TIDMXTR
RNS Number : 4405G
Xtract Resources plc
26 July 2021
For immediate release
26 July 2021
Xtract Resources Plc
("Xtract" or the "Company")
Bushranger Conceptual Open Pit Mining Study
The Board of Xtract Resources Plc ("Xtract" or the "Company") is
pleased to announce the results of a preliminary conceptual open
pit mining study completed by independent consultant, Optimal
Mining Solutions (Pty) Ltd of Australia ("Optimal") on the
Racecourse copper-gold deposit at the Bushranger project in New
South Wales (the "Conceptual Study"). The objective of the
Conceptual Study was to assess the potential of the Racecourse
deposit to be initially developed as an open cut mine and to
identity material variables which could affect the overall
economics of a mining operation at Racecourse.
Highlights
-- Open pit modelling was carried out using the currently
defined JORC (2012) compliant Inferred Resource of 71Mt @ 0.44% Cu
and 0.064 g/t Au at a cut-off of 0.3% Cu, as well as additional
unclassified resources at the Racecourse prospect
-- Analysis of 12 development options utilising various
parameters shows that an open pit based upon the currently defined
Racecourse Mineral Resource, can deliver a positive NPV return at a
0.15% Cu cut-off with a production rate of 20Mt per annum at a
copper price of US$5 per lb
-- The Conceptual Study concluded that the Racecourse deposit
contains significant low-grade tonnes of copper and gold which may
be economically recovered at a copper sales price above US$4 per
lb
-- Opportunities exist to improve the economic viability by
increasing the size of the Mineral Resource, analysing lower
production rates such as 12 or 15Mt per annum and optimising the
pit design together with dump development and tailings design
-- Ongoing assessment of the open pit potential of Racecourse
will model the economic effect of increasing the Racecourse Mineral
Resource based on drill intersections from the Bushranger Phase One
drilling programme and the results of the recently initiated Phase
Two drilling programme
Colin Bird, Executive Chairman said: "We are pleased with the
results of the Conceptual Study as the potential is beginning to
look attractive, with modelling indicating that an open pit based
upon the current geological model and at recently achieved and
forecast copper prices could pay back the pre-production capital
expenditure needed to put the overall project into operation. The
shallower drilling targets which have been identified can
considerably improve the economics of any open pit by enhancing the
tonnage resource and I am further encouraged by the fact that the
modelling key assumptions were based on the Cadia Hill Copper-Gold
Mine located some 75km northwest. We confidently expect to be able
to significantly increase the current Racecourse Mineral Resource,
following the results of the Phase One drilling as well as the
Phase Two drilling programme which has recently commenced, and any
increases to the Mineral Resource will enhance the economics of a
mining operation at Racecourse. Essentially, we see an open pit at
Racecourse as being potentially a viable stand-alone operation
which would facilitate cheaper underground mining utilising all of
the pre-paid surface infrastructure including the process plant.
The effect of this would be that underground extensions could be
looked at on a marginal cost basis, i.e., incremental capex and own
variable cost."
Bushranger Racecourse preliminary conceptual mining study
The Racecourse deposit currently contains a Mineral Resource
estimated as 71Mt @ 0.44% Cu & 0.064g/t Au at a cut-off of 0.3%
Cu, which has been classified as Inferred in accordance with JORC
(2012) (the "Inferred Resource").
The preliminary conceptual open pit optimisation mining study
("Conceptual Study") was completed by independent consultant,
Optimal Mining Solutions (Pty) Ltd of Australia ("Optimal"). Where
appropriate, other independent consultants were used, including
Cartledge Mining and Geotechnics together with Lycopodium (mineral
processing experts). The Conceptual Study was commissioned to
assess the open pit potential based on the currently defined
Inferred Resource. The objective of the Conceptual Study was to
assess the potential of the deposit to be initially developed as an
open cut mine and to identity material variables which could affect
the overall economics of a mining operation at Racecourse.
