- Significant progress with QME
optimisation studies
- Retirement of Director
September 5, 2019: At the Annual
General Meeting held in London
today, the Chairman, John Kearney,
presented an update on the activities of the Company,
As previously reported to shareholders, in 2018 Anglesey entered
into a Project Development and Cooperation Agreement with QME
Mining Technical Services, a division of QME Ltd, to carry out an
agreed programme of design, engineering and optimisation studies
relating to the future development of the Parys Mountain zinc,
copper lead project, located on the island of Anglesey in
Wales.
The primary objective of this exercise is to determine the
optimum production plan for the future Parys Mountain mine and we
are very pleased to be able to today report that significant
progress has been made with very encouraging results.
QME review and optimisation
As described in our recent Annual Report, QME completed detailed
reviews of mine development capital and mine operating costs of the
basic mine plan, using their extensive experience in mine
development in Ireland and
throughout Europe, and identified
the potential for improvements in the development plans contained
in the 2017 Scoping Study.
QME developed a model to estimate the mine operating costs for
the life of mine. As indicated in the Annual Report QME has
confirmed an expected operating cost of $US48 per tonne. This figure is generally
in line with the projected operating costs estimated by Micon
International and Fairport Engineering in the 2017 Scoping Study,
although, as might be expected, some specific cost items were
higher and some lower.
The QME review work suggests support for the application of a
lower cut-off for mine planning purposes than used in the 2017
Scoping Study.
In 2012 Micon produced a detailed Resource Estimate for the
Parys Mountain property and used a range of cut-off grades to
produce a matching range of resources, including a total Indicated
Resource of 6.97 million tonnes at $0
cut-off. At the time a cut-off of $US80 per tonne was used for resource reporting
purposes. This resulted in a published indicated resource
across the White Rock and Engine zone ore bodies of 2.1 million
tonnes and a further inferred resource in the same ore bodies of
0.65 million tonnes.
In the 2017 Scoping Study Micon used the same resource
base. This study utilised a cut-off of $60 per tonne and applied mine planning, dilution
and recovery criteria which generated a mineable tonnage of 2.1
million tonnes, which as a coincidence, was very similar to the
2012 resource tonnage calculated at a cut-off of $80 per tonne.
Higher tonnage available for
mining
Using the same geological data set as used by Micon but applying
a cut off of $US48 per tonne in
accordance with the forecast operating costs as noted above, QME
has now estimated that a larger tonnage of material could be
available for mining.
The QME work suggests that at the production cut-off of
$48 per tonne, a global 6.9 million
tonnes would be available within Parys Mountain’s White Rock and
Engine Zones for consideration in a detailed life-of-mine schedule
and associated financial analysis and to be incorporated into an
updated Scoping Study or Feasibility Study.
This 6.9 million global tonnes is substantially higher than the
mineable tonnage of 2.1 million tonnes, used in the 2017 Scoping
Study for mine planning and financial modelling. It is important to
note that QME made no changes to the underlying resource estimates
which were calculated by Micon in 2012.
Applying a 10% dilution and 98% recovery, would result in some
7.3 million tonnes being available for conversion into 'potentially
mineable tonnage' within the current global resource in all
categories.
As a further refinement, QME also looked at mining criteria and
developing potential stoping blocks within this 7.3 million
'potentially mineable tonnage' and in doing so eliminated some
material not located in economically mineable locations.
Based on these assumptions approximately 5.25 million tonnes in
situ would fall within these designed stoping blocks.
Longer potential minelife or higher
production rate
Using this updated 2019 block model, there is an opportunity to
develop a new 2019 mineable block model by re-defining the mining
shapes and the stoping plan, followed by a new development plan and
schedule.
If a mining plan was developed using this lower cut-off grade,
then at a constant 1,000 tonnes per day mill throughput rate as
used in the 2017 Scoping Study, the project life would be
significantly extended from the initial eight years indicated in
the Scoping Study to approximately 18-year mine
life.
However, it does have to be noted that by reducing the cut-off,
the grade of material that would be delivered to the mill would be
lower overall than that used in the 2017 scoping study.
The economic trade-off between a longer mine life and reduced
head-grade will need to be further studied to determine what, if
any, would be the net financial benefit. It will then likely
require further studies to determine if there is an ‘optimum’
cut-off grade that maximises the financial returns.
In addition, this new 2019 “potentially mineable tonnage”, would
justify and support an increase in the throughput rate and it
should also be possible to increase the effective mining rate, up
to say 500,000 tonnes per year, which would improve front-end
revenue and cash flow, although at a higher capital cost, and would
result in a mine life of approximately 10 years.
Summary of QME project
improvements
The Agreement with QME has seen the development of a substantial
amount of work on mine planning and design and project optimisation
on the Parys Mountain project at no cost to Anglesey and at no
dilution to Anglesey’s current shareholders.
The QME studies have indicated that the project can be improved
if the potential mineable tonnage can be increased by using a lower
cut-off grade and generating a revised mine development plan. It
should be emphasised that this optimisation work will have to be
supported by an updated scoping study or pre-feasibility study.
In the meantime, QME has suggested that additional studies are
carried out and this second stage of the process remains
ongoing.
These additional studies will also look at utilising some of the
inferred resources into the mining plan, continuing review to
determine theoptimum cut-off grade, and the use of updated metal
prices. While the inclusion of inferred resources does not meet the
strict criteria for feasibility studies used by banks for loan
evaluation, given the detailed geological knowledge of Parys
Mountain now available it is useful to include some of this
inferred resource for comparative financial modelling.
This second stage of the QME exercise is ongoing with completion
scheduled for the end of 2019. Subject to financing being
available, this work would then form the basis for commissioning an
updated scoping or preliminary feasibility study.
Retirement of Director
David Lean, who has been a
director of the Company for almost eighteen years, has indicated
that he wishes to retire from the Company at the 2019 Annual
General Meeting and will not stand for re-election. The board
wish to thank him for his sound advice and tireless efforts during
all this period
For further information, please contact:
Bill Hooley, Chief Executive +44
(0)7785-572517
Danesh Varma, Finance Director +44
(0)7740-932766