CONDOR BLANCO MINES LTD 
By April 30, 2014
March 2014 Quarterly Activity ReportASX Release Stock Code: CDB
Condor Blanco Mines Limited - Quarterly Activities Report
Activities during the quarter concentrated on completion of the trial bulk sampling of the Marianas Magnetite Tailings, the completion due diligence for an interest in the Dual, Universal Annex and Mopane coking coal projects in South Africa from Signet Coking Coal Limited and the finalisation of a debt funding agreement to progress the two projects.
Marianas Magnetite Tailings Project
During the quarter the bulk sample excavated from the Marianas Tailings Project was processed through Lacerta Finance and Mining SpA's commercial magnetite plant near La Serena in northern Chile. A total of 174 tonnes of the 200 tonnes of material stockpiled was processed. The results of the commercial trial exceeded Condor's expectations. Key results of the trial were:
Both mined head grade (17.88% Fe) and contained magnetite (11.68% magnetite) were significantly higher than the earlier 40 tonne samples.
Confirmatory analysis was particularly impressive with Davis Tube Test contained iron in the
20.1 tonnes of concentrate produced substantially increased at 69.63%. The magnetite concentrate represented 12.54% of material collected by weight, a 12.5% increase on the earlier recovery result.
The trial outperformed results in the earlier recovery study and substantially enhance the modelled economics of the project.
The results of the trial surpassed previous results from both previous channel sampling programmes and from the treatment of an earlier 40tonne bulk sample. Both the head grade (17.88% Fe) and contained magnetite (11.68% magnetite) of the bulk sample were significantly higher than the earlier
40 tonne sample. Confirmatory analysis was particularly impressive with Davis Tube Test (DTT)
contained iron in the 21.9 tonnes of concentrate produced substantially increased at 69.63%. The magnetite concentrate represented 12.54% of material collected by weight, a 12.5% increase on the
earlier recovery result.
The trial was undertaken under the Heads of Agreement signed previously with Lacerta Finance and Mining SpA (Lacerta). Lacerta has demonstrated expertise in recovering a high quality saleable iron concentrate from projects similar to Marianas. Lacerta operates the Mol magnetic separation plant located 90 kilometres north of La Serena, Chile. 200 tonnes of material was collected from 7 trenches at Marianas and sent to La Serena. 38 scoops of a Caterpillar 938G loader were then feed into the plant for processing, being a total of 174.4 tonnes of magnetite tailings.
The processing passed through to the first rougher stage of magnetic selection which utilised magnetic drums of 1,200 to 1,400 gauss with 13 poles, at an average rotational speed of 25 to 30 revolutions per minute. The concentrate obtained in this step, was then passed to the second intermediate stage of magnetic concentration, in which the magnetic drum rotates at a higher speed to achieve better cleaning of the material prior to the final stage. The concentrate obtained in the intermediate stage was then sent to a third and final finishing stage that applied a drum of 50-poles of 800 gauss rotating at 120 revolutions per minute. The reject from this round was recirculated once to give the total final concentrate. The final product coming off the finishing drum was 21.9 tons, which in relation to the total input of raw material, gave us a recovery percentage by weight of 12.54%.
Figure 1: Final Magnetite Concentrate Produced During the Commercial Trial
The chemical testing was performed by Analisis Mineros Limitada (Analmin), located in Coquimbo, Chile. Testing included the determination of total Fe, DTT, magnetic Fe, all potential contaminants as well as elements of potentially economic interest such as molybdenum, copper and gold.
The concentrate grade of the 21.9 tonnes of output from the un-optimised three drum circuit was
51.48% Fe. Consequently, to shift this grade up towards the DTT level, the implementation design will include an additional circuit to dis-agglomerate and sieve the feed as well as a linear arrangement of
two final drums to deliver a concentrate close to the DTT result of 69.74%. The analytical results of
the commercial trial are shown in the table below, which contrasts them from the earlier trial reported on 18 November 2013.
2
Performance Measure | Scoping Study Result (Announced 18 November 2014) | 200t Bulk Trial Result | Improvement Recorded (% increase in commercial trial) |
Tailings Fe Grade | 12.61% FeTotal | 17.88% FeTotal | 41.80% increase in Fe grade |
DTT concentrate recovery (% of feed recovered as concentrate by weight) | 11.14% | 12.54% | 12.40% increase in Recovered Weight |
Magnetic DTT concentrate | 65.22 % FeTotal | 69.63% FeTotal | 6.76% increase in DTT Fe grade |
Magnetic iron in the samples | 7.29% | 11.68% | 60.22% increase in contained Magnetic Fe |
As can be seen in the table, the grade results and processing performance of this commercial scale bulk sampling are substantially higher than earlier test work. The head grade and magnetite content in this 200 tonne sample is particularly pleasing, showing increases of over 40% from smaller tests.
The analysis of contaminants showed only low levels of all deleterious minerals, and no additional processing will be needed to remove minor elements contained in the tailings. A simple magnetite operation is sufficient to produce a clean saleable product. The level of sulphur in the product was
1.17% (down from 3,07% in the feed). Neither Condor nor its off-taker the Hong Kong-based investment and trading group Jiangxi Resources Limited, consider this level to be problematic in
placing material in Asian markets. Appropriate matching to buyers is already being considered.
Overall, the grade of the concentrate or final product was 51.48% total Fe. An additional round of processing over a magnetic drum will increase the grade towards the DTT level and enable a product of over 60% Fe to be obtained. Consequently a linear process including two finishing drums will be specified in the final plant design arrangement.
South African Hard Coking Coal Projects
During the quarter, Condor signed a definitive agreement to acquire an interest in a number of South African hard coking coal projects. Legal and technical due diligence has been completed and the terms will now be put forward for shareholder approval.
