TIDMEUZ
RNS Number : 5083A
Europa Metals Ltd
22 January 2020
22 January 2020
Europa Metals Ltd
("Europa Metals", the "Company" or the "Group") (AIM, AltX:
EUZ)
Operational and Strategic Update, Toral Pb, Zn, Ag Project,
Spain
Europa Metals, the European focused lead-zinc and silver
developer, announces an operational and strategic update in respect
of its wholly owned Toral lead, zinc and silver project ("Toral" or
the "Toral Project") situated in the region of Castilla y León,
north west Spain.
The Company has commenced the year with a review of both its
operations at, and data collated in relation to, its promising
Toral Project, including the resource drilling programme and
scoping study work conducted over the last two years. As a result,
the Board intends to focus the Company's activities on engineering
and processing optimisation during the course of H1 2020. The
current diamond drilling campaign will therefore conclude following
the completion of hole TOD-025, where drilling operations
recommenced earlier this month. Samples from holes TOD-024 and
TOD-025 will be sent for assay, with results expected later in Q1
2020.
Highlights:
-- Strategic review of Toral Project's operations/data:
o Company to focus on engineering and processing workstreams in
H1 2020 in order to optimise development options for Toral,
utilising the significant amount of data generated over the last
two years, including the scoping study, resource delineation
drilling and ongoing geotechnical, metallurgical and hydrological
studies;
o The Board sees limited additional incremental value from
conducting further indicated resource delineation drilling at the
current time, with the project's pre-existing mineral resource
estimate sufficient for economic modelling and mine development
decision-making;
o Newsflow expected to be focused on operational deliverables
and the project's economics; and
o Cost saving initiatives being implemented.
-- Operations:
o Drilling of hole TOD-025 recommenced in early January 2020.
Following completion, samples from both TOD-024 and TOD-025 will be
sent for independent assay;
o Metallurgy: second phase testing ongoing in order to complete
process flowsheet optimisation;
o Hydrology: water level monitoring stations being drilled and
engineering study on the likely water conditions in the potential
future mine is underway;
o Geotechnical: rock type and surface report, to aid mining
model revisions, nearing completion; and
o Environmental studies and stakeholder engagement ongoing.
Drilling
The drilling of diamond drill hole TOD-025 recommenced in early
January 2020 after the Christmas break. Following completion of
this hole, samples from holes TOD-024 and TOD-025 will be sent for
assay, with the results expected to be received later in Q1 2020.
The Board sees limited additional incremental value from conducting
further indicated resource delineation drilling at this time, with
the project's pre-existing resource estimate sufficient for
economic modelling and mine development decision-making.
Metallurgical Testwork
The preliminary metallurgical testwork results announced by the
Company on 18 December 2019 were highly encouraging. Locked cycle
testwork demonstrated the potential for future production of
high-grade lead and zinc concentrates from the Toral orebody. As
announced previously, Wardell Armstrong International ("WAI") made
a series of recommendations for a second phase of metallurgical
testwork, including amendments to the milling and froth flotation
procedure, which could achieve minor but potentially financially
significant improvements to concentrate grades. In particular, a
small reduction in the amount of zinc reporting to lead concentrate
could result in stronger lead concentrate grades and zinc
concentrate recoveries. The second phase of metallurgical testwork
is currently in progress at WAI's laboratory, which involves, inter
alia:
1. Mineralogical examination of the lead rougher concentrate to
indicate whether a slightly finer grind or slightly more selective
flotation reagents would be the most suitable approach;
2. Batch rougher/cleaner tests to evaluate the effects of grinding and/or reagent changes; and
3. Additional locked cycle tests to quantify flotation
performance improvements and generate samples of concentrate for
multi-element analysis (for marketing evaluation).
Following the completion of this work, Europa Metals will use
the additional data obtained for process flowsheet
optimisation.
Hydrogeological
A hydrogeological study has commenced to monitor water levels at
the Toral Project, with a first piezometer hole being drilled in
the central part of the deposit and further piezometer holes
expected to follow. Following receipt of sufficient data from the
various planned piezometers, the Company expects to announce its
initial findings alongside a conceptual study on the likely water
levels and pumping rates within the potential future mine area.
