December 2017 Quarterly Operations Reporttrekmetals.com.au/wp-content/uploads/2018/04/20180131-TKM... · TRINITY HALL 43 CEDAR AVENUE ... across much of the Project area is very similar

ASX Announcement 31 January 2018

BERMUDA TRINITY HALL 43 CEDAR AVENUE HAMILTON HM12

AUSTRALIA SUITE 5, 56 KINGS PARK ROAD

WEST PERTH, WA AUSTRALIA 6005

TEL: +61 8 6555 1879

TREK METALS LIMITED ARBN: 124 462 826

MAIL: PO Box 1796, West Perth WA 6872 Australia

EMAIL: [email protected] www.trekmetals.com.au

December 2017 Quarterly Operations Report

1. Key Points Kroussou Project

TKM enters into a binding term sheet with Battery Minerals Limited (ASX: BAT) subsequent to the quarter end to acquire the Kroussou Project 100% for a consideration of US$400,000 in a combination of cash and securities.

Initial results from a programme of ground based geophysics, including IP and NSAMT (Induced Polarisation and Natural Source Audio Magneto Tellurics) to target near surface open‐pit orebodies returns several large anomalies.

Anomalies within the Dikaki Channel highlight the potential for extensions to known mineralisation.

Inversion modelling suggests significant targets from near surface to approximately 100m below surface.

Arunta Lithium ‐ Cobalt Project

Project includes six exploration licences and one exploration licence application with historical rock chips up to 1,500ppm Li2O, 0.12% Co.

Project includes historical reports of lithium, cobalt, tin, tungsten, copper, tantalum and niobium anomalism and/or mineralisation

Reconnaissance field work indicates large volumes of granite with pegmatites and copper mineralisation at surface.

Historical exploration review to evaluate numerous opportunities within the extensive ground package is ongoing.

Lawn Hill Project

Meeting with Traditional Owners anticipated during the June Quarter.

Historical exploration review and initial target development work is ongoing.

Aeon Metals’ Walford Creek Deposit, along strike, has grown its resource to 15.7Mt @ 1.24% Copper and 0.15% Cobalt.




TEL: +61 8 6555 1879

2. Kroussou Project 2.1 100% Acquisition Subsequent to the quarter end, Trek was delighted to advise that a binding term sheet had been signed to acquire 100% of the Kroussou Zinc‐Lead Project in Gabon from Battery Minerals Limited (ASX:BAT) (refer to ASX announcement – 11 January 2018).

Trek will pay Battery Minerals Limited US$400,000 in a mix of cash and securities plus a deferred

consideration of shares and options, totalling US$2.5 million subject to a mineral resource of 250,000

tonnes of combined zinc‐lead metal being estimated on the Kroussou Project. Trek will also grant BAT a

2.5% NSR on the project, subject to a 1% buyback by TKM with the payment of US$1.5million in cash.

Deal Terms

Key points of the Term Sheet include:

TKM (or it’s nominee) will acquire 100% of the issued capital of BAT subsidiary, Select Exploration

(Select Exploration), which holds a 100% interest in the Kroussou Project.

The consideration for the acquisition of the Kroussou Project is:

o a cash payment of US$200,000 to BAT; and o the issue of US$200,000 of TKM shares based on a 5‐day VWAP prior to the date of issue and

subject to a minimum floor price of $0.025 (Consideration Shares) and one free attaching option (term of 3 years, $0.10 exercise price) for every two Consideration Shares issued.

The Consideration Shares will be subject to a 12‐month voluntary escrow period.

Deferred consideration upon an Indicated Resource (as defined in JORC 2012) of more than

250,000 tonnes of combined Zn/Pb metal being declared in relation to the Kroussou Project and

subject to shareholder approval, of US$2,500,000 of TKM shares based on a 5‐day VWAP prior to

the date of issue and subject to a minimum floor price of $0.025 (Deferred Consideration Shares)

and one free attaching option (term of 3 years, exercise price of 150% of the 5‐day VWAP prior to

the date of issue) for every two Deferred Consideration Shares issued (Deferred Consideration

Options) (together, the Deferred Consideration).

TKM will grant BAT a 2.5% net smelter royalty on gross sales revenue (NSR) with TKM having an

option to buy back 1% of the NSR for US$1,500,000.

