REG - Future Metals NL - Panton Scoping Study
07/12/2023 07:00
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RNS Number : 9392V Future Metals NL 07 December 2023
7 December 2023
Future Metals NL
Panton Scoping Study Demonstrates Potential for Long-life, Globally
Significant PGM Operation
§ Study leverages off >A$50m investment into Panton to date, including
prior feasibility studies, ~45,000m drilling, decline access to orebody &
comprehensive bulk metallurgical testwork
§ Study demonstrates potential for Panton to be one of few long life,
globally significant PGM operations in the western world
§ Robust project economics, low capital intensity versus industry benchmarks
and strong leverage to PGM price appreciation, with:
o 1.5Moz PdEq(2) mining inventory from 9.8Mt @ 3.60g/t PGM(3E)(1), 0.25%
Ni, 12.6% Cr(2)O(3) (4.77g/t PdEq(2)) for 1.1Moz PGM(3E)(1), 25kt Ni, 1.1Mt
Cr(2)O(3) concentrate
o Initial ~9-year mine life (study's mine plan covers just 26% of the
current defined Reef & High Grade Dunite material and only 10% of the
overall MRE)
o PGM production averaging 117,000oz pa from high grade feed of 3.60g/t
PGM(3E)(1)
o PdEq(2) production averaging 161,000oz pa (inc. nickel and chromite
by-products)
o Low All-in Sustaining Costs (AISC), averaging US$789/oz (projected to be
in the 2(nd) quartile), thereby providing resilience throughout the metal
price cycle
§ Conventional flowsheet (crush, grind & flotation), producing high grade
PGM & chromite concentrates, analogous to several current South African
PGM operations
§ Upside potential via resource growth, additional by-product credits
(copper, cobalt, rhodium & iridium), & further optimisation of mine
design, processing & logistics
§ Potential for future Cu-Ni-PGM resources at Eileen Bore Project to be
included in the next stages of feasibility work
§ Future Metals is planning initiation of a PFS, targeted for completion in
Q4 2024
Study Highlights
§ Study demonstrates the potential for Panton to be one of few significant
primary PGM operations in the western world. The Study supports a high-grade,
initial 9-year operation processing both Reef and High-Grade Dunite material
through a conventional crush, grind and flotation flow sheet, producing:
Avg. Production PGM Chromite Conc. Nickel PdEq(2)
(Oz pa) (Tpa) (Tpa) (Oz pa)
1,250ktpa 117,000 134,000 1,200 161,000
§ Robust economics with Panton demonstrating strong financial metrics that
reflect the high-grade and low capital intensity of the Project
Valuation Pre-Production Capex NPV(8%) IRR
(1,250kt) (A$m) (A$m) (%)
(pre / post tax) (pre / post tax)
Base Case 267 250 / 153 26% / 21%
PGM 5yr Avg Case 477 / 311 39% / 31%
PGM Basket By-product credits
Prices Platinum Palladium Gold Rhodium* Basket Price Nickel Chromite
(US$/oz) (US$/oz) (US$/oz) (US$/oz) (US$/oz) (US$/t) (US$/t)
Base Case 1,285 1,400 2,000 4,450 1,556 20,000 282
PGM 5yr Avg Case 1,040 2,115 1,870 12,450 2,200 20,000 282
*Note Rh not included in Panton Scoping Study economic evaluation. Included
for comparison to South African PGM Basket Price only
§ Panton Base Case long term PGM pricing aligns with the ~85(th) percentile
of the cost curve (see Figure One), with the current South African PGM(4E)
basket price at an unsustainable ~65% percentile (i.e. ~35% of current global
operations losing money), near all-time lows
§ Panton's estimated AISC of US$789/oz (projected 2(nd) quartile) provides
the opportunity for the planned future operations to generate robust operating
margins in all phases of the PGM price cycle (see Figures One & Two)
§ Study includes just 26% of Reef & High Grade Dunite material - mine
life extension and valuation uplift to be targeted via progressive uplift in
Resource categorisation
o Average annual operating free cash flow A$72m - clear value-add of mine
life extensions
§ Panton has the opportunity to achieve an accelerated pathway to production,
driven by:
o Project's location on granted Mining Leases
o >A$50m invested in the Project to date including an established
portal and decline, comprehensive metallurgical test work, >45,000m of
drilling & prior environmental studies
o Strong relationships with local stakeholders including the Traditional
Owners
§ Panton is optimally located, with good access to established
infrastructure:
o East Kimberley region of Western Australia, a top-tier mining and
investment jurisdiction
o ~1km from a sealed highway utilised by other mining operations
o ~70km from a sealed airstrip for employee and contractor transportation
o 300km from deep-water port at Wyndham, with easy access into key
potential markets
Figure One | PGM Industry's Cost Curve and Panton Project's positioning.
