REG - Amur Minerals Corp - Kun-Manie Nickel – Copper Sulphide TEO Results
07/06/2022 07:00
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RNS Number : 9126N Amur Minerals Corporation 07 June 2022
07 June 2022
AMUR MINERALS CORPORATION
(AIM: AMC)
Kun-Manie Nickel - Copper Sulphide TEO Results
$333 Million NPV(10%), 15.6% IRR
Amur Minerals Corporation ("Amur" or the "Company"), the exploration and
resource development company, announces the completion of its TEO Project (a
Russian feasibility level study) approved by the Russian Federation State
Committee on Reserves ("GKZ") with regard to its Kun-Manie nickel copper
sulphide project located in the Russian Far East.
Highlights:
· The TEO Project was compiled by Oreoll LLC ("Oreoll") and GKZ Russian
Federation ("RF") certified experts from all project disciplines.
· The GKZ expert commission approved a 19 year open pit operational
design with revenue generation derived from two saleable concentrates allowing
for the recovery of payable values for both copper and nickel. Minor payable
amounts for gold, platinum and palladium will also be recovered.
· The design parameters maximise revenue generation to the RF based on
fully loaded taxation and royalty schemes. The total Net Present Value
("NPV(10%)") deliverable to the RF is projected to be US$ 628 million.
This approach does not optimise the financial return to the project operator
which is addressed during the next and final requirement of the DEMP, the mine
planning stage.
· The GKZ commission reviewed Oreoll's submission. Necessary
adjustments allowing for the identification and approval of operational
parameters and considerations, associated capital / operating costs, the
revenue generation from the sale of individual nickel and copper concentrates
and selected commodity prices were defined. As a result of the expert
evaluations, a Life of Mine ("LOM") cutoff grade ("COG") was defined to be
0.2% Ni. The annual nominal production rate of 12.4 million ore tonnes was
selected.
· Lerchs Grossman open pit production analyses including mining loses
and dilution indicate the average LOM ore production grades for delivery to
the sulphide flotation plant will be 0.66% Ni, 0.18% Cu, 0.015% Co, 0.05
grammes per tonne ("g/t") Au, 0.90 g/t Ag, 0.14 g/t Pt and 0.14 gt/ Pd. The
total cumulative LOM RF NAEN certified Reserve totals 187.1 million ore
tonnes. Approximately 4.6 cubic metres ("m(3)") of waste will be extracted
per ore tonne.
· The total metal delivered from the mine to the processing plant will
be 1.2 million nickel tonnes, 343 thousand copper tonnes, 25.5 thousand tonnes
of cobalt, 25.7 tonnes of platinum, 26.5 tonnes of palladium, 9.0 tonnes of
gold and 168.5 thousand tonnes of silver.
· The Oreoll and GKZ experts have determined the LOM capital cost
estimate is US$ 1.92 billion with US$ 1.14 billion allocated as preproduction
and construction costs, US$ 698 million in sustaining costs and US$ 85 million
in working capital. The increase in the capital cost estimate from
previously reported projections is attributable to the more than doubling of
the previous annual operational capacity impacting the expansion of the open
pit mining fleet, the addition of a copper recovery circuit within the process
plant, tailings expansion, power plant requirements and the need to construct
a dual carriage way access road capable of handling the increased mine support
and concentrate transport needs. All capital expenditure sectors include
contingencies specific to the project and its location.
· Operating costs per ore tonne are projected to be US$ 42.32 including
ore and waste mining costs, depreciation and royalties.
· The LOM combined payable metals from the two concentrates total 627
thousand nickel tonnes, 177 thousand copper tonnes, 1.5 tonnes of gold, 3.3
tonnes of platinum and 3.5 tonnes of palladium. The payable metal schedules
and all fees are based on confidential metal trading schedules provided by two
reputable, recognised industry metals traders.
· Nickel and copper account for 95% of the LOM revenue obtained from
the two intermediate nickel and copper intermediate concentrate products.
