TIDMCNR
RNS Number : 7465C
Condor Gold PLC
20 October 2015
Condor Gold plc
7(th) Floor
39 St. James's Street
London
SW1A 1JD
Telephone +44 020 74081067
Fax: +44 020 74938633
7.00am on 20 October 2015
Condor Gold plc
("Condor" or "the Company")
Whittle Consulting's Optimisation Study Significantly Enhances
Economics
Condor (AIM:CNR), is pleased to announce the results from
Whittle Consulting Limited's ("Whittle") Enterprise Optimisation
study on La India Project, Nicaragua (the "Study"). The
optimisation involves the application of advanced analytical
techniques to construct a model of the operation from the ore
bodies through mining and ore treatment processes to products sold
to the market with a view to maximising a project's economics. The
study used the reserves/resources and technical studies used in the
NI 43-101 compliant Pre-Feasibility Study ("PFS") and Preliminary
Economic Assessments ("PEA") produced by independent mineral
resource and mining consultants SRK Consulting Limited ("SRK") in
December 2014.
Highlights of Optimisation Study:
-- 22% increase in average gold production for the first 5
years, ranging from 91,000 oz to 165,000 oz gold per annum across
three production scenarios
-- The object of the optimisation is to bring forward future cashflows
-- 29% increase to 866k oz gold from 674k oz gold of contained
gold of Indicated ounces only in the base case La India open pit,
as the pit pushes deeper
-- 29% increase to 1,066k oz gold from 827k oz gold contained
gold of Indicated and Inferred ounces within La India open pit +
two feeder pits
-- 18% increase to 1,544k oz gold from 1,313 oz gold of
contained gold of Indicated and Inferred within all pits and
underground
-- The model shows payback improves to 2-3 production years across three production scenarios
-- The recovered gold over life of mine ranges from 796,000 oz
to 1,437,000 oz gold across the 3 production scenarios
-- AlI in sustaining cash costs remain under US$700 per oz gold for all production scenarios
Mark Child CEO comments:
"The results of the optimisation study are extremely positive.
Indicated ounces of gold within the main La India open pit increase
by 29% to 866k oz gold as the pit pushes deeper. Contained gold
within the pit shells increases 29% to 1,066k oz gold for the main
pit and feeder pits. The annual gold production for the first 5
years increases on average 22% and ranges from 91,000 oz gold to
165,000 oz gold per annum versus the PFS and PEA studies. All in
sustaining cash costs remain under US$700 per oz gold. The
recovered gold over life of mine ranges from 796,000 oz to
1,437,000 oz gold. The average pay back of upfront capital costs is
between two and three production years, highlighting the
outstanding economics and versatility of La India Project.
The optimisation study commenced in May 2015 to maximise the
economics for four production scenarios at La India Project by
bringing forward future cashflows and increasing production ounces.
The main optimisation mechanisms applicable to the La India Project
are: variable cut-off grade, stockpile use,
grind-throughput-recovery, optimised pit and phasing, and
multi-mine scheduling"
Background
Whittle Consulting's (Whittle) Enterprise Optimisation is an
integrated approach to maximising the economics of a mining
business by simultaneously optimizing 10 different mechanisms
across the mining value chain. Condor commissioned the independent
optimisation study in May 2015 to investigate strategic options to
improve project economics. The Study is a strategic planning tool
and is not NI 43-101 compliant. However, Whittle is the recognised
world leader in a specialist field of maximising the economics of a
mine and has completed work for major mining companies: Rio Tinto,
Anglo American, Kinross, AngloGold Ashanti, Barrick, Xstrata,
Vale.
Four production scenarios were assessed, based on the study
methodology employed by SRK and Condor.
-- The PFS case includes measured and indicated material only
from the La India open pit, with a processing capacity of 0.8
million tonnes per annum (mtpa) or 2,200 tonnes per day (tpd).
-- The PEA 1.0 case also includes the La India open pit inferred
material, with a process capacity of 1.0 mtpa or 2,800tpd
-- The PEA 1.2 case includes all of the La India open pit
material, and also includes material from two nearby smaller pits,
America and Central Breccia. The processing capacity for this case
is 1.2 mtpa or 3,300tpd. This is known as scenario "A" in the SRK
reports.