Source SFA (Oxford)
*Further details for the industry cost curve analysis are shown under PGM
Industry Cost Curve Position section in the body of this announcement
Figure Two | South African PGM(4E) Basket Price. Source: Bloomberg &
Company estimates.
*The PGM(4E) basket price is calculated based on the weightings of Pt, Pd, Au
and Rh production for the South African PGM industry. All other metals
production is considered a by-product and credited towards an operations' cost
base
Significant upside potential for Panton over and above the Scoping Study
outcomes from:
o The Panton orebody is open at depth and interpreted to have improving
thicknesses and grades; further drilling may support mine life extensions
o Inclusion of other payable metals including rhodium, iridium, copper and
cobalt
o Resource delineation and inclusion of processing feed from nearby
projects such as Eileen Bore Project or other discoveries within Future
Metals' 176km(2) exploration acreage
o Pricing upside associated with 'Western premiums' for scarce and
critical resources located in Australia supporting supply chain development
outside of China, Russia and South Africa
o Expansion potential from the significant near-surface Bulk Dunite
mineralisation which is not included within this Scoping Study
Managing Director Jardee Kininmonth commented:
"We are very pleased that the Panton Scoping Study demonstrates robust
economics for a globally significant PGM-Ni-Chromite Project.
Future Metals' team has capitalised on the significant bank of prior work
completed on the Project and its superior grades to develop a conventional
flow sheet producing saleable PGM and chromite concentrates at a meaningful
scale in a global context. Coupled with the fact that Panton is one of the
only near-term development prospects for PGM supply outside of Russia and
South Africa, the Company is in a tremendous position to grow value through
2024 and beyond.
The Scoping Study shows a robust Project which can withstand downturns in the
PGM price cycle and provide significant leverage to upswings in prices too.
The Company plans to progress Panton swiftly through the various feasibility
stages in order to be as production-ready as possible during the next
upswing."
Further details and the full scoping study can be found at the following
link: http://www.rns-pdf.londonstockexchange.com/rns/9392V_1-2023-12-6.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/9392V_1-2023-12-6.pdf) and on
the Company's website at https://future-metals.com.au.
This announcement has been approved for release by the Board of Future Metals
NL.
Cautionary Statement
The Scoping Study Report ("Scoping Study" or "Study") referred to in this
announcement has been undertaken to evaluate the potential development of the
Panton PGM-Ni-Cr Project ("Panton" or the "Project"). The Project is 100%
owned by Future Metals NL ("Future Metals", "FME" or the "Company"). The
Scoping Study comprises a preliminary technical and economic study of the
potential viability of the Project. It is based on low accuracy level
technical and economic assessments that are not sufficient to support
estimation of Ore Reserves. Additional infill drilling, evaluation work and
appropriate studies are required before Future Metals will be able to estimate
Ore Reserves or provide assurance of an economic development case. The Scoping
Study has been completed to a level of accuracy of +/- 35%.
Of the Mineral Resources scheduled for extraction in this Scoping Study's
production target, approximately 86% are classified as Indicated and 14% as
Inferred over the first five years and 50% are classified as Indicated and 50%
as Inferred over the evaluation period. There is a low level of geological
confidence associated with Inferred Mineral Resources, and there can be no
certainty that further exploration work will result in the determination of
Indicated Mineral Resources or that the production target will be realised.
Under prior owners, the Project has previously had a JORC (2012) Mineral
Resource Estimate ("MRE") with the majority of that estimate in the Measured
& Indicated categories. This supported a Bankable Feasibility Study which
was completed on the Project. Additional conservatism has been applied when
estimating Panton's current JORC MRE, however, the Company believes that this
is relevant information when assessing the results and confidence levels
applied in this Scoping Study.
Future Metals notes that the majority of the upfront capital required is
projected to be repaid in the years where Indicated Resources comprise a
majority of the production schedule. The Company believes that it has a
reasonable basis for providing such forward-looking statements and the
forecast financial information based on material assumptions outlined in this
announcement. One of the key assumptions is that funding for the Project will
be available when required. While the Company considers all of the material
assumptions to be based on reasonable grounds, there can be no certainty that
they will prove to be correct or that the range of outcomes indicated by the
Scoping Study will be achieved.
To achieve the range of outcomes indicated in the Scoping Study, funding in
the order of approximately A$267m will likely be required in pre-production
capital expenditure. There is no certainty that the Company will be able to
raise that amount of funding when needed. It is also possible that such
funding may only be available on terms that may be dilutive to, or otherwise
affect, the value of Future Metals' shares. It is also possible that Future
Metals could pursue other value realisation strategies such as a sale, partial
sale or joint venture of the Project. If it does, this could materially reduce
the Company's proportionate ownership of the Project. Given the uncertainties
involved, investors should not make any investment decisions based solely on
the results of the Scoping Study.
