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AYM Anglesey Mining Plc

1.35
0.00 (0.00%)
Last Updated: 08:00:00
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Anglesey Mining Plc LSE:AYM London Ordinary Share GB0000320472 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 1.35 1.30 1.40 1.35 1.35 1.35 61,531 08:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Metal Mining Services 0 -961k -0.0023 -5.87 5.67M

Anglesey Mining PLC Positive Results of Scoping Study

24/07/2017 7:00am

UK Regulatory


 
TIDMAYM 
 
Anglesey Mining plc 
 
24 July 2017        LSE:AYM 
 
                  Anglesey Mining Reports Positive Results of 
                     Scoping Study on Parys Mountain Mine 
 
     Viable mining project demonstrated with initial eight-year mine life 
 
Anglesey Mining plc ("Anglesey" or the "Company") is pleased to report, in 
summary, the results of its recently completed 2017 Scoping Study on its wholly 
owned Parys Mountain copper-lead-zinc project in North Wales. 
 
The Scoping Study was prepared by Micon International Limited (Micon) and 
Fairport Engineering Ltd (Fairport). 
 
The selected base case envisages a mining rate of 1,000 tonnes per day, to 
produce an average annual output of 14,000 tonnes of zinc concentrate at 57% 
Zn, 7,200 tonnes of lead concentrate at 52% Pb and 4,000 tonnes of copper 
concentrate at 25% Cu, annually, over an initial mine life of eight years. 
 
The overall net smelter return (NSR) for the three concentrates, including the 
silver and gold precious metals contributions, is expected to total more than 
$270 million at the forecast metal prices used for the base case models. 
 
The base case yields a pre-tax net present value of $33.2 million, or GBP26.6 
million, at a conservative 10 per cent discount rate, using present day metal 
prices of $1.25 per pound for zinc, $1.00 per pound for lead, $2.50/pound for 
copper, $17.50 per ounce for silver and $1,275 per ounce for gold and at an 
exchange rate of GBP1.00 = $US1.25.  With an estimated pre-production capital 
cost of $53 million, or GBP42 million, this results in an indicated internal rate 
of return (IRR) of 28.3%. 
 
Using longer term metal price projections of $1.35 per pound for zinc and $3.00 
per pound for copper the NPV10 would be $43.2 million, or GBP34.6 million.  At an 
8% discount rate, used to reflect the relatively low risks of the project given 
its advanced level of development and low political risk in the UK, the NPV8 
would be enhanced to $41 million, or GBP32.8 million, for the base case metal 
price scenario and to $53 million, or GBP42 million for the higher long-term 
metal prices, with an IRR of 33% 
 
To illustrate the comparison and put the results of the Scoping Study into 
context, the market capitalisation of the Company at the close of trading on 
21st July was GBP8.9 million. 
 
Importantly, the study was based on only the 2.1 million tonnes of indicated 
resources reported by Micon in 2012.  Micon had also reported a further 4.1 
million tonnes of inferred resources which were not incorporated into the 
Scoping Study.  It is expected that a high proportion of these inferred 
resources will be converted to indicated resources once exploration drilling 
from underground takes place.  These additional resources would be processed 
through the same concentrator plant and would significantly increase the 
projected life of the mine, to perhaps double the mine-life to 15 or 18 years, 
and enhance the NPV. 
 
Bill Hooley, Chief Executive commented "We are very pleased with the results of 
the Scoping Study which demonstrate a viable mine development at Parys Mountain 
and a healthy financial internal rate of return. The base case economic model 
at 1,000 tonnes per day indicates a robust project at consensus forecasts for 
the long-term prices of zinc and copper. This is the first detailed economic 
study of the Parys Mountain project for a number of years and, based on the 
current availability of reconditioned process plant, the estimated 
pre-production capital cost for the project is at a level that could be 
financeable." 
 
The pre-tax net present values, at 10% and 8% discount rates, and internal 
rates of return, are illustrated in the table below, all at a Sterling:US 
dollar exchange rate of GBP1.00 = $US1.25. The table also demonstrates the 
sensitivities of the Parys Mountain Project to zinc and copper prices. 
 
