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ASX Code: HNR
Dear Shareholders During the 3rd Quarter Hannans: announced a major corporate initiative being the proposed acquisition of a Scandinavian focussed minerals company; completed reverse circulation (RC) drilling at Lake Johnston, geochemical sampling at Forrestania and field reconnaissance in the East Pilbara; and completed an in-specie distribution of Errawarra Resources (owner of the Jigalong manganese project) to Hannans shareholders.
Capital Structure
Shares on issue: 131.6m Options on issue: 5m (ex 20c$1) Market cap: $10.5m (at 8c)
Board of Directors
Chairman: Richard Scallan Managing Director: Damian Hicks Non-Executive Director: William Hicks Non-Executive Director: Jonathan Murray
Our Exploration Team has always remained focussed on generating greenfields exploration targets and thereafter testing those targets with the aim of making an economic minerals discovery. The following financial statistics1 reflect that pursuit for greenfields exploration success:
Period Exploration & Evaluation Expenditure ($ million) 1.489 1.271 Exploration & Evaluation Expenditure Expressed as a Percentage of Net Operating Cash Flows 82.9 90.7
3rd Quarter 2012/2012 Quarter Average for the period 1 July 2010 31 March 2012 (7 Quarters) Average over all Quarters 2 Total for the period 1 October 2003 31 March 2012 (34 Quarters)2
0.550 18.706
78.4 78.4
Projects
Forrestania Nickel & Gold Lake Johnston Nickel & Gold QVR Nickel East Pilbara Gold & Base Metals
1 Figures extracted from Hannans Reward Ltd Appendix 5Bs 2 Includes all Quarters since listing on ASX on 5 December 2003
The Exploration Team has had success exploring for iron and manganese in the East Pilbara region of Western Australia and when combined with corporate action, this success has enabled Hannans to fund exploration campaigns without raising capital since 2009. In this case the risk taking was rewarded. We will also continue to focus our efforts on making a greenfields gold or nickel discovery that will provide Shareholders with a rapid share price increase. It is acknowledged however that greenfields exploration is high risk and that Hannans sustained exploration efforts without recent significant success, particularly during this period of global financial turmoil, has tested the resolve of Shareholders. While Hannans maintains a strong balance sheet and tight capital structure the Board has decided to adjust the risk profile of its portfolio away from 100% pure greenfields exploration. In that regard, Hannans made an offer during the Quarter to acquire Scandinavian Resources Ltd, a company that has JORC compliant iron resources and a potential pathway to production in a low sovereign risk country. If this proposed acquisition is successfully completed, Hannans will have a risk adjusted platform from which to achieve its Goals. Please consider this Quarterly Report in that context and if you have any questions you are most welcome to contact me. Yours faithfully, Damian Hicks
When combined with Hannans existing 17.27% shareholding in SCR and other SCR Shareholders who have accepted the Offer, Hannans relevant interest as at 27 April 2012 has increased to c.65.0%.
Hannans Investment Management sold 300,000 Atlas Iron Limited (ASX:AGO) shares to provide Hannans with working capital.
CBS continues to provide transaction services and financial management services to listed and unlisted companies and in doing so earns revenue that reduces Hannans fixed costs. The total fees earned since commencement of this business unit amount to $370,784.
APPOINTMENT
Hannans has appointed Mr Ben Della-Vedova (Chartered Accountant) to the role of Business Development Manager. Prior to joining Hannans in early 2012 Ben had a combined 7 years experience with both PwC Australia in their Transaction Services and Valuation team and Deloitte in their Assurance and Advisory team. Ben has worked on a diverse range of publicly listed and private clients across a wide range of industries such as mining, oil and gas, financial services, manufacturing, agriculture, local government and corporate advisory.
RESIGNATION
Mr Don Huntly resigned as Exploration Manager during the Quarter. Hannans exploration activities are now being managed by Tom Lyons, Exploration Geologist and Helen Sanders, Administration Geologist together with a team of experienced external consultants.