For further information please contact:
Future Metals NL +61 8 9480 0414
Jardee Kininmonth info@future-metals.com.au
Strand Hanson Limited (Nominated Adviser) +44 (0) 207 409 3494
James Harris/James Bellman
Panmure Gordon (UK) Limited (UK Broker) +44 (0)207 886 2500
John Prior/Hugh Rich/Rauf Munir
FlowComms (UK IR/PR) +44 (0) 789 167 7441
Sasha Sethi
Introduction
Future Metals owns 100% of the Panton PGM-Ni-Cr deposit ("Panton" or the
"Project") in the eastern Kimberley region of Western Australia, a tier one
mining jurisdiction. The Project is located on three granted mining licenses
70km north of Halls Creek and 60km south of the operating Savannah Nickel Mine
owned by Panoramic Resources Ltd.
The Project is well situated for future planned operations, with good access
to roads, a deep-water port at Wyndham, sealed airstrips and local populations
at the nearby towns of Halls Creek and Kununurra.
The Project is located within the traditional lands of the Malarngowem, and
the tenure sits within the Alice Downs Pastoral Station.
PGM-Ni-Cr mineralisation occurs within a layered, differentiated
mafic-ultramafic intrusion referred to as the Panton intrusive which is a 9km
long and 3km wide and 1.7km thick south-west plunging synclinal intrusion. PGM
and Cr mineralisation is hosted within a series of stratiform chromite reefs
as well as a surrounding zone of mineralised dunite within the ultramafic
package.
Panton is the highest grade PGM deposit in Australia, with mineralisation
defined across three components within a JORC (2012) Mineral Resource
Estimate; the Reef, the High Grade Dunite and the Bulk Dunite. The High Grade
Dunite is at the contact and runs parallel to the Reef throughout the entire
deposit. These two components of the Resource are the focus for the Scoping
Study and planned future operations.
Future Metals plans to produce both a high-grade PGM concentrate, and a
chromite concentrate from the Panton deposit. These concentrates will be
trucked via sealed public roads to Wyndham for export to customers globally.
Figure Three | Panton PGM-Ni-Cr Project's Location
Key Study Outcomes and Assumptions
Physicals Assumptions
The Study has been compiled by the Company based on a series of workstreams
undertaken by external consultants and has examined two development scenarios,
a 1,250ktpa Case and 850ktpa Case, with the higher production scenario
determined to be optimal.
Planned operations involve the mining of small open pits in the initial years
of construction and operation, followed by underground mining operations to
support a concentrator utilising a crush, grind and flotation flow sheet to
produce a PGM concentrate and a chromite concentrate.
The primary difference between the two alternative cases assessed is the
processing throughput rates, and the resultant mining rates and pre-production
capital required. Outputs for the 850ktpa Case are set out in Chapter 11 of
the Panton Scoping Study.
Table One | Operating Assumptions
Metric Unit Scoping Study Outcome
Mining Physicals
Underground Mining
Total Lateral Development m 84,056
Total Vertical Development m 4,071
Total Waste kt 2,254
Total Reef Ore kt 3,513
Reef Grade - PGM(3E)(1) (LOM Avg) g/t 6.84
Reef Grade - PdEq(2) (LOM Avg) g/t 8.96
Total Dunite Ore kt 5,365
Dunite Grade - PGM(3E)(1) (LOM Avg) g/t 1.61
Dunite Grade - PdEq(2) (LOM Avg) g/t 2.19
Years of Underground Mining yrs 8.5
Open Pit Mining
Total Waste kt 11,648
Strip Ratio W:O 12.2
Total Reef Ore kt 273
Reef Grade - PGM(3E)(1) (LOM Avg) g/t 6.23
Reef Grade - PdEq(2) (LOM Avg) g/t 8.16
Total Dunite Ore kt 679
Dunite Grade - PGM(3E)(1) (LOM Avg) g/t 1.52
Dunite Grade - PdEq(2) (LOM Avg) g/t 2.09
Years of Open Pit Mining yrs 2.0
Processing Physicals
Total Indicated Ore Processed kt 4,888 (50%)
Total Inferred Ore Processed kt 4,942 (50%)
Total Ore Processed kt 9,830
Processing Years (LOM) years 8.5
PGM(3E)(1) Grade (LOM Avg) g/t 3.60
Nickel Grade (LOM Avg) % 0.25%
Chromite Grade (LOM Avg) % 12.6%
PdEq(2) Grade (LOM Avg) g/t 4.77
Recovery - Pt (LOM Avg) % 81%
Recovery - Pd (LOM Avg) % 92%
Recovery - Au (LOM Avg) % 95%
Recovery - Ni (LOM Avg) % 40%
Recovery - Cr(2)O(3) (LOM Avg) % 73%
Total PGM(3E) Concentrate Produced kt 379
PGM(3E)(1) Concentrate Grade (LOM Avg) g/t 81
Nickel (in PGM(3E) Concentrate) Grade (LOM Avg) % 2.7%
Summary of Recovered Metal
Recovered PGM(3E)(1) in Concentrate (LOM Avg) oz pa 117,000
Recovered Nickel in Concentrate (LOM Avg) tpa 1,200
Saleable Chromite Concentrate (LOM Avg) tpa 134,000
Recovered PdEq(2) (LOM Avg) oz pa 161,000
Financial Assumptions
The Study utilised the assumptions set out in Table Two. The Company concluded
that it has a reasonable basis for using these assumptions and providing the
forecast financial information and production targets included in this
announcement. The Company is satisfied that the financial viability of the
Project is not dependent on the inclusion of Inferred Resources.