The GKZ approved prices for the primary revenue generators of nickel and
copper were US$ 14,468 per Ni tonne (US$ 6.56 per pound) and US$ 6,758 per Cu
tonne (US$ 3.07 per pound). Minor credits were included for gold (US$ 58.90
/ g), platinum (US$ 34.35 / g) and palladium (US$ 80.75 / g).
· For the 19 year production schedule, the NPV(10%) is US$ 333 million
with an Internal Rate of Return ("IRR") of 15.6%. The payback period for the
12.4 million ore tonne per year operation is projected to be 5.5 years.
Robin Young, CEO of Amur Minerals, commented:
"The TEO Project feasibility study results generated by the GKZ expert
commission indicates the Kun-Manie operation should be scaled up to as much as
12.4 million ore tonnes per year for a 19 year open pit operation. This is a
more than doubling of the previously anticipated capacity of 6.0 million ore
tonnes per year.
"Given the current commodity prices for nickel and copper are substantially
higher than the $6.56 per pound nickel and $3.07 per pound copper utilised in
the TEO Project, there is substantial upside potential to enhance the GKZ
commissions NPV10% of US$ 333 million and IRR of 15.6% financial results.
The GKZ Project Feasibility Study did not include sensitivity analysis as
related to metal prices which is typical of western studies. Today's
approximate price of US$ 13.50 per pound nickel and US$4.25 per pound of
copper support the of upside potential to improve the financial results.
"The Company also notes that the present geopolitical situation related to the
Russian Federation will impact the Company's ability to develop Kun-Manie due
to sanctions and restrictions implemented by the Federation. Sources for
capital funding will likely be limited and western companies are no longer
considering investment within Russia."
As a requirement of the terms and conditions of the Detailed Exploration and
Mine Production Licence ("DEMP"), the RF GKZ has reviewed, adjusted and
approved the Oreoll independently compiled RF feasibility study. All
documentation has been registered with all appropriate local, state and
federal agencies. Work was undertaken by RF experienced, licenced and
certified individuals and organisations experienced in the evaluation of
nickel copper sulphide projects.
It has been established that a 19 year open pit operation at an annual rate of
12.4 million ore tonnes should be implemented. Financial results have
derived a NPV(10)) of US$ 333 million and an IRR of 15.6%. A nickel price of
US$ 14,468 per tonne (US$ 6.56 per lb) and a copper price of US$ 6,758 per
tonne (US$ 3.07 per lb) were used in the RF feasibility study. The results
provide the basis for the next phase required as a part of the DEMP where RF
approved mine plans and designs are to be compiled.
The results have been determined by experts utilised by the RF certified
company of Oreoll and the expert commission of the GKZ. The expert opinions
confirm that it is appropriate to more than double the scale of the previously
reported operation.
Keys elements driving the expert commission's approval for the expansion of
the operation are based on NorNickel's wholly owned subsidiary (Gipronickel
Institute) metallurgical test work, flowsheet and plant designs that confirmed
two revenue generating intermediate concentrate products (nickel and copper)
can be generated. This supercedes the previously understood design wherein a
single all commodity bulk concentrate design was planned wherein only nickel
was payable. Scaling up of the operation has required adjustments in most
sectors of the operation and there is now the need to construct a dual
carriage way access road between the mine site and Baikal-Amur ("BAM") rail
station. The RF expert commission have also provided capital and operating
costs for the 12.4 million ore tonne per annum production scenario.
AMC notes that Reserves reported herein are in accordance with Russian Reserve
reporting standards (NAEN). JORC resources and reserves are not allowed for
use in the definition or classification of Reserves in the RF. There are
three Russian categories identified as B, C(1) and C(2). Those that are
within an open pit (mineable) are reported as in-balance reserve whilst those
not mined or below cutoff grade and within the pit are off-balance reserves.
