a542fe8751730edc5948ee.pdf
2015
A N N U A L R E P O R T
ABN 61 123 156 089
www.manhattancorp.com.au
CONTENTS
CORPORATE DIRECTORY 1
CHAIRMAN'S REVIEW 2
REVIEW OF OPERATIONS 6
DIRECTORS' REPORT 15
AUDITOR'S REPORT 25
AUDITOR'S DECLARATION 27
FINANCIAL STATEMENTS 28
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 28
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 29
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 30
CONSOLIDATED STATEMENT OF CASH FLOWS 31
NOTES TO THE FINANCIAL STATEMENTS 32
DIRECTORS' STATEMENT 55
ASX ADDITIONAL INFORMATION 56
ANALYSIS OF SHAREHOLDINGS 56
TENEMENT SCHEDULE 59
CORPORATE DIRECTORY
DIRECTORS
Alan J Eggers Executive Chairman
B.Sc, B.Sc(Hons), M.Sc, F.S.E.G., MAusIMM, MAIG
Marcello Cardaci Non Executive Director
B.Juris, LLB, B.Com
John A G Seton Non Executive Director
LLM(Hons)
COMPANY SECRETARY
Sam Middlemas
B.Com, PGradDipBus., CA
BUSINESS OFFICE
Level 1
37 Ord Street
WEST PERTH WA 6005
PO Box 1038
West Perth WA 6872
Telephone: +61 8 9322 6677
Facsimile: +61 8 9322 1961
REGISTERED OFFICE
Level 1
37 Ord Street
WEST PERTH WA 6005
INTERNET ACCESS
Email: [email protected]
Web Site: www.manhattancorp.com.au
COUNTRY OF INCORPORATION
Australia
SHARE REGISTRY
Computershare Investor Services Pty Ltd
Level 11
172 St Georges Terrace PERTH WA 6000
INVESTOR ENQUIRIES
Australia: 1300 787 272
International: +61 3 9415 4000
Facsimile: +61 8 9323 2033
Web Site: www.computershare.com.au
AUDITORS
Rothsay Chartered Accountants
Level 1, Lincoln Building
4 Ventnor Avenue
West Perth WA 6005
BANKERS
Westpac Banking Corporation
109 St Georges Terrace Perth WA 6000
SOLICITORS
Gilbert + Tobin
1202 Hay Street West Perth WA 6005
CORPORATE ADVISERS
Gresham Advisory Partners
Perth WA 6000
STOCK EXCHANGE LISTING
Australian Securities Exchange ('ASX')
ASX Code: MHC
CHAIRMAN'S REVIEW
29 September 2015
Dear Shareholders and Investors
I'm pleased, on behalf of the Board and our executive team, to present Manhattan's 2015 Annual Report
including the Financial Statements for the year ended 30 June 2015 and my review of the uranium sector.
Commodity Prices and Uranium
Commodity prices are crashing and on a downward slope including zinc, nickel, gold, silver, iron ore, coal,
coffee, sugar and oil.
There is one exception, uranium. Despite general uncertainty in commodities markets, about the Chinese
economy and rickety tech stocks, uranium price is up 33% in the last year.
It's now being widely accepted that low carbon nuclear power makes a significant contribution to meeting greenhouse gas emission targets. Japan, by restarting reactors, will meet its post 2020 greenhouse gas emission targets, South Korea increases its nuclear new build to reduce the country's emissions to 37% below business as usual levels by 2030 and the USA also has released plans to reduce 2030 emissions by 33% delivered by low emissions from nuclear power reactors.
Uranium price is forecast to rise by 80% to US$64.64lb by 2018 according to the median four analysts' forecasts compiled by Bloomberg. Gold, by comparison, is expected to rise by 14% to US$1,285 an ounce in the same period.
The improved prospects for uranium, the raw material in reactor fuel, is in contrast to slowing demand and ample supply for most other metals. Uranium is now trading at US$37.25lb, from a low of $28lb in August 2014.
CHAIRMAN'S REVIEW
World Nuclear Power Developments
What is happening is the US and Japan are renewing their commitment to nuclear power along with China, Russia, India, South Korea and UAE pushing ahead with their nuclear expansions.
A new report by the World Nuclear Association (WNA) forecasts global nuclear power generation capacity should grow by more than 45% over the next 20 years.
The report states that until the Fukushima accident in Japan the outlook for nuclear power around the world was improving, but despite the March 2011 disaster many countries are putting more emphasis on satisfying environmental and energy security of supply strategies, which should favour an increase in nuclear power.
