TIDMXTR
RNS Number : 5059S
Xtract Resources plc
06 November 2023
For immediate release
6 November 2023
Xtract Resources Plc
("Xtract" or the "Company")
Bushranger Pit Optimisation & Financial Study
The Board of Xtract Resources Plc ("Xtract" or the "Company") is
pleased to announce the successful completion of an updated Pit
Optimisation & Financial Modelling Study ( " Bushranger Study "
) to examine the economics of open pit extraction of the
copper-gold Mineral Resources currently defined on the Bushranger
Porphyry Copper-Gold Project ("Project") in central New South
Wales, Australia.
Highlights
-- Xtract engaged independent consultants, Optimal Mining
Solutions (Pty) Ltd of Australia ("Optimal Mining") , to
investigate the economics of a 5Mtpa, 20Mtpa or 25Mtpa open pit
mining operation, focussed on the extraction of shallow
higher-grade mineralisation from the Bushranger Project.
-- The Racecourse Prospect Mineral Resource is 512Mt @ 0.22%
CuEq*, at a cut-off of 0.1% CuEq, containing 1.1Mt of copper
equivalent metal and classified as Inferred and Indicated in
accordance with JORC (2012) (see RNS 23 November 2022).
-- The current Racecourse Prospect Mineral Resource has the
potential to be economically mined at mining rates of 20Mpta, or
greater, and at copper prices of US$10,000/t and above.
-- The Bushranger Study concluded that the highest post tax NPV8
of AU$363m (NPV10 - AU$265m) processes ore above 0.10% CuEq at
20mtpa with a sale price of US$11,000/t.
-- The Bushranger Study recognised that optimisation of the
processing plant capacity, capital costs, operating costs and
metallurgical recoveries could greatly improve the economic
outcomes of mining the Racecourse deposit. Addition of an ore
sorter does not add value at this stage.
-- The Company is focusing efforts on further improvements in
metallurgical recovery and potential associated cost benefits
linked to capital and operating costs.
-- The Bushranger Study concluded that due to the large size and
relatively low grade of the Racecourse deposit, conditions are
expected to be excellent for efficient and productive mining. The
current Ascot Mineral Resource is not of sufficient size, or close
enough to surface, to warrant mining.
-- The Company believes that the discovery of the Ascot prospect
porphyry copper deposit (see RNS 9 December 2021) confirms that the
Bushranger Project hosts multiple copper-gold porphyry systems and
further new discoveries could significantly enhance the economics
of the overall Bushranger Project.
*CuEq % = (Cu%) + (Au g/t * 0.6577)% + (Ag g/t * 0.008769) %
Cu Price = US$8800/t, Au Price = US$1800/oz, Ag Price =
US$24/oz
Colin Bird, Executive Chairman said: "The final results from the
Bushranger Study show that the currently defined Mineral Resources
on the Bushranger Project have the potential to be the basis of a
large scale, economic mining operation, producing significant free
cash flows. The outcomes generated from the mining study are a
solid start to understanding the economics of mining the Project's
mineral resources and show there is considerable upside possible
through optimisation of plant capacity, capital costs, operating
costs and metallurgical recoveries, along with potential
incorporation of alternative ore pre-concentration methods. More
work is warranted in all these areas but particularly metallurgical
studies where improved recoveries could have a knock-on effect on
both capital and operating cost. Larger deposits require
significantly more capital expenditure and as such warrant
considerable study and due diligence at an early stage of project
development when optimisation can radically change a Project's
fortunes. We are at this stage and with this in mind, the Company
will continue with its studies working towards the ultimate mine
and operating plan that provides the best scenario for development
of the Bushranger resource."
Final Results from Bushranger Study
Following definition of the updated Mineral Resource for the
Racecourse Prospect and definition of the maiden Mineral Resource
for the Ascot Prospect, Xtract contracted Optimal Mining to
complete the Bushranger Study. The Bushranger Study was aimed at
examining the economics of 5Mtpa (the high-grade option), 20Mtpa or
25Mtpa open pit mining operation.
Where appropriate, input from other independent consultants was
utilised, including Measured Resources (mineral resource estimate),
Lycopodium (mineral processing experts) and TOMRA (ore sorting
technology). The Bushranger Study was commissioned to assess the
open pit potential based on the currently defined Inferred and
Indicated Resources. The objective of the Bushranger Study was to
assess the potential of the deposit to be initially developed as an
open cut mine and to identity material variables which could affect
the overall economics of a mining operation at Bushranger. The
Bushranger Study included inferred and indicated Mineral Resources
some of which are considered too speculative geologically to have
economic considerations applied to them that would enable them to
be categorised as mineral reserves. The Bushranger Study was based
on technical and economic assessments that are insufficient to
support estimation of Ore Reserves or to provide assurance of an
economic development case at this stage, or to provide certainty
that the conclusions of the Bushranger Study will be realised.