The agreement gives Condor the right to earn an initial stake in The Duel, Universal Annex and Mopane projects, all located in the Soutpansberg Coalfield of northern South Africa from Hong Kong company Signet Coking Coal Limited (Signet). Signet holds 74% of the projects, with the remainder held by a Black Economic Empowerment partner as required under South African law.
Condor will gain an initial 33% interest in Signet by providing US$5m to be spent on the drilling and feasibility work at The Duel. Condor has also negotiated an additional option over the large land holding that forms the Tshipise 2 project that sits east along the same trend as the flagship The Duel project. This option is exercisable at no cost should the The Duel drilling not deliver a minimum inferred
3
resource of at least 30 million tonnes of Hard Coking Coal with an overall maximum ash content of
12% (Minimum Resource), but will cost US$2.5m in cash and $2.5m of additional earn-in spending otherwise.
Should the Minimum Resource be delivered, Condor would pay a further US$5m to increase its stake to 49.75% and also has a final option to increase its ownership of Signet to 68% (being a controlling project stake of 50.3% including the BEE partner). This option is retained until 60 days after the completion of a definitive feasibility study and would cost US$15m. Condor considers the pricing of these stakes to be fair given recent valuations on comparable projects at such advanced stages. For instance, Venmyn Deloitte provided valuations for several adjacent reports to neighbouring company Coal of Africa Limited.1
The central aim of the new joint venture will be for Condor to finance the drill-out of The Duel project. This set of six tenements sits directly adjacent to the already drilled Makhado (including Telema and Gray) and Mt Stuart projects held by Coal of Africa Limited, which is reported to contain a total of
879,734,822 Gross Tonnes in Situ (GTIS) for Makhado (including Telema and Gray) and an inferred resource of 407,162,828 GTIS for Mt Stuart.2 The Duel drilling program is prepared and Signet's
operational management team is ready to implement it. A preferred drilling company with extensive
coal experience has rigs available to mobilise.
Debt Funding Arrangement
Chairman, Dr. Paul Crosio, arrived in Zurich and met with the key financing parties over April. The final execution documentation for the factoring of the loan is now being prepared by a European bank.
The final instrument which provides the underlying security for this transaction has been registered to
Condor and security transferred.
Receipt of this non-dilutive debt funding will enable Condor to implement development of Marianas Magnetite Tailings Project in Copiapo, Chile, and to pursue the acquisition of Signet Coking Coal Limited holder of the The Duel, Universal Annex and Mopane projects in the Soutpansberg Coalfield of northern South Africa.
1 See Page v. of "Independent Geologist Specialist Report: On the Principal South African Operating and Non -Operating Mineral Assets of Coal of Africa Limited", available at: http://www.coalofafrica.com/assets/technical-reports/venmyn-deloitte-independant- specialist-report_10dec12.pdf
2 See: http://www.coalofafrica.com/assets/technical-reports/venmyn-deloitte-independant-specialist-report_10dec12.pdf. Makhado (including Telema and Gray) has GTIS resources of resources of 445,025,424 tonnes measured, 328,176,038 indicated and 106,533,360 inferred for a total of 879,734,822 GTIS.
4
Appendix 5B Mining exploration entity quarterly report
Appendix 5B Mining exploration entity quarterly reportIntroduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10
Name of entity
Condor Blanco Mines Limited
Rule 5.3
ABN Quarter ended ("current quarter")
16 141 347 640 31 March 2014
Consolidated statement of cash flowsCash flows related to operating activities
1.1 Receipts from product sales and related debtors
1.2 Payments for (a) exploration & evaluation
(b) development
(c) production
(d) administration
1.3 Dividends received
1.4 Interest and other items of a similar nature received
1.5 Interest and other costs of finance paid
1.6 Income taxes paid
1.7 Other (provide details if material)
Net Operating Cash Flows
Page 1
Appendix 5B
Mining exploration entity quarterly report
1.13 Total operating and investing cash flows (brought forward) | (440) | (1,950) |
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Net financing cash flows | 536 59 (94) | 1,861 860 (860) |
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Net financing cash flows | 501 | 1,861 |
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter | 61 1 | (89) 149 2 |
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter | 62 | 62 |
Current quarter
$A'000
1.23 Aggregate amount of payments to the parties included in item 1.2 (351)
1.24 Aggregate amount of loans to the parties included in item 1.10 -
1.25 Explanation necessary for an understanding of the transactions
Non-cash financing and investing activities2.1 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
Page 2
Appendix 5B Mining exploration entity quarterly report
Financing facilities availableAdd notes as necessary for an understanding of the position.
3.1 Loan facilities
3.2 Credit standby arrangements
Estimated cash outflows for next quarter4.1 Exploration and evaluation
4.2 Development
4.3 Production
4.4 Administration
Reconciliation of cashReconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.
Changes in interests in mining tenements6.1 Interests in mining tenements relinquished, reduced or lapsed
Page 3
AppendixsB
Mining exploration entity quarterly report
6.2
Interests in mining tenements acquired or increased
Page 4
Appendix 5B Mining exploration entity quarterly report
Issued and quoted securities at end of current quarterDescription includes rate of interest and any redemption or conversion rights together with prices and dates.
7.5 +Convertible debt securities (description)
7.6 Changes during quarter
(a) Increases through issues (b) Decreases through securities matured, converted
Page 5
Appendix 5B
Mining exploration entity quarterly report
7.12 Unsecured notes (totals only)
Page 6
Compliance statementAppendix 5B Mining exploration entity quarterly report
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).
2 This statement does give a true and fair view of the matters disclosed.
30/04/2014
Sign here: ............................................................ Date: ............................
Secretary
Peter Dunoon
Print name:........................................................
Notes1 The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of
Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
== == == == ==
Page 7
|
distributed by
|
