TIDMBMR
RNS Number : 0213R
BMR Group PLC
06 December 2016
BMR Group PLC ("BMR" or the "Company")
Kabwe Update and OPEX Costs
The Board is pleased to announce its production targets,
expected operating costs and expansion plans for its Kabwe
treatment plant ("Plant"), currently under construction and
scheduled to be commissioned mid 2017.
Zinc and Lead LME price rises
In the past 12 months the LME zinc ("Zn") and lead ("Pb") prices
have risen substantially from circa $1,600 per tonne and $1,700 per
tonne to circa $2,700 and $2400 per tonne, respectively. These
price rises have significantly increased the in-situ Zn, Pb and
metal values of the Company's combined JORC and non JORC tailings
assets due to be processed at the Plant to approximately US$1.2
billion and US$0.46 billion, respectively. Provisional estimates of
the Vanadium ("V") present in all three tailings products
(non-JORC) have the potential of increasing the total value to
approximately US$2 billion. The Zn price rise has also impacted
favourably on the value of the Star Zinc acquisition, which is
expected to be completed in the near future.
Plant Production
As previously announced, the Company will commission the planned
5 tonnes/hour Plant initially using the Wash Plant Tailings
("WPT"). The WPT resource is JORC compliant comprising 573,458
tonnes at 10.66% Zn and 7.21% Pb. Based on Zn and Pb metal
recoveries of 78% and 88% respectively, which have been discounted
by 5% from laboratory test results, the Plant, once fully
operational, is expected to produce approximately 15,000 tonnes of
zinc sulphate heptahydrate ("ZSH") and 2,300 tonnes of lead sponge,
per annum. BMR expects to operate the Plant on a 24/7 basis.
Cost of plant
The Company continues to expect, as announced on 1 June 2016,
that the capital cost of the Plant will be no more than $2.68
million, with an industry-standard deviation of -30% and +50%.
Operating Expenditure (OPEX)
OPEX is currently estimated at $120/tonne of tailings treated,
with sulphuric acid comprising approximately 50% of the costs.
Sulphuric acid is readily available from the local Copperbelt
smelters where prices are close to historic lows. With the
exception of specialist re-agents, all other significant Plant
consumables, such as Lime and Limestone, can be sourced
locally.
Mineral Royalty, Corporation Tax and Marketing costs
BMR's operations are categorized as 'open pit' and will incur a
5% mineral royalty payment to the Zambian Government. Corporation
tax is currently 30%. The Company's production will be sold FOB
Kabwe under the terms of the African Compass International ("ACI")
Off-Take Agreement announced on 8 August 2016. Payment for the
Company's products are due on acceptance of the goods by ACI's
agent at the point of loading (in Kabwe) and presentation of
documentation against the Buyer's Letter of Credit.
Production Ramp Up Programme and Targets
Based on the Company's ongoing metallurgical optimisation
programme, the Board now believes that a meaningful near term
production increase (1st stage production ramp up) can be achieved
by adding capacity to certain sections of the 5 tonnes/hour
original plant. This will be confirmed once the Plant is fully
operational and once its performance can be assessed under
production conditions.
In the 1(st) stage ramp up, it is planned by late 2018 to double
the Plant feed tonnage by combining WPT with ore from the Star Zinc
project. By adopting this strategy, the Company expects the Zn
plant head grade to increase along with Zn metal production from
3,100 tonnes (ZSH equivalent, 15,000 tonnes) to approximately 8,000
tonnes per annum. At this stage, ZSH and lead sponge production is
expected to remain constant, with the additional Zn metal
production in the form of cathode. The intention is to upgrade the
Star Zinc ore by sorting at the mine site before transportation to
Kabwe.
The 2(nd) stage production ramp up is planned for 2020 and will
involve a substantial increase in Plant feed tonnage and the likely
construction of a new plant to handle the higher tonnage. The Plant
feed is expected to comprise a combination of Leach Plant Residues
("LPR"), Imperial Smelter Furnace Slag ("ISFS") and Star Zinc ore.
This will result in an increased Zn metal production to
approximately 25,000 tonnes per annum.
Recovery of Vanadium, Germanium and Silver by-products
As previously announced, recent test work undertaken by BMR's
metallurgical partner Kupfermelt successfully recovered Zn, Pb and
V into a pregnant liquor solution ("PLS") from a 2:1 blend of
LPR/ISFS. Work continues on the selective recovery of V from the
PLS to produce vanadium pentoxide which, when completed, will be
taken into account when valuing the Company's assets in the future.
A further announcement on the results of this test work will be
made in due course.
The Company would like to confirm that V has been recovered into
PLS from the WPT.
In the New Year, mineralogical analysis and metallurgical test
work will start on bulk samples of the different Star Zinc ore
types to investigate the deportment and process routes to recover
germanium and silver.
Zambia Environmental Management Agency (ZEMA)
The conditions attached to ZEMA's approval of the ESIA, which
was received on 26 April 2016 to operate the Plant, required air,
ground water and personal health base line data to be established,
plus on-going monitoring programme and reporting protocols. This
compliance work has now been completed and will be lodged with ZEMA
shortly.
The Company's consultant remains in discussion with ZEMA
following the appeal lodged on 16 September 2016, to challenge
their decision not to allow the sale of WKS for block
construction.
Note: This announcement has been reviewed by Geoff Casson, B.Sc.
(Hons), PhD, R Eng (Zambia), Member Engineering Institute of Zambia
(Metallurgy), General Manager of the Company's Zambian subsidiary,
Enviro Processing Ltd, who is a Qualified Person in accordance with
the guidance note for Mining, Oil & Gas Companies issued by the
London Stock Exchange in respect of AIM Companies.
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
Alex Borrelli, Chairman, commented: "We believe shareholders
will be encouraged by these projections for the Kabwe Plant, where
we are focused on achieving meaningful returns for the Company and
our longstanding shareholders."
Ends
For further information:
BMR Group PLC
Alex Borrelli, CEO and Chairman 020 7734 7282
WH Ireland Limited - NOMAD and Joint Broker
Chris Fielding, Head of Corporate Finance 020 7220 1666
Peterhouse Corporate Finance - Joint Broker
Lucy Williams/ Duncan Vasey/ Heena Karani 020 7469 0930
This information is provided by RNS
The company news service from the London Stock Exchange
END
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