Announcement - Laos Bolaven Plateau Bauxite Project

8/9/2019 Announcement - Laos Bolaven Plateau Bauxite Project

1/18

23 October 2006

The Company Announcements Office

Australian Stock Exchange Limited

Laos Bolaven Plateau Bauxite Project Update

An Ord River Resources (ORD) delegation is leaving this week for Laos to commenceimplementation of the proposed Bolaven Plateau bauxite development.

ORD and China Non-ferrous Metals International Mining Co. Ltd (CNMIM) have a Joint Venture (JV)to develop a major bauxite deposit in Southern Laos, on the Bolaven Plateau. CNMIM is Chinasmajor institution for sourcing non-ferrous mineral supplies for Chinese industry.

Initial exploration work undertaken by ORD and CNMIM shows that Laoss bauxite deposits have thepotential to be as large as Western Australias Darling Ranges deposits, which produce 14% of theworlds alumina, and preliminary sampling indicates they have similar quality and grade.

The bauxite potential, in and around the projects existing tenement, is estimated to be up to 2 2.5billion tonnes. Negotiations are in progress for the JV to secure additional tenements in the area.

With that potential, ORD estimates an annual production of up to 20 mtpa (million tonnes per annum)of bauxite from the Bolaven Plateau is possible, which may be refined to 5 - 7 mtpa of alumina.

ORD is planning to achieve an initial JORC resource estimate by mid-2007.

Ord River Resources

Currently there is a JV between ORD (49%) and CNMIM (51%).

The ORD/CNMIM JV (70%) has an agreement with a Laos company (30%) to develop a 138 squarekilometre tenement on the Bolaven Plateau.

2006 spot aluminaprice average1

US$430/tonne Price of aluminium2 US$2,716.50/tonne19 Oct 2006

Patrick Sam YueCompany Secretary

Contact:

Libby Gauld, Wilkinson Media, 02 8001 8888, 0404 889 692, [email protected]

The information in this report that relates to Exploration Results is based on information compiled byMr Peter Temby and reviewed Mr Michael Morgan, a bauxite consultant and a member of TheAustralian Institute of Mining and Metallurgy. Mr Morgan has sufficient experience that is relevant tothe style of mineralization and type of deposit under consideration and to the activity which he isundertaking to qualify as a Competent Person as defined in the 2004 Edition of the AustralasianCode for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Morganconsents to the inclusion in this report of matters based on this information in the sense that thescientific reasoning behind the acquisition of the figures appears to him to be reasonable..

1ABARE Australian Commodities: September Quarter 20062 London Metal Exchange: cash seller and settlement


2/18

Media Release - 23 October 2006

Australian resource company pioneers a newaluminium industry in Laos

Ord River Resources (ORD) has identified bauxite deposits in Southern Laos Bolaven Plateau, which may support alarge scale mining operation and boost the countrys fortunes.

Early analysis indicates the quality and quantity of bauxite could fuel an industry as big as the Darling Rangesaluminium industry in Western Australia, which produces 14% of the worlds alumina. At current alumina prices, thisrepresents US$3.2 billion per year, said John Towner, Executive Chairman, ORD.

The Lao Bolaven Plateau has the potential to be one of the largest bauxite deposits in the world.

The Bolaven Plateau also has the potential to support a fully integrated aluminium industry: bauxite mining, an aluminarefinery and an aluminium smelter.

The industrys likely viability is boosted by the Plateaus natural resources, ability to produce hydro power and proximityto China a major aluminium market.

An aluminium industry would have huge economic benefits for the people of Laos, said Mr Towner.

The World Bank considers Laos one of the worlds least developed countries. In 2004 GDP was $US399 per person.

A new resource industry will act as a catalyst for better infrastructure development and the development of a skilledworkforce.

ORD has an agreement to develop the Bolaven Plateau bauxite deposit with its strategic partner, China Non-ferrousMetals International Mining Co Ltd (CNMIM), the institution for sourcing major nonferrous mineral supplies for Chineseindustry.

ORD is currently considering various community, transport and mining infrastructure opportunities with our Chinesepartners, in conjunction with the Lao Government. A delegation leaves for Laos this week, said Mr Towner.

CNMIM has already secured an interest in 138 square kilometres of the Bolaven Plateau for bauxite exploration anddevelopment. Negotiations are underway to acquire additional areas.