Metal Prices                                 Pre-Tax 
 
Zinc      Lead $ Copper  Silver Gold         Undiscounted  NPV      NPV (8%)  IRR 
$/lb      /lb    $/lb    $/oz   $/0z         $M            (10%)    $M        % 
                                                           $M 
 
1.25      1.00   2.50    17.50  1,275        91.2          33.2     41.0      28.3 
 
1.35      1.00   3.00    17.5   1,275        110.8         43.2     52.4      33.1 
 
 Foreign Exchange assumed to be GBP1.00: $US1.25 
 
Summary of 2017 Scoping Study 
 
Mine Development Plan 
 
The original feasibility studies conducted on the Parys Mountain project in the 
1990s envisaged production at a rate of 1,000 tpd being mined at depth through 
the 300-metre-deep Morris Shaft.  During the period 2006-2010 Anglesey Mining 
carried out a detailed drilling programme on the White Rock Zone which lies 
adjacent to the Morris Shaft and largely overlies the deeper Engine Zone 
deposits, but which extends to surface.  As a result of this drilling the 2012 
resource estimate carried out by Micon included both the White Rock Zone and 
the Engine Zone. 
 
A new mining plan based on a surface decline to access the White Rock zone was 
prepared.  The proposed decline would be developed by mining contractors and 
would be used as the initial means of access to the resource for development 
and mining. Mined ore would be trucked up the decline to the proposed surface 
processing plant. During the initial production phase from White Rock the 
decline would continue to be driven to reach the current bottom of the Morris 
Shaft and beyond.  The shaft would then be dewatered and deepened by 
approximately 150 metres and would be recommissioned as a hoisting shaft for 
the remnant White Rock ore and for the deeper Engine Zone ore. 
 
Production Alternatives 
 
The initial work on the Scoping Study was designed on a throughput of 500 
tonnes per day using conventional processing.  As the first results became 
available it became apparent that a higher daily production throughput would be 
financially more attractive to potential financiers.  Accordingly, assessment 
of increased throughput alternatives of 700 tpd and 1,000 tpd were added to the 
initial scope of the study.  This extra work necessitated additional time and 
resulted in finalisation of the study being delayed beyond its originally 
expected completion date. 
 
In addition, the concept of adding a dense media separation plant ahead of the 
main concentrator was reviewed.  Dense media separation (DMS) is a process 
technology to remove largely non-metal bearing material from the mine feed 
ahead of the concentrator.  This results in a substantial reduction in the 
tonnage of ore to be treated by the concentrator.  Obviously, there are 
additional costs associated with building and operating a DMS plant, and there 
is some loss of metal associated with the DMS tailings, but overall inclusion 
of a DMS plant improves the financial performance. 
 
Concurrent with evaluation of these processing options, mine planning at 700 
tpd and 1,000 tpd was also studied.  Mining would be carried out initially from 
the main decline using rubber-tyred equipment including drill jumbos, 
load-haul-dump machines and trucks to remove development waste to surface and 
production ore to the processing plant.  It was concluded that after an initial 
ramp-up period, the higher production level can be maintained.  In due course, 
the lower level of the shaft will be accessed from the decline and deepened as 
originally planned. The existing hoist and headframe will be refurbished and 
used to bring ore to the surface for delivery to the adjacent processing plant. 
 
The planned processing plant was initially designed in a modular form with an 
initial capacity of 500 tpd throughput expandable to 1,000 tpd to minimise 
up-front capital costs.  The plant will consist of crushing and grinding 
followed by conventional three stage flotation to produce copper, zinc and lead 
concentrates to be shipped to smelters in Europe. 
 
The study clearly showed that the best financial results can be obtained with 
the higher throughputs.  There is relatively little additional capital cost 
required for the higher throughput options and this increase is rapidly offset 
by lower unit operating costs and increased revenue. 
 
Based on these outcomes it was concluded that the preferred development option 
for the Parys Mountain Mine is a 1,000 tpd mine and plant with a DMS section 
ahead off the main concentrator.  This will generate a mine life of 
approximately eight years. 
 
Mineral Resources and Exploration Potential 
 
The 2017 Scoping Study utilises the Micon 2012 JORC Code compliant resource 
estimate of 2.1 million tonnes at 6.9% combined base metals in the indicated 
category.  Micon had also reported a further 4.1 million tonnes at 5.0% 
combined base metals in the inferred category. These inferred mineral resources 
were not included in the current study but would have significantly extended 
the projected operating life of the mine with a consequential increase in the 
resultant estimated valuation. 
 
