Forte Energy NL
LSE : FTE

February 01, 2011 02:00 ET

Quarterly Activities and Cashflow Report

                                                                                                      
                                                                                       FORTE ENERGY NL
                                                                                       ACN 009 087 852
                                                                                     ASX/AIM CODE: FTE
                                                       Telephone: +618 9322 4071, Fax: +618 9322 4073
                                                                                                     
                                                                                                     
                                                                                         Quarterly Report

                                                                                            December 2010

Forte  Energy  NL  ('Forte Energy' or 'the Company') (ASX/AIM: FTE) is an emerging international  uranium
company  focused on the exploration and development of a portfolio of uranium assets in the Republics  of
Mauritania and Guinea, West Africa.

                                               Highlights
--------------------------------------------------------------------------------------------------------

Uranium Exploration - Mauritania (West Africa)

*   Completion  of  extended  7,000m  Reverse Circulation  ("RC")  component  of  resource  drilling
    programme at A238 uranium prospect
        
*   Assay results received so far from 36 out of 120 RC holes with best intercepts including:

        -  44m @ 555ppm U
        -  52m @ 434ppm U
        -  55m @ 476ppm U
        -  80m @ 369ppm U
    
*   1,500m  diamond  core drilling programme nearing completion, with estimation  of  a  preliminary
    maiden  JORC resource for A238 expected in H1 2011, while additional follow-up drilling is undertaken
    before the end of field season

*   Several new prospects with high grade uranium at surface identified for drill testing later this
    field season
    
    
Uranium Exploration - Guinea (West Africa)

*    Extensive road and bridge rehabilitation has been carried out to facilitate site access  to  the
     Firawa Project

*    Programme  of  extension  and infill RC drilling commencing this week  aiming  to  increase  the
     current Inferred JORC resource of 17.7Mt grading 296ppm U3O8 for 11.6 million pounds of contained U3O8 at
     Firawa

*    7,000  samples  from previous drilling at Firawa to be re-assayed for Rare Earth Elements  (REE)
     for  estimation  of a JORC resource following discovery of REE in six samples chosen  randomly  from
     throughout the deposit
        
*    Appointment  of  contractors  for pre-feasibility studies including  metallurgical  testing  and
     design and environmental and anthropological studies
        
        
Corporate activity
        
*    Announcement of placement to raise A$15m from issue of 120m shares at 12.5c per share

Republic of Mauritania, West Africa
-----------------------------------

The December quarter saw the commencement of an extensive season of drilling and field exploration across
the Company's uranium exploration licences in the Zednes region of northern Mauritania. The primary focus
so  far has been to follow up previous drilling at the A238 prospect, located 55km south-east of the town
of Bir Moghrein and 135km north-west of Bir En Nar.

A  7,000m  programme of RC drilling comprising 120 holes was completed in December 2010,  and  a  further
1,500m of diamond core drilling is nearing completion. The results from these programmes are expected  to
enable estimation of an initial JORC code compliant uranium resource for A238 during H1 of 2011.

To  view "Figure 1 -Exploration targets within Forte Energy's Mauritania permit," please open the following
link in a new window: http://media3.marketwire.com/docs/fte_0201_fig_1.pdf

A  total  strike length of 3,500m was drilled, with two distinct mineralised bodies delineated,  a  large
southern  body roughly 1,800m in length, and a shorter and thinner northern body some 800m in length.  So
far  assays  have  been  received from 36 of the 120 RC drill holes, including 10 holes  from  the  thick
central  core  of the larger body which revealed wide near-surface intersections of mineralisation.  Best
intersections so far include:

Table 1 - Highlights from RC drillhole assays at A238

--------------------------------------------------------------------------------------------------------
Hole                  UTM         UTM      AZIM      DIP    From       To    metres     ppm U    est ppm
                  Easting    Northing                                                               U3O8
--------------------------------------------------------------------------------------------------------
238RC101           284147     2771686        55      -70      74      118        44       555        654
--------------------------------------------------------------------------------------------------------
238RC102           284203     2771726        55      -70       0       52        52       434        512
--------------------------------------------------------------------------------------------------------
238RC104           284108     2771784        55      -70      29       84        55       476        561
--------------------------------------------------------------------------------------------------------
238RC105           284080     2771764        55      -70      72      103        31       332        392
--------------------------------------------------------------------------------------------------------
                                                             107      159        52       321        379
--------------------------------------------------------------------------------------------------------
238RC107           284218     2771617        55      -70      53      133        80       369        435
--------------------------------------------------------------------------------------------------------
238RC109           284272     2771532        55      -70      14       15         1       337        397
--------------------------------------------------------------------------------------------------------
Note: Lengths reported do not represent true widths.

