CORPORATE DIRECTORY
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CHAIRMAN'S ADDRESS
WELCOME TO THE OLYMPIA RESOURCES LIMITED
2007 ANNUAL REPORT
Dear Shareholders,
I am pleased to present the 2007 Annual Report for Olympia Resources Limited.
The Executive team and the Board have continued to move Olympia’s three projects through to production over the last twelve months. The first production will come from Kalimantan where the first of two zircon processing plants at Sampit in Kalimantan is scheduled for start-up in November with the second Bati Bati plant following soon afterwards in early in 2008.
During the year Olympia has been able to secure marketing off take agreements for over 70% of the production from the Harts Range project. In addition markets have been defined and letters of intent signed for the remaining production. The off take agreements underpin the project and guarantee ongoing sales revenue from Harts Range. Olympia is working with financiers with the aim to have this project financed by the end of 2007. Harts Range is a world class abrasives resource with reserves defined for the first ten years of mining but with total ore resources which potentially could sustain mining at Harts Range for over 50 years.
The Keysbrook project is moving through the Western Australian environmental approval process. I would point out that the WA environmental approval process has effectively delayed the project by more than a year. We expect to have a decision from the Western Australian Minister for the Environment by years end. During the year a toll treatment agreement was signed with Bemax Cable Sands to treat the concentrate from Keysbrook through their Bunbury dry separation plant. This reduces the capital cost of the Keysbrook project by over $15 million.
Exploration in Kalimantan is moving to an exciting phase as the initial scout drilling and geological interpretation is completed and access obtained to tenements for drilling. The drilling crews are being increased from one to four to carry out the major exploration program planned for the next year. Our geologists are continuing to find evidence of low grade zircon and gold over large areas of Central Kalimantan during scout drilling. The tenements we are now applying for are in areas where there is potential for higher grades through secondary enrichment of the alluvial river deposits.
Exploration in Western Australia has been reduced over the past year to concentrate the Company’s expenditure on progressing the Harts Range, Keysbrook and Kalimantan projects through to production. This is not to say that the Western Australian tenements aren’t prospective and further drilling is planned in the Southwest of WA during the next year.
Lastly I would like to thank the Executive team and Board members for the work over the past year and look forward to the beginning of production and revenue at Kalimantan over the next few months plus commencement of construction of Harts Range and Keysbrook in 2008.
Yours faithfully,
OLYMPIA RESOURCES LIMITED
Mal Randall
CHAIRMAN
REVIEW OF OPERATIONS
Activities Overview
During the past year Olympia’s three main project areas have progressed towards production with our first processing plant due to start production in Kalimantan in November this year followed by the second Kalimantan plant early in 2008.
A positive feasibility study on the Harts Range Abrasives project was completed during the year which led to the Olympia board approving the development of the Harts Range mine. Negotiations commenced with prospective financiers to fund the project with the aim of securing funding prior to the end of 2007. Robert Brand, who is Olympia’s marketing manager, has arranged sales for approximately 70% of the Harts Range garnet production in 3 or 5 year offtake agreements. The remaining production has identified markets and letters of intent have been exchanged with customers. The long term outlook for garnet remains strong with global demand increasing and prices strengthening.
During the year a toll treatment agreement was signed with Bemax Cable Sands. Concentrate from the Keysbrook mine will be treated through the Bemax dry processing plant in Bunbury Western Australia. Toll treating removes the need for Olympia to build its own dry processing plant and thus reduces the capital requirement for the Keysbrook project by over $15 million. The Keysbrook mine continued through the Western Australian Environmental Protection Authority (EPA) environmental approval process which required considerable further work to be carried out during 2007. This including the sinking of the water bores and development of all environmental management plans for the Keysbrook Project. Although the environmental process is proceeding slower than we anticipated steady progress has been made and it is expected that a recommendation on the Keysbrook project will be made by the Western Australian Minister for the Environment before the end of 2007.
The Kalimantan project is moving quickly with Olympia’s board approving the purchase of a zircon processing plant at Sampit in Central Kalimantan. This plant will produce standard grade zircon and is planned to be in production by the end of November, 2007. The construction of a second processing plant at Bati Bati in Southern Kalimantan will commence after the start-up of the Sampit plant and will be in production in early 2008. The feasibility studies for the plants indicate that when operating at full capacity they will produce significant cashflow for Olympia.
