The Company's interest in the Bigrlyi Uranium Joint Venture, which is a pre-development mineral project, is classified in the accounts as "Investment in Joint Venture". The Bigrlyi project is located in the Ngalia Basin, approximately 390 km northwest of Alice Springs, in the Northern Territory. The project is characterised by relatively high uranium grades (with vanadium credits) and excellent metallurgical recoveries.
The Bigrlyi Uranium Joint Venture is an important asset which Southern Cross first acquired in 1981 in a purchase from the Commonwealth Atomic Energy Commission in a joint venture with a number of other companies. The project was subject to significant exploration activity in the period 1974 to 1982 and then remained on a care and maintenance basis for many years. Energy Metals Ltd (EME) obtained a majority interest in the project in November 2005 and became Operator. An active drilling and exploration programme has been underway since then.
In a recent Circular to Shareholders in respect of the call made on the Company's partly paid shares, it was stated that the Southern Cross interest in the Bigrlyi Uranium Joint Venture is 5%. It should be noted that this is subject to the formal completion of a settlement agreed with the other Bigrlyi Uranium Joint Venture parties. Although Southern Cross held a 5% interest for many years, there has been some uncertainty regarding the Company's interest due to a purported dilution from 5% to 4.2%, the validity of which was not accepted by the Company. Pending finalisation of the agreed settlement, Energy Metals Ltd (EME) continues to show the Company's interest in the project at 4.2%, even though the Operator’s recent cash calls have been made, and have been paid, on the basis of a 5% interest in the project being held by Southern Cross.
A JORC compliant uranium and vanadium resource estimate of 7.27Mt @ 0.13% U3O8 and 0.24% V2O5
at a 0.5kg/t U3O8 cut-off grade was announced to the ASX in May 2009.
At cut-off grade 0.5kg/t U3O8 the uranium mineral resource totals 22.7Mlb of U3O8. Using a lower cut-off grade of 0.25kg/t U3O8 the resource increases to 29.4Mlb of U3O8 with most of this resource lying within 200m of the surface and potentially amenable to open cut mining. At both of these cut-off grades, approximately 55% of the contained uranium metal reports to the Indicated Resource category.
During the latter part of 2009, 67 RC holes (total 8,118m) and 9 diamond holes (total 750m) were drilled to infill resource positions at the A4 and A15 deposits, and to investigate untested positions west of A4 and A15. Large diameter core from the diamond drilling programme has been dispatched to the ANSTO Lucas Heights facility for initial heap leach testwork.
The JV Operator has advised that a new resource estimate for the Bigrlyi project incorporating the 2009 drilling results is scheduled for release in the June 2010 quarter.
Further information may be obtained from the website of the Operator, Energy Metals Ltd (EME), www.energymetals.net.
Other Investment Activities
Southern Cross has for many years invested surplus funds in property, shares and other investment projects.
An investment of $500,000 was made some twenty years ago, whereby the Company became a 50% joint first mortgagee over freehold beachfront land at Nadi, Fiji. This investment opportunity was provided by the Chairman who, together with other associated interests, retained the other 50% of the mortgage.
The Company also has a 20% shareholding in the Fijian company which is the registered proprietor of the properties. The freehold land is zoned for Special Uses, related to tourism activities. It is suitable for the development of about 700 holiday apartments and for hotels.
As the Company is a joint mortgagee as well as a joint substantial shareholder in the Fijian company, its interests are closely aligned with the other shareholders and mortgagees. Whilst there may be a view that conflicts of interest could have arisen, all parties are reviewing the potential and strategy for this investment on a regular basis to ensure a transparent process is followed, as well as ensuring that the approach taken maximises the potential return, despite the delays due to political upheavals that have occurred in Fiji in recent years.
As the initial acquisition returned 230% on the original investment within the first three years, the Directors consider that this investment has already provided, and should provide in future, significant returns to the Company.
The Company holds strategic investments in two listed entities - Longreach Oil Ltd (LGO) and Chapmans Ltd (CHP). LGO is concentrating on oil, gas and coal exploration. CHP has been operating on a small scale in investment projects, provision of venture capital and general investment. CHP also has a subsidiary company, Hallmark Minerals N L in which it holds about 70% and in which Southern Cross has a 20% shareholding. Hallmark Minerals has recently been re-activated and has invested in a coal mining project in Kalimantan, Indonesia and is also seeking to participate in other mineral exploration and development projects. |
Uranium: Australia