TIDMAMC
RNS Number : 7582I
Amur Minerals Corporation
30 March 2015
30 March 2015
AMUR MINERALS CORPORATION
(AIM: AMC)
Underground Production Potential Defined At Flangovy and
Kubuk
15 Year Mine Life at Six Million TPA
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 evaluation of the potential to produce ore from
underground operations at its Kun-Manie nickel-copper sulphide
project. Using an Earnings Before Income Taxes, Depreciation and
Amortisation ("EBITDA") trade off analysis, the Company has
concluded that production by a combination of open pit and
underground methods from the deposits at Maly Kurumkon / Flangovy,
Vodorazdelny, Ikenskoe / Sobolevsky and Kubuk is potentially
capable of supporting a six million tonne per annum nominal
capacity project for a 15 year period. In-fill drilling at Flangovy
and Kubuk is required to upgrade Inferred resource to Indicated
resource allowing for the subsequent conversion to a mineable
reserve. Most of the planned drilling will target the areas of
underground potential. The operation is now anticipated to be a
combined open pit and underground operation with production being
an approximate blend of 50% from open pit and 50% from underground.
Highlights include the following:
-- In-fill drilling is required to confirm the resource
identified at Flangovy and Kubuk. Presently defined Inferred
resources require conversion to the Indicated JORC category.
Additional exploration through step out drilling to expand the
existing resource is not required.
-- Open pit production will come from Maly Kurumkon,
Vodorazdelny, Ikenskoe / Sobolevsky and Kubuk. A total of 46.2
million tonnes of ore at a strip ratio of 2.8 tonnes of waste per
tonne of ore has been identified. The average nickel grade is
estimated to be 0.61% with copper being 0.16%. The majority of this
material is already drilled to a Proved and Probable reserve
class.
-- Underground production will come from Flangovy and the area
below and adjacent to the presently identified Kubuk pit.
Underground production is estimated to be 44.1 million tonnes of
ore averaging 0.55% nickel and 0.16% copper. The majority of this
material requires in-fill drilling to convert the Inferred resource
to Indicated. Flangovy is targeted for in-fill drilling during the
next field campaign wherein a target of 26.3 million tonnes will be
tested. The target at Kubuk totals approximately 17.8 million
tonnes.
-- Total combined open pit and underground production is
expected to be 90.3 million ore tonnes at an average grade of 0.58%
nickel and 0.16% copper. Total contained nickel is 524,000 tonnes,
copper is 142,000 tonnes. The average contained grade of cobalt is
0.01%, platinum and palladium are both projected to be 0.13
g/t.
-- By adding mineable underground production, the indicated
amount of ore is increased from 66.8 million ore tonnes to 90
million tonnes. Simultaneously, the amount of open pit waste is
reduced by 211 million tonnes.
-- Preliminary underground designs including a Reverse Room and
Pillar Retreat ("RRPR") or a Long Hole Retreat ("LHR") system were
examined and it has been confirmed by the Company that the ore zone
thicknesses, grades and orientation are conducive to both mining
methods.
-- First principle engineering costs estimates indicate that the
cost to mine a tonne of ore using one of the underground approaches
is US$11.88 per ore tonne including development. The estimated cost
to mine an open pit tonne of material is US$1.58.
-- The life of mine EBITDA using a combination of open pit and
underground production is projected to be US$1.4 billion. This
represents an increase from the previously reported Conceptual Open
Pit Design EBITDA expectation of US$1.2 billion. The total increase
in implementing the combined surface and underground production
scenarios is US$0.23 billion. The EBITDA is based on the
concentrate being shipped to a contract smelter where approximately
30% of the nickel, 50% of the copper and all base metals are lost
as a part of the smelting fees. The total value of the lost metal
is projected to be US$3.45 billion.
-- Analysis has shown a substantial increase in projected
mineable reserve and extension of the mine life from 11 years for
the open pit only option to 15 years for the combined open pit and
underground production option. This is based on an annual
production rate of 6.0 million ore tonnes per year.
