TIDMAMC
RNS Number : 1366U
Amur Minerals Corporation
05 April 2016
5 April 2016
AMUR MINERALS CORPORATION
(AIM: AMC)
Maly Kurumkon / Flangovy Resource Exceeds Expectations
Amur Minerals Corporation ("Amur" or the "Company"), the
nickel-copper sulphide mineral exploration and resource development
company focused on the far east of Russia, is pleased to inform
shareholders that an independent resource estimate of the Maly
Kurumkon / Flangovy ("MKFL") deposit is now complete.
The estimate compiled by SRK Consulting (UK) Ltd ("SRK")
includes all results from drilling undertake prior to and including
2015. The resource estimation methodology has been modified since
that used for the previous estimate to enable the better definition
of metal related to high grade zones. The global nickel equivalent
for the entire Kun-Manie project has been increased from 831,000
tonnes to 958,000 tonnes (based on today's metal pricing for
nickel, copper platinum and palladium). The global nickel metal
resource for the Kun-Manie project has been increased from 650,600
tonnes to 723,000 tonnes. At MKFL, total contained nickel has been
increased by approximately 25% from 294,200 tonnes to a total of
366,600 tonnes. MKFL resources suitable for conversion to reserves
that can be used in a mine plan have been increased by 126% from
126,100 nickel tonnes to 285,200 nickel tonnes. The MKFL high grade
zones contain 73% of the nickel at a cutoff grade of 0.5%. The
newly implemented modelling approach has likewise been applied to
update the deposits of Kubuk and Ikenskoe / Sobelovsky which
contain similar high grades zones.
Highlights
-- Kun-Manie contained nickel equivalent based on combined
nickel, copper, platinum, and palladium using current metal prices
stands at 958,000 tonnes. Cobalt, gold and silver are not
included.
-- The resource estimate compiled by SRK Consulting (UK) LTD
("SRK") has successfully identified the high grade zones in excess
of 0.50% nickel within discrete continuous structures.
-- Global Kun-Manie resource expanded from 120.8 million tonnes
containing 650,600 tonnes of nickel, 178,400 tonnes of copper, 16.9
tonnes of platinum, and 18 tonnes of palladium to 158.4 million
tonnes containing 723,000 tonnes of nickel, 203,100 tonnes of
copper, 20.0 tonnes of platinum and 20.8 tonnes of palladium. The
average nickel grade is 0.46% with copper being 0.13%.
-- MKFL resource expanded from 52.9 million tonnes containing
294,200 nickel tonnes and 85,100 tonnes of copper to 90.6 million
tonnes containing 366,600 tonnes of nickel and 109,900 tonnes of
copper. Platinum increased to 8.5 tonnes with palladium now
standing at 8.9 tonnes. The average nickel grade is 0.40% with
copper being 0.12%.
-- At MKFL, 78% of the contained nickel (285,200 tonnes) is now
JORC classified as Indicated. Previously, the Indicated resource
averages 0.42% nickel containing 126,100 tonnes of nickel. The
infill drill programme of 2015 was successful in conversion of
Inferred resources to Indicated resources. The MKFL Indicated
resource has been more than doubled.
-- Approximately 73% of the nickel (268,700 nickel tonnes at a
zero cutoff grade ("COG")) is contained within high grade
structures. Averaging 0.84% nickel and 0.22% copper, the total
metal within the high grade zones is relatively insensitive to
increasing cutoff grades. An increase in the COG from zero to 0.40%
reduces the nickel inventory by 400 tonnes of nickel in the high
grade structures to a total of 268,300 tonnes. The 0.40% COG was
based on the nickel price of $8,800 per tonne ($4.00 / lb.).
-- It is anticipated that there will be a substantial upgrade to
the projected mine grades associated with the areas to be mined
using underground methods within the MKFL area. Previously
projected underground mining grades determined by the Company were
0.53% nickel, the high grade resource zones now are projected to be
in the order 0.80% nickel. This represents an increase of
approximately 50%.
-- The MKFL potential mining reserve requires an update to
identify the optimal location of the interface between open cast
and underground production.
-- The MKFL modelling approach has been tested on the Kubuk and
Ikenskoe / Sobolevsky deposits. Results are being reviewed by the
Company and will be released on completion of the review.
It was acknowledged by the Company that Resources and Reserves
will be substantially altered with regard to the newly implemented
modelling approach. For this reason, the Company has already placed
a notice on its website that the resources are in the process of
being updated. Also critical is the need to regenerate the mining
reserves for the Kun-Manie project. Upon completion of the review
of Kubuk and Ikenskoe / Sobolevsky, the JORC reserve will be
updated.
The change to a new estimation approach was undertaken to better
establish the grade distribution of the high grade mineralisation.
The high grade zones contain 73% of metal at a grade of 0.84%
nickel and 0.22% copper. These are the zones that will be targeted
for reserve definition and inclusion in a mine plan. The present
unaudited potential reserve is projected to be 0.54% nickel and
0.15% copper. This will permit the Company to generate a more
optimised production schedule potentially moving higher grade ores
forward in the production schedule having a larger and more
beneficial impact on the economic potential of the project.
As the Company now completed resource estimation studies using
two different methods, an extensive review of the history and
development of the resource and reserve statements has been
provided in the Notes to Editors. Readers of this announcement are
encouraged to read the lengthy review to develop a full
understanding of the evolution of the resources and reserves over
the course of the last 15 months.
