TIDMMIO
RNS Number : 3609I
Minco PLC
30 August 2016
MINCO PLC - HALF-YEAR REPORT JUNE 30, 2016
Dublin, 30 August, 2016- Minco Plc (AIM-"MIO") ("Minco" or the
"Company") announces its half year financial results and report on
operations for the six months ended June 30, 2016 which have been
published today.
This news release should be read in conjunction with Minco's
unaudited Financial Statements and Management's Discussion and
Analysis for the six months ended June 30, 2016. Copies of these
documents are available on the Company's website www.mincoplc.com
and are also available on request, free of charge, from the
Company's registered office at 27 Lower Hatch Street, Dublin 2,
Ireland.
FINANCIAL RESULTS - JUNE 30, 2016
For the six month period ended June 30, 2016, Minco recorded a
loss of $513,000 compared to a profit of $79,000 for the same
period ended June 30, 2015. The loss for the six month period ended
June 30, 2016 included a foreign exchange loss of $98,000 compared
to a gain of $550,000 for the period ended June 30, 2015.
During the six month period ended June 30, 2016 Minco invested
$264,000 on exploration of its mineral properties, of which the
largest amounts were expended on the Buchans zinc lead project in
central Newfoundland. Administrative expenses, excluding foreign
exchange, for the six month period ended June 30, 2016 amounted to
$429,000 compared to $497,000 in the same period in 2015.
At June 30, 2016, Minco held mineral properties with a book
value of $13,260,000, cash and cash equivalents of $3,313,000 and
had a working capital surplus of $2,959,000, compared to a working
capital surplus of $3,628,000 at December 31, 2015.
NEWFOUNDLAND BASE METAL PROJECTS - METALLURGICAL STUDIES
In December 2015, through its wholly owned subsidiary Buchans
Minerals Corporation ("Buchans Minerals), Minco entered into a
collaboration agreement with Canadian Zinc Corporation (TSX:CZN)
("Canadian Zinc") to undertake a research programme to complete
physical and metallurgical bench scale studies on seven
volcanogenic massive sulphide ("VMS") deposits located in the
Victoria Lake district of central Newfoundland and to share
research data on their respective central Newfoundland
Cu-Pb-Zn-Ag-Ag deposits.
The total cost of the research project was originally estimated
at $735,000 with Buchans Minerals and Canadian Zinc providing up to
$100,000 and the remaining $535,000 to be funded through the
Research & Development Corporation of Newfoundland and Labrador
("RDC") GeoEXPLORE Industry-led R & D Technology Development
and Demonstration Program.
The seven deposits have demonstrated resources of various sizes
and quality, are all located near the communities of Millertown and
Buchans, NL and within trucking distance (30-90 km) of the recently
closed Duck Pond Cu-Zn Mine. Individually at this time, the various
deposits are not large enough to support stand-alone operations,
but could potentially be developed with improving economic factors
and by utilizing a central mill facility.
The intent and objective of the research is to determine the
technical and economic viability of developing the companies'
deposits into producing operations by utilizing a central milling
facility. The concept is based on the potential that collectively,
the satellite deposits can be economically mined, pre-concentrated,
trucked and then milled simultaneously or sequentially through a
central mill.
In July, 2016, the research program was expanded by the
inclusion of Minco's Lundberg deposit into the current study and
RDC agreed to provide additional research funding of $58,000. The
near surface Lundberg deposit is comprised of base metal sulphide
enriched stockwork mineralization located in the footwall to the
previously mined, high-grade, Lucky Strike massive sulphide ore
body. The inclusion of the Lundberg deposit in the study will allow
for a comprehensive evaluation of all the known base metal deposits
in central Newfoundland and ultimately allow for the determination
of the optimal development and economic scenario for the
district.
The technical evaluation is focused on conducting a series of
metallurgical tests that include mineralogical assessments of the
deposits, grindability characterization, acid generation
assessment, bench scale Dense Media Separation ("DMS"),
pre-concentration testing and bench scale flotation testing.
To date the program has conducted mineralogical assessments,
grindability tests, DMS tests and is now conducting bench scale
flotation tests. Preliminary results indicate that:
-- Preconcentration of the ore by DMS (prior to flotation) has
been determined to be technically viable for semi-massive and
stringer sulphide samples from the Boomerang-Domino, Lemarchant,
Bobbys Pond and Daniels Pond deposits.
-- Initial flotation tests indicate the deposits are amenable to
a common flotation flowsheet with the sequential Cu-Pb-Zn flotation
flowsheet providing the best overall performance for all four
deposits tested. Further development of the sequential flotation by
bench scale testing is in progress.
