TIDMPGM
RNS Number : 3901L
Phoenix Global Mining Ltd
19 April 2018
Phoenix Global Mining Ltd / Ticker: AIM:PGM / Sector: Mining
19 April 2018
Phoenix Global Mining Ltd ('Phoenix' or the 'Company')
Preliminary Economic Assessment Completed for the Empire Mine
Project, Idaho
16% increase in forecast annual copper production
Phoenix Global Mining Ltd (LSE AIM: PGM), the AIM quoted, North
American-focused base and precious metals exploration and
development company, is pleased to announce the results of the
Preliminary Economic Assessment (PEA) for its Empire Mine project
in Custer County, Idaho, USA.
PEA Highlights:
-- 8,124 Tonnes Annual Copper Production
-- $65m average annual revenue, assuming $8,265 per tonne copper price across life of mine
-- 8-Year Mine Life @ 0.24% Copper Cut-Off Grade
-- 76% Heap Leach Copper Recovery
-- $61.2m pre-production capex
-- $4,068 per tonne Copper Cash Cost of Production
-- $53.66 million after tax NPV (7.5% discount)
-- 23.5% IRR after tax
-- PEA is based on open pit oxide copper production only, and
excludes any potential revenue from gold, silver or zinc
Dennis Thomas, the Company's CEO, said: "I am pleased to report
on the successful completion of our PEA on the Empire Mine open pit
oxide deposit. This is a significant milestone for the Company and
brings us an important step closer to copper production.
The PEA shows an average copper cathode production rate of 8,124
tonnes a year from a 2 million tonne a year mine at a cash cost of
production of US$1.85 per pound of copper, an increase of 16% in
annual copper production from our original projections. The project
has robust economics and the 2018/2019 work programme will provide
the opportunity to not only grow the existing Empire copper oxide
resource but also to address the potential economic benefits of the
gold, silver and zinc that were reported in the updated November
2017 resources following the 2017 drilling programme. The PEA does
not consider production of these potential by-products. We are also
confident that the project economics will continue to improve as
the operating and capital costs are further examined and refined
through the course of the BFS and we look forward to updating
shareholders as we progress through the BFS process
A Bankable Feasibility Study (BFS) work programme has been
developed that will commence in Q3 this year and will build from
the current PEA. The BFS will provide the necessary information to
begin construction in 2019 with the goal of production by early
2021."
Preliminary Economic
Assessment
------------------------- ------------ ------------
Average annual copper 8,124 Tonnes
production
------------------------- ------------ ------------
Average annual revenue 65,010,500 US$
------------------------- ------------ ------------
Average annual operating 33,051,375 US$
costs
------------------------- ------------ ------------
Average EBITDA 31,959,125 US$
------------------------- ------------ ------------
Mine life 8 Years
------------------------- ------------ ------------
Revenue per tonne of 8,002 US$ / tonne
copper
------------------------- ------------ ------------
Cash cost of production 4,068 US$ / tonne
------------------------- ------------ ------------
Pre-production capital 61,207,000 US$
costs
------------------------- ------------ ------------
LOM cash flow pre-tax 134,580,000 US$
------------------------- ------------ ------------
LOM cash flow after 117,940,000 US$
tax
------------------------- ------------ ------------
NPV (5%) pre-tax 82,800,000 US$
------------------------- ------------ ------------
NPV (5%) after tax 70,580,000 US$
------------------------- ------------ ------------
NPV (7.5%) pre-tax 64,210,000 US$
------------------------- ------------ ------------
NPV (7.5%) after tax 53,660,000 US$
------------------------- ------------ ------------
Project Overview
The Empire Project is located in southeast-central Idaho, in the
Alder Creek Mining District and encompasses 109 contiguous mining
claims, including 21 patented lode claims and 88 unpatented lode
claims, covering 1774 acres (719 hectares). The Project consists of
a skarn-hosted, open-pit, heap leach SX-EW copper resource and a
deeper-rooted and past-producing high-grade copper, gold, silver
and tungsten vein system. The subject of this PEA is the open-pit
copper oxide resource.
