Positive Result From Wetar Copper Project DFS

 
TIDMFND 
 
Positive Result From Wetar Copper Project DFS 
       Finders to order long lead items for Stage 1 expansion 
 
                             Highlights 
 
Results of  the Wetar  Copper  Project Definitive  Feasibility  Study 
(DFS) indicate an  economically robust  project with a  mine life  of 
approximately nine years. 
 
Life of mine operating  costs are estimated to  be US$1.00/lb Cu  and 
the project has a total funding requirement of up to US$118 million. 
 
After review of the DFS results, the Finders board has approved: 
 
*          Ordering of long lead items to fast track Stage 1 
  (Expanded Demonstration Plant); and 
*          A further review of mining schedules, waste and ore 
  movement, and mining indirect costs relating to the 
             Stage 2 expansion with the expectation of being able to 
reduce the funding requirement. 
 
Land compensation and community assistance agreements are in place. 
 
Project development will  comprise three stages,  with Stage 1  being 
the expansion of the current  1,800 tpa copper cathode  demonstration 
plant to 5,000 tpa (referred to as the Expanded Demonstration  Plant, 
or EDP), followed  by final  expansion to 23,000  tpa copper  cathode 
utilizing the Whim Creek SX-EW plant under option to Finders.   Stage 
3 is the development of the Lerokis pit and haulage of Lerokis ore to 
the Kali Kuning plant to maintain copper cathode production at 23,000 
tpa. 
 
Stage 1 uses expanded  heap leach areas all  within the footprint  of 
the existing disturbed area from  previous mining at the Kali  Kuning 
deposit.   It  has  the  distinct  advantage  of  making  Finders   a 
profitable copper producer at the earliest opportunity, and of  equal 
importance, it significantly reduces  the construction risk in  Stage 
2.  The timeline for achieving Stage  1 production is expected to  be 
five months after completion of the permitting process. 
 
Stage 2 comprises expansion to 23,000 tpa copper cathode,  comprising 
on-going production  of 5,000  tpa  from the  expanded  demonstration 
plant plus an  additional 18,000 tpa,  utilizing a newly  constructed 
pad area in the adjacent Kali Kuning valley and the Whim Creek  SX-EW 
plant. Subject to  obtaining project finance,  full capacity  cathode 
production is expected  to be  reached within  12 months  of Stage  1 
completion. 
 
Stage 3 development  envisages additional ore  feed from the  Lerokis 
deposit to maintain full production levels at the existing plant  and 
is expected to commence in Year 3 of operations. 
Finders and its local partner, PT Batutua Kharisma Permai, have  been 
working closely with  the appropriate authorities  in preparation  of 
all supporting  documents  ready  for an  application  for  a  mining 
permit. The requirements under the new 2009 Indonesian Mining Law are 
similar to  those  under the  previous  legislation, except  for  new 
articles relating to local communities. 
 
Finders currently foresees  no material impediments  to the grant  of 
the necessary permits once  final implementing rules and  regulations 
are issued by the Government.  Finders is pleased to report that land 
compensation and community development  agreements have already  been 
signed. 
 
Key results  from  the  DFS  on  a  100%  project  basis,  using  the 
approximate current spot  copper price of  US$6,500/t are  summarized 
below. 
 
