Forte Energy NL

November 03, 2014 02:00 ET

Quarterly Activities & Cashflow Report

                                                                                         FORTE ENERGY NL
31st October 2014
                                    Quarterly Report - September 2014

Forte  Energy  NL ("Forte" 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  Slovak  Republic,
Europe, and the Republics of Mauritania and Guinea, West Africa.

                            Highlights of 3rd Quarter to 30th September 2014

    *   Definitive Joint Venture agreement with European Uranium Resources Ltd ("European  Uranium")
        executed 31 July 2014 whereby Forte may earn a 50% interest in the Slovak uranium projects of European
        Uranium for a total expenditure of CAD$4,000,000 over 10 years
    *   Shareholder  approved placement completed post quarter end with 271 million shares  and  135
        million options issued for total consideration of more than A$1.5m before costs
    *   Restructuring of financing facilities with Darwin Strategic Limited
    *   Forte to acquire a 50% interest in NI 43-101 compliant estimated mineral resources of 57.6Mlbs
        contained U3O8 (100% basis), to significantly boost Forte's uranium resources
    *   The Company continues talks with other parties with respect to further potential transactions
    *   Continued focus on expenditure reduction
    *   Forte's  existing  U3O8 JORC resources (all at a 100ppm cut-off) (Forte holds  100%  of  the

Project              Resource Category         M tonnes         ppm U3O8           Contained U3O8 Mlbs

A238*                         Inferred             45.2              235                          23.4
Bir En Nar                   Indicated              0.5              886                           1.0
                              Inferred              0.8              575                           1.0
Firawa                        Inferred             30.3              295                          19.5

Total **                     Indicated              0.5              886                           1.0
                              Inferred             76.3              262                          43.9
                                 Total             76.8              266                          44.9
        *   A238NW Anomaly included in the A238 Inferred Resources
        **  Mineral  resource estimates for the Company's Joint Venture interests in the Slovak  Republic
            are  not included in the above resource table as they are not presently compliant with the JORC

Commenting on the quarter, Mark Reilly, Managing Director of Forte, said:
"With  revised  funding  arrangements in place, and having paid the CAD$500,000 cash  consideration  post
quarter  end  for  the Slovak joint venture, Forte is working closely with European Uranium  to  finalise
works programmes and looks forward to updating the market in due course."

Slovak Uranium Joint Venture

On 16 June 2014, Forte announced a Joint Venture Agreement with European Uranium Resources Ltd ("European
Uranium"), whereby Forte may earn a 50% interest in the Slovak uranium projects of European Uranium for a
total  expenditure of CAD$4,000,000 over 10 years. A definitive joint venture agreement was  subsequently
executed  by  both parties on 31 July 2014 and payment of the initial CAD$500,000 cash consideration  was
completed on 1 October 2014.

Forte's  interest  is  held  through  ownership  of 50%  of  the  shares  in  European  Uranium's  Slovak
subsidiaries,  Ludovika  Energy  and  Ludovika Mining, which hold the  mineral  licenses  comprising  the
Kuriskova  and Novoveska Huta uranium projects. Forte must sole fund a minimum of CAD$350,000 a  year  on
the  Ludovika  entities  over  the  next ten years to maintain its 50% interest  with  the  first  year's
expenditure of CAD$350,000 being an obligation.

Forte is working closely with European Uranium to develop and agree a works programme for the first year.
Both companies look forward to updating shareholders on the works programme and development strategy when

About European Uranium's assets

European  Uranium  has  two  project areas in Slovakia, namely Kuriskova and  Novoveska  Huta,  of  which
Kuriskova  is  the  most  advanced. The projects are held in two wholly owned  subsidiaries  of  European
Uranium that are registered in the Slovak Republic.

The  Kuriskova project consists of 32 square kilometres of mineral licenses situated approximately 10  km
northwest of the city of Kosice, a regional industrial centre in East-Central Slovakia.

The  summary  results of a preliminary feasibility study prepared for Kuriskova released in January  2012
are as follows:

        - IRR 30.8%
        - 1.9 year payback on CAPEX of $US 225m
        - NPV $US 276m at 8% discount
        - Base case price $US 68/lb U3O8
        - First 4 year operating costs $US 16.68/lb U3O8
        - Life of Mine operating costs $US 22.98/lb U3O8

The Novoveska Huta uranium deposit is located at the western end of the Carpathian uranium belt, about 50
kilometres northwest of Kuriskova and near the town of Spisska Nova Ves. The deposit consists of a mining
license over one square kilometre and a surrounding fifteen square kilometre exploration license.