-- The PEA 1.6 case adds underground mining from La India and
America, over and above the material in PEA 1.2. The processing
capacity for this case is 1.6 mtpa or 4,400tpd. This is known as
scenario "B" in the SRK reports.
Validation runs for each case were produced. Optimised runs were
generated using multi-mine scheduling, fully variable cut-off grade
and stockpiling. Reduced capacity cases were run, also optimised
for schedule, cut-off grade and stockpiling.
Grind-throughput-recovery relationships were developed for the La
India open pit material, and this methodology was used to further
optimize the schedule for all cases. Pit and Phase optimisation was
completed on the La India pit using the Enterprise Optimisation
economics.
The optimised cases were developed from work done from May 2015
through to September 2015. The gold price for this work is $1,250
per troy ounce, and the silver price is $19.75/troz in order to
have a like for like comparison with the PFS and PEAs. Metal
recoveries were based on the PFS and PEA work completed in late
2014.
The Enterprise Optimisation methodology included the
Grind-Throughput-recovery (GTR) work being isolated to La India
Vein Set only due to limited metallurgical data on the America and
Central Breccia. Similar results may be recognized when data is
collected and assessed for the America and Central Breccia open pit
and underground material. It is important to note that the 1.0 mtpa
case does not have a PFS/PEA study equivalent, nor corresponding
pit designs, so there is no comparison data. In these cases,
improvements are measured against the initial Enterprise
Optimisation calibration runs.
Table 1. Comparison of optimisation production scenarios to PFS
and PEAs
http://www.rns-pdf.londonstockexchange.com/rns/7465C_1-2015-10-19.pdf
The initial optimised schedule for the PFS 0.8 mtpa / 2,200 tpd
case, utilizing fully variable cut-off grade and a maximum of 1.5
mt of stockpiling. The grind-throughput-recovery methodology
improves economics over the prior case due to faster/coarser
grinding and reduced costs. The Enterprise Optimisation net value
economics generate a larger pit and higher early value phases.
Whilst this exercise did generate a larger pit with more ounces, it
should be stressed that this is not at a PFS level of study.
The PEA 1.2 "A" case, includes all Measured, Indicated
&Inferred material from all three pits, with a nominal
processing capacity of 1.2 mtpa (3,300 tpd). There are two cut-off
grade and stockpile optimised Prober schedules for reduced
processing rates. Cut-off grade and stockpiling improves economics
over the PEA A case, and GTR adds to the economics. Overall, the
Enterprise Optimisation methodology significantly improved
cashflows for the PEA "A" 1.2.
The PEA 1.6 "B" case includes all of the open pit material
available, plus a scoping study view of underground resource from
the La India and America deposits, with a nominal processing
capacity of 1.6 mtpa / 4400 tpd. For the PEA 1.6 "B" case, the
cut-off grade and stockpile schedule improves economics over the
base, and the GTR case adds ounces. The GTR approach had less
impact in this case as only the La India material has sufficient
information for GTR analysis. With the addition of the Central
Breccia (CBZ) material, the America pit material, and the higher
grade underground material, there is proportionally less material
eligible for this methodology. The Enterprise Optimised
economics-base pit and phase optimisation generated significant
cashflow.
Outcomes
This Enterprise Optimisation Study developed the optimised
schedules through variable cut-off grade, stockpile capacity,
grind-throughput-recovery, multi-mine scheduling, and optimised pit
and phasing. Significant outcomes of this process include:
1. An optimised schedule utilizing fully variable cut-off grade
with stockpiling adds significantly to greater production ounces
and enhanced cashflow in all cases.
2. The permitted maximum stockpile capacity of 1.5Mt should be
utilized, and additional stockpile capacity may increase cashflows
and production ounces
3. The grind size-throughput-recovery (GTR) methodology adds
significant improved cashflow and production ounces to the project
in all cases where it can be utilized.
4. Modification of the ultimate pit and phase selection based on
the methodology presented here increases cashflows significantly in
all cases, partially due to incorporating additional tonnes and
ounces.