-- A production schedule is being finalised to determine the Net
Present Value of the newly defined mining system. Initial ore will
come from the open pits with underground production to follow.
Based on the production schedule, the Company will be able to
assess the economic potential of the operation on a toll smelting
basis and subsequently assess the viability of constructing and
operating its own smelter.
The Underground Analysis ("UA") included a series of steps
comprised of a review of the configuration of the ore with regard
to its orientation and thickness to determine if the mineralisation
could be mined using a proven underground mining system.
Preliminary schematic drawings confirmed that both the RRPR and LHR
could be successfully implemented. Estimates for development and to
mine ore were compiled using the first principle approach. The cost
to mine and deliver a tonne of ore to the processing plant is
estimated to be US$11.88 per ore tonne.
The EBITDA value to mine the Runge, Pincock, Minarco ("RPM")
December 2014 generated mining shells was calculated based on the
newly defined underground mining cost for comparison to the open
pit shell EBITDA's. The parameters used to estimate the EBITDA
values for both the open pit and underground production scenarios
are presented below.
Open Underground
Cost Centre Pit
Mining Cost Per Tonne $1.58 $11.88
------- ------------
Processing Cost Per Ore Tonne $10.38 $10.38
------- ------------
Tailings Handling Cost Per
Ore Tonne $0.14 $0.14
------- ------------
Concentrate Transport To Rail
Per Ore Tonne $1.72 $1.72
------- ------------
General & Administrative Per
Ore Tonne $2.15 $2.15
------- ------------
Rail Transport to Smelter Per
Ore Tonne $12.09 $12.09
------- ------------
Smelter Penalties Per Ore Tonne $3.80 $3.80
------- ------------
Metallurgical deductions were 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 pays for 70% of the
recovered nickel and 50% of the recovered copper. The smelter also
does 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 (i) Open
Pit only and (ii) Open Pit and Underground options are presented
below.
Deposit EBITDA Increase
In EBITDA
Open Pit Only Open Pit and Underground
--------------- -------------------------
Ikenskoe / Sobolevsky $355,949,875 $355,949,875 $-
--------------- ------------------------- -------------
Maly Kurumkon / Flangovy $552,336,844 $680,898,198 $128,561,354
--------------- ------------------------- -------------
Vodorazdelny $135,014,810 $135,014,810 $-
--------------- ------------------------- -------------
Kubuk $138,519,076 $239,629,058 $101,109,983
--------------- ------------------------- -------------
Total $1,181,820,605 $1,411,491,942 $229,671,337
--------------- ------------------------- -------------
The underground EBITDA values generated at both Vodorazdelny and
Ikenskoe / Sobolevsky were less than the open pit EBITDA for all
shells. Hence, these two deposits represent open pit mineable areas
only. The combined life of mine EBITDA for both deposits totals
US$491 million.
The Maly Kurumkon / Flangovy life of mine open pit only EBITDA
totals US$552 million. The underground EBITDA indicates that the
Maly Kurumkon / Flangovy open pit can be reduced in size. The ores
no longer contained within the reduced pit can potentially be
recovered by underground mining and additional ores previously not
economically recoverable by open pit methods may also be recovered
by underground operations. The open pit EBITDA component is now
estimated to be US$363 million with an additional US$318 million in
underground production. The combined production scenario is
projected to be US$681 million, an increase of US$129 million
(23%).
The Kubuk life of mine, open pit only, production option has an
EBITDA of US$138 million. The UA indicates that the Kubuk open pit
production will remain as previously reported, however, previously
uneconomic open pit material may be economically recovered using
one of the two underground methods. The underground Kubuk EBITDA
value is projected to be US$101 million bringing the total Kubuk
life of mine EBITDA to US$240 million. This is an increase of 72%
in the EBITDA at Kubuk.