Nuclear electricity output is set to increase at a faster rate over the next five years than we have seen for more
than two decades and a new pipeline of uranium mines will be needed to meet the demand for primary fuel.
Nuclear Power is Cost Competitive
The cost of nuclear power is in line with other baseload energy technologies, but nuclear power plants can generate more electricity, and more cheaply, over their full lifetime if financing costs are low. This is the conclusion of a recent joint OECD Nuclear Energy Agency and International Energy Agency report.
Inventories are overhanging the market. In the short term the uranium markets will be driven by inventories with US holding 116Mlb, Europe 138Mlb, global suppliers 50Mlb with Japan holding an estimated 160Mlb and China 280Mlb U3O8 equivalent. These inventories are equivalent to around 5 years of current demand and 3 years demand in 2025.
Record Nuclear New Build Underway in China
This view is underwritten by the fact that there are 436 nuclear power plants operable in 31 countries and the new build continues at an all time record level with 67 reactors now under construction around the world.
China, with 25 units under construction, is now building nuclear reactors faster than any other country in the world, in addition to making the world's largest investments in new types of nuclear reactors.
China is commissioning a new 1,000Mw reactor every month with four connected in 2015 and a further eight to be commission by the end of the year. China will surpass the US as the largest producer of nuclear power and consumer of uranium at 52 million pounds a year by 2025.
USA and Japan Renew Commitment to Nuclear
President Obama this month unveiled a blue print for reducing carbon emissions from the nation's power plants by almost a third from 2015 to 2030, allowing reactors to count towards individual state's efforts to meet federal targets for carbon free electric power. USA has 5 new reactors under construction and Japan 3.
Japanese Prime Minister Shinzo Abe confirmed plans to have atomic energy account for 22% of the nation's energy by 2030. Now, Japan's Kyushu Electric Power Company has finally recommissioned its Sendai unit one nuclear reactor, now fully operational, and a second unit to be commissioned by mid October 2015.
CHAIRMAN'S REVIEW
Russia, Asia and Middle East Developments
Russia is building 9 new reactors, India 6 and the South Korean government recently announced two further nuclear power reactors are to be constructed and plans for four coal fired power stations dropped. Korea now has 24 nuclear plants operating, 6 under construction and 8 on order or planned.
UAE has four reactors under construction that are on track to enter commercial operation by 2020 and
another 10 proposed.
New Uranium Mines Required
To feed the rising global capacity, the world will likely need to increase primary mine production by 83% to 267 million pounds of uranium oxide by 2025, up from 146 million pounds of uranium oxide in 2014.
The WNA report concludes that rapid uranium demand growth in a number of countries, particularly China, coupled with a limited contribution of secondary supplies will result in the need for additional mined uranium. With the mine supply shortfall growing the uranium mines needed to supply the existing and new reactors are years away, according to a report by KPMG, with current uranium prices about half of the US$75lb required to attract investment in new mines.
Australian Uranium Industry in Positive Space
Industry experts agree, Australia is well placed to cash in on a uranium boom with the world's largest known recoverable uranium resources, already a reliable supplier and the world's third largest producer.
Market analysts predict the shortfall in supply will require at least 12 to 15 new medium sized mines, producing 3 to 5 million pounds a year, are required to meet supply by 2020. The lag time on average of 5 to 7 years to approve, build new mines and produce yellowcake means new mine investment is required now to meet projected uranium oxide deliveries required by 2020.
The recent modest recovery in uranium prices is underpinned by Japan restarting a number of its 47 idle reactors. Depressed uranium prices have curtailed exploration activities and the opening of new mines. Mines closures along with delays in commissioning Cameco's Cigar Lake mine, a labour dispute at their McArthur River operation in Canada and political unrest in the Ukraine have also squeezed the supply outlook.
Tenement Holdings and Access Approvals
To conserve cash, Manhattan has continued to maintain minimal expenditure on its Ponton project whilst it seeks on ground access approval by the WA government to the key granted exploration licence, E28/1898, located within the Queen Victoria Spring Nature Reserve.
Gaining access approval to E28/1898 and the Double 8, Stallion, Highway and Ponton uranium deposits and targets at Ponton will see resource definition drilling underway along the 55km of defined palaeochannels where previous broad spaced drilling has intersected uranium mineralisation amenable to in-situ metal recovery (ISR).
CHAIRMAN'S REVIEW
Manhattan's Resources and Project Development
Manhattan has 100% control of WA's 8th largest reported uranium resource with Inferred Resources for Double 8 of 17.2Mlb uranium oxide. In addition, drilled Exploration Targets totalling 33 to 67Mlb uranium, at 200ppm U3O8 cutoff, for the Double 8, Stallion South, Highway South and Ponton have been reported.