5. The theory of constraints indicates using US Dollar per
kilowatt hour as the limiting factor in the business system will
improve value. The Enterprise Optimised pit and phase optimisation
based on this, combined with cut-off and GTR optimisation adds
significantly to enhanced economics of the project.
(MORE TO FOLLOW) Dow Jones Newswires
October 20, 2015 02:00 ET (06:00 GMT)
6. When additional mining material is added, processing capacity
may not necessarily need to be increased.
The Enterprise Optimisation methodology as applied in this study
was able to pull cash flow forward.
Conclusion
Overall, the independent optimisation analysis conducted by
Whittle clearly demonstrates the potential to unlock substantial
additional production ounces and cashflows from the La India
Project. Across 3 production scenarios, the model shows production
ounces and cashflows could be increased substantially. The payback
on upfront capital costs reduces to between two to three production
years, and gold production increases on average 22% for the first 5
years. Whittle's study is a strategic planning tool, which is used
to maximise the economics, ahead of a "build decision" and can
often form part of a more detailed Definitive/Bankable Feasibility
Study. It should be noted that Whittle's study is not NI 43-101
compliant and would require re-generation of the PFS and PEAs to
confirm the improvements.
Whittle Consulting Limited
Whittle Consulting's (http://www.whittleconsulting.com.au)
approach to Enterprise Optimisation involves the application of
advanced analytical techniques to construct a model of the
operation from the ore bodies through mining and ore treatment
processes to products sold to the market. Once modelled, a powerful
mathematical optimiser is applied to manipulate the variables which
are regarded as "negotiable", to develop long-term plans that excel
in terms of a wide range of economic and other operational and
business criteria. All the mechanisms required for this study have
been implemented before - most of them on a routine basis. Because
Condor is in an Offer Period as defined under the Takeover Code,
any NPV numbers have to be provided by an Independent Valuer for
the purposes of Rule 29 of the Takeover Code. Whittle, who were
retained before the Offer Period, has acted as an independent
optimisation consultant and not as an Independent Valuer and
therefore NPV numbers are excluded from this announcement. The
Company will consider releasing NPV figures in due course and if
then in an Offer Period, fully in accordance with the requirements
of Rule 29.
Whittle's Enterprise Optimisation study on Condor was prepared
by Richard Peevers (B.A. (Geology), MBA (Finance), M.Eng. (Civil),
Registered Professional Civil Engineer California). Richard holds
degrees in geology, engineering, and business administration and
has managed copper, gold, borate, and nickel optimisation studies
for Whittle Consulting.
Competent Person's Declaration
Information in this announcement that relates to the project
evaluation, Preliminary Feasibility Study, engineering and mine
planning is based on information compiled and/or reviewed by Gerald
David Crawford, the Chief Operating Officer, who is a Registered
Professional Engineer in the states of Colorado and Nevada and
member of the Society of Mining, Metallurgy and Exploration, and a
mining engineer with 38 years of experience in the design and
evaluation of precious and base metal mineral resources. Mr.
Crawford is a full-time employee of Condor Gold plc and has
sufficient experience which is relevant to the mining method and
type of deposit under consideration, and to the type of activity
which he is undertaking to qualify as a Qualified Person as defined
under Canadian NI 43-101. Mr. Crawford consents to the inclusion in
the announcement of the matters based on their information in the
form and context in which it appears and confirms that this
information is accurate and not false or misleading.
