Forte Energy NL

February 03, 2014 02:00 ET

Quarterly Activities & Cashflow Report

                                                                                          Forte Energy NL
31st January 2014
                                    Quarterly Report - December 2013

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 of 4th Quarter to 31st December 2013

    *       Increased focus on identifying and reviewing value-adding transactions
    *       Review of cost base completed leading to a reduction in overheads, including restructuring of
            corporate head office and relocation of Management
    *       40% reduction in Chairman and 50% reduction in Managing Director fees
    *       c.$750,000 cost saving per annum successfully implemented
    *       Second tranche of placement completed raising more than £700,000 (approximately A$1.2 million)
            before costs.
    *       Completion of sale of Millenium mining leases in Queensland for $100,000
    *       Forte Energy U3O8 JORC resources (all at a 100ppm cut-off):

         Project                Resource           Tonnage            Grade            Contained
                                Category             (Mt)           (ppm U3O8)         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
                                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


Commenting on the quarter, Mark Reilly, Managing Director of Forte Energy, said:
"Forte  Energy  continues  to  investigate potential corporate opportunities  which  may  complement  the
Company's  strategic  positioning. With indications of improving sentiment  in  the  uranium  market;  we
believe  that we are well positioned, with adequate financing facilities available, to take advantage  of
any suitable value-accretive opportunities as they arise."


During  the  quarter,  Forte Energy has continued to focus on reviewing external opportunities  that  may
complement  the  Company's strategic direction. In consultation with the Company's largest  shareholders,
Management  continues to explore a number of strategic opportunities that have become  available  in  the
current  depressed  uranium  market  and looks forward to updating shareholders  on  these  as  and  when
appropriate. The Board believes that this strategic shift from further exploration to corporate  activity
is  in the best interests of all stakeholders, given the current market conditions, and it is pleased  to
have the full support of the Company's largest shareholders.

In  keeping  with  its  previously announced strict cost control programme and  optimisation  of  working
capital, the Company has implemented a number of measures to reduce its ongoing costs.  These include the
significant reduction in overheads by rationalising Forte Energy's London presence through the closure of
the  corporate  head office in the UK and the relocation of Management to Australia.  In  line  with  the
Company's  aggressive  cost reduction efforts, Forte Energy's Chairman and Managing  Director  have  both
agreed to substantial reductions in their fees: 40% reduction for the Chairman and 50% reduction for  the
Managing Director, with effect from 1st July 2013.

Following a review of Forte Energy's Management team to ensure that its expertise is best suited  to  the
Company's  current  requirements, Scott Yelland, the Chief Operating Officer, has left  to  pursue  other
opportunities.   Mr  Yelland  is  a mining engineer, and whilst his considerable  experience  has  proved
invaluable to date, the Company's temporary focus on external opportunities, rather than developing Forte
Energy's  resource in the current depressed uranium market, has meant that it has had to  streamline  its

The expected annualised savings from all these cost reduction initiatives is approximately $750,000.

During  the quarter the Company received $100,000 cash in settlement for the sale of its Millenium mining
leases in Queensland to Element Minerals Australia Pty Ltd, a subsidiary of Elementos Limited (ASX: ELT).
The  transfer  applications have been processed by the Queensland Department  of  Natural  Resources  and

Following shareholder approval at the general meeting held on 31 October 2013, the second tranche of  the
capital  raising was completed raising a further £739,500 (approximately A$1.25 million) before costs  at
0.4 pence (approximately 0.7 cents) per share.

The  Company  has  £9.4 million ($17 million) available under its £10 million Equity  Financing  Facility
("EFF")  with  Darwin  Strategic  Limited, a majority owned subsidiary  of  Henderson  Global  Investors'
Volantis  Capital.   The  two  year  convertible loan facility  for  up  to  US$1,000,000  with  Dutchess
Opportunity Cayman Fund, Ltd ("Dutchess") has been settled and terminated.


Forte Energy 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.

Forte Energy also holds four 100%-owned uranium exploration licences in Guinea, West Africa, covering two
separate project areas.  The Firawa project consists of two licences, totalling 286km2, which are located
approximately  25km to the east of Kissidougou.   The Bohoduo project consists of two licences,  covering
an area of 294km2, situated approximated 120km north east of Firawa.

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

Forte  Energy will continue to undertake low cost exploration and scoping related activities in  relation
to  its Mauritanian and Guinean projects, including consolidation of the exploration results to date  and
high  level consideration of priority areas to target for increasing its resource bases in what have been
demonstrated to be well mineralised prospects.

Despite  the continued pressures evident in the worldwide uranium market, Forte Energy remains  confident
in  the  compelling  medium  to long term supply/demand fundamentals, which indicate  a  sizeable  supply
shortfall  in coming years.  We believe that Forte Energy's existing uranium assets and its potential  to
take  advantage of external opportunities will position the Company well to capitalise on the strong long
term fundamentals of the uranium market.