An existing 0.75% net smelter royalty payable in relation to the Kroussou Project to a third party

(Existing Royalty) which can be bought back for US$250,000, will be novated from BAT to TKM as

part of the acquisition.

If TKM abandons the Kroussou Project, BAT has the option to acquire the project for fair value. If

TKM sells the Kroussou Project, the third‐party purchaser must undertake to provide BAT with an

equivalent Deferred Consideration or TKM may agree to pay BAT the Deferred Consideration.

Conditions precedent to completion of the acquisition include a satisfactory 30‐day due diligence

period for TKM, novation of the Existing Royalty from BAT to TKM and other conditions precedent

which are considered standard for a transaction of this nature including no material adverse

change to BAT or TKM, representations and warranties of BAT being true and correct and BAT

complying with its obligations under the Term Sheet. TKM may terminate the Term Sheet if any

conditions precedent are not satisfied or waived by 31 March 2018 and BAT may terminate if a

material adverse change occurs in relation to TKM.

The Term Sheet also contains representations and warranties from the parties that are considered

standard for this type of transaction.




TEL: +61 8 6555 1879

A formal share sale agreement and royalty deed in respect of the Term Sheet is expected to be executed

by the parties by the end of Q1 2018.

2.2 Surface Geophysics During the quarter, the Company announced that it had commenced a ground geophysical programme at its Kroussou Zn‐Pb Project JV (refer to ASX announcement – 16 October 2017).

This programme, consisting of both IP and NSAMT methods (Induced Polarisation and Natural Source Audio Magneto Tellurics), aimed to assist drill targeting in combination with the recently identified soil anomalies within the Project area.

Initial lines indicated significant anomalies potentially related to mineralisation being present within the Dikaki Channel. Both IP and NSAMT methods highlighted these anomalies that appear related to known

mineralisation. Inversion modelling orientation lines across some of the known mineralisation at Dikaki has indicated that a substantial semi‐continuous conductive body persists from surface (associated with known mineralisation) to approximately 100m below surface (Figures 2 and 3) (refer to ASX announcement – 03 November 2017).

2.3 Future Work The geophysical programme has now recommenced following a period of heavy rain that halted activity. It is anticipated that the programme will be completed during Q1 2018 with drilling to follow thereafter.

3. Arunta Project 3.1 Project Acquisition Trek announced the 100% acquisition, during the quarter, of Elm Resources Pty Ltd which owns seven applications (six now granted) in the Northern Territory that are highly prospective for Lithium and Cobalt

(Figure 4) (refer to ASX announcement – 15 November 2017).

This acquisition provides Trek with significant exposure to strategic commodities for the mobile energy / battery market and is an adjunct to its strategy of the discovery of zinc and lead deposits both in Australia (Lawn Hill Project) and via its interest in the Kroussou Zinc‐Lead Project JV in Gabon.

Trek sees this commodity mix as presenting opportunities in both base load energy storage (lead and zinc)

and mobile energy storage (lithium and cobalt) as the renewables sector expands globally.

The key technical aspects of the Arunta Lithium – Cobalt Project are as follows:

7 ELA’s (6 now granted) for a total of 5,274 km2

Approximately 200km NW of Alice Springs adjacent to the Tanami Road with a major unsealed

link road to the Stuart Highway traversing the eastern part (Napperby) of the project area

Wangala Suite Granites mapped across the Napperby area – highly lithium fertile rocks

Historic rock chips up to 0.12% Cobalt in Lander Bed meta‐sediments

Southwark Granite in the western part of the project area (Mt Singleton) contains pegmatites and

greisen phases with elevated tungsten – highly lithium fertile rocks

Abundant pegmatites mapped in both regions of the project

Exploration possible year‐round with access along pastoral and exploration tracks

Potential exists also for tin, tungsten, copper, gold, tantalum and niobium mineralisation




TEL: +61 8 6555 1879

A reconnaissance field trip was undertaken late last year and confirmed the presence of widespread

granites mapped as Wangala Suite which are considered highly prospective sources for lithium

mineralisation in the Northern Territory. Outcropping copper mineralisation was also present at one

location visited during the excursion (Figures 5 and 6).