Robin Young, CEO of Amur Minerals, commented:
"We are extremely pleased to release the Maly Kurumkon /
Flangovy resource update. We attained two major milestones with
last year's drill programme at Maly Kurumkon / Flangovy. We
increased the global nickel equivalent to just short of a million
tonnes while simultaneously converting the majority of the
previously existing Inferred resource into the Indicated resource
category. The conversion added 50% to the project's Measured and
Indicated resource. These resources are also believed to be
suitable for JORC reserve definition. Additionally, continuous high
grade zones have been identified and estimated. Substantially
higher grades than reflected in previous resource models have been
derived and should increase the mined grades within the anticipated
areas targeted for underground production. An optimal production
schedule could well result in moving the underground production
forward in the life of mine schedule. We anticipate that this will
improve the project economics by recovering more metal in earlier
years."
"There is additional upside potential for the increase and
improvement of the global resource at Kun-Manie without any
additional drilling. The implementation of the same resource
modelling procedures could have a substantial impact on the
distribution of metal at Kubuk and Ikenskoe / Sobolevsky. Resources
have been compiled and are under review. These could also
significantly impact the global resource and reserve statements
provided within this announcement. Results will be released as the
review of each deposit is finalised."
Company Nomad and Broker Public Relations
Amur Minerals S.P. Angel Corporate Yellow Jersey
Corp. Finance LLP
Robin Young Ewan Leggat Dominic Barretto
CEO Laura Harrison Harriet Jackson
+44(0)7981126818 +44(0)2034700470 +44(0)7768537739
For additional information, visit the Company's website,
www.amurminerals.com.
Notes to Editors
The information contained in this announcement has been reviewed
and approved by the CEO of Amur, Mr. Robin Young. Mr. Young is a
Geological Engineer (cum laude), a Professional Gerologist licensed
by the Utah Division of Occupational and Professional Licensing,
and is a Qualified Professional Geologist, as defined by the
Toronto and Vancouver Stock Exchanges. An employee of Amur for 12
years, previously Mr. Young was employed as an independent
consultant with Fluor Engineers, Fluor Australia and Western
Services Engineering, Inc. during which time his responsibilities
included the independent compilation of resources and reserves in
accordance with JORC standards. In addition, he was the lead
engineer and participant of numerous studies and projects requiring
the compilation of independent Bankable Studies utilised to finance
small to large scale projects located worldwide. Mr. Young is
responsible for the content of this announcement which includes
information derived by SRK.
For further information, see the Company website at
www.amurminerals.com.
Background
The Company is now using a modified resource estimation
methodology that is significantly different from that historically
utilised. Modelling has been updated to reflect the consideration
that production will be derived from a combination of open cast and
underground methods whereas all previous resource estimates have
been based on open cast production only. For this reason, the
Company has provided a detailed history of the development of the
resources and attendant reserves to provide the reader with a
detailed understanding of the currently reported resource and
reserve statements which are the basis for establishing the
economic potential of a project. It is an extensive and substantial
review and the Company encourages the readers to examine and
consider the important information that has been provided.
Evolution of Resources and Reserves
(MORE TO FOLLOW) Dow Jones Newswires
April 05, 2016 02:00 ET (06:00 GMT)
At acquisition of the exploration licence, available project
information indicated that the Kun-Manie licence area could contain
a series of large, near surface bulk mineable nickel and copper
sulphide deposits ranging in grade from 0.5% to 0.7% nickel. The
information also indicated that the mineralisation was suitable for
open cast mining. This observation was based on existing limited
field exploration results, widely dispersed surface trenches and
limited drilling within two potential deposits identified as
Vodorazdelny and Ikenskoe.
Due to the project's remote location, it was understood that a
substantial resource would have to be proven to cover the
anticipated capital costs of a 300 to 400 kilometre long access
road and the construction of a similar length power line as well as
the capital cost expenditures associated with the mining and
processing of a large scale bulk mineable resource on site. If
successful, the production plan would consist of open cast mining
of the mineralisation and the generation of a concentrate for
onward shipping and contract smelting.
With this information, the Company focused its drilling on
accessible areas of mineralisation that could be readily mined by
open cast production methods. A total of 60 months of drilling has
been completed and five deposits containing open cast recoverable
ores have been identified within five deposits located within the
confines of the production licence area. Open cast mineralisation
has been drill identified at all deposits. Various maiden and
resource updates have been compiled over the exploration project
life. Procedures utilised by the independent consultant SRK were
typical estimation approaches suited for the modelling of the open
cast mineable resources and the subsequent determination of
reserves. Mineralised structures based on a 0.2% cutoff grade were
compiled within each deposit. These mineral structures included
external dilution and internal waste that could not be selectively
removed during open cast mining. Therefore, resource statements
were reported using a 0.0% Ni cutoff grade to account for internal
and external waste. Reserves reported based on the resource models
were therefore appropriate for the open cast mining system.
In early 2014, external and internal studies designed to
determine the current JORC compatible and potential expansion of
the open cast reserve by the inclusion of Inferred resources were
compiled. At the conclusion of the evaluations, a potential open
cast reserve and production schedule was developed for both a
contract smelting scenario and an owner operated smelter refinery
complex.
During the open cast production evaluation and related
scheduling effort, substantial portions of the higher grade open
cast resource models were identified as being potentially
recoverable by underground methods where greater profits per tonne
of ore could be generated than would be attained from the open cast
production environment. Using the existing open cast based resource
models, a combined open cast and underground production schedule
was compiled which generated an improved revenue curve over the
anticipated life of the mine. It was noted that the grades within
the existing open cast based block models were understating the
grade of the underground material and potentially overstating the
tonnage of underground ore. The primary reason for this conclusion
within the resource was related to the inclusion of internal waste
and external dilution reflecting the open cast mining method
envisaged that would be left behind in an underground mining
scenario. It was not possible to selectively exclude and account
for this impact, a reserve was generated that indicated a combined
open cast and underground mine production approach was suited for
mining of the Kun-Manie resources.
