Last checked at 15 Dec 2015 07:00
15 December 2015
Weatherly International plc
Tschudi Reserve and Processing Update
Weatherly International plc ("Weatherly" or the "Company") today announces an updated JORC (2012) reserve and resource update for its Tschudi mine. The Company also provides updated mining and processing schedule options for a potential low-cost expansion of Tschudi to produce 20,000 tonnes of copper cathode per annum.
Highlights
· Tschudi ore reserves of 24.4Mt at 0.85% copper for 214,000 tonnes of contained copper metal after mining depletion of 8,000 tonnes:
o Increase over previous reserve estimate of 215,650 tonnes contained copper before mining commenced;
o Increase in contained copper despite lower copper prices being used for the reserve update exercise indicating the robustness of the reserve to the significant decrease in copper price;
· An additional 142 infill holes (8,963 metres) have been drilled since the previous reserve published in 2012
o A total of 572 holes (67,068 metres) have been used in the updated reserve estimation at Tschudi
· Pit optimization work has decreased Strip Ratio by 10% from 7.5:1 (waste:ore) to 6.5:1
· Updated C1 cash costs:
o LOM C1 costs expected to be reduced by 9% to USD3,865 per tonne of copper cathode
o Current FY2016 C1 cash costs expected to be in the range from USD4,250 to USD4,350 per tonne
· Expansion opportunity being evaluated:
o Identified opportunity to increase processing capacity from 17,000 to 20,000 tonnes per annum
o If implemented, a further reduction in LOM operating costs by USD10.6M to USD 3,785/t
o Upfront capital expenditure requirement estimated of USD1.2M
Craig Thomas, CEO, commented:
"As promised in October, we have been able to provide updated life-of-mine cost guidance for Tschudi based on the updated reserve estimate, and we are very pleased to report that these costs have improved by 9% compared to the feasibility study estimates.
"The team we have in place on site are focused on further improving the financial outcomes from the Tschudi project in the year ahead and I am looking forward to updating the market as further information regarding the processing schedule options becomes available."
Tschudi Reserve and Resource Update
All reserves and resource estimates in tables A and B below have been updated to 30 June 2015 and are reported in accordance with the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code") and estimated by a Competent Person as defined by the JORC Code (as described more fully below).
Table A
Weatherly Mining Namibia, Tschudi Operation : Ore Reserves as at 30 June 2015
Deposit | Classification | Tonnes | Grade | Contained Metal |
|
| (Mt) | Copper (%) | Copper (kt) |
TSCHUDI (0.3% Cu cut-off) | Proved | 7.3 | 0.93 | 68 |
| Probable | 18.0 | 0.81 | 146 |
| Total Ore Reserve | 25.3 | 0.85 | 214 |
Net attributable to Weatherly (96.5%) |
| 24.4 | 0.85 | 207 |
The Ore Reserve estimate is reported above a copper cut-off grade of 0.3%, and based on a copper price of USD5,950/tonne (USD2.70/lb).
Current surface stockpiled ore has been excluded from the reserve estimate. Approximately 280kt of ore at 0.44% copper was stockpiled at the end of June 2015 containing 1,237 tonnes copper metal.
Table B
Weatherly Mining Namibia, Tschudi Operation : Mineral Resources as at 30 June 2015
Deposit | Classification | Tonnes | Grade | Contained Metal |
|
| (Mt) | Copper (%) | Copper (kt) |
TSCHUDI (0.3% Cu cut-off) | Measured | 6.8 | 0.98 | 67 |
| Indicated | 23.1 | 0.84 | 195 |
| Measured & Indicated | 29.9 | 0.87 | 262 |
| Inferred | 22.2 | 0.72 | 160 |
| Total Mineral Resource | 52.1 | 0.81 | 422 |
Net attributable to Weatherly (96.5%) |
| 50.3 | 0.81 | 407 |
The Measured and Indicated Mineral Resources are inclusive of Ore Reserves.
The above tables are subject to rounding errors and may not cast.
The Ore Reserves and Mineral Resources were estimated by Mr Anthony Cameron and Mr Riaan Herman respectively, Competent Persons as defined by the JORC Code, and reported in accordance with the JORC Code.
Background on Ore Reserve and Mineral Resources
An additional 142 infill holes (8,963 metres) have been drilled since the previous reserve published by Weatherly in 2012. A total of 572 holes (67,068 metres) have been used in the updated resource estimation at Tschudi. Geological information added from the recent drilling, and experience gained over the first year of mining and processing, has been used to update the geological model of the deposit.
In addition the entire resource has now been estimated using the Ordinary Kriging ("OK") methodology, whereas previously the lower (main) mineralised zone was estimated using the Inverse Distance Squared (ID2) methodology and the upper mineralised zones by OK.
Due to the metallurgical issues encountered in the initial processing some of the upper, clay rich, leached cap material, 0.6Mt of material previously classified as ore has now been classified as waste. This material will be stockpiled separately, as it is possible that this will be economically treatable later in the life of mine when the processing of the deeper sulphide ore will generate acid during the heap leach.
Overall, after mining depletion of 1.5Mt of ore to 30 June and reclassification of 0.6Mt from ore to waste, the total resource has decreased by 0.9Mt of ore (from 53.0Mt to the current 52.1Mt). Removing mining depletion, this consequently reflects an underlying increase in ore tonnages from the original resource estimate.