Per the Committee for Mineral Reserves - International Reporting Standards
("CRIRSCO"), RF and western resources / reserves (JORC) are somewhat
correlative. In-Balance Russian B Reserves equate to JORC Proved with
Russian C(1) and portions of C(2) approximating JORC Probable Reserves.
All USD values quoted herein are based on Russian Ruble derived estimates and
have been converted at an exchange rate of 73 RUR per US$.
Company Nomad and Broker Public Relations
Amur Minerals Corp. S.P. Angel Corporate Finance LLP BlytheRay
Robin Young CEO Richard Morrison Megan Ray
Adam Cowl Tim Blythe
+7 (4212) 75 56 15 +44 (0) 203 470 0470 +44 (0) 207 7138 3204
For additional information on the Company, visit the Company's website,
www.amurminerals.com.
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
Notes to Editors
The information contained in this announcement has been reviewed and approved
by the CEO of Amur, Mr. Robin Young. Mr. Young is a Geological Engineer (cum
laude), a Professional Geologist licensed by the Utah Division of Occupational
and Professional Licensing, and is a Qualified Professional Geologist, as
defined by the Toronto and Vancouver Stock Exchanges. An employee of Amur,
previously Mr. Young was employed as an independent consultant with Fluor
Engineers, Fluor Australia and Western Services Engineering, Inc. during which
time his responsibilities included the independent compilation of resources
and reserves in accordance with JORC standards. In addition, he was the lead
engineer and participant of numerous studies and projects requiring the
compilation of independent Bankable Studies utilised to finance small to large
scale projects located worldwide. Mr. Young is responsible for the content
of this announcement which includes information derived by Russian Federation
mining experts under the employ of Ore0ll and the GKZ fully encompassing
commission of experts.
Glossary
DEFINITIONS OF EXPLORATION RESULTS, RESOURCES & RESERVES
EXTRACTED FROM THE JORC CODE: (December 2012) (www.jorc.org)
A 'Mineral Resource' is a concentration or occurrence of material of intrinsic
economic interest in or on the Earth's crust in such form, quality and
quantity that there are reasonable prospects for eventual economic extraction.
The location, quantity, grade, geological characteristics, and continuity of a
Mineral Resource are known, estimated or interpreted from specific geological
evidence and knowledge. Mineral Resources are sub-divided, in order of
increasing geological confidence, into Inferred, Indicated and Measured
categories.
An 'Inferred Mineral Resource' is that part of a Mineral Resource for which
tonnage, grade and mineral content can be estimated with a low level of
confidence. It is inferred from geological evidence and assumed but not
verified geological and/or grade continuity. It is based on information
gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes which may be limited or of uncertain
quality and reliability.
An 'Indicated Mineral Resource' is that part of a Mineral Resource for which
tonnage, densities, shape, physical characteristics, grade and mineral content
can be estimated with a reasonable level of confidence. It is based on
exploration, sampling and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits, workings and drill
holes. The locations are too widely or inappropriately spaced to confirm
geological and/or grade continuity but are spaced closely enough for
continuity to be assumed.
A 'Measured Mineral Resource' is that part of a Mineral Resource for which
tonnage, densities, shape, physical characteristics, grade and mineral content
can be estimated with a high level of confidence. It is based on detailed and
reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes. The locations are spaced closely enough to confirm
geological and/or grade continuity.
An 'Ore Reserve' is the economically mineable part of a Measured and/or
Indicated Mineral Resource. It includes diluting materials and allowances for
losses which may occur when the material is mined. Appropriate assessments and
studies have been carried out, and include consideration of and modification
by realistically assumed mining, metallurgical, economic, marketing, legal,
environmental, social and governmental factors. These assessments demonstrate
at the time of reporting that extraction could reasonably be justified. Ore
Reserves are sub-divided in order of increasing confidence into Probable Ore
Reserves and Proved Ore Reserves.
TEO Project - Технико-экономическое обоснование
As part of the terms and conditions of the DEMP licence, the compilation of a
TEO Project (Feasibility Study) is required.