Mineral Resources
The PEA is based on the previously reported November 7, 2017
Resource Update prepared by Hard Rock Consulting. This estimate
encompasses the open-pit copper oxides occurring within an
optimized pit-shell and includes 11,485 million tons in the
Measured and Indicated category, grading 0.52% Cu above a cutoff
grade of 0.184%, and 9,880 million tons of Inferred material above
the same cutoff grading 0.41% Cu.
Mine Planning
The PEA mine plan was prepared by Hard Rock Consulting (HRC)
using GemCom and AutoCad software. There were no constraints on
land boundaries, allowing the pit shell and design pit to encompass
and capture the majority of the MI&I resources in the November
7, 2017 Resource Report. The PEA-level phased pit design was based
on slopes recommended by Call and Nicholas of 45-degrees in the
oxide breccia rock type and 51-degrees in all other rock types. The
2.2 million tonne a year mine plan uses a cut-off grade of 0.24%
copper.
The pit designs are based on PEA-level operating cost
assumptions and appear to be consistent with current labour, fuel,
reagent, and general processing costs.
Operating costs were calculated assuming CAT 777 trucks and CAT
992 loaders and DM45 production drills. The work schedule assumes
two-12 hour shifts per day, 365 days per year at an assumed 92%
availability for haul trucks and loaders, and 85% availability for
all other equipment.
Production Schedule
The PEA mine plan was designed as a series of four phased
push-backs to achieve a balanced production of ore and waste rock
over the life of the mine. The mine preproduction requirements at
the project are minimal given the presence of mineable
mineralization near the bedrock surface. The first pit phases are
planned near the crusher area to minimize haulage distances at the
beginning of the mine life. Waste material from the pit areas will
be utilized for construction of the heap leach pad, crusher area
and other infrastructure.
Crushing, Screening and Agglomeration
Run-of-mine ("ROM") ore will be delivered to a modular
crushing-screening plant at a rate of 350 short tons per hour. This
throughput is based on 75% plant availability on a 24-hour basis.
ROM material is expected to have a P(100) of 24". The leach pad is
currently being designed for crushed material having a P(80) of 3/4
".
The crushing-screening plant will consist of dump hopper, a
vibrating grizzly feeder, a jaw crusher, a secondary screen and
cone crusher, and a tertiary screen and cone crusher. These
components are connected by 30-in wide conveyors.
Ore grade material from the open pit will be crushed to 6.35 mm
and then agglomerated with cement prior to loading on the heap
leach pad in 10m lifts. Agglomerated ore will be conveyed to the
leach pad via a series of grasshopper conveyors feeding a radial
stacker.
Heap Leaching and Pregnant Leach Solution (PLS) Pond
Golder Associates have provided a PEA-level preliminary layout
for a 20-million-tonne heap leach pad. The leach pad is located in
an east-west valley located to the north of the Empire open pit in
an area known as North Gulch. The layout includes perimeter roads
and anchor trenches.
The PLS pond will receive the aggregate flow of PLS from the
leach pad and has a pond capacity of 1,495,000 gallons. The
contingency pond is designed to capture any overflow of the PLS
pond in the event of a 24-hour 100-year storm event that saturates
the leach pad. The design capacity is 8,380,000 gallons.
The leach pad is planned to be constructed in stages in order to
minimize initial capital. Phase 1 will allow for 3 years of
operation before phase 2 will need to be constructed.
Solvent Extraction, Tank Farm and Electrowinning (SX-EW)
Copper-bearing PLS will be pumped to the solvent extraction (SX)
area for processing to extract the copper from solution. The SX
stripping circuit consists of two stripping mixer-settlers in a
series arrangement. Each SX stripper has two mix tanks and a
settler which mix the copper-rich organic from the extraction
settlers with strongly acidic lean electrolyte to transfer copper
from the organic liquid to the electrolyte. Rich electrolyte loaded
with copper leaving the stripping settlers will report to the
loaded organic tanks in the tank farm.
