TIDMSML
RNS Number : 1814Z
Strategic Minerals PLC
16 May 2019
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.
16(th) May 2019
Strategic Minerals plc
("Strategic Minerals", "SML" or the "Company")
Redmoor mining scoping study leads to positive financial
assessment
Strategic Minerals plc (AIM: SML; USOTC: SMCDY), a producing
mineral company actively developing projects prospective for
battery materials, is pleased to announce that Cornwall Resources
Limited ("CRL"), the joint venture vehicle developing the Redmoor
Tin/Tungsten project, has received an updated scoping study it
commissioned from mining consultants Wardell Armstrong
International ("WAI"), following on from the recent Mineral
Resource Estimate update.
On the basis of this study, CRL has carried out a preliminary
assessment of the potential returns from an underground mining
project at Redmoor in Cornwall. This assessment suggests, based on
a nominal plant feed rate of 600ktpa, an IRR of 19%, and an NPV of
$94m, based on a capex of $89m. Further work will now be carried
out to continue to advance and further optimise the project as it
heads towards a pre-feasibility study ("PFS").
Highlights:-
-- Positive outcome from scoping level underground mining study
completed by regionally based consultants WAI; resultant indicative
mine schedule confirms economic potential of project.
-- Study suggests an indicative production rate of 600ktpa; potential mine life of 10+ years.
-- Life of Mine production schedule indicates 7.1Mt @ 1.09% tin equivalent grade.
-- The results of the study have been modelled internally by CRL
and already show strong positive returns, together with potential
for further optimisation.
-- Metallurgical testwork carried out in parallel confirms
amenability of ore to gravity pre-concentration with good potential
recoveries and grades.
-- Significant upside has been identified with exploration
target likely to extend the existing mine life as well as targeting
high margin ores early in the production schedule.
John Peters, Managing Director of Strategic Minerals,
commented:
"The recently completed mining study, while still based on an
Inferred Mineral Resource, provides SML confidence that a major
portion of the recently announced resource of 11.7Mt at 1.17% SnEq
can potentially be economically mined.
"Using the results of this study, SML believes it has confirmed
its view that Redmoor has the potential to be a world class tin and
tungsten mine which will deliver attractive returns on
investment.
"SML looks forward to continuing to add value to the project as
it advances towards a PFS."
Introduction
SML's 50% owned joint venture vehicle CRL has, through
consultant WAI, recently completed an underground mining scoping
study for its Redmoor Tin/Tungsten project located in Cornwall, UK.
These studies have been based on the updated Inferred Mineral
Resource of 11.7 million tonnes @ 0.56% tungsten (WO ), 0.16% tin
and 0.50% copper(1) for a 1.17% tin equivalent grade(2), as
announced by SML in February 2019.
A scoping study and preliminary economic assessment for the
Redmoor project was completed in May 2018. This was based on the
known mineral resource at the time of 4.5Mt @ 1.0% SnEq. The
exploration drilling completed in 2018 and early 2019 resulted in
an increased resource of 11.7Mt @ 1.17% SnEq. The updated scoping
study was focussed on updating the mine study to include the effect
of the significant increase in resource.
Mining Study
WAI was engaged to carry out a preliminary mine design,
conceptual life of mine schedule, and mining capital and operating
cost estimates for the Redmoor project based on the updated
Inferred Mineral Resource announced in February 2019.
The completed mining study focusses on a processing plant and
mine surface infrastructure fed from an underground mine accessed
via a decline.
WAI selected long-hole stoping with backfill as the most
suitable mining method. This assessment was based on the size and
geometry of mineralisation and environmental considerations. The
preliminary mine design includes a decline from surface (portal),
with a central access to the resource from which ore drives can be
developed along strike. A return air rise and an escape way system
were also included in the design.
Mining stope designs were optimised using Mineable Shape
Optimiser ("MSO") software using design criteria based on a cut-off
value assessment of Net Smelter Return ("NSR") in combination with
a geotechnical assessment and mining equipment constraints.
