TIDMAMC
RNS Number : 8691H
Amur Minerals Corporation
19 March 2015
19 March 2015
AMUR MINERALS CORPORATION
(AIM: AMC)
Conceptual Pit Study Identifies Potential Reserve Increase of
70%
In-Fill Drill Programme to Target Inferred Resources
Amur Minerals Corporation ("Amur",the "Company" or "AMC"), the
exploration and development company focused on base metal projects
located in the Far East of Russia, reports it is has completed an
internal Conceptual Open Pit Study of the JORC resource at its
Kun-Manie nickel copper sulphide project. Three key observations
have been derived from the study results. Successful in-fill
drilling to convert Inferred resource to Indicated resource should
expand the present open pit defined JORC reserve by as much as 70%
to a total of 67 million tonnes averaging 0.59% nickel and 0.18%
copper. The Inferred resources require in-fill drilling and have
been assigned a high priority drill status for conversion to
reserves. This will be beneficial to the compilation of a bankable
study where a longer mine life is required to cover capital
expenditures associated with the project. Also, substantial
portions of the resource appear to be suitable for mining using
underground methods, which could expand the reserve beyond that
indicated to be recoverable by open pit mining. The potential
upgraded resource and reserve could sustain a 6.0 million ore tonne
per year production rate. The results are based on a new estimate
for Q1 2015 operating costs, updated metallurgical recoveries and a
toll smelter schedule to process the sulphide concentrate, the
study has identified specific areas for drilling within the Maly
Kurumkon / Flangovy, Ikenskoe / Sobolevsky and Kubuk deposits.
Highlights from the analysis include:
-- In-fill drilling will be initiated at Maly Kurumkon /
Flangovy followed by Kubuk and finally Ikenskoe / Sobolevsky
deposits.
-- The historical drill confirmation success rate in converting
Inferred resource to Indicated resource has been high with near
complete conversion of the Inferred resource class.
-- Successful in-fill drilling of existing Inferred resources
could increase the Indicated resource by 80%.
-- The Company's newly upgraded Indicated resource could
increase the in pit recoverable metal tonnage from 219,000 to
366,000 nickel tonnes (67%) and from 58,000 to 99,000 copper tonnes
(70%). By deposit, the targets consist of:
o A potential reserve increase from 21.5 million to 37.9 million
ore tonnes with the nickel grade increasing to 0.58% at the Maly
Kurumkon / Flangovy deposit.
o Kubuk contains no reserves and is wholly classified as an
Inferred resource. In-fill drilling would add 7.3 million tonnes to
the reserve averaging 0.62% nickel.
o The Ikenskoe / Sobolevsky deposit could increase from 12.7
million to 17.1 million tonnes with a potential increase in nickel
grade from 0.53% to 0.61%.
-- Based on the new estimate for Q1 2015 operating costs,
metallurgical reductions at the processing plant and the smelter
and a nickel price of US$ 7.50 per pound (US$ 16,530 per tonne),
the current reserve Earnings Before Income Tax, Depreciation and
Amortization ("EBITDA") EBITDA is in the order of US$ 0.64 billion.
The potential additional EBITDA for the in-fill drill targets is
US$ 0.54 billion.
-- The mineralised limits have not been established for the Maly
Kurumkon / Flangovy, Ikenskoe / Sobolevsky and Kubuk deposits. Step
out drilling along strike and down dip could further increase the
current 120.8 million tonne global resource and ultimately expand
the reserve beyond the potential increase defined above.
-- The Gorny deposit has not been included in this assessment
due to its limited size and lower average grade. The limits of the
mineralisation at the Vodorazdelny deposit have been identified and
there is no Inferred resource thereby precluding it from the
analysis.
Based on a Conceptual Open Pit Study, the Company has defined
near term drill targets at three of the five deposits thus far
identified at Kun-Manie. The highest priority target is the Maly
Kurumkon / Flangovy deposit which contains 45% of the project
resource as well as the largest amount of Inferred mineral.
