Mineral Deposits Limited (TSX:MDM)(ASX:MDL) is pleased to announce the results
of the Definite Feasibility Study ("DFS") for the Grande Cote Mineral Sands
Project ("GCP" or the "Project") in Senegal, West Africa.
The DFS, compiled in association with AMC Consultants, commenced in August 2009
and has considered all aspects related to development of the Project, including
mining, metallurgical, processing and engineering, marketing, economics, and
social and environmental.
Key highlights of the DFS are:
Mine Path A mine dredge path for the first 14 years of the operation
has been developed which has yielded a proved and probable
Ore Reserve estimate of 751 million tonnes of 1.8% heavy
mineral ("HM")
Capital Cost The capital cost (including contingency) is estimated at
US$406 million
Production Zircon and ilmenite output would represent approximately 7%
and 10% respectively of world production, which together with
the high quality of the zircon, makes the Project of
international significance
Internal Rate The IRR based on the first 14 years of operation only (with
of Return no terminal value) is 21% and the projected payback period is
and Payback approximately 5 years after operations commence - confirming
Period the Project's attractive economics
Clever Fonseca, CEO of MDL's mineral sands business, said "the DFS has
established the basis to proceed to securing funding for Grande Cote. Having
already received the necessary mining approvals and established the fiscal
arrangements with the Government of Senegal, we are now focusing on the planning
process to expedite development of the Project."
Other highlights of the DFS are:
-- The ore body characteristics comprise free flowing sands, a consistent
grain size, no overburden, minor vegetation, minimal slimes, and no hard
lenses - thereby limiting operating costs
-- The ore body size and characteristics provide for a large scale dredge
operation, mining approximately 55 million tonnes per annum, and
conventional processing technology
-- With a dredge path for the first 14 years covering an area approximately
40% of the mine lease, an additional 10 or more years of mine life
beyond the current Ore Reserves is considered feasible subject to
additional drilling
-- Testwork on a series of bulk samples has determined that the Project can
yield a high quality zircon product plus a saleable ilmenite product,
along with small amounts of rutile and leucoxene. Average annual
production rates are projected at approximately 80,000 tonnes of zircon,
575,000 tonnes of ilmenite, 6,000 tonnes of rutile, and 11,000 tonnes of
leucoxene
-- Grande Cote is planned to enter the market in 2013 and consultancy group
TZMI is forecasting that the zircon market dynamics from 2012 will be
increasingly dominated by tight supply, with the degree of undersupply
dependent on the success of bringing new projects into operation. From
2015 onwards the expectation is for a widening deficit, mainly as a
result of major losses of production from existing suppliers and a lack
of new projects entering the market
-- A premium price for the zircon product is anticipated as a result of (1)
its high quality, (2) the close proximity of the Port of Dakar to the
important European and North American markets, and (3) the utilisation
of container shipments to sell small lots into a range of niche markets
and which allow for just-in-time inventories for customers
-- Cash operating costs are projected to average approximately US$75
million annually
-- A high level project development schedule has construction commencing in
the 3rd quarter of 2011, a completion date for initial commissioning
during the 1st quarter of 2013 and for first sales products to be
produced by June 2013
MDL's interest in the GCP is held by Grande Cote Operations SA ("GCO"), a
Senegalese registered company, which is 90% indirectly owned by MDL and 10%
owned by the Government of the Republic of Senegal ("GRS"), as a
non-contributory interest.
About MDL
Mineral Deposits Limited is an ASX and TSX listed mining company with a current
focus in Senegal, West Africa through a producing gold mine, the Sabodala Gold
Operation, and a to be developed mineral sands project, the Grande Cote Mineral
Sands Project.
The Sabodala Gold Operation, which poured its first gold in March 2009, is
located 650 kilometres east of the capital Dakar within the West African
Birimian geological belt in Senegal, and about 90 kilometres from major gold
mines and discoveries in Mali. The area has only recently been opened for mining
and exploration and is emerging as a significant new gold camp, with more than
10M ounces of resources already discovered.
The Grande Cote Mineral Sands Project is located on the coast of Senegal
starting approximately 50 kilometres north of Dakar and extending northwards for
more than 100 kilometres. The large scale of the ore body and the high quality
of the zircon provides the potential to establish an operation of international
significance.