Consideration

Trek secured the outright purchase of the Arunta Li‐Co Project for a consideration of $300,000 comprising

an issue of 8,571,429 Trek shares at $0.035 per Trek share. Fifty percent of the shares issued as

consideration will be escrowed for 6 months. There are no other material conditions of the agreement.

3.2 Future Work Compilation of historical data will be ongoing with a more complete understanding of the potential of the

tenements to continue to emerge in the coming months with commensurate ground works beginning

during 2018.

4. Lawn Hill Project 4.1 Historic Exploration Trek is continuing to evaluate the historic data available for the Lawn Hill Project (Figure 7). The geology

across much of the Project area is very similar to that which hosts the Walford Creek Project (see Aeon

Minerals ASX: AML), across the border in Queensland approximately 30km to the east. The Fish River

Fault, associated intimately with the Walford Creek mineralisation, traverses TKM’s Lawn Hill Project area.

A compilation of available historic stream sediment data, collected in the 1980’s across the Lawn Hill

Project area, indicates the potential for copper, cobalt, zinc and lead mineralisation across the tenement

application areas (refer to ASX announcement – 21 August 2017).

The Lawn Hill Project is located immediately across the border (approx. 35km west and directly along

strike) on the Northern Territory side, from the emerging Walford Creek Copper‐Cobalt‐Zinc‐Lead Project

owned by Aeon Metals Limited. Aeon Metals suggests that the Walford Creek Project contains Australia’s

largest and most advanced sulphide cobalt resource.

The rocks hosting the Walford Creek Project, the Lawn Hill Platform, extend across the border from

Queensland into the Northern Territory. An obvious and abrupt absence of copper‐cobalt, zinc and lead

occurrences within the Lawn Hill Platform rocks on the Northern Territory side of the border is not

necessarily due to an absence of mineralisation but rather a lack of exploration.

ESSO conducted limited surface exploration between 1979 ‐ 1981 which included:

• stream sediment sampling

• rock chip sampling

• gravity survey

• drilling of two stratigraphic diamond drillholes

4.2 Tenement Applications The process of negotiating access arrangements to allow for the grant of the Lawn Hill Project tenure is

ongoing. A meeting with Traditional Owners is now due to be held in Q1 2018.




TEL: +61 8 6555 1879

Several new tenement applications were lodged during the quarter to bolster the Lawn Hill Project

package. For details of this see the ASX announcement from 27 November 2018 (Figure 8).

5. Kangaluwi Copper Project 5.1 Court Case The Company is awaiting written judgement by the Judge of the Lusaka High Court on the appeal lodged

by organisations associated with the conservation movement in Zambia on 17 January 2014 against the

decision of the Minister of Lands, Natural Resources and Environment Protection to approve the

Company's 100% owned Kangaluwi Copper Project. The stay of execution remains in place pending the

outcome of the appeal against the Minister’s decision.

TKM is currently evaluating its options with respect to the divestment of this Project.

6. Corporate 6.1 Fund Raising & General Meeting Given the very strong market interest in the key strategic commodities for the mobile energy / battery

market and the prospectivity of the Arunta Li‐Co Project, Trek received commitments during the quarter

from new and existing sophisticated and professional investors for 67,741,935 new shares to raise $2.1

million (before costs) at $0.031 per Trek share through Lead Manager PAC Partners (Placement). The

Placement included a 1:2 free attaching unlisted option exercisable at $0.06 before 2 November 2021

(Placement Options) and 4,000,000 Broker Options on the same terms.

Proceeds from the Placement were to fund:

Initial assessment of the Arunta Lithium‐Cobalt Project in Northern Territory

Continuing advancement of exploration activities at the Kroussou Zinc‐Lead Project in

Gabon

Support ongoing exploration activities on the company’s other base metals project in the

Northern Territory, the Lawnhill Zinc‐Copper‐Cobalt Project

General working capital, including evaluation of new project opportunities

The securities were issued in two tranches, the first utilising its capacity under Listing Rules 7.1 and 7.1A of 58,997,562 fully paid ordinary shares issued in November 2017. The remaining 8,744,373 shares, the Placement Options and the Broker Options received shareholder approval at a General Meeting which was held on 4 December 2017 and were issued following that meeting.

The Company also received at that General Meeting approval for the issue of 8,571,429 new fully paid

ordinary shares for the purchase of the Arunta Li‐Co Project and for the issue of 21 million unlisted options exercisable at $0.06 before 2 November 2021 to directors.