Approximately 15 million tonnes of Inferred mineral will be
targeted in the next field season for conversion to an Indicated
resource category by in-fill diamond core drilling of 6,000
metres.
The Conceptual Open Pit Study also indicates that the scale of
the resource and reserve can likely support a long term production
rate of 6.0 million tonnes per year. This is an increase above the
4.0 million tonnes used in the 2007 SRK Consulting Ltd ("SRK") Pre
Feasibility Study ("PFS"). The potential for further resource and
reserve expansion by step out drilling along strike and down dip
where the limits of mineralisation are not yet delineated could
also contribute to extending the life of the planned operation.
Further examination of the current reserve pits with those
generated in the Conceptual Open Pit Study has identified there is
potential to supplement the open pit production with underground
production. There are two sources available for underground
extraction. These include:
-- The ability to access mineralisation not "mined" in the pits.
Mineralisation located in the immediate area of the final pit
limits could be developed at a low cost, extending the life of the
operation.
-- The increased stripping ratio identified by the Conceptual
Open Pit Study also supports that underground production may be
viable at an even larger scale. In areas where the open pit mining
cost to extract a tonne of ore and the associated waste exceeds
that to mine a tonne of ore from underground, underground methods
may be generate higher revenues per ore tonne. This could reduce
open pit sizes and the accompanying mining fleet capital costs
while simultaneously maintaining the reserve inventory. This
requires further investigation.
The Conceptual Open Pit Study includes Inferred Resources, for
this reason the Company notes that it has not referred to the
tonnages contained within the Conceptual Open Pits as "Reserve" but
mineralisation. This is in accordance with JORC 2012 reporting
requirements. See the Notes to Editors for important information
regarding this RNS and a link to schematics of the conceptual pit
designs derived in the analysis.
Robin Young, CEO of Amur Minerals Corporation, commented:
"Though simple in design, the Conceptual Open Pit Study has
identified near term drill priorities key to rapidly developing
reserves that are necessary for obtaining bankability for
Kun-Manie. We have been able to target an increase in our reserve
of approximately 70% bringing the total to 67 million tonnes
containing 366,000 tonnes of nickel and 99,000 tonnes of copper.
Successful in-fill drilling of the Inferred targets would provide
an increment in the Earnings Before Income Tax, Depreciation and
Amortization ("EBITDA") of approximately US$ 0.54 billion. This
study has also identified the potential for further reserve
expansion by adding ores recoverable by underground mining which is
being examined at present. As we await the approval decision to
award the mining licence, we continue to undertake activities to
advance the project on the behalf of our investors and
shareholders. This includes work progressing on the update to the
2007 SRK study wherein identified upgrades and enhancements are
being incorporated into the final project configuration."
Enquiries:
Company Nomad and Broker Public Relations
Amur Minerals S.P. Angel Corporate Finance Yellow Jersey
Corp. LLP
Robin Young CEO Ewan Leggat Dominic Barretto
Katy Birkin Kelsey Traynor
+44 (0) 79 8112 +44 (0) 77 6853
6818 +44 (0) 20 3470 0470 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 that has included
information derived by SRK, RPM, SGS and AMC's staff of
professionals.
For further information, see the Company website at
www.amurminerals.com.
Additional Information
The proposed Kun-Manie sulphide nickel-copper project located in
Amur Oblast of the Russian Federation will require smelting of a
concentrate to generate revenues. In 2007, the design configuration
and project economics were reported in a Pre-Feasibility Study
("PFS") by SRK Consulting Ltd ("SRK"). Subsequent work has
substantially modified the original design concept and results of
the PFS. As a result, the design basis has been modified taking
into account subsequently derived information.
The changes to the design along with inflation and the recent
devaluation of the Ruble have also resulted in the need for a
comprehensive update of the operating costs. In Q1 2015, the
operating costs were calculated by the Company using first
principle engineering practices based on the updated design
described below.
