Minemakers Limited: December 2012 Quarterly Activities Report
31 Janeiro 2013 - 12:47PM
Marketwired Canada
Minemakers Limited (TSX:MAK)(ASX:MAK)(NAMIBIAN:MMS)
HIGHLIGHTS
PHOSPHATE, AUSTRALIA
Wonarah Project (Minemakers 100%)
-- Metallurgical testwork for IHP nearing completion.
-- Resource position increased and classification improved.
-- A new Notice of Intent lodged with the Northern Territory Government.
-- Further discussions held with potential, strategic partners.
-- JDCPhosphates' demonstration plant in Florida nears completion of
construction.
PHOSPHATE, NAMIBIA
Sale of Namibian Assets
-- Sale of the Company's 42.5% interest in the Sandpiper Phosphate Project
and 70% interest in the Rocky Point Project in Namibia to Mawarid Mining
LLC for approximately A$25 million was completed.
CORPORATE
-- On 4 December 2012, Mr Dennis Wilkins resigned as a Director of the
Company.
-- On 20 December 2012, Mr Ian McCubbing was appointed to the Board as a
Non-Executive Director.
-- On 31 December 2012, Mr Andrew Drummond moved from Executive Chairman to
Non-Executive Chairman. Mr Drummond will continue to provide business
development services to the Company due to his deep and unique
experience in the phosphate sector.
-- Minemakers has free cash of $27.3 million and approximately $2.4 million
in tradeable shares of ASX listed companies.
WONARAH ROCK PHOSPHATE PROJECT, NORTHERN TERRITORY
(100% Equity)
To view "Figure 1: Wonarah Locality Map", please visit the following link:
http://media3.marketwire.com/docs/Figure1Wonarah.jpg.
INTRODUCTION
The Wonarah rock phosphate deposit is a world class asset, as can be seen by
comparison between the project and the published resources of other important
production centres, as follows.
----------------------------------------------------------------------------
Ma'Aden (Saudi Arabia) +/- 532Mt @ 19.3% P2O5
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Bayovar (Peru) +/- 230Mt @ 17.2% P2O5
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Wonarah +/- 842Mt @ 18.1% P2O5
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Source: Ma'aden Annual Report 2011
Vale Form 20-F Dec 2011
Minemakers aims to take advantage of Wonarah's favourable infrastructure
position and political stability to develop a major centre for the production of
beneficiated rock and downstream phosphatic fertilisers and/or intermediate
products. Wonarah's advantages, apart from its size and grade, include:
-- Bitumen highway access.
-- Proximity to a standard gauge railway with spare freight capacity.
-- Proximity to a natural gas supply, the pipeline for which closely
follows the railway line.
-- Access to an established bulk commodity port at Darwin.
-- Situated in a stable political jurisdiction.
-- Situated on land owned by the Traditional Owners, with whom a life of
mine Mining Agreement has been signed which covers mining, processing
and fertiliser production.
-- Proximity to ample groundwater.
-- Proximity to a regional population centre at Tennant Creek.
FEASIBILITY STUDY
A Bankable Feasibility Study ("BFS") is underway, which considers two technical
options for Wonarah's development; the traditional wet acid process ("WAP") and
the IHP kiln based patented technology ("IHP"), owned by JDCPhosphate Inc.
("JDCP") of Florida. The study represents an extension of the work that was
undertaken for the Direct Shipping Ore ("DSO") feasibility study in 2010.
The BFS will update, extend and/or validate the earlier studies and initiate new
studies for aspects of the project that were not required in earlier
evaluations, such as tailings storage. Investigations will cover the full range
required for preparation of a BFS, the major elements of which will include:
-- Approvals
-- Environmental and Social
-- Geology and Resources
-- Mining and Reserves
-- Beneficiation
-- IHP
-- Tailings Storage Facility
-- Project Logistics
-- Surface Hydrology
-- Hydrogeology, Water Supply and Water Balance
-- Marketing
-- Financial Analysis
A technical decision on the development route for the project will be taken
in mid-2013.
