REG - Europa Metals Ltd - Successful Completion of Hydrogeological Programme

Europa MetalsAnnouncement

13/12/2021 07:00

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RNS Number : 3039V  Europa Metals Ltd  13 December 2021

13 December 2021

Europa Metals Ltd

("Europa Metals", the "Company" or the "Group") (AIM, AltX: EUZ)

Successful Completion of Hydrogeological Programme

- Toral Pb, Zn & Ag Project, Spain

Europa Metals, the European focused lead, zinc and silver developer, is
pleased to announce the successful completion and results of an independent
hydrogeological study on its wholly owned Toral lead, zinc and silver project,
Castilla y León, Spain ("Toral" or the "Toral Project"). The progression of
the requisite hydrogeological assessments and monitoring programmes forms a
key part of de-risking the Toral Project for the potential future development
of an underground lead, zinc and silver mining operation.

 

Highlights

·    Independent hydrogeological study commissioned from CRS Ingenieria
now concluded following a 5 month programme

·    Objective was to assess water conditions and drainage relating to the
potential future development of the Toral Project

·    Bore hole and piezometer programme involved a series of pumping tests
and live monitoring utilising indicator dyes to assess sub-surface water flows
and rates

·    Results are in line with the hydrogeological conditions assumed
within the Company's existing planned development model for a potential
underground lead, zinc and silver mine at Toral (please refer to the
 Appendix below for Bara Consulting/AMS' previously reported preliminary
economic study highlights)

·    Piezometers continue to monitor water levels in line with the
Company's ongoing compliance with hydrogeological regulations within the
region and Spain

 

The independent study was commissioned from, and carried out by, CRS
Ingenieria (www.crsingenieria.es (http://www.crsingenieria.es) ), and has now
been concluded following an extensive testing programme undertaken over a 5
month period encompassing a central bore hole and a series of water monitoring
piezometers. Data recovery and logging utilised a series of indicator dyes
released into the water system at various points with subsequent monitoring
their presence across a network of piezometers across the deposit. Using the
hydrogeological software module of Rocscience Inc.'s RS2 software, three
levels or horizons have been modelled in the karst system, each being assigned
a permeability based on the results obtained from the pumping tests (2021) and
utilisation of a conceptual model of the system.

 

 

The study's findings allow Europa Metals to establish an initial understanding
of the approximate underground connectivity, flow and permeability within the
head area and central area of the system.

 

Figure 1: location of bore hole and piezometer monitoring stations

 

http://www.rns-pdf.londonstockexchange.com/rns/3039V_1-2021-12-10.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3039V_1-2021-12-10.pdf)

 

 

 

Key Findings

 

The pumping tests reinforced the current hydrogeological model for the Toral
Project in terms of the variation of permeability at depth from previous
tests. Accordingly, it has facilitated the evaluation of, and estimation of a
range of permeability for, the epiphreatic zone (non-saturated) and the
shallow phreatic (saturated) in a central area of the system, almost 1km from
the river (discharge) and approximately 0.8km from the headwaters.

The hydraulic connections (established through dyes released at injection
wells) between hole TOD-018 and the wells located along the carbonated outcrop
(TOP-026, TOP-027, TOD-023 and P-16) and the Sil River have now been assessed,
with a clear flow line between the head area (TOD-018) of the system and its
discharge into the river. The hydraulic connection of the P-11 well with the
Sil River has also been verified.

 

These connections establish the entire route of the underground flow, from the
head areas to the discharge zone, thereby validating the structure and
operation of the proposed conceptual underground mining development model as
outlined by Bara Consulting in the Company's announcement of 18 November 2020.

 

Programme detail

 

The detection of fluorescein in the TOP-027 well enables Europa Metals to
evaluate the flow rate between this well, located in the central area of the
system, and the Injection Well (at hole TOD-018), a distance of 785m away.

 

It took 22 days for the first fluorescein to reach the pumping well (TOP-026)
and a further 6 days for it to reach peak concentration. Accordingly, the
transit speed of the underground flow is approximately 30-36m/day. Such speed
is relatively slow compared to other modelled karst systems and suggests
extensive development of functional caverns and flows in free circulation.
Consequently, the live well results correspond to the characteristic speeds
associated with those of a typical low-medium karstification and corresponding
flows within the saturated zone. This supports and reinforces the historical
data obtained from previous tests and strengthens the Company's proposed
hydrogeological model for Toral.

 

 

Commenting today, Laurence Read, CEO of Europa Metals, said:

"Following an extensive hydrogeological campaign, I am delighted to report the
findings of CRS Ingenieria's independent study, which fall within the
parameters of those previously modelled and established for Toral. This
represents a step forward for the project with a responsible and appropriate
water strategy, accredited by third parties and adhering to best practice
regional regulations and federal Spanish law.

 

"Our work relating to hydrogeology and the local environment is ongoing, but
this study supports our decision to press ahead with the planned 2022 drilling
campaign. This campaign will commence in the New Year and involve both
resource drilling and a series of shallow geotechnical drilling. The
geotechnical component will be designed to assess the suitability of ground
conditions for plant site infrastructure as well as the suitability of local
disused quarry sites, which in turn could form part of  a reclamation
strategy following consultation with local community groups, by way of filling
in areas with inert waste material from crushing during future production
activities and then landscaping the areas concerned."

