TIDMAMC
RNS Number : 9126N
Amur Minerals Corporation
07 June 2022
07 June 2022
AMUR MINERALS CORPORATION
(AIM: AMC)
Kun-Manie Nickel - Copper Sulphide TEO Results
$333 Million NPV(10%) , 15.6% IRR
Amur Minerals Corporation ("Amur" or the "Company"), the
exploration and resource development company, announces the
completion of its TEO Project (a Russian feasibility level study)
approved by the Russian Federation State Committee on Reserves
("GKZ") with regard to its Kun-Manie nickel copper sulphide project
located in the Russian Far East.
Highlights:
-- The TEO Project was compiled by Oreoll LLC ("Oreoll") and GKZ
Russian Federation ("RF") certified experts from all project
disciplines.
-- The GKZ expert commission approved a 19 year open pit
operational design with revenue generation derived from two
saleable concentrates allowing for the recovery of payable values
for both copper and nickel. Minor payable amounts for gold,
platinum and palladium will also be recovered.
-- The design parameters maximise revenue generation to the RF
based on fully loaded taxation and royalty schemes. The total Net
Present Value ("NPV(10%) ") deliverable to the RF is projected to
be US$ 628 million. This approach does not optimise the financial
return to the project operator which is addressed during the next
and final requirement of the DEMP, the mine planning stage.
-- The GKZ commission reviewed Oreoll's submission. Necessary
adjustments allowing for the identification and approval of
operational parameters and considerations, associated capital /
operating costs, the revenue generation from the sale of individual
nickel and copper concentrates and selected commodity prices were
defined. As a result of the expert evaluations, a Life of Mine
("LOM") cutoff grade ("COG") was defined to be 0.2% Ni. The annual
nominal production rate of 12.4 million ore tonnes was
selected.
-- Lerchs Grossman open pit production analyses including mining
loses and dilution indicate the average LOM ore production grades
for delivery to the sulphide flotation plant will be 0.66% Ni,
0.18% Cu, 0.015% Co, 0.05 grammes per tonne ("g/t") Au, 0.90 g/t
Ag, 0.14 g/t Pt and 0.14 gt/ Pd. The total cumulative LOM RF NAEN
certified Reserve totals 187.1 million ore tonnes. Approximately
4.6 cubic metres ("m(3) ") of waste will be extracted per ore
tonne.
-- The total metal delivered from the mine to the processing
plant will be 1.2 million nickel tonnes, 343 thousand copper
tonnes, 25.5 thousand tonnes of cobalt, 25.7 tonnes of platinum,
26.5 tonnes of palladium, 9.0 tonnes of gold and 168.5 thousand
tonnes of silver.
-- The Oreoll and GKZ experts have determined the LOM capital
cost estimate is US$ 1.92 billion with US$ 1.14 billion allocated
as preproduction and construction costs, US$ 698 million in
sustaining costs and US$ 85 million in working capital. The
increase in the capital cost estimate from previously reported
projections is attributable to the more than doubling of the
previous annual operational capacity impacting the expansion of the
open pit mining fleet, the addition of a copper recovery circuit
within the process plant, tailings expansion, power plant
requirements and the need to construct a dual carriage way access
road capable of handling the increased mine support and concentrate
transport needs. All capital expenditure sectors include
contingencies specific to the project and its location.
-- Operating costs per ore tonne are projected to be US$ 42.32
including ore and waste mining costs, depreciation and
royalties.
-- The LOM combined payable metals from the two concentrates
total 627 thousand nickel tonnes, 177 thousand copper tonnes, 1.5
tonnes of gold, 3.3 tonnes of platinum and 3.5 tonnes of palladium.
The payable metal schedules and all fees are based on confidential
metal trading schedules provided by two reputable, recognised
industry metals traders.
-- Nickel and copper account for 95% of the LOM revenue obtained
from the two intermediate nickel and copper intermediate
concentrate products. The GKZ approved prices for the primary
revenue generators of nickel and copper were US$ 14,468 per Ni
tonne (US$ 6.56 per pound) and US$ 6,758 per Cu tonne (US$ 3.07 per
pound). Minor credits were included for gold (US$ 58.90 / g),
platinum (US$ 34.35 / g) and palladium (US$ 80.75 / g).
