TIDMBMR
RNS Number : 8088Z
BMR Group PLC
01 June 2016
Wednesday 1 June 2016
BMR Group PLC ("BMR" or the "Company")
Pilot Plant Update with Letter of Intent
BMR, the Zambian-focused mineral processing business, is pleased
to announce an update on its proposed operations in Kabwe,
Zambia.
On 6 May 2016, BMR announced that it had received approval from
the Zambia Environmental Management Agency (ZEMA) for the Company's
Environmental Social Impact Assessment in respect of its tailings
retreatment process and the construction of its planned pilot and
main treatment plants in Kabwe.
The Company has continued to refine the process and advance the
engineering design work and its plant construction plans for the
pilot plant. In addition, the Directors are pleased to announce
that the Company has received an approach for an off-take agreement
in respect of increased levels of production than those originally
anticipated from the pilot plant.
This has led to a Letter of Intent from a private South African
group engaged in mining, energy and agri-business dated 24 May 2016
("LOI"). Under the LOI, BMR can draw-down from a $2 million
facility for the construction of the pilot plant which will now be
configured as a semi-production unit (the "Plant"). This LOI is
subject to a completed sale and purchase agreement, for the sale
over a three-year period of agricultural grade zinc sulphate
heptahydrate (ZSH) (500 tpm) and lead sponge (300 tpm). It also
anticipates the eventual sale of LME grade zinc cathodes (300 tpm).
A further announcement will be made when the various terms are
finalised and related agreements are entered into.
The Directors expect the Plant to generate sufficient production
capacity for the ZSH and lead sponge to satisfy the LOI. Additional
production and subsequent sale of zinc cathodes will result from
production at the main plant in due course. The Directors believe
that the LOI off-take for ZSH and lead sponge significantly
enhances the returns from BMR's zinc and lead assets over a
sustained period of time to the benefit of Shareholders.
To configure the Plant for producing the ZSH and lead sponge in
the quantities outlined in the LOI, the Directors estimate the
capital expenditure to be approximately $2.68 million. The
Directors are satisfied that this cost can be satisfied from the
current cash resources, currently amounting to over GBP1 million,
and from the $2 million draw-down facility. The aggregate cost of
$2.68 million comprises 52% of confirmed quotations, 18% of
factored costs and 30% of internally estimated costs in respect of
$1.8 million for mechanicals, $0.4 million for instrumentation and
electrical items and $0.48 million for labour, pipework and other
ancillaries.
On 22 September 2015, the Company announced that Tony Francis
BSc Eng. Metallurgy, ARSM, FIMMM, CEng, of Francis Minerals
Consulting Limited had been engaged to undertake a peer review of
the acid/brine leaching process for the recovery of lead and zinc
from the tailings and had concluded its suitability. The Company
has recently re-engaged Tony Francis to undertake a review of the
costings of the Plant in respect of the configuration for the
production capacity for the ZSH and lead sponge. Tony Francis has
concluded that the capital expenditure of $2.68 million can be
categorised as adequate for a scoping estimate with an
industry-standard deviation of -30% and +50%.
The Directors are estimating the operating expenditure at the
Plant to be approximately $150 per tonne of tailings, based on the
current costs of acid, reagents, labour and electricity. The
Directors expect that the net sales generated from the ZSH and lead
sponge, once having satisfied the $2 million facility repayment
under the terms of the LOI, will provide sufficient funds for the
Company to complete the zinc electro-winning and copper/iron
removal circuits at the Plant.
The Directors are now commencing construction of the Plant. The
immediate focus is on securing larger items with long ordering lead
times, including the thickeners, leach/precipitation tanks and
agitators. In addition, the Company is seeking to engage the
services of a project manager and skilled labour from the local
market. The Directors expect the Plant to be commissioned for the
commencement of production by early 2017.
Other developments
Waelz Kiln Slag ("WKS")
BMR announced on 13 May 2016, the submission of the definitive
Environmental Project Brief ("EPB") in connection with the proposed
sale of WKS, from its Kabwe site (comprising approximately 1.1
million tonnes of WKS, as surveyed on a JORC-compliant basis by
Mineral Corporation Consultancy (Pty)). The Company expects to
receive final approval from ZEMA for the EPB, in the near future
and then intends to generate revenues from sales of the WKS as a
construction aggregate, with a relatively limited cost of
sales.