Shareholders should note that the Conceptual Study is
preliminary in nature and includes inferred mineral resources that
are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be
categorised as mineral reserves. The Conceptual Study is based on
low-level technical and economic assessments and is insufficient to
support estimation of Ore Reserves or to provide assurance of an
economic development case at this stage, or to provide certainty
that the conclusions of the Conceptual Study will be realised.
The Conceptual Study evaluated 12 development options for the
currently estimated Inferred Resource , covering a range of
production rates, copper sale prices and cut-off grades to
calculate a pre-tax net present value ("NPV") using a range of
discount rates . The following items were covered in the Conceptual
Study:
- Project Methodology
- Infrastructure Layout Concept
- Process Plant and Tailings Cost Estimate
- Pit Optimisation (Pseudoflow) Inputs & Results
- Practical Pit Shell Designs
- Scenario Schedule Inputs
- Scenario Schedule Results
- Financial Model Inputs
- Financial Model Results
The various scenarios examined produced an optimal case
(Scenario 10) which processes ore above 0.15% Cu at a throughput of
20mtpa with an assumed copper sale price of US$5/lb. This returns a
positive NPV at both the consultant's preferred 8% discount rate as
well as at a 10% discount rate as set out in Table 1 below
(together with the other scenarios):
Table 1 - Racecourse Open Pit Development
NPVs for Various Development Scenarios
Cu Sale Cut-off 8% Discount 10% Discount
Price Grade Rate (NPV8) Rate (NPV10)
(US$/lb) (Cu%)
Mill Capacity (AU$m) (AU$m)
Scenario (mpta)
-------------- ---------- -------- ------------- --------------
1 10 3.00 0.00 -688,170 -712,187
-------------- ---------- -------- ------------- --------------
2 10 4.00 0.00 -465,566 -529,843
-------------- ---------- -------- ------------- --------------
3 10 5.00 0.00 -53,289 -194,402
-------------- ---------- -------- ------------- --------------
4 20 3.00 0.15 -1,167,808 -1,189,931
-------------- ---------- -------- ------------- --------------
5 20 3.00 0.20 -1,209,649 -1,223,689
-------------- ---------- -------- ------------- --------------
6 20 3.00 0.25 -1,302,094 -1,307,005
-------------- ---------- -------- ------------- --------------
7 20 4.00 0.15 -454,507 -520,732
-------------- ---------- -------- ------------- --------------
8 20 4.00 0.20 -697,709 -746,863
-------------- ---------- -------- ------------- --------------
9 20 4.00 0.25 -953,679 -981,076
-------------- ---------- -------- ------------- --------------
10 20 5.00 0.15 267,768 134,943
-------------- ---------- -------- ------------- --------------
11 20 5.00 0.20 -183,800 -270,536
-------------- ---------- -------- ------------- --------------
12 20 5.00 0.25 -414,955 -482,297
-------------- ---------- -------- ------------- --------------
The development parameters for Scenario 10 are shown in Table 2
below:
Table 2 - Racecourse Open Pit Development
Parameters - Scenario 10
Item Parameters
------------
Mill Capacity (mpta) 20
------------
Copper Sale Price (US$/lb) 5
------------
Cut-off Grade (Cu%) 0.15
------------
Total Ore Tonnes (mt) 162
------------
Strip Ratio (t:t) 4.37
------------
Copper Recovery (%) 86.80
------------
Gold Recovery (%) 82.30
------------
Copper Produced (000lb) 913,788
------------
Gold Produced (oz) 229,114
------------
Mine Life (yrs) 9
------------
Total Capex (AU$m) 1,454
------------
Total Opex (AU$m) 4,152
------------
Total Revenue (AU$m) 6,627
------------
Cashflow (AU$m) 1,021
------------
NPV @ 8% (AU$m) 268
------------
NPV @ 10% (AU$m) 135
------------
Source: Optimal Mining Solutions (Pty) Ltd of Australia
Conceptual Study dated July 2021.
The Conceptual Study concluded that the Racecourse deposit
contains significant low-grade tonnes of copper and gold which may
be economically recoverable at copper sale prices above US$4/lb.