 
+-------------------------------------------------------------------+ 
| Ore Tonnes*                           |      8.4 | Million tonnes | 
|---------------------------------------+----------+----------------| 
| Strip Ratio                           |      1.0 |                | 
|---------------------------------------+----------+----------------| 
|                                       |          |                | 
|---------------------------------------+----------+----------------| 
| Life of Mine (LOM) Production         |  146,000 | Tonnes cathode | 
|---------------------------------------+----------+----------------| 
| Mine Life                             |      8.7 | Years          | 
|---------------------------------------+----------+----------------| 
| Average Grade (LOM)                   |     2.5% | Cu             | 
|---------------------------------------+----------+----------------| 
| Average Recovery (LOM)                |      71% |                | 
|---------------------------------------+----------+----------------| 
|                                       |          |                | 
|---------------------------------------+----------+----------------| 
| Average operating cost (LOM)          | US$ 1.00 | per lb Cu      | 
|---------------------------------------+----------+----------------| 
| Capital  - Stage 1 / EDP              |   US$ 12 | million        | 
|---------------------------------------+----------+----------------| 
|                 -  Stage  2  /  incl. |          |                | 
| Whim Ck                               |   US$ 91 | million        | 
|---------------------------------------+----------+----------------| 
| Working capital                       |   US$ 15 | million        | 
|---------------------------------------+----------+----------------| 
|                                       |          |                | 
|---------------------------------------+----------+----------------| 
| Pre-tax Payback (Stages 1 & 2)        |      1.4 | years          | 
|---------------------------------------+----------+----------------| 
| Pre-tax NPV10                         |  US$ 240 | million        | 
|---------------------------------------+----------+----------------| 
| Pre-tax IRR                           |      60% |                | 
+-------------------------------------------------------------------+ 
 
* Includes 0.2Mt of Inferred Resource within the pit shell 
 
These capital estimates include  a total of  almost US$40 million  in 
indirect  costs  included  in   vendor  and  contractor   quotations, 
principally for the earth-moving  component of the initial  pre-strip 
and pad construction and for  EPCM (overall management and  delivery) 
for Stage 2. 
 
Finders' management  considers that  significant savings  to  capital 
estimates are possible on the basis of its review of the DFS and have 
identified changes to  the leach pad  design, alternative waste  dump 
locations and improvements to the mining schedule which are likely to 
achieve these savings. 
Furthermore, funding required for the project includes US$12  million 
for extra production  capacity in the  EDP and US$10  million for  an 
acid neutralisation plant  which were not  considered in  preliminary 
studies and are  included in  the DFS as  a means  of de-risking  the 
project  for  debt   finance  and  based   on  experience  from   the 
demonstration plant. 
 
Chris Farmer, Managing Director, said: 
 
"The staged expansion route chosen  for the Wetar project provides  a 
minimum development  risk approach,  and also  greatly increases  the 
company's options to secure favourable  financing terms for the  full 
scale project while retaining the maximum value for shareholders. The 
EDP will be an economic  mine on a stand  alone basis at current  and 
lower copper  prices, and  the full  scale operation  will have  cash 
costs at the mid point of world copper producers." 
 
For further information please contact 
 
 
Finders Resources Ltd: 
Russell         Non-Executive Chairman      [phone] 
Fountain 
Chris Farmer    Managing Director           [e-mail] 
Financial PR: 
Doug Macdonald  Capital      Group      (in [phone] 
                Australia) 
Nick Elwes      College Hill (in the UK)    [phone] 
RFC Corporate Finance Ltd - Nomad: 
Rob Adamson     Managing Director           [phone] 
Stuart Laing    Executive Director          [phone] 
FinnCap -  Finders' Broker for the AIM market: 
Mathew Robinson Corporate Finance Director  [phone] 
Joe Lunn        Analyst                     [phone] 
 
 
Competent Person Statement 
The  information  in  this   report  that  relates  mineral   reserve 
estimation is based on work completed by Mr John Wyche who is a  full 
time employee of Australian Mine Design and Development Pty Ltd and a 
member of the  Australasian Institute  of Mining  and Metallurgy.  Mr 
Wyche 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 Wyche 
consents to the inclusion in the  report of the matters based on  his 
information in the form and context in which it appears. 
 
