Quarterly Activities Report for the period ending 31 ... · effectively develop smelting facilities. Chinese government restrictions on the ferroalloy industry have presented opportunity

A.C.N. 118 738 999

Quarterly Activities Report

for the period ending 31 December 2011

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31 Jan 2012

Quarterly Activities Summary Status: ASX Listed Public Co. GICS Sector: Materials GICS Industry : Metals & Mining ASX Code: HAZ Details

Directors Terry Butler-Blaxell Managing Director John Chegwidden Non Executive Director Frank Ashe Non Executive Director Carol New Company Secretary

Hazelwood’s (The Company) majority owned ATC Ferrotungsten Project, which was completed under budget during the previous quarter, remains in a production-ready state.

Financing for the procurement of feedstock and first fill materials is presently being negotiated, against a backdrop of significant volatility and uncertainty in capital markets.

A corporate advisory and fund raising mandate has been renewed with Hartleys Limited, who have a proven track record of success-fully arranging funding for the Company’s activities.

Full year official Chinese export figures show a continued decline in the volume of ferrotungsten exported from China, in part due to export tariffs and other restrictions imposed by the Chinese Government. Outside of China, there are few sources of supply of ferrotungsten.

The Company is presently conducting a strategic review to deter-mine the optimum structure for realising value from its refining business unit in ATC and its minerals assets in Australia. Syntella Partners of New York have been engaged to assist with this exercise.

Studies on the potential for expansion into other ferroalloys are in progress. The Company has demonstrated the capability to cost-effectively develop smelting facilities. Chinese government restrictions on the ferroalloy industry have presented opportunity to develop new, non-China based smelting capacity.

The Company's geological consultants, who confirmed the prospectivity of the Copper Gorge base metal target (Atlas Iron 30%), are presently conducting a review of the potential for iron ore within the Company's East Pilbara tenements.

Ordinary Fully Paid Shares 263,655,356

Quoted Ordinary Fully Paid Shares 263,655,356

Unlisted Options 10 c (30 Apr 2012) 5,000,000


Unlisted Options 25 c (30 Jun 2012) 1,000,000

Unlisted Options 30 c (30 Jun 2012) 1,000,000

Unlisted Options 20 c (31 Aug 2012) 4,000,000





Unlisted Options 20 c (22 Dec 2013) 850,000


12 month High - Low $0.10 - $0.26

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Quarterly Activities Report for the period ending 31 December 2011

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Advisor Appointment & Strategic Review Hazelwood continues its long-standing relationship with Hartleys Limited, who have a proven track record with the Company. A corporate advisory and fund raising mandate with Hartleys was renewed in December for a further 12 months. The Company is actively being presented to a range of local and international investors to assess the most appropriate funding strategy for the procurement of inventory and first fill for the recently completed ATC Ferrotungsten Project. The Company is pleased to announce that it has also entered into a corporate advisory mandate with Syntella Partners of New York, who have expressed interest in Hazelwood’s activities. The principals of Syntella have executed metals and mining transactions in excess of $US50 billion, across all metal categories, geographies and asset development stages. Syntella are assisting with a strategic review of the Company to determine the optimum structure for realising value from Hazelwood’s refining business unit (ATC) and Australian based minerals assets. The Company is currently being presented to a range of North American investors. Hazelwood looks forward to working along side Hartleys and Syntella to better realise the value of the Company.


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Tungsten Market Conditions and Restrictive Chinese Policy Official Chinese customs statistics for the full year 2011 have shown continued, restricted export tonnages for ferrotungsten. As with all ferroalloys, the export of ferrotungsten from China is subject to a 20% export tariff, and the VAT rebates for exporters have been abolished. Tungsten in particular is considered a strategic metal and the Chinese, who control approximately 70% of the world’s reserves for tungsten have placed numerous restrictions on the mining, processing and export of the material. Outside of China, there are few sources of supply for ferrotungsten, which is used in tool steels and high speed steels. European and Japanese specialty steel makers are the largest non-China consumers of tungsten in steels. Hazelwood and ATC have an agency agreement with Wogen Resources Ltd for the distribution of ferrotungsten to Wogen’s existing network of specialty steelmaking customers. The Ministry of Industry and Information Technology of the People’s Republic of China reportedly indicated that around 7.4 million tonnes per annum of outdated ferroalloy production capacity in China would be eliminated under its “Twelfth Year Plan”. Emissions targets and power rationing are constraints on the ferroalloy industry in China. Hazelwood is examining the potential for the establishment of new ferroalloy and metals refining capacity outside of China, and has commenced a review of the production technology and equipment required for such an endeavour. The Company has demonstrated it can cost-effectively develop refining facilities in Vietnam and hopes to leverage off its achievement there.