Geotechnical
A geotechnical study is currently being completed, to a
pre-feasibility study level, with more than 60 samples being tested
across four laboratories. This study aims to characterise the rock
types of the Toral Project, thereby enabling further review of the
proposed underground mining method and design. The report will aid
further economic revisions to the mining model, which the Company
intends to announce once the initial findings are available.
Summary
Europa Metals has generated and collated a significant amount of
independently verified data over the last two years and the
Company's efforts will now focus on the completion of the current
second phase metallurgical testwork and optimisation of the Toral
Project's process flow sheet. The Board believes that focusing on
the abovementioned specific tasks will best enable the progression
of Toral in a cost effective and optimal manner and looks forward
to announcing the results of the various workstreams and impact on
the project's economics in due course
Laurence Read, Executive Director of Europa Metals,
commented:
"Europa Metals has generated significant amounts of data on its
Toral Project over the last two years and, in light of the
prevailing challenging market conditions, we believe that further
resource delineation drilling will not generate significant
incremental value for shareholders at the current time.
"Accordingly, whilst we are pleased with progress on the current
drill campaign, once hole TOD-025 has been completed and assay
results released, we shall not commission a JORC resource update or
conduct further drilling for the time being. Through completion of
the second phase of metallurgical testwork and focusing on flow
sheet optimisation and offtake potential, we believe that we can
progress the project and advance such important workstreams whilst
efficiently deploying capital and marketing the project's potential
and viability to both the industry and potential partners."
Myles Campion, Technical Director of Europa Metals, further
commented:
"Our efforts over the past 2-3 years have produced substantial
data on Toral, significantly advancing our understanding and
knowledge of the deposit. Our next steps are key in furthering and
securing the potential development scenarios for Toral. The results
from our ongoing work will enable us to further assess both process
and development options, whilst at the same time conserving
capital."
For further information on the Company, please visit
www.europametals.com or contact:
Europa Metals Ltd
Dan Smith, Non-Executive Director and Company Secretary
(Australia)
T: +61 417 978 955
Laurence Read, Executive Director (UK)
T: +44 (0)20 3289 9923
Strand Hanson Limited (Nominated Adviser)
Rory Murphy/Matthew Chandler
T: +44 (0)20 7409 3494
Turner Pope Investments (TPI) Limited (Broker)
Andy Thacker/Zoe Alexander
T: +44 (0)20 3657 0050
Sasfin Capital Proprietary Limited (a member of the Sasfin
group)
Sharon Owens
T (direct): +27 11 809 7762
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014.
Notes to Editors:
Economic highlights from the Company's selected development
scenario
Estimated economic forecasts for the Toral Project based on the
current level of work (+/-30%) from the Scoping Study (December
2018) comprise:
-- US$110 million net present value (NPV) using a discount rate of 8%;
-- 24.4% internal rate of return (IRR);
-- Estimated US$33 million CAPEX for a proposed 450ktpa design
capacity plant, including associated auxiliary costs, with
infrastructure being situated near portal entrance on the north
side of the deposit;
-- Estimated total CAPEX of US$110 million;
-- US$25 per tonne indicative OPEX processing cost at steady state conditions;
-- US$36 per tonne indicative OPEX mining cost utilising mechanised cut and fill; and
-- 15-year production plan, with significant potential for extension.
Basis for announcing economics
The factors that lead the Company to believe that it has a
reasonable basis for announcing a production target and forecast
financial information are detailed in the Scoping Study and can be
summarised as follows:
Three conceptual underground mining development and production
scenarios were considered and developed throughout the Scoping
Study, resulting in the identification of a preferred scenario,
highlights from which are set out below:
-- decline ramp access to the north of the deposit, targeting
mine production within the higher-grade core towards the centre of
the planned mining blocks;
-- entry to mine via a principal decline reaching various levels;
-- series of internal mining inclined ramps constructed to access levels;
-- mechanised cut and fill (MCAF) mining method proposed;
-- 4x4 metre mine standard development size;
-- a ventilation raise would be drilled (raise-bored) to provide
both adequate ambient conditions underground and a second,
emergency means of access/egress into the mine;
-- ore transported to a flotation process plant by conveyor or
haul truck from the mine and crushed to a suitable product for
milling;
-- milled ore floated by standard flotation technology to
provide lead and zinc concentrate, with silver probably reporting
to the lead concentrate for sale as a combined product; and
-- 4% Zn Eq cut-off used with potential for mine life extension.
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END
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