The Company has utilised a long term Base Case PGM Basket Price (Pt, Pd, Au,
Rh) assumption that is modelled at approximately the 85(th) percentile of the
PGM(4E) cost curve, i.e. it assumes a long term price where ~15% of operations
are loss making. Price assumptions for platinum, palladium and nickel are also
supported by estimates from a range of market analysts. The Company has
utilised spot prices for gold and chromite concentrate (40-42% Cr(2)O(3), CIF
South Africa). The Company has also included a financial evaluation utilising
the historical 5-year average PGM prices.
The project has been modelled on an unlevered basis on 100% ownership terms.
NPV(8%) and IRR are modelled from the start of project construction. Costs
incurred to reach a Final Investment Decision ("FID") are not included in the
pre-production capital estimate. The capital payback period is assumed to be
measured from the commencement of production.
Capital costs are based on current engineering databases and direct quotes
from equipment manufacturers, as well as estimates based on recent actual
pricing from similar WA mining operations. They include all pre-production
site, processing plant, tailings dam, mine development and initial open pit
mining costs. They also include sustaining capital post-production.
Operating costs are derived from a number of sources including quotes supplied
by vendors, consultants' databases and estimates based on similar WA mining
operations.
The Company's financial evaluation outputs and key project metrics are set out
on a real, unlevered basis.
Table Two | Financial Assumptions
Base Case PGM 5-year Avg Case
Commodity prices (LOM avg.)
Pt US$/oz 1,285 1,040
Pd US$/oz 1,400 2,115
Au US$/oz 2,000 1,870
Rh* US$/oz 4,450 12,450
PGM(4E) Basket Price US$/oz 1,556 2,200
Ni US$/t 20,000 20,000
Cr(2)O(3) (40-42% CIF South Africa) US$/t 282 282
Financial
WACC (real) % 8%
Exchange rate A$/US$ 0.65
Payability
Pd payability % 92
Pt payability % 92
Au payability % 80
Ni payability % 55
Cr(2)O(3) payability % 95
Pd-Au payability (tails product) % 98
Pre-Production Capital Estimates
Pre-Production Open Pit Mining A$m 21
Pre-Production Underground Mining A$m -
Processing Plant A$m 146
Non-Process Infrastructure A$m 34
Indirects A$m 33
Contingency A$m 32
Total Pre-Production Capital A$m 267
Sustaining Capital (LOM avg.) A$m 17
Operating Expenditure Estimates
Open Pit Mining A$/t processed 26.7
Underground Mining A$/t processed 97.4
Processing A$/t processed 37.6
G&A A$/t processed 5.0
Realisation Costs (Logistics, TC/RCs) A$/t processed 20.6
Financial Outcomes
NPV(8%) (pre-tax) A$m 250 477
NPV(8%) (post-tax) A$m 153 311
IRR (pre-tax) % 26% 39%
IRR (post-tax) % 21% 31%
Payback Period Years 4.0 3.2
*Note Rh not included in Panton Scoping Study economic evaluation. Included
for comparison to South African PGM Basket Price only
Production Target
The focus of the Study is the Reef-style mineralisation and the mineralised
High Grade Dunite which sits predominantly in the footwall of the Reef. The
deposit is laterally and vertically extensive, and mineralisation is
demonstrably continuous across its extent. The shallower portions, which the
Study envisages to be mined initially, have been more densely drilled and
therefore have been categorised as Indicated Resources. The spacing of
drillholes is broader at depth (see Figure Four), and while this deeper
drilling demonstrates the continuity of the Reef and High Grade Dunite
mineralisation, there are lower levels of geological confidence in the grades
and widths of the mineralisation in these areas. Given this, the deeper
portion of the deposit has been classified as Inferred. The Company intends to
complete a review of the Resource in conjunction with the Study mine planning
to define the areas which require further drilling in order to upgrade them
from Inferred to Indicated. As part of the Study, the Company has included $3m
per annum from Year 5 for infill drilling costs.
Figure Four | Isometric view of high-grade Panton with drill traces and
resource blocks coloured by Resource classification
Under prior owners, the Project has previously had a JORC (2012) MRE with the
majority of that estimate falling in the Measured and Indicated categories.
This supported a Bankable Feasibility Study which was completed on the Project
in 2003 and updated in 2012. A significant component of Panton's current JORC
MRE has been classified as Indicated and, the Company believes that this is
relevant information when assessing the results and confidence levels applied
in the Study.