Preliminary bench scale rougher flotation tests at varying
primary grind sizes were conducted in order to select the primary
grind size to use for subsequent rougher flotation testing. The
grind size was selected for each deposit by considering flotation
selectivity and recovery of each of the payable base metals into
their respective concentrates. All grind sizes were within the
range of grinds used commercially for complex base metal sulphide
flotation, with the Boomerang grind size being similar to the
finest grinds currently being used commercially.
With the flowsheet and primary grind sizes selected, sequential
rougher flotation tests for the reagent scheme assessment were
completed on metallurgical samples from Daniels Pond (9 tests),
Bobbys Pond (7 tests), Boomerang (14 tests), Lemarchant MS (10
tests) and Lemarchant FW (4 tests). Results of the rougher
flotation program show good to very good copper, lead and zinc
recoveries to the respective rougher flotation concentrates but
with some tests reporting elevated levels of arsenic and antimony,
which may necessitate further cleaning or reduction test work.
Subsequent to June 30, 2016, the metallurgical test work is
continuing and is focused on the development of the flotation
flowsheet using the sequential flotation of copper, lead, and zinc.
The bench scale batch cleaner flotation test program on the copper,
lead and zinc concentrates is underway and expected to be completed
in September.
Once the bench scale testing program is completed, a process
simulation and order of magnitude cost assessment model will be
developed to evaluate and identify the key factors impacting the
operating economics of a centralized milling concept for processing
of the base metal deposits. Results from the modeling will be used
to help optimize the exploration and development programmes and
budgets, by focusing on the key factors that are critical to
assessing the economic potential and viability of developing some
of the deposits through a central milling facility.
The expanded programme is now budgeted at $840,000 of which
Minco has agreed to fund $130,000. The programme, including the
addition of research work on the Lundberg deposit, is scheduled to
be completed by November 2016.
BUCHANS BASE METAL EXPLORATION PROJECTS
Since 2015, Minco has focused its exploration efforts near the
former Lucky Strike mine to explore for high-grade resources that
may positively impact open pit and underground development of the
Company's Lundberg deposit. At Lucky Strike, previous operator,
Asarco, mined 5.6 million tonnes averaging 18.4% Zn, 8.6% Pb, 1.6%
Cu, 112 g/t Ag & 1.7 g/t Au. This deposit was the largest
orebody mined at Buchans, where Asarco mined 16.2 million tonnes
averaging 14.51% Zn, 1.33% Cu, 7.56% Pb, 126 g/t Ag & 1.37 g/t
Au from 5 deposits before mining ceased in 1984.
The Lucky Strike mine exploited high-grade massive sulphides
located immediately above a large, lower grade, stockwork
mineralised zone that comprises the Company's undeveloped Lundberg
deposit. The Lundberg deposit hosts Indicated resources of 23.4
million tonnes grading 1.41% Zn, 0.60% Pb, 0.35% Cu, 5.31 g/t Ag
and 0.07 g/t Au, plus Inferred resources of 4.3 million tonnes
averaging 1.29% Zn, 0.54% Pb, 0.27% Cu, 4.47 g/t Ag and 0.08 g/t Au
(see Minco press release dated March 4, 2013 for more complete
disclosure). The Lundberg deposit was initially assessed by a
positive Preliminary Economic Assessment (PEA) in 2011 (see Buchans
Minerals press release dated August 12, 2011), and has since been
the subject of further work including resource drilling,
environmental assessment and ongoing metallurgical test work.
During the second half of 2015, Minco initiated a program of
relogging to assess potential for the discovery of additional
high-grade resources near the Lundberg deposit. This program
resumed in spring 2016 and to date has relogged 258 historic
surface and underground drill holes (29,382 m) within 2 kilometres
of the former Lucky Strike mine. While the program is ongoing and
expected to dominate field activities in Buchans for the remainder
of 2016, several specific target areas have been identified and are
under review.
One of these areas is located approximately 200 metres southwest
of the former Lucky Strike mine and covers a satellite deposit to
the Lucky Strike orebody known as the West Orebody. The West
Orebody deposit was discovered in 1940 at 300 metres depth and
consists of a cluster of small but high-grade massive sulphide
lenses. The deposit was accessed during the mid-1940's as an
extension to the Lucky Strike orebody and is believed to have
produced less than 100,000 tonnes of high-grade ore. The West
Orebody deposit was only explored by short, historic underground
drilling and a few widely-spaced surface holes. Minco believes this
mineralization may be associated with a controlling structure or
mineralized trend that was active during formation of the Lucky
Strike and West Orebody deposits, and that this trend represents a
priority exploration target for the discovery of new high-grade
massive sulphides. Minco has permitted a drilling and borehole
geophysical program to explore this target in early 2017, as winter
ground conditions are required to access this area.