EXPLORATION
PROJECTS OVERVIEW
By Tom Lyons, Exploration Geologist
Hannans is of the opinion that the following project portfolio has the potential to deliver an economic mineral deposit: FORRESTANIA (east of Hyden, Western Australia); Nickel, Gold and Iron QUEEN VICTORIA ROCKS (south-west of Coolgardie, Western Australia); Nickel and Gold LAKE JOHNSTON (west of Norseman, Western Australia); Nickel and Gold EAST PILBARA (south-east of Newman, Western Australia); Gold and Base Metals
Figure 1. Southern Yilgarn tenement location diagram Figure 2. East Pilbara project showing tenement locations
LAKE JOHN STON PROJECT A 51 RC percussion hole drilling program targeting gold was completed this quarter at the Mt Gordon Prospect Assays have been received for all of the holes and the best intervals are listed below: MGRC013 1 metre @ 2.90 g/t Au (previously reported) MGRC019 1 metre @ 3.62 g/t Au MGRC020 2 metres @ 2.35 g/t Au (previously reported) MGRC024 3 metres @ 1.40 g/t Au MGRC036 6 metres @ 0.74g/t Au MGRC045 1 metre @ 2.29g/t Au MGRC046 2 metres @ 1.10g/t, 1 metre @ 2.17g/t and 1 metre @ 2.13g/t Au MGRC047 2 metres @ 1.00g/t Au and 2 metres @ 4.24g/t Au MGRC048 2 metres @ 1.01g/t Au MGRC049 2 metres @ 5.75g/t Au and 1 metre @ 4.98g/t Au MGRC050 2 metres @ 3.56g/t Au MGRC056 2 metres @ 1.75g/t Au A single RC percussion hole targeting nickel mineralisation has also been drilled at the Mt Gordon Prospect, assays have been received which have returned elevated nickel including: MGRC059 48 metres @ 0.3% Ni (including 2 metres @ 0.52% Ni) from 16 metres and 2 metres @ 0.56% Ni from 96 metres
FORRESTANIA PROJECT A new gold anomaly has been defined from auger sampling at Skeleton Rocks
Hannans Forrestania project, comprising ground in joint venture and wholly owned tenements, is located within the multicommodity Forrestania nickel, gold and iron greenstone belt. The project adjoins ground owned by mining companies Western Areas (ASX:WSA) and St Barbara (ASX:SBM). Over the past quarter exploration has been focused within the Skeleton Rocks prospect area in the form of geochemical sampling and field reconnaissance.
Figure 4. Skeleton Rocks Au in auger sampling assays and 1VD aeromagnetic image The following table includes a summary of the physical exploration completed within the Forrestania Project.
*The amounts shown above are prepared on an Accruals Basis and are unaudited.
The tenements are located approximately 25km south-east of Russian mining giant Norilsks Maggie Hays and Emily Ann nickel sulphide mines (Figure 5). High grade gold mineralisation has been identified in rock chip sampling at the Ernest Prospect, in RC percussion drilling at the Ernest, Hardcore and Charles Prospects and in RAB drilling at the Richard Prospect (Figure 5). Recent exploration activities for gold and nickel have been focused within the Mt Gordon prospect area where a +8,000 metre RC percussion drilling program has been completed. The following table includes a summary of the exploration activities completed during the quarter:
*The amounts shown above are prepared on an Accruals Basis and are unaudited.
The drilling dominantly intersected mafic (basalt) and granodiorite lithologies with minor quartz veining, pyrite mineralisation and silica alteration. The gold mineralisation appears to be associated with narrow, brittle quartz veining and weak to moderate silica alteration. A full review and interpretation of the results is now to be undertaken with the aim of better understanding the gold mineralisation in the prospect area and to determine whether the drilling has effectively explained the strong surface expression created from the geochemical sampling.
The hole intersected ultramafic lithologies with intervals of elevated Mg content ranging from 0.13% to 23.7% Mg. RC chips from several sections of this hole have been sent to a lab for Petrographic and Mineragraphic investigation to help determine the exact mineral composition of the samples and determine if any significant nickel bearing sulphides are present.