Senegal is one of Africa's most successful democracies, having gained
independence in 1960. It enjoys a stable and investor friendly political and
social environment. The government of the Republic of Senegal is MDL's valued
partner and holds a 10% free carried interest in both projects, which will
accrue dividends once MDL has recovered its capital invested.
Mineral Resource and Ore Reserve Estimates
The information in this release that relates to Mineral Resource and Ore Reserve
estimates was prepared by Rod Webster (in relation to the Mineral Resource
estimate) and Pier Federici (in relation to the Ore Reserve estimate) of AMC
Consultants Pty Ltd ("AMC"). Mr Webster and Mr Federici have sufficient
experience, which is relevant to the style of mineralisation and type of deposit
under consideration, and to the activity undertaken. The estimates have been
prepared in accordance with Canadian National Instrument 43-101, the CIM
standards and the Australasian Code for Reporting of Mineral Resources and Ore
Reserves 2004 Edition (the "JORC Code"). Mr Webster and Mr Federici are both
qualified 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 NI43-101. Mr Webster and Mr
Federici have both consented to the inclusion of this information in the form
and context in which it appears in this release.
PROJECT OVERVIEW
Background
In September 2004, MDL was selected by the Government of the Republic of Senegal
("GRS") to develop the Grande Cote Project ("GCP"). Under its Mining Convention,
MDL acquired the rights to explore and develop the project which had been
previously held by DuPont. On 27 November 2007, the Presidential Decree granting
the Mining Concession for the GCP was issued to MDL.
MDL's interest in the GCP is held by Grande Cote Operations SA ("GCO"), a
Senegalese registered company which is owned indirectly by Mineral Deposits (as
to 90%) and directly by the GRS (as to 10% non-contributory interest).
In 2004, MDL also acquired the Sabodala Gold Project in eastern Senegal via an
open tender from the GRS. The Sabodala Gold Mining Convention was signed in
early 2005 and MDL moved to develop the project. In March of 2009 the Sabodala
Mine was successfully commissioned and commenced operation. Through the
development of the Sabodala Mine, MDL has gained considerable knowledge and
practical expertise in the development and operation of mining projects in
Senegal. This includes an excellent working relationship with the GRS, an
understanding of the legal requirements, the management of construction and
contracting activities, supply and logistics, human relations, environmental
management and community issues. This expertise has been used in the development
of the project execution and operational strategy proposed for the GCP. The
recent development of the Sabodala Project also provides a valuable and current
database of construction and operational cost.
The Republic of Senegal ("Senegal") is located on the western bulge of Africa.
Senegal is a stable, democratic republic under multiparty democratic rule based
on the French civil law system. The country gained its independence from France
in 1960 after about 75 years of French rule. The capital, Dakar, is situated on
the most westerly point of the coastline of Africa. The area to be mined is
located on a coastal dune system. The dunes begin 25 km north-east of Dakar and
extend northwards for more than 140 km.
Concession Terms
Key terms of the Mining Concession are:
-- MDL has been granted a 25 year mine lease for the GCP, with the
potential for renewal for a further period;
-- MDL is entitled to a 15 year exoneration from taxation;
-- a 5% gross production royalty will be payable by MDL to the GRS;
-- the GRS shall have the right to acquire 10% of the project's production
based on a cost-plus formula;
-- the GRS is entitled to receive dividends once the project's capital
costs and associated shareholder loans have been recovered;
-- no import duties shall be levied on MDL-owned or rented equipment or
project related goods and services;
-- MDL will expend US$150,000 per annum on other agreed social programs
during the period in which mining operations are ongoing on the license
area;
-- MDL will support training/equipment needs of the Department of Mines and
Geology of Senegal with payments of US$50,000 annually during the period
in which mining operations are ongoing;
-- MDL will cooperate with the GRS to apply best practices in environmental
protection of the Grande Cote region; and
-- the Government of Senegal or national private sector persons or
registered companies have the right to acquire a further 25%
contributory interest by way of the issue of new shares in GCO at a
purchase price to be independently evaluated by an internationally
recognised public accountancy firm or investment bank. This right is
exercisable only once during the 30 day period following Grande Cote
Operations receiving an offer of project finance.
Location
The GCP is located on a coastal dune system starting about 50 km north-east of
Dakar and extending northward for more than 100 km. The mineralised dune system
averages 4km in width and contains largely un-vegetated sand masses. The project
area is 445.7 km2.