The venture will be enhanced by CNMIMs strong relationship with the Lao Government.

ORD and CNMIM are focused upon creating a long-term sustainable industry in Laos, said Mr Towner.

With an upskilled workforce, world best practice standards and a co-operative relationship with the Lao Government,everybody will benefit.

Ends

Contact: Libby Gauld, Wilkinson Media, 02 8001 8888, 0404 889 692


3/18

ORD data

The bauxite potential, in and around the existing tenement, is estimated to be up to 2 2.5 billion tonnes. Negotiationsare in progress for the JV to secure additional tenements in the area.

With that potential ORD estimates an annual production of up to 20 mtpa (million tonnes per annum) of bauxite fromthe Bolaven Plateau is possible, which may be refined to 5 7 mtpa of alumina.

2006 spot alumina priceaverage*

US$430/tonne Price of aluminium** US$2,716.50/tonne19 Oct 2006

*ABARE Australian Commodities: September Quarter 2006**London Metal Exchange: cash seller and settlement


4/18

Developing an integrated

aluminium industry in Laos

Policy overview an evolvingdocument

Prepared by Wilkinson Media Pty Ltd

23 October 2006


5/18

2

Contents

1. Overview

2. The people of Laos

3. The Bolaven Plateau supporting a new industry for Laos

4. CNMIM a strategic partner

5. Ord River Resources a unique approach

6. The strategy making it happen

7. Next steps


6/18


7/18

4

Together ORD, CNMIM and the Lao company can develop a sustainableand profitable aluminium industry, which will generate value, andeconomically empower the people of Laos.

RecentDevelopments

ORD and CNMIM are visiting Laos in late October to commence detailed

exploration and development of the bauxite deposits.

The Bolaven Plateau k ey facts

Currently there is a Joint Venture (JV) between ORD (49%) and CNMIM (51%) for all CNMIMsinterests in Laos.

CNMIM (70%) is currently in a JV with a local Lao company (30%), and has secured a 138square kilometre tenement on the Bolaven Plateau.

The bauxite potential, in and around the existing tenement, is estimated to be up to 2 2.5 billion

tonnes. Negotiations are in progress for the JV to secure additional tenements in the area.

With that potential, ORD estimates an annual production of up to 20 mtpa (million tonnes perannum) of bauxite from the Bolaven Plateau is possible, which may be refined to 5 - 7 mtpa ofalumina.

2006 spot aluminaprice average*

US$430/tonne Price of aluminium** US$2,716.50/tonne19 Oct 2006

*ABARE Australian Commodities: September Quarter 2006**London Metal Exchange: cash seller and settlement


8/18

5

The people of Laos

Laos is officially known as the Lao People's Democratic Republic (Lao PDR).

It has a population of approximately 6 million people.

Laos is a land-locked country in mainland South East Asia, bordered by China, Vietnam,Cambodia, Thailand and Burma.

Its total land area is approximately 237,000 square kilometers - roughly equivalent to the state ofVictoria or the United Kingdom.

Laos is classified as a Least Developed Country (LDC) by the World Bank and relies heavily onforeign aid.

In 2004, GDP per capita was US$3991. Social indicators revealed that Lao health and educationwere amongst the poorest in the region. Infant and maternal mortality rates were high, and the

average life expectancy was 54.7 years.

Only half the population currently has access to safe drinking water, and less than half hasaccess to safe sanitation facilities.

Economic development

Laos is a Marxist-Leninist state. Since 1986 however, Laos has promoted gradual economicliberalisation.

The economy is dominated by subsistence agriculture, upon which 80% of the population relies.

The industry and service sectors are growing however and now account for almost half GDPgrowth.

The Lao Government is now actively promoting development of its rich natural resource base inhydropower, bauxite, gold-copper, tin, iron ore and coal. Foreign investment is being encouragedto accelerate economic reform, and help generate improvements in education and infrastructurenecessary for Laoss economic development and international competitiveness.

The introduction of attractive foreign investment legislation has helped increase foreigninvestment inflows, particularly in the hydropower and mining sectors.

The Sepon gold and copper mine in Savannakhet, Southern Laos, is an example of the LaoGovernment partnering with an Australian resource company, Oxiana. It is the largest foreigndirect investment project in Laos, and with around 2,000 permanent employees, is the single

largest employer outside of government.

