A$80 Million Dividend and Return of Capital Completed; Focus Now on Deliver

Sale of Finnish Assets to Boliden

Altona completed the sale of its Finnish operations and most of its exploration assets in Finland to Boliden Mineral AB (Publ) (“Boliden”), a Swedish base metal miner and smelter in late 2014.

The consideration for the sale amounted to US$98.3 million for the assets together with adjustments for working capital, net debt and net capital expenditure during the settlement period. 

Capital Return and Special Dividend

The Board determined to return the bulk of the proceeds to shareholders and 12 cents per share was paid as a return of capital and a special unfranked dividend of 3 cents per share was paid at the same time as the return of capital.  In total, Altona returned A$80 million of the value released from the sale of the Finnish operations to shareholders.

Strategy

Building on a record of success

Altona was formed from the merger of Vulcan Resources and Universal Resources in 2010.

The Outokumpu Project in Finland was financed and built on time and budget in 2012, the mine outperformed and Altona was able to pay back project debt 2 years early. The sale of Outokumpu for A$112 million in 2014 (market cap pre deal ~A$80 million) resulted in A$80 million (15 cents) returned to shareholders in February 2015.

In parallel with developing Outokumpu, the Cloncurry Definitive Feasibility Study (“DFS”) and permitting was completed.  It is not well appreciated that Altona is a successful explorer.  Resources increased 142% since 2010 including the recent Turkey Creek discovery. 

Altona is now focussed on a transaction to realise and demonstrate value from the Cloncurry asset, a transaction could take many forms.

−      Joint venture

−      Corporate transaction

−      Project sale

A key part of our strategy is that if Cloncurry is to be financed, the financing should avoid aggressive debt and dilution while maximising shareholder return and conserving cash. 

At Cloncurry, Altona will continue with low-key, low-cost activities that add value and shorten lead times.  In summary Altona has:

−      A record of operational and financial success

−      A record of exploration success

−      A record of shareholders returns

−      A strong cash backing

−      A robust and development-ready project at Cloncurry

−      A project of growing and material scale at Cloncurry

−      Leverage to a deal on Cloncurry

Cash Balance

Altona had A$47.6 million of funds on deposit at 31 March 2015 following the return of approximately A$80 million to shareholders in February 2015. This provides Altona with a strong cash position to conduct its business.

Cash movements for the quarter are tabulated below:

Overheads include $400,000 of costs associated with the sale of our Finnish assets and the subsequent return of funds to shareholders and costs relating to the evaluation of corporate and sale transactions related to the Cloncurry Project.

Share Price Activity on ASX

Please note the share prices below are not adjusted for the 15 cent return to shareholders.

Quarter open                         0.24¢

High                                      0.24¢

Low                                       0.10¢

Quarter close                         0.11¢

Average daily volume           683,608

The share price performance is pleasing as it represents an increase of 22% on a share price of 9 cents adjusted for the capital return.

Half Year Profit

The statutory accounts for the half year ended 30 December 2014 were published during this quarter.  Hightlights are:

• Profit after tax from Outokumpu operations for 3 months of A$7.7 million until operations sold
• Disposal of Finnish assets gave rise to a gain of A$31.5 million

The Little Eva Copper-Gold Project is planned to be the first mine development at the Cloncurry Copper Project 90 kilometres north-east of Mt Isa and 11 kilometres north of MMG’s $1.2 billion Dugald River zinc mine.  The project sits within granted mining licences and native title agreements and environmental authority are in place.

A DFS on the Little Eva Project was released in May 2012 and was updated in March 2014.

Partnering process continues

The process to sell, partner or finance the Little Eva Project continues. A number of parties are active in the data room, have visited site and conducted due diligence studies.  Dialogue with these parties continues. 

Maiden resource

Turkey Creek is located 1.5 kilometres east of the planned Little Eva open pit mine and processing plant which lies within the granted Mining Leases.

During the quarter Altona announced the first Resource Estimate for Turkey Creek.

21 million tonnes at 0.59% copper for 123,300 tonnes of contained copper.

The resource is reported at a 0.3% lower cut-off grade and a full tabulation at different cut-off grades and ore types is given in Tables 1 and 2 and a detailed summary of the supporting data and methodology is given in Table 1 of the JORC Code 2012 Edition is provided in Appendix 1.