Once  all results are received and incorporated into 3-dimensional modelling of the deposit, the  Company
plans  to  undertake  further RC drilling at A238 based on these results before the end  of  the  current
Mauritanian field season.

RC  drilling will also be undertaken on other prospects where high grade uranium was intersected  in  the
last  drilling  campaign.  Drilling  has commenced at the first  of  these,  the  A29  prospect,  located
approximately  20km  to  the  south of A238.  Continuing field programmes including  mapping,  trenching,
radiometrics  and radon sampling are assisting in the identification and assessment of new prospects  and
in determining additional drill targets.


Republic of Guinea, West Africa
-------------------------------

Forte  Energy  has  four  exploration permits in Guinea covering its Firawa and Bohoduo  prospects  which
include exploration for both uranium and REEs. The Firawa prospect has an initial JORC compliant Inferred
Resource  of  17.7Mt  at 296ppm for 11.6Mlbs U3O8 (100ppm cut-off), but remains open in  all  directions.
Preliminary metallurgical studies have confirmed the potential for heap leach recovery.

Following a field visit to the Firawa prospect after the 2010 wet season, the Company engaged contractors
to  undertake  rehabilitation works on roads and bridges and clearing of local access tracks  to  improve
access  for  heavy  vehicles  transporting drilling equipment to site. This work  has  now  finished  and
drilling  equipment  is now on site for an initial phase of RC drilling which is to  be  followed  by  an
extensive programme of infill and extension diamond drilling. Results from these programmes are  expected
to enable a revised JORC code compliant resource to be calculated for Firawa.

To  view  "Figure  2  -Guinea  exploration projects," please open the  following  link  in  a  new  window:
http://media3.marketwire.com/docs/fte_0201_fig_2.pdf


During  routine  metallurgical analysis of a sample of Firawa ore, standard XRF  analysis  found  a  mass
balance deficit (a proportion of the ore that could not be identified).  A more detailed ICP analysis  of
this  sample showed that it contained a total REE grade of 1.3%. Encouraged by this find, a further  five
RC  drilling  samples  from throughout the deposit were also assayed for REEs.  These  five  samples  all
returned higher REE grades than the initial sample.

Table 2 - Firawa, REE assays

--------------------------------------------------------------------------------------------------------
Element              Units    Original       FRW12:        FRW12:        FRW14:        FRW30:      FRW31:
                                Sample       44-45         46-47         42-43         32-33         4-5
--------------------------------------------------------------------------------------------------------
Cerium                 ppm        5330       11650         13900         11600         10150        9740
--------------------------------------------------------------------------------------------------------
Dysprosium             ppm         235         406           480           331           356         333
--------------------------------------------------------------------------------------------------------
Erbium                 ppm          80         114         132.5           107           100       113.5
--------------------------------------------------------------------------------------------------------
Europium               ppm         154         287           346           245           270         236
--------------------------------------------------------------------------------------------------------
Gadolinium             ppm         448         550           672           477           590         444
--------------------------------------------------------------------------------------------------------
Holmium                ppm        31.6        51.5          60.9          45.6          49.7        46.2
--------------------------------------------------------------------------------------------------------
Lanthanum              ppm        2409        5070          6050          4510          4210        4160
--------------------------------------------------------------------------------------------------------
Lutetium               ppm         5.6        8.52          8.28          7.91          6.76        7.23
--------------------------------------------------------------------------------------------------------
Neodymium              ppm        2953        5770          6880          6080          5490        4890
--------------------------------------------------------------------------------------------------------
Praseodymium           ppm         760        1450          1725          1530          1315        1230
--------------------------------------------------------------------------------------------------------
Samarium               ppm         530        1050          1255           981           879         883
--------------------------------------------------------------------------------------------------------
Terbium                ppm        54.8        82.9          99.7          67.9            71        66.4
--------------------------------------------------------------------------------------------------------
Thulium                ppm           8        12.6          14.7            83            19        18.2
--------------------------------------------------------------------------------------------------------
Ytterbium              ppm          44        68.5          71.8          61.4            55        62.8
--------------------------------------------------------------------------------------------------------
                                                                                              
