Weatherly International Plc Regulatory News (WTI)

17 Dec 2009 07:00



Weatherly International Plc ('Weatherly' or the 'Company')

Tschudi Pit Optimisation Study

Weatherly is pleased to announce the results of a preliminary pit optimisation study (the 'Study') prepared in conjunction with Coffey Mining for the development of its wholly owned Tschudi project (the 'Project'). 

Highlights:

Preliminary pit optimisation results indicate that an economically viable open cut operation could be established at Tschudi.

If detailed feasibility work is successful and subject to funding, the Company believes it could be possible to establish an operation producing between 7,000 - 12,000 tonnes of copper per annum within two years.

Pit optimised based on two scenarios: (A) Producing copper sulphate and copper (sulphide) concentrate (B) Producing a single copper sulphate product

Both scenarios under consideration are low capital cost options which take advantage of the Company's existing plant and infrastructure at Tsumeb, within a short distance of the mine.

The Study concludes that the preliminary pit optimisation results indicate that an economically viable open cut operation could be established at Tschudi and recommends that further work should be performed to firm up the economic parameters of the Project. Along with the restart of mining operations at Otjahase and Matchless, the preparation of a feasibility study for the development of the Project is a priority for the Company with the funding to be provided by the proposed equity subscription by East China Exploration and Development Bureau ('ECE'). 

The Tschudi deposit is located 26km by road west of the Tsumeb town, concentrator and smelter. The orebody comprises a relatively thick tabular orebody dipping at approximately 28 degrees to the north along a synclinal contact. The orebody is open at depth and a significant proportion is available for open pit mining. As described in the Company's announcement dated 2 November 2009, based on a report prepared by Coffey Mining, and using a cut off grade of 0.3% Cu, a total Measured and Indicated resource for the Project has been estimated at 28.84 million tonnes of ore grading 0.93% Cu. The strike continuation along the synclinal contact is also highly anomalous for copper and base metals and further exploration is planned. The Study considered optimal pit designs under various scenarios and operating parameters within this resource. 

Metallurgical testwork has been carried out over the years both by Goldfields in the 1980s and 1990s and by Weatherly when it operated an underground mine at Tschudi in 2008. The ore, which is a combination of oxides and sulphides (predominantly chalcocite) is amenable to both leaching and conventional flotation. As a result, there are a number of competing metallurgical routes that could be used in exploiting the orebody including: (a) trucking the ore to the existing plant in Tsumeb and using conventional flotation methods to produce a suitable concentrate for the smelter; or  (b) heap leaching the ore on site to produce either an intermediate feed suitable for the smelter, copper sulphate of copper cement. There could be justification to produce copper cathode on site but this has not been taken into account at this stage.

The Study considered two scenarios. The first was based on (a) above where the low grade oxide ore is left on site for heap leaching to an intermediate product (CuSo4) while the sulphide ore is trucked to the Tsumeb concentrator. The second scenario is based on (b) heap leaching all ore on site to produce copper sulphate which was trucked to the smelter for processing to blister copper.

The Study did not consider capital expenditure requirements however both of the above scenarios are low capital options which take full advantage of the existing plant and infrastructure at Tsumeb, within a short distance of the mine. The only significant capital expenditure requirements would be associated with upgrading the Tsumeb concentrator or establishing the site heap operation. 

Operating costs are still being refined, however the company through its previous operations and neighbouring open pits has a strong database from which to draw upon and which was utilised in the preparation of the Study. In both cases, 'unit cost' inputs were based on contractor mining and hence any costs associated with mining equipment, pre-stripping or transport are treated as an operating cost.

A range of pits were produced using a $6000/t copper price although sensitivities were also run at a lower level, $4,500/t. Of the pits generated, the operating parameters for the 'best pits' for each scenario on the basis of undiscounted and discounted cash flow analysis are summarised below:

Scenario A - Producing copper sulphate and copper (sulphide) concentrate

Scenario B - Producing a single product of copper sulphate

* Cash flows discounted using a discount rate of 10%

** All tonnes quoted are classified as Measured and Indicated (JORC) and do not include any Inferred.

The Company intends to accelerate the feasibility work as soon as the ECE deal is completed, and to finalise the pit and metallurgical process optimisations. Assuming the feasibility work is positive and that funding is available, the Company believes that it would be possible to establish an operation producing between 7,000 - 12,000 tonnes of copper per annum within two years. 

A copy of the full report by Coffey Mining is available by pasting the following web link into your internet browser:

http://www.rns-pdf.londonstockexchange.com/rns/2479E_-2009-12-16.pdf

For further information contact:

Qualified Person Notes

The mineral resource estimates contained in this news have been prepared in accordance with The Code for Reporting of Mineral Resources and Ore Reserves of the Australasian Joint Ore Reserves Committee (JORC)]. The technical information in this news release, including the information that relates to geology, mineralization, drilling, and mineral resource estimates on the Tschudi Project, is based on information prepared under the supervision of, or has been reviewed by M McKinney of Coffey Mining (SA) (Pty) Ltd The foregoing person is a "qualified person" for the purposes of JORC with respect to the geology, mineralization and drilling being reported on. The "qualified person" responsible for the independent resource estimate for resources at Tschudi was A B Goldschmidt, a geologist with Coffey Mining (SA) (Pty) Ltd with more than 20 years of experience. The technical information has been included herein with the consent and prior review of the above noted qualified persons. The qualified persons have verified the data disclosed, including sampling, analytical and test data underlying the information or opinions contained herein.