SRIG Transaction on Track

About SRIG

SRIG is a financially robust partner

SRIG was established in 2009, is based in Chengdu in south-western China and is 100% owned by the Sichuan provincial government. The group’s principal businesses are in the road, bridge and rail construction and management sectors. SRIG had total assets of US$26.8 billion in 2014 and revenues over US$6 billion. It has more than 20,000 employees.  SRIG has signalled its intention to diversify into other industries both within China and internationally.

CCXI, a Moody’s company, rated SRIG as AA+ with a stable outlook for a 2014 bond issue of approximately US$320 million. CCXI noted SRIG’s expertise, highlighting that SRIG was the first Chinese enterprise to secure an overseas bridge construction contract (Norway).

Corporate

Altona maintains a strong cash balance

Altona had A$45.0 million of funds on deposit at 30 September 2015.  This provides Altona with a strong cash position to underpin the SRIG transaction.

Cash movements for the quarter are tabulated below:

The principal assets of the company are the five mining leases at the Cloncurry Project.  Queensland Government annual fees are A$0.8 million and were paid this quarter.

Company focus on delivering Cloncurry the Project

Altona has a small staff of 6 and its Board will reduce to three Non-Executive Directors and the Managing Director effective from the Annual General Meeting. Altona is utilising part-time contractors to assist with managing the SRIG work programme. Altona strives to retain the expertise to conclude the SRIG transaction, manage the Cloncurry asset and maintain the public company at minimum cost.

During the quarter, Altona commenced the process of winding up its wholly owned Finnish subsidiary, Vulcan Kotalahti Oy.  Boliden retains an option over the assets held by the other Finnish subsidiary company still held by Altona.

Share Price Activity on ASX

Quarter open                       9.5¢

High                                    9.5¢

Low                                     8.0¢

Quarter close                      8.5¢

Average daily volume         1,159,226

Annual results

Highlights from Altona’s annual financial results which were released during the quarter were:

• Profit before tax of A$33 million for FY2015.
• Sale of Finnish operations to Boliden Mineral AB in October 2014 for A$112 million.
• 15 cents per share returned to shareholders in February 2015 as a 12 cent capital return and a 3 cent dividend.

The Cloncurry Project offers a large resource of 287 million tonnes at 0.6% copper, 0.04g/t gold for 1.65 million tonnes contained copper and 0.4 million ounces gold and is close to infrastructure.  It is located 90 kilometres north-east of Mt Isa and 11 kilometres north of MMG’s $1.2 billion Dugald River zinc mine.

The Little Eva Copper-Gold Project is planned to be the first mine development at the Cloncurry Copper Project.  A Definitive Feasibility Study (“DFS”) announced by Altona on 13 March 2014 for the Little Eva development anticipates the construction of a 7 million tonne per annum open-pit mine and flotation plant capable of producing 39,000 tonnes per annum copper and 17,000 ounces gold over an initial mine life of 11 years.  The principal permits required are in place.

The project sits within granted mining licences and native title agreements and the environmental authority are in place.  

Agreed SRIG Work Programme

Altona and SRIG agreed a programme of work of up to US$2 million to advance and maintain the project whilst SRIG complete formal due diligence and the parties obtain various regulatory approvals. Any costs incurred by Altona from this programme would be credited as a cash contribution towards Altona’s obligations under the Framework Agreement.

Assessing the impact of Turkey Creek

The principal purpose of the work is to incorporate the recent Turkey Creek discovery into the mine plan thus allowing the layout of pits, waste dumps and the Tailings Storage Facility (“TSF”) to be revised. This will permit the existing Environmental Management Plan (“EMP”) to be updated and lodged with the authorities.

Mining Studies

Mining studies indicate opportunity for increased value

The deposits that will provide feed to the Little Eva mill are Little Eva, Turkey Creek, Bedford, Lady Clayre and Ivy Ann.  These deposits were optimised and pits designed in 2012 (other than the recent Turkey Creek discovery).  New resource models and the 2014 DFS mining costs used were used in a new optimisation completed during the quarter.  The 2014 costs were significantly below those used in the prior optimisation. Initial results of new optimisations indicate the potential for a material increase in reserves at the Project.

Studies are now focussed on the optimum schedule for mining these deposits and determining the optimum layout for waste dumps and mining related infrastructure.  This is required to update the Environmental Authority.

Drilling Programme

Metallurgical drilling underway

Altona has commenced a 555 metre diamond drilling programme at Turkey Creek, Little Eva and Bedford to collect metallurgical samples.

An opportunity exists for a significant improvement in the value of the Project if oxide mineralisation can be included in the mine plan.  This material is not in the DFS mine plan and is planned to be stockpiled when mined as part of pre-strip to access sulphide ore.

The drill rig contracted by Altona is to be used by SRIG to conduct confirmatory twinning of certain drill holes as part of their formal due diligence.

Infrastructure and layout

Preliminary work has commenced on modifying the design of the TSF and the infrastructure layout at the Little Eva plant site.

Assays of pre-Altona Core

Assay results highlight the quality of the large Cloncurry Resource

Drilling results from assaying of 9 diamond drill holes that were drilled, but never assayed were reported. The holes were drilled for geotechnical and metallurgical purposes prior to the formation of Altona in 2010.

The results include the following highlights:

Little Eva deposit:   29.1 metres at 1.41% copper, 0.11g/t gold

                               35.0 metres at 0.60% copper, 0.23g/t gold

Bedford deposit:      4.4 metres at 1.15% copper, 0.25g/t gold

Scanlan deposit:     34.0 metres at 0.69% copper

                               20.7 metres at 0.68% copper

A full table of results, Altona’s standard sampling and assaying methodology and location map is given in the ASX Release dated 8 October 2015..

The results confirm current resource models and highlight a number of areas for minor extensions and adjustments to the models. The sampling is part of systematic review of deposit models ahead of the proposed project development.

The results serve as a reminder of the scale and tenor of the very large resource available at the Cloncurry Project of:

286 million tonnes at 0.57% copper, 0.04g/t gold for 1.65 million tonnes of contained copper and 0.41 million ounces of contained gold.

Roseby South Project

Roseby South is a strategic 100% owned asset

The Roseby South Project (“Roseby South”) is now unencumbered as the option held by Chinalco Yunnan Copper (“CYU”) to earn an interest in the project has expired. The project is 100% owned by Altona, and operated by Altona.

Roseby South abuts Altona’s 100% owned Cloncurry Copper Project. It is not included in the SRIG Framework Agreement.

Roseby South covers an area of 475km2 and covers the extension of the prospective stratigraphy which hosts both Altona’s Cloncurry Copper Project and MMG Limited’s Dugald River Zinc mine immediately to the north. The option to CYU was granted two years ago and Roseby South has greatly increased in strategic value with the go-ahead of the Dugald River mine, the announcement of the Altona-SRIG agreement and Altona’s Turkey Creek discovery.

The large mineralised system identified at Companion within Roseby South offers a near-term prospect for resource definition.  Highlights from previous drilling include the following:

• 26 metres at 0.68% copper, 0.25g/t gold from 63 metres;including 15 metres at 1.15% copper and 0.41g/t gold.
  • 34 metres at 0.75% copper, 0.21g/t gold from 54 metres;including 4 metres at 1.86% copper and 0.21g/t gold

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 per 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 revenues estimated 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