The tank farm will be located below the solvent extraction
facility and contains tanks, pumps, heat exchangers, and filters
that service the SX-EW facilities. The tank farm will store and
transfer organic, electrolyte, reagents, and crud, as well as
provide storage for a 5-day supply of fresh reagents. The tank farm
is designed with secondary containment capable of holding 110% of
the contents of the largest tank.
The electrowinning facility removes copper from the rich
electrolyte solution and plates the copper on cathodes using a
direct current electrical process. The copper sheets are stripped,
or "harvested", on a daily or weekly basis. The sheets are then
sampled, bundled, weighed, and loaded onto flatbed trucks for
transport to market.
A main electrical substation is located in the SX-EW plant area
and receives power from a new 24.9kV power line coming from the
Mackay substation 3 miles away belonging to Lost River Electric
Cooperative in Mackay, Idaho. The Empire substation will transform
power from 24.9 kV to 13.8 kV for the tankhouse, and lower voltages
for distribution to the various areas of the plant. Medium and low
voltage in the various plant areas will be 4160 V and 480 V. Motor
control centres and electrical equipment rooms for the low voltage
distribution are located at the crushing plant, the
stockpile/agglomerator, the EW tankhouse, the SX circuit and tank
farm, the leach pad/PLS pond and up at the truck shop near the
Empire open pit.
Infrastructure and Services
Ancillary facilities at the mine site include a prefabricated
modular guardhouse and truck scale, a pre-engineered metal
warehouse/maintenance building, a truck shop and a fuel
station.
In the town of Mackay, other ancillary facilities will include
the administration building and an assay lab for production samples
from the mine. A separate solution lab will be housed in a room at
the EW building for control of process solutions.
The administration building is provided for the general
administrative personnel, safety, environmental and office
services. Currently, the building is specified to be a
pre-engineered building. Space is also provided for an analytical
laboratory. A warehouse/maintenance building is provided in the
SX-EW plant area and a security gate house is provided at the main
entrance to the plant.
Mine Access Road
The access to the Empire mine follows along the existing Smelter
Avenue that leads from Mackay to the mine site. The mine access
road has been designed for a maximum grade of 8% and will be
widened to 40 ft to accommodate two-way traffic and oversize
vehicles delivering mining equipment. Berms and drainage channels
have been incorporated into the PEA design.
Power Supply and Distribution
Grid power for the Empire mine will be provided by Lost River
Electric Cooperative, located in Mackay, and is assumed in the PEA
at a bulk industrial rate of $0.07 per kW-hr. Power will be
supplied through a new 24.9 kV power line from the Mackay
substation.
Water Supply and Distribution
The Empire copper SX-EW operation will be a zero-discharge
facility. All water that is used in the operation will be recycled
into the raffinate leach solution.
The PEA estimates operational requirements of approximately 386
gpm for the processing circuit, truck shop, and dust control, with
approximately 194 gpm lost to evaporation and irreducible moisture
content in the heap. Fresh water and fire water will be stored in
tanks at the site and will be filled with water from the Company's
Cliff Creek water right and from a constructed catchment basin.
Potable water will be sourced from Mackay.
Commodity Price Projections
In view of the medium-to long term copper supply shortfall a
copper price of $3.75 per pound ($8,265 per tonne) has been used
for the base case analysis. This price is based on the average
forecast copper price as reported by Metal Bulletin Apex
Copper.
Permitting and Environmental
As part of the PEA process, the Company determined that the most
practical and economical mining and processing scenario would be to
design the heap leach pad and SX-EW facility on unpatented claims
north of the open-pit. This decision was made based on slope angles
and safety factor calculations.
As a result, the Empire project will require the submission of a
Plan of Operations and Record of Decision prior to operation.