Measured and indicated resources have decreased from 33.3Mt to 30.0Mt due to mining depletion, the reclassification of upper leach cap material, and changes in classification methodology resulting in some indicated resources being downgraded to inferred (approximately 1.2Mt). Measured resources have increased from 4.4Mt to 6.8Mt due to additional infill drilling since the previous resource estimate. The overall copper grade of the resource has remained consistent with the previous estimate.
The reserves have been estimated based on a copper price of US$5,950/tonne (US$2.70/lb). The previous resource estimate was based on US$7,500/tonne (US$3.40/lb). The updated reserves are also based on a first-principles review of all mining, processing and other costs based on the operational experience gained to date. Whittle optimisations were run on the new resource using these updated parameters, and new pit designs were developed based on Whittle pit shells. The calculated cut-off grade has remained 0.3% copper, despite the lower assumed copper price, indicating the robustness of the reserve to the significant decrease in copper price used and also reflecting the updated operating cost assumptions.
The overall reserve estimate tonnage has increased 11% from 22.7Mt to 25.3Mt, despite mining depletion of 1.5Mt and the exclusion of 0.6Mt of upper leach cap material previously included in reserves. The overall reserve grade has decreased by approximately 10% from 0.95% copper to 0.85% copper. The net effect is that contained copper is essentially unchanged at 214kt. The decrease in grade is attributable to changes in estimation method from ID2 to OK in the lower mineralised zone, and also to the application of more conservative dilution assumptions than previously applied. The proved reserve has increased from 4.4Mt to 7.3Mt with additional drilling, 1.5Mt having been depleted during the year.
The life-of-mine Strip Ratio (SR) has reduced by approximately 10% from 7.5:1 (waste:ore) to 6.5:1 due to improved definition of the orebody profile, enhanced pit designs and the changed dilution assumptions. In the period to the end of June 2015, the SR actually achieved was 6.9:1.
Life of Mine Scheduling and Cost Estimates
Information gathered from operating conditions at Tschudi have been used to revise management expectations for the production schedule for the life of the Tschudi mine, based on the current design capacity of 17,000 tonnes per annum (17ktpa) of copper cathode.
Unit costs have decreased by 9% overall compared to previous estimates due to a weaker local currency, lower diesel fuel prices and improved optimised pit designs which have together offset local currency cost escalations and the reduction in reserve ore grades.
| Current Estimate (December 2015) | Prior Estimate (May 2015) |
Life of Mine Cash Cost C1 | USD 3,865/t (USD 1.75/Ib) | USD 4,226/t (USD 1.92/lb) |
For FY2016 (from commencement of Commercial Production on 1 October 2015 to 30 June 2016), C1 cash costs are anticipated to be approximately in the range from USD4,250 to USD4,350 per tonne, and in FY2017, C1 cash costs are expected to be approximately USD4,100 per tonne.
Expansion Opportunity Update
Further to the Company's previously reported work on expansion opportunities at Tschudi, the Company has reviewed the capital and operating costs for increasing processing capacity by 18% to 20,000 tonnes per annum (20ktpa) of copper cathode.
Expenditure of approximately USD1.2 million would be required for such an expansion of the processing facilities. This would be required for increased solution pumping capacity, replacement alternative-technology mixers in the Solvent Extraction plant, and various components of the site electrical systems.
Life of Mine scheduling work for such a scenario indicates reduced unit costs over life of mine due primarily to certain costs remaining fixed despite the output volume increase. Unit cash costs would be anticipated to be:
| 20ktpa scenario |
Life of Mine Cash Cost C1 | USD 3,785/t (USD 1.72/Ib) |
Life of mine operating cost savings obtained from operating at 20ktpa instead of 17ktpa are currently estimated at approximately USD10.6 million. The Company will now undertake further detailed work to support any potential investment decision as well as evaluation of funding options, and will update the market in respect of this in due course.
For further information please contact:
Weatherly International plc +44 (0) 20 7936 9910
Craig Thomas, Chief Executive Officer
Kevin Ellis, CFO and Company Secretary
RFC Ambrian Limited +44 (0) 20 3440 6800
(Nominated Adviser & Broker)
Samantha Harrison
Finncap +44 (0) 20 7220 0500
(Joint Broker)
Christopher Raggett
Blytheweigh +44 (0) 20 7138 3204
(Financial PR)
Tim Blythe / Camilla Horsfall / Megan Ray
Competent Person Sign-off
The information in this report that relates to the Tschudi Ore Reserve estimate is based on information compiled by Mr Anthony Cameron, BE (Mining), Grad Dip Bus, M Comm Law, FAusIMM, a Competent Person who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Cameron is the Principal Mining Engineer of Cameron Mining Consulting Ltd. Mr Cameron has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and ore Reserves'. Mr Cameron consents to the inclusion in this announcement of the matters based on his information in the form and context in which they appear.
The information in this report that relates to the Tschudi Mineral Resource estimate is based on information compiled by Mr Riaan E Herman, Pr.Sci.Nat, a Competent Person who is a Professional Natural Scientist of the South African Council for Natural Scientific Professions, which is Recognised Professional Organisation ('RPO'). Mr Herman is the Managing Director of Riaan Herman Consulting cc. Mr Herman has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and ore Reserves'. Mr Herman consents to the inclusion in this announcement of the matters based on his information in the form and context in which they appear.