The project has made a significant contribution to Laoss GDP. In 2005 it contributed 30% toLaoss export revenue2.

1Australian Government Department of Foreign Affairs and Trade: Laos Country brief - October 2006

2Oxiana 2005 Sustainability Report


9/18

6

The Bolaven P lateau

ORD, through its work with CNMIM,has identified bauxite deposits on theBolaven Plateau, Southern Laos, thatmay support a large-scale mining

operation, with a very long mine life.

A bauxite mining industry will havehuge economic benefits for thepeople of Laos.

A mine, operating to worlds bestpractice, will act as a catalyst forbetter infrastructure development andthe development of a skilledworkforce.

A host of new businesses and

industries will be generated tosupport the new resource base.

It is considered that the bauxitemining development in the BolavenPlateau will be bigger than anyresource project currently in Laos,including the Sepon gold and coppermine.

To ensure safe operations, the JV will undertake a long term unexploded ordnance (UXO)clearance program, to remove residual military ammunition and explosives left from the regionalconflict in the 1960s and 1970s.

Agent Orange, a powerful herbicide and defoliant, was sprayed on the Plateau during this period.The Plateau, unlike much of Laos which is densely forested, is now bare and infertile. Bauxitemining, and the sustainable environment practices required, will help revegetate the land.

The Bolaven Plateau bauxite province


10/18

7

The Bolaven Plateau supporting a new industry for Laos

Quality and quantity

ORD has identified one of the worlds largest undeveloped bauxite resources in Southern Laos,with the greatest individualareas of bauxite on the south-eastern part of the Bolaven Plateau.

The bauxite province extends into Cambodia and Vietnam. BHP Billiton is currently exploring thebauxite deposits in Cambodia. Alcoa, the world's largest alumina supplier, is exploring inVietnam.

Initial exploration on the Bolaven Plateau by ORD and CNMIM show the bauxite deposits to below grade (low levels of Al2O3). It is high quality however, with low levels of undesirable elementsand minerals. This is good news as it reduces the cost of production of alumina.

The grade and quality is comparable to the bauxite found in the Darling Ranges, WesternAustralia, which currently supports three major bauxite mines and four alumina refineries.

Bolaven Plateau bauxite resources

Exploration of the Bolaven P lateau

The JV has already secured a 138 square kilometre tenement on the Bolaven Plateau for

exploration. It is now negotiating for a further 84 square kilometres in one adjoining block.

The project is 30% owned by a local Lao company. ORD/CNMIM owns the remaining 70%.

The bauxite potential, in and around the existing tenement, is estimated to be up to 2 2.5 billiontonnes.

Negotiations to acquire additional areas of the bauxite province are currently in progress.Securing these areas is desirable to ensure a long mine life at high capacity.


11/18

8

CNMIMs original tenement on the Bolaven Plateau red outline

Development of the Bolaven P lateau

CNMIMs geologists and engineers have broad experience in precious and base metalexploration and international development ventures, including aluminium mining and production.

Its skills have already been paramount in defining the bauxite resource area on the BolavenPlateau.

Together with ORDs skilled geoscientists and sound economic start-up models, the development

of the project will progress rapidly.

An integrated aluminum industry for Laos

ORDs short term program is to explore the feasibility of mining the outcropping bauxite depositsand developing an on-sitealumina refinery.

The vertically integrated project may also include an aluminium smelter.


12/18

9

Once the bauxite ore is mined, an alumina refinery is required to convert the raw bauxite ore intoalumina (aluminium oxide).

An aluminium smelter then converts the alumina into aluminium metal the end product.

The production of aluminium offers the prospect of aluminium metal industries being developed inLaos, such as fabricated product businesses.

An aluminium smelter also offers the possibility of drawing business from other bauxite andalumina production sites; in Vietnam, Cambodia and China.

The feasibility of the integrated project model is being evaluated. The size of the deposits,availability of power, cost of power, and cost of transportation from the Bolaven Plateau to theglobal market are key considerations in the viability of this project.

Hydropower

The aluminium industry requires a huge amount of power.

In fact, aluminium is often referred to as solidified electricity because it requires so much energyto produce.