--------------------------------------------------------------------------------------------------------
Total REE                %       1.30%       2.66%         3.17%         2.61%         2.36%       2.22%
--------------------------------------------------------------------------------------------------------

Following  these  successful intermediate REE results, the Company has decided to re-assay  approximately
7000 drill samples stored on site at Firawa that were used to estimate the initial uranium resource, with
the  objective of calculating a JORC compliant REE resource at Firawa in addition to the existing uranium
resource. Retrieval of these samples has now commenced and assay results will be reported in due course.

The  Company  has  appointed  UK  based mineral engineering consultants, GBM  Engineering,  to  lead  the
metallurgical  testing and process design project for the Firawa Uranium Project. The  presence  of  REEs
requires a more comprehensive testing regime aimed at developing a full Uranium/ REE process design.

The Company has also announced the appointment of global engineering firm SGS to undertake the associated
environmental  and  anthropological surveys in the region of the Firawa  deposit  as  part  of  the  pre-
feasibility studies.


Corporate
---------

On  18  January  2011  the  Company  announced plans for a placement to sophisticated  and  institutional
investors.  The  placement  is expected to raise A$15 million via the issue of  120  million  fully  paid
ordinary  shares  at 12.5 cents per share. The placement is being conducted in two instalments  with  the
first  tranche  of 87,098,704 shares allotted on 27 January 2011 pursuant to the Company's 15%  placement
authority.  The  second  tranche of 32,901,296 shares is to be placed subject  to  obtaining  shareholder
approval  at  a  general  meeting.  In  this regard, a Notice of  Meeting  (NOM)  will  be  forwarded  to
shareholders shortly.


Conclusion
----------

Forte  Energy  is extremely positive about its exploration programmes in both Mauritania and  Guinea  and
their potential for increasing the existing uranium resources in both countries and a maiden REE resource
for Firawa during 2011. Successful completion of the current capital raising will place the Company in  a
strong financial position to pursue these exploration programmes and progress pre-feasibility studies for
the Firawa prospect.






Mark Reilly
Managing Director
31 January 2011

For further information contact:

Mark Reilly, Managing Director
Forte Energy N.L.                                Tel: +44 (0) 203 300 0187

Stuart Laing
RFC Corporate Finance - Nomad                    Tel: +61 (0) 8 9480 2506

Robin Henshall/Tim Graham
Matrix Corporate Capital LLP                     Tel: +44 (0) 203 206 7000

Jos Simson/Emily Fenton
Tavistock Communications                         Tel: +44 (0) 207 920 3150

Nicholas Read/Paul Armstrong
Read Corporate                                   Tel: +61 (0) 8 9388 1474

Note:

The  information in this report that relates to Exploration Results is based on information  compiled  by
Mr.  Bosse  Gustafsson, who is a Member of the European Federation of Geologists, a 'Recognised  Overseas
Professional  Organisation' ('ROPO') included in a list promulgated by the ASX  from  time  to  time.  Mr
Gustafsson  is  a  full  time  Technical Director of Forte Energy NL and is responsible  for  exploration
activities  in Mauritania and Guinea. Mr. Gustafsson has sufficient experience which is relevant  to  the
style  of  mineralisation  and  type of deposit under consideration and  to  the  activity  which  he  is
undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves'.