1. Wet Acid Process
The production of high-analysis granular phosphate fertilisers, such as DAP
and MAP, near the township and regional centre of Tennant Creek, which
provides natural gas, rail and highway connections, and its social
infrastructure. The process entails:
-- Mining
-- Beneficiation to 30% P2O5 on site
-- Slurry pipeline transport of beneficiated rock to Tennant Creek
-- Reaction with sulphuric acid to produce phosacid
-- Filtration to remove gypsum
-- Concentration of acid through condenser to MGA (54% P2O5)
-- Ammoniation of phosacid and granulation, introduced to produce DAP/MAP -
high nutrient value products
2. Improved Hard Process
The production of high-value superphosphoric acid ("SPA") on site utilising
the IHP. Minemakers owns 3.2% (post recent dilution) of JDCP, and additional
news on JDCP is presented below under the header, "JDCPhosphate Inc. -
Florida Demonstration Plant". Through its investment in JDCP, Minemakers has
exclusive rights to the IHP in Australia until 2019. The IHP entails:
-- Mining
-- Beneficiation to 15-20% P2O5
-- Grinding with petroleum coke and silica
-- Pelletisation
-- Roasting in a ported rotary kiln
-- Delivery of a phosphorus rich gas
-- Hydration process
-- Superphosphoric acid production at a contained 70% P2O5 - a very high
nutrient product
Both alternatives will likely require some beneficiation of the mined phosphate
rock. Diamond drilling to obtain samples for testwork was completed during the
June 2012 Quarter, and samples were freighted to Adelaide where they have been
crushed, assayed and composited in preparation for various tests.
The testwork programme relating to the IHP has been largely completed with
testwork results indicating that a satisfactory feed product for the IHP plant
can be produced using simple crushing and attrition, which removes unwanted
clays from the ore.
Confirmatory testing using the optimised conditions will be undertaken early in
the March 2013 Quarter together with screening testwork on the silica sand which
overlies the deposit and which will be required as one of the inputs into the
IHP feed.
It is anticipated that all testwork in relation to the IHP will be complete
early in the March 2013 Quarter.
INCREASED AND IMPROVED RESOURCE POSITION
Previous resource estimates released in November 2011 resulted from exploration
targeting higher grade areas suitable for DSO phosphate rock production.
Delineation of high grade bodies requires relatively close spaced drilling for
resource estimation at even the Indicated confidence level.
As the development plan for Wonarah is now for a larger downstream fertiliser
operation rather than a DSO operation, Minemakers has recently been focussed
upon broader areas of mineralisation, which could be mined at a lower grade as
this will be feed to a beneficiation plant. Additionally, should the IHP be
adopted, a lower P2O5 ore grade with a higher silica content will be required.
Minemakers' independent geostatistical consultants, MPR Geological Consultants
Pty Ltd ("MPR"), were requested to analyse Minemakers' extensive drill data base
to re-estimate resources, based on the requirement to feed a beneficiation
plant.
The new resource estimates, at a 10% cut-off are as follows:
----------------------------------------------------------------------------
Measured Indicated Measured + Indicated Inferred
Mt P2O5% Mt P2O5% Mt P2O5% Mt P2O5%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Arruwurra 25.7 18.7 27.7 17.8 53.4 18.2 82 16
----------------------------------------------------------------------------
Main Zone 52.6 21.8 194 17.4 247 18.3 460 18
----------------------------------------------------------------------------
Total 78.3 20.8 222 17.5 300 18.3 542 18
----------------------------------------------------------------------------
The Measured and Indicated Resource categories can be used in due course as the
basis for determination of Proven and Probable Reserve estimates as part of the
ongoing BFS.
Although it is not certain that future drilling will be successful, infill
drilling has the potential to convert a significant portion of the Inferred
Resources to higher confidence categories.