The integrated project in Laos will need a cost-effective power source locally available.

Laos has significant hydropower resources and experience with this technology. It currentlyexports power to Vietnam and Thailand.

With its rivers, mountainous terrain, and a local 900 metre relief, the Bolaven Plateau hassignificant hydropower potential.

ORDs program, subject to a feasibility study, is to construct a local hydropower scheme to

sustain an integrated aluminium industry.

Proximity to market

Laoss proximity to the Chinese metal market is a strong leverage point into the aluminiumindustry.

Laos shares its northern border with China and China is a large and very rapidly expandingmarket for aluminium.

In the short term, Chinas power is predominately coal based. With the industry in Laos operatingon hydropower, it will be more cost-effective for China to use a Lao alumina refinery andaluminium smelter.

In the long term, the shortage of aluminium raw materials in the Chinese market will be asignificant issue. On average, China consumes 75 million tonnes of bauxite per year3. China hasdepleted its natural bauxite resources and by 2015 its stocks will be totally deficient.

Laos is strategically placed to meet this ever-increasing demand.

3Macquarie Bank, October 2005: Aluminium outlook why are prices here and why could they go higher?


13/18

10

Global Demand

Supply / demand studies predict that global aluminum demand will outstrip supply by 2008.An aluminum industry in Laos will have substantial market power and profitability.

Derived in part from Macquarie Bank October 2005: Aluminium outlook

The World Bank

The World Bank is a vital source of financial and technical assistance to developing countries.

It provides low-interest loans, interest-free credit and grants to developing countries for education,health, infrastructure, communications and many other purposes.

A new aluminium industry in Laos will require World Bank assistance and support.

With that support comes scrutiny. A condition of World Bank lending is that world best standardsare adhered to, in all aspects of the development.

This is another checkpoint to ensure that world-best employment, infrastructure andenvironmental practices are adhered to throughout the industrys development.

15000000

20000000

25000000

30000000

35000000

40000000

45000000

50000000

55000000

60000000

65000000

year

to

nnes

1995 2000 2005 20151990

BHP-B demand

prediction April

2006

Alcoa demand

prediction

March 2006

Demand outs trips

production capacity

2008

2020


14/18

11

CNMI M a strategic partner

CNMIM

China Non-ferrous Metals International Mining Co. Ltd (CNMIM) is Chinas leading non-ferrousminerals investment company, with international mining and smelting operations.

As the international representative of the Chinese smelting industry, its core business is theexploration and development of overseas mineral resources.

CNMIM has more than 24 years experience in non-ferrous metals resource development andconstruction.

It is the biggest overseas non-ferrous metals resource developer in China, producing 68% of totaldomestic copper, 88% nickel, 17% zinc and 92% platinum.

Ord River Resources and CNMIM

In 2004, CNMIM chose ORD to be its entrepreneurial partner. This followed a global marketsurvey by CNMIM to find a western partner with which it could form a strategic relationship andconduct major mineral projects worldwide.

CNMIM was looking for technical and corporate expertise, including skills at raising investmentcapital in western markets.

CNMIM identified ORD personnel as having the following attributes:

Successful project management. A track record for exploration and development of mineral resources. A track record for successfully launching listed resource based companies. Geoscientists committed to the exploration of world class mineral resources.

CNMIM has since purchased a 20% share in ORD.

Chairman Mr Tao Luo, Chairman and President of CNMIM, sits on the ORD Board of Directors asDeputy Chairman.

The two companies have an agreement to explore the potential of developing an integratedaluminium industry in Laos.

The Lao and Chinese strategic economic alliance

Laos and China, together with a number of other Asian countries, have an economic program ofco-operation. Through this relationship CNMIM has developed strong personal and business tieswithin Laos.

This provides a strong base for discussions regarding the exploration and development of a newaluminium industry with the Lao Government.


15/18


16/18

13

The strategy making it happen

Lao Government

The special relationship that exists between CNMIM, the Lao company and the Lao Governmentwill assist to make the project feasible.

ORD and CNMIM will continue to nurture this relationship.

The corporate-government model proposed by ORD and CNMIM is based on the highlysuccessful Australian aluminium industry. The model has allowed Australia to grow from a smallplayer in the 1970s, to become the largest producer of bauxite and alumina in the world,producing 30% of the worlds alumina.