Imperial Smelting Furnace Slag ("ISF Slag")
The Company continues to assess the commercial feasibility of
recovering zinc from the ISF Slag (estimated by Mineral Corporation
Consultancy (Pty), in its March 2012 report, to contain 1,481,563
dry tonnes, as surveyed on a JORC compliant basis, at a mean grade
of 8.07% Zn (119.6kt contained Zn)). New test work carried out by
our consultants Kupfermelt designed to optimise and improve the
previously achieved recovery rate of 77.2% Zn has been successful
but at very high acid consumption rates. Test work continues to
investigate several possible options to mitigate the high acid
consumption, mainly caused by the iron content in the ISF slag, by
blending it with either the wash plant tailings or the leach plant
residues. In the event that this further work concludes positively,
the Company will commission a full JORC-compliant survey of the ISF
slag.
Exploration of the south eastern Kashitu section of the
Company's Large Scale Mining Licence at Kabwe, Zambia
The Company will shortly commence an exploration programme to
delineate a potential resource in the Kashitu section of the
Company's Large Scale Mining Permit area. This follows a recent
study carried out by Geoquest Ltd, Zambia at the Company's request
to re-assess the geological potential of this area. The study
undertook a forensic analysis of available historic data from
previous work by Billiton, ZCCM and Teal, with the objective of
scoping out a future exploration programme.
Selected historic Rotary Blast Hole (RAB) drill results
identified near surface grades up to 31% zinc over 2 metres and a
Reverse Circulation (RC) drill hole returning 12.6% zinc, 3 metres
from surface.
The planned exploration programme will be structured to identify
the grade and potential tonnage of a near surface resource amenable
to mining by open pit and suitable for treatment in the Company's
planned treatment plant.
Grant of options
The Company announces that, as part of its remuneration and
incentivisation arrangements, options over an additional 4,186,626
new ordinary shares of GBP0.01 each in the Company (the "Options")
have been granted to Directors and senior management taking the
total number of Options to 17,383,172 being 10.0 per cent. of the
current issued share capital.
The terms of the Options are identical to those options granted
on 15 June 2015 and include an exercise price of 6p for the
Options, being 33.3 per cent. of the closing mid-market price on 31
May 2016, the date the Options were granted. Any unexercised
Options will lapse if the option holder leaves the Company for any
reason. The Options vest as follows:
-- 25 per cent. immediately;
-- 25 per cent. on the first announcement of interim or year-end
results following successful testing of the initial Kabwe
plant;
-- 25 per cent. on the first announcement of interim or year-end
results following first revenue from a commercial sale of product
from the extended production plant; and
-- 25 per cent. on the announcement of the next interim or
year-end results thereafter demonstrating a continuing commercial
revenue stream.
The interests of the Directors in the Company following the
grant of the Options are as follows:
Director Ordinary Options Options Total number
shares granted granted of Options
held 15 June 31 May now held
2015 2016
---------------- ---------- ---------- ---------- -------------
1,066,666
Alex Borrelli* (0.61%) 6,070,411 2,139,832 8,210,243
---------------- ---------- ---------- ---------- -------------
Jeremy
Hawke - 2,903,240 1,023,397 3,926,637
---------------- ---------- ---------- ---------- -------------
* also holds 666,666 warrants following his subscription in the
open offer announced on 18 February 2016.
Alex Borrelli, Chairman, commented: "We are delighted to have
been offered under the Letter of Intent a $2 million drawdown
facility which will enable us to complete the enlarged Plant
construction and for the sale of zinc sulphate heptahydrate and
lead sponge. We believe this significantly enhances the returns
from BMR's zinc and lead assets over a sustained period of time to
the benefit of our shareholders."
Ends
For further information:
BMR Group PLC
020 7734 7282 Alex Borrelli, CEO and Chairman
WH Ireland Limited 020 7220 1666
NOMAD and Joint Broker Chris Fielding, Head of Corporate
Finance
Peterhouse Corporate Finance 020 7469 0930
Joint Broker Lucy Williams/ Duncan Vasey/ Heena Karani
This information is provided by RNS
The company news service from the London Stock Exchange
END
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