The 2015 Design Basis
The current design basis as of Q1 2015 consists of a single
simple concept. As the ore is sulphidic in character, a saleable
nickel - copper concentrate is to be generated for subsequent sale
and smelting on the international market. Conventional open cast
mining and flotation is planned. The flotation concentrate will be
trucked from the site over a 320 kilometre road for delivery to the
rail head at Ulak located on the Baikal Amur railroad in the Amur
Oblast. From there, it will be transported by rail to a commercial
smelter.
The project requires the construction of a 320 kilometre road to
provide access and allow for the supply of the operation and the
delivery of the concentrate to the rail station located on the
Baikal Amur rail line. The road design has been substantially
upgraded to handle year round operations with widening to two lanes
and the inclusion of a larger maintenance fleet for the road.
Power will be generated on site using diesel fueled generator
sets. A total of 40 mW of installed capacity is planned.
The site is to be operational year round. Mine production will
be derived from four pits located along the Kurumkon Trend. Open
pit mining is planned for 6.0 million tonnes of ore per year to be
treated by the processing plant located at site. The plant will
crush, grind and float the sulphide ore generating about 350,000
tonnes of concentrate per annum. The recovery of nickel is
estimated to be 80% of the mine delivered grade of 0.55% nickel.
Copper recoveries are projected to be approximately 90% with a
grade of 0.16%. Mill tailings will be stored within an impoundment
area adjacent the mill site.
The concentrate produced will be truck transported to the rail
station with monthly shipments being directed to a smelter. The
toll smelter will pay for approximately 70% of the nickel and 50%
of the copper. No additional payable value will be derived from the
by-product metals of cobalt, platinum and palladium.
The Conceptual Open Pit Study
On 28 August 2014, the Company issued an RNS updating the
defined reserve at Kun-Manie. Reserves were reported from the
deposits of Maly Kurumkon / Flangovy, Vodorazdelny and Ikenskoe /
Sobolevsky. The cumulative contained Proved and Probable reserve
was established to be 39.2 million ore tonnes containing 219,000
tonnes of nickel and 58,100 tonnes of copper. The reserve was based
on JORC 2012 reporting standards and a nickel price of US$ 8.50 per
pound (US$ 18,740 per tonne).
The reserve was derived from SRK resource models which included
estimated metal values of nickel, copper, cobalt, platinum and
palladium as well as the associated resource codes of Measured,
Indicated and Inferred. Runge, Pincock & Minarco ("RPM")
uploaded the resource models to the Whittle open pit optimisation
algorithm and generated a series of open pit mine shells for two
distinct scenarios. The two scenarios included:
-- Reserve Definition: Pit shells defined based on Measured and
Indicated resources only. The results are acceptable for reporting
reserves of the Proved and Probable classes.
-- Upside Potential: Pit shells were also defined using all
categories of mineralisation including Inferred. These shells are
much larger than the reserve shells and depict areas where in-fill
drilling is necessary to convert Inferred resources to the higher
quality resource categories of Indicated and Measured allowing for
subsequent inclusion in reserve statements. Presently, these shells
do not represent reserves but only depict potential.
The generated shells for each of the two scenarios were derived
based on Q2 2014 operating costs per tonne, metallurgical
recoveries and mining constraints such as pit slope angles (45
degrees) and mine dilution (5%). Each shell is based on a unique
metal price. In the evaluation, RPM used a starting price of US$
1.50 per pound (US$ 3,304 per tonne) nickel thereby creating the
first shell. Incremental shells were generated at US$ 0.50 per
pound (US$ 110 per tonne) increments up to a final price of US
10.00 per pound (US$ 22,040 per tonne). RPM provided the results to
the Company which included the total projected mined tonnes, mined
waste tonnes, mined ore tonnes and average grade of the material
contained within each shell for both scenarios.