European Uranium Slovakian U3O8 NI 43-101 mineral resource estimates (100%) ***

Project              Resource Category         M tonnes         ppm U3O8           Contained U3O8 Mlbs

Kuriskova **                 Indicated              2.3            5,550                          28.5
                              Inferred              3.1            1,850                          12.7
Novoveska                     Measured              0.8            1,080                           2.0
Huta **                      Indicated              0.8              970                           1.7
                              Inferred              4.7            1,230                          12.7

Total                         Measured              0.8            1,080                           2.0
                             Indicated              3.1            4,352                          30.2
                              Inferred              7.8            1,477                          25.4
                                 Total             11.7            2,141                          57.6

        **  Kuriskova calculated at 500ppmU cut-off, Novoveska Huta at 600ppmU cut-off
        *** These  mineral  resource estimates are reported in this announcement  as  "foreign  estimates
            under ASX Listing Rule 5.10
            *    The foreign estimates are not reported in accordance with the JORC Code.
            *    A competent person has not yet undertaken sufficient work to classify the foreign estimates as
                 mineral resources or ore reserves in accordance with the JORC Code.
            *    It is uncertain that, following evaluation and/or further exploration work, it will be possible
                 to report these estimates as mineral resources or ore reserves in accordance with the JORC Code.
            ASX  Listing Rule 5.12 specifies that additional information must be provided to  the  market
            in  any  announcement  containing  foreign estimates.  Forte  has  previously  provided  that
            information in the Accompanying Notes in its announcement of 4 April 2014.


Forte  is  one  of  the  largest uranium exploration licence holders in Mauritania, with  ten  100%-owned
licences, covering over 7,000 km² in the vicinity of Bir Moghrein in the North West, close to the  border
with  Western  Sahara. To date, exploration by Forte has identified a large number of  potential  uranium
prospects.  In particular, previous drilling at the A238 Prospect has identified an inferred resource  of
23.4Mlbs U3O8 (45.2M tonnes @ 235ppm U3O8, 100ppm cut-off).

Forte  also  holds  two  100%-owned uranium exploration licences in Guinea, West Africa,  comprising  the
Firawa  project. This project consists of two licences, totalling 286km2, which are located approximately
25km  to  the  east of Kissidougou. The Firawa project has an inferred resource of 19.5Mlbs  U3O8  (30.3M
tonnes @ 295ppm U3O8, 100ppm cut-off).

No  significant  exploration works were carried out in Mauritania or Guinea during the quarter  with  the
Company focussing instead on acquisition activities and preserving its capital.


During the quarter, Forte has continued to focus on corporate and acquisition activities. The Company has
maintained its strict cost control focus to minimise overheads and optimise its working capital.

The  Company notes some positive signals emerging in the uranium market recently, with the spot price for
uranium  currently above US$36 per pound after dropping to US$28 per pound earlier this  year.  Also,  in
Japan  this week, the city assembly of Satsumasendai voted to restart reactors one and two at the  Sendai
nuclear  power plant, which are expected to resume operations early in 2015. Forte remains  confident  in
the compelling medium to long term supply/demand fundamentals, which indicate a sizeable supply shortfall
in  coming years.  Following the European Uranium Joint Venture agreement, Forte's expanded portfolio  of
uranium  interests  should  enhance  the  Company's prospects to  capitalise  on  the  strong  long  term
fundamentals of the uranium market.

In  light  of  the above and notwithstanding the completion of its joint venture agreement with  European
Uranium, the Company continues talks with other parties in respect to further acquisitions.

Approval  for  a share placement and a Share Purchase Plan ("SPP") was received at a General  Meeting  of
shareholders  on  30  July  2014.  The placement was completed on 14  October  2014  with  the  issue  of
271,157,428 shares at 0.56 cents per share for total consideration of more than A$1.5m before costs,  and
included  one free Placement Warrant for each two shares subscribed for. The Placement Warrants  have  an
exercise  price  of £0.005 (approximately A$0.0093) each and an expiry period of two years.  Shareholders
also  approved the issue of 164.062.500 Loan Note Warrants to Darwin with a 5-year expiry and an exercise
price of 0.4 pence per share.

In  addition  to  the  above  placement On 14 October 2014 the Company  announced  that  it  had  secured
additional funding for working capital following renegotiation of its financing arrangements with  Darwin
Strategic Limited ("Darwin"). As a result of these negotiations:
    *   Both parties agreed to the early expiration of the £10 million discretionary financing facility
        announced on 15 February 2013;
    *   Darwin agreed to extend the maturity date of its existing £437,500 convertible loan to 9 January
    *   Both  parties entered into a new £500,000 Controlled Equity Offering Agreement  (Performance
        Swap); and
    *   As part of the Controlled Equity Offering, Darwin is to receive 60,692,308 warrants with  an
        exercise price of £0.0032 and five year expiry period.