The  information  in  this report that relates to the Mineral Resource at Firawa in Guinea  is  based  on
information compiled by Mr. Bosse Gustafsson of Forte Energy NL and Mr. Doug Corley of Coffey Mining Ltd.
Mr. Gustafsson and Mr. Corley have sufficient experience which is relevant to the style of mineralisation
and  type of deposit under consideration and to the activity which they have undertaken to qualify  as  a
Competent  Person as defined in the 2004 Edition of the "Australasian Code for Reporting  of  Exploration
Results, Mineral Resources and Ore Reserves".

Mr. Gustafsson, Mr. Inwood and Mr. Corley consent to the inclusion in this report of the matters based on
their information in the form and context in which it appears.


Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96.  Origin:  Appendix 8.  Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

Name of entity
--------------------------------------------------------------------------------------------------------
FORTE ENERGY NL

--------------------------------------------------------------------------------------------------------

ABN                                                         Quarter ended ("current quarter")
---------------------------                                 ---------------------------------        
59 009 087 852                                                        31 December 2010
---------------------------                                 ---------------------------------

                                                            ----------------------------------
                                                            Current quarter       Year to date
Cash flows related to operating activities                       A$'000            (6 months)
                                                                                     A$'000
                                                            ----------------------------------
1.1       Receipts from product sales and related debtors              -                   -
1.2       Payments for  (a)  exploration and evaluation          (1,034)             (1,993)
               (b)  development                                        -                   -
               (c)  production                                         -                   -
               (d)  administration                                 (667)             (1,244)
1.3       Dividends received                                           -                   -
1.4       Interest  and  other items of a  similar  nature                                  
          received                                                    77                 107
1.5       Interest and other costs of finance paid                     -                   -
1.6       Income taxes paid                                            -                   -
1.7       Other (provide details if material)                          -                   -
                                                            ----------------------------------
                                                                                            
          Net Operating Cash Flows                               (1,624)             (3,130)
----------------------------------------------------------------------------------------------
                                                                                            
          Cash flows related to investing activities                    
1.8       Payment for purchases of:                                                         
               (a) prospects                                           -                   -
               (b) equity investments                                  -                   -
               (c) other fixed assets                                  -                 (8)
1.9       Proceeds from sale of:                                                            
               (a) prospects                                           -                   -
               (b) equity investments                                  -                   -
               (c) other fixed assets                                  -                   -
1.10      Loans to other entities                                      -                   -
1.11      Loans repaid by other entities                               -                   -
1.12      Other (provide details if material)                          -                   -
                                                            ----------------------------------
                                                                                            
          Net investing cash flows                                     -                 (8)
                                                            ----------------------------------
1.13      Total   operating  and  investing   cash   flows       (1,624)             (3,138)
          (carried forward)
----------------------------------------------------------------------------------------------

Consolidated statement of cash flows

----------------------------------------------------------------------------------------------
1.13      Total   operating  and  investing   cash   flows       (1,624)             (3,138)
          (brought  forward)
----------------------------------------------------------------------------------------------

          Cash flows related to financing activities                                        
1.14      Proceeds from issues of shares, options, etc.              108                 108
1.15      Proceeds from sale of forfeited shares                       -                   -
1.16      Proceeds from borrowings                                     -                   -
1.17      Repayment of borrowings                                      -                   -
1.18      Dividends paid                                               -                   -
1.19      Other - Settlement of Guarantee                                                   
                                                            ----------------------------------
          Net financing cash flows                                   108                 108
----------------------------------------------------------------------------------------------
                                                                                            
          Net increase (decrease) in cash held                   (1,516)             (3,030)
          
1.20      Cash at beginning of quarter/year to date                2,571               4,092
1.21      Exchange rate adjustments to item 1.20                       2                 (5)
                                                            ----------------------------------
1.22      Cash at end of quarter                                   1,057               1,057
----------------------------------------------------------------------------------------------
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
                                                                            ------------------
        Aggregate  amount of payments to the parties included  in  item                   220
        1.2
                                                                            ------------------
        Aggregate amount of loans to the parties included in item 1.10                      0
----------------------------------------------------------------------------------------------
        
        Explanation necessary for an understanding of the transactions

      ----------------------------------------------------------------------------------------
        Salaries and rental of office premises
      ----------------------------------------------------------------------------------------