Cloncurry represents a major strategic mineral inventory in the Mt Isa region

The global Mineral Resource for the Cloncurry Project is now:

286.8 million tonnes at 0.57% copper, 0.4g/t gold for 1.65 million tonnes of contained copper and 0.4 million ounces contained gold.

The Turkey Creek Mineral Resource estimate is based on RC drilling and geological mapping. Geological modelling was conducted by Altona and the block modelling was undertaken by independent resource consultancy Optiro Pty Ltd.

The majority of the Mineral Resource is sulphide ore from 25 metres to 160 metres below surface. An oxide cap ranging from surface to depths of 25 to 45 metres is included in the resource estimate.

The Turkey Creek deposit will be included in the mining inventory for the Little Eva development. To enable the estimation of an Ore Reserve, Altona will complete a limited programme of diamond drilling to collect samples for definitive metallurgical testwork. It is expected that the incorporation of Turkey Creek will increase mine life by at least 1-2 years from the current 11 year schedule.

Key to the impact of Turkey Creek is to determine if shallow oxide ore can be treated through the proposed Little Eva flotation circuit via sulphidisation. The amenability of oxide mineralisation to sulphidisation at Bedford and Little Eva will also be determined. Initial metallurgical testwork indicates high recoveries from sulphide ore following the proposed Little Eva flotation scheme.

Given the location of Turkey Creek at the site of the proposed Tailings Storage facility and the implications for prospectivity in the immediate area of Little Eva and Turkey Creek, it is likely that the development will now revert to the fully permitted tailings storage facility located some 4 kilometres to the south west of the proposed plant site.

See ASX announcement of 31 March 2013 for full details.

Roseby South Joint Venture

Chinalco Yunnan Copper Resources Ltd (“CYU”) continued exploration activities to earn an interest in the Roseby South Project.

Exploration work by CYU concentrated on completing and analysing a mobile metal ion (MMI) soil geochemistry survey comprising 1,105 samples covering the Pilgrim Fault corridor and Companion/Brolga prospect (EPM 10833 and 11611).

Polymetallic anomalies were identified by the MMI soil geochemical survey associated with the Pilgrim Fault and at Native Companion.  In 2014, CYU completed an initial six hole exploration drilling program at the Native Companion prospect identifying a mineralised zone, at least 5km in strike length, highlighted by:

• An anomalous zinc zone to the north of Native Companion; and
• strong copper mineralisation intersected in drilling (best intersection 26m @ 0.68% copper and 0.25g/t gold from 63m; including 15m @ 1.15% copper and 0.41g/t gold. Please refer to CYU ASX release of 3 December 2014.

As a consequence of these results, CYU propose more extensive, drilling and further exploration activities to be undertaken to test the identified MMI anomalies and at Native Companion in 2015.

Competent Persons Statement: The information in this report that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Dr Alistair Cowden, BSc (Hons), PhD, MAusIMM, MAIG.  Dr Cowden is a full time employee of the Company and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.  Dr Cowden consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

Little Eva Project production target and forecast financial information: Information in this release refers to a production target and the forecast financial information derived from a production target as disclosed to the market in the ASX release “Cost Review Delivers Major Upgrade to Little Eva” dated 13 March 2014, which is available to be viewed at www.altonamining.com or www.asx.com.au. The Company confirms that all the material assumptions underpinning the production target and the forecast financial information derived from the production target referred to in the above-mentioned release continue to apply and have not materially changed.

Copper equivalence:  When used, copper equivalent refers to copper in concentrate produced, or planned to be produced.  It does not refer to metal contained within insitu resources, reserves or drill results.  The copper equivalent grade is calculated by factoring the copper grade by resource from all metals (NSR) being copper, zinc, gold and silver.

Please direct enquiries to:

Alistair Cowden                                           James Harris

Managing Director                                        Professional Public Relations

Tel: +61 8 9485 2929                                   Tel: +61 8 9388 0944

altona@altonamining.com                           james.harris@ppr.com.au

Jochen Staiger

Swiss Resource Capital AG - Germany

Tel: +41 71 354 8501

js@resource-capital.ch