Variscan Mines Limited
ABN 16 003 254 395
Financial Report for the year ended 30 June 2016
Your directors submit their report for the year ended 30 June 2016.
Directors
The names and details of the Company's directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.
Patrick Elliott, BCom, MBA, CPA
Chairman
Patrick was appointed a Director of the Company on 22 December 2008 and is a company director specialising in the resources sector with over 40 years' experience in investment and corporate management. His early career was at Consolidated Gold Fields Australia Limited and covered investment analysis and management, minerals marketing (copper, tin, rutile and zircon). In 1979 he went into investment banking and became Head of Corporate Finance for Morgan Grenfell Australia Limited in 1982. Patrick subsequently became Managing Director of Natcorp Investments Ltd in 1986 which owned a number of manufacturing businesses. After its takeover he became an active early stage venture capital investor with an emphasis on resources.
Patrick is Chairman of Argonaut Resources NL and Chairman of Cap-XX Limited (Australian company listed on AIM) and Tamboran Resources Limited (unlisted public company). He is also a director of a number of privately owned companies.
During the past three years Patrick has also served as a director of the following other listed companies:
Argonaut Resources NL - appointed June 2003
Global Geoscience Limited - appointed April 2003
Cuesta Coal Limited - appointed October 2011, resigned November 2014
Gregory Jones, BSc (Hons 1) (UTS), MAusIMM
Managing director
Greg was appointed Managing Director on 20 April 2009. Greg is a geologist with over 30 years of exploration and operational experience gained in a broad range of metalliferous commodities within Australia and overseas. Greg has held senior positions in a number of resource companies including Western Mining Corporation and Sino Gold Mining Limited. His experience spans the spectrum of exploration activity from grass-roots exploration through to resource definition and new project generation, as well as mine geology, ore resource/reserve generation and new mine development.
Greg was awarded the Institute Medal for academic excellence whilst at university and is credited with several economic discoveries including the Blair nickel and the Orion gold deposits in Western Australia. He is a director of Eastern Iron Limited, Silver City Minerals Limited, Thomson Resources Ltd and Moly Mines Limited.
During the past three years Gregory has also served as a director of the following other listed companies:
Eastern Iron Limited - appointed April 2009
Silver City Minerals Limited - appointed April 2009
Thomson Resources Ltd - appointed July 2009
Moly Mines Limited - appointed August 2014
Kwan Chee Seng
Non-executive director
Chee Seng was appointed a Director of the Company on 17 February 2009. Chee Seng has investments in the renewable sustainable energy, base metal resources and the biotechnology businesses. He has extensive experience in senior management and in business.
In March 2009, Chee Seng launched his fund management business with the incorporation of Luminor Capital Pte Ltd and Luminor Pacific Fund 1 Ltd (Fund 1). Recently he has launched Luminor Pacific Fund 2 Ltd (Fund 2). The Fund 1 and Fund 2 have been approved by the Economic Development Board of Singapore under the Global Investor Program.
In December 2012, Chee Seng acquired a major shareholder stake in Singapore listed GRP Limited, and in March 2013 he was appointed Executive Director of GRP. He has previously served as Non-Executive Director of Singapore listed companies Van der Horst Energy Limited (from March 2008 to November 2011) and Viking Offshore and Marine Ltd (from mid-2009 to end 2010).
During the past three years Mr Kwan has not served as a director of any other ASX listed company.
Dr Foo Fatt Kah, MB, BCh, BAO, MBA
Non-executive director
Dr Foo was appointed a Director of the Company on 7 October 2009. Dr Foo is the Managing Director and co- founder of Luminor Capital, a private equity fund management company based in Singapore. He has over 20 years' experience in the investment banking, fund management and advisory businesses spanning Europe and Asia. He was previously Head of Asian Equities for SG Securities Asia (the Asian Investment Banking business for Societe Generale) covering 10
Asian countries ex-Japan. Since 2004 Dr Foo has been active as an investor, overseeing investments in Resources, Energy and Healthcare.