For the Reserve Definition scenario, the Company calculated the
Earnings Before Income Tax, Depreciation and Amortisation
("EBITDA") for each incremental shell using the US$ 8.50 per pound
(US$ 18,740 per tonne) nickel price. The specific shell from which
the last positive EBITDA was derived was selected as the open pit
limit and contained the material considered to be a reserve. The
gross EBITDA was estimated to be approximately US$ 750 million.
For the Upside Potential scenario, RPM results indicated there
was a substantial increase in the mined material from that defined
in the Reserve Definition scenario. This substantial increase
confirmed that successful in-fill drilling could substantially
increase the current reserve inventory. RPM also confirmed the
Company's view that there was potential to mine some of the ore in
the lower levels of the pits by underground methods and that the
open pits might well be reduced in size.
During late 2014, a period of hyper-devaluation of the Ruble
occurred and the value at year end was nearly 60 Rubles to the US
Dollar. Previously calculated operating costs used 35 Rubles to the
USD. Due to inflation and the devaluation, the Company updated the
operating costs for Kun-Manie using first principle engineering
practices to determine the impact on the cutoff grade for mining
and the EBITDA. The updated Q1 2015 operating costs are presented
in the table below.
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 $3.80
--------------------------------- -------
Metallurgical deductions were also considered in the
determination of the EBITDA with average recoveries at the plant
being 80.4% for nickel and 90.2% for copper. A final deduction was
included to account for smelter fees wherein the smelter only pays
for 70% of the recovered nickel and 50% of the recovered copper.
The smelter also did not pay for any of the recovered cobalt,
platinum or palladium. The EBITDA using the Q1 2015 updated
information and a nickel price of US$ 7.50 per pound (US$ 16,530)
for both the Reserve and Upside options is presented below.
Deposit Upside (Inferred
Reserve Defined + Reserve)
----------------------- ---------------------- ------------------------
TOTAL EBITDA TOTAL EBITDA
-----------------------
EBITDA ($/t) EBITDA ($/t)
----------------------- ------------- ------- --------------- -------
Ikenskoe / Sobolevsky $166,109,948 $13.04 $355,949,875 $20.78
----------------------- ------------- ------- --------------- -------
Maly Kurumkon /
Flangovy $339,613,071 $18.42 $552,336,844 $14.56
----------------------- ------------- ------- --------------- -------
Vodorazdelny $135,014,810 $30.41 $135,014,810 $30.41
----------------------- ------------- ------- --------------- -------
Kubuk $- $- $138,519,076 $19.08
----------------------- ------------- ------- --------------- -------
Total $640,737,829 $17.99 $1,181,820,605 $17.70
----------------------- ------------- ------- --------------- -------
The corresponding mineralised tonnages contained within the
Upside pit shells are presented below and contain all resource
categories of mineralisation. These represent target tonnages only
and must not be considered as a reserve.
Deposit Waste Ore Strip Ni Cu
(m T) (m T) Ratio (%) (%)
-------------------------- ------- ------- ------- ----- -----
Ikenskoe / Sobolevsky 52.77 17.13 3.08 0.61 0.15
-------------------------- ------- ------- ------- ----- -----
Maly Kurumkon / Flangovy 258.17 37.93 6.81 0.58 0.16
-------------------------- ------- ------- ------- ----- -----
Vodorazdelny 3.32 4.44 0.75 0.71 0.18
-------------------------- ------- ------- ------- ----- -----
Kubuk 25.12 7.26 3.46 0.62 0.16
-------------------------- ------- ------- ------- ----- -----
Total 339.38 66.76 5.08 0.60 0.16
-------------------------- ------- ------- ------- ----- -----
Schematic's depicting the Reserve and Conceptual pits* are
available at the following link:
http://www.rns-pdf.londonstockexchange.com/rns/8691H_-2015-3-19.pdf
*Note that the red areas depict zones of Inferred resource that
require in-fill drilling whilst the yellow areas are step out drill
targets requiring drilling in the longer term.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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