15% dilution with a diluting grade of 0% SnEq and a 95% mining
recovery were assumed in the mining study.
The conceptual life of mine schedule developed by WAI shows a
significant increase in equivalent grade (SnEq) with depth and mine
life.
Key results of the mining study include;
-- Life of mine schedule includes 7.1Mt @ 0.58% WO(3) , 0.10%
Sn, 0.38% Cu for a Tin equivalent grade of 1.09%
-- Average mining cost of US$46.9/tonne ore
-- Initial underground development length of 2.0 km
-- Capital development cost estimated at US$2,770/metre
(1)SML Announcement, 14 February 2019, Redmoor Mineral Resource
Update
(2)Equivalent metal calculation notes; Sn(Eq)% = Sn%*1 +
WO3%*1.43 + Cu%*0.40. Commodity price assumptions: WO3 US$
33,000/t, Sn US$ 22,000/t, Cu US$ 7,000/t. Recovery assumptions:
total WO3 recovery 72%, total Sn recovery 68% & total Cu
recovery 85% and payability assumptions of 81%, 90% and 90%
respectively
CRL Economic analysis
An economic evaluation of the project has been completed by CRL
based on:
-- The mining scoping study results completed by WAI
-- The processing and infrastructure study results completed by Fairport Engineering; and
-- Estimates of other project costs made by CRL
The key modelling parameters are:
Parameter Unit Value
----------------- -------
Tin Price USD/tonne 22,000
Tungsten Price (WO ) USD/MTU 330
Copper Price USD/lb 3.18
Tin Recovery (to concentrate) % 68
Tungsten Recovery (to concentrate) % 72
Copper Recovery (to concentrate) % 85
Tonnes Mined (LOM) Tonnes Millions 7.1
Tin Equivalent Grade Mined
(after dilution) % Sn Eq. 1.09
Project Capital US$M 89
LOM Sustaining Capital US$M 23
LOM Operating Cost US$/Tonne Mined 75
NSR royalty rate 3%
------------------------------------------------------- -------
SML has utilised the schedule and contractor-operated mining
capital and operating costs estimated in the WAI Scoping Mining
Study and the inputs from the scoping study as presented in May
2018 as the basis for an updated financial evaluation of the
potential returns from the Redmoor project.
An economic evaluation of the project has been completed by CRL
based on:
-- The mining study results completed by Mining One
-- The processing and infrastructure study results completed by Fairport Engineering; and
-- Estimates of other project costs made by CRL
Preliminary evaluation indicates the following key (after tax)
results:
-- NPV (@8%): US$94M
-- IRR (%): 19.4%
-- Life of Mine operating margin: 46%
-- Payback time (from first ore): 3.4 years
The results of the scoping study, as well as substantial upside,
provides SML confidence that Redmoor can deliver sufficient returns
for investors and potentially deliver a world class project.
Cautionary Statement and Forward Looking Statements
The results of the mining, processing and surface infrastructure
studies recently completed, and the economic assessment results
based on these studies DO NOT constitute a Scoping Study as defined
in the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves, 2012 (JORC). This is primarily
due to the fact that these studies are based upon a purely an
Inferred Mineral Resource which is by its nature, uncertain. Any
valuation results contained in this announcement are therefore
illustrative only and should not be relied upon for investment
purposes.
This report contains "forward-looking information" that is based
on the Company's expectations, estimates and forecasts as of the
date on which the statements were made. This forward-looking
information includes, among other things, statements with respect
to the Company's business strategy, plans, objectives, performance,
outlook, growth, cash flow, earnings per share and shareholder
value, projections, targets and expectations, mineral reserves and
resources, results of exploration and related expenses, property
acquisitions, mine development, mine operations, drilling activity,
sampling and other data, grade and recovery levels, future
production, capital costs, expenditures for environmental matters,
life of mine, completion dates, commodity prices and demand, and
currency exchange rates. Generally, this forward-looking
information can be identified by the use of forward-looking
terminology such as "outlook", "anticipate", "project", "target",
"likely", "believe", "estimate", "expect", "intend", "may",
"would", "could", "should", "scheduled", "will", "plan", "forecast"
and similar expressions. The forward-looking information is not
factual but rather represents only expectations, estimates and/or
forecasts about the future and therefore need to be read bearing in
mind the risks and uncertainties concerning future events
generally.