The Kalimantan exploration program over the past year has focussed on understanding the geology of the alluvial zircon / gold deposits in Kalimantan through scout drilling using a single drill team. Based on this essential preliminary work applications for several prospective tenements (KPs) have recently been lodged and when approved detailed exploration drilling will be carried out. To allow sufficient drilling to occur Olympia is increasing its drilling teams in Kalimantan from one to four.
Harts Range Industrial Abrasives Project
The Harts Range abrasive project is situated 180 kilometres north east of Alice Springs in the Northern Territory. The deposit is a world class abrasives resource containing the following ore reserves:
| Reserve class |
Ore (t) | Garnet Recovered (t) |
AMH* Recovered (t) |
| Proven | 36,000,000 | 1,100,000 | 3,100,000 |
| Probable | 35,000,000 | 1,200,000 | 3,100,000 |
| Total | 71,000,000 | 2,300,000 | 6,200,000 |
REVIEW OF OPERATIONS
Environmental approval and a mining licence have been granted for the Harts Range project. In addition, an Indigenous Land Use Agreement has been negotiated with the traditional owners of the land at Harts Range and the Central Land Council.
During the year a revised feasibility study was completed balancing market opportunities with optimum plant capacity to maximise the profitability of the project. Based on the results of this feasibility study the Olympia Board approved development of the Harts Range mine and the Company began negotiations to obtain funding for the project.
Over the past year Olympia has worked on formalising sales commitments into off-take agreements. In an industry not known for long term sales agreements Olympia was pleased to have be able to arrange 70% of its garnet production from Harts Range in 3 or 5 year off-take agreements.
The remaining production has identified markets and letters of intent have been exchanged with customers.
The willingness of substantial customers to sign off-take agreements is indicative of the garnet market being undersupplied, especially for the coarser grade of garnet produced at Harts Range and the customers need to lock in reliable long term supply.
Pre-construction work continued at Harts Range including development of a bore field which will supply sufficient water for the project.
Olympia is working with financiers with the aim of finalising funding before the end of 2007 with construction of the mine and processing plant commencing in early 2008.
Keysbrook Mineral Sands Project
The Keysbrook mineral sands deposit is located approximately 70 kilometres south of Perth between the townships
of Keysbrook and North Dandalup. The mineral reserves at Keysbrook are given below:
| Reserve Class |
Sand (t) | % Heavy Mineral |
% Clay | Heavy Mineral (t) |
| Proven | 39,000,000 | 2.7% | 8.1% | 1,110,000 |
| Probably | 2,000,000 | 2.6% | 7.8% | 64,000 |
| Total | 41,000,000 | 2.7% | 8.1% | 1,174,000 |
A bankable feasibility study has been completed for the project indicating the following production over the 8 year mine life:
| Product |
Project |
Typical Annual |
| Ilmenite | 180,000 | 22,000 |
| High Ti02 Ilmenite | 117,000 | 14,000 |
| Leucoxene | 351,000 | 42,000 |
| Zircon | 125,000 | 15,000 |
| Total | 773,000 | 93,000 |
During the year, Olympia entered into a life of mine toll treatment agreement for the operation with Cable Sands (WA) Pty Ltd which is a wholly owned subsidiary of Bemax Resources Limited. Under the agreement, Cable Sands will treat wet concentrates from Olympia’s Keysbrook mineral sands project, effectively reducing the capital expenditure budget required for Keysbrook by over $15 million. A second zircon off-take agreement was signed during the year and now all production from Keysbrook is under sales contracts.
REVIEW OF OPERATIONS
Olympia is in the process of seeking environmental approval for the Keysbrook project from the Western Australian Environmental Protection Authority. In Western Australia gaining environmental approval takes considerable time and Olympia has been working through the EPA process since mid 2005. Olympia expected to gain a decision on the project from the EPA in early 2007 however in late 2006 the EPA requested Olympia to carry out further work with respect to the project.
During 2007 this considerable further work was carried out by Olympia and submitted to the EPA. This included further surveys and monitoring as well as development of all management plans for the mining operation. In addition two production bores and three deep monitoring bores were drilled into the Leederville aquifer at Keysbrook. Pump test data was used to model any potential affects of Olympia’s water use on other stakeholders. In addition, an application for the extraction of 2 gigalitres of water annually has been submitted to the Department of Water.
