Amur Minerals Corporation Owner Operated Smelter EBITDA Analysis (3462K)
April 16 2015 - 2:00AM
UK Regulatory
TIDMAMC
RNS Number : 3462K
Amur Minerals Corporation
16 April 2015
16 April 2015
AMUR MINERALS CORPORATION
(AIM: AMC)
Owner Operated Smelter EBITDA Analysis
Capital Cost Assessment Underway
Amur Minerals Corporation ("Amur" or the "Company"), the
exploration and development company focused on base metal projects
located in the Far East of Russia, reports it is has completed the
first of two internal assessments for constructing an Owner
Operated Smelter ("OOS") in lieu of contract smelting of the
Kun-Manie nickel copper concentrate by a Toll Smelter ("TS"). Based
on a 15 year mine life producing six million tonnes of nickel
copper sulphide ore per year, the composition of the sulphide
concentrate and its variability over the proposed mine life has
been defined. Definition of the composition of the concentrate has
allowed the Company to determine specific operating costs related
to an OOS option. Based on the projected costs, the EBITDA
("Earnings Before Interest, Tax, Depreciation and Amortisation")
per ore tonne has been determined for four alternatives available
for the treatment of the concentrate.
In addition to the 2007 base case TS option, the Company has
determined that three potential product streams can be derived from
an OOS option. The three products consist of the production of a
Low Grade Matte ("LGM"), a High Grade Matte ("HGM") or Final Metal
Cathodes / Precipitate ("Cathode"). The EBITDA for the OSS options
are substantially higher than that of the TS option. The TS life of
mine EBITDA is projected to be US$ 1.17 billion whilst the highest
OSS (Cathode) life of mine EBITDA is projected to be US$ 3.48
billion. Having defined the associated operating costs for each of
the three OSS product options, the final step has been initiated to
identify which of the three final product streams provides the best
indicated Net Present Value for Kun-Manie. A nickel price of US$
7.50 per pound (US$ 16,530 per tonne) was used in the assessment.
Highlights follow:
-- EBITDA per ore tonne for Toll Smelting is projected to be US$ 12.96 per ore tonne.
-- The Owner Operated Low Grade Matte EBITDA estimated value is US$ 29.38 per ore tonne.
-- The Owner Operated High Grade Matte EBITDA projected value is US$ 31.40 per ore tonne.
-- The Owner Operated Cathode / Precipitate Product EBITDA value
per ore tonne is estimated to be approximately US$ 38.70.
-- The capital cost to generate the three product stream options for the OSS alternative varies substantially. The Low Grade Matte option would be the lowest capital cost whilst that of Cathode production is substantially higher. The capital cost estimates are being finalised to establish the preferred product option for the Kun-Manie operation.
The evaluation of the OOS is the final step in establishing the
base case design for Kun-Manie and allowing for release of an
economic assessment of the project. The previous design basis from
2007 was to smelt the concentrate using a toll smelting option
wherein numerous penalties and payments adversely impact the
EBITDA. The financially burdensome aspect of a TS option is
attributable to the lost revenue as toll smelting does not pay for
all recovered metals. For Kun-Manie, the TS revenue penalties
include losses approaching 30% of the recovered nickel (123,500
life of mine tonnes), 50% of the recovered copper (62,500 life of
mine tonnes) and 100% of any other metals including cobalt (6,500
life of mine tonnes), platinum (253,000 life of mine ounces) and
palladium (288,000 life of mine ounces). An additional substantial
cost to the Company is the high cost of rail transport and
magnesium oxide penalties to the toll smelter. The combined cost
for these two centres exceeds US$ 1.4 billion over the projected 15
year mine life.
The determination of the EBITDA is the first phase of the
evaluation of the OOS option. The composition of the concentrate
and its variability over the proposed mine life has been
established. This included determination of the economic mineral
content as well as that of the slag (waste) forming elements both
of which impact the operating costs and the final metal content of
the saleable products. Three product streams available to an AMC
OOS and are summarized below:
-- Low Grade Matte: Using an Electric Arc Furnace ("EAF") the
concentrate would be smelted generating a LGM that can be sold
onward for further smelting and refining. In this configuration,
the matte would contain approximately 25% combined nickel, copper
and cobalt.
-- High Grade Matte: To generate a HGM, an oxygen plant, a
converting furnace and an off-gas converter would be added to the
EAF. The resultant product derived from the LGM would be a higher
quality matte. This HGM would contain approximately 70% combined
nickel, copper and cobalt. The product would be sold to a refinery
for further processing.
-- Cathode / Precipitate Metal: Further processing of the HGM
would include the addition of a refinery which would include a
leaching, solvent extraction - electrowinning and a precipitation
plant. The recovered metal would include nickel cathodes, copper
cathodes, cobalt precipitate, platinum and palladium metal. The
products could be sold onto various end users.
In calculation of the operating costs associated with the OOS
option, the OSS would be located on the Baikal Amur Rail Line
("BAM") near Verknezeisk or Gorny. To smelt the concentrate, it
will be necessary to blend the material with coal and limestone. By
locating the smelter on the BAM, it will be possible to supply the
necessary coal and limestone required to smelt Kun-Manie
concentrate while avoiding the transport of smelter consumables to
site. The location will also provide the potential to toll smelt
sulphide concentrates sourced from other mines and operations
provided there is sufficient capacity. Both the coal and limestone
required to undertake the smelting of the concentrate are
available, and most could be sourced from Amur Oblast.
As the metal content improves with each step in the smelting
process, the capital cost will also increase. The composition of
the concentrate impacts the capital expenditure. The capital costs
related to each product stream are now being examined to determine
the Net Present Value ("NPV") for each option allowing for the
final selection of the OSS configuration.
Robin Young, CEO of Amur Minerals Corporation, commented:
"We are pleased to inform the shareholders that the construction
of an Owner Operated Smelting facility located along the Baikal
Amur Rail system could substantially increase the economic
potential by a near tripling of the EBITDA of the Kun-Manie nickel
sulphide project. Recently released information on the resources,
reserves and potential mine production from both open pit and
underground operations indicates that Kun-Manie has the potential
to support a long term, large scale operation. This increased scale
indicates that the construction of a captive smelter is likely to
be highly beneficial to Amur. A near tripling of the EBITDA from
contract smelting is highly encouraging. Our last step in the
assessment is the determination of the capital cost for the
smelting option and the three products that could be generated.
This will allow for the definition of the base design of Kun-Manie.
We look forward to releasing the final results of the smelter
analysis in due course."
Enquiries:
Company Nomad and Broker Public Relations
Amur Minerals Corp. S.P. Angel Corporate Yellow Jersey
Finance LLP
Robin Young CEO Ewan Leggat Dominic Barretto
Katy Birkin Kelsey Traynor
+44 (0) 20 3470
+44 (0) 7981 126 818 0470 +44 (0) 77 6853 7739
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) and is a Qualified Professional
Geologist, as defined by the Toronto and Vancouver Stock Exchanges.
An employee of Amur for 10 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 RNS.
For further information, see the Company website at
www.amurminerals.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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