-- For the 19 year production schedule, the NPV(10%) is US$ 333
million with an Internal Rate of Return ("IRR") of 15.6%. The
payback period for the 12.4 million ore tonne per year operation is
projected to be 5.5 years.
Robin Young, CEO of Amur Minerals, commented:
"The TEO Project feasibility study results generated by the GKZ
expert commission indicates the Kun-Manie operation should be
scaled up to as much as 12.4 million ore tonnes per year for a 19
year open pit operation. This is a more than doubling of the
previously anticipated capacity of 6.0 million ore tonnes per
year.
"Given the current commodity prices for nickel and copper are
substantially higher than the $6.56 per pound nickel and $3.07 per
pound copper utilised in the TEO Project, there is substantial
upside potential to enhance the GKZ commissions NPV10% of US$ 333
million and IRR of 15.6% financial results. The GKZ Project
Feasibility Study did not include sensitivity analysis as related
to metal prices which is typical of western studies. Today's
approximate price of US$ 13.50 per pound nickel and US$4.25 per
pound of copper support the of upside potential to improve the
financial results.
"The Company also notes that the present geopolitical situation
related to the Russian Federation will impact the Company's ability
to develop Kun-Manie due to sanctions and restrictions implemented
by the Federation. Sources for capital funding will likely be
limited and western companies are no longer considering investment
within Russia."
As a requirement of the terms and conditions of the Detailed
Exploration and Mine Production Licence ("DEMP"), the RF GKZ has
reviewed, adjusted and approved the Oreoll independently compiled
RF feasibility study. All documentation has been registered with
all appropriate local, state and federal agencies. Work was
undertaken by RF experienced, licenced and certified individuals
and organisations experienced in the evaluation of nickel copper
sulphide projects.
It has been established that a 19 year open pit operation at an
annual rate of 12.4 million ore tonnes should be implemented.
Financial results have derived a NPV(10) ) of US$ 333 million and
an IRR of 15.6%. A nickel price of US$ 14,468 per tonne (US$ 6.56
per lb) and a copper price of US$ 6,758 per tonne (US$ 3.07 per lb)
were used in the RF feasibility study. The results provide the
basis for the next phase required as a part of the DEMP where RF
approved mine plans and designs are to be compiled.
The results have been determined by experts utilised by the RF
certified company of Oreoll and the expert commission of the GKZ.
The expert opinions confirm that it is appropriate to more than
double the scale of the previously reported operation.
Keys elements driving the expert commission's approval for the
expansion of the operation are based on NorNickel's wholly owned
subsidiary (Gipronickel Institute) metallurgical test work,
flowsheet and plant designs that confirmed two revenue generating
intermediate concentrate products (nickel and copper) can be
generated. This supercedes the previously understood design wherein
a single all commodity bulk concentrate design was planned wherein
only nickel was payable. Scaling up of the operation has required
adjustments in most sectors of the operation and there is now the
need to construct a dual carriage way access road between the mine
site and Baikal-Amur ("BAM") rail station. The RF expert commission
have also provided capital and operating costs for the 12.4 million
ore tonne per annum production scenario.
AMC notes that Reserves reported herein are in accordance with
Russian Reserve reporting standards (NAEN). JORC resources and
reserves are not allowed for use in the definition or
classification of Reserves in the RF. There are three Russian
categories identified as B, C(1) and C(2) . Those that are within
an open pit (mineable) are reported as in-balance reserve whilst
those not mined or below cutoff grade and within the pit are
off-balance reserves. Per the Committee for Mineral Reserves -
International Reporting Standards ("CRIRSCO"), RF and western
resources / reserves (JORC) are somewhat correlative. In-Balance
Russian B Reserves equate to JORC Proved with Russian C(1) and
portions of C(2) approximating JORC Probable Reserves.
All USD values quoted herein are based on Russian Ruble derived
estimates and have been converted at an exchange rate of 73 RUR per
US$.
Company Nomad and Broker Public Relations
Amur Minerals Corp. S.P. Angel Corporate BlytheRay
Finance LLP
Robin Young CEO Richard Morrison Megan Ray
Adam Cowl Tim Blythe
+44 (0) 207 7138
+7 (4212) 75 56 15 +44 (0) 203 470 0470 3204
For additional information on the Company, visit the Company's
website, www.amurminerals.com.