Source: Ord River Resources from Australian Aluminum Council data

There are three key ingredients to this model:

1. That the Lao Government recognises the positive impact the business will haveon Laos, and works with ORD and CNMIM to create a world class aluminiumindustry.

2. That the Lao Government works with CNMIM and ORD to develop the majority ofthe bauxite resources. Economy of scale is critical to ensuring a profitableindustry. Fragmentation works against, not for, a healthy aluminium industry.

3. That the Lao Government sells hydropower at cost price, or near aluminiumindustry competitive price. Aluminium production requires a large amount ofpower. Approximately 14kw hours are required to produce one kilogram ofaluminium. Production is only cost-effective if power price compares favourablyto the discounted prices obtained by aluminium smelters globally.

Australian Aluminium Production Growth

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

1972

1977

1982

1987

1992

1997

2002*

tonnes


17/18

14

Australian Government

The Australian Governments understanding of the ORD CNMIM Laos relationship isimportant to ensure the project is consistent with Australian foreign policy.

The Australian Government has a prominent and positive profile in Laos, and is one of the five

largest aid donors. In 2005-06, Australian Government aid to Laos is estimated to be AUD$19.6million4.

The Australian Agency for International Developments (AusAID) education contribution eachyear, which totals AUD$3.98 million, includes funding 40 students to study in Australia and 64students to study at the National University of Laos.

The focus of Australias aid is to strengthen Lao human resources, promote growth in the marketeconomy and reduce the vulnerability of the poor.

Australia is also one of the major foreign investors in Laos, contributing to the Lao economy andlocal employment through its mining companies, particularly the gold and copper mining projectscurrently being developed.

A strong relationship between the Australian Government and ORD is essential.

ORD will explore the feasibility of Australian Government funding to support the Lao mining andresource industry, by way of local education and scholarships.

Lao Community Relations

To ensure local support for the mine, ORD will develop strong local community relations with thepeople on the Bolaven Plateau and the rest of the country. It is essential that the people of Laosrecognise the positive benefits the industry will bring to their country, and the additional income,

jobs, skills and associated major works that will take place.

Regular communication with the Lao Government and media will help achieve this.

Investor Relations

Australian investors, and potential investors, will be kept updated on the companys activitiesthrough regular communication with the Australian Stock Exchange and through the generalmedia.

To raise the necessary funds for a Lao aluminum industry, ORD plans to dual list by seekingquotation on the London Stock Exchange (LSE). British investors, and potential investors, willthen be informed through the LSE and general media.

Mass media

Australia and international media will be watching to ensure ORD and CNMIM do not repeat thepattern of environmental disasters left by other mining companies in the region.

Strong relations with media are critical to ensuring ORDs activities are accurately reported.

4Australian Government Department of Foreign Affairs and Trade: Laos Country brief - October 2006


18/18

15

Timeline

Initial exploration: June 2007

ORD to be onsite by December 2006: two field camps to be established.

Commence exploratory work:

- Drilling: Approximately 12,000 metres of vertical drill holes

- Pitting and channel sampling: Approximately 500 pits to be tested

- Ore modelling: Determine the shape of the deposits.

- Detailed Geographic Survey: Map all drill holes and pit samples.

- Contour maps: Develop contour maps of the 250 square kilometres, of and adjacentto the two tenements, for detailed interpretation.

- Initial metallurgical sample: Process testing.

Commence baseline environmental studies to determine the state of the environmentbefore mining operations commence.

Prepare a JORC (Joint Ore Reserves Committee) compliant resource statement.

Further exploration: June 2008

Continue exploratory work:

- Drilling: An additional 18,000 metres of vertical drill holes.

- Pitting and channel sampling: A further 700 pits to be tested.

- Ore modelling: Additional resources to be added to the model.

- Detailed Geographic Survey: Additional drill holes and pits to be mapped.

- Representative metallurgical samples: The second and possibly thirdmetallurgical samples to be tested.

Upgrade JORC compliant resource statement as results are received.

Status quo: December 2008

Preliminary mine planning completed.

Results of the pre-feasibility study assessed.

Decision to proceed to full feasibility study.

Commencement of full feasibility study.

Documents

Announcement - Laos Bolaven Plateau Bauxite Project