The  Company's efforts to proceed with a SPP have been hampered by the minimum pricing restrictions under
the  ASX  Listing  Rules  and recent volatility in share prices. The minimum  price  is  determined  with
reference  to the average trading price on ASX, however, the majority of the Company's shares are  traded
on  AIM  which  has generally been trading at a discount to the ASX price. The Company  is  committed  to
offering  a  SPP  to  its  shareholders and looks forward to announcing a replacement  plan  when  market
conditions permit.

Completion of the placement and the new Darwin funding agreement that were completed after the end of the
quarter  has  improved the Company's cash position. The Company is also in the process of  realising  its
GRIT  shares  to raise additional funds which would enable the company to be fully funded  for  its  work

Mark Reilly
Managing Director

For further information contact:

Mark Reilly, Managing Director
Forte Energy NL                                  Tel: +61 (0) 8 9322 4071

Oliver Morse / Trinity McIntyre
RFC Ambrian Ltd                                  Tel: +61 (0) 8 9480 2500
(AIM Nominated Adviser to the Company)

Forte Energy NL
Suite 3, Level 3
1292 Hay Street
West Perth WA 6005
Ph: +61 (0)8 9322 4071
Fax: +61 (0)8 9322 4073


Forte held the following interests in mining tenements at the end of the Quarter:

LOCATION             TENEMENT NAME/PROJECT                        TENEMENT               INTEREST
Republic of          Kissidougou (Firawa)                          XP 110                  100%
Guinea               Kissidougou (Firawa)                          XP 130                  100%

Republic of          Steilet Zednes                                XP 281                  100%
Mauritania           D' Adem Essder                                XP 282                  100%
                     Rhall Amane                                   XP 283                  100%
                     Tisram                                        XP 284                  100%
                     Gleibat Ten Ebdar                             XP 285                  100%
                     Legleya                                       XP 286                  100%
                     Hassi Baida                                   XP 948                  100%
                     Ouissuat                                      XP 949                  100%
                     Bir Ould Ben Nassar                           XP 1173                 100%
                     Nord Tmeimichat Rhall Amane                   XP 1588                 100%
NOTE:           XP = Exploration Permit

There  were  no  tenements acquired or disposed of during the Quarter and no changes  in  the  beneficial
interests held by the Company.

About Forte Energy
Forte  Energy  is  an  Australian-based minerals company focused on the exploration  and  development  of
uranium  and associated bi-products in Mauritania and Guinea in West Africa. The Company has an extensive
pipeline  of  assets and total JORC resources of 76.8Mt @ 266ppm U3O8for 44.9Mlbs contained U3O8  (100ppm

Its  flagship assets are the A238 prospect (23.4Mlbs U3O8) and the Bir En Nar project (2.06Mlbs U3O8)  in
Mauritania, and the Firawa Project in Guinea (19.5Mlb U3O8).

Forte Energy U3O8 JORC resources (all at a 100ppm cut-off) (Forte holds 100% of these projects):

Project            Resource Category        M tonnes         ppm U3O8         Contained U3O8 Mlbs

A238*                         Inferred             45.2              235                          23.4
Bir En Nar                   Indicated              0.5              886                           1.0
                              Inferred              0.8              575                           1.0
Firawa                        Inferred             30.3              295                          19.5

Total                        Indicated              0.5              886                           1.0
                              Inferred             76.3              262                          43.9
                                 Total             76.8              266                          44.9
        * A238NW Anomaly included in the A238 Inferred Resources
The Company is quoted on the Australian Securities Exchange (ASX: FTE) and AIM market of the London Stock
Exchange (AIM: FTE). For more information, visit

The information in this report that relates to the reporting of Mineral Resources is based on information
compiled  or  reviewed by Mr. Galen White, who is a Fellow of the Australasian Institute  of  Mining  and
Metallurgy (FAusIMM). Mr White is the Principal Geologist of CSA Global (UK) Ltd. CSA Global have an  on-
going  role  as geological consultants to Forte Energy NL. Mr. White 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'. Mr. White consents to the
inclusion  in  this report of the matters based on his information in the form and context  in  which  it

The  information in this announcement that relates to the reporting of foreign mineral resource estimates
is  provided  under  ASX listing rule 5.12 and is an accurate representation of the  available  data  and
studies for the Kuriskova and Novoveska Huta uranium deposits and is based on information reviewed by  Mr
Dorian  (Dusty) Nicol. Mr Nicol is President and CEO of European Uranium Resources Ltd.  Mr  Nicol  is  a
Fellow  of  the AusIMM, a Registered Member of the SME, a Certified Professional Geologist, a  Registered
Geologist in the state of Wyoming, USA and is a Qualified Person under NI 43-101.