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
Notes to Editors
The information contained in this announcement has been reviewed
and approved by the CEO of Amur, Mr. Robin Young. Mr. Young is a
Geological Engineer (cum laude), a Professional Geologist licensed
by the Utah Division of Occupational and Professional Licensing,
and is a Qualified Professional Geologist, as defined by the
Toronto and Vancouver Stock Exchanges. An employee of Amur,
previously Mr. Young was employed as an independent consultant with
Fluor Engineers, Fluor Australia and Western Services Engineering,
Inc. during which time his responsibilities included the
independent compilation of resources and reserves in accordance
with JORC standards. In addition, he was the lead engineer and
participant of numerous studies and projects requiring the
compilation of independent Bankable Studies utilised to finance
small to large scale projects located worldwide. Mr. Young is
responsible for the content of this announcement which includes
information derived by Russian Federation mining experts under the
employ of Ore0ll and the GKZ fully encompassing commission of
experts.
Glossary
DEFINITIONS OF EXPLORATION RESULTS, RESOURCES & RESERVES
EXTRACTED FROM THE JORC CODE: (December 2012) (www.jorc.org)
A 'Mineral Resource' is a concentration or occurrence of
material of intrinsic economic interest in or on the Earth's crust
in such form, quality and quantity that there are reasonable
prospects for eventual economic extraction. The location, quantity,
grade, geological characteristics, and continuity of a Mineral
Resource are known, estimated or interpreted from specific
geological evidence and knowledge. Mineral Resources are
sub-divided, in order of increasing geological confidence, into
Inferred, Indicated and Measured categories.
An 'Inferred Mineral Resource' is that part of a Mineral
Resource for which tonnage, grade and mineral content can be
estimated with a low level of confidence. It is inferred from
geological evidence and assumed but not verified geological and/or
grade continuity. It is based on information gathered through
appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes which may be limited or of uncertain
quality and reliability.
An 'Indicated Mineral Resource' is that part of a Mineral
Resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated with a
reasonable level of confidence. It is based on exploration,
sampling and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits,
workings and drill holes. The locations are too widely or
inappropriately spaced to confirm geological and/or grade
continuity but are spaced closely enough for continuity to be
assumed.
A 'Measured Mineral Resource' is that part of a Mineral Resource
for which tonnage, densities, shape, physical characteristics,
grade and mineral content can be estimated with a high level of
confidence. It is based on detailed and reliable exploration,
sampling and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits,
workings and drill holes. The locations are spaced closely enough
to confirm geological and/or grade continuity.
An 'Ore Reserve' is the economically mineable part of a Measured
and/or Indicated Mineral Resource. It includes diluting materials
and allowances for losses which may occur when the material is
mined. Appropriate assessments and studies have been carried out,
and include consideration of and modification by realistically
assumed mining, metallurgical, economic, marketing, legal,
environmental, social and governmental factors. These assessments
demonstrate at the time of reporting that extraction could
reasonably be justified. Ore Reserves are sub-divided in order of
increasing confidence into Probable Ore Reserves and Proved Ore
Reserves.
TEO Project - -
As part of the terms and conditions of the DEMP licence, the
compilation of a TEO Project (Feasibility Study) is required.
Requirements of both local permitting and international
fundraising require increasing numbers of projects in Russia and
CIS to carry out dual technical studies. The principal focus of
Russian mining project design is to satisfy Russian regulatory
requirements. However, the technical documents are not generally
accepted by international banks for project finance outside Russia.
Similarly, international study documents are not accepted for
design and permitting in Russia. With the Kun-Manie project being
located within Russia, the Company has focused on Russian required
documentation and approvals.
The Russian design and permitting system is centered around two
key statutory technical documents termed the TEO Konditsy and the
TEO Project. These documents are subject to regulatory approval and
are broadly equivalent to the international prefeasibility study
and the feasibility study respectively. A comparison of study
criteria suggests similar approaches are used for the main
technical disciplines in project design by the time projects are at
the point of construction, but there is divergence on environmental
matters where the OVOS (Russian Environmental and Social Impact
Assessment ("ESIA") equivalent) differs from an ESIA in some
significant areas. The key differences relate to project footprint,
level of technical detail required for baseline studies, level of
public consultation, consideration and disclosure of information,
labour, coverage of community and social issues and the preparation
of a Social and Environmental Management System (SEMS).