To view a map of "Location of Grande Cote", please visit the following link:
http://media3.marketwire.com/docs/mdm_map1_616.pdf
Geology and Mineral Resource Estimate
The main heavy mineral ("HM") deposits identified to date are Diogo, Mboro, Fass
Boye and Lompoul. Other deposits have been partially explored within the Mining
Concession and there is potential to identify additional deposits beyond the
limits of present drilling. Both the dunes and the underlying marine sands
contain HMs, principally ilmenite with accessory zircon, rutile and leucoxene.
Zircon and ilmenite are the main commodities of interest.
Exploration has been conducted with two types of drilling, air core reverse
circulation ("RC") and hand auger. All holes are vertical. Samples were
collected at 1m intervals from both RC and hand auger drilling. To the end of
May 2010, GCO has drilled 8,285 RC holes for 150,665m and 12,462 hand auger
holes for 45,203m, which combined with 39,063m of previous drilling by others,
gives a combined total of 234,931m drilled and assayed.
Based on the drilling, geological and mining consulting company AMC Consultants
Pty Ltd ("AMC") has estimated a Mineral Resource estimate for the Diogo, Mboro,
Fass Boye and Lompoul areas of the deposit which is set out in Table 1.
Table 1: Mineral Resource Estimate for the Diogo, Mboro, Fass Boye and
Lompoul areas
--------------------------------------------------------
Resource Category Total Tonnes (M) HM (%)
--------------------------------------------------------
Measured 980 1.73
--------------------------------------------------------
Indicated 50 1.72
--------------------------------------------------------
Measured + Indicated 1,030 1.73
--------------------------------------------------------
Based on a surface that is 6 metres below the natural water table with 1.25%
HM cut-off grade
A block model was used to define the resource volume and HM grades were
estimated into each parent block using ordinary kriging. The Mineral Resource
estimate has been reported assuming the deposit will be mined by dredging where
the total thickness of the sand mined is based on the dredge operating at the
natural water table and its cutter operating up to 6m below the water table. For
reporting, the total sand accumulated to 6m below the natural water table, above
a cut-off of 1.25% HM, has been classified as Measured and Indicated based on
the drill hole spacing and available information on the watertable level.
Decreasing the cut-off significantly increases the tonnes of the Mineral
Resource estimate as demonstrated in Table 2.
Table 2: Mineral Resource Estimate by cut-off % HM (Measured and Indicated)
--------------------------------------------------------
Cut-Off (% HM) Tonnes (Billion) HM (%)
--------------------------------------------------------
0.50 4.14 1.05
--------------------------------------------------------
0.75 2.90 1.23
--------------------------------------------------------
1.0 1.72 1.48
--------------------------------------------------------
The above Mineral Resource estimates have been prepared by Rod Webster of AMC.
The estimates have been prepared in accordance with Canadian NI43-101, the CIM
standards and the Australasian Code for Reporting of Mineral Resources and Ore
Reserves 2004 Edition (the "JORC Code"). Mr Webster is qualified 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 NI43-101.
Mining and Ore Reserve Estimates
Mining will be carried out by dredging a continuous canal (dredge path) through
the dunal orebody at a projected rate of approximately 55 Mt of sand per annum.
The dredge will float in an artificial pond accompanied by a floating spiral
concentrator ("WCP"). To the rear of the WCP a tailings stacker will deposit the
tailings to fill the mined canal and achieve a final landform. Vegetation will
be cleared in advance of the dredge pond and rehabilitation will be completed on
the final landform.
Based on the mineral resource block model, a mine dredge path for the first 14
years of the operation has been developed and the Ore Reserve Estimate is as
follows:
Table 3: Ore Reserve Estimate for first 14 years of operation (designed mine
path)
-------------------------------------------------------------------
Classification Total Tonnes (M) HM (%) HM Tonnes (M)
-------------------------------------------------------------------
Proved 746 1.8 13.2
-------------------------------------------------------------------
Probable 5 1.7 0.1
-------------------------------------------------------------------
Proved and Probable 751 1.8 13.3
-------------------------------------------------------------------
This Ore Reserve estimate is the mineral resource contained within the dredge
path design and is based on the projects economics and engineering performed as
part of the DFS.
The above Ore Reserve estimate has been prepared by Pier Federici of AMC. The
estimate has been prepared in accordance with Canadian NI43-101, the CIM
standards and the Australasian Code for Reporting of Mineral Resources and Ore
Reserves 2004 Edition (the "JORC Code"). Mr Federici is qualified 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 NI43-101.