As feed to an IHP kiln is likely to be at a lesser grade, resources combined for
the two deposits estimated at a 5% cut-off are as follows, and they indicate the
very large size of the Wonarah deposit:
----------------------------------------------------------------------------
Measured Indicated Measured + Indicated Inferred
Mt P2O5% Mt P2O5% Mt P2O5% Mt P2O5%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
82.3 20.2 391 13.2 473 14.4 933 13
----------------------------------------------------------------------------
The extent to which mining, metallurgical, infrastructure, permitting, marketing
and other financial factors may affect the Mineral Resource Estimates has not
yet been established. Mineral Resources that are not Mineral Reserves do not
have demonstrated economic validity.
The following table compares the 2012 estimated resources to the previous 2010
estimate. As that latter estimate did not include Measured Resources, the 2012
Measured and Indicated categories were combined for comparative purposes.
MAIN ZONE ARRUWURRA
------------------------------------ ------------------------------------
Mt P2O5% Mt P2O5%
------------------------------------ ------------------------------------
------------------------------------ ------------------------------------
November November
2011 2011
Indicated 252 18.2 Indicated 51 18.3
Inferred 395 18 Inferred 84 16
------------------------------------ ------------------------------------
Current Current
Indicated 247 18.3 Indicated 53.4 18.2
Inferred 460 18 Inferred 82 16
------------------------------------ ------------------------------------
------------------------------------ ------------------------------------
Differences Differences
------------------------------------ ------------------------------------
Indicated -2% 1% Indicated 5% 0%
------------------------------------ ------------------------------------
Inferred 16% 0% Inferred -2% 0%
------------------------------------ ------------------------------------
The 2012 Inferred estimates represent an increase in estimated resource tonnages
of 16% for Main Zone, and 13% for the combined project.
MPR estimated that, in addition to the Mineral Resources described above,
broadly spaced drill holes at Main Zone suggest the presence of further
mineralisation with exploration potential of approximately 150Mt to 250Mt at an
average P2O5 grade of approximately 15% to 20%. This potential mineralisation is
based on broadly spaced drilling and has had insufficient exploration to define
a Mineral Resource, and the estimates of tonnage are conceptual in nature. It is
uncertain that further drilling will convert any of the exploration potential to
a Mineral Resource.
To view "Figure 2: Wonarah Locality and Infrastructure", please visit the
following link: http://media3.marketwire.com/docs/Figure2WonarahLocality.jpg.
To view "Figure 3: Wonarah Deposit", please visit the following link:
http://media3.marketwire.com/docs/Figure3WonarahDeposit.jpg.
EXPLORATION DRILLING
An RC drilling programme commenced on 8 September 2012 drilling through to 24
September 2012 when crew break and rig maintenance interrupted the programme.
The programme was completed in early October 2012. This programme was targeting
high grade and relatively shallow phosphate intersections to the north of Main
Zone and close to the Barkly Highway, as well as broadly spaced testing to the
northwest of Main Zone and in the western target area to determine their overall
prospectivity and to confirm areas that need to be retained for potential future
production. A total of 2,945m was drilled during the Quarter.
NOTICE OF INTENT (NOI)
On 20 December 2012, the Company's environmental consultants, Coffey
Environments, submitted on behalf of Minemakers, a new Notice of Intent to the
Northern Territory government, thereby triggering the Territory's environmental
assessment process.
The submission of the NOI was preceded by a company briefing session with the
various government agencies involved in the assessment process.
The Company expects to be advised of the level of assessment required and will
be issued with a set of guidelines during the first Quarter of 2013. It should
be noted that the NOI, and subsequent assessment document, will be restricted to
addressing the differences between the previously approved DSO project and the
project now proposed. This will significantly reduce the time and cost of the
environmental part of the BFS.
STRATEGIC PARTNERSHIP PROCESS
Minemakers continues to engage actively with potential project partners for the
Wonarah project. The key criteria remain technical input, support in financing
and off-take of product.
