TIDMTHR
RNS Number : 4599G
Thor Mining PLC
29 June 2012
THOR MINING PLC
MOLYHIL PROJECT (NT)
DEFINITIVE FEASIBILITY STUDY CONFIRMS FINANCIAL RETURNS
AND EARLY CAPITAL PAYBACK POTENTIAL
Dated: 29 June 2012
The Board of Thor Mining Plc ("Thor") (AIM, ASX: THR), is
pleased to advise that following completion of the Definitive
Feasibility Study (DFS) for the Molyhil tungsten and molybdenum
project in Australia's Northern Territory ("Molyhil"), it is
confirmed that Molyhil will deliver attractive financial returns as
well as the early payback of the capital required for its
development.
Highlights
-- EBIT returns provide for 21 month payback period
-- All equity Net Present Value (NPV) of A$28 million with an
Internal Rate of Return (IRR) of 24%, after tax.
-- Production cost of A$125/mtu concentrate compared with revenue of A$354/mtu.
-- DFS outcomes calculated on 4 year ore reserve
-- Substantial upside potential identified on optimisation of
pit design parameters to extend mine life.
Next steps
-- Negotiate concentrate sales and finance agreements
-- Detailed engineering studies.
Molyhil Definitive Feasibility Study (DFS)
Following the publication in May 2012 of an updated open cut ore
reserve statement, Thor has completed the necessary mining and
production schedules and incorporated the results into a
feasibility model, along with previously published parameters
(refer attachment "A" ), to produce an attractive feasibility study
outcome.
The results of the study show:
-- EBIT returns provide for 21 month payback period
-- All equity Net Present Value (NPV) of A$28 million at a
discount rate of 8% (A$23million @ 10% or A$36 million @ 5%) after
tax.
-- All equity Internal Rate of Return (IRR) of 24% after tax.
-- Production cost of A$125/mtu concentrate (after deduction of
molybdenum bi-product credits) compared with revenue of
A$354/mtu.
-- Mine life of 4 years, derived from the updated open cut ore
reserve statement published on 30(th) May 2012.
-- Capital expense of A$70 million.
-- Before tax surplus cash of A$62 million after recovering the original investment.
The DFS has been prepared by Thor Mining PLC using data and
information supplied by third party consultants for key components,
including:
-- Resource estimates and open cut ore reserve statement;
-- Mine planning;
-- Capital and operating costs;
-- Metallurgical processes and outcomes;
-- Commodity prices and exchange rates;
-- Environmental studies
Next steps
The next steps for the Molyhil project involve securing
concentrate sales (off-take) agreements and finance for the project
development, after which it is planned to commence detailed
engineering studies, along with onsite civil works in preparation
for mine and process plant construction and development.
The longer term future for Molyhil
The Molyhil mining plan is derived from the open cut ore reserve
statement, and therefore the life of the proposed operation in the
DFS is of the order of 4 years. Pit optimisation studies by Runge,
however, reveal that a relatively modest 7% improvement in economic
factors has the potential to increase the reserve and mining life
by over 50%. By contrast a 20% deterioration in economic factors
shows a modest 13% reduction in mining life and reserve.
The potential beyond the current estimated life may include:
-- Extending the open cut operation and/or underground mining to
extract more of the 65% of the resource, laterally and at depth,
which is not included in the ore reserve.
-- Potential production exploration targets, including some
recently identified within several kilometres of Molyhil (Figure.
2)
-- Potential from an also recently identified, large magnetic
target below the known Molyhil resource (Figure. 3) which, if it
contains substantial economic mineralisation, could sustain a
longer term underground mining operation.
Figure 1: Tungsten prospects (magnetic anomalies) adjacent
Molyhil
http://www.rns-pdf.londonstockexchange.com/rns/4599G_-2012-6-29.pdf
Figure 2: Modelled magnetic target beneath Molyhil resource
http://www.rns-pdf.londonstockexchange.com/rns/4599G_1-2012-6-29.pdf
Commenting, Mick Billing, Executive Chairman of Thor Mining
said, " We are now approaching the development phase for Molyhil
and pleased that the DFS has so clearly defined the economic
viability as well as the opportunity for an early payback on the
capital required for its development. At the same time, we have
identified ways to improve the mining life of Molyhil significantly
and identified a large magnetic target below the known Molyhil
resource and believe this may sustain a much longer term mining
operation"
Enquiries:
Mick Billing +61 (8) 7324 Thor Mining Executive
1935 PLC Chairman
Allan Burchard +61 (8) 7324 Thor Mining CFO/Company
1935 PLC Secretary
Gerry Beaney/ +44 (0) 207 Grant Thornton Nominated
David Hignell 383 5100 Corporate Adviser
Finance
Nick Emerson/ +44 (0) 1483 Simple Investments Broker
Renato 413500
Rufus
Alex Walters/ +44 (0) 7771 Cadogan PR Financial
Emma Wigan 713608 PR
+44 (0) 207
839 9260
Competent Person statement -
The information in this report that relates to exploration
results is based on information compiled by Richard Bradey, who
holds a BSc in applied geology and an MSc in natural resource
management and who is a Member of The Australasian Institute of
Mining and Metallurgy. Mr Bradey is an employee of Thor Mining PLC.