The economic limits of the deposit were initially calculated as
part of a pit optimisation assessment using Deswik's pseudoflow
module. The economic limits of the deposit were calculated applying
all foreseeable operating costs and revenues, with capital costs
not included. The pit optimisation assessment was undertaken
utilising the following assumptions:
-- Capital Cost Estimate - AU$713M (10Mtpa), AU$1,159M (20Mtpa)
-- Annual Feed Rate (ROM t) - 5Mpta, 20Mtpa and 25Mtpa
-- Concentrate Output Cu Grade - 25%
-- Copper Metal Recovery - 88%
-- Gold Metal Recovery - 82.3%
-- Silver Metal Recovery - 75%
-- Overall Pit Wall Angle - 46 (0)
-- Block Model Regularisation - 10m x 10m x 10m Cells
-- Ore Dilution Grade Cu - 0%
-- Ore Dilution Grade Au - 0 g/t
-- Ore Dilution Grade Ag - 0 g/t
-- Cut off Grades - 0.10% CuEq*, 0.15% CuEq
-- Copper Sales Price - US$8,000/t, $9,000/t, $10,000/t, $11,000/t
-- Gold Sales Price - US$1,900/oz
-- Silver Sales Price - US$22/oz
-- Exchange Rate AUD - US$0.70
-- Treatment Cost - US$85/conc t
-- Refining Charge Cu - US$/0.085/lb payable copper
-- Refining Charge Au - US$/5.00/oz payable gold
-- Refining Charge Ag - US$/0.50/oz payable silver
-- Mining Cost - AU$1.70/t (20Mtpa), AU$1.67/t (25Mtpa)
-- Depth Penalty for Ore - AU$0.0016/t per vertical metre
-- Depth Penalty for Waste - AU$0.0023/t per vertical metre
-- Environmental Costs - AU$0.052/t (20Mtpa), AU$0.051/t (25Mtpa)
-- Royalty (% of ex-mine value) - 4.0%
-- Processing Cost - AU$11.63/t milled (20Mtpa), AU$8.41
(20Mpta - low-cost option), AU$10.64/t milled (25Mpta)
-- G& A Costs - AU$1.50/t milled (20Mtpa), AU$1.35/t milled
(25Mpta)
-- Freight - AU$127.30/concentrate t
-- Copper Payable % - 95%
-- Gold Payable % - between 90% and 98%, with average of 93%
realised
-- Silver Payable % - 90%
Using the four different scenarios for the copper price (
US$8,000/t, $9,000/t, $10,000/t, $11,000/t), the two different
copper cut-off grades (0.10% CuEq and 0.15% CuEq) and the two
scenarios for the mining rate (20Mtpa and 25Mtpa), a total of 16
cases were assessed in the pit optimisation assessment for the
Racecourse and Ascot Mineral Resources. A separate ore extraction
case was considering for reducing the processing cost from
AU$11.63/t milled to AU$8.41/t milled. Therefore, in total 17 ore
extraction cases were assessed in the pit optimisation assessment
and the physical outcomes are given in Table 1.
Case 12, of 25Mtpa mining rate, $11k/t copper sale price and
0.10% CuEq cut-off grade, provides the highest cashflow of AU$1.9b.
However, as shown by case 17, which is the same as case 12 but with
the lower operating costs of AU$8.41/t milled, improvements to the
operating costs can significantly impact the economic outcomes,
with case 17 generating an additional AU$425M in free cash
flow.
The physical outcomes as set out in the link below show that the
current Ascot Mineral Resource only generated small quantities,
<5Mt of ore, and consequently, is too small to warrant
development in its current form:
Table 1 - Bushranger Project Open Pit Mining Analysis - Ore
Extraction Cases
http://www.rns-pdf.londonstockexchange.com/rns/5059S_1-2023-11-6.pdf
Due to the grade of the copper-gold mineralisation at the
Racecourse deposit, processing costs are nearly 50% of the total
operating costs. Pre-concentration of ore has the potential to
lower operating costs due to reducing processing mass and
accordingly, Xtract had completed tests using the TOMRA ore sorting
system as announced on 20 July 2023.