The Company concluded that future resource modelling efforts
would require enhancement to reflect the newly identified combined
mining production programme. As the Company was in the process of
infill and step out drilling of the MKFL deposit, it was determined
the 2016 resource update would be the first resource model
undertaken using the new resource estimation approach. Once the
modified resource estimate approach was developed, it would be
determined if the additional deposits of Kubuk and Ikenskoe /
Sobolevsky should also be updated using the new procedures even
though there was no additional drilling available to either
deposit.
In Q1 of 2016, the Company in association with SRK undertook a
review of the global MKFL drill results including the 2015 infill
and step out drilling. It was determined that the resource
estimation procedure could be modified to generate a model
reflecting both open cast and underground production methods. The
prime difference between the historical estimation procedures and
that used to compile the new MKFL resource estimate was the
identification and modelling of two mineral domains instead of the
single domain approach used in the historical modelling efforts.
High Grade (more suited for underground considerations) and Low
Grade (more suited for open cast considerations) domains were
generated.
Results generated during the Q1 2016 MKFL resource update
determined the modified approach was successful in discretely
characterising the resource allowing for a more representative
determination of resources to be mined in a combined production
environment. Updates of the Kubuk and Ikenskoe / Sobelevsky models
were immediately initiated to provide a common estimation technique
for these deposits.
The newly implemented modelling approach has significantly and
positively impacted the resource statement at MKFL. The model
provides a more robust reflection of the distribution of metal and
tonnage. At this time, MKFL is the only resource model that has
been fully updated and vetted by SRK and the Company using the new
two mineral domain approach. The model is more robust as it allows
for the development of a production mine plan better suited to
evaluation of the underground reserve potential.
Updated resources for Ikenskoe / Sobolevsky and Kubuk have been
received and are currently under review by the Company. Results
will be released as the review of each deposit is completed.
Vodorazdelny has not been remodelled as it remains an open cast
production target and the resource would not significantly change
by implementation of this approach. Gorny has been excluded as it
is too low in grade and will therefore come late in the mine life
and presently represents an open cast target.
Kun-Manie Resource Modelling Procedures (Implemented Through Q1
2015)
Resource estimates for the five deposits at Kun-Manie
historically have been compiled on the basis that mine production
would be generated by open cast mining. The original SRK modelling
approach was created based on the available information and drill
results developed during the early stages of exploration at
Kun-Manie when deeper ores and substantially continuous high grade
lenses had not yet been identified. Mineralised limits were
established using an open cast compatible approach wherein
mineralised shells were created using a single cutoff grade of 0.2%
nickel. Within these shells, internal waste and external dilution
that could not be selectively removed during open cast mining were
included to allow for the reporting of fully diluted open cast
reserve statements. The grades within the mineralised shells were
estimated using Ordinary Kriging. This initial modelling process
has been utilised since the drilling of the first hole at Kun-Manie
and through all resource estimates and updates. As of April 2015,
all deposits were originally estimated using the open cast
considerations. A summary of the JORC resource as of April 2015 is
summarized below.
Global Kun-Manie JORC Resource Estimate - All Deposits Open Cast
Targets
Zero Cutoff Grade (Internal Waste and Dilution Included)
Orebody Tonnage Ni Ni Cu Cu Pt Pt Pd Pd
(Mt) (%) (t) (%) (t) (g/t) (kg) (g/t) (kg)
----------------- -------- ----- -------- ----- -------- ------ ------- ------ -------
Total Measured 15.7 0.52 81,800 0.13 21,100 0.2 2,900 0.2 3,200
----------------- -------- ----- -------- ----- -------- ------ ------- ------ -------
Total Indicated 37.8 0.56 210,500 0.15 57,000 0.1 4,560 0.1 5,300
----------------- -------- ----- -------- ----- -------- ------ ------- ------ -------
Sub-total 53.5 0.55 292,300 0.15 78,100 0.1 7,460 0.2 8,500
----------------- -------- ----- -------- ----- -------- ------ ------- ------ -------
Total Inferred 67.3 0.53 358,300 0.15 100,300 0.1 9,440 0.1 9,500
----------------- -------- ----- -------- ----- -------- ------ ------- ------ -------
Grand Total 120.8 0.54 650,600 0.15 178,400 0.1 16,900 0.1 18,000
----------------- -------- ----- -------- ----- -------- ------ ------- ------ -------
Numbers may not be precise due to rounding.
Q1 2015 JORC Open Cast Reserve and Upside Potential
Assessment
During Q1 2015, Runge, Pincock, Minarco ("RPM") was engaged to
generate two updated reserve estimates for each of the five
deposits at Kun-Manie. Using the SRK resource models, RPM generated
an initial open cast optimisation design based on resources of the
Measured and Indicated classes to define reserves in accordance to
JORC reporting criteria. The Measured and Indicated resources
falling within the final open cast limits were classified as Proved
and Probable reserves, respectively.
(MORE TO FOLLOW) Dow Jones Newswires
April 05, 2016 02:00 ET (06:00 GMT)
The second design utilised all resource classes including
Inferred resources. By including the Inferred resource category,
enlarged open cast designs were generated which identified areas of
potential reserve that required further infill drilling to allow
for the designation of reserves in accordance with JORC standards.
