REG - Thor Mining PLC - Upgraded Ore Reserve For Molyhil Tungsten Mine <Origin Href="QuoteRef">THRL.L</Origin>

Thor EnergyAnnouncement

06/09/2014 22:28

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RNS Number : 5489N
Thor Mining PLC
29 July 2014 
 
29 July 2014 
 
THOR MINING PLC 
 
UPGRADED ORE RESERVE DELIVERS LONGER 6 YEAR LIFE FOR MOLYHIL TUNGSTEN MINE 
 
An updated Ore Reserve Statement of 3.0 million tonnes @ 0.31% WO₃ (tungsten
tri-oxide) and 0.12% Mo (molybdenum) has been announced by Thor Mining Plc
("Thor") (AIM, ASX: THR) for its wholly-owned proposed Molyhil tungsten mine
in Australia's Northern Territory ("Molyhil"). 
 
The revised reserve is likely to support a six year mine life at Molyhil, a
two year extension from the previous study as announced on 30 May 2012. 
 
This new reserve, with improvements largely attributable to the benefits of
adopting ore sorting technology, has boosted mineable reserves of contained
tungsten inWO₃ by 33.3% to 9,200 tonnes, and contained molybdenum by 63.6% to
3,600 tonnes. 
 
Highlights 
 
·      Reserve statement of 3.0 million tonnes @ 0.31% WO₃ and 0.12% Mo. 
 
·      Ore sorting increases grade of material processed by 15% to 0.35%
WO₃and 0.14% Mo. 
 
·      Post ore sort tungsten equivalent grade of 0.46% WO₃ using a 15%
upgrade. 
 
·      Very high grade near-surface tungsten provides opportunity for early
payback of project capital. 
 
Next steps 
 
·      Update capital and operating cost estimates 
 
·      Completion of upgraded financial feasibility study 
 
Mr Mick Billing, Executive Chairman of Thor Mining: 
 
"This is a major step forward for the Molyhil project.  The Open Cut Ore
Reserve Statement provides for significant additional production from Molyhil,
whilst the process improvements demonstrate that production costs will be very
low, particularly in the initial couple of years.  Indeed, the tungsten grade
of the mineralisation, in the top 40 metres of the resource, before molybdenum
credits, is 0.53% WO3, substantially above the project's average grade,
suggesting very low operating costs in the first two years of operation, and
subsequent early capital payback. 
 
The next step is to update the bankable feasibility study for the project,
including a review of capital and operating costs.  This is anticipated to be
completed before the end of the quarter ended September 2014, enabling the
finance of the project to be concluded.  The Directors believe that the
enhanced project economics shown by this updated Reserve statement will
significantly boost the prospects of securing project finance." 
 
Molyhil Open Cut Ore Reserve Statement 
 
Based upon the Resources Estimate reported to the ASX & AIM on 30 January
2014, and following a re-estimate of costs and metallurgical recovery factors,
mining consultancy, AVCS Pty Ltd, has issued a statement of Open Cut Ore
Reserve for the Molyhil deposit of 3.0 million tonnes averaging 0.31% WO3 &
0.12% Mo, classified as Probable. See Table 1 and Attachment 1. The improved
outcome is largely driven by successful test results of pre-concentration of
ore using ore sorting technology. 
 
Table 1:           Molyhil Open Cut Ore Reserve Statement 
 
 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: 
 
·      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. 
 
·      The statement is derived from the Indicated portion of the resource
estimate only, and the Inferred portion is excluded from the calculations. The
long-term prices used were US$408/mtu for WO3concentrate and US$12.76/lb for
Mo concentrate at an exchange rate of US$0.83 to A$1.00. The WO3and Mo
Processing Recovery post ore sorting used was 85% and 77.8% respectively. 
 
Much of the improvement in outcomes is derived from the innovation of ore
sorting technology where Thor has successfully demonstrated a 15% to 25% mass
rejection with minimal loss of payable metal.  Other savings have been
achieved compared with previous studies, via electing to owner-operate mining
activities rather than use contract miners, and to purchase some
infrastructure items in lieu of leasing.  Some further process improvements
are also in progress with scheelite flotation testwork continuing. 
 
