REG - Thor Mining PLC - UPGRADED MOLYHIL FEASIBILITY STUDY <Origin Href="QuoteRef">THRL.L</Origin>

Thor EnergyAnnouncement

28/01/2015 24:17

RNS Number : 7770B
Thor Mining PLC
12 January 2015
12 January 2015 
THOR MINING PLC
Thor Mining PLC ("Thor" or the "Company")
UPGRADED MOLYHIL FEASIBILITY STUDY 
IMPROVES FINANCIAL RETURNS AND CONFIRMS EARLY CAPITAL PAYBACK
The Board of Thor Mining Plc ("Thor") (AIM, ASX: THR) is pleased to advise that a just completed upgraded Feasibility Study for the Company's wholly-owned Molyhil tungsten project in Australia's Northern Territory ("Molyhil") has confirmed that the project will deliver attractive financial returns as well as an early payback of the capital required for its development.
Study Highlights
 Project payback period of 18 months after payment of royalties and taxation
 All equity Net Present Value (NPV) of A$67 million with an Internal Rate of Return (IRR) of 44%, after taxation & royalty payments.
 EBITDA of A$201 million
 Cash production cost of US$112/mtu concentrate compared with revenue of US$358/mtu
 Capital expenditure (CAPEX) of A$70 million (US$56 million)
 Six year mine life
 Simple open cut mining operation followed by standard mineral processing techniques
 Operation substantially permitted
Next steps
 Secure project development finance agreements
 Detailed engineering studies
 Complete permitting
Molyhil Feasibility Study 
Following the publication in July 2014 of an updated JORC 2012 compliant open cut ore reserve statement for Molyhil, Thor has completed the necessary mining and production schedules and capital and operating cost estimates, and incorporated these results into the feasibility model, along with previously published parameters (refer attachment "A"), to produce an upgraded and attractive feasibility study outcome with a mining and processing operation over a 6 year life.
The results of the study show:
 EBIT returns provide for 18 month payback period
 All equity Net Present Value (NPV) of A$67 million at a discount rate of 8% (A$53million @ 12% or A$80 million @ 5%) after tax and royalty payments
 All equity Internal Rate of Return (IRR) of 44% after tax and royalty payments
 Production cost of US$112/mtu concentrate (after deduction of molybdenum bi-product credits) compared with revenue of US$354/mtu
 Mine life of 6 years, derived from the updated open cut ore reserve statement published in July 2014
 Capital expense of A$70 million (US$56 million)
 EBITDA of A$201million.
The feasibility study has been prepared by Thor Mining PLC using data and information supplied by third party consultants and suppliers for key components, including:
 Resource estimates and open cut ore reserve statement;
 Mine planning;
 Capital and operating costs;
 Metallurgical processes and outcomes;
 Commodity prices and exchange rates;
 Environmental studies.
Mining
Mining is planned using conventional open cut mining methods; contract drill & blast, followed by owner operated excavation and haulage.
An average pit slope of 48 currently provides for a waste to ore ratio of 5.2:1. There may be an opportunity to improve this ratio during operations and via targeted geo-technical drilling.
The resource estimate extends below the level of the open cut ore reserve used in this study providing potential to extend the project life either by deepening the open pit, or via underground mining methods depending upon subsequent costs and metal prices.
Processing
Mineral processing involves:
 Two stage crushing to -55mm:
 X-Ray (XRT) ore sorting at two sizes -55mm to +25mm, and -25mm to +10mm
 Tertiary crushing
 Two stage grinding using a rod mill followed by a ball mill
 Three stage flotation circuit
o Molybdenum flotation
o Sulphide flotation
o Scheelite flotation
 Concentrate dressing
The revised process flowsheet involves replacing the previous scheelite gravity recovery method with flotation which has achieved substantial improvements in economic recovery and also in reducing levels of some deleterious elements in final concentrate compared with the original circuit. The scheelite concentrate dressing process which follows the flotation step has been tested but is not yet optimised. It is expected that this optimisation process will be completed during the detailed design phase.
Project Infrastructure
Molyhil is located 220 kilometres north-east of Alice Springs in Australia's Northern Territory. Access is via the Plenty Highway a partially sealed road off the Stuart Highway which connects Alice Springs and Darwin.
The project will operate as a fly-in fly-out operation with provision for camp and electricity generation facilities provided in the cost estimates.
The project has ample water from underground aquifers nearby.
Product Off-take sale agreements
In October 2013 Thor received a Letter of Intent from US based Global Tungsten & Powders (GTP) in respect of 70% to 75% of total tungsten concentrate production for the life of the proposed Molyhil operation. The Directors of Thor are working towards sales agreements for the balance of those concentrates and also for the molybdenum by-product concentrates.
Next steps
The next steps for the Molyhil project involve securing the balance of concentrate sales (off-take) agreements and finance for the project development, after which it is planned to commence detailed engineering studies, along with completion of the Mine Management Plan and onsite civil works in preparation for mine and process plant construction and development.
Table 1. Molyhil Key Features
Project NPV post tax & Royalties
A$67 million