Requirements of both local permitting and international fundraising require
increasing numbers of projects in Russia and CIS to carry out dual technical
studies. The principal focus of Russian mining project design is to satisfy
Russian regulatory requirements. However, the technical documents are not
generally accepted by international banks for project finance outside Russia.
Similarly, international study documents are not accepted for design and
permitting in Russia. With the Kun-Manie project being located within Russia,
the Company has focused on Russian required documentation and approvals.
The Russian design and permitting system is centered around two key statutory
technical documents termed the TEO Konditsy and the TEO Project. These
documents are subject to regulatory approval and are broadly equivalent to the
international prefeasibility study and the feasibility study respectively. A
comparison of study criteria suggests similar approaches are used for the main
technical disciplines in project design by the time projects are at the point
of construction, but there is divergence on environmental matters where the
OVOS (Russian Environmental and Social Impact Assessment ("ESIA") equivalent)
differs from an ESIA in some significant areas. The key differences relate to
project footprint, level of technical detail required for baseline studies,
level of public consultation, consideration and disclosure of information,
labour, coverage of community and social issues and the preparation of a
Social and Environmental Management System (SEMS).
It has been noted that the Russian Design Institutes often leave the detailed
economic analysis until compilation of the TEO Project. A common problem is
design teams tend to look for "technological solutions" without due concern
for project economics. The end result of this can be mines that are
overcapitalized and hence sub-optimal. It can be concluded that Design
Institutes have the monopoly on Russian permitting reports. Similarly, Russian
institutes generally do not prepare feasibility studies to international
standards as established by western requirements, and this continues to be the
case. Therefore, to achieve the requirements meeting both RF and western
studies that have a significant overlap but are meant to obtain two unique
results their is necessary for international consultants and Russian Design
Institutes to cooperate on a joint work programme during the mine planning
stage. Key issues ensuring the most appropriate final operation configuration
must be considered throughout the next phase and that the environmental work
programme covers the additional studies necessary for the ESIA should western
financing be a part of the funding package.
The AMC compiled TEO Project includes all available operational details and
economic assessment of the potential of Kun-Manie. This input will also be
utilised in any subsequent international funding packages.
Resource and Reserve Determinants - West Versus Russian
Russia uses its own mineral reporting and classification system ("NAEN") which
differs substantially in the calculation procedures used to compile the
internationally (such as JORC) recognised resource / reserve classification
systems. The Russian system divides mineral reserves into seven categories, in
three major groups, based on the level of exploration performed. These are:
· Fully explored/ reserves (A, B, C1),
· Evaluated reserves (C2), and
· Prognostic/inferred resources (P1, P2, P3).
Computation of NAEN reserves follows a set of prescribed manual procedures
established by the Ministry of Natural Resources of the Russian Federation.
The NAEN Code, was developed by the Society of Experts on Mineral Resources in
close cooperation with the Russian State Commission of Reserves (GKZ). A
CRIRSCO Public Reporting Template was updated in 2014 allowing for a
comparison of the NAEN versus western codes. It currently provides Guidelines
on the Alignment of Russian Minerals Reporting Standards and a mapping of the
Russian and the CRIRSCO categorization of mineral resources and mineral
reserves. For reporting in public disclosures related to western companies,
it is recommended that the CRIRSCO proposed alignment guidelines on reporting
exploration and mining results in public disclosures be utilised. The proposed
"mapping" facilitates a comparison of the Russian classification categories of
Resources and Reserves, used for state and corporate reporting as established
by the GKZ (Categories A, B, C1, C2) to that of CRIRSCO categories which are
more familiar to the western investor community.