It is expected that a recommendation by the EPA on the Keysbrook project will be made late in 2007. After the recommendation by the EPA there will be a period for appeals to be heard before a final decision on approval is made by the WA Minister for the Environment. Although environmental approval from the WA Minister for the Environment is the fundamental approval for all mining projects Olympia must also obtain shire approvals. The shire approval process can take some time so finalisation of all approvals will not now occur before mid 2008.
Kalimantan Zircon project
Zircon Trading
During the year, the Company established Sinol Trading Pte Ltd (“Sinol”), a Singapore-based joint venture between Olympia Resources Ltd (60%) and Sinarco Pte Ltd (40%) for the purpose of buying zircon concentrate in Kalimantan and exporting this to Chinese customers. The trading activity was adversely affected by changes to Indonesian mining and export regulations, including temporary bans on the export of concentrate. Nevertheless, the trading activity has proved to be an invaluable mechanism for building relationships with Chinese industrial mineral customers and this will greatly facilitate sales of products from Olympia’s planned mineral sands processing plants.
Zircon trading from Kalimantan into China ceased in July 2007. Zircon concentrate will now be purchased in Kalimantan and fed into the PT Olympia Resources Indonesia (PT Olympia) proposed zircon processing plants at Sampit and Bati Bati.
Sampit Processing Plant
In mid 2007 an opportunity to purchase a partially completed zircon processing plant in Sampit in Central Kalimantan became available to Pt Olympia for USD$535,000. This plant was based on Chinese made equipment and design and had a maximum zircon production capacity of 10,000 tpy.
Sampit is situated 220 km North West of Bati Bati and is central to the zircon mining areas near Pangkalanbun, Tumbangsamba and Kasongan. The Olympia board agreed that purchasing the Sampit plant fitted with its strategy of establishing relatively cheap processing plants in Kalimantan to achieve early cashflow and capital payback. The Board approved purchase of the Sampit plant in August 2007, Olympia signed agreements to acquire the land and processing plant. Completion of the processing plant by the seller by the end of November 2007 is included in the purchase price.
REVIEW OF OPERATIONS
The Sampit plant site fronts onto the Sampit River, where the plants licensed wharf can take coastal vessels of up to 3,700 tonnes. This allows for bulk shipping of product direct from the plant to customers. Alternatively, 19km by road from the processing site is the Port of Sampit which has container loading facilities for shipping of bagged product in sea containers.
Until Olympia has its own mine in production, zircon concentrate will be purchased off artisan miners in Central Kalimantan.
At the maximum feed rate of 15,000 tpy of typical Kalimantan concentrate the Sampit processing plant will produce the following:
| Product | Annual Production |
| Zircon | 10,000 (t) |
| Ilmenite | 650 (t) |
| Rutile + Leucoxene | 400 (t) |
| Gold | 1,000 ounces |
The demand for zircon remains strong and Olympia has received many enquiries from prospective customers in China, Southeast Asia, Europe and South America for the high quality Kalimantan zircon. Olympia sees no problem in selling zircon from the plant at world competitive prices.
On current market prices the above products from the Sampit plant will give total gross sales revenue of approximately AUD$10 million per year and net cashflow before interest and tax of approximately $2 million per year.
Bati Bati Processing Plant
Olympia’s board has approved the construction of a zircon separation plant to be built at Bati Bati near Banjarmasin in Southern Kalimantan. The feasibility study completed in 2006 confirmed the plant to be highly profitable and with a payback period of less than 12 months. The capital cost for the Bati Bati plant was estimated in 2006 to be $3.1 million. Over 2007 the plant has been redesigned and simplified with a resultant decrease in the capital cost to $2.3 million of which $600,000 has been expended on design, plant and land leaving a capital requirement for a further $1.7 million to complete the plant.
At maximum production the plant will process 35,000 tpa of concentrate and produce the following products:
| Product | Annual Production |
| Zircon | 23,555 (t) |
| Rutile | 1,570 (t) |
| Gold | 1,166 ounces |
The Company purchased land to accommodate the processing plant and the necessary environmental approvals have been obtained. PT Olympia has obtained a licence to mine and process mineral sands and has upgraded its BKPM (foreign company) Licence. Work permits for foreign workers in Indonesia and import tax exemption for imported equipment are being finalised and once these are granted construction can commence at Bati Bati.