The Company examined the expanded pit areas to prioritise infill
drilling efforts to convert Inferred to Indicated resources.
Both designs were based on open cast mining of ore and its being
processed at an onsite plant generating a single concentrate for
contract smelting. The parameters included a metallurgical recovery
of 80% nickel equivalent at the mine site and the operating costs
presented below. The nickel price of $16,500 per tonne ($7.50 per
lb.) was used.
Mining Cost Per Tonne $1.58
--------------------------- -------
Processing Cost Per
Ore Tonne $10.38
--------------------------- -------
Tailings Handling Cost
Per Ore Tonne $0.14
--------------------------- -------
Concentrate Transport
To Rail Per Ore Tonne $1.72
--------------------------- -------
General & Administrative
Per Ore Tonne $2.15
--------------------------- -------
Rail Transport to Smelter
Per Ore Tonne $12.09
--------------------------- -------
Smelter Penalties Per
Ore Tonne $3.80
--------------------------- -------
The RPM design for the open cast reserve statement based on
Measured and Indicated resources is presented below.
Q1 2015 Non-JORC Open Cast Proved and Probable Reserves by
Deposit
Fully Diluted Grades
Deposit Waste Ore Strip Ni Cu
(m (m Ratio (%) (%)
T) T)
----------------------- ------ ----- ------- ----- -----
Ikenskoe / Sobolevsky 44.8 12.7 3.5 0.53 0.13
----------------------- ------ ----- ------- ----- -----
Maly Kurumkon
/ Flangovy 85.3 21.5 4.0 0.55 0.15
----------------------- ------ ----- ------- ----- -----
Vodorazdelny 4.1 5.0 0.8 0.67 0.18
----------------------- ------ ----- ------- ----- -----
Kubuk None None None None None
----------------------- ------ ----- ------- ----- -----
Gorny None None None None None
----------------------- ------ ----- ------- ----- -----
Total 134.2 39.2 3.4 0.56 0.15
----------------------- ------ ----- ------- ----- -----
Numbers may not be precise due to rounding.
The inclusion of Inferred resources in the definition of open
cast limits established that a substantial portion of the Inferred
resource could be mined should infill drilling confirm the
continuity of the mineralisation and contained grades in areas of
more widely spaced drilling. The upside potential reserve was
substantially larger and resulted in the extraction of an
additional 85% tonnes of nickel and copper above that of the JORC
compliant estimates of reserves. The upside potential open cast
reserve by deposit is summarised below.
Q1 2015 Non-JORC Open Cast Potential Reserve by Deposit
Inferred Resources Included - Fully Diluted Grades
Deposit Waste Ore Strip Ni Cu
(m (m Ratio (%) (%)
T) T)
----------------------- ------ ----- ------- ----- -----
Ikenskoe / Sobolevsky 52.8 17.1 3.1 0.61 0.15
----------------------- ------ ----- ------- ----- -----
Maly Kurumkon
/ Flangovy 258.2 37.9 6.8 0.58 0.16
----------------------- ------ ----- ------- ----- -----
Vodorazdelny 3.3 4.4 0.8 0.71 0.18
----------------------- ------ ----- ------- ----- -----
Kubuk 25.1 7.3 3.5 0.62 0.16
----------------------- ------ ----- ------- ----- -----
Gorny NE NE NE NE NE
----------------------- ------ ----- ------- ----- -----
Total 339.4 66.8 5.1 0.60 0.16
----------------------- ------ ----- ------- ----- -----
Numbers may not be precise due to rounding.
NE is Not Evaluated due to low grade of ores.
Based on the upside potential and assuming a 15 year production
period, the analysis indicated that an average open cast production
rate of 4.5 million tonnes of ore per year could be sustained with
successful infill drilling of existing Inferred resources located
within the upside potential open cast designs. This was greater
than the 4.0 million tonne per year production rate defined in the
2007 SRK Pre-Feasibility Study ("PFS"). The average fully diluted
mining grade for nickel was projected to be 0.60% and for copper it
would be 0.16%. A total of 400,800 tonnes of nickel and 106,900
tonnes of copper were defined as present within the upside
potential open cast designs at four of the Company's identified
deposits. Gorny was excluded due to its lower grade.
The upside potential designs also permitted the Company to
identify which portions of the Inferred resource required infill
drilling. From within three deposits (Ikenskoe / Sobolevsky, Kubuk
and MKFL), 28.2 million tonnes of Inferred resource required infill
drilling. The largest Inferred target was defined to be located at
MKFL. For this reason, the Company identified MKFL as the 2015 area
for drilling.
RPM also noted that underground production looked to be a viable
alternative in areas of high stripping ratios.
Owner Operated Smelter Impact on Open Cast Reserve Potential
In early Q2 2015, the Company held discussions with Outotec, a
smelting specialist, to determine the potential of the Company
constructing and operating its own smelter and refinery located
along the Baikal Amur rail line. Based on the metallurgical results
compiled by Sibsvetmetniproyect and SGS Minerals, it was determined
that a smelter refinery complex could successfully generate a
smeltable concentrate. This was further confirmed by a confidential
contract smelter that was interested in smelting of the Kun-Manie
concentrate.
This potential reserve option was investigated because of the
high cost to the Company related to contract smelting: refining
fees, smelting penalties and the cost of rail transport to a
contract smelter refiner. In addition, the Company was only going
to be remunerated for 70% of the delivered nickel and 50% of the
delivered copper. All other metals were excluded from the payable
value. By constructing an owner operated smelter refinery complex,
direct operating costs were increased by $11.25 per ore tonne.