Competent Person's Statement
Mining Scoping Study
The information in this announcement that relates to the Mining
Scoping Study is based on information compiled and/or reviewed by
Stephen Holley CEng., a Member of the Institute of Materials,
Minerals and Mining (MIMMM), and who is employed by Wardell
Armstrong International (WAI) as Principal Mining Engineer. Stephen
Holley has sufficient experience which is relevant to the type of
deposit and mining method under consideration and to the activity
which he is undertaking to qualify as a Competent Person "as
defined in the "Note for Mining and Oil & Gas Companies" which
form part of the AIM Rules for Companies". Stephen Holley has
reviewed and consented to the inclusion in the announcement of the
matters relating solely to the Mining Scoping Study based on his
information in the form and context in which it appears.
CRL Economic Analysis
The information in this announcement that relates to the
Preliminary Economic Evaluation is based on information compiled
and/or reviewed by Jonathan Reynolds B.ASc., a Member of the
Australasian Institute of Mining and Metallurgy, and who is
employed by Reynolds Consultant as Principal Consultant. Mr
Reynolds has sufficient experience which is relevant to the
valuations of the type of deposit and mining method under
consideration.
For further information, please contact:
+61 (0) 414 727
Strategic Minerals plc 965
John Peters
Managing Director
www.strategicminerals.net
Follow Strategic Minerals on:
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Twitter: @SML_Minerals
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+44 (0) 20 3470
SP Angel Corporate Finance LLP 0470
Nominated Adviser and Broker
Ewan Leggat
Laura Harrison
Notes to Editors
Strategic Minerals Plc is an AIM-quoted, operating minerals
company actively developing projects prospective for battery
materials. It has an operation in the United States of America and
Australia along with development projects in the UK and Australia.
The Company is focused on utilising its operating cash flows, along
with capital raisings, to develop high quality projects aimed at
supplying the metals and minerals being sought in the burgeoning
electric vehicle/battery market.
In September 2011, Strategic Minerals acquired the distribution
rights to the Cobre magnetite tailings dam project in New Mexico,
USA, a cash-generating asset, which it brought into production in
2012 and which continues to provide a revenue stream for the
Company. This operating revenue stream is utilised to cover company
overheads and invest in development projects orientated to
supplying the burgeoning electric vehicle/battery market.
In January 2016, the portfolio was expanded with the acquisition
of shares in Central Australian Rare Earths Pty Ltd, which holds
tenements in Western Australia prospective for cobalt, nickel
sulphides and rare earth elements. The Company has since acquired
all shares in Central Australian Rare Earths Pty Ltd. In September
2018, the Company entered contracts for the sale of certain CARE
tenements identified as gold targets.
In May 2016, the Company entered into an agreement with New Age
Exploration Limited and, in February 2017, acquired 50% of the
Redmoor Tin/Tungsten project in Cornwall, UK. The bulk of the funds
from the Company's investment were utilised to complete a drilling
programme that year. The drilling programme resulted in a
significant upgrade of the resource. This was followed in 2018 with
a 12-hole 2018 drilling programme has now been completed and the
resource update that resulted was announced in February 2019.
In March 2018, the Company completed the acquisition of the
Leigh Creek Copper Mine situated in the copper rich belt of South
Australia and brought the project into production in April
2019.
The Company, in March 2019, entered into arrangements to acquire
the balance of the Redmoor Tin/Tungsten project in Cornwall,
UK.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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