Source: Chinese custom statistics

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2006 2007 2008 2009 2010 2011

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Official Chinese Exports Ferrotungsten

Japan

Europe

Tariff imposed on Ferroalloys


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Site visit by fund managers—ATC Ferrotungsten Project, Vietnam


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Appendix 5B Mining exploration entity quarterly report

+ See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 1

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

HAZELWOOD RESOURCES LTD

ABN Quarter ended (“current quarter”)

88 118 738 999 31 December 2011

Consolidated statement of cash flows

Cash flows related to operating activities

Current quarter $A’000

Year to date (6 months)

$A’000 1.1 Receipts from product sales and related debtors

Nil Nil

1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration

(433) Nil Nil

(604)

(909) Nil Nil

(2,053) 1.3 Dividends received Nil Nil 1.4 Interest and other items of a similar nature received 17 56 1.5 Interest and other costs of finance paid Nil Nil 1.6 Income taxes paid Nil Nil 1.7 Other (provide details if material) R & D Refund Nil Nil

Net Operating Cash Flows (1,020) (2,906)

Cash flows related to investing activities

1.8 Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets

Nil Nil

(740)

Nil Nil

(1,241) 1.9 Proceeds from sale of: (a)prospects

(b)equity investments (c)other fixed assets

Nil Nil Nil

Nil Nil Nil

1.10 Loans to other entities (25)

(35)

1.11 Loans repaid by other entities Nil

Nil

1.12 Other (provide details if material) Nil Nil

Net investing cash flows (765) (1,276)

1.13 Total operating and investing cash flows (carried forward) (1,785) (4,182)

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+ See chapter 19 for defined terms. Appendix 5B Page 2 30/9/2001

1.13 Total operating and investing cash flows (brought forward) (1,785) (4,182)

Cash flows related to financing activities

1.14 Proceeds from issues of shares, options, etc. Nil Nil 1.15 Proceeds from sale of forfeited shares Nil Nil 1.16 Proceeds from borrowings Nil Nil 1.17 Repayment of borrowings Nil Nil 1.18 Dividends paid Nil Nil 1.19 Other – Capital Raising Costs Nil Nil

Net financing cash flows Nil Nil

Net increase (decrease) in cash held

(1,785) (4,182)

1.20 Cash at beginning of quarter/year to date 2,301 4,698 1.21 Exchange rate adjustments to item 1.20 Nil Nil

1.22 Cash at end of quarter 516 516

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

Current quarter $A'000

1.23

Aggregate amount of payments to the parties included in item 1.2 92

1.24

Aggregate amount of loans to the parties included in item 1.10 NIL

1.25

Explanation necessary for an understanding of the transactions

N/A

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

N/A

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

N/A

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or p

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

Amount available $A’000

Amount used $A’000

3.1 Loan facilities

Nil Nil

3.2 Credit standby arrangements

Nil Nil

Estimated cash outflows for next quarter

$A’000 4.1 Exploration and evaluation

200

4.2 Development

Nil

4.3

Production Nil

4.4

Administration 500

Total

700

Reconciliation of cash Reconciliation 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.

Current quarter $A’000

Previous quarter $A’000

5.1 Cash on hand and at bank 516 2,301

5.2 Deposits at call Nil Nil

5.3 Bank overdraft Nil Nil

5.4 Other (provide details) Nil Nil

Total: cash at end of quarter (item 1.22) 516 2,301

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Changes in interests in mining tenements Tenement

reference Nature of interest (note (2))

Interest at beginning of quarter

Interest at end of quarter

6.1 Interests in mining tenements relinquished, reduced or lapsed

N/A N/A

6.2 Interests in mining tenements acquired or increased

N/A N/A

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Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.

Total number Number quoted

Issue price per security (see note 3) (cents)

Amount paid up per security (see note 3) (cents)

7.1 Preference +securities (description) 7.2 Changes during quarter

(a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions

7.3 +Ordinary securities

263,655,356 263,655,356

7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs

Nil

Nil

Nil

Nil

7.5 +Convertible debt securities (description)

7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted

Nil

7.7 Options (description and conversion factor)

5,000,000 2,000,000 1,000,000 1,000,000 4,000,000 1,000,000 2,000,000 4,000,000 5,000,000 3,000,000 850,000

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

Exercise price 10 Cents 20 Cents 25 Cents 30 Cents 20 Cents 25 Cents 30 Cents 20 Cents 25 Cents 20 Cents 20 Cents

Expiry date 30 April 2012 30 April 2012 30 June 2012 30 June 2012 31 August 201231 August 201231 August 20129 April 2013 6 August 2015 6 August 2013 22 Dec 2013

7.8 Issued during quarter

Nil

Nil

7.9 Exercised during quarter

Nil

7.10 Expired during quarter

Nil

Nil

7.11 Debentures (totals only)

.12 Unsecured notes (totals only)

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Compliance statement 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 4).

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

Sign here: Date: 31 January 2012

(Director/Company Secretary) Print name: John Chegwidden 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 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 1022: Accounting for Extractive

Industries and AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International

Accounting 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.

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Quarterly Activities Report for the period ending 31 ... · effectively develop smelting facilities. Chinese government restrictions on the ferroalloy industry have presented opportunity