It has been noted that the Russian Design Institutes often leave
the detailed economic analysis until compilation of the TEO
Project. A common problem is design teams tend to look for
"technological solutions" without due concern for project
economics. The end result of this can be mines that are
overcapitalized and hence sub-optimal. It can be concluded that
Design Institutes have the monopoly on Russian permitting reports.
Similarly, Russian institutes generally do not prepare feasibility
studies to international standards as established by western
requirements, and this continues to be the case. Therefore, to
achieve the requirements meeting both RF and western studies that
have a significant overlap but are meant to obtain two unique
results their is necessary for international consultants and
Russian Design Institutes to cooperate on a joint work programme
during the mine planning stage. Key issues ensuring the most
appropriate final operation configuration must be considered
throughout the next phase and that the environmental work programme
covers the additional studies necessary for the ESIA should western
financing be a part of the funding package.
The AMC compiled TEO Project includes all available operational
details and economic assessment of the potential of Kun-Manie. This
input will also be utilised in any subsequent international funding
packages.
Resource and Reserve Determinants - West Versus Russian
Russia uses its own mineral reporting and classification system
("NAEN") which differs substantially in the calculation procedures
used to compile the internationally (such as JORC) recognised
resource / reserve classification systems. The Russian system
divides mineral reserves into seven categories, in three major
groups, based on the level of exploration performed. These are:
-- Fully explored/ reserves (A, B, C1),
-- Evaluated reserves (C2), and
-- Prognostic/inferred resources (P1, P2, P3).
Computation of NAEN reserves follows a set of prescribed manual
procedures established by the Ministry of Natural Resources of the
Russian Federation.
The NAEN Code, was developed by the Society of Experts on
Mineral Resources in close cooperation with the Russian State
Commission of Reserves (GKZ). A CRIRSCO Public Reporting Template
was updated in 2014 allowing for a comparison of the NAEN versus
western codes. It currently provides Guidelines on the Alignment of
Russian Minerals Reporting Standards and a mapping of the Russian
and the CRIRSCO categorization of mineral resources and mineral
reserves. For reporting in public disclosures related to western
companies, it is recommended that the CRIRSCO proposed alignment
guidelines on reporting exploration and mining results in public
disclosures be utilised. The proposed "mapping" facilitates a
comparison of the Russian classification categories of Resources
and Reserves, used for state and corporate reporting as established
by the GKZ (Categories A, B, C1, C2) to that of CRIRSCO categories
which are more familiar to the western investor community.
The Russian classification system prescribes grid densities for
drilling and trenching, based on the type of deposit, size, shape
and complexity. Deposits demonstrating continuity scale with regard
consistency of length, depth, thickness and grade variability
require less dense drilling than a vein deposit would require. Huge
amounts of lithological, mineralogical and geochemical data are
interpreted and summarised in geological and technical-economic
reports, filed at local and central state committees or
directorates. The density of the drilling and level of detail of
knowledge about the mineral prospect determines the "reserve
category". After applying mining parameters such as cut-off grade,
minimum mineable thickness of the ore body, maximum thickness of
the included waste and minimum grade per mining unit (COG), the
mineralised material is classified as fully explored and ready for
mining development. Every geological and technical-economic report
with resources or reserves is reviewed and must be approved by the
GKZ technical experts committee on mineral resource and reserve
evaluations. It is the committee's decision that a project has a
significant amount of mineralised material to provide for the
resource / reserve to be approved and included in the registerd
mineral inventory of Russia and available to the Company for
extraction.
One of the main differences between the CRIRSCO Reporting
Standards and the classification systems for State Regulatory
purposes is that CRIRSCO standards are non-prescriptive. The
Competent or Qualified Person (CP or QP) for the project can design
and implement exploration programs, following the best exploration
practices, but having the freedom to choose appropriate exploration
techniques, field activities and analyses. The Resource/Reserve
estimation parameters and procedures are selected by the CP or QP
with regard to the implementation of appropriate exploration
programmes. The code does not recommend observation point density,
drill hole spacing or any other metrics whilst the NAEN system is
far more prescriptive and definitive.