Background Information on the Wetar Copper Project 
(FND 94% and earning through expenditure) 
The Wetar  Copper Project  comprises two  high grade  deposits,  Kali 
Kuning and Lerokis, which are located  within 3km from the coast  and 
suitable for  open  pit  mining  with  a  low  waste:ore  ratio.  Ore 
reserves,  independently  assessed  by   Australian  Mine  Design   & 
Development Pty Ltd (AMDAD) and in accordance with the JORC Code, are 
as follows: 
 
Wetar copper reserves 
             Category   Tonnes   Grade %   Contained     Contained 
                          (m)       Cu    Copper (kt)     Copper 
                                                      Attributable to 
                                                       Finders (94%) 
                                                           (kt) 
Kali Kuning 
Pit          Proved      4.91      2.5    123                     116 
             Probable    0.85      2.2    19                       18 
             Sub-Total   5.76      2.5    142                     133 
Lerokis Pit  Proved      2.05      2.4    49                       46 
             Probable    0.37      2.3    9                         8 
             Sub-Total   2.42      2.4    58                       55 
Combined     Proved      6.96      2.5    172                     162 
             Probable    1.22      2.2    28                       26 
             Total       8.18      2.5    205                     193 
 
100% project basis. The tonnes and  grades are stated to a number  of 
significant digits reflecting the confidence of the estimate.   Since 
each number and total is rounded individually the columns and rows in 
the above table may not show  exact sums or weighted averages of  the 
reported tonnes and grades. 
 
These Reserves were estimated using a cut-off of 0.5% copper for  two 
pits at Kali Kuning and Lerokis with an overall waste to ore ratio of 
0.98. The results represent a 94% and 97% conversion of Measured  and 
Indicated  Resources  to   Reserves  at  Kali   Kuning  and   Lerokis 
respectively, and form the basis for the production schedules used in 
the DFS. 
In addition there is  a third deposit Meron,  located 2 km from  Kali 
Kuning.  This  prospect  has  a  potential size  of  1mt  @  2.3%  Cu 
(Non-JORC compliant) based  on historical drilling  results from  the 
previous gold mining operation. 
Copper mineral species at  Kali Kuning and  Lerokis are dominated  by 
chalcocite and  covellite, which  are readily  amenable to  bacterial 
assisted leaching, and  chalcopyrite which leaches  faster at  higher 
temperatures.  A two  year laboratory test  program indicated  copper 
recoveries of up to 80%. 
As part  of a  definitive feasibility  study, a  demonstration  SX-EW 
plant with  5  tonnes  per  day  copper  cathode  capacity  has  been 
operational since February 2009 and  is permitted to process  100,000 
tonnes of ore from  the Kali Kuning deposit.   The test heaps are  at 
heights similar  to commercial  operations  worldwide and  the  SX-EW 
technology being used is industry standard. 
SX-EW technology is  currently responsible for  approximately 22%  of 
the world's copper production. 
The project  is  at the  same  location as  an  old gold  mine  which 
operated  between  1989-1997  and   benefits  from  having   existing 
infrastructure in place, particularly a wharf, camp and roads. 
Disclaimer 
This announcement may or may not contain certain "forward looking 
statements". All statements, other than statements of historical 
fact, which address activities, events or developments that Finders 
believes, expects or anticipates will or may occur in the future, are 
forward looking statements. Forward looking statements are often, but 
not always, identified by the use of words such as "seek", 
"anticipate", "believe", "plan", "estimate", "targeting", "expect", 
and "intend" and statements that an event or result "may", "will", 
"can", "should", "could", or "might" occur or be achieved and other 
similar expressions. These forward looking statements reflect the 
current internal projections, expectations or beliefs of Finders 
based on information currently available to Finders. Statements in 
this document that are forward-looking and involve numerous risks and 
uncertainties that could cause actual results to differ materially 
from expected results are based on the Company's current beliefs and 
assumptions regarding a large number of factors affecting its 
business. Actual results may differ materially from expected results. 
There can be no assurance that (i) the Company has correctly measured 
or identified all of the factors affecting its business or the extent 
of their likely impact, (ii) the publicly available information with 
respect to these factors on which the Company's analysis is based is 
complete or accurate, (iii) the Company's analysis is correct or (iv) 
the Company's strategy, which is based in part on this analysis, will 
be successful. Finders expressly disclaims any obligation to update 
or revise any such forward looking statements. 
 
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