Central Asia Metals PLC Results of the Copper Bay DFS (4000U)

TIDMCAML

RNS Number : 4000U

Central Asia Metals PLC

18 January 2017

18 January 2017

CENTRAL ASIA METALS PLC

("CAML" or the "Company")

Results of the Copper Bay Definitive Feasibility Study

Central Asia Metals plc (AIM: CAML) today announces the results of the definitive feasibility study (DFS) for its 75% owned Copper Bay tailings project in Chile.

Summary

 
      --   Mineable resource of 34.8 million tonnes 
            at a copper grade of 0.24%, containing 84,635 
            tonnes of copper metal; 
      --   DFS envisages average annual copper production 
            of 8,640 tonnes for seven years; 
      --   Average C1 cash cost of $1.37 per pound of 
            copper produced; 
      --   Initial capital of $88.5 million; 
      --   Post-tax net present value (NPV) at an 8% 
            discount rate of $34.1 million, at a copper 
            price of $3.00 per pound; 
      --   Significant additional resource potential 
            in surf and bay zones; 
      --   Copper Bay development on hold pending an 
            internal review of options. 
 

Project overview

Following the completion of the pre-feasibility study (PFS) in 2015, CAML made the decision to undertake a DFS on its 75% owned Copper Bay tailings project in the Atacama Region of northern Chile. Copper Bay Limited effectively holds the exploitation licence comprising 15.25km(2) .

The project is a site of historic tailings disposal on the beach at Chañaral Bay. This resulted from the Potrerillos and El Salvador copper mines releasing tailings residues from their respective mineral processing operations into the Rio Salado, which outflows into Chañaral Bay. Between 1938 and 1975, it is believed that some 250 million tonnes of tailings were discharged and now sit in the beach, surf and bay zones.

The DFS utilises a dredging operation to recover the copper tailings, a solvent extraction and electro- winning (SX-EW) plant to produce copper cathode and a flotation circuit to produce a copper in concentrate product that could be marketed to nearby smelters.

The DFS was undertaken by Copper Bay with detailed input from the following international consultants:

 
      --   Cube Consulting Pty Ltd, Australia - geology, 
            resources, mineable resources, engineering 
            and financial analysis 
      --   IHC BV Mining Advisory Services, The Netherlands 
            - dredge study and mine design 
      --   M&F Consultores, Chile - environmental impact 
            assessment (EIA), environmental baseline 
            studies 
      --   Wardell Armstrong International, UK - metallurgical 
            testwork 
      --   Propipe S.A., Chile - engineering, processing 
            plant design and capital cost estimation 
 

Mineral Resource estimate

As part of the study, Cube Consulting undertook a Mineral Resource estimate to JORC (2012) standards and demonstrated contained copper of 125,820 tonnes at a 0.1% Cu cut-off grade.

 
 Mineral Resource          Tonnes       Copper     Contained 
                             (kt)    grade (%)    copper (t) 
------------------------  -------  -----------  ------------ 
 Measured and Indicated    39,042         0.24        92,166 
------------------------  -------  -----------  ------------ 
 Inferred                  14,398         0.23        33,654 
------------------------  -------  -----------  ------------ 
 Total                     53,440         0.24       125,820 
------------------------  -------  -----------  ------------ 
 

In addition, historical work obtained in 2008 estimated a non-compliant resource of about 190,000 tonnes of copper within the surf and bay zones.

The mineable resource comprises 34.8 million tonnes of tailings material at a copper grade of 0.24%, containing 84,635 tonnes of copper. The overall mineable resource includes 7% of material that has been classified as an inferred resource and which forms part of the overall dredging production plan.

The difference between Mineral Resource and mineable resource tonnages arises due to material remaining in-situ during the dredging process to form a berm between the operation and the sea, and due to removal from the mine plan of a high acid-consuming lower shell-rich horizon.

Operational summary

The study envisages a nine year project, comprising two years of construction followed by seven years of operation, which would process five million tonnes of material annually at a copper grade of 0.24%. Total copper recoveries in the processing plant are expected to be 72%, yielding an annual average of 7,080 tonnes of copper cathode and 1,560 tonnes of copper in a concentrate grading 20%.

Capital cost

Total initial capital expenditure has been estimated at $88.5 million. This figure excludes contingency of $6.8 million.

The table below shows capital expenditure components and costs:

 
 Component                                      $m 
-------------------------------------------  ----- 
 Dredging                                     10.8 
-------------------------------------------  ----- 
 Site preparation / earthworks                 3.2 
-------------------------------------------  ----- 
 Plant equipment                              39.7 
-------------------------------------------  ----- 
 Plant construction                           25.6 
-------------------------------------------  ----- 
 Pre-production operating costs                3.0 
-------------------------------------------  ----- 
 First fills                                   1.4 
-------------------------------------------  ----- 
 Engineering, procurement and construction 
  management (EPCM)                            4.8 
-------------------------------------------  ----- 
 Total initial capex, excluding 
  contingency                                 88.5 
-------------------------------------------  ----- 
 

Operating cost

The study estimates a C1 life of mine cash cost of copper production in the lower half of the global cost curve at $1.37 per pound, excluding contingency costs of $0.05 per pound.