Kun-Manie NAEN VS JORC
Over the seasonally limited exploration life at of Kun-Manie,
the Company compiled numerous JORC resource statements as
additional exploration data was accumulated. Though the JORC
estimates were unacceptable for use in the RF reserve definition
process, this approach provided the Company with the ability to
report per the CRIRSCO guidelines that are more familiar to western
investors. The most recent JORC estimates including all exploration
results was compiled by RPM Global (30 June 2021).
The TEO Project compiled resource is based on the NAEN system
which is required to advance a project into production. A
comparison of the Kun-Manie JORC and NAEN results based on same
exploration data sets is summarised below. Note, the comparison of
results for the RPM Global JORC estimate is based on a 0.3% Ni COG
whilst that of the NAEN estimate is based on the RF GKZ selected
COG of 0.2% Ni.
NAEN Ore Ni Cu Ni Cu JORC Ore Ni Cu Ni Cu
(Russian) Mt % % T T COG 0.3% Mt % % T T
COG 0.2% (1,000's) (1,000's) Ni (1,000's) (1,000's)
Ni
------------
Maly Kurumkon / Flangovy
----------------------------------------------------------------------------------------------------------------------
B 3.6 0.75 0.20 27.0 7.3 Measured 7 0.76 0.22 55 16
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
C1 35.0 0.74 0.21 258.7 72.3 Indicated 38 0.80 0.22 300 84
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
B+C1 38.6 0.74 0.21 285.6 79.6 M+I 45 0.79 0.22 355 100
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
C2 10.0 0.71 0.21 70.7 20.6 Inferred 3 0.79 0.23 24 7
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
TOTAL 48.6 0.73 0.21 356.3 100.2 MKF TOTAL 48 0.79 0.22 380 110
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
Ikenskoe / Sobolevskey /Kubuk
----------------------------------------------------------------------------------------------------------------------
B 4.1 0.64 0.17 26.0 7.3 Measured 11 0.70 0.19 77 21
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
C1 113.5 0.69 0.19 786.4 221.2 Indicated 88 0.74 0.21 650 180
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
B+C1 117.7 0.69 0.19 812.3 228.5 M+I 99 0.74 0.20 727 201
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
C2 16.0 0.58 0.17 92.9 27.0 Inferred 25 0.68 0.19 170 48
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
TOTAL 133.7 0.68 0.19 905.2 255.6 ISK TOTAL 125 0.72 0.20 890 250
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
Vodorazdelny
----------------------------------------------------------------------------------------------------------------------
B 2.2 0.89 0.24 19.3 5.2 Measured 2 0.84 0.24 15 4
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
C1 3.0 0.72 0.21 21.5 6.4 Indicated 2 0.80 0.22 17 5
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
B+C1 5.1 0.79 0.22 40.8 11.5 M+I 4 0.8 0.23 32 9
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
C2 0.1 0.74 0.19 0.8 0.2 Inferred 1 0.78 0.22 10 3
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
TOTAL 5.3 0.79 0.22 41.6 11.7 VOD TOTAL 5 0.81 0.23 43 12
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
Sub-total (Deposits estimated by both NAEN and JORC Estimates)
----------------------------------------------------------------------------------------------------------------------
B 9.9 0.73 0.20 72.2 19.8 Measured 20 0.73 0.20 147 41
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
C1 151.5 0.70 0.20 1,066.6 299.9 Indicated 128 0.75 0.21 967 269
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
B+C1 161.4 0.71 0.20 1,138.8 319.7 M+I 148 0.75 0.21 1,114 310
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
C2 26.1 0.63 0.18 164.3 47.8 Inferred 29 0.69 0.20 204 58
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
TOTAL 187.5 0.69 0.20 1,303.1 367.5 GLOBAL 178 0.75 0.21 1,313 372
------ ----- ----- ----------- ----------- ---------- ---- ----- ----- -----------
Gorny (Additional NAEN)
------------------------------------------------------------
B - - - - -
------ ----- ----- ----------- -----------
C1 4.2 0.45 0.12 18.9 5.0
------ ----- ----- ----------- -----------
B+C1 4.2 0.45 0.12 18.9 5.0
------ ----- ----- ----------- -----------
C2 4.9 0.41 0.1 19.8 4.9
------ ----- ----- ----------- -----------
TOTAL 9.0 0.43 0.11 38.7 9.9
------ ----- ----- ----------- -----------
NAEN Grand Total
------------------------------------------------------------
B 9.9 0.73 0.20 72.2 19.8
------ ----- ----- ----------- -----------
C1 155.7 0.70 0.20 1085.5 304.9
------ ----- ----- ----------- -----------
B+C1 165.6 0.70 0.20 1157.7 324.7
------ ----- ----- ----------- -----------
C2 31.0 0.59 0.17 184.1 52.7
------ ----- ----- ----------- -----------
TOTAL 196.6 0.68 0.19 1341.8 377.4
------ ----- ----- ----------- -----------
Totals may differ due to rounding.