The deposit continues to the north and south on the Lease beyond these Ore
Reserves. While additional mine life will depend on the economics of the Project
including the mineral distribution, geometry and access, and additional drilling
is required, it could be anticipated that an additional 10 or more years of mine
life beyond the current Ore Reserves is feasible.
Processing
The heavy mineral concentrate ("HMC") from the floating spiral concentrator
("WCP") will be pumped to the mineral separation plant ("MSP") where it will be
dewatered and stockpiled for batch processing in the MSP.
An extensive testwork program has been completed with the primary aim being to
maximise recovery and product quality. The most recent testwork was completed by
Downer EDI in 2010 using a 1,037 kg bulk sample. Testwork results indicate a
product mix of three to four zircon products, two ilmenite products and rutile
and leucoxene products is feasible. Overall recovery for HM was 82.6%.
Detailed flowsheets, plant layouts and the plant design basis have been
developed by Ausenco. The flowsheets for the mine and WCP present mass balances
using the nominal feed tonnage (7,000 t/h) from the dredge and a plant feed
heavy mineral ("HM") grade of 2.0%. The Mineral Separation Plant ("MSP")
consists of three separate circuits: Wet Circuit, Zircon Dry Circuit and
Ilmenite Dry Circuit. A high level flow sheet is shown below.
To view "High Level Process Flow Sheet", please visit the following link:
http://media3.marketwire.com/docs/mdm_map2_616.pdf
Infrastructure
Significant existing road, rail and port infrastructure exists within the
country of Senegal and is easily accessible by the Project. This includes road
and rail infrastructure and port and harbour facilities.
The proposed MSP is located near Diogo village, approximately midway along the
mining lease to enable access to nearby infrastructure including major highways,
roads, railways and the Port of Dakar. The nearby town of Mboro, 25 km south, is
adjacent to an phosphate mine. The main highway between Dakar and Saint Louis to
the north is located 20 km east of the MSP site.
Ilmenite will be transported in bulk by road to a railhead 25km from the MSP
site and then by the existing rail system to the Port of Dakar. Zircon, rutile
and leucoxene will be transported in shipping containers via approximately 125
km of existing bitumised road to the Port.
Plant construction materials and equipment for the mine, MSP and the power
station, liquid fuel (if required) for the power station, operating supplies and
maintenance components will be transported to site by road from Dakar. Dakar is
the main West African base for many well equipped, international freight
logistics companies. MDL successfully utilized a combination of these transport
and logistics companies during the construction of the Sabodala Project. The
EPCM Contractor will conduct a detailed transport and logistics study for
project construction items, to ensure the timely, low cost delivery of equipment
and materials to site.
Additional infrastructure and services required includes:
-- site buildings and storage facilities;
-- power station and liquid fuel storage facility;
-- information and communications technology; and
-- rail wagon and ship loading facilities.
Mill buildings, the power station and fuel storage, administration offices,
warehouses and lay-down areas will be located at the MSP site.
The maximum power demand for the GCP is 22 MW with a connected load of 27 MW.
Annual power consumption is calculated as 141,000 MWh. MDL's power supply
strategy is similar to that used in the Sabodala operation, whereby GCP will own
and operate a 28 MW dual fuel (Heavy Fuel Oil ("HFO")/ Natural gas) fired power
station. Given the long life of the operation, MDL considers this a more
economic option than other power supply options investigated. The installation
of a natural gas compatible power station will also provide opportunity for
utilization of a local energy source with the added benefit of potential carbon
credits under the clean development mechanism.
The liquid fuel farm will have a HFO storage capacity of 1M litres which is
sufficient for two weeks supply if straight HFO is burnt in the power station.
If required during the wet season, additional storage capacity of 2M litres is
available at the Port of Dakar.
The existing Information Technology ("IT") infrastructure at the Exploration
Camp and in GCO's Dakar offices will be upgraded during development of the GCP.
The key elements will be similar to those of the Sabodala operation and include
voice and data communications, wide and local area infrastructure, PCs and
specialist software.
Wagons will be purchased and running rights have been negotiated for their
operation on the existing rail system. A new mobile loading facility will be
required for loading trains at the rail head and unloading, storage and ship
loading facilities for bulk ilmenite will be constructed at the Port of Dakar.
