VANCOUVER, June 29, 2015 /CNW/ - Flinders Resources
Limited ("Flinders" or the "Company") (TSXV: FDR) wishes to
clarify its disclosure relating to the status of production at its
100% owned Woxna graphite mine and processing plant in Sweden ("Woxna"). The Company has
completed stage 1 of its development plan with the successful
restart of the plant and mine, commissioning and establishment of
meaningful graphite production at Woxna, however, commercial
production, as determined under accepted accounting practice
considering International Financial Reporting Standards, has not
yet been achieved.
Commercial production is a convention for determining the point
in time at which the commissioning of the mine and plant has been
completed after which production costs are no longer capitalized
and are reported as operating costs. The determination of when
commercial production commences is based on several qualitative and
quantitative factors.
The Woxna processing facility was refurbished and upgraded with
new equipment in the first half of 2014 after which the processing
plant commenced operation by feeding stockpiled graphitic material
into the plant during July 2014. The plant was operated until
the end of 2014 on stockpiled graphitic rock and mining of
graphitic rock commenced in Q1 2015. The freshly mined
graphitic rock was fed into the Woxna processing facility and
operated at normal design capacity producing graphite concentrate
inventory. This inventory was stockpiled instead of sold due
to declining global flake graphite demand during 2015 that has
pushed prices to a four year low. As previously disclosed, given
these weakening conditions, the Board of Flinders has chosen to
reduce production at Woxna and only supply larger volumes when
improved graphite prices return thus conserving working
capital.
The Woxna project has never defined a mineral reserve and the
previous preliminary economic assessment ("PEA") on Woxna
dated October 29, 2013, has been
superseded by the Company's current technical report dated
May 11, 2015 that increased the
measured and indicated mineral resource on Woxna to 7.7Mt @ 9.3% Cg
so the PEA is no longer valid. The decision to recommence mining at
Woxna was not based on a feasibility study of mineral reserves
demonstrating economic and technical viability as the Company is of
the view that the establishment of mineral reserves is not
necessary. There is increased uncertainty and risk of economic and
technical failure associated with such production decisions.
Mineral resources that are not mineral reserves do not have
demonstrated economic viability. The estimate of mineral resources
may be materially affected by environmental, permitting, legal,
title, socio-political, marketing or other relevant
issues.
The Board of Flinders is of the view that the costs of
undertaking a feasibility study for a brownfield project of this
type and scale is cost prohibitive. Therefore, the Company
determined it was the most responsible utilization of financial
resources to restart the mine and processing plant to establish
itself in the graphite market as quickly as possible to develop
credible sales and marketing presence. The Company
acknowledges that there is increased uncertainty and risk of
economic and technical failure associated with such production
decisions not supported by pre-feasibility and feasibility studies
that are structured for a large greenfield project. With the cost
of this brownfield project, Flinders believes its financial
decision to restart the Woxna mine was justified without the
contribution from an extensive series of studies.
It is noteworthy that the Woxna mine and processing facility
currently has all environmental, permitting, legal, title,
sociopolitical approvals in place and is in operation. It was
concluded that the risk of restarting the plant was manageable
which is demonstrated in the cost effective manner the facility was
refurbished and restarted for a low capital cost and rapidly
integrated into the graphite market. As previously mentioned
the graphite market is at a 4 year low so the decision was made to
operate the plant on a production ready status until the graphite
market conditions improve. The Woxna plant can be restarted in
a matter of days once viable economics return to the graphite
market. The qualified person as defined in National Instrument
43-101 for the Woxna project, Blair
Way, President and Chief executive Officer and a director of
the Company, and a Fellow of the Australasian Institute of Mining
and Metallurgy, has reviewed and verified the contents of this
release.
On behalf of the Board,
"Blair Way"
Blair
Way, President and CEO
Forward-Looking Information
Certain information in this news release may constitute
forward-looking statements or forward-looking information within
the meaning of applicable securities laws (collectively,
"Forward-Looking Statements"). All statements, other than
statements of historical fact that address activities, events or
developments that the Company believes, expects or anticipates will
or may occur in the future are Forward-Looking Statements.
Forward-Looking Statements are often, but not always, identified by
the use of words such as "seek," "anticipate," "believe," "plan,"
"estimate," "expect," and "intend" and statements that an event or
result "may," "will," "can," "should," "could," or "might" occur or
be achieved and other similar expressions. Forward-Looking
Statements are based upon the opinions and expectations of the
Company based on information currently available to the Company.
Forward-Looking Statements are subject to a number of factors,
risks and uncertainties that may cause the actual results of the
Company to differ materially from those discussed in the
Forward-Looking Statements including, among other things, the
Company has yet to generate a profit from its activities; there can
be no guarantee that the estimates of quantities or qualities of
minerals disclosed in the Company's public record will be
economically recoverable; uncertainties relating to the
availability and costs of financing needed in the future;
competition with other companies within the mining industry; the
success of the Company is largely dependent upon the performance of
its directors and officers and the Company's ability to attract and
train key personnel; changes in world metal markets and equity
markets beyond the Company's control; mineral resources are, in the
large part, estimates and no assurance can be given that the
anticipated tonnages and grades will be achieved or that the
indicated level of recovery will be realized; production rates and
capital and other costs may vary significantly from estimates;
changes in corporate goals and strategies, the Company's
preliminary economic assessment is no longer current or valid and
the Company has no plans to complete a new preliminary economic
assessment, a pre-feasibility or feasibility study on the project,
as a result there is an increased risk of technical and economic
failure for the Woxna graphite project; unexpected geological
conditions; delays in obtaining or failure to obtain necessary
permits and approvals from government authorities; all phases of a
mining business present environmental and safety risks and hazards
and are subject to environmental and safety regulation, and
rehabilitation and restitution costs; the Company does not maintain
insurance against environmental risks; and management of the
Company have experience in mineral exploration but may lack all or
some of the necessary technical training and experience to
successfully develop and operate a mine. Although the Company
believes that the expectations reflected in the Forward-Looking
Statements, and the assumptions on which such Forward-Looking
Statements are made, are reasonable, there can be no assurance that
such expectations will prove to be correct. Readers are cautioned
not to place undue reliance on Forward-Looking Statements, as there
can be no assurance that the plans, intentions or expectations upon
which the Forward-Looking Statements are based will occur.
Forward-Looking Statements herein are made as at the date hereof,
and unless otherwise required by law, the Company does not intend,
or assume any obligation, to update these Forward-Looking
Statements.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or the
accuracy of this news release.
SOURCE Flinders Resources Limited