Another target currently being assessed by the ongoing relogging
program is located immediately north of the former Lucky Strike
orebody where the down dip extension of the mine's host rocks
remain poorly tested by widely-spaced historic drilling and
significant gaps remain between drill holes that could host
significant tonnages of high-grade massive sulphides.
In April 2016, the Company received $100,000 in grants from the
government of Newfoundland and Labrador's Junior Exploration
Assistance (JEA) program in support of its Lucky Strike South
drilling undertaken in 2015. In June Minco submitted additional
proposals for grant funding to support additional exploration
drilling in 2016 as additional drilling may be undertaken during
the second half of 2016 to assess target areas being investigated
by the current relogging program.
WOODSTOCK MANGANESE PROJECT
Despite the benefits highlighted in the preliminary economic
assessment for the Woodstock manganese project, the continued
problem of excess production capacity within the EMM market and the
large initial capital commitment required to develop the Woodstock
project has hindered Minco's ability to attract potential
development partners that have experience in producing and
marketing EMM.
The electrolytic manganese metal (EMM) market is still
struggling with the problem of excess production capacity in China
that continues to place downward pressure on the EMM price.
Although the number of EMM plants in China has dropped
significantly from approximately 200 plants in 2011 to the current
estimate of 30 plants, their combined production capacity of
approximately 1.5 million tonnes per year still far exceeds the
market consumption of approximately 1.0 million tonnes per year.
This ongoing problem of over capacity has continued to apply
downward pressure on the EMM price such that it currently trades at
approximately US$0.79 / lb EMM, a price that is only marginally
higher than the current estimated average EMM plant operating cost
of US$ 0.75 / lb EMM.
MINERAL EXPLORATION AT NORTHERN PENNINES, ENGLAND
Minco's exploration project in the northern Pennines is centered
on a 3.5 by 2.5 kilometre area in the vicinity of the village of
Nenthead, the most prolific area of past production within the
Pennines orefield which covers a total area of approximately 350
square miles.
Minco's 2012-2015 drill programme has established a significant
stratiform component to the mineralisation within the Great
Limestone which had not been previously recognised. Intersections
within the Great Limestone has demonstrated the potential for
significant stratiform mineralisation adjacent to historic
workings. The presence of small "flats" (stratiform stopes) on
historic mine plans has proven indicative of laterally extensive
stratiform replacement within the Great Limestone, with perhaps
eighty percent remaining in place. Fifteen kilometres of these
mineralised structures have been outlined by previous mining with
flats recorded adjacent to 5.5 kilometres, all of which has
potential for stratiform mineralisation.
The intersections of reasonable widths of lead and zinc
mineralization at three different levels in two holes drilled on
the Whitewood-Barneycraig-Williams fault/vein structure in
Northumberland, are considered very positive results and indicate
the mineral potential of this large Whitewood-Barneycraig-Williams
fault/vein structure which was previously demonstrated by historic
mining to be mineralized over a strike length of 3.5
kilometres.
Minco is currently negotiating extensions or amendments to
certain of the exploration licences and option agreements, and
expects to conclude the various Option Agreements in due
course.
LEAD-ZINC EXPLORATION, MOATE, COUNTY WESTMEATH, IRELAND
In November 2015 Minco was granted three new Prospecting
Licences by the Minister of Communications, Energy and Natural
Resources. The new licences, PLs 1228, 1229 and 3981, at Moate in
County Westmeath, are centered on a specific geological target
identified by Minco, with potential for zinc-lead mineralization of
Tynagh Mine type.
Minco's new Moate licences are located along the northwestern
margin of the Irish Midland Orefield on the "Tynagh-Ballinalack
Trend". All but one of the major Irish zinc-lead deposits of the
Irish Midland Orefield lie along the margins of the Orefield. The
Moate target lies mid-way between the former Tynagh Mine, located
50 kilometres to the southwest, and the similar styled Ballinalack
deposit, situated 35 kilometres to the northeast.
The Tynagh Mine operated successfully from 1965 to 1981
producing 9,000,000 tonnes of ore, from both open pit and
underground, at average grades of approximately 7% lead, 5.5% zinc,
0.5% copper and 2.6 ounces of silver per tonne.
Minco's studies of previous drilling have outlined a geological
setting that Minco believes mirrors that at the former Tynagh Mine,
where zinc-lead mineralization was hosted by breccias developed at
the margin between the reef and off-reef limestone facies. The
geology at Moate is also comparable to that at the smaller
Ballinalack deposit.