Simultaneously, the projected operating cost related to contract
smelting was eliminated. This resulted in a net reduction of cost
per tonne of ore by the removal of rail transport estimated to be
$12.09 per tonne and the removal of $3.80 per ore tonne due to
penalty fees associated with the contract smelter. It also allowed
the Company to capture lost revenues associated with the smelter
fees of 30% for nickel, 50% for copper and 100% fee for cobalt,
platinum and palladium. Minor gold and silver could also be
recovered.
The Company examined the existing upside production results to
determine the impact on the potential reserve by changeover to an
owner operated smelter refinery complex. It was determined the
changeover would further increase the open cast potential reserve,
as previously marginal ore could now be processed economically. The
indicated expansion of the open cast potential reserve was
determined for the four higher grade deposits. Gorny was excluded
due to its lower grade.
Q2 2015 Non-JORC Open Cast Mining
Owner Operated Smelter Potential Reserves by Deposit
Inferred Resources Included - Fully Diluted Grades
Deposit Waste Ore Strip Ni Cu
(m (m Ratio (%) (%)
T) T)
----------------------- ------ ----- ------- ----- -----
Ikenskoe / Sobolevsky 82.0 21.3 3.9 0.57 0.14
----------------------- ------ ----- ------- ----- -----
Maly Kurumkon
/ Flangovy 340.7 49.6 6.9 0.54 0.16
----------------------- ------ ----- ------- ----- -----
Vodorazdelny 4.1 5.0 0.8 0.67 0.18
----------------------- ------ ----- ------- ----- -----
Kubuk 64.3 9.4 6.9 0.62 0.16
----------------------- ------ ----- ------- ----- -----
Gorny NE NE NE NE NE
----------------------- ------ ----- ------- ----- -----
Total 491.1 85.3 5.8 0.56 0.16
----------------------- ------ ----- ------- ----- -----
Numbers may not be precise due to rounding.NE is Not Evaluated
due to low grade of ores.
The potential reserve (including the Inferred resource) increase
represents a significant upgrade over that of the toll smelted
reserve. The potential open cast reserve was increased to 85.3
million tonnes which represents a production rate of 5.7 million
tonnes of ore per year over a 15 year mine life. The total mined
nickel is 480,900 tonnes (74% of the total defined resource) with
copper being 133,200 tonnes (75% of the total resource). It was
also noted that an additional 151,700 tonnes of waste were mined to
recover the 18.5 million in ore tonnes providing an incremental
stripping ratio of 8.2 waste tonnes per ore tonne.
Key conclusions were derived at this stage. The Company should
consider building and operating its own smelter refinery complex,
with the additional plant and infrastructure becoming an integral
part of the operation for Kun-Manie. And the existing drilled
resource could support a 6.0 million tonne per year ore production
rate.
(MORE TO FOLLOW) Dow Jones Newswires
April 05, 2016 02:00 ET (06:00 GMT)
End of H1 2015 Operational Blueprint
On 29 June 2015, the Company announced that it had developed an
Operation Blueprint based on a series of internal trade off studies
designed to optimise the proposed Kun-Manie operation. These
included the compilation of a mine production scenario using a
combination of open cast and underground production, newly
generated operating costs reflecting the devaluation of the Ruble
and the decision to construct and operate its own smelter refinery
complex.
Based on an EBITDA analyses, the Company identified the limits
of open cast mining for each of the four deposits as well as the
potential sources for underground production. Two EBITDA values
were calculated for each block. The greater value identified the
mining method of choice. The open cast limit was determined when
the open pit EBITDA value was exceeded by the underground value.
The table below presents the potential distribution of production
by open cast and underground production scenarios should infill
drilling of the Inferred resources be successful.
Q2 2015 Non-JORC Open Cast Owner Operated Smelter Potential
Reserves
Inferred Resources Included - Fully Diluted Grades - Q2
Operating Cost Adjustment
Production Total Total Total Strip Ni Cu Co Pt Pd
All Resource Tonnes Ore Waste Ratio (%) (%) (%) (g/t) (g/t)
Classes (Mt) (Mt) (Mt)
-------------------- -------- ------ ------- ------- ----- ----- ----- ------- -------
Open Pit /
Underground 90.0 130.5 0.56 0.15 0.01 0.13 0.15
-------------------- -------- ------ ------- ------- ----- ----- ----- ------- -------
Open Pit Component 175.5 45.0 130.5 2.9 0.59 0.15 0.01 0.13 0.16
-------------------- -------- ------ ------- ------- ----- ----- ----- ------- -------
Underground
Component 45.0 0.54 0.15 0.01 0.13 0.14
-------------------- -------- ------ ------- ------- ----- ----- ----- ------- -------
Numbers may not be precise due to rounding.
A total 90 million tonnes of ore potential reserve to be mined
over a 15-year life was identified from the April 2015 resource
inventory. The total life of mine metal to be delivered to the
proposed smelter refinery complex is projected to be 411,600 tonnes
of nickel, 124,900 tonnes of copper, 6,500 tonnes of cobalt, 8.1
tonnes of platinum and 9.2 tonnes of palladium. Minor gold and
silver may also be recovered at the smelter. The metal will be
contained within 6.3 million dry tonnes of concentrate.
Confirmatory drilling of the Inferred portion considered to be
potentially mineable must be infill drilled.
It was also noted that the development to access underground
production could be done within ore, further reducing mining waste
related to underground development.
