ASX Announcement | 2 June 2015 | Page 1 Fourfold Increase in Bauxite Hills Ore Reserve Metro Mining Limited announces a significant increase in its Bauxite Hills Project Ore Reserve from 12.1million tonnes* to 48.2 million tonnes. The Bauxite Hills Mine Project is situated 95 km north of Weipa on Queensland’s Cape York Peninsula and five kilometres south-east of the port at Skardon River (see Figure 1). Western Cape York is world- renowned for its deposits of high-quality, export-grade bauxite. The Company completed a Pre-Feasibility Study (PFS) in February 2015. This study identified a Probable Ore Reserve of 12.1 million tonnes * (49.2 % total Al2O3, 36.6% THA, 7.4% RxSi) Direct Shipping Ore (DSO) compliant with the JORC 2012 code and based on the borehole analysis and geological modelling completed up to that date. Since the completion of the PFS in February, Metro has completed the analysis of the BH1 boreholes drilled previously at 160m centres and has updated the geological model to include these results; refer Table 2. The geological model update resulted in the resource upgrade announced to the ASX on 2 June 2015. The recent drill hole analysis and geological modelling continue to confirm that the resource at Bauxite Hills is suitable for Direct Shipping Ore (DSO) that is planned to be transhipped via the Skardon River. The production of DSO allows the development of a mine with lower capital and lower operating costs than a mine producing a beneficiated bauxite product by avoiding a number of significant costs, including; reduced infrastructure costs with no requirement for a large beneficiation plant and associated reduced water, energy and tailings dam requirements. . ASX ANNOUNCEMENT 2 June 2015 41.8 million tonnes Proved Ore Reserve** (50.7% total Al2O3, 38.6% THA, 6.3% RxSi) 6.4 million tonnes Probable Ore Reserve** (49.3% total Al2O3, 36.8% THA, 6.9% RxSi) Mine Life extended from 21 to 27 years Production of up to 2 million tonnes of Direct Shipping Ore (DSO) per year*** Key Points * Refer ASX Announcement 17 Feb* 2015 **Reserve estimated in accordance with guidelines in JORC (2012) ***Refer ASX Release 17 Feb 2015. Metro confirms all material assumptions underpinning the production target and corresponding financial information continue to apply and have not materially changed as per Listing Rule 5.19.2 Bauxite Hills Project Summary
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ASX Announcement | 2 June 2015 | Page 1
Fourfold Increase in Bauxite Hills Ore Reserve Metro Mining Limited announces a significant increase in its Bauxite Hills Project
Ore Reserve from 12.1million tonnes* to 48.2 million tonnes.
The Bauxite Hills Mine Project is situated 95 km north of Weipa on Queensland’s Cape York Peninsula and
five kilometres south-east of the port at Skardon River (see Figure 1). Western Cape York is world-
renowned for its deposits of high-quality, export-grade bauxite.
The Company completed a Pre-Feasibility Study (PFS) in February 2015. This study identified a Probable
Ore Reserve of 12.1 million tonnes* (49.2 % total Al2O3, 36.6% THA, 7.4% RxSi) Direct Shipping Ore (DSO)
compliant with the JORC 2012 code and based on the borehole analysis and geological modelling
completed up to that date.
Since the completion of the PFS in February, Metro has completed the analysis of the BH1 boreholes
drilled previously at 160m centres and has updated the geological model to include these results; refer
Table 2. The geological model update resulted in the resource upgrade announced to the ASX on
2 June 2015.
The recent drill hole analysis and geological modelling continue to confirm that the resource at Bauxite
Hills is suitable for Direct Shipping Ore (DSO) that is planned to be transhipped via the Skardon River.
The production of DSO allows the development of a mine with lower capital and lower operating costs
than a mine producing a beneficiated bauxite product by avoiding a number of significant costs,
including; reduced infrastructure costs with no requirement for a large beneficiation plant and associated
reduced water, energy and tailings dam requirements.
.