For the commonly reported deposits (excluding the Gorny
deposit), the global ore tonnages and contained metal are highly
similar as indicated below:
-- The NAEN estimate contains 4.8% more tonnage (14.5 million tonnes) at 187.5 million tonnes.
-- The NAEN estimate contains 0.5% fewer nickel tonnes at 1.3 million total tonnes.
-- The NAEN estimate contains 1.2% fewer copper tonnes at 367 thousand total tonnes.
It is noted that the similarity of the results is not atypical
based on the experience of the Company staff wherein multiple
reviews and independent compilations of projects having been
estimated using both JORC and NAEN estimates were available. This
includes projects located within the RF, China, Central Asia and
Eastern Europe.
Kun-Manie NAEN Reserves
Four COG's were evaluated in the TEO Project. These ranged from
0.1% Ni to 0.4% Ni in increments of 0.1% Ni. Lerchs Grossman open
pit optimisation assessments based on each COG scenario resulted in
the identification of 0.2% Ni being the preferred COG. The
selection of the 0.2% Ni COG was based on the result that it
provided the maximum revenue generation to the RF including all
taxation and metal royalties at payable metal prices of US$ 6.56.
per pound for nickel and $3.07 per pound for copper. An NPV10% of
US$ 625 million.
The table below presents the summary of the NAEN reserve
category and for each commodity. For the commodities of nickel,
copper and cobalt, sampling intervals (1.5 metres) allowed for the
identification of reserves by the categories of B, C1 and C2. For
platinum, palladium, gold and silver, the metal content was based
on composite sample lengths over the entire nickel and copper
mineralised interval. Hence, the numerically reduced sample density
has provided classification of these commodities into the NAEN
category of C2.
The table also presents a summary of the NAEN reserves by
mineable category. In-Balance reserves are contained within the
Lerchs Gorssman 0.2% Ni COG pit. Out of Balance reserves are
comprised of mineralisation located external the 0.2% Ni pit shell
and that mineralisation within the pit shell considered to be
sub-economic (less than 0.2% Ni average grade) when diluted to a
five meter minimum mining thickness.
GKZ Approved NAEN Reserve - Insitu
Commodity Unit In Balance Out of Balance Total (In plus Out)
----------- ------ ----------------------------------- ----------------------------- -----------------------------------
B C1 C2 Total C1 C2 Total B C1 C2 Total
B
----------- ------ ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Ore Tonnes kT 9,877 143,708 18,564 172,149 - 12,012 12,410 24,422 9,877 155,720 30,974 196,571
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Ni kT 73 1,025 120 1,218 - 60 64 124 73 1,085 184 1,342
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Cu kT 20 287 35 342 - 18 18 35 20 305 53 377
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Co kT 1 21 2 25 - 1 1 3 1 23 4 28
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Pt Kg - - 24,812 24,812 - - 3,490 3,490 - - 28,302 28,302
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Pd Kg - - 26,810 26,810 - - 3,795 3,795 - - 30,605 30,605
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Au Kg - - 9,063 9,063 - - 1,300 1,300 - - 10,363 10,363
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Ag T - - 174 174 - - 22 22 - - 196 196
Commodity Unit In Balance Grade Out of Balance Grade Average Grade (In plus
Out)
----------------------------------- ----------------------------- -----------------------------------
Ni % 0.73 0.71 0.65 0.71 - 0.50 0.52 0.51 0.73 0.70 0.59 0.68
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Cu % 0.20 0.20 0.19 0.2 - 0.15 0.14 0.15 0.20 0.20 0.17 0.19
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Co % 0.010 0.020 0.015 0.015 - 0.010 0.010 0.010 0.014 0.014 0.012 0.014
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Pt g/t - - 0.14 0.14 - - 0.14 0.14 - - 0.14 0.14
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Pd g/t - - 0.16 0.16 - - 0.16 0.16 - - 0.16 0.16
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Au g/t - - 0.05 0.05 - - 0.05 0.05 - - 0.05 0.05
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Ag g/t - - 1.01 1.01 - - 0.90 0.89 - - 1.00 1.00
----------- ------ -------- ------- -------- ------- ------- ------- -------- ------- --------
Totals may differ due to rounding.