 

For further information on the Company, please visit:

www.europametals.com (http://www.europametals.com)

Linkedin:          Europa Metals ltd

Twitter:            @ltdeuropa

Vox:                 Europametals

or contact:

 

Europa Metals Ltd

Dan Smith, Non-Executive Director and Company Secretary (Australia)

T: +61 417 978 955

Laurence Read, CEO (UK)

info@europametals.com

 

Strand Hanson Limited (Nominated Adviser)

Rory Murphy/Matthew Chandler

T: +44 (0)20 7409 3494

WH Ireland Limited (Joint Broker)

Harry Ansell/Dan Bristowe/Katy Mitchell/Sarah Mather

T: +44 (0)20 7220 1666

Turner Pope Investments (TPI) Limited (Joint Broker)

Andy Thacker/James Pope

T: +44 (0)20 3657 0050

 

Questco Corporate Advisory Proprietary Limited

Sharon Owens

T: +27 (11) 011 9212

 

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018, as amended.

 

 

Notes to Editors:

 

Appendix: Further information on the Toral Project

 

The pre-existing Inferred and Indicated resource for the Pb-Zn-Ag
mineralisation located on the Toral property, licence number 15.199, has been
independently estimated at various cut-offs. For the Toral deposit's resource,
the economic cut-off was determined by calculation of block revenue factors
based on Zn equivalent calculations derived from an historical three-year
trailing average for Zn, Pb and Ag prices. Indicative mining and processing
costs derived from a 2020 scoping study and typical of the region and deposit
type were applied along with typical mining recovery and dilution factors and
metallurgical recovery factors identified from laboratory studies and
production at comparable third party deposits and accepted by Addison Mining
Services Limited ("AMS"). For reporting purposes in compliance with JORC
(2012), an economic cut-off grade of 4% Zn equivalent (including Pb and Ag
credits) was selected in consideration of the aforementioned factors and
allowing for some increase in commodity prices in order to define resources
with a reasonable prospect of eventual economic extraction.

 

The latest Mineral Resource Estimate commissioned from AMS and effective as of
14 September 2021 for the Toral deposit comprised:

·    An Indicated resource of approximately 5.9Mt @ 7.1% Zn Equivalent
(including Pb credits)*, 4.2% Zn, 3.3% Pb and 27g/t Ag, including:

o  251,000 tonnes of zinc, 196,000 tonnes of lead and 5.2 million ounces of
silver.

·    An Inferred resource of approximately 14Mt @ 6% Zn Equivalent
(including Pb credits), 3.8% Zn, 2.5% Pb and 20 g/t Ag, including:

o  540,000 tonnes of zinc, 350,000 tonnes of lead and 9 million ounces of
silver.

·    A total resource of approximately 20Mt @ 6.3% Zn Equivalent
(including Pb credits), 3.9% Zn, 2.7% Pb and 22 g/t Ag, including:

o  790,000 tonnes of zinc, 550,000 tonnes of lead and 14 million ounces of
silver.

 

* - Zn Eq (PbAg)% is the calculated Zn equivalent incorporating silver credits
as well as lead and is the parameter used to define the cut-off grade used for
reporting resources (Zn Eq (PbAg)% = Zn + Pb*0.867 + Ag*0.027). Zn Equivalent
calculations were based on 3-year trailing average price statistics obtained
from the London Metal Exchange and London Bullion Market Association giving an
average Zn price of US$2,516/t, Pb price of US$1,961/t and Ag price of
US$19.4/oz. Recovery and selling factors were incorporated into the
calculation of Zn Eq values. It is the Company's opinion that all the elements
included in the metal equivalents calculation (zinc, lead and silver) have a
reasonable potential to be recovered and sold.

 

Highlights from Bara Consulting/AMS' 2020 Independent Preliminary Economic
Study

Based on a previous mineral resource estimate, the key findings of an
independent preliminary economic study commissioned from Bara Consulting and
AMS and announced by the Company on 18 November 2020 were as follows:

 

·  US$156m NPV at an 8% discount rate

·  31.3% IRR

·  17Mt @ 6.7% ZnEq (including Pb credits) resource (JORC 2012) including
indicated resource of 3.8Mt @ 8.1% ZnEq (including Pb and Ag credits) - 4% cut
off grade

·  Sub-Level Longhole Stoping ("SLOS") mining method selected

·  700k tonnes per annum operation with a 7.6% ZnEq mined grade:

o  SLOS with ramp/raise-bore shaft access;

o  10% dilution;

o  3.5m average mined mineralised widths

·  Processing comprises an ore sorting front-end using X-ray Transmission
("XRT") followed by grinding and flotation

·  Grade/recovery: 3.3% Pb/87%; 4.2% Zn/86%; 26.7g/t Ag/85%

·  US$79m upfront Capex

·  3-year trailing average metals prices of US$2,668/t for zinc, US$2,099/t
for lead and US$16.5/oz for silver

·  US$963m Revenue over Life of Mine ("LOM")

·  US$477m Opex over LOM

·  US$471m EBITDA over LOM

·  49% Operating Margin (US$63.56/t all-in cost)

·  12-year LOM scenario

·  Conceptual LOM production schedule incorporates 100% of the existing
Indicated resource in the early years, ending with elevated zinc grades in the
deep Inferred zones

·  Deposit open to the east and at depth for potential production expansion
during the mine's life

·  Project's 3-year Investigation Permit renewed until 15 November 2023

 

 

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