The Russian classification system prescribes grid densities for drilling and
trenching, based on the type of deposit, size, shape and complexity. Deposits
demonstrating continuity scale with regard consistency of length, depth,
thickness and grade variability require less dense drilling than a vein
deposit would require. Huge amounts of lithological, mineralogical and
geochemical data are interpreted and summarised in geological and
technical-economic reports, filed at local and central state committees or
directorates. The density of the drilling and level of detail of knowledge
about the mineral prospect determines the "reserve category". After applying
mining parameters such as cut-off grade, minimum mineable thickness of the ore
body, maximum thickness of the included waste and minimum grade per mining
unit (COG), the mineralised material is classified as fully explored and ready
for mining development. Every geological and technical-economic report with
resources or reserves is reviewed and must be approved by the GKZ technical
experts committee on mineral resource and reserve evaluations. It is the
committee's decision that a project has a significant amount of mineralised
material to provide for the resource / reserve to be approved and included in
the registerd mineral inventory of Russia and available to the Company for
extraction.
One of the main differences between the CRIRSCO Reporting Standards and the
classification systems for State Regulatory purposes is that CRIRSCO standards
are non-prescriptive. The Competent or Qualified Person (CP or QP) for the
project can design and implement exploration programs, following the best
exploration practices, but having the freedom to choose appropriate
exploration techniques, field activities and analyses. The Resource/Reserve
estimation parameters and procedures are selected by the CP or QP with regard
to the implementation of appropriate exploration programmes. The code does not
recommend observation point density, drill hole spacing or any other metrics
whilst the NAEN system is far more prescriptive and definitive.
Kun-Manie NAEN VS JORC
Over the seasonally limited exploration life at of Kun-Manie, the Company
compiled numerous JORC resource statements as additional exploration data was
accumulated. Though the JORC estimates were unacceptable for use in the RF
reserve definition process, this approach provided the Company with the
ability to report per the CRIRSCO guidelines that are more familiar to western
investors. The most recent JORC estimates including all exploration results
was compiled by RPM Global (30 June 2021).
The TEO Project compiled resource is based on the NAEN system which is
required to advance a project into production. A comparison of the Kun-Manie
JORC and NAEN results based on same exploration data sets is summarised
below. Note, the comparison of results for the RPM Global JORC estimate is
based on a 0.3% Ni COG whilst that of the NAEN estimate is based on the RF GKZ
selected COG of 0.2% Ni.
NAEN (Russian) COG 0.2% Ni Ore Ni Cu Ni T Cu T JORC Ore Ni Cu Ni T Cu T
Mt % % (1,000's) (1,000's) COG 0.3% Ni Mt % % (1,000's) (1,000's)
Maly Kurumkon / Flangovy
B 3.6 0.75 0.20 27.0 7.3 Measured 7 0.76 0.22 55 16
C1 35.0 0.74 0.21 258.7 72.3 Indicated 38 0.80 0.22 300 84
B+C1 38.6 0.74 0.21 285.6 79.6 M+I 45 0.79 0.22 355 100
C2 10.0 0.71 0.21 70.7 20.6 Inferred 3 0.79 0.23 24 7
TOTAL 48.6 0.73 0.21 356.3 100.2 MKF TOTAL 48 0.79 0.22 380 110
Ikenskoe / Sobolevskey /Kubuk