Project permitting will require a joint agency review and approval
process for disturbance on patented land subject to regulation by
the Idaho Department of Lands (IDL) and unpatented land in the
Salmon-Challis National Forest (SCNF) managed by the Forest
Service. It is anticipated that the Forest Service will be the lead
agency for environmental reviews of the entire project, which will
solicit input from state agencies and other federal agencies.
To initiate permitting, the Company will submit a Plan of
Operation to the Forest Service. The plan must include general
information including dates and duration of proposed operations,
site location, access - including construction specifications for
earthwork, layout of operation, description of operational details,
engineering designs for structures, and environmental protection
measures (EPMs). The EPMs must address air and water quality, fish
and wildlife impacts, cultural resources, protection of scenic
values, and solid and hazardous waste management. There are no
water quality concerns that have been identified in the Project
Area.
The Forest Service will conduct an environmental review, as
required by the National Environmental Policy Act ("NEPA"). Formal
scoping of the NEPA review will be initiated after submittal of the
Plan of Operation. The project may be reviewed under an
Environmental Assessment, since it does not fall into one of the
categories of actions that normally require an Environmental Impact
Statement, particularly since the claim block is not located within
an inventoried roadless area, wilderness area, or proposed
wilderness area.
A reclamation performance bond will be posted prior to the
issuance of the Record of Decision. A single bond instrument could
be issued to satisfy the requirements of the Forest Service and IDL
on the unpatented and patented claims.
Economic Model and Analysis
The PEA for the Empire Project evaluates the project as a heap
leach SX-EW copper cathode operation at a mining rate of 2 million
tonnes of ore a year. The economic viability of the Project was
evaluated using a constant-dollar, after-tax discounted
cashflow.
Mineral resources were incorporated into the economic evaluation
using Measured, Indicated and Inferred material. These are based on
the November 2017 NI 43-101 resources.
After-Tax cash flows were calculated on a yearly basis for the
life of the mine. Federal, state and local taxes were considered
for this evaluation.
The Project is projected to have robust economics at the base
case copper price of $3.75/lb. The projected sensitivities in the
Net Present Value from variations in the discount rate have also
been calculated on an After-Tax basis
The project economics are summarized below:
Imperial Metric
================= ==================== =================== ================================= =================================
Resources Cut-off grade 0.24% 0.24%
Measure & indicated short tons/tonnes 10,024,000 9,096,189
Cu Grade % 0.56% 0.56%
Inferred short tons/tonnes 8,098,000 7,348,457
Cu Grade % 0.46% 0.46%
Waste short tons/tonnes 48,565,000 44,069,873
Strip Ratio 2.68 2.68
----------------------------------------- ---------------- --------------------------------- ---------------------------------
Average ore per
Mine Production day short tons/tonnes 6,200 5,626
Average ore per
year short tons/tonnes 2,200,000 1,996,370
Average waste per
year short tons/tonnes 5,896,000 5,350,272
Life of mine (LOM) years 8 8
-------------------- ------------------------------------- --------------------------------- ---------------------------------
Copper
Production LOM Cu grade % 0.52% 0.52%
Contained copper short tons/tonnes 94,234 85,512
Average
metallurgical
recovery % 76.0% 76.0%
LOM recovered
copper short tons/tonnes 71,618 64,989
Average annual
copper production short tons/tonnes 8,952 8,124
-------------------- ------------------------------------- --------------------------------- ---------------------------------
US$ / short
Base case copper ton / per
LOM Revenue price tonne 7,500 8,265
US$ / pound
copper 3.75 3.75
LOM gross revenue US$ 537,136,080 537,136,080
LOM Net revenue
after freight,
insurance,
royalties US$ 520,084,000 520,084,000