Our increasing understanding of the IHP, especially as it relates to timing and
extent of capital expenditure coupled with the cash received from the sale of
our Namibian assets, allows us more flexibility as it relates to partner
selection. It is possible, should the IHP technology be selected as the
preferred technical route, that Minemakers proceeds to the first 200,000tpa
module without a partner or with a minority equity off-take partner, albeit our
preference remains to secure a JV partner at this stage.
As a consequence of the above, we are able to be more selective in our partner
choice and ensure that the ensuing business combination is sustainable and value
enhancing.
JDCPHOSPHATE INC. - FLORIDA DEMONSTRATION PLANT
Minemakers owns 3.2% of JDCP which in turn owns the patented process to produce
SPA by the IHP.
JDCP successfully concluded the first tranche of funding for its demonstration
plant in late 2011 and in August 2012 announced that a second tranche had been
concluded. Notable amongst the investors in the second tranche were Mitsui & Co
(USA) Inc. and Vulcan Phosphates LLC (a special purpose entity formed by the
owners of Agrifos Fertilisers LLC). The participation of these two companies
provides strong encouragement as to the prospects of commercialising this
technology.
In the March 2012 Quarter, JDCP commenced construction of a demonstration plant
at its site in Fort Meade, Florida. Commissioning is anticipated in the first
half of 2013. The plant will have a capacity of 12,000tpa of high quality and
high concentration SPA.
It is expected that each commercial IHP production train will produce 200,000t
of contained P2O5. Were Wonarah to be developed using the IHP it would enable
the option of a staged approach to be taken, which would minimise the initial
capital outlay to enter production and spread total capital expenditure over
several years.
To view "Figure 4: JDCP Demonstration Plant under construction, ported kiln now
in place, January 2013", please visit the following link:
http://media3.marketwire.com/docs/Figure4JDCPPlant.jpg.
Construction of the JDCP IHP demonstration plant is nearing completion at Fort
Meade in Florida. As of 25 January 2013, it was approximately 90% complete with
on-site assembly of the kiln in progress together with electrical and
instrumentation cabling and piping being run. Operational personnel are being
recruited and include a number who have undergone specialised training at a
local college. They will take up their roles progressively over the next few
weeks in order to familiarise themselves with the plant prior to start-up.
Members of Minemakers management team visited the Fort Meade site in January
2013 to coordinate JDCP's technical support for Minemakers BFS to ensure
complete integration of the IHP into the overall study. The JDCP study team will
comprise members of the engineering team who have just designed and built the
demonstration plant. Our project will benefit enormously from the insights that
they gained during that process.
SALE OF NAMIBIAN ASSETS
In December 2012 Minemakers announced it had completed the sale of its 42.5%
interest in the Sandpiper Phosphate Project and 70% interest in the Rocky Point
Project in Namibia to Mawarid Mining LLC for approximately A$25 million. Cash
payment was received on 12 December 2012.
The sale was conditional upon Minemakers shareholder approval and upon Namibia
Competition Commission approval, both of which were obtained during the Quarter.
Minemakers will not have cash tax payable on the proceeds from the sale due to
existing group tax losses.
As a condition of the sale Minemakers has agreed to not engage in any activities
that compete directly with the Sandpiper Project in Namibia for a period of five
years except as it relates to JDCP or its dry kiln technology.
Completion of the sale of the Company's Namibian phosphate assets signifies the
end of various unsuccessful attempts to consolidate the ownership of the
Sandpiper Project. Realising an attractive and certain cash value for those
assets in the current economic climate provides Minemakers with significant
flexibility in pursuing the development of Wonarah, including partner selection,
as well as the opportunity to pursue other growth initiatives.
Minemakers retains an indirect interest in the Sandpiper Project through its
13.81% shareholding in UCL Resources Limited providing Minemakers shareholders
with exposure to the value upside from the project.
INVESTMENTS
1. JDCPHOSPHATE INC.
Refer to earlier in this report.