B 4.1 0.64 0.17 26.0 7.3 Measured 11 0.70 0.19 77 21
C1 113.5 0.69 0.19 786.4 221.2 Indicated 88 0.74 0.21 650 180
B+C1 117.7 0.69 0.19 812.3 228.5 M+I 99 0.74 0.20 727 201
C2 16.0 0.58 0.17 92.9 27.0 Inferred 25 0.68 0.19 170 48
TOTAL 133.7 0.68 0.19 905.2 255.6 ISK TOTAL 125 0.72 0.20 890 250
Vodorazdelny
B 2.2 0.89 0.24 19.3 5.2 Measured 2 0.84 0.24 15 4
C1 3.0 0.72 0.21 21.5 6.4 Indicated 2 0.80 0.22 17 5
B+C1 5.1 0.79 0.22 40.8 11.5 M+I 4 0.8 0.23 32 9
C2 0.1 0.74 0.19 0.8 0.2 Inferred 1 0.78 0.22 10 3
TOTAL 5.3 0.79 0.22 41.6 11.7 VOD TOTAL 5 0.81 0.23 43 12
Sub-total (Deposits estimated by both NAEN and JORC Estimates)
B 9.9 0.73 0.20 72.2 19.8 Measured 20 0.73 0.20 147 41
C1 151.5 0.70 0.20 1,066.6 299.9 Indicated 128 0.75 0.21 967 269
B+C1 161.4 0.71 0.20 1,138.8 319.7 M+I 148 0.75 0.21 1,114 310
C2 26.1 0.63 0.18 164.3 47.8 Inferred 29 0.69 0.20 204 58
TOTAL 187.5 0.69 0.20 1,303.1 367.5 GLOBAL 178 0.75 0.21 1,313 372
Gorny (Additional NAEN)
B - - - - -
C1 4.2 0.45 0.12 18.9 5.0
B+C1 4.2 0.45 0.12 18.9 5.0
C2 4.9 0.41 0.1 19.8 4.9
TOTAL 9.0 0.43 0.11 38.7 9.9
NAEN Grand Total
B 9.9 0.73 0.20 72.2 19.8
C1 155.7 0.70 0.20 1085.5 304.9
B+C1 165.6 0.70 0.20 1157.7 324.7
C2 31.0 0.59 0.17 184.1 52.7
TOTAL 196.6 0.68 0.19 1341.8 377.4
Totals may differ due to rounding.
For the commonly reported deposits (excluding the Gorny deposit), the global
ore tonnages and contained metal are highly similar as indicated below:
· The NAEN estimate contains 4.8% more tonnage (14.5 million tonnes) at
187.5 million tonnes.
· The NAEN estimate contains 0.5% fewer nickel tonnes at 1.3 million
total tonnes.
· The NAEN estimate contains 1.2% fewer copper tonnes at 367 thousand
total tonnes.
It is noted that the similarity of the results is not atypical based on the
experience of the Company staff wherein multiple reviews and independent
compilations of projects having been estimated using both JORC and NAEN
estimates were available. This includes projects located within the RF,
China, Central Asia and Eastern Europe.
Kun-Manie NAEN Reserves
Four COG's were evaluated in the TEO Project. These ranged from 0.1% Ni to
0.4% Ni in increments of 0.1% Ni. Lerchs Grossman open pit optimisation
assessments based on each COG scenario resulted in the identification of 0.2%
Ni being the preferred COG. The selection of the 0.2% Ni COG was based on
the result that it provided the maximum revenue generation to the RF including
all taxation and metal royalties at payable metal prices of US$ 6.56. per
pound for nickel and $3.07 per pound for copper. An NPV10% of US$ 625
million.
The table below presents the summary of the NAEN reserve category and for each
commodity. For the commodities of nickel, copper and cobalt, sampling
intervals (1.5 metres) allowed for the identification of reserves by the
categories of B, C1 and C2. For platinum, palladium, gold and silver, the
metal content was based on composite sample lengths over the entire nickel and
copper mineralised interval. Hence, the numerically reduced sample density
has provided classification of these commodities into the NAEN category of C2.
The table also presents a summary of the NAEN reserves by mineable category.
In-Balance reserves are contained within the Lerchs Gorssman 0.2% Ni COG
pit. Out of Balance reserves are comprised of mineralisation located
external the 0.2% Ni pit shell and that mineralisation within the pit shell
considered to be sub-economic (less than 0.2% Ni average grade) when diluted
to a five meter minimum mining thickness.