The Company also completed in October 2017 the issue of 4 million new fully paid ordinary shares at $0.025 per share to sophisticated and professional investors to finalise the $2 million capital raising

approved by shareholders at the Annual General Meeting of Shareholders in August 2017.




TEL: +61 8 6555 1879

7. Tenements

Tenement Holder Last

Qtr Interest

Current

Qtr Interest

EPM26707 (appl.)

(Queensland)

Trek Metals Limited100% 100%

EPM26708 (appl.)

(Queensland)

Trek Metals Limited 100% 100%

G4‐569

(Gabon)

Select Explorations Gabon SA

(Wholly owned subsidiary of

Battery Minerals Limited)

0%

(Option agreement

to enter into JV to

earn up to 70%)

0%

G4‐588 Select Explorations Gabon SA

(Wholly owned subsidiary of

Battery Minerals Limited)

0%

(Option agreement

to enter into JV to

earn up to 70%)

0%

EL31564

(Northern Territory)

ELM Resources Pty Ltd

(100% owned subsidiary) 100% 100%

EL31565




EL31566




EL31567




EL31598




EL31599







TEL: +61 8 6555 1879

EL31728 (appl.)




EL31260 (appl.)


TM Resources Pty Ltd


EL31261 (appl.)




EL31751 (appl.)




EL31752 (appl.)




EL31753 (appl.)




15547‐HQ‐LML

(Zambia)

Mwembeshi Resources


13170‐HQ‐LPL

(Zambia)

Cheowa Resources

(Incorporated JV‐ 51%

Glencore 49% TKM)

49% 49%

13171‐HQ‐LPL

(Zambia)

Cheowa Resources


Glencore 49% TKM)

49% 49%

8573‐HQ‐LPL

(Zambia)

Cheowa Resources


Glencore 49% TKM)

49% 49%

COMPETENT PERSONS STATEMENT

The information in this report that relates to exploration results is based on information compiled by Mr

Bradley Drabsch, Member of the Australian Institute of Geoscientists (“AIG”) and Managing Director of

Trek Metals Limited. Mr Drabsch has sufficient experience which is relevant to the style of mineralisation

and type of deposit under consideration and to the activity that is being undertaken to qualify as a

competent person as defined in the JORC Code 2012. Mr Drabsch consents to the inclusion in the report of

the matters based on the information in the form and context in which it appears.

Figure 1: Kroussou Project Location Plan

Figure 2: Geophysical image (metal factor – chargeability/resistivity) over part of the Dikaki Channel. The anomalies may represent down dip and along strike

extensions to the known mineralization (for details of intersections, refer ASX Announcement 11 May 2017

Figure 3: DDIP Inversion Model along section line 640300mN indicating a chargeable body that approximately coincides with known mineralization at surface and a

much larger anomalous region deeper down

Figure 4: The Arunta Project tenements on regional 1VD Aeromagnetics

Figure 5: Wangala Suite Granites Figure 6: Rocks from a copper occurrence

on EL31598 (671,850mE 7,568,900mN Z52)

Figure 7: Lawn Hill Project tenement applications in the Northern Territory and Queensland (excluding the newest applications – see below figure)

Figure 8: Witwatersrand Gold targets within existing and new tenement applications in the Northern Territory and Queensland

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

+ See chapter 19 for defined terms. 01/09/2016 Appendix 5B Page 1

Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Name of entity

TREK METALS LIMITED

ARBN Quarter ended (“current quarter”)

124 462 826 31 DECEMBER 2017

Consolidated statement of cash flows*

* Trek Metals Limited has changed its presentation currency to USD.