Based on the in-pit 0.2% Ni pit shell design, the primary NAEN
Reserve inventory of falls within the B + C1 + C2 categories and is
distributed follows:
-- 87.6% of the mineralised tonnage is in-balance (172 million tonnes).
-- 90.8% of the nickel is in-balance at an average insitu grade
of 0.71% Ni (1.2 million tonnes).
-- 76.3% of the copper is in-balance at an insitu grade of 0.20% Cu (342 thousand tonnes).
-- 89.3% of the cobalt is in balance at an insitu grade of 0.015% Co (25 thousand tonnes).
Application of selective open pit mining considerations provides
the final mined tonnages and grades delivered to the sulphide
flotation plant. Based on a minimum mining thickness of five
meters, dilution of 7.4% and 2.9% losses, a total of 187 million
ore tonnes are deliveraable to the plant for processing using the
recommended Girponickel Institute sulphide flotation methods. The
NAEN inventory is provided in the table below.
Mine Delivered Mill Feed NAEN
Reserve
Dilution and Mining Losses Included
COG 0.2% Ni
--------------------------------------------
Commodity Factor In Balance -
B + C1 + C2
----------- -------- ---------------------
0.2% Ni Grade
COG
----------- -------- ------------ -------
Mill Feed
Tonnes T 187,134,000
-------- ------------ -------
Ni T 1,233,697 0.66%
-------- ------------ -------
Cu T 343,045 0.18%
-------- ------------ -------
Co T 25,518 0.014%
-------- ------------ -------
Pt Kg 25,709 0.14
g/t
-------- ------------ -------
Pd Kg 26,547 0.14
g/t
-------- ------------ -------
Au Kg 8,964 0.05
g/t
-------- ------------ -------
Ag Kg 168,505 0.90
g/t
-------- ------------ -------
Totals may differ due to rounding.
Ore Processing
NorNickel's subsidiary, Gipronickel Institute conducted
metallurgical test work on representative samples of the Kun-Manie
ore. Its work was mutually supportive of previously undertaken work
and subsequently established the preferred metallurgical flowsheet
for the generation of individual nickel and copper sulphide
concentrates. Previously a single bulk concentrate had been
considered in design considerations.
Crushing and grinding requirements were established for the mill
feed. For each concentrate type, the mass pull ratios,
metallurgical recoveries, composition of the concentrates, water
usage requirements, consumables consumption requirements, tailings
handling approach and the process plant equipment list were
defined.
The following table presents a summary of the metallurgical
recoveries of the metals by concentrate type.
LOM Flotation Plant Recoveries by Concentrate
Type
Commodity Nickel Nickel Copper Copper
Concentrate Concentrate Concentrate Concentrate
Recovery Tonnage Recovery Tonnage
------------- ------------- ------------- -------------
Concentrate
(kt) 10,292 842
------------- ------------- ------------- -------------
Ni 76.3% 941,311 0.4% 5,182
------------- ------------- ------------- -------------
Cu 27.2% 93,308 54.0% 185,244
------------- ------------- ------------- -------------
Au 40.9% 3.7 18.9% 1.7
------------- ------------- ------------- -------------
Pt 50.3% 12.9 2.8% 0.7
------------- ------------- ------------- -------------
Pd 50.8% 13.5 3.7% 9.8
------------- ------------- ------------- -------------
*Cobalt and silver have been excluded as there was no payable
allotment
by either of the two metal market traders for either
concentrate.