GKZ Approved NAEN Reserve - Insitu
Commodity Unit In Balance Out of Balance Total (In plus Out)
B C1 C2 Total B C1 C2 Total B C1 C2 Total
Ore Tonnes kT 9,877 143,708 18,564 172,149 - 12,012 12,410 24,422 9,877 155,720 30,974 196,571
Ni kT 73 1,025 120 1,218 - 60 64 124 73 1,085 184 1,342
Cu kT 20 287 35 342 - 18 18 35 20 305 53 377
Co kT 1 21 2 25 - 1 1 3 1 23 4 28
Pt Kg - - 24,812 24,812 - - 3,490 3,490 - - 28,302 28,302
Pd Kg - - 26,810 26,810 - - 3,795 3,795 - - 30,605 30,605
Au Kg - - 9,063 9,063 - - 1,300 1,300 - - 10,363 10,363
Ag T - - 174 174 - - 22 22 - - 196 196
Commodity Unit In Balance Grade Out of Balance Grade Average Grade (In plus Out)
Ni % 0.73 0.71 0.65 0.71 - 0.50 0.52 0.51 0.73 0.70 0.59 0.68
Cu % 0.20 0.20 0.19 0.2 - 0.15 0.14 0.15 0.20 0.20 0.17 0.19
Co % 0.010 0.020 0.015 0.015 - 0.010 0.010 0.010 0.014 0.014 0.012 0.014
Pt g/t - - 0.14 0.14 - - 0.14 0.14 - - 0.14 0.14
Pd g/t - - 0.16 0.16 - - 0.16 0.16 - - 0.16 0.16
Au g/t - - 0.05 0.05 - - 0.05 0.05 - - 0.05 0.05
Ag g/t - - 1.01 1.01 - - 0.90 0.89 - - 1.00 1.00
Totals may differ due to rounding.
Based on the in-pit 0.2% Ni pit shell design, the primary NAEN Reserve
inventory of falls within the B + C1 + C2 categories and is distributed
follows:
· 87.6% of the mineralised tonnage is in-balance (172 million tonnes).
· 90.8% of the nickel is in-balance at an average insitu grade of 0.71%
Ni (1.2 million tonnes).
· 76.3% of the copper is in-balance at an insitu grade of 0.20% Cu (342
thousand tonnes).
· 89.3% of the cobalt is in balance at an insitu grade of 0.015% Co (25
thousand tonnes).
Application of selective open pit mining considerations provides the final
mined tonnages and grades delivered to the sulphide flotation plant. Based
on a minimum mining thickness of five meters, dilution of 7.4% and 2.9%
losses, a total of 187 million ore tonnes are deliveraable to the plant for
processing using the recommended Girponickel Institute sulphide flotation
methods. The NAEN inventory is provided in the table below.
Mine Delivered Mill Feed NAEN Reserve
Dilution and Mining Losses Included
COG 0.2% Ni
Commodity Factor In Balance - B + C1 + C2
0.2% Ni COG Grade
Mill Feed Tonnes T 187,134,000
Ni T 1,233,697 0.66%
Cu T 343,045 0.18%
Co T 25,518 0.014%
Pt Kg 25,709 0.14 g/t
Pd Kg 26,547 0.14 g/t
Au Kg 8,964 0.05 g/t
Ag Kg 168,505 0.90 g/t
Totals may differ due to rounding.
Ore Processing
NorNickel's subsidiary, Gipronickel Institute conducted metallurgical test
work on representative samples of the Kun-Manie ore. Its work was mutually
supportive of previously undertaken work and subsequently established the
preferred metallurgical flowsheet for the generation of individual nickel and
copper sulphide concentrates. Previously a single bulk concentrate had been
considered in design considerations.
Crushing and grinding requirements were established for the mill feed. For
each concentrate type, the mass pull ratios, metallurgical recoveries,
composition of the concentrates, water usage requirements, consumables
consumption requirements, tailings handling approach and the process plant
equipment list were defined.
The following table presents a summary of the metallurgical recoveries of the
metals by concentrate type.
LOM Flotation Plant Recoveries by Concentrate Type
Commodity Nickel Concentrate Nickel Concentrate Tonnage Copper Concentrate Recovery Copper Concentrate Tonnage
Recovery
Concentrate (kt) 10,292 842
Ni 76.3% 941,311 0.4% 5,182
Cu 27.2% 93,308 54.0% 185,244
Au 40.9% 3.7 18.9% 1.7
Pt 50.3% 12.9 2.8% 0.7
Pd 50.8% 13.5 3.7% 9.8
*Cobalt and silver have been excluded as there was no payable allotment
by either of the two metal market traders for either concentrate.