Total payable metal over the life of the Project is forecast to be
approximately 1,210koz of PdEq(2) (911koz PGM(3E)(1), 5kt nickel and 1,084kt
chromite concentrate).
Annual numbers with the breakdown of Indicated and Inferred Resources for
mined ore are shown in Figure Five. Indicated Resources comprise 86% of the
total material scheduled for extraction in the first five years of the
production target outlined in the Study. Over the life of mine, Indicated
material comprises 50% of the Study's production target. The Study
demonstrates that the pre-production capital for the Project is forecast to be
repaid in Year 5 when Indicated material comprises the majority of the mine
plan.
Figure Five | Ore Mined -
by Resource Classification vs. Operating Free Cash Flow
The mine plan only includes 26% of material from the combined MRE for the Reef
and High Grade Dunite. There is significant upside potential for the Project
from improving the geological confidence of the Inferred mineralisation for
its inclusion of additional material into the mine plan. Figure Five shows the
forecast annual free cash flows of the Project. As an indication of the
potential upside associated with mine life extensions, average annual free
cash flows during the years of operation are A$72m.
Sensitivity Analysis
The Project's NPV(8%) and IRR are most sensitive to changes in PGM(3E)(1)
prices, operating costs and exchange rates, as shown in Figure Five.
Figure Six | Project NPV(8%) (pre-tax) Analysis
Table Three | Scenario Analysis - PGM(3E) Price Assumptions
Base Case
Pt Price (US$/oz) 1,085 1,185 1,285 1,385 1,485
Pd Price (US$/oz) 1,200 1,300 1,400 1,500 1,600
Gold Price (US$/oz) 1,800 1,900 2,000 2,100 2,200
Rhodium Price (US$/oz)* 4,450 4,450 4,450 4,450 4,450
Basket PGM(4E) Price (US$/oz) 1,370 1,463 1,556 1,649 1,743
Pre-tax NPV(8%) (A$m) 78 164 250 336 422
Pre-tax IRR (%) 14% 20% 26% 31% 37%
Payback Period 5.0 4.4 4.0 3.7 3.4
Annual Operating CF (A$m) 69 80 91 101 112
LOM Operating CF (A$m) 588 679 771 862 953
LOM FCF (A$m) 164 255 346 437 529
Annual Operating FCF (A$m)** 51 61 72 83 94
*Note Rh is not included in the Study's economic evaluation. Included for
comparison to South African PGM operations only.
**Operating FCF refers to free cash flow excluding pre-production capital
Project's Positioning
The Study highlights the Project as being a potentially globally significant
producer of PGMs and chromite. Panton also represents one of the only
near-term development PGM projects outside of Russia and South Africa.
Additionally, the Study demonstrates that Panton has a lower capital intensity
than other similar PGM projects in the study phase, given its higher PGM
grade.
PGM Market Dynamics
The supply of primary PGM production is currently dominated by South African
and Russian operations. Such operations supply >80% of PGM(4E) (Pd, Pt, Au
& Rh) production (based on actual 2022 figures). Both of these countries
are subject to material investment and operating risks:
- Russia is currently subject to international sanctions which has
deterred Western investment into its mining industry, complicated the sourcing
of new and sustaining mining equipment for existing operations and caused
Western customers to seek alternative sources for metals such as PGMs.
- South Africa produced over 71% of primary platinum supply and 37% of
primary palladium supply in 2022. Many of the operations in South Africa have
operated for several decades, leading to deep mines and aging infrastructure
which ultimately increases operating costs and sustaining capital. These
issues are amplified by the chronic power availability issues in the country.
South African deposits are also relatively high in rhodium, with the
recent profitability of many operations being driven by very strong rhodium
prices, which has subsequently declined (2021: Rh price ~US$29,000/oz vs 2023:
Rh price ~US$4,450/oz). This price decline, coupled with significant cost base
inflation has the potential to lead to mine closures in the near to medium
term.
PGM Industry Cost Curve Position
The Study demonstrates that the proposed operation has the potential to be a
low-cost producer of PGMs, with strong resilience for future operations
throughout the PGM price cycle.
Figure One shows that at the current PGM(4E) basket price of ~US$1,250/oz
approximately 35% of existing PGM production is loss-making. This creates
potential for a significant amount of supply to cease in the near to medium
term unless prices increase.
Panton's cash costs net of by-product credits and AISC of US$678/oz and
US$789/oz respectively demonstrate that if the Project was currently producing
it would be towards the middle of the 2(nd) quartile of PGM production,
thereby ensuring resilient margins in a depressed price environment and making
for an economically robust project capable of withstanding sustained downturns
in PGM prices.
Further details on the calculation methodology for the Company's stated cash
costs, AISC and PGM industry cost curve are set out in Chapter 10 of the
Study.
Study Stage PGM Projects ex-South Africa and Russia
Table Four shows how Panton compares to two other study-stage PGM projects
outside of South Africa and Russia. In contrast to other developers, Panton
has a superior grade and materially lower capital requirements.