Optimal believe that the economic recovery and processing of ore
with low grades between 0.1 - 0.2% Cu is pivotal for the economic
viability of the Racecourse project, with the sensitivity analysis
showing that for each 0.05% drop in cut-off grade the NPV drops by
as much as AU$341 million. Overall, Optimal believe that taking
account of the project's large size and relatively low grade,
conditions should support the efficient and productive mining of
the deposit. Optimisation of the processing plant capacity, capital
cost, metallurgical recoveries and operating cost will improve the
economic viability, and further opportunities exist to:
- Increase the size of the current Inferred Resource which will
be critical to project viability;
- Analyse lower production rates, such as 12 or 15mpta;
- Evaluate further phase 1 and 2 pit designs; and
- Optimise dump development and the rehabilitation schedule.
The preliminary open pit economic modelling in the Conceptual
Study showed that an open pit based on the current geological
model, which includes the estimated Inferred Resource, at
Racecourse could pay back the cost of capital for a combined open
pit and underground mining operation while being NPV positive based
only on an initial open pit operation. When the results of the
Phase One and Phase Two drilling programmes are incorporated into
the Racecourse mineralisation model, Xtract expects that the
Inferred Resource will increase significantly in size, which will
have a strongly positive effect on the overall economics of a
mining operation at Racecourse.
Further information is available from the Company's website
which details the company's project portfolio as well as a copy of
this announcement: www.xtractresources.com
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").
The person who arranged for the release of this announcement on
behalf of the Company was Colin Bird, Director.
Enquiries :
Xtract Resources Plc Colin Bird, +44 (0)20 3416 6471
Executive Chairman www.xtractresources.com
Beaumont Cornish Limited Roland Cornish +44 (0)207628 3369
Nominated Adviser and Michael Cornish www.beaumontcornish.co.uk
Joint Broker Felicity Geidt
Novum Securities Limited Jon Belliss +44 (0) 207 399 9427
Joint Broker Colin Rowbury www.novumsecurities.com
Qualified Person
Information in this announcement relating to the exploration
works has been reviewed by Edward (Ed) Slowey, BSc, PGeo, a
consultant to Xtract. Mr Slowey is a graduate geologist with more
than 40 years' relevant experience in mineral exploration and
mining, a founder member of the Institute of Geologists of Ireland
and is a Qualified Person under the AIM rules. Mr Slowey has
reviewed and approved the geological content of this
announcement.
Qualified Person
In accordance with AIM Note for Mining and Oil & Gas
Companies, June 2009 ("Guidance Note"), Colin Bird, CC.ENG, FIMMM,
South African and UK Certified Mine Manager and Director of Xtract
Resources plc, with more than 40 years' experience mainly in hard
rock mining, is the qualified person as defined in the Guidance
Note of the London Stock Exchange, who has reviewed the technical
information contained in this press release.
Optimal Mining Solutions (Pty) Ltd of Australia
Optimal Mining Solutions (Pty) Ltd of Australia has reviewed the
information in this announcement which has been derived from the
Conceptual Study and has confirmed that the information so
presented is balanced and complete and not inconsistent with the
Conceptual Study.
TECHNICAL GLOSSARY
The following is a summary of technical terms:
"Au" Gold
"Cu" Copper
"Inferred Mineral That part of a Mineral Resource for which
Resource" quantity and grade (or quality) are estimated
on the basis of limited geological evidence
and sampling. Geological evidence is sufficient
to imply but not verify geological and grade
(or quality) continuity. It is based on exploration,
sampling and testing information gathered
through appropriate techniques from locations
such as outcrops, trenches, pits, workings
and drill holes
"JORC Code" Australasian Institute of Mining and Metallurgy
Joint Ore Reserves Committee code on mineral
resources and ore reserves
"mineralisation" Process of formation and concentration of
elements and their chemical Compounds within
a mass or body of rock
"mpta" Million tonnes per annum
"NPV" Pre-tax net present value
"porphyry" A deposit of disseminated copper minerals
in or around a large body of intrusive rock
"Pseudoflow" The Pseudoflow algorithm is used to outline
the ultimate pit limit by finding the maximum
net value of the blocks extracted.
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