Dr Foo is qualified in Medicine (MB, B Ch, BAO) and Business Administration (M.B.A.) from the Queen's University, United Kingdom, with further continuing education qualifications from Insead on Economic Value Added (EVA) and International Project Management. He has experience with listed companies in Singapore, being previously Executive Director of CyberVillage Holdings Ltd and currently Lead Independent Director of PEC Ltd.
During the past three years Dr Foo has not served as a director of any other ASX listed company.
Michael Moore BEng (Hons), MAusIMM, MAICD
Non-executive director (appointed 4 August 2015)
Mike is a mining engineer from the Camborne School of Mines with over 15 years operational and executive management experience across a diverse range of commodities in Australia, West Africa and France. He has previously held senior and executive management roles with a number of companies including Rock Australia Mining & Civil Pty Ltd, Carnegie Minerals PLC and, more recently, with ASX listed Montezuma Mining Company Ltd where he was CEO. Mike's experience includes mine feasibility studies and mine operations, important in supporting Variscan's strategy to successfully advance its French projects towards production.
Mike has previously been a director of Carnegie Minerals Gambia Ltd and Cordier Mines SAS (France).
Mike was appointed a Non-Executive Director on 4 August 2015.
During the past three years Mike has not served as a director any other ASX listed company.
Dr Jack Testard
Executive director
Jack was appointed a Director of the Company on 14 May 2014. Jack is a French geologist with over 40 years of experience in Europe, Africa, CIS countries, Turkey, Saudi Arabia and Guyana. Jack was formerly Head of the Minerals Resources Division of the BRGM (Bureau de Recherches Géologiques et Minières - the French Geological Survey), President of GIP GEODERIS and Manager of the Ovacik gold mine in Turkey under Normandy La Source. Dr Testard is President of Variscan Mines SAS, the wholly owned French subsidiary of Variscan Mines Limited, based out of Orleans, France.
Jack is currently President of the French Chamber of Mines, Treasurer of the Federation of Minerals and Non Ferrous Metals (FEDEM) and a Director of the Société de l'Industrie Minérale (SIM).
During the past three years Jack has not served as a director of any other ASX listed company.
Directors' interests in shares and options
As at the date of this report, the interests of the Directors in the shares and options of Variscan Mines Limited were:
|
Directors
|
Shares directly and indirectly held
|
Options directly and indirectly held
|
|
P Elliott
|
7,365,786
|
5,136,460
|
|
G Jones
|
9,353,219
|
10,139,999
|
|
C S Kwan
|
154,080,846
|
72,535,368
|
|
F K Foo
|
19,930,911
|
11,118,348
|
|
M Moore
|
-
|
1,000,000
|
|
J Testard
|
200,000
|
3,400,000
|
Company secretary
Ivo Polovineo, FIPA
Ivo Polovineo was appointed Company Secretary of the Company on 31 December 2010. Ivo has over 30 years' experience in corporate accounting, finance and company secretarial work for a diverse range of companies. He has spent the past 20 years in senior management roles in the resources sector including seven years as Company Secretary (and five years as CFO) of Sino Gold Mining Limited (a former ASX 100 company) until December 2009.
Ivo is currently also Company Secretary of Thomson Resources Ltd, Silver City Minerals Limited and Lynas Corporation Ltd.
Principal activities
The principal continuing activity of the consolidated entity is the exploration for economic base and precious metals, tin and tungsten deposits.
Results
The net result of operations of the consolidated entity after applicable income tax was a loss of $1,360,558 (2015: loss $1,929,515) which includes the write-off of exploration expenditure during the year of $31,845 (2015: $198,419).
Dividends
No dividends were paid or proposed during the year.
