Weatherly International Plc Regulatory News (WTI)

7 Dec 2006 07:01

Weatherly International PLC07 December 2006 New mine starts to help production towards 20,000 tonne target The Company is pleased to announce that following recent developments at theTschudi/Tsumeb West mine, combined with production at other operating mines atKombat, Otjihase/Matchless will contribute to its move to raise its overallcopper output to more than 20,000 tonnes a year. Weatherly's subsidiary, Ongopolo, has begun operations at two former mine-sitesin the Tsumeb area. The main operation is at a place called Tschudi,approximately 20 kilometres due west of Tsumeb. This area was last worked as anunderground mine between 1989 and 1992. In 1998 Gold Fields of South Africadeparted Namibia and the mine was placed in the hands of the Receiver. The minewas purchased from the Receiver by Ongopolo in 2000, and apart from a bulksampling exercise to test the near surface oxides in 2003, the underground mineremained dormant. The Tschudi deposit is a tabular orebody dipping at around 35 degrees, andextending over a known strike length of approximately 4 kilometres (although itremains open in both directions and at depth). The orebody was drilledextensively in the 1970's, and various historical reserves were reported usingcut off grades between 0.2% and 1.0% Cu. At the lower cut off, the resource wasapprox. 40 million tonnes at an average grade of around 0.8% Cu, while at thehigher cut off the resource dropped to around 10 million tonnes at 1.4% Cu. The most recent Tschudi resource model, prepared by James Lonergan of Mintek Incin August 2002, estimated a total resource of 43.4 million tonnes grading 0.83%Cu and 10.5g/t Ag using a cut off of 0.2% Cu. This work was reviewed byAustralian consultants RSG global in October 2006 as part of a more detailedMining Study. The Mining Study confirmed the viability of underground mining, and designed aninitial campaign to exploit one of the higher grade areas making use of apreviously constructed decline for access to the underground sulphide ore.Based on the study, the initial campaign would recover approximately one milliontonnes of ore grading 1.5% Cu and 15g/t Ag over a period of 3.3years. Miningwould be relatively shallow, between 80 and 590 metres below surface, and as aresult mining costs would be around US$17/t. Ore would be trucked to theconcentrator in Tsumeb at an average rate of 300,000t per annum once fullproduction build-up is achieved. Ore production from stoping operations wouldbe expected within 6 months of project start-up, with ore development commencingalmost immediately. The first ore is to be mined early next year, and stockpiled until the Tsumebconcentrator starts up in June 2007. The plan is to feed the concentrator at arate of up to 500,000tpa with a blend of additional ore from Tsumeb West,another small mine just on the outskirts of Tsumeb town. This mine, which waslast operating in 2004, has a small but high grade resource of 742,000 tonnesgrading 2.0% Cu. It is planned to operate this mine at around 150,000tpa. Tsumeb West is also the site of a newly established training school, wherecadets conducted their first blasts about a month ago. Tsumeb West is unique inbeing the only underground mine in Namibia with female miners. The new cadetswill complete their training in about two months and a new intake is expected tofollow. Ongopolo plans to man the two new mines with a combination of older experiencedminers transferred from its Kombat operations, and the new trainees above.Overall, manning requirements at both mines are expected to reach 100, whichwill have a significant and positive impact on employment prospects for youngpeople in the area and the local economy of Tsumeb. The mine start-up costs are expected to be in the order of US$3 million, withUS$2.5 million to be spent on equipping the mines and the rest refurbishing theTsumeb concentrator. All capital required to bring the mines to full productionwill be funded from internal cash flow. Plans are also in place to develop open pits at Tschudi in two other high gradesections to the west of the proposed underground workings. Based on detailedmine plans prepared by A. Cameron and Associates (and reviewed by RSG), the openpittable reserve is 3.2 million tonnes grading 1.2% Cu at an overall strippingratio of 8 to 1. The pits would be completed in about four years after whichremaining high grade ore would be accessed by further underground developmentfrom the base of the open pits. Given that the orebody is open at depth(virtually no drilling below 500 metres depth), mining could continue wellbeyond the first seven years contemplated to date. For further information contact: Weatherly International plcJohn Norris +44 (0) 20 7917 2989 Libertas Capital Corporate FinanceJonathan Flory +44 (0) 20 7569 9650 First City Financial Public RelationsAllan Piper +44 (0) 20 7436 7486 This information is provided by RNS The company news service from the London Stock Exchange