Water management is one of the key issues affecting the success of the GCP. It
is important for the operation of the mine, the transfer of concentrates to the
MSP, the mineral separation processes and the needs of the local community who
depend on it for their survival. There are three predominant project specific
uses of water:
-- flotation of the mining dredge, surge bin and wet concentrator modules
and slurrying of dunal orebody for processing;
-- pumping mineral concentrates as slurries from the mine to the MSP and
waste return to the mine; and
-- processing of mineral streams in the MSP.
Extensive modelling of existing water resources and the effects of mining on the
water table has been completed by PSM Australia Pty Ltd. This modelling
incorporating regional data such as rainfall, irrigation practices plus a
project based weather station data. Based on this work the project water
requirements are able to be met and the affect on regional water resources is
understood.
Capital Cost Estimate
The capital cost estimate for the project, prepared by Ausenco, is US406
million. Accuracy of the estimate is +/-15%.
Table 4: Capital Cost estimate for the GCP
----------------------------------------------------------------------------
Item US$M
----------------------------------------------------------------------------
Mining - Dredge and Services 37.9
----------------------------------------------------------------------------
Wet Concentrator Plant 84.7
----------------------------------------------------------------------------
Mineral Separation Plant 54.1
----------------------------------------------------------------------------
Mining - Infrastructure 8.4
----------------------------------------------------------------------------
Mineral Separation Plant - Infrastructure 5.8
----------------------------------------------------------------------------
Power Station 45.3
----------------------------------------------------------------------------
Rail/Port Facilities and Rolling Stock 18.6
----------------------------------------------------------------------------
Temporary Construction Facilities 21.5
----------------------------------------------------------------------------
Indirects - EPCM, Commissioning and Project Fee 52.1
----------------------------------------------------------------------------
Owners Costs 47.0
----------------------------------------------------------------------------
Estimation/Design Allowance 16.8
----------------------------------------------------------------------------
Contingency 13.8
----------------------------------------------------------------------------
Total 406.0
----------------------------------------------------------------------------
The capital cost estimate is based on all new equipment and Sabodala Project
experience has been used for estimating owner's costs, subcontract and material
rates, productivity factors and EPCM manning requirements. Additional scope
changes resulting from the recent testwork have also been incorporated into the
plant design and the capital estimate.
Assumptions used to derive the capital cost estimate include:
-- Exchange rates used for conversion of costs to $US are: 1 A$ = 0.90 US$,
1 Euro = 1.50 US$, and 1 CFA = 0.0022 US$.
-- When unit rates from the Project's August 2006 estimate have been used
they have been increased by 25% to allow for escalation - which is
consistent with the average for equipment price increases from the
tender price validation.
-- For construction activities craft base wages are based on current gang
rates applying to other project estimates within the region. Where unit
rates from the Sabodala Project have been used, they have been increased
by 15% to allow for escalation. This is based on the labour index
increasing by 25% over the period, while bulk commodity prices have
remained flat.
-- A 2.5% duty is payable on ex-works value of all goods entering Senegal.
-- Costs for construction accommodation are based on 400 persons for year
one and 800 persons for year two of construction. Provisions have been
included for spare parts and first fill consumables.
-- An EPCM fee of 3% of direct costs under management by the EPCM
contractor has been included in the estimate. Owner's Costs include the
GCO's representatives during construction, accommodation, transport, IT
and communications, social and environmental programs, studies and costs
associated with local and statutory requirements.
-- The capital cost estimate excludes demurrage for capital freight,
working capital (which is included in the overall project financial
model) withholding taxes and other similar Senegalese taxes, and
corporate costs. Sustaining or deferred capital costs are included in
the financial model.
The Base Date for the Capital Costs is 30 November 2009. A provision for
escalation beyond the estimate base date has not been included in the estimate.
Production
Testwork on a series of bulk samples has determined that the Project can yield a
product mix of three to four zircon products, two ilmenite products and small
amounts of rutile and leucoxene. Estimated average annual production rates are:
-- Zircon - 79,500 tonnes (Premium 32,000t, Intermediate 25,000t, Standard
20,000t, Secondary 2,500t)
-- Ilmenite - 575,000 tonnes (Sulphate 400,000t, Chloride 175,000t)
-- Rutile - 6,000 tonnes
-- Leucoxene - 11,000 tonnes
Marketing
On a global scale, planned product output from the GCP would represent
approximately 7% of the world zircon production and around 10% of world ilmenite
production.