Q1 2016 MKFL Drill Target Selection, Analysis and Resource
Procedure Modifications
The 2015 drill programme targeted the Flangovy area of the MKFL
deposit, was selected to allow the Company to accomplish three
objectives. It contained a large 27 million tonne Inferred resource
suitable for conversion to Indicated thereby adding to a JORC
compatible reserve. The wide spaced drilling within Inferred block
also contained a substantial amount of high grade ore indicated to
be recoverable by open cast mining but having a high waste to ore
stripping ratio area, thereby representing a potentially large
underground mining area. It also included step out drilling to
establish the potential for increasing the resource.
The final analytical results from Alex Stewart Laboratories
("ASL") were delivered in January 2016, vetted by staff and
subsequently provided to SRK for resource modelling. The 2015 drill
information was combined with the existing data base and
preliminary 3D analyses of the results were examined. Discussions
were held between the Company and SRK wherein it was established
that resource modelling required modification to reflect the
differences between the mineralisation types and production
methods.
Resource modelling was upgraded to account for two specific
mineral domains reflecting the use of two mine production methods.
The first domain was related to underground mineable grades
(referred to as the High Grade domain) with the second being
typical of open cast methods (referred to as a Low Grade
domain).
The High Grade domain was modeled first and was based on a
cutoff grade of 0.50% nickel. The domain contained some areas of
lower grade to maintain geological continuity and which would not
be able to be selectively removed during mining. The subsequently
modelled Low Grade domain contained the remaining mineralisation
typically in excess of 0.10% Ni as well as intercalated waste that
cannot be selectively remove during open cast production. The Low
Grade domain captures the mineralisation that is below the 0.50%
nickel cutoff grade for the High Grade domain typically lies
adjacent to and often surrounds the High Grade shells.
The Q1 2016 Maly Kurumkon - Flangovy Resource Estimate
The 2015 drill programme significantly upgraded the MKFL
resource dated 30 July 2013. The 2013 MKFL resource consisted of
52.9 million tonnes of ore representing 43% of the global resource
defined at Kun-Manie. Of the 52.9 million tonnes, 31.1 million
tonnes were determined to be Inferred resource category with the
remainder classified as Indicated resource. The MKFL resource prior
to the update is summarised below.
2013 Resource Maly Kurumkon / Flangovy Resource
Zero Cutoff Grade (Includes Internal Waste and
Dilution)
Open Cast Considerations Only
----------------------------------------------------------------------------------------
Resource Tonnes Ni Ni Cu Cu Pt Pt Pd Pd
Category (million) (%) Tonnes (%) Tonnes g/t Kg g/t Kg
----------- ----------- ----- -------- ----- -------- ----- ------ ----- ------
Indicated 21.8 0.58 126,100 0.16 34,900 0.1 2,400 0.1 3,000
----------- ----------- ----- -------- ----- -------- ----- ------ ----- ------
Inferred 31.1 0.54 168,100 0.16 50,200 0.1 3,000 0.1 3,100
----------- ----------- ----- -------- ----- -------- ----- ------ ----- ------
Total 52.9 0.56 294,200 0.16 85,100 0.1 5,400 0.1 6,100
----------- ----------- ----- -------- ----- -------- ----- ------ ----- ------
Numbers may not be precise due to rounding.
The newly acquired drill information in combination with the
newly introduced domain modelling method has positively and
substantially impacted the MKFL resource statement. Based on the
SRK resource model, the global mineralised tonnage has increased by
71% (37.7 million tonnes) whilst the nickel content has been
increased by 25% (72,400 tonnes) with copper also increasing by 29%
(24,800 tonnes). The infill drilling of the Inferred resource area
has increased the Indicated resource by 46 million ore tonnes which
are substantially larger than the anticipated 27 million tonnes
targeted for conversion. The 2016 resource estimate is presented
below and has been segregated into the resource contained within
the Low and High Grade shells.
March 2016 Maly Kurumkon / Flangovy JORC Resource
Zero Cutoff Grade (Includes Internal Waste)
High Grade and Low Grade Mineral Domains
Resource Tonnes Ni Ni Cu Cu Pt Pt Pd Pd
Category (millions) (%) Tonnes (%) Tonnes g/t Kg g/t Kg
Indicated
High Grade 24.9 0.86 214,300 0.23 57,200 0.1 3,700 0.1 3,900
Indicated
Low Grade 43.5 0.16 70,800 0.06 27,000 0.1 2,900 0.1 3,000
Total Indicated 68.4 0.42 285,200 0.12 84,200 0.1 6,600 0.1 6,900
Inferred
High Grade 7.1 0.76 54,400 0.20 14,100 0.1 1,000 0.1 1,000
Inferred
Low Grade 15.0 0.18 27,000 0.08 11,500 0.1 900 0.1 1,000
Total Inferred 22.2 0.37 81,400 0.12 25,600 0.1 2,000 0.1 2,000
Total High
Grade 32.0 0.84 268,700 0.22 71,300 0.1 4,700 0.1 4,900
Total Low
Grade 58.5 0.17 97,800 0.07 38,500 0.1 3,800 0.1 4,000
Total 90.6 0.40 366,600 0.12 109,800 0.1 8,500 0.1 8,900
Numbers may not be precise due to rounding.
With regard to the High Grade domain, a total of 32.0 million
tonnes of ore are present and average 0.84% nickel with copper
being 0.22%. The High Grade domain contains 73% of the total nickel
and 65% of the total copper. As for the Low Grade shell, the
resource grade is reduced because much of the high grade data used
to previously calculate the open cast grade is now restricted to
the High Grade domain.