-------------------- ------------------------------------- --------------------------------- ---------------------------------
LOM Operating
Costs Mining US$ 115,480,000
Processing US$ 122,959,000
G&A US$ 22,511,000
Mining licences
& property tax US$ 3,461,000
Total US$ 264,411,000 264,411,000
-------------------- ------------------------------------- --------------------------------- ---------------------------------
LOM EBITDA US$ 255,673,000
--------------------------------------- ------------------ --------------------------------- ---------------------------------
Average
annual
revenue US$ 65,010,500
Average annual operating
cost US$ 33,051,375
Average
annual
EBITDA US$ 31,959,125 31,959,125
--------------------------------------- ------------------ --------------------------------- ---------------------------------
Pre Production
Capital Lease purchase
Costs or contract mining US$ 185,000
Crushing &
agglomerating US$ 11,122,000
Leach pads & ponds US$ 5,419,000
Process plant US$ 21,629,000
Infrastructure US$ 3,435,000
Site general US$ 13,879,000
Utilities US$ 3,538,000
Bonding US$ 2,000,000
Total US$ 61,207,000 61,207,000
-------------------- ------------------------------------- --------------------------------- ---------------------------------
Ongoing
Capital Crushing &
Costs agglomerating US$ 2,145,000
Leach pads & ponds US$ 7,085,000
Mining equipment
lease purchase US$ 18,310,000
Reclamation bonding US$ 4,000,000
Salvage US$ - 643,000
Total US$ 30,897,000 30,897,000
-------------------- ------------------------------------- --------------------------------- ---------------------------------
LOM cash flow pre
Cash Flow tax US$ 134,580,000
LOM cash flow after
tax US$ 117,940,000
-------------------- ------------------------------------- --------------------------------- ---------------------------------
NPV (5.0%) NPV pre tax US$ 82,800,000
NPV after tax US$ 70,580,000
-------------------- ------------------------------------- --------------------------------- ---------------------------------
NPV (7.5%) NPV pre tax US$ 64,210,000
NPV after tax US$ 53,660,000
-------------------- ------------------------------------- --------------------------------- ---------------------------------
IRR IRR pre tax % 26.3% 26.3%
IRR after tax % 23.5% 23.5%
-------------------- ------------------------------------- --------------------------------- ---------------------------------
Operating
Costs / US$ / pound
Pound Copper Mining copper 0.81
US$ / pound
Processing copper 0.86
General & US$ / pound
Administration copper 0.16
Mine License & US$ / pound
Property Tax copper 0.02
Cash Cost / lb US$ / pound
Cu copper 1.85
-------------------- ------------------------------------- --------------------------------- ---------------------------------
Capital Cost Estimates
Capital costs for developing the Empire mine are estimated from
other recent mine development capital costs as well as quotes for
some of the larger components. The operating costs were determined
based on HRC's industry knowledge and prior experience, Info Mine's
Cost Mine Service, and actual costs data from operating mines of
similar size. Golder Associates prepared the heap leach facility
construction capital cost estimate, and M3 Engineering contributed
PEA-level design information and takeoff data for the plant capital
and operating cost estimates.
The open pit mining equipment is assumed to be leased rather
than purchased. The type of lease is assumed to be a capital
equipment lease. Total initial capital is estimated at $67.9
million, including a $6.8 million contingency
Sustaining capital costs are included for phase 2 and 3 of the
leach pad. A portion of the leach pad conveying system is also
delayed for purchase into year 1.
Operating Cost Estimates
Operating costs for the Project were developed from material and
consumption data provided by M3 Engineering, HRC's industry
knowledge and prior experience, and Info Mine's Cost Mine
Service.
Taxes
State, local, and federal taxes, including income taxes and the
Idaho Mining License tax, have been considered in this study, and
are included in the economic analysis.
Royalties
A 2.5 percent royalty, calculated on the gross proceeds less
transportation and refining costs, has been included for all the
metal produced, as required by underlying agreements.