Resource definition drilling at Ponton will likely deliver resource upgrades and, initially, form the basis of mine development plans at Ponton. Along with resource drilling, an environmental impact statement and a bankable feasibility study will commence in preparation for the uranium mine development approval process.
Ponton Potential Lower Quartile ISR Producer
The sand hosted uranium mineralisation at Ponton is located in shallow, 40 to 70 metres deep, palaeochannels. Tetra Tech's 2011 desktopscopingstudyconfirmedtheuraniumdepositshavepotentialtobeviable, sustainable low cost ISR producers with modest capital requirements to develop and lower quartile operational cost profile.
Manhattan Liquidity and Outlook
In recent months the Company's share price has stagnated with thin market liquidity and obvious disinterest by investors. As flagged last year the catalysts that will trigger renewed investor interest in Manhattan will be access approvals to Ponton, a firmer and sustained uranium price and resumption of resource drilling at Ponton.
The Company's board remains optimistic that the recent increase in uranium price is a sign of a sustained rally and, despite the lack of real progress so far, the necessary approvals can be gained to further the drilling and development of its Ponton uranium project in the coming year.
The board looks forward to your continued support as investors as we focus on restoring shareholder value, delivering an approved mining project and identify growth opportunities that add value.
ALAN J EGGERS
Executive Chairman
29 September 2015
REVIEW OF OPERATIONS
INTRODUCTION
Manhattan Corporation Limited's ('Manhattan') flagship Ponton uranium project is located approximately 200km northeast of Kalgoorlie on the edge of the Great Victoria Desert in WA. The Company has 100% control of around 1,250km2 of exploration tenements underlain by Tertiary palaeochannels within the Gunbarrel Basin. These palaeochannels are known to host a number of uranium deposits and drilled uranium prospects (Figures 1 & 2).
The Company is drill testing and developing palaeochannel sand hosted uranium mineralisation amenable to in-situ metal recovery ('ISR').
FIGURE 1: MANHATTAN'S PONTON URANIUM PROJECT
In March 2011 Manhattan reported an Inferred Resource for the Double 8 uranium deposit at Ponton in WA of 17.2 million pounds ('Mlb') of uranium oxide ('U3O8') at a 200ppm cutoff. This information was prepared and first disclosed under JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.
Exploration Results at Ponton, reported on 7 February 2014, have also identified four wide spaced drilled Exploration Targets with tonnage ranges of 4 to 45 million tonnes ('Mt'), grade ranges of 250 to 450ppm U3O8 totalling 33 to 67Mlb U3O8 at the 200ppm U3O8 cutoff. In accordance with clause 17 of the JORC Code 2012, the potential quantity and grade reported as Exploration Targets in this report must be considered conceptual in nature as there has been insufficient exploration and drilling to define a Mineral Resource and it is uncertain if further exploration and drilling will result in the determination of a Mineral Resource.
The four Exploration Targets reported for the Ponton project are:
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Double 8 of between 2.5 and 5.5Mlb U3O8;
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Stallion South of between 8 and 16Mlb U3O8;
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Highway South of between 8 and 16Mlb U3O8; and
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Ponton of between 15 and 30Mlb U3O8
REVIEW OF OPERATIONS
The Double 8 Resource Estimate and the Double 8, Stallion South, Highway South and Ponton Exploration Targets reported here were prepared by the Company's independent resource consultants Hellman & Schofield.
The Double 8 uranium deposit and the four Exploration Targets at Double 8, Stallion South, Highway South and Ponton are all located on granted exploration licence, E28/1898, located mostly within the Queen Victoria Spring Nature Reserve ('QVSNR') (Figures 2 & 3).
FIGURE 2: MANHATTAN'S PONTON TENEMENTS
The four Exploration Targets reported are based on actual exploration results including Manhattan's aircore and sonic drilling of over 760 holes and 52,700 metres of drilling along the palaeochannels immediately to the north of QVSNR, over 50km of conductive palaeochannels defined by the Company's airborne EM and magnetic surveys within QVSNR (Figure 3) and uranium mineralised sands discovered in previous drilling of 114 holes and 6,900 metres of drilling and down hole gamma logging by PNC Exploration ('PNC') and Uranerz Limited ('Uranerz') in the area.
Manhattan is now seeking exploration access approval to exploration licence E28/1898 located mostly within the QVSNR. The licence was granted in August 2011. On gaining exploration access to E28/1898 Manhattan will recommence drill testing and evaluation of the Double 8 uranium deposit and the four Exploration Targets identified at Double 8, Stallion South, Highway South and Ponton prospects where resource definition drilling will underpin the future development of the project.