Table Four | PGM Project Comparisons (ex-South Africa & Russia)
Project Owner Location Upfront Pre-Production Capital PGM(3E)(1) Grade Life of Mine PGM(3E)(1) Production Co-Product Production
(A$m) (g/t) (Years) (Koz, LOM Avg) (LOM Avg)
Panton Future Metals Western Australia 267 3.60 8.5 117 1kt nickel
134kt chromite concentrate
Gonneville Chalice Mining Western Australia 1,600 0.95 19 280 9kt nickel
(15Mt) 10kt copper
0.8kt cobalt
Marathon Generation Mining Ontario, Canada 1,243(3) 0.90 12.5 216 9kt copper
248koz silver
(3) Pre-production capital estimate of C$1,110. AUD:CAD exchange rate of 0.89
applied
*See Appendix Two for source details
Project Configuration
Initial open pit mining will be undertaken in parallel with construction of
the processing plant. Open pit mining will continue into the second year of
operations, providing the initial processing feed for the processing plant.
Portal and decline development will begin within Year 2 and material from
underground mining will comprise the majority of processing feed from Year 3
onwards.
Panton's processing flowsheet will produce a PGM concentrate with payable
by-products and a chromite concentrate.
Mined material will report to a crusher, followed by ore sorting to separate
Reef from High Grade Dunite. Each of these feed types will then report to
their own processing train. The unit operations for both are the same to
produce a PGM concentrate; two-stage grinding followed by flotation.
The Reef flow sheet will also include a Resin-in-Leach leaching circuit to
produce a high-grade PGM product for direct sale to refiners or for blending
with the PGM concentrate produced from flotation. The Reef flow sheet also
includes a flotation circuit to produce a chromite concentrate.
Figure Seven shows the summary flowsheet for the Panton Project.
Figure Seven | Panton Scoping Study Flowsheet (summarised)
Power will be supplied from a gas-fired power plant on site utilising trucked
liquefied natural gas with variable renewable energy from a solar panel
installation.
Water will be supplied from a borefield located within the existing Mining
License area.
The Project is located ~1km from a sealed highway which runs to the deep-water
port at Wyndham approximately 300km to the north. Multiple third party
operations export their products out of the port. A sealed airstrip is located
at Halls Creek, ~70km to the south of the Project along a sealed highway.
It is envisaged that the proposed workforce at Panton would be predominantly
fly-in, fly-out and would travel to and from Halls Creek via Broome and onto
Perth (or elsewhere).
Upside Opportunities
The Study underpins a compelling investment case for progressing the Project,
and the Company sees significant further upside opportunities as set out
below:
§ Improved geological confidence of existing Resource: The Study only
includes 26% of the Reef and High Grade Dunite MRE due to reporting
constraints in including Inferred resources. Average annual free cash flows of
A$72m in the Study demonstrate the significant upside in increasing mine life
through the inclusion of existing Resources.
§ Resource growth: The Panton orebody is open at depth and interpreted to
have improving thicknesses and grades; further drilling may support mine life
extensions beyond the currently modelled life of mine.
§ Additional payable metals: The Panton deposit contains metals either not
included in the MRE or not assumed to be payable. Additional work in the PFS
stage may support the inclusion of other payable metals including rhodium,
iridium, copper and cobalt.
§ Expansion potential: The Study does not include the near-surface Bulk
Dunite mineralisation. This component of the MRE comprises 55.7Mt @ 1.2g/t
PdEq(4), with future metallurgical studies may support a significantly
expanded operation.
§ Regional discoveries: The Company has recently expanded its exploration
position around the Panton Project. Additional nearby discoveries will
potentially further enhance the Project's economics through shared surface and
processing infrastructure. Future Metals' Eileen Bore Project is located ~15km
to the east of Panton and historic drilling indicates the potential to quickly
establish a resource estimate, progress metallurgical understanding and
include it in the overall project development plan.
§ Western price premiums: Pricing upside associated with being one of the
few western PGM & chromite projects outside of China, Russia and South
Africa. The Company will establish the Project's competitiveness on a carbon
intensity basis during the planned PFS, however given the grade, and intended
power source the Company is currently of the view that the Project will be
substantially less carbon intensive than many existing projects.
(4) MRE PdEq calculation details provided in Appendix One of the Study
Funding Strategy
Estimated pre-production funding of A$267m is required to achieve the range of
outcomes indicated in the Study. The Company is of the view that there is a
reasonable basis to believe that the requisite funding amount for the Project
will be available when required. The grounds on which this reasonable basis is
established include:
§ The Project has strong technical and economic fundamentals which provide
an attractive return on capital and generate robust cashflows under a range of
commodity price assumptions, even at currently depressed spot prices. This
provides a strong platform for attracting potential equity, debt and offtake
funding.