 
 Component              Per year ($m)   Per pound ($/lb) 
---------------------  --------------  ----------------- 
 Plant                           18.0               0.93 
---------------------  --------------  ----------------- 
 Dredging                         2.5               0.14 
---------------------  --------------  ----------------- 
 G&A                              3.0               0.16 
---------------------  --------------  ----------------- 
 Sales and marketing              2.6               0.14 
---------------------  --------------  ----------------- 
 Total                           26.1               1.37 
---------------------  --------------  ----------------- 
 

NPV and internal rate of return (IRR)

On the current mine plan, the post-tax NPV of the project is $34.1 million at an 8% discount rate and a flat copper price of $3.00 per pound. The project's post-tax IRR is 19.1%.

Gavin Ferrar, Business Development Director, commented:

"We are pleased that the Copper Bay team has delivered the DFS and that following the Company's total investment in Copper Bay of $6.2 million, CAML has added significant value in delivering a project worth $34.1 million based on a copper price of $3.00 per pound.

"Given the current uncertainty with regard to the near and medium term expectations for copper, the CAML Board has recommended that the project remains in our development pipeline while we review our options. We will update the market as and when appropriate."

For further information contact:

 
                                         Tel: +44 (0) 20 
 Central Asia Metals plc                  7898 9001 
Gavin Ferrar, Business Development 
 Director 
 Nick Clarke, Executive Chairman 
 Nigel Robinson, CFO 
 Louise Wrathall, Investor 
 Relations 
 [e-mail] 
 Peel Hunt (Nominated Adviser            Tel: +44 (0) 20 
  & Joint Broker)                         7418 8900 
Matthew Armitt 
 Ross Allister 
 Mirabaud Securities (Joint             Tel: +44 (0) 20 
  Broker)                                7878 3362 
Peter Krens 
 
                                        Tel: +44 (0) 20 
Bell Pottinger (PR Advisers)             3772 2500 
Lorna Cobbett 
 Aarti Iyer 
 Marianna Bowes 
 

Qualified Person Statement

The technical information contained in this announcement has been reviewed and approved by Brian Gregory Fitzpatrick, a consultant working for Cube Consulting Pty. Ltd. Mr. Fitzpatrick is a Competent Person as defined by the JORC code, 2012 Edition, having five years' experience that is relevant to the style of mineralisation and type of deposit described in the announcement, and to the activity for which he is accepting responsibility. Mr. Fitzpatrick consents to the inclusion in the announcement of the matters based on the work undertaken and context in which it appears.

Note to editors

About CAML

Central Asia Metals, an AIM-listed UK company based in London, owns 100% of the Kounrad SX-EW copper project in Kazakhstan. The Company also has a 75% equity interest in Copper Bay Ltd, which is a private company that has conducted a definitive feasibility study at its copper project in Chañaral Bay, Chile. In November 2016, Central Asia Metals signed a framework agreement to acquire an effective 80% interest in the Shuak copper exploration property in northern Kazakhstan. For further information, please visit www.centralasiametals.com.

Glossary

 
 Cu                  Copper 
------------------  ---------------------------------------- 
 Inferred Mineral    That part of a Mineral Resource 
  Resource            for which 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. An Inferred 
                      Mineral Resource has a lower 
                      level of confidence than that 
                      applying to an Indicated Mineral 
                      Resource and must not be converted 
                      to a Mineral Reserve. It is reasonably 
                      expected that the majority of 
                      Inferred Mineral Resources could 
                      be upgraded to Indicated Mineral 
                      Resources with continued exploration. 
------------------  ---------------------------------------- 
 Indicated Mineral   That part of a Mineral Resource 
  Resource            for which 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 and is sufficient 
                      to assume geological and grade 
                      or quality continuity between 
                      points of observation. An Indicated 
                      Mineral Resource has a lower 
                      level of confidence than that 
                      applying to a Measured Mineral 
                      Resource. 
------------------  ---------------------------------------- 
 Measured Mineral    That part of a Mineral Resource 
  Resource            for which quantity, grade or 
                      quality, densities, shape, and 
                      physical characteristics are 
                      estimated with confidence sufficient 
                      to allow the application of Modifying 
                      Factors to support detailed mine 
                      planning and final evaluation 
                      of the economic viability of 
                      the deposit. Geological evidence 
                      is derived from detailed and 
                      reliable exploration, sampling 
                      and testing and is sufficient 
                      to confirm geological and grade 
                      or quality continuity between 
                      points of observation. A Measured 
                      Mineral Resource has a higher 
                      level of confidence than that 
                      applying to either an Indicated 
                      Mineral Resource or an Inferred 
                      Mineral Resource. 
------------------  ---------------------------------------- 
 Mineral Resource    A concentration or occurrence 
                      of solid material of economic 
                      interest in or on the Earth's 
                      crust in such form, grade or 
                      quality and quantity that there 
                      are reasonable prospects for 
                      eventual economic extraction. 
                      The location, quantity, grade 
                      or quality, continuity and other 
                      geological characteristics of 
                      a Mineral Resource are known, 
                      estimated or interpreted from 
                      specific geological evidence 
                      and knowledge, including sampling. 
------------------  ---------------------------------------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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January 18, 2017 02:00 ET (07:00 GMT)