Forte Energy NL

July 31, 2014 11:12 ET

Quarterly Activities & Cashflow Report

                                                                                         Forte Energy NL
31st July 2014
                                      Quarterly Report - June 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  Republics  of
Mauritania and Guinea, West Africa.

                               Highlights of 2nd Quarter to 30th June 2014

    *   Agreement  to  enter into Joint Venture for Slovakian uranium assets with  European  Uranium
        Resources Ltd ("European Uranium") announced. 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

    *   Definitive Joint Venture agreement with European Uranium executed 31 July 2014
    *   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
    *   Shareholder approval obtained post quarter end for substantial placement and Share Purchase Plan
    *   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


Commenting on the quarter, Mark Reilly, Managing Director of Forte, said:
"Forte  looks  forward  to working closely with European Uranium in a long term relationship  to  advance
these  exciting  Slovakian  uranium assets, and with shareholder approval received  to  raise  additional
equity,  the  Company will be well positioned to take advantage of other opportunities and for  when  the
anticipated improvement in the uranium market occurs."

Joint Venture

On  16 June 2014, the Company announced the execution of a binding Letter of Intent ("LOI") by Forte  and
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. The interest
will  be  held through ownership of 50% of European Uranium's currently wholly-owned Slovak subsidiaries,
Ludovika  Energy  and  Ludovika  Mining, which hold the mineral licenses  comprising  the  Kuriskova  and
Novoveska Huta uranium projects.

This new agreement with European Uranium replaces the Share Purchase Agreement ("SPA") announced on 9 May
2014,  which  was terminated on 14 June 2014. The SPA was terminated for failure to satisfy  one  of  the
conditions,  when the special resolution of European Uranium shareholders to approve the  acquisition  by
Forte of its Slovakian uranium assets was not approved by the required majority of shareholders.

The principal terms of the earn-in agreement are:

    *   European Uranium will transfer 50% of the shares of each of the two Slovak companies to Forte,
        the ownership of which will be governed by a shareholder's agreement and subject to forfeiture whereby if
        Forte does not meet the required expenditures on the Kuriskova and Novoveska Huta uranium projects, it
        must transfer the shares of the Slovak companies back to European Uranium.

    *   To acquire its 50% interest in the projects, Forte must expend a total of CAD$4 million on the
        following schedule:

        Cash Payments to European Uranium:                                      CAD$             CAD$
        No later than June 20, 2014                                          $25,000                 
        On  signing a definitive agreement, but not later than  14                                   
        August 2014 (see below)                                             $475,000
        Total cash to European Uranium                                                       $500,000
        Work Commitments:                                                                            
        Year 1 (firm obligation)                                            $350,000                 
        Years 2 - 10, minimum annual expenditures $350,000 /  year                                   
        unless  higher  amounts are required to keep  licenses  in                  
        good standing                                                     $3,150,000
        Total work commitments                                                             $3,500,000
        Total earn-in expenditure commitment                                               $4,000,000
    *   The expenditures can be accelerated by Forte at Forte's election.  If the parties each agree to
        sell their 50% interest to a third party then Forte will pay European Uranium the difference between
        CAD$3,500,000 and expenditures made to date.

    *   A definitive joint venture agreement is to be executed by both parties. The date for completion
        of this has been extended until the 14 August 2014 (previously 31 July 2014).

    *   Forte can forfeit its 50% interest to European Uranium with no further obligation any time after
        it  has  paid  European Uranium CAD$500,000 and funded the first year minimum work commitment  of

    *   Prior  to  Forte  completing  the earn-in of its 50% interest, exploration  and  development
        activities on the projects will be governed by a Management Committee on which European Uranium will have
        the casting vote until Forte has funded the full CAD$4,000,000.  Forte will be the operator during this

The  transaction  is  subject to receipt of all applicable regulatory approvals. The initial  payment  of
CAD$25,000 (which was due by 20 June 2014) has been paid. A share placement to raise funds for the second
instalment of CAD$475,000 was approved by shareholders at the General Meeting held on 30 July 2014.

As announced today, the definitive joint venture agreement was executed by both parties on 31 July 2014.

In  addition, on 23 April 2014, Forte announced the completion of a private subscription for  CAD$100,000
in the capital of European Uranium consisting of 1,111,111 shares (based on a price of CAD$0.09 each) and
555,555 attaching warrants with a two year term and exercise price of CAD$0.15.

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.

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).

Following  a  review of its exploration priorities and objectives, the Company has elected to  relinquish
the  Bohoduo  project  in Guinea, which consisted of two licences, covering an area of  294km2,  situated
approximated 120km north east of Firawa. Exploration conducted at Bohoduo had not been sufficient  for  a
resource estimate to be defined.

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,  with
expected annual savings of approximately A$750,000.