This newly compiled resource estimate is more robust for the
development of reserves in the combined mine production scenario
where both open cast and underground methods are planned for
implementation. By having a segregated High and Low Grade Domain
model, it will enhance the definition of reserves and potentially
allow for the development of an optimised production schedule where
higher grades can be scheduled earlier in the production cycle.
Impact of Cutoff Grade
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The cutoff grade defines the amount of ore that is recoverable
at a profit. The profit varies with the long term metal price that
is utilised. Selection of the correct metal price anticipated at
anticipated production start up in four years hence is challenging
at best. For this reason, a series of cutoff grades were examined
at three nickel metals prices. These were the current price of
approximately $8,800 per tonne ($4.00 / lb.), the Company utilised
price since 2007 of $16,500 per tonne ($7.50 per lb.) and the long
term independent price projected by Royal Bank of Canada of $20,900
per tonne ($9.50). The resultant cutoff grades for the open cast
recoverable portion of the resource range from 0.12% nickel to
0.29% nickel. The underground associated cutoff grade ranges from
0.17% nickel to 0.39% nickel. Using this widely varying range of
cutoff grades, the Company identified the portion of the MKFL
nickel resource available for conversion to reserves. This includes
the Inferred resource as well and is summarised in the table
below.
Proportion of the April 2016 MKFL Resource Available for
Conversion to Reserve
Open Cast and Underground Production
Inferred Resource Included
Tonnes Ni Ni
Resource at Increasing COG (mt) (%) Tonnes
MKFL April 2015 Resource 52.9 0.56 294,200
MKFL April 2015 Potential Owner
Operated Smelter Reserve 45.5 0.56 252,800
MKFL April 2016 (Zero Nickel
Cutoff Grade) 90.6 0.40 366,600
MKFL April 2016 (0.1% Nickel
Cutoff Grade) 74.5 0.48 355,400
MKFL April 2016 (0.2% Nickel
Cutoff Grade) 50.2 0.64 318,600
MKFL April 2016 (0.3% Nickel
Cutoff Grade) 36.3 0.79 285,500
MKFL April 2016 (0.4% Nickel
Cutoff Grade) 33.0 0.83 274,700
% % %
Percent Change from April 2016
Zero Nickel COG Resource Tonnes Ni Ni Tonnes
Percent Change of April 2016
Resource Above 0.1% Ni COG -16% 120% -3%
Percent Change of April 2016
Resource Above 0.2% Ni COG -40% 160% -13%
Percent Change of April 2016
Resource Above 0.3% Ni COG -54% 198% -22%
Percent Change of April 2016
Resource Above 0.4% Ni COG -58% 208% -25%
The Company cautions the reader that the above information is
indicative only. Use of a single cutoff grade is not appropriate as
the open cast cutoff grades will differ from that of an underground
operation. This is intended to illustrate the impact of the new
resource modelling approach and the sensitivities of the resource
as a whole to changing metal price. However, it is possible to note
that a substantial portion of the metal contained in the total
resource has the potential to be converted to reserves (this
assumes successful infill drilling of the Inferred resource).
At a cutoff grade of 0.2% nickel, 55% of the April 2016 resource
tonnes are above cutoff grade. A total of 50.2 million tonnes
contain 318,600 tonnes of nickel at a grade of 0.64% nickel. This
is greater than the 294,200 tonne nickel resource of April 2015 at
MKFL. The 2015 global resource estimate at a zero cutoff defined
the resource to consist of 52.9 million tonnes averaging 0.56%
nickel. The new modelling approach indicates a higher average grade
by approximately 14%. This is comparable to a nickel price of
$16,500 per nickel tonne ($7.50 per lb.) which has been the price
utilised by the Company since 2007.
Using the approximate current nickel price of $8,800 per tonne
($4.00 per lb.) giving an approximate 0.30% cutoff grade, the
available resource decreases to approximately 35 million tonnes of
ore containing about 280,000 tonnes of nickel. The average grade of
this material is projected to be a minimum of 0.79% nickel which is
nearly double the average grade of the newly updated MKFL resource
which is 0.40% nickel (the zero grade cutoff grade).
The analysis provides an overview of the potential variation in
the available resource to reserve conversion. It does not reflect
the fact that there will be two distinct COG's independently
related to the open cast production and that of underground
production.
Looking Forward
The development of the use of a dual domain modelling of the
resource at MKFL has provided a more robust model in defined
tonnages and grades suitable for comparison in the development of a
mine production schedule. For this reason, the Company has and
plans to undertake the following:
-- Resource models have been regenerated at the deposits of
Kubuk and Ikenskoe / Sobolevsky and provided to the Company for
review, comment and finalisation. It is anticipated that
substantial modifications in the resources of each deposit will be
reported. As the results of each deposit are finalised, the results
will be released.
-- Upon finalisation of the resource update, a Request for
Proposal ("RFP") to compile reserve statements and an optimised
production schedule will be issued. The work will include the
generation of an updated reserve statement fully compliant with
JORC standards. In addition, the upside potential reserve will be
examined wherein Inferred resources are included in a potential
mine plan to facilitate future drill programmes.
-- Determination of metallurgical grade recovery curves at
Flangovy and Kubuk are being defined through metallurgical test
work by SGS Minerals. The final results are near completion and
will be utilised to the definition of reserve.