Figure 5
Figure 6
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Table 1: Mt Gordon Au RC drilling summary table Hole ID MGA East 289953 289907 289602 MGA North 6402152 6402147 6403103 Dip Azi. Total Depth 156 156 168 From (m) 122 133 82 116 130 MGRC019 289553 6403102 -60 090 150 89 102 129 MGRC020 MGRC024 MGRC027 MGRC033 MGRC035 MGRC036 MGRC043 MGRC045 289499 289564 289403 289450 289300 290004 289902 290003 6403102 6403199 6403202 6403401 6403400 6404161 6404046 6403950 -60 -60 -60 -60 -60 -60 -60 -60 090 090 090 090 090 090 090 090 156 150 156 114 120 120 174 174 0 26 126 43 132 102 94 62 140 163 99 127 157 MGRC046 289905 6403951 -60 090 168 80 101 113 130 138 MGRC047 289502 6403998 -60 090 156 12 62 78 MGRC048 MGRC049 289460 289400 6404003 6404000 -60 -60 090 090 174 173 90 167 113 129 136 143 159 MGRC050 MGRC052 MGRC056 290608 290579 289930 6403994 6404050 6402051 -60 -60 -60 090 090 090 192 174 122 62 146 112 To (m) 123 134 83 117 132 90 103 130 2 28 129 44 134 103 95 68 141 164 100 128 158 82 102 114 131 139 14 64 80 92 168 114 130 138 144 160 64 148 114 Int (m) 1 1 1 1 2 1 1 1 2 2 3 1 2 1 1 6 1 1 1 1 1 2 1 1 1 1 2 2 2 2 1 1 1 2 1 1 2 2 2 Au Grade (g/t) 2.91 0.70 1.12 0.83 0.89 3.62 0.58 1.04 0.81 2.35 1.40 1.43 0.53 1.73 1.06 0.74 0.72 1.84 0.90 1.27 2.29 1.10 2.17 0.52 0.80 2.13 0.75 1.00 4.24 1.01 1.28 1.24 0.97 5.75 0.53 4.98 3.56 0.62 1.75
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Table 2. Mt Gordon Nickel RC drilling summary table Hole ID MGA East 290825 MGA North 6400803 Dip Azi. Total Depth 174 From (m) 16 96 118 140
*Lower cut-off grade of 0.25% Ni
Int (m) 48 2 16 28
Ni Grade (%)
MGRC059
-60
090
*The amounts shown above are prepared on an Accruals Basis and are unaudited.
*The amounts shown above are prepared on an Accruals Basis and are unaudited.
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Complete current auger sampling program. Implement additional infill and step-out auger sampling at Skeleton Rocks. Field check Azurite occurrence at Skeleton Rocks NW.
1581 auger samples completed. Minor reconnaissance work completed. Data compilation and review. Field checked Azurite occurrence at Skeleton Rocks NW, however a second visit is required.
A new gold anomaly has been defined from auger sampling A total of two gold anomalies and one nickel anomaly has been defined from auger program Extensive weathered BIF subcrop and outcrop noted in the area. Azurite (Cu hydroxylcarbonate) noted in historical RAB samples from Skeleton Rocks NW, samples were not assayed for base metals.
Field check Ni and Au anomalies at Skeleton Rocks. Implement additional infill and step-out auger sampling at Skeleton Rocks North. Second field check of Azurite occurrence at Skeleton Rocks NW. Field reconnaissance on Iron targets
Process and interpret auger sampling programs. Field reconnaissance at Stormbreaker North. RC percussion drilling to test hematite rich iron mineralisation during the coming quarter.
Nil.
Nil.
Process and interpret auger sampling programs. Field reconnaissance at Stormbreaker North. RC percussion drilling to test hematite rich iron mineralisation during the coming quarter
Process and interpret auger sampling programs. Field reconnaissance at Stormbreaker North.