As reported in 2012, the resource estimate was made using a gross metal product 
value cut-off of $80 per tonne.  It is noted that the cash operating cost of 
the project, prior to royalties and taxes, is forecast at $47 per tonne.  This 
will enable some further review of the resource to be undertaken.  A lower cut 
of-grade would increase the tonnes in the indicated category at the same time 
as reducing the grade.  The larger tonnage would increase the mine life but 
would reduce the annual revenue due to the lower feed grade to the plant.  An 
optimisation study will be required to determine the optimum cut-off grade that 
would provide the maximum increased return over that currently reported. 
 
It is also noted that in addition to the indicated and inferred resources 
reported by Micon, the Parys Mountain area, over which the Company holds the 
mineral rights, contains numerous indications of mineralisation across several 
kilometres many of which have been disclosed in earlier releases and reports. 
The Company has recognised that as most of these indications have been 
encountered in drilling at some depth, further exploration would be more 
effective from underground locations once mining operations commence.  Should 
any of these exploration efforts prove successful an increased throughput and a 
further extended mine life would be the likely outcome. 
 
Scoping Study Results 
 
Capital Costs: 
 
The pre-production capital cost of the preferred option base case including 
mining, DMS, concentrator and infrastructure is estimated at $53 million.  The 
initial capital cost for mine development is estimated to be $13 million, the 
concentrator $29.5 million including $3 million for the DMS plant and 
infrastructure $10 million, for a total of $53 million.  Included within these 
figures is a $4 million contingency provision. 
 
The major component of capital costs is initially associated with the 
processing plant and surface infrastructure.    Capital costs have been 
estimated based on quotes provided by equipment suppliers together with 
construction costs forecast by Fairport. Capital costs for the processing plant 
and infrastructure includes, when suitable, some used and reconditioned plant 
which has been identified as readily available.  The remainder would be new 
equipment. 
 
Despite the quite wide spread in throughputs studied it became apparent that 
the lower throughput options did not present significant savings in capital 
cost.  This is largely due to minimum equipment sizes required for several 
units that could also accomplish the duty for the higher throughputs and with 
the fixed items for work required for buildings, construction etc that do not 
change materially across the throughput range. 
 
Mine development capital costs are based on all new equipment and on mine 
contractor development costs. 
 
Operating Costs: 
 
Operating costs have been developed by Micon and Fairport based on current 
knowledge and experience. Cash operating costs at the higher levels of 
production are forecast at around $47 per tonne of ore treated. Whilst capital 
costs were fairly constant across the throughput spectrum, operating cash costs 
per tonne of ore mined and milled varied significantly with the higher 
throughputs benefitting from much lower costs.  This led to the clear 
conclusion that the higher the throughput the better the financial result. 
 
The following table shows the key outcomes derived for each of the options 
studied. 
 
                    500 tpd no DMS   700 tpd no DMS  700 tpd with    1,000 tpd with 
                                                     DMS             DMS 
 
Life of Mine        16               12              12              8 
(Years) 
 
Initial Capital     48               50              52              53 
Cost $m 
 
Operating cash cost 63               55              53              47 
$/t 
 
NPV10 $m *          9.0              21.6            19.3            33.2 
 
IRR % *             13.8             20.3            18.8            28.3 
 
Payback (Years) *   7                5               5               4 
 
Pre-Tax Based on Cu $2.50/lb, Zn $1.25/lb, Pb $1.00/lb, Ag $17.50/oz, Au $1,275 
/oz 
 
Selected Base Case Option - 1,000 tpd 
 
The 1,000 tpd option is clearly the most favourable financial outcome.  The 
additional capital cost required is only $5 million higher than the lowest cost 
option and at these levels that is not considered critical. 
 
The inclusion of the DMS plant results in the rejection of approximately 37% of 
mined material ahead of the concentrator.  Included within this is 
approximately 4.5% of the metal in feed that will be permanently lost to 
tailings.  As a result of the application of the DMS the net concentrator feed 
to the floatation circuits will be approximately 700 tpd. 
 
The NPV and IRR generated are significantly better at 1,000 tpd than the lower 
throughput options.  Therefore the 1,000 tpd option has been chosen as the base 
case for further consideration. 
 
No detailed study was carried out on a 1,000 tpd throughput without the DMS. 
However, a short study indicated that it is likely that DMS will be far more 
favourable when the plant capacity is expanded to around 1500 tpd, which should 
occur when the inferred resources are upgraded to the indicated category.  The 
incorporation of DMS is therefore considered advisable and prudent. 
 