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

ABN                                                       Quarter ended   ("current quarter")
59 009 087 852                                                        30 September 2014

                                                            Current quarter      Year to date
Cash flows related to operating activities                       A$'000            (3 months)

1.1       Receipts from product sales and related debtors              -                   -
1.2       Payments for  (a)  exploration and evaluation              (8)                 (8)
               (b)  development                                        -                   -
               (c)  production                                         -                   -
               (d)  administration                                 (204)               (204)
1.3       Dividends received                                           -                   -
1.4       Interest  and  other items of a  similar  nature                                  
          received                                                     -                   -
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                                 (212)               (212)
          Cash flows related to investing activities                                        
1.8       Payment for purchases of:                                                              
               (a) prospects                                           -                   -
               (b) equity investments                                  -                   -
               (c) other fixed assets                                  -                   -
1.9       Proceeds from sale of:                                                            
               (a) prospects                                           -                   -
               (b) equity investments                                133                 133
               (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                                   133                 133
1.13      Total   operating  and  investing   cash   flows          (79)                (79)
          (carried forward)

Consolidated statement of cash flows

1.13      Total   operating  and  investing   cash   flows          (79)                (79)
          (brought  forward)
          Cash flows related to financing activities                                        
1.14      Proceeds from issues of shares, options, etc.                -                   -
1.15      Proceeds from sale of forfeited shares                       -                   -
1.16      Proceeds from borrowings                                     -                   -
1.17      Repayment of borrowings                                    (2)                 (2)
1.18      Dividends paid                                               -                   -
1.19      Other - Settlement of Guarantee                                                        
          Net financing cash flows                                   (2)                 (2)
          Net increase (decrease) in cash held                      (81)                (81)
1.20      Cash at beginning of quarter/year to date                   92                  92
1.21      Exchange rate adjustments to item 1.20                       -                   -
1.22      Cash at end of quarter                                      11                  11

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
        Aggregate  amount of payments to the parties included  in  item                    54
        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

2.2     Details  of  outlays  made  by other entities to establish or  increase  their  share  in
        in which the reporting entity has an interest

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

                                                   Amount available             Amount used
                                                         '000                      '000
3.1       Loan facilities                                  -                         -
3.2       Credit standby arrangements                      -                         -

Estimated cash outflows for next quarter
4.1     Exploration and evaluation                                                     200
4.2     Development                                                                      -
4.3     Production                                                                       -
4.4     Administration                                                                 150
          Total                                                                      350 *

*Total  cash  outflows for the next quarter are greater than the cash balance at the end of  the  current
quarter  as  the  Company expects to receive cash from sale of its remaining shares in  Global  Resources
Investment Trust plc (GRIT) and from its Darwin Controlled Equity Offering financing facility.

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
5.1     Cash on hand and at bank                                  11                    92
5.2     Deposits at call                                           -                     -
5.3     Bank overdraft                                             -                     -
5.4     Other (provide details)                                    -                     -
        Total: cash at end of quarter (item 1.22)                 11                    92

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                                                              
        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

                                       Total number    Number quoted    Issue price   Amount paid up
                                                                       per security     per security
                                                                       (see note 3)     (see note 3)
                                                                            (cents)          (cents)
7.1     Preference     +securities                                                                  
7.2     Changes during quarter                                                                      
        (a)  Increases through                                      
        (b)  Decreases through
        returns of capital, buy-
        backs, redemptions
7.3     +Ordinary securities          1,416,495,311   1,416,495,311                               
                                          2,250,000               -            25                1
7.4     Changes during quarter                                                                    
        (a) Increases through                                                                     
        (b)  Decreases through
        returns of capital, buy-
7.5     +Convertible          debt                1                                                 
        securities (description)
        Darwin   loan   note   for
7.6     Changes during quarter                                                                    
        (a)  Increases through                    1
        issues (Lender agreed for
        Loan Note to become
        (b)  Decreases through
        securities matured,
7.7     Options  (description  and                                         Exercise    Expiry date
        conversion factor)                                                    price               
                                          4,000,000               -      12.5 cents     14/04/2015
                                          5,000,000               -         3 pence     14/02/2015
7.8     Issued during quarter                                                                     
7.9     Exercised during quarter                                                                  
7.10    Expired during quarter          1,000,000                -          6 pence      1/09/2016
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  October 2014.
                 Company Secretary

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


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

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

  • Forte Energy NL