ASX ANNOUNCEMENT
2 June 2015
41.8 million tonnes Proved Ore Reserve** (50.7% total Al2O3, 38.6% THA, 6.3% RxSi)
6.4 million tonnes Probable Ore Reserve** (49.3% total Al2O3, 36.8% THA, 6.9% RxSi)
Mine Life extended from 21 to 27 years
Production of up to 2 million tonnes of Direct Shipping Ore (DSO) per year***
Key Points
* Refer ASX Announcement 17 Feb* 2015
**Reserve estimated in accordance with guidelines in JORC (2012) ***Refer ASX Release 17 Feb 2015. Metro confirms all material assumptions underpinning the production target and corresponding financial
information continue to apply and have not materially changed as per Listing Rule 5.19.2
Bauxite Hills Project Summary
ASX Announcement | 02 June 2015 | Page 2
Open cut mining method utilising front end loaders for loading and trucks for hauling. The material does
not need any drilling and blasting, however some ripping by dozer is likely to be required. The wheel
loaders are recommended for loading because of its high manoeuvrability for blending purposes. This is
the preferred mining method for bauxite deposits. The bauxite will be hauled to the ROM stockpile using
Road Train Trucks. Waste material will be initially stored Ex-Pit onto barren or non-economical land while
the In-Pit waste dumping is expected to commence within first six months of production. The waste
volume is low for this deposit and it is not expected to represent a major problem in terms of waste
storage or required capacity of mining equipment.
Equipment Assumptions
As part of the Pre-Feasibility Study, equipment sections were completed in two stages. Firstly to supply
costs for equipment appropriate in such a deposit, these were then utilised as part of the pit optimisation.
The second stage constituted a detailed equipment section to meet the production schedule defined in
the PFS Revision. MEC Consultants derived the number of equipment units required for the loading,
hauling, crushing and auxiliary. Loading and hauling cycle times for each mining area were calculated in
the model using standard machinery operating guidelines. The data was combined with typical
operational delay and utilisation of equipment to estimate the fleet productivity in order to achieve the
planned annual production of up to 2Mtpa of mined and crushed Bauxite.
Mining the Bauxite Hills Project
Summary Mining Method
Fig 1: Bauxite Hills Tenement Area
ASX Announcement | 02 June 2015 | Page 3
Mining Boundaries
The PFS Revision considered two key boundaries in development of the mine plan and subsequent
reserves. The Mining Lease boundaries were given a 50m clearance offset to allow for adequate haulage
space and environmental buffer. The Bauxite Hills deposit also encroaches on areas defined as Matters of
State Environmental Significance (MSES), these zones have been treated with a 100m off-set.
Mining Loss & Dilution
The nature of the deposit was considered along with the selected equipment types to determine
appropriate loss and dilution factors. The product is a Run of Mine Ore or Direct Shipping Ore (DSO) and in
order to minimise the degradation of quality of product, higher loss was accepted and modelled. The
Reserves are adjusted for loss of 0.1m at the roof and 0.1m floor of the Bauxite interval. A dilution of 0.1m
from the top horizon is assumed between top and bauxite horizons.
Other Mining Factors & Cut-off Grade
A Pit Optimisation was completed as part of the PFS in order to determine the economic mining limit of
the ore resource. Mineralised zones were defined by grades ≥45% total Al2O3 and ≤8% RxSi.
The Environmental Permit for Mining (EPM), Mining Lease and Native Title claims are mentioned in detail
within the PFS and reserves report. The EPM is owned by Metro Mining and the Mining Leases are in
“Application” status. Two Native Title claims have been lodged and Metro Mining is working on the “right
to negotiate” process under Section 29 of the Act.
In addition an EIS study is currently being completed by CDM Smith. There are several environmentally
sensitive areas surrounding the bauxite deposit but their location is accurately known; no bauxite
resources have been included within these areas.
The Bauxite Hills Project was assessed based on annual production of up to 2 million tonnes of wet DSO
(10% moisture) product over a mine life of 27 years. The inferred ore and non-categorized ore utilised in
the pit optimisation and the mining schedule is less than 10% of the schedule material and a positive
project value is still achieved with its exclusion.