Technical Glossary
$/kWhr Dollars per kilowatt-hour, one means
of optimizing mill throughput. Mills
are frequently a bottleneck / constraint
in improvement of net present value
-------------- -----------------------------------------------------
CBZ Central Breccia deposit, a near surface
inferred resource located bout 2km to
the northeast of the La India Pit
-------------- -----------------------------------------------------
CDR Whittle's abbreviation for the Condor
project
-------------- -----------------------------------------------------
COG Cut-off Grade - a grade of gold in ore
that segregates ore from waste or stockpile
material. One of the variables that Prober
manipulates to improve NPV
-------------- -----------------------------------------------------
Constraint A term from Linear Programming, any attribute
of a cash flow and operating cost model
that serves to limit increases in the
net present value of the system
-------------- -----------------------------------------------------
Enterprise Enterprise Optimisation - Whittle terminology
Optimisation for 'Whole Mine' optimisation
-------------- -----------------------------------------------------
GTR Grind- Throughput- Recovery- - Prober
optimisation of the grind size, gold
recovery and mill throughput variables
in the EO process
-------------- -----------------------------------------------------
LP Linear Programming - A mathematical technique
used to optimize a process subject to
a set of constraints
-------------- -----------------------------------------------------
mtpa Million tonnes per annum (metric tonnes)
-------------- -----------------------------------------------------
NPV Net Present Value
-------------- -----------------------------------------------------
P&P Pit and Phase - Whittle optimisation
of the ultimate pit shell and all contained
phases to achieve maximum NPV using EO
net value economics
-------------- -----------------------------------------------------
PEA Preliminary Economic Assessment - A conceptual-level
study used to demonstrate basic economic
viability under Canadian National Instrument
43-101
-------------- -----------------------------------------------------
PFS Preliminary Feasibility Study - Overall
economic accuracy of +/- 25%
-------------- -----------------------------------------------------
Prober The proprietary software package used
by Whittle Consulting Ltd. to implement
Enterprise Optimisation
-------------- -----------------------------------------------------
Stockpile A means of controlling the grade of material
sent through the mill, whereby higher
grades are given preferential treatment,
particularly when a surplus of ore is
available within any mining period.
-------------- -----------------------------------------------------
Theory of All production processes are limited
Constraints by any number of factors, such as advance
rate within the mine, truck capacity,
or power that can be applied through
the SAG mill (for example). Prober uses
these constraints to eliminate unworkable
scenarios, solving for the maximum NPV
achievable within the constraints
-------------- -----------------------------------------------------
tr.oz Troy Ounce, standard transaction unit
for gold and silver sales, at 31.1031
grams per troy ounce.
-------------- -----------------------------------------------------
UG Underground Mining
-------------- -----------------------------------------------------
Validation The initial test of the Whittle cash
Run flow model and fixed-mining Prober run
that ensures that pre-optimisation economics
calculated by Whittle agree with existing
PFS and PEA results
-------------- -----------------------------------------------------
- Ends -
For further information please visit www.condorgold.com or
contact:
Condor Gold plc Mark Child, Executive Luc English, Country
Chairman and CEO Manager Nicaragua
+44 (0) 20 7408 1067 +505 8854 0753
Beaumont Cornish Roland Cornish and
Limited James Biddle
+44 (0) 20 7628 3396
Numis Securities
Limited John Prior and James
Black
+44 (0) 20 72601000
Farm Street Media Simon Robinson
+44 (0) 7593 340107
About Condor Gold plc:
Condor Gold plc was admitted to AIM on 31(st) May 2006. The
Company is a gold exploration and development company with a focus
on Central America.
Condor completed a Pre-Feasibility Study (PFS) and two
Preliminary Economic Assessments (PEA) on La India Project in
Nicaragua in December 2014. The PFS details an open pit gold
mineral reserve of 6.9M tonnes at 3.0g/t gold for 675,000 oz gold
producing 80,000 oz gold p.a. for 7 years. The PEA for the open pit
only scenario details 100,000 oz gold production p.a. for 8 years
whereas the PEA for a combination of open pit and underground
details 140,000 oz gold production p.a. for 8 years. La India
Project contains a total attributable mineral resource of 18.4Mt at
3.9g/t for 2.33M oz gold and 2.68M oz silver at 6.2g/t to the CIM
Code.
In El Salvador, Condor has an attributable 1,004,000 oz gold
equivalent at 2.6g/t JORC compliant resource. The resource
calculations are compiled by independent geologists SRK Consulting
(UK) Limited for Nicaragua and Ravensgate and Geosure for El
Salvador.
(MORE TO FOLLOW) Dow Jones Newswires
October 20, 2015 02:00 ET (06:00 GMT)
Condor Gold (LSE:CNR)
Historical Stock Chart
From Apr 2024 to May 2024
Condor Gold (LSE:CNR)
Historical Stock Chart
From May 2023 to May 2024