Review of operations
The most significant developments in the Company's operations and financing activities were:
Exploration France Overview
Variscan Mines has targeted France for mineral deposits due to the country's favourable geology, good mineral endowment, excellent infrastructure, skilled workforce and strong government support. In the past year Variscan was granted two additional exploration licences, the Loc Envel tungsten and Silfiac lead-zinc- silver PERs in Brittany, western France. Variscan now holds six licences in which it considers there is good potential for short term resource generation and/or major new discoveries.
During the financial year the bulk of Variscan's exploration work focussed on its Merléac and St Pierre projects.
Merléac Project
The Merléac licence covers the eastern end of the Châteaulin Basin, a sequence of felsic volcanics and clastic sedimentary rocks containing a number of base and precious metal deposits. One of these is the high grade Porte-aux-Moines (PAM) volcanogenic massive sulphide (VMS) zinc-lead-copper-silver-gold deposit which lies near the centre of the licence about 125 kilometres west of Rennes, Brittany.
Following its discovery in 1975, the BRGM (Bureau de Recherches Géologiques et Minières - the French geological survey) completed considerable exploration on PAM, including about 9.5 kilometres of drilling and two kilometres of underground decline development. The work outlined zones of high grade lead-zinc- copper-silver-gold mineralisation up to 20 metres thick from surface to a depth of about 300 metres over a strike length in excess of 250 metres.
In 2015 the Company accessed three remaining surface core holes from the BRGM exploration of PAM stored at the BRGM Orleans core farm. Resampling of mineralised intervals was completed and samples sent to ALS Geochemistry for confirmatory reassay. Results from this work confirmed the high grade nature of the deposit with strong, zinc dominant, polymetallic intersections recorded in all holes.
The ALS assays were, on average, slightly higher grade than the original BRGM assays, confirming the general overall accuracy and the high quality of the BRGM work. This provides high confidence in the veracity of
the BRGM assays for the remaining drilling and underground development.
Porte-aux-Moines Mineral Resource
In June 2016 the company published a maiden Mineral Resource reported to JORC 2012. The Mineral Resource for PAM is 2.2 million tonnes grading 6.0% zinc, 1.3% lead, 0.8% copper, 80.6 g/t silver and 0.9 g/t gold. This places the deposit within the first grade quartile for zinc-rich deposits worldwide, indicating good potential for economic extraction provided sufficient tonnage can be defined.
Further drilling is required to confirm the geological interpretation, increase the tonnage of Indicated Mineral Resource and provide additional samples for confirmatory density measurements and gold assays. In the short term, deeper drilling is planned to test the thickened Main Zone and deeper parts of the HW1 zone.
In addition, later drilling may also infill the thinner, but shallower section of the Main Zone close to the surface, which has had little exploration in the past. There is good potential in this area to expand the Indicated Resource above the level of the former underground development.
Modelling work by Variscan indicates that approximately 3.5+ million tonnes of resource will be required at PAM to justify initiation of mine feasibility studies. Growing the size and enhancing the classification levels of the current 2.2 million tonne resource base to a level sufficient to allow the company to move into feasibility studies is a key priority.
Regional Exploration
The regional potential within the licence for additional VMS deposits is considered excellent. PAM is hosted within a sequence of vitric tuffs and pyritic black shales (the mine sequence) which can be traced for approximately 80 kilometres along strike and within structurally repeated blocks in the Merléac licence. Within these rock units, outcropping gossanous zones containing highly anomalous base and precious metal values have been defined, interpreted to represent the oxidised expressions of underlying sulphides. Some of these gossans were previously mined by shallow open pits for iron up until the 19th century and generally have not been explored below the iron oxide cap aside from shallow BRGM drilling in some locations.
In September 2015, Variscan completed modelling of a large Versatile Time Domain Electromagnetic (VTEM) survey completed to test key mineralised areas in and around PAM and within the broader Merléac licence. The survey covered approximately 160 square kilometres of the southern section of Merléac, testing about 50 strike kilometres of the PAM mine sequence.