Implement geochemical sampling programs. Plan surface geophysics trials over the Mundaroo Prospect.
Field reconnaissance and rock chip sampling Planned surface geophysics trials
Rock chip samples returned values up to 423ppm Zn, 248ppm Pb and 0.82ppm Ag.
Nil
Data compilation and interpretation Undertake benchmarking study into base metals deposits/occurrences in the area
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Nil.
Nil
Nil
Nil.
Nil
Nil
MT GORDON PROSPECT(Au)
High grade (up to 5.75g/t) gold intervals intersected in drilling. Elevated nickel (up to 0.56%) intervals intersected in drilling
Nil
Nil
Nil.
Nil.
Nil
QUEEN VICTORIA ROCKS PROJECT (302 sq kms granted, 253sq kms application)
Schedule from Previous Qtr YARMANY PROSPECT (Ni) Work Completed Current Qtr Summary and Positive Results Outstanding Activities from Previous Qtr Schedule Coming Qtr
Nil
Nil
Rehabilitation of RC drilling collars and pads. Validate geology and magnetic high features.
Rehabilitation of RC drilling collars and pads. Validate geology and magnetic high features
Nil
Nil
Nil.
Nil.
Nil.
Nil.
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The amounts shown above are prepared on an Accruals Basis and are unaudited.
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HIM
FACILITY ($)
2,500,000 1,750,000 750,000 500,000 5,500,000
NOTES
4 4 4
Notes 1 Approximately 126,000 AGO shares were sold during April 2012 2 Theoretical value calculated using BSOPM with 3.47% risk free rate, 87.6% volatility & 214 days to maturity as of 31 March 2012 3 Theoretical value calculated using BSOPM with 3.47% risk free rate, 87.6% volatility &259 days to maturity as of 31 March 2012 4 Assumes no conversion into SCR at 33c and 66c respectively (ie convertible loans) 5 Refer Annual Financial Report for the Year Ended 30 June 2011
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STRATEGY
CBS revenue reduces Hannans fixed cost CBS offers Hannans shareholders opportunities to access new offerings (e.g. Scandinavian Resources Ltd, Naraccota Resources Ltd, Lithex Resources Ltd) CBS utilises expertise of Hannans corporate team to provide transaction services and corporate management services to listed and unlisted private and public companies
CLIENTELE
Our clients include Scandinavian Resources Ltd (ASX: SCR), Equity & Royalty Resources Ltd, Naracoota Resources Ltd (ASX: NRR) and Swedish incorporated entities Scandinavian Resources AB and Kiruna Iron AB as well as the Hannans Reward Group of companies. The range of services provided this year include assisting with the IPO and listing on the ASX of Narracoota Resources Ltd, preparation of Annual, Half Year and Quarterly Reports, preparation of loan documents, preparation of detailed board packs for board meetings, arranging shareholder meetings, preparation of Notices of Meeting and providing full accounting and financial management support to our Australian and Swedish based clients. Our clients benefits by engaging with experienced and professional services customised to their individual needs which provides ease of mind that unnecessary missed dates or delays in the companys obligations. This enables clients to focus on the core business activities of their company rather than day-to-day management, providing better utilisation of managements time.