2. UCL RESOURCES LIMITED (ASX:UCL)
Minemakers holds 13.81% equity in UCL Resources Limited, worth approximately $2
million at the end of the Quarter.
3. AUSTRALIA MINERALS & MINING GROUP LIMITED (ASX:AKA)
Minemakers holds 4.65% of Australia Minerals & Mining Group Ltd worth
approximately $0.4 million.
4. TNT MINES LIMITED (19% equity)
Minemakers was not supportive of TNT Mines' recent desire to consolidate its
shares and is encouraging TNT Mines to seek a corporate solution to ensure its
ongoing viability. Minemakers does not believe a potential ASX listing via IPO
is realistic in the foreseeable future.
CORPORATE
BOARD AND MANAGEMENT CHANGES
During the December Quarter 2012 Minemakers announced that Mr Andrew Drummond
would retire as Executive Chairman and become Non-Executive Chairman of the
Company effective 31 December 2012.
Founding Director, Mr Dennis Wilkins retired from the Board of the Company on 4
December 2012 and Mr Ian McCubbing joined the Board as Non-Executive Director on
21 December 2012.
CASH POSITION
At the end of the December 2012 Quarter Minemakers had cash of A$27.3 million.
Refer to the December 2012 Quarterly Cashflow Report of today's date.
Cliff Lawrenson, Managing Director
Competent Persons' Statement
The qualified person in relation to this press release is Andrew Drummond, who
is Chairman of the Company and a Fellow of the Australian Institute of Mining
and Metallurgy and a Member of the Australian Institute of Geoscientists, and
who has reviewed and approved the information in this press release. Mr Drummond
has sufficient experience deemed relevant to the style of mineralization 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' and a 'Qualified Person' as defined in National Instrument 43-101
- Standards of Disclosure for Mineral Projects. Mr Drummond consents to the
inclusion in the report of the matters based on his information in the form and
context in which it appears.
Information in this report related to the current Mineral Resource estimates
reflects information compiled by Jonathon Abbott who is a full time employee of
MPR Geological Consultants Pty Ltd. Mr Abbott, a Member of the Australian
Institute of Geoscientists, has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and to the
activity which he is reporting to qualify as a Competent Person as defined in
the 2004 edition of the "Australasia n Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves". Mr Abbott consents to the
inclusion in the report of the matters based on the information compiled by
them, in the form and context in which it appears.
With respect to the JORC, Clause 18, and in respect of some targets the
potential quantity and grade of them are conceptual in nature, and there may
have been insufficient exploration to date to define a Mineral Resource and is
uncertainty if further exploration would result in the determination of a
Mineral Resource.
For further information on Wonarah, please refer to Minemakers' NI 43-101
compliant technical report entitled "Technical Report Preliminary Economic
Assessment for Wonarah Phosphate Project, Northern Territory, Australia", dated
January 2012 and available on SEDAR at www.sedar.com. An updated Mineral
Resource estimate is being prepared for SEDAR.
Cautionary Statement Regarding Forward-Looking Information
All statements, trend analysis and other information contained in this report
relative to markets for Minemakers' trends in resources, recoveries, production
and anticipated expense levels, as well as other statements about anticipated
future events or results constitute forward-looking statements. Forward-looking
statements are often, but not always, identified by the use of words such as
"seek", "anticipate", "believe", "plan", "estimate", "expect" and "intend" and
statements that an event or result "may", "will", "should", "could" or "might"
occur or be achieved and other similar expressions. Forward-looking statements
are subject to business and economic risks and uncertainties and other factors
that could cause actual results of operations to differ materially from those
contained in the forward-looking statements. Forward-looking statements are
based on estimates and opinions of management at the date the statements are
made. Minemakers does not undertake any obligation to update forward-looking
statements even if circumstances or management's estimates or opinions should
change. Investors should not place undue reliance on forward-looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Minemakers Limited
Mr Cliff Lawrenson
Managing Director and CEO
+61 8 9264 7000
+61 8 9264 7099 (FAX)
www.minemakers.com.au
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