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
      ----------------------------------------------------------------------------------------
        Nil
      ----------------------------------------------------------------------------------------

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
      ----------------------------------------------------------------------------------------
        Nil
      ----------------------------------------------------------------------------------------

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

                                             -------------------------------------------------
                                              Amount available            Amount used
                                                        $A'000                 $A'000
                                             -------------------------------------------------
3.1       Loan facilities                                  Nil                    N/A
                                             -------------------------------------------------
3.2       Credit standby arrangements                      Nil                    N/A
----------------------------------------------------------------------------------------------

Estimated cash outflows for next quarter
                                                                               --------------
                                                                                    $A'000
                                                                                    
                                                                               --------------
4.1     Exploration and evaluation                                                   1,150
                                                                               --------------
4.2     Development                                                                      -
                                                                               --------------
4.3     Production                                                                       -
                                                                               --------------
4.4     Administration                                                                 550
---------------------------------------------------------------------------------------------
          Total                                                                      1,700
---------------------------------------------------------------------------------------------

Reconciliation of cash                               ----------------------------------------
Reconciliation  of cash at the end of  the  quarter  Current quarter       Previous quarter
(as  shown  in the consolidated statement  of  cash           $A'000                $A'000
flows) to the related items in the accounts  is  as
follows.
---------------------------------------------------------------------------------------------
5.1     Cash on hand and at bank                               1,057                   571
                                                     ----------------------------------------
5.2     Deposits at call                                           -                 2,000
                                                     ----------------------------------------
5.3     Bank overdraft                                             -                     -
                                                     ----------------------------------------
5.4     Other (provide details)                                    -                     -
---------------------------------------------------------------------------------------------
        Total: cash at end of quarter (item 1.22)              1,057                 2,571
---------------------------------------------------------------------------------------------

Changes in interests in mining tenements

                              ------------------------------------------------------------------
                               Tenement       Nature of interest      Interest at    Interest at
                               reference      (note (2))              beginning of   end of
                                                                      quarter        quarter
                              ------------------------------------------------------------------
6.1     Interests  in  mining                                                        
        tenements
        relinquished,
        reduced or lapsed
                              ------------------------------------------------------------------
6.2     Interests  in  mining                                                        
        tenements    acquired
        or increased
                              ------------------------------------------------------------------


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        Amount
                                                                       per security   paid up per
                                                                       (see note 3)      security
                                                                            (cents)     (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          582,658,031      582,658,031                             
                                        2,250,000                -             25             1
                                      -----------------------------------------------------------
7.4     Changes during quarter                                                                 
        (a) Increases through                                                                  
        issues                                                                                 
        Conversion of options           2,000,000        2,000,000            5.5           5.5
         (b)  Decreases through                                                                
        returns of capital, buy-                                                               
        backs
-------------------------------------------------------------------------------------------------
7.5     +Convertible          debt                                                             
        securities (description)
                                      -----------------------------------------------------------
7.6     Changes during quarter                                                                 
        (a)  Increases through
        issues
        (b)  Decreases through
        securities matured,
        converted
-------------------------------------------------------------------------------------------------
7.7     Options  (description  and                                         Exercise      Expiry
        conversion factor)                                                    price        date
                                                                                               
                                        5,000,000                -       11.0 cents    21/12/12
                                        3,000,000                -       10.0 cents    17/12/13
                                        6,000,000                -       20.0 cents    23/12/12
                                        1,000,000                -          6 pence    26/11/13
                                                 
                                      -----------------------------------------------------------
7.8     Issued during quarter                                                                  
                                      -----------------------------------------------------------
7.9     Exercised during quarter        2,000,000                -              5.5    29/11/10
                                      -----------------------------------------------------------
7.10    Expired during quarter                                                                 
-------------------------------------------------------------------------------------------------
7.11    Debentures                                                                             
        (totals only)
-------------------------------------------------------------------
7.12    Unsecured notes                                                                        
        (totals only)
                                      -----------------------------

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 2011.
                Company Secretary

Print name:      Murray Wylie...............................


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  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.


                                                                                                         
                                                                                                         
                                                                                                         

Contact Information

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