Independent analyst TZMI is forecasting long term deficits in each of the
zircon, ilmenite, rutile and leucoxene markets. This is driven by a progressive
decrease in supply from existing producers, coupled with a lack of new projects
and ongoing growth in consumption. These supply deficits can only be met by the
discovery and development of new resources such as the GCP.
In the case of the GCP, the marketing position is enhanced by the close
proximity of the Port of Dakar to the important European and North American
markets, particularly for the main commercial product, zircon. Dakar is a large
container port and the existing service from Dakar provides for shipments every
7 to 10 days to Europe and every 7 to 14 days to North America which assists
customers in maintaining just in time inventories. The container requirements of
the GCP can also be expected to attract interest from shipping lines because
Dakar has a long history of having to export containers empty due to lack of
export cargoes.
Grande Cote is planned to enter the market in 2013 and TZMI forecast that the
zircon market dynamics from 2012 will be increasingly dominated by tight supply,
with the degree of undersupply dependent on the success of bringing new projects
into operation. From 2015 onwards the expectation is for a widening deficit,
mainly as a result of major losses of production from existing suppliers and a
lack of new projects entering the market, see Figure 1.
To view "Figure 1", please visit the following link:
http://media3.marketwire.com/docs/mdm_fig1_616.pdf
TZMI also anticipates significant supply gaps to occur for sulphate and chloride
ilmenite (see Figure 2 and Figure 3), as well as for rutile and leucoxene, for
similar reasons for the forecast deficits of zircon, i.e. a progressive decrease
in supply, a lack of new projects and ongoing growth in consumption.
To view "Figure 2", please visit the following link:
http://media3.marketwire.com/docs/mdm_fig2_616.pdf
To view "Figure 3", please visit the following link:
http://media3.marketwire.com/docs/mdm_fig3_616.pdf
MDL's marketing objective is to optimise the sales revenue for all products. In
the case of zircon, rutile and leucoxene, this will be achieved through a widely
based sales mix based on using container shipments, enabling products to be sold
into a range of niche markets. MDL's opinion, supported by TZMI, is that premium
prices will be achieved for zircon, rutile and leucoxene by way of sale by
container into selected end use markets. Ilmenite trades differently to zircon,
rutile and leucoxene. Ilmenite is a high volume, low value product and is
shipped in bulk shipment under long term sales arrangements at prevailing market
prices for bulk shipment.
Zircon is the single most important commercial product of the project with
revenues representing 57% of the total. Ilmenite contributes 36% and about 7% is
split about equally between rutile and leucoxene.
MDL (on behalf of GCO) has sales arrangements in place with a number of
customers covering all of the currently envisaged zircon production. The terms
of these arrangements include a pricing mechanism which is renewed on a rolling
basis and is subject to final product quality. The agreements will be formalised
after completion of further product quality trials and customer evaluations.
These trials are well advanced and have demonstrated that the GCP zircon product
will have a competitive edge in terms of product quality against other
suppliers. Ilmenite marketing is also being progressed with a number of
customers under the customary process of evaluation subject to confidentiality
agreements.
Operating Costs
Estimated operating costs have been prepared for the mining, wet concentrator,
mineral separation processing operations, transportation and the supporting
services required for the operations at Grande Cote. A summary of the estimated
operating costs is shown in Table 6.
Table 6: Estimated Annual Operating Costs
--------------------------------------------------------------
Description US$M
--------------------------------------------------------------
Power and Fuel 23.1
--------------------------------------------------------------
Employee Costs 7.9
--------------------------------------------------------------
Maintenance 13.8
--------------------------------------------------------------
Transportation / Shipping 22.4
--------------------------------------------------------------
Other 8.1
--------------------------------------------------------------
Total 75.3
--------------------------------------------------------------
Fuel is required for power generation, gasoil for drying and mobile equipment.
For power generation the unit rate cost estimation was based on the Sabodala
power station fuel/ lubricant consumption rates, downtime and performance.
The human resources strategy and costs for the GCP draw on the considerable
expertise built up over the past five years by MDL in Senegal. Expatriate and
national salaries are based on the current operation at Sabodala. Average
salaries are used for expatriate employees while the national labour rates are
as regulated by the government and gazetted by Decree 2006-1262 dated 15
November 2006. All employee costs include on-costs.
Maintenance labour is included in the labour rates. Maintenance unit rate costs
are based on benchmarks for similar operations and include the dredge and wet
plant, MSP and the ilmenite plant.