The results from TOMRA tests were inconsistent and following
further assessment of the TOMRA results, Optimal Mining have
determined that using TOMRA only improves the margin of ore blocks
with extremely low copper grades (<0.1%). Accordingly, the
conclusion from this assessment is that due to the low potential
for providing economic benefits, a sorter for ore pre-concentration
was not included in the final financial modelling.
In the next stage of the Bushranger Study, the economic limits
of selected pit optimisation assessment scenarios were further
developed by Optimal Mining into detailed practical open pit shells
with accompanying large out-of-pit dump designs. The practical pit
shell designs contained batters and berms and haulage ramps to the
process plant and overburden dumps. The pit shells were divided
into mining benches, strips and blocks and interrogated by the
geological model to provide the quantities and qualities for the
seven selected mining scenario schedules.
A detailed dig and dump schedule, including haulage modelling,
was completed for all seven detailed
cases with the results imported into a financial model for
economic assessment.
The seven detailed cases which were fully designed, scheduled
and haulage modelled are as follows:
-- Option 1 - 5mtpa @ $8k/t copper with 0.25% CuEq cut-off grade
-- Option 2 - 20mtpa @ $8k/t copper with 0.15% CuEq cut-off grade
-- Option 3 - 20mtpa @ $9k/t copper with 0.15% CuEq cut-off grade
-- Option 4 - 20mtpa @ $10k/t copper with 0.10% CuEeq cut-off
grade
-- Option 5 - 20mtpa @ $11k/t copper with 0.10% CuEq cut-off grade
-- Option 6 - same as Option 5 with lower processing cost (case
17)
-- Option 7 - same as Option 5 with 5mtpa production rate
Details of the ore extraction cases are set out Table 2 in the
link below and summarised as follows:
Option Option Option Option Option Option Option
Item Units 1 2 3 4 5 6 7
Quantities Unit Total Total Total Total Total Total Total
----- ------ ------ ------ ------ ------ ------ ------
EBITDA AU$ '000 $301,075 $832,934 $1,156,980 $1,546,265 $2,090,895 $2,109,517 $1,730,271
Free cash flow AU$ '000 $185,526 $1,288,250 $1,341,073 $1,541,532 $1,825,980 $1,830,203 $1,549,151
--------------- --------- --------- ---------- ---------- ---------- ---------- ---------- ----------
AU$
NPV8 '000 -$547,800 -$74,120 -$19,431 $185,950 $362,842 $296,797 -$95,473
--------------- --------- --------- ---------- ---------- ---------- ---------- ---------- ----------
Breakeven
Copper Price US$/t $11,973 $8,313 $9,085 $9,349 $9,900 $10,170 $11,570
--------------- --------- --------- ---------- ---------- ---------- ---------- ---------- ----------
AU$
NPV10 '000 -$569,354 -$153,145 -$99,466 $104,862 $264,610 $193,973 -$197,086
--------------- --------- --------- ---------- ---------- ---------- ---------- ---------- ----------
Table 2 - Bushranger Project Open Pit Mining Analysis - Detailed
Schedule Scenarios
http://www.rns-pdf.londonstockexchange.com/rns/5059S_2-2023-11-6.pdf
The following equipment assumptions were applied in the seven
detailed schedule scenarios:
1. The following dig units were used in the schedules:
-- PC4000 - 1,300 bcm/hr on waste and ore
-- PC7000 - 2,000 bcm/hr on ore and 2,100 bcm/hr on waste
-- PC8000 - 2,200 bcm/hr on waste and ore
2. All dig units operate for up to 6,000 hours per annum.
3. The following trucks were used in the schedules:
-- Komatsu 830E - 83 bcm (220t) capacity, loaded by PC4000's and PC7000's.
-- Komatsu 930E - 109 bcm (290t) capacity, loaded by PC8000's.
4. Stockpiling will be pivotal to achieving the required annual ore tonnes.
5. 4 ore stockpiles have been created adjacent to the mill -
high grade (>0.25%), medium grade (0.20%-0.25%), low grade
(0.15%-0.20%), very low grade (<0.15%)
6. Stockpile loaders rehandle from the ore stockpiles to the crusher in grade priority.
7. Drill and blast is not scheduled but is not expected to be a constraint.
The following mining assumptions were applied in the seven
detailed schedule scenarios:
1. Several dependencies were established to ensure the logical
sequence of the dig and dump faces, including:
-- The entire bench above, in the same phase, must be completed before starting the next bench.
-- Blocks must be dug in the correct sequence away from the ramp mouth.
2. Annual ore tonnes are constrained to 5mt, 20mt 25mt, however
monthly ore tonnes are slightly higher so any shortfalls can be
picked up later in the year.