Confidential payable schedules sourced from two internationally recognised
metal traders were evaluated by the GKZ. From these schedules, payable metal
amounts within each concentrate, minimum required metal contents for
payability, treatment and refining costs and penalty fees for deleterious
metals and gangue minerals were used. The following table presents the LOM
payable metal totals inclusive of fees, penalties, minimum payable amounts and
all other deductions.
Commodity Nickel Concentrate % Payable Payable Nickel Copper Concentrate Payable Copper Payable Metal
% Payable
Ni (t) 66.63 627,196 0.4 Penalty 627,196
Cu (t) No Payment 95.5 176,908 176,908
Au (t) Below Minimum 90.0 1.5 1.5
Pt (t) 26.5 3.4 Below Minimum 3.4
Pd (t) 26.5 3.6 26.5 0.3 3.9
Operating Cost
The commission reviewed, adjusted and approved operating cost per tonne (Q4
21) which average US$ 42.32 per ore tonne over the mine life. Newly
identified operating cost centers previously excluded were transport and
property taxes. Royalty taxes had previously been calculated using the Far
East Development Fund reduced schedule during the first 10 years of operation.
Environmental fees had not been included. Depreciation was previously
included in cash flow models but not as a part of the operating cost.
Operating Cost Centres Cost Per
Ore Tonne
Mining (Ore plus Waste) $13.08
Processing $11.06
Tailings Handling $1.77
Concentrate Transport $4.44
Transport Tax $0.01
Royalty Tax $2.86
Property Tax $0.83
Environmental Fees $0.15
General and Administrative $1.42
Depreciation $6.69
Total Cost US$ / Ore Tonne $42.32
Capital Cost Projections
The Oreoll and GKZ experts have determined the LOM capital cost estimate is
US$ 1.92 billion with US$ 1.14 billion allocated as preproduction and
construction costs, US$ 698 million in sustaining costs and US$ 85 million in
working capital. The increase in the capital cost estimate from previously
reported projections is attributable to the more than doubling of the previous
annual operational ore capacity impacting the expansion of the open pit mining
fleet, process plant, tailings, power plant requirements and the need to
construct a dual carriage way access road capable of handling the increased
mine support and concentrate transport needs. All capital expenditure
sectors include regional regulatory contingency factors es specific to the
project location and its being characterised as a permafrost location.
Capital Investment Summary
Category US$D (m)
Life Of Mine Capital Expenditure $1,924
Preproduction Construction $1,141
Working $85
Sustaining $698
Based on the preproduction construction cost and the nominal annual capacity
of 12.4 million ore tonnes, the capital cost per tonne is approximately US$
92.01 per tonne of plant throughput. For the capital intensity basis of
the annual payable nickel plus nickel equivalent of copper, the total is
anticipated to be capital intensity cost is projected to be $30,535 per
tonne. Revenues derived from recovered gold, platinum and palladium are
excluded.
Net Present Value, Internal Rate of Return and Payback
Based on the GKZ selected metal price of US$ 6.56 per pound nickel and US$
3.07 per pound copper at the production rate of 12.4 million ore tonnes per
annum the following was estimated by the RF economist from the commission.
· NPV10% is US$ 333 million.
· IRR is 15.6%.
· Payback is 5.5 years.
Sensitivity analyses related to the price of metals was not reported. It is
noted that the previously utilised base case metal prices for western study
wok based on a nickel only single bulk concentrate were US$ 8.00 per nickel
pound. As the previous technical operation was based on the sale of a single
bulk concentrate, a direct comparison of prior results is inappropriate given
the NorNickel subsidiary test work confirmed the addition of a saleable copper
concentrate, a material impact across the entire operation.
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