He has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person
as defined in the 2004 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Richard Bradey consents to the inclusion in the report
of the matters based on his information in the form and context in
which it appears.
The information in this report that relates to the Molyhil
Mineral Resource is based on information compiled by Mr Craig
Allison, who is a Member of The Australasian Institute of Mining
and Metallurgy and Mr Trevor Stevenson who is a Fellow and
Chartered Professional of the Australasian Institute of Mining and
Metallurgy, a member of the Mineral Industries Consultants
Association and is a full-time employee of Runge Limited. Mr
Stevenson has sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration and to
the activity which he is undertaking to qualify as a Competent
Person as defined in the 2004 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Mr Stevenson consents to the inclusion in the report of
the matters based on his information in the form and context in
which it appears.
The Ore Reserves estimate in the Statement was based on
information compiled and reviewed jointly by Mr Alan Dickson and Mr
Andrew Newell. Alan Dickson is a Fellow and Chartered Professional
of the Australasian Institute of Mining and Metallurgy, a member of
the Mineral Industries Consultants Association and is an associate
of Runge. Alan Dickson, has sufficient experience which is relevant
to the style of mineralisation and type of deposit under
consideration and to the activity he is undertaking to qualify him
as a Competent Person as defined in the 2004 Edition of the
Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves. Andrew Newell is a Chartered
Professional Member of the Australasian Institute of Mining and
Metallurgy, a member of the Mineral Industries Consultants
Association and is an associate employee of Runge. Andrew Newell,
has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity he is undertaking to qualify him as a Competent Person as
defined in the 2004 Edition of the Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore
Reserves.Institute of Mining and Metallurgy. Mr Allison is a
full-time employee of Runge Limited. He has sufficient experience
which is relevant to the style of mineralisation and type of
deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2004
Edition of the 'Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves'. Mr Allison consents
to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
Updates on the Company's activities are regularly posted on
Thor's website www.thormining.com, which includes a facility to
register to receive these updates by email.
Attachment A: Molyhil Definitive Feasibility Study (DFS) Input
Parameters
1. Mineral Resource estimate of 4.7 million tonnes averaging
0.28% WO(3) & 0.22% MoS in Indicated and Inferred
categories
2. Open Cut Ore Reserve for the Molyhil deposit of 1.64 million
tonnes averaging 0.42% WO(3) & 0.13% Mo (0.22% MoS )
categorised as Probable
3. Revenue factors:
-- Revenue / mtu scheelite concentrate = US$354/mtu
-- Revenue / pound molybdenum concentrate = US$13.20
-- A$1.00 = US$0.92 during 1(st) year of production
4. Metallurgical recovery
-- Tungsten = 85%
-- Molybdenum = 77.8%
5. Capital cost = A$70 million
6. Operating Factors
-- Mining waste to ore ratio = 5.3 : 1
-- Mining costs = A$24.23 / tonne ore
-- Processing & admin costs = A$65 / tonne ore
The Molyhil Mineral Resource is summarised in Table 1.
Below:
Table 1: January 2012 Molyhil Mineral Resource Estimate
(Reported at 0.1% combined Mo + WO3 Cut-off and above 200mRL
only)
Classification Tonnes Fe MOS(2) WO(3) MOS(2) WO(3)
----------------
t % % % (t) (t)
---------------- ---------- ----- ------- ------ ------- -------
Measured - - - - - -
Indicated 3,820,000 18.8 0.22 0.29 8,200 10,900
Inferred 890,000 15.2 0.25 0.25 2,200 2,200
---------------- ---------- ----- ------- ------ ------- -------
Total 4,710,000 18.1 0.22 0.28 10,400 13,100
---------------- ---------- ----- ------- ------ ------- -------
Note minor rounding errors may occur in compiled totals.
The deposit was estimated by using Ordinary Kriging (OK) grade
interpolation, constrained by interpretations prepared using a
nominal 10 to 15% iron oxide cut-off grade to define the skarn
bodies and a minimum downhole length of 2m.
The Molyhil Open Cut Ore Reserve Statement is summarised in
Table: 2 below
A total of 1.64 Mt of Open Cut Ore Reserves is estimated at the
Molyhil deposit which is categorised as Probable (see Table 2).
Table 2: Total Open Cut Ore Reserves
Ore Reserves
---------------------------------------
Mo WO(3) Mo WO
Tonnage (t) (t)
(Mt) (%) (%)
---------- -------- ----- ------ ------ ------
Proved 0 0 0 0 0
---------- -------- ----- ------ ------ ------
Probable 1.64 0.13 0.42 2,200 6,900
---------- -------- ----- ------ ------ ------
TOTAL 1.64 0.13 0.42 2,200 6,900
---------- -------- ----- ------ ------ ------
Notes: Estimate has been rounded to reflect accuracy
All estimates are on a dry tonne basis The reserve estimate
extends to a maximum depth below surface of 122 metres
This information is provided by RNS
The company news service from the London Stock Exchange
END
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