The ROM ore will be screened and crushed to remove organic material and reduce the top size of
<100mm. No other beneficiation or processing is required.
Mineralised zones are defined by grades ≥45% total Al2O3 and ≤8% RxSi, based on saleable grade
limitations.
The Lerchs-Grossmann pit optimisation algorithm was utilised in the Vulcan software to determine the
extent of economically mineable ore reserves. The individual block values were assigned considering
product price and mining costs, along with quality variations. The ore blocks are spatially grouped in the
process to determine the economical extent of the mining reserves.
The optimisation process also takes in account the capital expenditure which is applied during the
optimisation analysis stage. Table 1 shows the initial capital expenditure figures used during the process of
optimization. Additional capital will be required to cover the cost of development over the life of mine
with initial CAPEX remaining at AU$27.4M. Capital expenditure will include the development of haul roads
and pit access, camp and mine site facilities, loading and crushing facilities, acquisition of mining
equipment and a contingency of 25% of total capital costs.
Social and Environmental Factors
Production and Processing
Economic Pit Boundary
ASX Announcement | 02 June 2015 | Page 4
Pit Design
Table 1: CAPEX:
Breakup of capital required for first production
2016 Construction 2016 Capex A$M
Mine Access (Haul Road) $2.8
Mine & barge Loading Infrastructure $10.6
Mine Camp & Airport $5.0
Mining Equipment $2.5
Contingency & Owners Costs $6.5
Total Capex $27.4
NB: additional anticipated capital of $18.1M
will be required in years following first production
for extending haul roads and sustaining capital.
The Bauxite deposit is a very shallow deposit and does not require detailed batter design. Pit and stage
designs were produced on the basis of batters at angle of repose. These designed were reserved in
Deswik software for scheduling purposes.
The economic block model reserves were used to define a mining limit with practical mining blocks then
cut to a detailed scheduling as part of the Prefeasibility study. The detail dig and dump sequencing along
with equipment numbers were then modelled in a discounted cash flow model to further justify the
project value when full offsite cash costs are analysed.
The Bauxite Hills Project was assessed based on annual production of up to 2 million tonnes of product for
a life of mine of about 27 years. For the purpose of realistic mine production modelling a portion of
inferred and lesser confidence resources were included, removal of these from the economic modelling
has no impact on the reserves stated in this estimate as the economic viability is tested on each block
and a full site level with this portion representing less than 10% of the modelled production. It is important
to note that Inferred Category and non-categorized material according to JORC Standard cannot be
converted to Ore Reserves due to its lower confidence level.
Financial Modelling
The financial model was developed by Metro Mining. The mining schedule is the key input to this model.
This model was reviewed by MEC Mining and demonstrated a positive NPV when full offsite cash costs
and taxation was considered. This model was also sensitivity tested demonstrating positive project value
for 20% variance modelling.
Overview of Ore Reserves Estimation Processes
The ore reserves estimation process included completion of detailed pit optimisation with the resulting
economic limits then used for detailed pit and stage design. The designed stages are reserved using
appropriate modifying factors, and then scheduled inclusive of detailed haulage for full assessment
through a financial model. This process was completed as part of the PFS and the PFS Revision.
Schedule & Financial Analysis
Reserve Estimate
Bauxite Quality and Market
The price of commodity used during the optimisation
process varies on block by block basis. The variation
reflects the change in quality of ore within mining blocks.
Each 1% of increase in content of reactive silica (RxSi) in
Bauxite is calculated to decrease the FOB price of the
bauxite by a factor agreed with the customer. Each 1%
increase in tri-hydrate alumina (THA) content of Cape
Alumina bauxite is calculated to increase the FOB price
of the bauxite by a factor agreed with the customer.
The price of Bauxite FOB, North Queensland was
provided by CM Group (CM), a commodity supply
specialists hired by Metro Mining refer ASX release 17 Feb
2015. The optimisation process uses the average price as
a base value which was then adjusted on block by
block basis in accordance to changes in grade, as
discussed above.