All separation equipment together with other long lead items such as the drier, pumps, hoppers etc. have been purchased for Bati Bati and will be shipped to Kalimantan once the import tax exemption has been obtained.
REVIEW OF OPERATIONS
It is anticipated that construction will commence at Bati Bati early in 2008, with first production in Quarter 2, 2008.
Kalimantan Exploration
Initially the Sampit and Bati Bati processing plants will be fed with zircon concentrate purchased off local artisan miners. Olympia’s exploration program aim is to find and develop its own large scale mechanised mine in Kalimantan which will provide concentrate feed for the processing plants..
Kalimantan is China’s largest supplier of zircon, largely derived from artisan mining of old gold mine tailings. As a result of it’s exploration program over the past year, Olympia is of the view that significant deposits of zircon exist in under-explored areas outside the gold mine tailings.
Olympia’s program over the past year has concentrated on mapping the distribution of zircon and gold in Central Kalimantan, identifying areas of high exploration potential, and securing exploration ground. Olympia is increasing its number of drilling teams from one to four and plans to carry out a major drilling program over the next six months. Our geologists are continuing to find evidence of low grade zircon and gold over large areas of Central Kalimantan during scout drilling. The tenements we are now applying for are in areas where there is potential for higher grades through secondary enrichment of the alluvial river deposits.
Australian Mineral Sands Exploration
In the southwest of Western Australia three drilling campaigns were completed. This led to further definition of anomalous zones in the Capel South and Busselton Projects. Exploration in the Capel South and Capel North Projects in 2007-2008 summer will be targeted on geomorphic anomalies and known zones of mineralisation. There are four tenement applications within the Busselton Project which should be granted within the next six of months.
A geomorphology study was carried out on the Pinjarra Project and a number of targets were identified within and outside our tenements. This resulted in Olympia Resources Limited applying for two tenements west of our existing tenements.
A drilling programme was completed on the Eucla Project in 2006-2007 that led to the surrendering of eight tenements in the Project. A joint venture with Mineral Sands Ltd on the remaining Exploration Licences E69/2090-2092 has been finalised enabling Mineral Sands Ltd to earn up to 80% interest in the tenements by completing exploration and identifying a resource. This programme is an extension of the current exploration programme being conducted by Mineral Sands Ltd in the Balladonia area.
REVIEW OF OPERATIONS
At 30 June 2007 Olympia Resources heavy mineral resources inventory was as follows:
| Ore (t) | HM% | Clay Fines % | HM (t) | |
| Keysbrook* | ||||
| Measured | 56,000,000 | 2.6% | 8.0% | 1,450,000 |
| Indicated | 5,000,000 | 2.5% | 7.9% | 130,000 |
| Inferred | 3,000,000 | 2.5% | 8.3% | 85,000 |
| Ambergate# | ||||
| Measured | 3,122,000 | 6.2% | 16.3% | 192,400 |
| Indicated | 3,696,000 | 5.9% | 12.9% | 219,000 |
| The Loop# | ||||
| Inferred | 11,500,000 | 7.2% | 26.5% | 820,000 |
| Keysbrook South* | ||||
| Indicated | 13,600,000 | 2.24% | 11.0% | 305,000 |
| North Dandalup# | ||||
| Inferred | 10,700,000 | 4.5% | 25% | 490,000 |
| Coolup* | ||||
| Indicated | 2,000,000 | 6.0% | 9.3% | 120,000 |
| Yalyalup* | ||||
| Inferred | 14,627,000 | 4.78% | 17.8% |
690,100 |
| Total | 123,245,000 | 3.6% | 13.1% | 4,501,500 |
# Reported in Olympia Resources Prospectus
* Resource prepared by John Baxter RPGeo, Olympia Resources Ltd
Northern Territory Uranium
During the year Olympia commissioned a paper study on the potential for uranium mineralisation on its Northern Territory leases. The study concluded that Olympia’s Jinka Project tenements were prospective for Uranium. The uranium potential for the area is considered to be related to the Arunta metamorphics and Valley-fill type deposits as well as a prominent uranium anomaly in the Eastern portion of the tenement block.
Olympia will commence ground spectrometer surveys on target areas as soon as permission is finalised with the areas Traditional Owners late in 2007. It is anticipated that the spectrometer surveys will identify targets for subsequent drilling.