JORC Resource Estimate - April 2016
(zero cutoff grade)
Orebody Tonnage Ni Ni Cu Cu Pt Pt Pd Pd
Mt % t % t g/t kg g/t kg
=========== ======== ===== ======== ===== ======== ==== ======= ===== =======
Kubuk (Under Update)
Measured 0 0 0 0 0 0 0 0 0
Indicated 3.5 0.68 23,400 0.18 6,100 0.1 460 0.1 400
Subtotal 3.5 0.68 23,400 0.18 6,100 0.1 460 0.1 400
Inferred 17.1 0.56 95,500 0.16 26,800 0.1 2,540 0.1 2,000
Total 20.6 0.58 118,900 0.16 32,900 0.1 3,000 0.1 2,400
Gorny (No Update Planned)
Measured 0 0 0 0 0 0 0 0 0
Indicated 0 0 0 0 0 0 0 0 0
Subtotal 0 0 0 0 0 0 0 0 0
Inferred 7.6 0.31 23,900 0.09 7,000 0.2 1,600 0.2 1,900
Total 7.6 0.31 23,900 0.09 7,000 0.2 1,600 0.2 1,900
Ikenskoe / Sobolevsky (Under Update)
Measured 14.9 0.52 77,100 0.13 19,700 0.2 2,700 0.2 3,000
Indicated 7.7 0.39 29,800 0.1 7,800 0.1 1,100 0.2 1,300
Subtotal 22.6 0.47 106,900 0.12 27,500 0.2 3,800 0.2 4,300
Inferred 11.5 0.62 70,800 0.14 16,300 0.2 2,300 0.2 2,500
Total 34.1 0.52 177,700 0.13 43,800 0.2 6,100 0.2 6,800
Vodorazdelny
Measured 0.8 0.57 4,700 0.17 1,400 0.3 200 0.3 200
Indicated 4.8 0.66 31,200 0.17 8,200 0.1 600 0.1 600
Subtotal 5.6 0.64 35,900 0.17 9,600 0.1 800 0.1 800
Inferred 0 0 0 0 0 0 0 0 0
Total 5.6 0.64 35,900 0.17 9,600 0.1 800 0.14 800
Maly Krumkon / Flangovy
Measured 0 0 0 0 0 0 0 0 0
Indicated 68.4 0.42 285,200 0.12 84,200 0.1 6,600 0.1 6,900
Subtotal 68.4 0.42 285,200 0.12 84,200 0.1 6,600 0.1 6,900
Inferred 22.2 0.37 81,400 0.12 25,600 0.1 1,900 0.1 2,000
Total 90.6 0.40 366,600 0.12 109,800 0.1 8,500 0.1 8,900
Global Total Resource
Measured 15.7 0.52 81,800 0.13 21,100 0.2 2,900 0.2 3,200
Indicated 84.4 0.44 369,600 0.13 106,300 0.1 8,800 0.1 9,200
Sub-total 100.1 0.45 451,400 0.13 127,400 0.1 11,600 0.1 12,400
Inferred 58.4 0.47 271,600 0.13 75,700 0.1 8,300 0.1 8,400
Grand
Total 158.4 0.46 723,000 0.13 203,100 0.1 20,000 0.1 20,800
----------- -------- ----- -------- ----- -------- ---- ------- ----- -------
Numbers may not be precise due to rounding.
Glossary
DEFINITIONS OF EXPLORATION RESULTS, RESOURCES & RESERVES
EXTRACTED FROM THE JORC CODE: (December 2012) (www.jorc.org)
A 'Mineral Resource' is a concentration or occurrence of
material of intrinsic economic interest in or on the Earth's crust
in such form, quality and quantity that there are reasonable
prospects for eventual economic extraction. The location, quantity,
grade, geological characteristics and continuity of a Mineral
Resource are known, estimated or interpreted from specific
geological evidence and knowledge. Mineral Resources are
sub-divided, in order of increasing geological confidence, into
Inferred, Indicated and Measured categories.
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An 'Inferred Mineral Resource' is that part of a Mineral
Resource for which tonnage, grade and mineral content can be
estimated with a low level of confidence. It is inferred from
geological evidence and assumed but not verified geological and/or
grade continuity. It is based on information gathered through
appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes which may be limited or of uncertain
quality and reliability.
An 'Indicated Mineral Resource' is that part of a Mineral
Resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated with a
reasonable level of confidence. It is based on exploration,
sampling and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits,
workings and drill holes. The locations are too widely or
inappropriately spaced to confirm geological and/or grade
continuity but are spaced closely enough for continuity to be
assumed.
A 'Measured Mineral Resource' is that part of a Mineral Resource
for which tonnage, densities, shape, physical characteristics,
grade and mineral content can be estimated with a high level of
confidence. It is based on detailed and reliable exploration,
sampling and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits,
workings and drill holes. The locations are spaced closely enough
to confirm geological and/or grade continuity.
An 'Ore Reserve' is the economically mineable part of a Measured
and/or Indicated Mineral Resource. It includes diluting materials
and allowances for losses which may occur when the material is
mined. Appropriate assessments and studies have been carried out,
and include consideration of and modification by realistically
assumed mining, metallurgical, economic, marketing, legal,
environmental, social and governmental factors. These assessments
demonstrate at the time of reporting that extraction could
reasonably be justified. Ore Reserves are sub-divided in order of
increasing confidence into Probable Ore Reserves and Proved Ore
Reserves.
This information is provided by RNS
The company news service from the London Stock Exchange
END
DRLUGUCACUPQPUC
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April 05, 2016 02:00 ET (06:00 GMT)
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