring its financial position. The Company incurred operating cash out flow of $981,000 and cash at the end of the quarter was $1.0 million. The expected cash outflows of current expenditure for the December quarter are $650,000, however it is dependent on the extent of drilling activity that will occur during that period.

During the September quarter the company completed the first tranche of a $3 million capital raising, with $1.1 million being received from the issue of ordinary shares. The second tranche of $1.9 million was received in October following shareholder approval of the further share issue.

In addition, as noted above, the farm-in arrangements for the Radio Gold mine resulted in $200,000 being received during the September quarter and a further $300,000 has been received in October.

The Company also has $450,000 remaining of the prepayment with its drilling partner, National Geotech. The prepayment was put in place to via a share issue of the Company’s ordinary shares. This amount will be progressively offset against drilling costs at the East Menzies tenements.

As REZ will be focused on its exploration activities in the period to 30 June 2020 we expect that the Company will continue to incur operating cash out flows. Cash flow from operations of the Radio Gold farm-in arrangements are unlikely to occur during the balance of the financial year, although $250,000 is programmed to be received from the sale of a further 3.125% of the Radio Gold tenements to Bullfinch.

The Board considers that the cash held, and the prepayment, represent sufficient financial resources to meet its current business objectives. Further capital raisings will be considered as the exploration program progresses.

About Resources and Energy Group Limited

Resources and Energy Group Limited (ASX:REZ) is an independent, ASX-listed mineral resources explorer, developer and producer, holding mining leases in Western Australia and Queensland. REZ aims to develop a portfolio of mining tenements through to production. REZ is currently focused on the development of the flagship Menzies Project 130km north of Kalgoorlie in Western Australia.

Announcements (1) 17th July 2019 – (ASX:REZ)- East Menzies - Outstanding Bedrock Gold Anomaly Identified (2) 25th July 2019 (ASX:REZ) - East Menzies Update - Drilling at Goodenough (3) 1st of August 2019 – (ASX:REZ) - Radio Gold $4m Farm-in Partnership (4) 21st August 2019 – (ASX:REZ) - $3 million Raised - Placement Oversubscribed (5) 4th September 2019– (ASX:VAL) - Acquisition of Radio Gold Project Farm-In (6) 4th September 2019 – (ASX:REZ) - Acquisition of Radio Gold Project Farm-in (7) 19th September 2019 – (ASX:REZ) - Highly Promising Drill Targets at Menzies Gold Project (8) 26th of September 2019 – (ASX:REZ) Hits of up to 9gpt to Underpin Resource Update at

Goodenough

Mr Christian Price – REZ Investors: David Frances - Chief Executive Officer E: [email protected] P: +61 2 9227 8900

Media: Paul Armstrong E: [email protected] P: +61 8 9388 1474

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

+ See chapter 19 for defined terms 1 September 2016 Page 1

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Name of entity Resources & Energy Group Limited ABN Quarter ended (“current quarter”) 12 110 005 822 30 September 2019

Consolidated statement of cash flows Current quarter

(3 months) $A’000

Year to date (3 months)

$A’000 1. Cash flows from operating activities

- - 1.1 Receipts from customers 1.2 Payments for

(708) (708) (a) exploration & evaluation (b) development - - (c) production - - (d) staff costs (164) (164) (e) administration and corporate costs (100) (100) 1.3 Dividends received (see note 3) - - 1.4 Interest received - - 1.5 Interest and other costs of finance paid (9) (9) 1.6 Income taxes paid - - 1.7 Research and development refunds - - 1.8 Other (provide details if material) - -

1.9 Net cash from / (used in) operating activities

(981) (981)

2. Cash flows from investing activities

2.1 Payments to acquire: (a) property, plant and equipment (b) tenements (see item 10) (c) investments (d) other non-current assets



Consolidated statement of cash flows Current quarter (3 months)

$A’000


$A’000 2.2 Proceeds from the disposal of:

(a) property, plant and equipment (b) tenements (see item 10) 200 200 (c) investments (d) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other – deposits returned

2.6 Net cash from / (used in) investing activities

200 200

3. Cash flows from financing activities

1,119 1,119 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible

notes

3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of

shares, convertible notes or options (177) (177)

3.5 Proceeds from borrowings 3.6 Repayment of borrowings (192) (192) 3.7 Transaction costs related to loans and

borrowings

3.8 Dividends paid 3.9 Other (provide details if material)

3.10 Net cash from / (used in) financing activities

750 750

4. Net increase / (decrease) in cash and cash

equivalents for the period

1,036 1,036 4.1 Cash and cash equivalents at beginning

of period 4.2 Net cash from / (used in) operating

activities (item 1.9 above)

(981)

(981)

4.3 Net cash from / (used in) investing activities (item 2.6 above)

200

200



Consolidated statement of cash flows Current quarter (3 months)

$A’000


$A’000 4.4 Net cash from / (used in) financing

activities (item 3.10 above) 750 750

4.5 Effect of movement in exchange rates on cash held

4.6 Cash and cash equivalents at end of period Notes: Second tranche of $1.8 million to complete the $3m capital raising was received in October 2019. A further $300,000 was also received in October from the partial sale of tenements relating to the Radio Gold mine.

1,005 1,005

5. Reconciliation of cash and cash

equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts

Current quarter $A’000

Previous quarter $A’000

5.1 Bank balances 1,005 1,005 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details)

5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)

1,005 1,005

6. Payments to directors of the entity and their associates Current quarter

$A'000

6.1 Aggregate amount of payments to these parties included in item 1.2

-

6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3

-

6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2



7. Payments to related entities of the entity and their associates Current quarter

$A'000

7.1 Aggregate amount of payments to these parties included in item 1.2

27

7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3

-

7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

8. Financing facilities available

Add notes as necessary for an understanding of the position

Total facility amount at quarter

end $A’000

Amount drawn at quarter end

$A’000

8.1 Loan facilities (refer 8.4)

189 189

8.2 Credit standby arrangements

8.3 Other (please specify)

8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.

Remaining balance of project development notes was repaid via an issue of the company’s shares in October 2019 refer ASX release dated 4 September 2019

9. Estimated cash outflows for next quarter (ongoing costs only) $A’000

9.1 Exploration and evaluation 400 9.2 Development - 9.3 Production - 9.4 Staff costs 150 9.5 Administration and corporate costs 100 9.6 Other (provide details if material) -

9.7 Total estimated cash outflows 650



10. Changes in tenements (items 2.1(b) and 2.2(b) above)

Tenement reference and location

Nature of interest Interest at beginning of quarter

Interest at end of quarter

10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced

Note: Change in Radio Gold tenement ownership occurred on receipt of balance of funds in October 2019 (refer ASX release dated 4 September 2019)

10.2 Interests in mining tenements and petroleum tenements acquired or increased

Compliance statement 1 This statement has been prepared in accordance with accounting standards and policies

which comply with Listing Rule 19.11A. 2 This statement gives a true and fair view of the matters disclosed.

Sign here: Date: 30 October 2019 Print name: Warren Kember Company Secretary

strong exploration results at menzies gold project and ... · estimated to have produced +15m oz of...

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