REVIEW OF PROJECTS
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PONTON PROJECT (WA)
Interest: Manhattan 100%
Operator: Manhattan Corporation Limited
REVIEW OF OPERATIONS
The Ponton project area is underlain by Tertiary palaeochannels within the Gunbarrel Basin. Carbonaceous sand hosted uranium mineralisation, below 40 to 70 metres of cover, has now been defined by drilling along 55 kilometres of the palaeochannels at Stallion, Stallion South, Double 8, Ponton, Highway and Highway South prospects (Figure 3). At a depth of 40 to 70 metres the uranium mineralisation is in shallow reduced sand hosted tabular uranium deposits in a confined palaeochannel that is potentially amenable to ISR metal recovery, the lowest cost method of producing yellowcake with the least environmental impact.
Within E28/1898 approximately 6,900 metres of drilling, in 114 drill holes, was drilled and down hole gamma logged by PNC and Uranerz in 1983 to 1986. This drilling discovered the palaeochannel sand hosted uranium mineralisation at Double 8, Stallion South, Highway South and Ponton (Figure 3). Manhattan has obtained and compiled all the PNC and Uranerz exploration results including the geological drill logs, assay results, down hole gamma logs, logging tool calibrations and estimated disequilibrium factors. These drill logs and gamma logs have been digitised and verified by Manhattan's independent consultants 3D Exploration Pty Ltd.
Forty four (44) of these drill holes were drilled into the Double 8 deposit. Double 8 was found to host roll-front or tabular type uranium mineralisation in the lower parts of the palaeochannel (40 to 70 metres depth) in reduced sands. The uranium mineralisation was drill intersected in an area along approximately nine kilometres of the palaeochannel, at widths of approximately 500m on average and down hole thicknesses of 3 to 25 metres.
From December 2009 to December 2010 Manhattan drilled over 52,700 metres of aircore and sonic drilling in 767 holes along the palaeochannels at Ponton to the north of the QVSNR. Manhattan's exploration and drilling results and the historic PNC and Uranerz data have been reviewed and the Inferred Resource estimated for Double 8 and Exploration Targets reported for Double 8, Stallion South, Highway South and Ponton prospects.
FIGURE 3: DOUBLE 8 RESOURCE, STALLION SOUTH, HIGHWAY SOUTH & PONTON EXPLORATION TARGETS
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REVIEW OF OPERATIONS
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DOUBLE 8 URANIUM DEPOSIT (WA)
Interest: Manhattan 100%
Operator: Manhattan Corporation Limited
The Double 8 uranium deposit is located in granted tenement E28/1898 in the southwest of the project area within the QVSNR (Figures 2 & 3).
DOUBLE 8 INFERRED RESOURCE ESTIMATES
An Inferred Resource of 7,800 tonnes (17.2Mlb) of uranium oxide at a 200ppm U3O8 cutoff for the Double 8 uranium deposit was reported in 2011. The reported resources are based on RC drilling by PNC in the mid 1980's and are classified as Inferred. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the
basis that the information has not materially changed since it was last reported.
Double 8 Inferred Resources
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DOUBLE 8 INFERRED RESOURCE ESTIMATES
|
|
CUTOFF GRADE
U3O8 (ppm)
|
TONNES (MILLION)
|
GRADE U3O8 (ppm)
|
TONNES U3O8 (t)
|
POUNDS (MILLION) U3O8 (Mlb)
|
|
100
|
110
|
170
|
18,700
|
42.0
|
|
150
|
51
|
240
|
12,240
|
26.0
|
|
200
|
26
|
300
|
7,800
|
17.2
|
|
250
|
14
|
360
|
5,040
|
11.0
|
|
|
Where U3O8 is reported it relates to grade values calculated from down hole radiometric gamma logs. Double 8 drill holes were logged by PNC using Austral L300 Middiloggers for natural gamma radiation. Four Austral L300 loggers were used by PNC in the area, calibrated against each other on a regular basis, and gamma responses compared to chemical assays
from a number of core holes. Conversion factors for gamma response to U assays assuming secular equilibrium were then established. eU3O8 grades are then estimated by converting down hole radiometric gamma logs to equivalent uranium eU and multiplied by 1.179 to convert to equivalent uranium grades eU3O8. A further disequilibrium factor is applied by
multiplying eU3O8 by 1.2 to establish U3O8. Down hole radiometric gamma logging in sand hosted uranium deposits, similar to Double 8, is a common and well established method of estimating uranium grades. All U3O8 grade results reported are subject to possible disequilibrium factors that should be taken into account when assessing the reported grades.