Minco has planned an initial exploration programme consisting of
six inclined drill holes for a total of 1400 metres of
drilling.
XTIERRA INC.
Minco holds approximately 30 million shares in Xtierra Inc.
("Xtierra"), a company listed on the TSX Venture Exchange under the
symbol "XAG", representing an approximate 26% interest.
Xtierra holds mineral properties located in the State of
Zacatecas in the Central Mineral Belt of Mexico. The Bilbao Project
is a polymetallic sulphide and oxide replacement
silver-lead-zinc-copper deposit located approximately 500km
northwest of Mexico City in the southeastern part of the State of
Zacatecas. Xtierra also holds an extraction licence for the
silver-rich La Laguna Pedernalillo ("Laguna") tailings deposit
located near the city of Zacatecas in Mexico.
In December 2013, the Company agreed to provide working capital
financing to Xtierra, and agreed to purchase $250,000 principal
amount of 5% working capital notes due June 30, 2014. In April
2014, the Company agreed to provide a further working capital
advance to Xtierra of $125,000 which together with the $254,000
working capital Notes, including $4,000 interest, were rolled into
new non-convertible 5% secured notes (total $379,000) due April 30,
2015, secured, pari-passu with Pacific Road Group of Funds
("Pacific Road"), (another significant shareholder of Xtierra), by
a pledge by Xtierra of its shares of Orca Minerals Limited.
On April 29, 2015, Pacific Road and Minco plc, both agreed to
extend the due dates of the non-convertible 5% secured notes in the
amount of $965,000 from April 30, 2015 to August 31, 2015, and to
provide further advances up to $15,000 each. On August 24, 2015,
Pacific Road and Minco both agreed to further extend the due dates
of the Notes from August 31, 2015 to January 31, 2016 and to
provide further advances of up to $17,500 each to fund Xtierra's
property maintenance costs and working capital. Xtierra agreed to a
fee of $29,000 to obtain the extension, which amount was added to
the principal amount of the Notes. On January 31, 2016, Pacific
Road and Minco both agreed to an extension of the maturity dates of
the secured notes to April 30, 2016. The purpose of the various
extensions of the maturity dates of the secured notes was to
provide Xtierra additional time to assess its strategic
alternatives.
The Notes matured and became due and payable on April 30, 2016.
Pacific Road and Minco have not made demands for payment and are
discussing possible solutions with Xtierra on a without prejudice
basis. Xtierra has made certain settlement or restructuring
proposals to each of Pacific Road and Minco. Pacific Road has
advised Xtierra that Pacific Road desires to see this process come
to a conclusion in the near term and, in the absence of an
acceptable outcome, Pacific Road reserves all its rights to demand
repayment of the Notes and if necessary to initiate foreclosure
actions. On July 26, 2016, the Company made a further advance in
the amount of $50,000 to fund Xtierra's working capital and
maintain its mineral properties.
QUALIFIED PERSON
Benjamin Batson, P. Geo. is Minco's Non-independent Qualified
Person for the purposes of National Instrument 43-101, Standards of
Disclosure for Mineral Projects and has approved the technical
disclosures in this announcement.
ABOUT MINCO PLC
Minco Plc, incorporated in the Republic of Ireland and listed on
the AIM Market of the London Stock Exchange ("MIO"), is an
exploration and development company currently engaged in zinc-lead
exploration in Canada, the United Kingdom and Ireland, and is also
evaluating its Woodstock manganese project in New Brunswick,
Canada.
Minco also holds an approximate 26% shareholding in Xtierra
Inc., (TSXV- "XAG"), which holds mineral properties in Mexico, and
a 2% NSR royalty on the Curraghinalt gold property in Northern
Ireland, currently being explored by Dalradian Resources Inc.
(TSX-"DNA").
Danesh Varma: CFO & Company Secretary +44 (0) 8452 606
034
Peter McParland: Director - Ireland +353 (0) 46 907 3709
Peter Tyler: Chief Geologist - Ireland and UK +44 (0) 78 5432
3056
Warren MacLeod: Director, President Buchans Minerals +1 709 725
0555
John Frain: Davy (NOMAD) +353 (0)1 6796363
Saif Janjua: (Corporate Advisor) (Broker, Beaufort Securities)
+44 (0) 20 7382 8415
Copies of this announcement together with copies of Minco's
unaudited interim financial statements and related management's
discussion and analysis for the six month period ended June 30,
2016 are posted on the Company's website at www.mincoplc.com and on
SEDAR at www.sedar.com and are available for inspection at the
Company's registered office at 27 Hatch Street Lower, Dublin 2,
Ireland
This information is provided by RNS
The company news service from the London Stock Exchange
END
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