Confidential payable schedules sourced from two internationally
recognised metal traders were evaluated by the GKZ. From these
schedules, payable metal amounts within each concentrate, minimum
required metal contents for payability, treatment and refining
costs and penalty fees for deleterious metals and gangue minerals
were used. The following table presents the LOM payable metal
totals inclusive of fees, penalties, minimum payable amounts and
all other deductions.
Commodity Nickel Payable Copper Payable Copper Payable
Concentrate Nickel Concentrate Metal
% Payable % Payable
Ni (t) 66.63 627,196 0.4 Penalty 627,196
------------- -------- -------------- --------------- --------
Cu (t) No Payment 95.5 176,908 176,908
------------- -------- -------------- --------------- --------
Below
Au (t) Minimum 90.0 1.5 1.5
------------- -------- -------------- --------------- --------
Pt (t) 26.5 3.4 Below Minimum 3.4
------------- -------- -------------- --------------- --------
Pd (t) 26.5 3.6 26.5 0.3 3.9
------------- -------- -------------- --------------- --------
Operating Cost
The commission reviewed, adjusted and approved operating cost
per tonne (Q4 21) which average US$ 42.32 per ore tonne over the
mine life. Newly identified operating cost centers previously
excluded were transport and property taxes. Royalty taxes had
previously been calculated using the Far East Development Fund
reduced schedule during the first 10 years of operation.
Environmental fees had not been included. Depreciation was
previously included in cash flow models but not as a part of the
operating cost.
Operating Cost Centres Cost Per
Ore Tonne
Mining (Ore plus Waste) $13.08
-----------
Processing $11.06
-----------
Tailings Handling $1.77
-----------
Concentrate Transport $4.44
-----------
Transport Tax $0.01
-----------
Royalty Tax $2.86
-----------
Property Tax $0.83
-----------
Environmental Fees $0.15
-----------
General and Administrative $1.42
-----------
Depreciation $6.69
-----------
Total Cost US$ / Ore
Tonne $42.32
-----------
Capital Cost Projections
The Oreoll and GKZ experts have determined the LOM capital cost
estimate is US$ 1.92 billion with US$ 1.14 billion allocated as
preproduction and construction costs, US$ 698 million in sustaining
costs and US$ 85 million in working capital. The increase in the
capital cost estimate from previously reported projections is
attributable to the more than doubling of the previous annual
operational ore capacity impacting the expansion of the open pit
mining fleet, process plant, tailings, power plant requirements and
the need to construct a dual carriage way access road capable of
handling the increased mine support and concentrate transport
needs. All capital expenditure sectors include regional regulatory
contingency factors es specific to the project location and its
being characterised as a permafrost location.
Capital Investment Summary
Category US$D
(m)
-------
Life Of Mine Capital Expenditure $1,924
-------
Preproduction Construction $1,141
-------
Working $85
-------
Sustaining $698
-------
Based on the preproduction construction cost and the nominal
annual capacity of 12.4 million ore tonnes, the capital cost per
tonne is approximately US$ 92.01 per tonne of plant throughput. For
the capital intensity basis of the annual payable nickel plus
nickel equivalent of copper, the total is anticipated to be capital
intensity cost is projected to be $30,535 per tonne. Revenues
derived from recovered gold, platinum and palladium are
excluded.
Net Present Value, Internal Rate of Return and Payback
Based on the GKZ selected metal price of US$ 6.56 per pound
nickel and US$ 3.07 per pound copper at the production rate of 12.4
million ore tonnes per annum the following was estimated by the RF
economist from the commission.
-- NPV10% is US$ 333 million.
-- IRR is 15.6%.
-- Payback is 5.5 years.
Sensitivity analyses related to the price of metals was not
reported. It is noted that the previously utilised base case metal
prices for western study wok based on a nickel only single bulk
concentrate were US$ 8.00 per nickel pound. As the previous
technical operation was based on the sale of a single bulk
concentrate, a direct comparison of prior results is inappropriate
given the NorNickel subsidiary test work confirmed the addition of
a saleable copper concentrate, a material impact across the entire
operation.
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