3. In general, the waste dump logic is as follows:
-- Small pit shells (options 1 to 5) only dump to the western dumps.
-- The large 20mtpa pit shell (option 6) dumps to the western and eastern dumps.
4. All options dump in the area adjacent to the processing plant first.
5. Ex-pit high grade and medium grade ore is dumped directly to
the ROM stockpile if capacity exists, otherwise dumped to ore
stockpiles. Low grade ore is always dumped to stockpiles.
Other key mining operation assumptions used in developing the
financial models for the seven detailed schedule options were as
follows:
1. Vegetation Clearing $5,000/ha
2. Topsoil Removal $6.00/bcm
3. Diesel $1.00/litre (includes fuel rebate)
4. Bulk Explosives $1,375/explosive tonne
5. Explosive Ancillaries $300/explosive tonne
6. Multi-skilled Operator $186,000/year
7. Skilled Operator $138,000/year
8. Mechanical Maintainer $192,000/year
9. Electrical Maintainer $204,000/year
10. All labour rates are fully costed including wages,
superannuation, bonuses, on-costs, etc.
11. A labour factor of 1.2 (for coverage, training, leave, etc.)
was applied
12. Each employee works 1,500 hours annually
Conclusions of Bushranger Study
The key conclusions from the Bushranger Study of the Racecourse
and Ascot Mineral Resources on the Bushranger Copper-Gold Porphyry
Project are as follows:
1. The Racecourse deposit contains significant low-grade tonnes
of copper, gold and silver which may be economically recoverable at
copper sale prices above US$10,000/t.
2. An annual production rate of 20mtpa is required to generate a positive post tax NPV8.
3. The highest post tax NPV8 of AU$363m (NPV10 - AU$265m)
(Detailed schedule option 5) processes ore above 0.10% CuEq at
20mtpa with a sale price of US$11,000/t.
4. The highest post tax NPV8 option provides a return on
investment of 7.1% with a payback period of 6 years.
5. Due to its large size and grade, conditions are expected to
be excellent for the efficient and productive mining of the
deposit.
6. The economic recovery of all metals (copper, gold, silver)
from low grade ores (<0.2% Cu) is pivotal for the economic
viability of the project.
7. Optimisation of the processing plant capacity, capital cost,
metallurgical recoveries and operating cost has the potential to
greatly improve the economic viability of the project and further
work is warranted in all of these areas.
8. A higher grade, lower volume, 5mpta mining practical mining
option does not appear to be economic.
9. Addition of an ore sorter does not add value at this stage.
10. The current Ascot Mineral Resource is not of sufficient
size, or close enough to the surface, to warrant mining.
The Company believes that additional tonnes of shallow
higher-grade copper-gold mineralisation has the potential to
significantly positively impact the economics of the overall
Bushranger Copper-Gold Porphyry Project and porphyry targets remain
untested in close proximity to the Racecourse Mineral Resource.
Further information is available from the Company's website
which details the company's project portfolio as well as a copy of
this announcement: www.xtractresources.com
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").
The person who arranged for the release of this announcement on
behalf of the Company was Colin Bird, Executive Chairman and
Director.
Enquiries :
Xtract Resources Plc Colin Bird, +44 (0)20 3416 6471
Executive Chairman www.xtractresources.com
Beaumont Cornish Limited Roland Cornish +44 (0)207628 3369
Nominated Adviser Michael Cornish www.beaumontcornish.co.uk
and Joint Broker Felicity Geidt
Novum Securities Limited Jon Belliss +44 (0)207 399 9427
Joint Broker Colin Rowbury www.novumsecurities.com
Qualified Person
Information in this announcement relating to the exploration
works has been reviewed by Edward (Ed) Slowey, BSc, PGeo, a
consultant to Xtract. Mr Slowey is a graduate geologist with more
than 40 years' relevant experience in mineral exploration and
mining, a founder member of the Institute of Geologists of Ireland
and is a Qualified Person under the AIM rules. Mr Slowey has
reviewed and approved the geological content of this
announcement.
Qualified Person
In accordance with AIM Note for Mining and Oil & Gas
Companies, June 2009 ("Guidance Note"), Colin Bird, CC.ENG, FIMMM,
South African and UK Certified Mine Manager and Director of Xtract
Resources plc, with more than 40 years' experience mainly in hard
rock mining, is the qualified person as defined in the Guidance
Note of the London Stock Exchange, who has reviewed the technical
information contained in this press release.