ASX Announcement | 02 June 2015 | Page 5
Estimated JORC Reserves
MEC Mining calculated that 41.8 Mt of Proved and 6.4 Mt of Probable Marketable Ore Reserves is a
reasonable and reliable estimate of the Reserves in the area of Bauxite Hills. On average, the Proved
Reserves contains 50.73% of total Al2O3 and 6.29% of reactive silica while the Probable Reserves on
average contains 49.26% of total Al203 and 6.92% of reactive silica; all qualities are reported on a dry basis.
The stated ROM reserves represent the marketable product tonnes as this is a direct shipping ore, with no
beneficiation and is saleable at ROM moistures.
In addition to the Reserves presented in table 2, for the purpose of realistic mine production modelling a
portion of inferred and lesser confidence resources were included in the production schedule of the PFS,
removal of these from the economic modelling has no impact on the reserves stated in this estimate. The
non-categorised reserve represents 5Mt of the 53.1Mt scheduled, with an annualised summary of mined
resources by category detailed in the PFS.
Table 2: Bauxite Hills – DSO Mineral and Ore Reserve estimates (refer Appendix 1)
TOTAL MARKETABLE ORE RESERVES 48.2 50.2 38.4 11.2 6.4 1 For BH1 and BH6 the tonnages are calculated using the following default bulk densities determined from a program of
sonic drilling; 1.6g/cm3 for BH1 and 2g/cm3 for BH6. Actual values are used where measurements have been taken 2 DSO or “Direct shipping ore” is defined as bauxite that can be exported directly with minimal processing and
beneficiation. 3 THA is trihydrate available alumina (gibbsite alumina + kaolinite alumina – low temperature desilication product (DSP)
alumina) at 1500C. 4 RxSi is reactive silica at 1500C. 5 Proved Reserve - the probable reserve is included in the BH1 & BH6 Measured resource 6 Probable Reserve - the probable reserve is included in the BH1 & BH6 Indicated resource
ASX : MMI
Electronic copies and more information available on the Company website: www.metromining.com.au
Contact: Chief Executive Officer | Mr Simon Finnis |Company Secretary | Mr Scott Waddell
REGISTERED OFFICE AND HEAD OFFICE Lvl 8, 300 Adelaide St, Brisbane | PO Box 10955, Adelaide St, Brisbane Q 4000
FORWARD LOOKING STATEMENT Statements and material contained in this ASX Announcement, particularly those regarding possible or assumed future
performance, production levels or rates, commodity prices, resources or potential growth of Metro Mining Limited, industry growth or other trend projections
are, or may be, forward looking statements. Such statements relate to future events and expectations and, as such, involve known and unknown risks and
uncertainties. Graphs used in this ASX Announcement (including data used in the graphs) are sourced from third parties and Metro Mining has not
independently verified the information. Metro Mining is at an early development stage and while it does not currently have a operating bauxite mine it is
taking early and preliminary steps (such as but not limited to Prefeasibility studies etc.) that are intended to ultimately result in the building and construction of
an operating mine at its project areas. Although reasonable care has been taken to ensure that the facts stated in this ASX Announcement are accurate and
or that the opinions expressed are fair and reasonable, no reliance can be placed for any purpose whatsoever on the information contained in this
document or on its completeness. Actual results and developments may differ materially from those expressed or implied by these forward looking statements
depending on a variety of factors. Nothing in this ASX Announcement should be construed as either an offer to sell or a solicitation of an offer to buy or sell
shares in any jurisdiction.
COMPETENT PERSON’S STATEMENT The information in this report to which this statement is attached that relates to the “Metro Mining – Bauxite Hills” Reserve
Estimate based on information compiled by Maria Joyce, a consultant to Metro Mining and a Competent Person who is a Chartered Engineer of the
Australasian Institute of Mining and Metallurgy. Maria Joyce is the head of the Technical Services division and full-time employee of MEC Mining Pty Ltd. Maria
Joyce has sufficient experience that is relevant to the style of mineralization, type of deposit under consideration and to the activity being undertaken to
qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves’. Maria Joyce consents to the inclusion in the report of the matters based on her information in the form and context in which it appears.