§ The Project is located in Western Australia, a top tier mining and
investment jurisdiction with a stable political and regulatory environment.
This increases attractiveness for potential financiers given the reduced level
of sovereign, legal, operational and financial risks.
§ The Project is the highest grade PGM & chromite deposit in Australia,
and one of the highest grade undeveloped PGM projects in the world. PGM supply
is currently heavily concentrated in Russia and South Africa. The criticality
of PGMs to multiple decarbonisation technologies, the significant risk of
negative supply shocks, and the Project's location in a top tier western
mining jurisdiction are expected to drive significant interest from a range of
potential pools of capital. This includes potential non-dilutive government
funding sources available for critical minerals projects in Western
jurisdictions.
§ The Company continues to engage with potential strategic partners who are
interested in the Project in light of the reasons stated above. The Company
will progress these discussions which may ultimately lead to a partnership
with a larger company with improved access to capital.
§ Future Metals' board and management team have a strong track record of
raising equity and debt funds for development and operating projects.
There can be no certainty that the Company will be able to source funding as
and when required. Typical project development financing would involve a
combination of debt and equity. It is possible that such funding may only be
available on terms that may be dilutive to or otherwise affect the value of
the Company's existing shares.
External Relations and Regional Benefits
The Study shows that Panton will be a significant operation in the East
Kimberley region of Western Australia, stemming from which there will be
substantial social and economic benefits.
The Company has had positive engagement with the Traditional Owners of the
Project area and will continue to engage with them, and the broader East
Kimberley community to ensure that the future development of the Project
provides a positive contribution to the region.
During construction the Project would provide approximately 150 jobs, with
steady-state operations requiring 215 jobs for ~9 years. The Company is
committed to prioritising indigenous employment and contracting services to
support its operations.
The Study sets out a high-grade, predominantly underground project with a
relatively small surface footprint. The Company's current exploration
practices involve minimising land disturbance where possible and it will
continue to do so as it advances the Project. The Company is committed to
being a strong environmental steward in the areas in which it operates and
will continue to engage positively with stakeholders to ensure that the
environmental impact of its activities and operations are minimised.
Forward Plan
The Study provides support that Panton is a commercially viable project and
accordingly, the Company now plans to commence a Pre-Feasibility Study ("PFS")
to further de-risk the Project and finalise a go-forward development case.
The Company will, in particular, seek to further optimise the processing
flowsheet, undertake metallurgical variability testing, progress offtake
discussions and improve the geological confidence of the MRE. Additionally,
the Company will begin preparing the Project for regulatory approvals
processes.
The Company is currently targeting completion of a PFS in Q4 2024.
Figure Eight | Panton Forward Plan and Development Timeline
Study Consultants
The Company completed the Panton Scoping Study with an internal team, with
support from several specialist consultants. The following list of consultants
have contributed to the Study.
Contributor Workstream
Independent Metallurgical Operations (IMO) Pty Ltd Metallurgical test-work, flowsheet, process design, process capital and
operating cost estimates
ABGM Pty Ltd Pit optimisation and underground mine design, scheduling, cost estimation.
Anandarasa Advisory Economic evaluation modelling
International Resource Solutions Pty Ltd Mineral resource estimation
Steinert Ore sorting testwork
Biologic Preliminary environmental assessment
RPM Global Permitting scoping study
Mainsheet Electricity scoping study
Competent Person's Statement
Mineral Resources
The information in this document that relates to Mineral Resources has been
extracted from the ASX announcement titled: "Resource Upgrade Defines Panton
Impressive Grade & Scale", 26 October 2023. This announcement is available
to view on the Company's website at future-metals.com.au. The Company confirms
that it is not aware of any new information or data that materially affects
the information included in the original announcement and that all material
assumptions and technical parameters underpinning the estimates in the
original release continue to apply and have not materially changed. The
Company confirms that the form and context in which the Competent Person's
findings are presented have not been materially modified from the relevant
original market announcement.
Metallurgy
The information in this announcement that relates to metallurgical test work
managed by Independent Metallurgical Operations Pty Ltd ("IMO") is based on,
and fairly represents, information and supporting documentation reviewed by Mr
Peter Adamini, BSc (Mineral Science and Chemistry), who is a Member of The
Australasian Institute of Mining and Metallurgy (AusIMM). Mr Adamini is a
full-time employee of IMO, who has been engaged by Future Metals NL to provide
metallurgical consulting services. Mr Adamini has approved and consented to
the inclusion in this announcement of the matters based on his information in
the form and context in which it appears.
Mining
The information in this document that relates to mine planning, design and
scheduling managed by ABGM Pty Ltd ("ABGM") is based on, and fairly
represents, information and supporting documentation reviewed by Mr Anton von
Wielligh, B.Sc. (Hons) in Engineering (Mining), who is a Fellow of AusIMM. Mr
von Wielligh is a full-time employee of ABGM, who has been engaged by Future
Metals NL to provide mining consulting services. Mr von Wielligh has approved
and consented to the inclusion in this announcement of the matters based on
his information in the form and context in which it appears.