Transport of GCP zircon, rutile and leucoxene final products will be via sealed
road in 20 foot containers to the port of Dakar for dispatch by sea. Ilmenite in
bulk will be trucked to a nearby rail head and then transported via rail to a
bulk load out facility at the Dakar Port for shipments to customers. All costs
are on a Freight On Board ("FOB") basis.
The Base Date for operating costs is April 2010.
Environmental and Social
As required under Senegal's Environmental Code and the Mining Convention, an
Environmental and Social Impact Assessment Study (Etude d' Impact Environmental
et Social, EIES) was completed in December 2005. In December 2005, MDL submitted
the EIES in support of its application for a Mining Concession. The EIES was
approved by the Environmental Department of the Ministry of Environment and
Nature Protection of the GRS on 20 January 2006.
An Environmental and Social Management and Monitoring Plan ("ESMMP") has been
developed based on commitments made in the EIES and the requirements of the GRS.
The ESMMP describes the monitoring, mitigation and management measures required
during the construction, operation, decommissioning and rehabilitation phases of
the GCP. The ESMMP provides a framework for ongoing environmental and social
management and sets guidelines for development of management plans and standard
operating procedures that will be developed as part of the management system.
The ESMMP is a dynamic document subject to updating and adjustment following
biennial review and will address key environmental and social issues including
water, rehabilitation, and avoidance of settlements and appropriate compensation
if temporary or permanent resettlement is required.
It is estimated that the GCP will employ directly up to 800 people during
construction with a GCO workforce of approximately 280 people plus 130
outsourced roles during operation. It is anticipated that 30% to 40% of the
total workforce will be recruited from local communities, which compares to
approximately 45% of MDL's Sabodala's workforce being recruited from regional
communities.
Implementation Schedule
A high level project development schedule has been developed by Ausenco and GCO.
The Project Execution Schedule assumes that financing for the Project will be
completed by the 1st quarter of 2011 and that the EPCM contractor will be
selected early in 2011. The schedule indicates a completion date for initial
commissioning during the first quarter of 2013 and for first sales products to
be produced by June 2013.
Summary of Key Project Assumptions and Metrics
----------------------------------------------------------------------------
Item Assumption and Metrics
----------------------------------------------------------------------------
Saleable Zircon - 79,500 tpa (Premium 32,000t, Intermediate 25,000t,
Products and Standard 20,000t Secondary 2,500t)
Average Annual Ilmenite - 575,000 tpa (Sulphate 400,000t, Chloride
Production 175,000t)
Rates Rutile - 6,000 tpa
Leucoxene - 11,000 tpa
----------------------------------------------------------------------------
Mining Strategy Owner Mining
----------------------------------------------------------------------------
Total Metres 150,665 m Reverse Circulation Drilling
Drilled (MDL) 45,203 m Auger Drilling
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Mineral Indicated Resource - 50 Mt at 1.7% HM
Resource Measured Resource - 980 Mt at 1.7% HM
estimate Total Indicated and Measured - 1,030 Mt at 1.7% HM
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Mining Rate 55 Mt per year of sand Average 7,000 tonnes per hour
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Mining Method Floating cutter section dredging operation
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Ore Reserve Probable Reserve - 5 Mt at 1.7% HM
estimate Proved Reserve - 746 Mt at 1.8% HM
Total Probable and Proved - 751 Mt at 1.8% HM
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Processing Floating Concentrator featuring banks of gravity-fed High
Method Capacity Spirals, followed by a land-based Mineral
Separation Plant which includes a Wet High Intensity
Magnetic Separation Plant, a zircon wet and dry plant and
an ilmenite plant
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Processing Rate 140 tonnes per hour to a maximum of 200 tonnes per hour
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Tailings Cyclone and discharge with tailings stacker
Disposal
Method
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Product Road transport in containers to Port of Dakar for zircon,
Transport rutile and leucoxene
Method Combination of road and rail transport in bulk to Port of
Dakar for ilmenite
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Project Engineering, Procurement and Construction Management
Execution Contractor
Methodology
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Construction Beginning of 2nd quarter 2011
Start Date
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Production End of 2nd quarter 2013
Start Date
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Defined Mining 14 Years
Path
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ABN 19 064 377 420
Goldmincoa Corporation Com (TSXV:GCP)
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Goldmincoa Corporation Com (TSXV:GCP)
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