Project IRR after tax & royalties
44%
All Equity Case

Project Capex
A$70 million
All Equity Case

Life of Mine C1 Cash Cost
US$112/mtu


Life of Mine EBITDA
A$201 million


Payback from 1st production
18 months


Project Life 
6 years


Average feed grade
0.31% WO
0.41% WO after ore sorting

0.12% Mo
0.12% Mo after ore sorting
Operating throughput
Crushing & Sorting
Milling/Flotation etc
500,000 tpa
400,000 tpa
After ore sorting
Annual Production Average
130,000 mtu *
Approximately 1.3% of global market
* 1mtu = 10Kg of contained WO
Mr Mick Billing, Executive Chairman of Thor Mining: 
"The Molyhil project has taken a significant step forward with this enhanced feasibility study. The returns are very attractive, and cash flow available for debt servicing of 2.5 times project capital cost. Substantial work has been undertaken to improve costs and we believe that Molyhil has a very attractive cost structure and a low start-up capital expense. We do not underestimate the task in securing project finance, however we believe these upgraded project economic outcomes are compelling"
Enquiries: 
Mick Billing
+61 (8) 7324 1935
Thor Mining PLC
ExecutiveChairman
Ray Ridge
+61 (8) 7324 1935
Thor Mining PLC
CFO/Company
Secretary
Colin Aaronson/ 
Jamie Barklem
+44 (0) 207 383 5100 
Grant Thornton UK LLP
Nominated Adviser
Andrew Monk/
Bhavesh Patel
+44 (0) 20 3005 5000
VSA Capital Ltd
Broker
Alex Walters
+44 (0) 7771 713608
+44 (0) 207 839 9260
Cadogan PR
Financial PR
Updates on the Company's activities are regularly posted on Thor's website www.thormining.com, which includes a facility to register to receive these updates by email.


Attachment A: Molyhil Feasibility Study Input Parameters
1. Mineral Resource estimate of 4.7 million tonnes averaging 0.28% WO3 & 0.13% Mo in Indicated and Inferred categories
2. Open Cut Ore Reserve for the Molyhil deposit of 3.0 million tonnes averaging 0.31% WO3 & 0.12% Mo categorised as Probable
3. Revenue factors:
 Revenue / mtu scheelite concentrate = US$354/mtu after concentrate discount
 Revenue / pound molybdenum concentrate = US$10.56
 A$1.00 = US$0.77 over life of mine
APT Tungsten Price Forecast *
2015
2016
2017
2018+
US$/mtu
471
481
446
466
* Source: Tungsten Market Research Ltd January 2014
4. Metallurgical recovery (post ore sorting)
 Tungsten = 85%
 Molybdenum = 77.8%
5. Capital cost = A$70 million
6. Operating Factors
 Mining waste to ore ratio = 5.2 : 1
 Mining costs = A$19.35 / tonne ore milled
 Processing & admin costs = A$65 / tonne ore milled
 Ore Sort reject = 25% of ore crushed
The Molyhil Mineral Resource is summarised in Table 2 Below:
Table 2: Summary of Molyhil Mineral Resource Estimate: (Reported on 30 January 2014)
Classification
Resource
WO3
Mo
Fe

Tonnes
Grade %
Tonnes
Grade %
Tonnes
Grade %
Indicated
3,820,000
0.29
10,900
0.13
4,970
18.8
Inferred
890,000
0.25
2,200
0.14
1,250
15.2
Total
4,710,000
0.28
13,100
0.13
6,220
18.1
Notes 
 Compliant with JORC 2012
 Thor Mining PLC holds 100% equity interest in this reserve.
 Mineral Resource reported at 0.1% combined Mo + WO3 Cut-off and above 200mRL only.
 Minor rounding errors may occur in compiled totals.
The Molyhil Open Cut Ore Reserve Statement is summarised in Table 3 below
Table 3: Molyhil Open Cut Ore Reserve Statement(Reported on 29 July 2014)
Classification
Reserve
WO3
Mo

'000 Tonnes
Grade %
Tonnes
Grade %
Tonnes
Probable
3,000
0.31
9,200
0.12
3,600
Total
3,000
0.31
9,200
0.12
3,600
Notes:
 Compliant with JORC 2012
 Thor Mining PLC holds 100% equity interest in this reserve.
 Estimate has been rounded to reflect accuracy.
 All estimates are on a dry tonne basis.
 The reserve estimate extends to a maximum depth below surface of 150 metres.

This information is provided by RNS
The company news service from the London Stock Exchange
  END
MSCEAEFNESSSEFF