Exploration and Metallurgical Results
The Information in this announcement that relates to previous exploration and
metallurgical results for the Project is extracted from the following ASX
announcements:
§ 27 July 2022 | High Grade Ni-Cu-PGE sulphides confirmed at Panton
§ 13 February 2023 | Mining and Processing Breakthrough at Panton
§ 21 March 2023 | High Grade PGM Mineralisation from 350m Step Out Drilling
§ 4 May 2023 | Drilling to commence at Nickel Sulphide Targets
§ 24 May 2023 | RC drilling commences at Panton Ni-Cu-PGM Targets
§ 11 July 2023 | Step Change in PGM Recovery - Improved to 86%
§ 5 October 2023 | FME Doubles Strategic Exploration Position Near Panton
§ 26 October 2023 | Resource Upgrade Defines Panton Impressive Grade &
Scale
The above announcements are available to view on the Company's website at
future-metals.com.au. The Company confirms that it is not aware of any new
information or data that materially affects the information included in the
relevant original market announcements. The Company confirms that the
information and context in which the relevant Competent Person's findings are
presented have not been materially modified from the original market
announcements.
Forward Looking Statements
Certain statements in this announcement relate to the future, including
forward-looking statements relating to the Company's financial position,
strategy and expected operating results. These forward-looking statements
involve known and unknown risks, uncertainties, assumptions, and other
important factors that could cause the actual results, performance or
achievements of the Company to be materially different from future results,
performance or achievements expressed or implied by such statements. Actual
events or results may differ materially from the events or results expressed
or implied in any forward-looking statement and deviations are both normal and
to be expected. Other than required by law, neither the Company, its officers
nor any other person gives any representation, assurance or guarantee that the
occurrence of the events expressed or implied in any forward-looking
statements will actually occur. You are cautioned not to place undue reliance
on those statements.
Appendix One | Peer Benchmarking References - Study-Stage PGM Projects
Project Company Study Stage Release Date Source
Gonneville Chalice Scoping 29 August 2023 G (https://chalicemining.com/wp-content/uploads/2023/08/61165357.pdf)
onneville Nickel-Copper-PGE Project Scoping Study
(https://chalicemining.com/wp-content/uploads/2023/08/61165357.pdf)
Marathon Generation Mining Feasibility 31 March 2023 M
(https://genmining.com/site/assets/files/3815/2023_updated_feasibility_study.pdf)
arathon 2023 Feasibility Study Update
(https://genmining.com/site/assets/files/3815/2023_updated_feasibility_study.pdf)
Glossary
Term Definition
AISC all-in sustaining costs
Au gold
Avg average
Cr(2)O(3) or Chromite an oxide mineral and principal ore of chromium
Competent Person or CP the competent person responsible for the relevant stated information contained
within this announcement
Cr chromium
Cu copper
Dunite an intrusive igneous rock of ultramafic composition and with phaneritic
(coarse-grained) texture
FCF free cash flow
FS feasibility study
FEED front-end engineering and design
FID final investment decision
g/t grams per tonne
Indicated that part of a Mineral Resource for which quantity, grade 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
Inferred that part of a Mineral Resource for which quantity and grade are estimated on
the basis of limited geological evidence and sampling
Ir iridium, one of the platinum group elements
IRR internal rate of return
JORC Code (2012) Australasian Code for Reporting of Mineral Resources and Ore Reserves 2012,
published by the Joint Ore Reserves Committee
km kilometres
kt thousands of tonnes
ktpa thousands of tonnes per annum
LOM Life-of-mine
m metres
Mafic igneous rocks that are low in silicon and high in iron and magnesium
Measured the part of a Mineral Reserve that has been sampled extensively by closely
spaced drill holes and/or developed by underground workings in sufficient
detail to render an accurate estimation of grade and tonnage
Mineral Resource a concentration or occurrence of solid material of economic interest for which
there is a reasonable prospect of eventual economic extraction
Moz million ounces
MRE mineral resource estimate
mRL metres relative level, i.e. metres above sea level
Mt million tonnes
Ni nickel
NPV net present value
O oxygen
Ore Reserve 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 or extracted
Os osmium, one of the platinum group elements
oz ounces
pa per annum
Panton PGM-Ni-Cr Project or Panton the Panton PGM-Nickel-Chromium (or Chromite) Project
Pd palladium, one of the platinum group elements
PdEq palladium equivalent
PFS Pre-Feasibility Study
PGE or PGM platinum group elements or metals. The collective term for platinum,
palladium, rhodium, ruthenium, osmium and iridium
PGM(2E) platinum group metals, Pt and Pd
PGM(3E) platinum group metals, Pt, Pd and Au
PGM(4E) platinum group metals, Pt, Pd, Au and Rh
Tpa tonnes per annum
W:O waste:ore ratio
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