The life of mine EBITDA using the combination of open pit and
underground value by deposit is estimated to be in the order of
US$1.4 billion. By inclusion of the underground production and
reduction in the size of the Maly Kurumkon / Flangovy open pit, the
the life of mine EBITDA is projected to increase by 19%.
A critical factor derived from the analysis is the substantial
increase in projected mineable reserve and the extension of the
mine life. The information below confirms that the 19% increase in
the global life of mine EBITDA has also increased the projected
mine life from 11 years (all open pit production) to 15 years based
on an annual production rate of 6.0 million ore tonnes per year.
Over the 15 year life, approximately half of the production will be
derived from open pits with the remainder being generated from
underground.
Production Total Total Total Strip Ni Cu Co Pl Pd
Tonnes Ore Waste Ratio (%) (%) (%) (g/t) (g/t)
(Mt) (Mt) (Mt)
Open Pit Only 406.1 66.8 339.4 5.1 0.60 0.16 0.01 0.13 0.14
-------- ------ ------- ------- ----- ----- ----- ------- -------
Open Pit / Underground 174.8 90.2 128.6 2.8 0.58 0.16 0.01 0.13 0.13
-------- ------ ------- ------- ----- ----- ----- ------- -------
Open Pit Portion 174.8 46.2 128.6 2.78 0.61 0.16 0.01 0.14 0.16
-------- ------ ------- ------- ----- ----- ----- ------- -------
Underground Portion 44.1 0.55 0.16 0.01 0.13 0.11
-------- ------ ------- ------- ----- ----- ----- ------- -------
Also noted in the analysis is the amount of lost value due to
toll smelter fees. The value of the metal kept by the smelter and
not recovered by the Company totals approximately US$3.45 billion
dollars. For this reason, the next step being implemented by the
Company is an assessment of the economic viability of constructing
and operating its own smelter. The analysis requires that the
Company determine the type and quality of the final saleable
product that can be generated as well as the costs to construct and
operate its own captive smelter. Analysis of this is in progress
and shall be reported as key results are determined. The value of
the lost metal due to smelter charges is presented below.
By Commodity % of Contained Commodity Price
Total Value
Loss of Nickel 31% $2,242,084,567 $16,530 Per Tonne
------- --------------- ------------------
$6,062.65 Per
Loss of Copper 50% $378,610,112 Tonne
------- --------------- ------------------
$31,305.32 Per
Loss of Cobalt 100% $202,920,230 Tonne
------- --------------- ------------------
Loss of Platinum 100% $379,761,779 $46.66 Per Gram
------- --------------- ------------------
Loss of Palladium 100% $247,226,612 $26.68 Per Gram
------- --------------- ------------------
Total Loss $3,450,603,300
------- --------------- ------------------
Robin Young, CEO of Amur Minerals Corporation, commented:
"The results from our analysis of the potential to mine
additional ores from underground advance us another step forward in
establishing the final design bases of the proposed Kun-Manie
operation. The ability to reduce the pit size at Maly Kurumkon /
Flangovy while simultaneously expanding the reserve through
economic underground extraction of uneconomic open pit reserves has
provided additional upside to the project economics. We can now
realistically establish a long term mine life thereby sustaining a
large scale operation at six million tonnes per year subject to
completion of in-fill drilling within two deposits."
"There is one more objective we must complete leading to our
finalisation of our update to the Pre-Feasibility Study completed
in 2007; this is whether we can produce a final saleable product
from our own smelter and cover the substantial cost to construct
our own facility. This requires our determination of the final
product as a low grade matte, a high grade matte, or final cathode
product. We will keep shareholders informed of our progress. This
will allow us to release our final results of the all in project
design basis and financial projections. This work is being rapidly
progressed."
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 nickel-copper sulphide 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 Current 2015 Design Basis - 25 March 2015
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 and two underground operations located
along the Kurumkon Trend. Production 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 400,000 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCJRMFTMBTTBPA
Amur Minerals (LSE:AMC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Amur Minerals (LSE:AMC)
Historical Stock Chart
From Apr 2023 to Apr 2024