Mark Reilly
Managing Director

For further information contact:

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

Geoff Nash/Ben Thompson                          Tel: +44 (0) 207 220 0500
Elizabeth Johnson (broking)

Bobby Morse/ Cornelia Browne
Buchanan                                         Tel: +44 (0) 207 466 5000

Stuart Laing
RFC Ambrian Ltd                                  Tel: +61 (0) 8 9480 2506
(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 Energy held the following interests in mining tenements at the end of the quarter:

LOCATION             TENEMENT NAME/PROJECT                        TENEMENT               INTEREST
Republic of          Kankan (Bohoduo)                              XP 107                  100%
Guinea               Kankan (Bohoduo)                              XP 129                  100%
                     Kissidougou (Firawa)                          XP 110                  100%
                     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

During the quarter the Company sold its 100% interests in the following mining tenements:

LOCATION             TENEMENT NAME/PROJECT                       TENEMENT               INTEREST
Queensland,          Rita Margaret                                ML 2512                  0%
Australia            This Time Maybe l                            ML 2761                  0%
                     Federal                                      ML 2762                  0%
                     Millennium #1                                ML 7506                  0%
                     Millennium #2                                ML 7507                  0%
NOTE:           ML = Mining Lease

There were no other 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):

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
Forte  Energy's  strategy is to target high grade uranium ore bodies and build a low cost  West  African-
focused  uranium  producer. The Company is quoted on the Australian Stock 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  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'. The total JORC resources tabulated
here  are as at 6th of July 2012. There has been no change, material or otherwise to the resource figures
quoted  here, since this date, and as such the resources remain reportable to JORC 2004 under which  they
were  estimated. Any subsequent reporting of Exploration Results, Mineral Resources and Mineral  Reserves
to  the market that represent a material change will be reported under JORC 2012, currently in force. Mr.
White  consents to the inclusion in this report of the matters based on his 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

ABN                                                           Quarter      ended      ("current
59 009 087 852                                                        31 December 2013

                                                            Current quarter       Year to date
Cash flows related to operating activities                       A$'000            (6 months)
1.1       Receipts from product sales and related debtors              -                        -
1.2       Payments for  (a)  exploration and evaluation            (501)               (669)
               (b)  development                                        -                   -
               (c)  production                                         -                   -
               (d)  administration                                 (533)               (931)
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                               (1,034)             (1,600)
          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                                         100                 100
               (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                                   100                 100
1.13      Total   operating  and  investing   cash   flows         (934)             (1,500)
          (carried forward)

Consolidated statement of cash flows

1.13      Total   operating  and  investing   cash   flows         (934)             (1,500)
          (brought  forward)
          Cash flows related to financing activities                                        
1.14      Proceeds from issues of shares, options, etc.            1,073               1,436
1.15      Proceeds from sale of forfeited shares                       -                   -
1.16      Proceeds from borrowings                                    87                  87
1.17      Repayment of borrowings                                      -                   -
1.18      Dividends paid                                               -                   -
1.19      Other - Settlement of Guarantee                                                        
          Net financing cash flows                                 1,160               1,523
          Net increase (decrease) in cash held                       226                  23
1.20      Cash at beginning of quarter/year to date                   77                 280
1.21      Exchange rate adjustments to item 1.20                       -                   -
1.22      Cash at end of quarter                                     303                 303
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                   130
        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                 GBP 10,000                  GBP 587
See also Note 6 for details of Discretionary Equity Financing Facility

Estimated cash outflows for next quarter
4.1     Exploration and evaluation                                                     100
4.2     Development                                                                      -
4.3     Production                                                                       -
4.4     Administration                                                                 150
          Total                                                                        250

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                                 303                    77
5.2     Deposits at call                                           -                     -
5.3     Bank overdraft                                             -                     -
5.4     Other (provide details)                                    -                     -
        Total: cash at end of quarter (item 1.22)                303                    77

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  ML2512         Sale of Millenium           100%            0%
        tenements              ML2761         mining leases in            100%            0%
        relinquished,          ML2762         Queensland                  100%            0%
        reduced or lapsed      ML7506                                     100%            0%
                               ML7507                                     100%            0%
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          1,246,495,311   1,246,495,311                               
                                          2,250,000               -            25                1
7.4     Changes during quarter                                                                      
        (a) Increases through                                                                     
        Issue for cash                  184,875,000     184,875,000    0.68 cents       0.68 cents
         (b)  Decreases through                                    
        returns of capital, buy-
7.5     +Convertible          debt                0                                               
        securities   (description)
        (refer   to  Appendix   3B
        dated 6 June 2013)
7.6     Changes during quarter                                                                    
        (a)  Increases through                     
        (b)  Decreases through                  (1)
        securities matured,                        
7.7     Options  (description  and                                         Exercise    Expiry date
        conversion factor)                                                    price               
                                          1,000,000               -         6 pence      1/09/2016
                                          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                                                                    
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 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.

6     Discretionary  Equity  Financing Facility  On 15 February 2013 the Company announced  that  it  had
      entered  into  a  £10  million ($17 million) discretionary equity financing  facility  with  Darwin
      Strategic  Limited,  a majority owned subsidiary of Henderson Global Investors'  Volantis  Capital.
      Forte  Energy is under no obligation to make a draw down and may make drawdowns at its  discretion.
      Further  details of the facility are available in the Company's announcement of 15  February  2013.
      At  the end of the quarter the Company has drawn down a total of approximately £587,000 ($893,000),
      leaving £9.4 million ($16 million) available to the Company under the facility.

Contact Information

  • Forte Energy NL