FEES INVOICED
Period January March 2011 April June 2011 July September 2011 October December 2011 January March 2012 Total $ 44,932 125,503 101,887 73,579 24,883 370,784
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HANNANS Capital
HANNANS REWARD LTD CAPITAL STRUCTURE as of 31 March 2012 TYPE FPO Options (ex. 80c) Options (ex. 40c) Options (ex. 80c) Options (ex. 20c) NUMBER 131,648,715 1,000,000 100,000 1,000,000 2,000,000 EXPIRY 30-Jun-12 30-Jun-12 30-Jun-13 30-Jun-13
SHAREHOLDERS OF HANNANS
As at 31 March 2012, there were 1,716 shareholders and the Top 20 Shareholders of Hannans were:Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Marfield Pty Limited Aust Global Resources Pty Ltd Acacia Investments Pty Ltd Eric Preston Pty Ltd HSBC Custody Nominees (Australia) Limited Mossisberg Pty Ltd Dixon International Pty Ltd Navigator Australia Ltd <Mlc Investment Sett A/C> Kanaslex Pty Limited Ms Susan Eileen Dechow Bonord Pty Ltd <C W Hulls & Co Super Fund> Mr Terrence Ronald Grammer Susern Holdings Pty Ltd Mandies Meats Pty Ltd <Number 2 Account> Mr Alan Paul Rudd Jigalong Community Inc/C Mr Terrence Ronald Grammer Mr David Milorad Novac + Ms Cathy Lee Sheehan <Shevac Super Fund A/C> Nijinsky Corporation Pty Ltd <Nijinsky Retire Fund A/C> Name JP Morgan Nominees Australia Limited <Cash Income A/C> Shares 11,120,733 8,724,543 3,636,363 3,554,697 3,020,000 2,633,200 2,296,296 2,075,720 1,608,989 1,548,296 1,500,001 1,500,000 1,500,000 1,500,000 1,497,000 1,400,000 1,306,500 1,290,000 1,206,346 1,200,600 54,119,284 77,529,431 % 8.45 6.63 2.76 2.70 2.29 2.00 1.74 1.58 1.22 1.18 1.14 1.14 1.14 1.14 1.14 1.06 0.99 0.98 0.92 0.91 41.11 58.89
20 Totals: Top 20 holders of ORDINARY SHARES (GROUPED) Total Remaining Holders Balance
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0.14 0.12 Share Price (AUD/Share) 0.10 0.08 0.06 0.04 0.02
450 400 350 300 Volume (k) 250 200 150 100 50
Trading Volume
0.00 0.0 03 Jan 12 17 Jan 12 31 Jan 12 14 Feb 12 28 Feb 12 13 Mar 12 27 Mar 12 Volume Share Price
0 02 Jan 11 Jan 20 Jan 31 Jan 09 Feb 20 Feb 29 Feb 09 Mar 20 Mar 29 Mar 12 12 12 12 12 12 12 12 12 12 Volume Average
Broker Activity
Commonwealth Securities Ltd Nomura Australia Limited Morgan Stanley Smith Barney Australia Pty Ltd Patersons Securities Limited Australian Investment Exchange Ltd ETRADE Australia Securities Ltd Macquarie Equities Ltd Bell Potter Securities Ltd RBS Morgans Limited Euroz Securities Ltd -200.0 -150.0 -100.0 -50.0 Sell ($k) 0.0 Buy ($k) 50.0 100.0 150.0
Hannans has developed a suite of prospective exploration projects within Australia covering the following: Forrestania a nickel and gold project 7km north of Western Area NLs Flying Fox nickel mine, a portion of the Stormbreaker Prospect includes a joint venture with Cullen Resources Ltd (Cullen) (Hannans 80%, Cullen 20% free carry). Lake Johnston a nickel and gold project located 25km south east of Norilsks Maggie Hays nickel mine and 100kms west of Norseman. Queen Victoria Rocks a nickel and gold project located 30km south-west of Coolgardie, WA. East Pilbara base metal exploration.
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CONTACTS
For further information please contact: Mr Damian Hicks Managing Director Ben Della-Vedova Business Development Director Tel: +61 8 9324 3388 Web: www.hannansreward.com Email: admin@hannansreward.com
Competent Persons Statement The information in this document that relates to exploration results is based on information compiled by Mr Donald Huntly, who is a Full Member of the Australian Institute of Geoscientists and a Registered Professional Geoscientist. Mr Huntly is a consultant to Hannans Reward Ltd. Mr Huntly has sufficient experience, which is relevant to the style of mineralisation and types of deposits under consideration and to the activity which has been undertaken to qualify as a Competent Person as defined by the 2004 edition of the Australian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Huntly consents to the inclusion in the report of the matters based on the information in the form and context in which it appears