Despite the continued lethargy in the worldwide uranium market, Forte remains confident in the compelling
medium  to  long  term supply/demand fundamentals, which indicate a sizeable supply shortfall  in  coming
years.   Upon the successful execution of the European Uranium Joint Venture agreement, Forte's  expanded
portfolio of uranium interests will enhance the Company's prospects to capitalise on the strong long term
fundamentals of the uranium market.

A General Meeting of shareholders was held on 30 July 2014 to consider resolutions in relation to a share
placement  and  a Share Purchase Plan. All resolutions were passed unanimously on a show  of  hands.  The
placement  entails the issue of up to 600 million shares at no less than 80% of the average market  price
for  the  last  5  days  shares  are traded prior to the share issue. In addition,  participants  in  the
placement  will receive 1 free warrant for every 2 shares purchased. Up to 300 million warrants  will  be
issued  with an exercise price of £0.005 (approximately A$0.0091) each and exercisable within 2 years  of
grant. Approval was received for the issue of up to 200 million shares through a Share Purchase Plan at a
price  not less than 80% of the average market price for the last 5 days that shares are traded prior  to
the  date  the  prospectus is signed. A prospectus containing further details of the Share Purchase  Plan
will be sent to shareholders shortly.

In  April  the Company entered into a short-term loan agreement with Darwin Strategic Limited. Under  the
agreement Forte has issued a Loan Note for £437,500, repayable by 10 August 2014 (initial repayment  date
of  10 July 2014 was extended on agreement of the parties). If the loan is not repaid by this date,  then
the  loan amount will increase to £481,250, the repayment period will be extended until January 2016  and
the lender may elect to convert all or part of the loan at the lower of 0.4 pence per share or 80% of  an
average  market price calculated during the twenty days prior to conversion. The agreement also  requires
that  Forte issue 164,062,500 warrants with a 5-year expiry and an exercise price of 0.4 pence per  share
to  the  lender. Shareholder approval to issue the Loan Note Warrants was received at the General Meeting
held  on  30  July  2014. Further details of the Loan Note and associated Warrants were included  in  the
Notice of Meeting that was announced and sent to shareholders on 30 June 2014.

The  Company  also  has  £9.4  million (A$17 million) available under its £10  million  Equity  Financing
Facility ("EFF") with Darwin as announced on 15 February 2013.

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)

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

During the quarter, the Company relinquished its 100% interest in its Bohoduo exploration permits (XP 107
and  XP 109) in the Republic of Guinea. There were no tenements acquired during the Quarter and no  other
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
59 009 087 852                                                          30 June 2014

                                                            Current quarter       Year to date
Cash flows related to operating activities                       A$'000           (12 months)
1.1       Receipts from product sales and related debtors              -                   -
1.2       Payments for  (a)  exploration and evaluation            (237)             (1,007)
               (b)  development                                        -                   -
               (c)  production                                         -                   -
               (d)  administration                                 (186)             (1,264)
1.3       Dividends received                                           -                   -
1.4       Interest  and  other items of a  similar  nature                                  
          received                                                     -                   2
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                                 (423)             (2,269)
          Cash flows related to investing activities                                        
1.8       Payment for purchases of:                                                              
               (a) prospects                                        (25)                (25)
               (b) equity investments                              (100)               (100)
               (c) other fixed assets                                  -                   -
1.9       Proceeds from sale of:                                                            
               (a) prospects                                           -                 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                                 (125)                (25)
1.13      Total   operating  and  investing   cash   flows         (548)             (2,294)

          (carried forward)
Consolidated statement of cash flows

1.13      Total   operating  and  investing   cash   flows         (548)             (2,294)
          (brought  forward)
          Cash flows related to financing activities                                        
1.14      Proceeds from issues of shares, options, etc.                -               1,436
1.15      Proceeds from sale of forfeited shares                       -                   -
1.16      Proceeds from borrowings                                   683                 770
1.17      Repayment of borrowings                                      -                   -
1.18      Dividends paid                                               -                   -
1.19      Other - Settlement of Guarantee                                                        
          Net financing cash flows                                   683               2,206
          Net increase (decrease) in cash held                       135                (88)
1.20      Cash at beginning of quarter/year to date                   57                 280
1.21      Exchange rate adjustments to item 1.20                       -                   -
1.22      Cash at end of quarter                                     192                 192
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                    55
        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                                                     200
4.2     Development                                                                      -
4.3     Production                                                                       -
4.4     Administration                                                                 150
          Total                                                                        350

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                                 192                    57
5.2     Deposits at call                                           -                     -
5.3     Bank overdraft                                             -                     -
5.4     Other (provide details)                                    -                     -
        Total: cash at end of quarter (item 1.22)                192                    57

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  XP107          Guinea Bohoduo               100            0
        tenements              XP129          Guinea Bohoduo               100            0
        relinquished,                         Interests
        reduced or lapsed                     relinquished
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                0                                               
        securities   (description)
        (refer   to  Appendix   3B
        dated 6 June 2013)
7.6     Changes during quarter                                                                      
        (a)  Increases through
        (b)  Decreases through
        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                           1                                                 
        (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  July 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