DOUBLE 8 EXPLORATION TARGET
The Double 8 Exploration Target, reported in January 2014, is based on 44 drill holes totalling approximately 2,700 metres of drilling and down hole gamma logs in areas of the deposit where drill spacing is considered too wide to define a Mineral Resource to an inferred resource status.
Exploration Results have identified a drilled Exploration Target with uranium mineralisation potential, at a 200ppm U3O8 cutoff, at Double 8 of 4 to 8Mt grading 250 to 450ppm U3O8 containing 1,100 to 2,500 tonnes or 2.5 to 5.5Mlb of contained U3O8.
Double 8 Exploration Target
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DOUBLE 8 EXPLORATION TARGET
|
|
CUTOFF GRADE
U3O8 (ppm)
|
TONNAGE RANGE (MILLION)
|
GRADE RANGE
U3O8 (ppm)
|
TONNAGE RANGE U3O8 (t)
|
POUNDS RANGE (MILLION) U3O8 (Mlb)
|
|
|
|
200
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4 - 8
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250 - 450
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1,100 - 2,500
|
2.5 - 5.5
|
In accordance with clause 17 of the JORC Code 2012, the potential quantity and grade reported as Exploration Targets in this
report must be considered conceptual in nature as there has been insufficient exploration and drilling to define a Mineral Resource and it is uncertain if further exploration and drilling will result in the determination of a Mineral Resource.
REVIEW OF OPERATIONS
The uranium mineralisation at Double 8 remains open and is yet to be closed off by drilling. Manhattan considers that further infill drilling, on 100m x 400m centres, of the Double 8 deposit will expand on the reported resource and the confidence levels of resources will improve and report to higher confidence categories under the JORC Code 2012.
On gaining exploration access to E28/1898, and approval of Manhattan's Program of Work ('POW') by the Department of Mines and Petroleum ('DMP'), the Company plans to complete approximately 200 aircore drill holes for 16,000 metres of infill resource definition drilling on 400 x 100m centres along the defined palaeochannel within the reported Inferred Resource area at Double 8. This drilling program, including the resource definition drilling planned for the Stallion South, Highway South and Ponton prospects, will be completed within approximately one year of POW approval (Figure 3).
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STALLION SOUTH (WA)
Interest: Manhattan 100%
Operator: Manhattan Corporation Limited
Stallion South is located immediately to the south of Stallion and northwest of Double 8 along the
Ponton palaeochannel. This prospect is within granted licence E28/1898 within the QVSNR (Figures 2
& 3).
The drilled uranium mineralisation at Stallion South is also hosted in palaeochannels within reduced carbonaceous sands and weathered granitic sands in a confined aquifer overlying crystalline granite basement.
STALLION SOUTH EXPLORATION TARGET
The Stallion South Exploration Target, reported in January 2014, is based on 13 drill holes totalling approximately 780 metres of drilling and down hole gamma logs. This drilling, on approximately 400m x 3km centres along the palaeochannel, is considered too wide to define a Mineral Resource to an inferred resource status.
Exploration Results have identified a drilled Exploration Target with uranium mineralisation potential at a 200ppm U3O8 cutoff, for Stallion South of 12 to 24Mt grading 250 to 350ppm U3O8 containing 3,600 to 7,300 tonnes or 8 to 16Mlb of contained U3O8.
Stallion South Exploration Target
STALLION SOUTH EXPLORATION TARGET
CUTOFF GRADE
U3O8 (ppm)
TONNAGE RANGE
(MILLION)
GRADE RANGE
U3O8 (ppm)
TONNAGE RANGE
U3O8 (t)
POUNDS RANGE
(MILLION) U3O8 (Mlb)
200 12 - 24 250 - 350 3,600 - 7,300 8 - 16
In accordance with clause 17 of the JORC Code 2012, the potential quantity and grade reported as Exploration Targets in this report must be considered conceptual in nature as there has been insufficient exploration and drilling to define a Mineral Resource and it is uncertain if further exploration and drilling will result in the determination of a Mineral Resource.
On gaining exploration access to E28/1898, and approval of Manhattan's POW by DMP, the Company plans to complete approximately 250 aircore drill holes for 20,000 metres of infill resource definition drilling on 400 x 100m centres along the defined palaeochannel at Stallion South. This drilling program, including the resource definition drilling planned for Double 8 and the Highway South and Ponton prospects, will be completed within approximately one year of POW approval (Figure 3).