Metal Production 
 
Metallurgical performance and recovery is based on the large volume of 
information available from test work on Parys Mountain ores over the years. 
 
Total base metal recovery in the concentrator to each of the three copper, zinc 
and lead concentrates is forecast to be 89.8% and taking into account the DMS 
losses overall recovery will be approximately 85.7%.  Significant amounts of 
silver and gold will report to each of the concentrates.  Some free gold will 
be recovered by gravity methods ahead of the concentrates and will be sold as 
Welsh gold. 
 
It is expected that each of the three base metal concentrates will be sold to 
smelters in Europe.  Smelter payment terms and penalties have been based on 
treatment charges currently prevailing from these smelters.  It is possible 
that better terms could be obtained from Chinese smelters from time to time but 
the cost of shipping to the Far East compared to the proximity of shipping to 
continental Europe is likely to make such options less viable. 
 
On average 14,000 tonnes of zinc concentrate at 57% Zn, 7,200 tonnes of lead 
concentrate at 52% Pb and 4,000 tonnes of copper concentrate at 25% Cu, will be 
produced annually.  These figures will vary somewhat during the life of the 
mine as mine feed varies depending upon the particular ore bodies being mined 
at any time. This will result in average annual metal production into 
concentrates of 17.6 million pounds of zinc, 8.3 million pounds of lead and 2.2 
million pounds of copper. 
 
Taking into account shipping costs, smelter terms and penalties, the overall 
net smelter return (NSR) for the three concentrates, including the precious 
metals contribution, is expected to total in excess of $270 million at the 
metal prices used for the base case calculations.  This would represent a net 
smelter return of approximately 72% of the metal value in concentrates sold to 
the smelters. 
 
Further work 
 
Both Micon and Fairport have recommended that further work be carried out, 
including more detailed mine and stope design, underground geotechnical 
studies, additional infill drilling in some locations, more detailed 
engineering studies, additional metallurgical test work, including work to 
improve recovery of specific metals to their own concentrate, and review of 
tailings management and paste processes. Several opportunities for cost 
reduction or productivity improvement have been identified for further study. 
 
It is planned to carry out these and other activities as suitable funds are 
available.  This will then lead to the generation of more detailed production 
and costing feasibility reviews to support project financing. 
 
John Kearney, Chairman stated, "I have been involved with this Company and the 
Parys Mountain project for many years, and I am encouraged that that many of 
the variables and moving parts, including metal prices, treatment charges and 
used plant availability, have now moved in our favour and present a real and 
realisable opportunity for Parys Mountain.  There is of course still much to be 
do but we now have a clear path forward.  We will need to expand the management 
team to make this happen and I look forward to being involved with the future 
financings and the path to development, construction and eventual mine 
production." 
 
Based on the positive results of the Scoping Study, the company now plans to 
engage in discussions with potential financiers or partners for the development 
of the Parys Mountain project.  It is expected that this financing will occur 
in a stepped progression.  A number of recommendations have been made by Micon 
and Fairport regarding further work to optimise and enhance the project as the 
next step ahead of mine development.  It is hoped that financing for this work 
can be arranged as speedily as possible and will be followed by subsequent 
financings to move towards mine construction. 
 
About Anglesey Mining plc 
 
Anglesey is carrying out feasibility and development work at its 100% owned 
Parys Mountain zinc-copper-lead deposit in North Wales, UK with a reported 
resource of 2.1 million tonnes at 6.9% combined base metals in the indicated 
category and 4.1 million tonnes at 5.0% combined base metals in the inferred 
category. 
 
Anglesey holds a 6% interest and management rights to the Grangesberg Iron 
project in Sweden, together with a right of first refusal to increase its 
interest by a further 51%. Anglesey also holds 11.8% of Labrador Iron Mines 
Holdings Limited which holds direct shipping iron ore deposits in Labrador and 
Quebec. 
 
For further information, please contact: 
 
Bill Hooley, Chief Executive +44 (0)7785 572517 
Danesh Varma, Finance Director +44 (0)207 653 9881 
Elliot Hance, Beaufort Securities +44 (0)207 382 8300 
 
 
 
 
END 
 

(END) Dow Jones Newswires

July 24, 2017 02:00 ET (06:00 GMT)

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