Current quarter $US’000

Year to date

(9 months) $US’000

1. Cash flows from operating activities

1.1 Receipts from customers

1.2 Payments for

(181) (643) (a) exploration & evaluation

(b) development ‐ ‐

(c) production ‐ ‐

(d) staff costs (80) (189)

(e) administration and corporate costs (68) (200)

1.3 Dividends received (see note 3) ‐ ‐

1.4 Interest received 4 6

1.5 Interest and other costs of finance paid ‐ ‐

1.6 Income taxes paid ‐ ‐

1.7 Research and development refunds ‐ ‐

1.8 Other (Refund of unclaimed GST 2015/2016)

‐ 122

1.9 Net cash from / (used in) operating activities (325) (904)

2. Cash flows from investing activities

‐ ‐

2.1 Payments to acquire:

(a) property, plant and equipment

(b) tenements (see item 10) ‐ ‐


+ See chapter 19 for defined terms. Appendix 5B Page 2 01/09/2016




Year to date


(c) investments ‐ (240)

(d) other non‐current assets ‐ ‐

2.2 Proceeds from the disposal of:

‐ ‐ (a) property, plant and equipment

(b) tenements (see item 10) ‐ ‐

(c) investments ‐ ‐

(d) other non‐current assets ‐ ‐

2.3 Cash flows from loans to other entities ‐ ‐

2.4 Dividends received (see note 3) ‐ ‐

2.5 Other (provide details if material) ‐ ‐

2.6 Net cash from / (used in) investing activities ‐ (240)

3. Cash flows from financing activities

1,662 3,1743.1 Proceeds from issues of shares

3.2 Proceeds from issue of convertible notes

3.3 Proceeds from exercise of share options

3.4 Transaction costs related to issues of shares, convertible notes or options (74) (185)

3.5 Proceeds from borrowings

3.6 Repayment of borrowings

3.7 Transaction costs related to loans and borrowings

3.8 Dividends paid

3.9 Other (provide details if material)

3.10 Net cash from / (used in) financing activities 1,588 2,989






Year to date


4. Net increase / (decrease) in cash and cash equivalents for the period

4.1 Cash and cash equivalents at beginning of period * 1,014 447

4.2 Net cash from / (used in) operating activities (item 1.9 above) (325) (904)

4.3 Net cash from / (used in) investing activities (item 2.6 above) ‐ (240)

4.4 Net cash from / (used in) financing activities (item 3.10 above) 1,588 2,989

4.5 Effect of movement in exchange rates on cash held * 47 32

4.6 Cash and cash equivalents at end of period

*Cash at 1 April 2017 amended to reconcile to Half year report

2,324 2,324

5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts


Previous quarter $US’000

5.1 Bank balances 2,308 998

5.2 Call deposits 16 16

5.3 Bank overdrafts ‐ ‐

5.4 Other (provide details) ‐ ‐

5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above) 2,324 1,014



6. Payments to directors of the entity and their associates Current quarter $US'000

6.1 Aggregate amount of payments to these parties included in item 1.2 51

6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 ‐

6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2

Payment of Director fees

7. Payments to related entities of the entity and their associates

Current quarter $US'000

7.1 Aggregate amount of payments to these parties included in item 1.2 ‐

7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 ‐

7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

‐

8. Financing facilities available Add notes as necessary for an understanding of the position

Total facility amount at quarter end

$US’000

Amount drawn at quarter end $US’000

8.1 Loan facilities

8.2 Credit standby arrangements

8.3 Other (please specify)

8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.



9. Estimated cash outflows for next quarter $US’000

9.1 Exploration and evaluation 362

9.2 Development ‐

9.3 Production ‐

9.4 Staff costs 61

9.5 Administration and corporate costs 67

9.6 Other (provide details if material)

‐ capital raising costs ‐

9.7 Total estimated cash outflows 490

10. Changes in tenements (items 2.1(b) and 2.2(b) above)

Tenement reference and location

Nature of interest Interest at beginning of quarter

Interest at end of quarter

10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced

10.2 Interests in mining tenements and petroleum tenements acquired or increased

EL31564‐NT

EL31565‐NT

EL31566‐NT

EL31567‐NT

EL31598‐NT

EL31599‐NT

Located in Northern Territory; granted during quarter

0% 100%

EL31753

EL31752

EL31751

EL31728

(appl.) NT

Tenements under application in Northern Territory

0% 100%

EPM26707

EPM26708

(appl.) QLD

Tenements under application in Queensland

0% 100%



Compliance statement

1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2 This statement gives a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 31 January 2018 Company Secretary

Print name: Nerida Schmidt

Notes

1. 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 that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, 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. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

Documents

December 2017 Quarterly Operations Reporttrekmetals.com.au/wp-content/uploads/2018/04/20180131-TKM... · TRINITY HALL 43 CEDAR AVENUE ... across much of the Project area is very similar