Optimal Mining Solutions (Pty) Ltd of Australia
Optimal Mining Solutions (Pty) Ltd of Australia has reviewed the
information in this announcement which has been derived from the
Pit Optimisation & Financial Modelling Study and has confirmed
that the information so presented is balanced and complete and not
inconsistent with the Pit Optimisation & Financial Modelling
Study .
Mineral Reserves and Resources
The Company estimates and discloses mineral reserves and
resources using the definitions adopted by JORC. Further details
are available at www.jorc.org. See the "Glossary of Geological and
Mining Terms" for complete definitions of mineral reserves and
mineral resources.
About Mineral Resources
Mineral resources are not mineral reserves and do not have
demonstrated economic viability but do have reasonable prospect for
economic extraction. They fall into three categories: measured,
indicated, and inferred. The reported mineral resources are stated
inclusive of mineral reserves. Measured and indicated mineral
resources are sufficiently well-defined to allow geological and
grade continuity to be reasonably assumed and permit the
application of technical and economic parameters in assessing the
economic viability of the mineral resource. Inferred mineral
resources are estimated on limited information not sufficient to
verify geological and grade continuity or to allow technical and
economic parameters to be applied. Inferred mineral resources are
too speculative geologically to have economic considerations
applied to them. There is no certainty that mineral resources of
any category will be upgraded to mineral reserves.
Important Information about Mineral Reserve and Resource
Estimates
Whilst the Company takes all reasonable care in the preparation
and verification of the mineral reserve and resource figures. the
figures are estimates based in part on forward-looking information.
Estimates are based on management's knowledge, mining experience,
analysis of drilling results, the quality of available data and
management's best judgment. They are, however, imprecise by nature,
may change over time, and include many variables and assumptions
including geological interpretation, commodity prices and currency
exchange rates, recovery rates, and operating and capital costs.
There is no assurance that the indicated levels of metal will be
produced, and the Company may have to re-estimate the mineral
reserves based on actual production experience. Changes in the
metal price, production costs or recovery rates could make it
unprofitable to operate or develop a particular deposit for a
period of time.
Forward Looking Statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identi ed by their use of terms and phrases such as "believe",
"could", "should" "envisage", "estimate", "intend", "may", "plan",
"will" or the negative of those, variations or comparable
expressions, including references to assumptions. These
forward-looking statements are not based on historical facts but
rather on the Directors' current expectations and assumptions
regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the
amount, nature and sources of funding thereof), competitive
advantages, business prospects and opportunities. Such forward
looking statements re ect the Directors' current beliefs and
assumptions and are based on information currently available to the
Directors. A number of factors could cause actual results to differ
materially from the results discussed in the forward-looking
statements including risks associated with vulnerability to general
economic and business conditions, competition, environmental and
other regulatory changes, actions by governmental authorities, the
availability of capital markets, reliance on key personnel,
uninsured and underinsured losses and other factors, many of which
are beyond the control of the Company. Although any forward-looking
statements contained in this announcement are based upon what the
Directors believe to be reasonable assumptions, the Company cannot
assure investors that actual results will be consistent with such
forward looking statements.
TECHNICAL GLOSSARY
The following is a summary of technical terms:
"Ag" Silver
"Au" Gold
"Cu" Copper
"CuEq" Copper equivalent grade, calculated using
assumed metal prices for copper, gold and
other metals
"Indicated Mineral That part of a Mineral Resource for which
Resource" quantity, grade (or quality), densities, shape
and physical characteristics are estimated
with sufficient confidence to allow the application
of Modifying Factors in sufficient detail
to support mine planning and evaluation of
the economic viability of the deposit. Geological
evidence is derived from adequately detailed
and reliable exploration, sampling and testing
gathered through appropriate techniques from
locations such as outcrops, trenches, pits,
workings and drill holes, and is sufficient
to assume geological and grade (or quality)
continuity between points of observation where
data and samples are gathered. (JORC 2012)
"Inferred Mineral That part of a Mineral Resource for which
Resource" quantity and grade (or quality) are estimated
on the basis of limited geological evidence
and sampling. Geological evidence is sufficient
to imply but not verify geological and grade
(or quality) continuity. It is based on exploration,
sampling and testing information gathered
through appropriate techniques from locations
such as outcrops, trenches, pits, workings
and drill holes. (JORC 2012)
"mineralisation" Process of formation and concentration of
elements and their chemical compounds within
a mass or body of rock
"NPV" Post-tax net present value
"porphyry" A deposit of disseminated copper minerals
in or around a large body of intrusive rock
"Pseudoflow" The Pseudoflow algorithm is used to outline
the ultimate pit limit by finding the maximum
net value of the blocks extracted.
"Mtpa" Million tonnes per annum
ENDS
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