Consultants
The following consultants have contributed to the PEA and have
been involved with the project since Q2 2017:
-- Resources and Mine Planning Hard Rock Consulting LLC - Lakewood, Colorado
-- Open Pit Slope Stability Call & Nicholas - Tucson, Arizona
-- Heap Leach Pad and Ponds Designs Golder Associates Inc - Tucson, Arizona
-- Metallurgical Testwork Minerals Technology LLC - Tucson,
Arizona
-- Process Plant and Infrastructure M3 Engineering &
Technology Corp. - Tucson, Arizona
-- Environmental Base Line and Permits CES - Pocatello, Idaho
Qualified Person
The information in this announcement has been reviewed by Roger
Turner A.C.S.M., M.Sc., M.I.M.M.M., C.Eng., Chief Technical Officer
and Director of the Company. Mr Turner is a graduate mining
engineer from the Camborne School of Mines with an MSc in Economic
Geology from Leicester University with more than 40 years'
experience in mine development, construction and operation and is a
qualified person under the AIM Rules. Mr Turner consents to the
inclusion of the information in the form and context in which they
appear.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
**S**
For further information please visit www.pgmining.com or
contact:
Phoenix Global Dennis Thomas / Richard c/o St Brides
Mining Ltd Wilkins Partners
+44 20 7236
1177
--------------------- ------------------------ --------------
SP Angel Lindsay Mair / Caroline Tel: +44 20
(Nominated Advisor) Rowe 3470 0470
--------------------- ------------------------ --------------
Brandon Hill Jonathan Evans / Oliver Tel: +44 20
Capital (Broker) Stansfield 3463 5000
--------------------- ------------------------ --------------
St Brides Partners Charlotte Page / Susie Tel: +44 20
(Financial PR) Geliher 7236 1177
--------------------- ------------------------ --------------
Notes
Phoenix Global Mining Ltd (AIM: PGM) is a North
American-focused, base and precious metal explorer and developer,
which is fast-tracking the historically-producing Empire Mine in
Idaho, USA, back into production and exploring for cobalt in Idaho
and gold in Canada.
Having established an initial copper oxide JORC and NI 43-101
resource of 19.4 mt grading 0.47% copper ('Cu') for 90,547t
contained Cu, plus zinc, gold and silver, Phoenix has defined a
two-phase development strategy. Phase One is focused on commencing
low cost, open pit production from the current oxide resource,
targeting 7,000t copper cathode per annum. Stage Two will look to
extend the life of mine by targeting the deeper (below c.120m),
higher grade copper sulphides, where intercepts of up to 11.4% Cu
have been recovered. Preliminary Economic Analysis work on the
priority open pit oxide resource is already underway. It is
estimated that only 5% of the potential ore system has been
explored to date and accordingly there is significant opportunity
to increase the resource through phased exploration; the current
resource relates to the oxide resource only, which remains open
along strike and does not include the deeper, higher grade
sulphides. Phoenix owns 80% of Empire.
The Company also holds 100% of the Bighorn and Redcastle
cobalt-copper properties in Idaho, USA, which are located north of
the Empire Mine on the Idaho Cobalt Belt. These are situated close
to the town of Cobalt and are close to projects being advanced by
Canadian junior miners, including eCobalt Solutions and US Cobalt.
Exploration will continue during 2018 to identify drilling
targets.
The Company has also acquired an exclusive option to earn into
80% of the Gordon Lake Project, in the Northwest Territories,
Canada, a high-grade shear hosted gold project comprising of 17
known mineralised zones of which only four have been tested with 59
diamond drill holes. The Company will proceed to examine the
optimal way forward to develop the project as a low-cost
underground gold producer.
With a management team that has successfully constructed,
commissioned and operated mines and low risk, mining-friendly
jurisdictions with excellent infrastructure, Phoenix is looking to
fulfil its ambitions to become a mid-tier base and precious metals
producing company, offering exposure to three high value and high
demand metals with compelling demand/supply fundamentals.
This information is provided by RNS
The company news service from the London Stock Exchange
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