Next steps 
 
Using this open cut reserve statement, AVCS has prepared a detailed mining
plan to provide Thor with a monthly mining schedule for the currently
estimated life of the proposed operation, including tonnes of ore and waste
removed and the grade of the material mined.  This will then be incorporated
into the financial model, along with revised capital and operating cost
estimates, to prepare economic return estimates. 
 
It is expected that this process will be completed during the quarter ending
30 September 2014. 
 
About Tungsten 
 
Tungsten is used in the manufacture of hard metals, steels, alloys and mill
products. Its unique physical properties (melting point/hardness/tensile
strength) and lack of substitutes, make tungsten critical in industrial, oil &
gas, mining and agricultural applications.  It is classified as a strategic
metal in the US, EU and China. Production and consumption of tungsten is
dominated by China, with western world demand growing. Tungsten prices
increased strongly during 2011 & have largely held those gains. 
 
Demand is estimated by the International Tungsten Industry Association to grow
at 4%pa til 2018. 
 
While Molyhil is principally a tungsten project, the contribution from the
contained molybdenum is significant. The grade of material reporting to the
processing plant adjusted for molybdenum credits, and after ore sorting, will
be equivalent to 0.46% WO₃, well above the grade of most Western World
operating or proposed tungsten mining operations. 
 
Enquiries: 
 
 Mick Billing                                  +61 (8) 7324 1935                        Thor Mining PLC        Executive Chairman     
 Ray Ridge                                     +61 (8) 7324 1935                        Thor Mining PLC        CFO/Company Secretary  
 Colin Aaronson/ David Hignell/ Jamie Barklem  +44 (0) 207 383 5100                     Grant Thornton UK LLP  Nominated Adviser      
 Andrew Monk/Bhavesh Patel                     +44 (0)20 3005 5000                      VSA Capital Limited    Broker                 
 Alex Walters                                  +44 (0) 7771 713608+44 (0) 207 839 9260  Cadogan PR             Financial PR           
 
 
Competent Persons Report 
 
The information in this report that relates to the Ore Reserves is prepared by
Andrew Vidale who is a Member of The Australasian Institute of Mining and
Metallurgy. Andrew Vidale is a full time employee of AVCS and has sufficient
experience relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2012 Edition of the "Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves" ("The
JORC Code 2012 Edition"). Andrew Vidale consents to the inclusion of material
within this report by Thor. 
 
Molyhil  - Table 1 
 
 Criteria                                               Commentary                                                                                                                                                                                                                                                      
 Mineral Resource estimatefor conversionto OreReserves  TheOreReserveestimateis basedontheMineralResourceestimatepreparedbyRunge Pincock Minarco (RPM)reportedintheOctoberto December2013 quarterly report. TheMineralResourcesarereportedinclusiveof OreReserves.                                                      
 Sitevisits                                             AsitevisithasnotbeenconductedbytheCompetentPerson. TheCompetentPersonis satisfiedthatthe3Dtopographicdatasuppliedand descriptionsof thesiteenvironmentandexpectedoperatingconditionsareadequate forthecompletionof                                              
                                                        appropriateminedesignsandschedulesandfortheestimation of OreReserves.                                                                                                                                                                                           
 Studystatus                                            ThorcompletedandpublishedaDefinitiveFeasibilityStudy(DFS)in June2012.  A JORC2004compliantOreReservewaspublishedin May2012. ThisOreReserveis an updatebasedonplannedchangesto oreprocessingand revisedoperatingandcapitalcostestimatesleadingto                 
                                                        updatedpitoptimisation,pit designandmineschedules.                                                                                                                                                                                                              
 Cut-off parameters                                     AnNSRcut-offhasbeendeterminedtakingintoconsideration:o  WO3priceo  Mopriceo  Processingcosto  Metallurgicalrecoverieso  Transportcosto  G&Acosts RoyaltytoNorthernTerritorygovernmentandprivateentitieswerenotincludedin the calculationof theNSR               
 Miningfactors orassumptions                            TheOreReservehasbeenestimatedfrom detailedpit designswhichwerebasedon apreferredshellchosenfrom arangeof pit optimisationshells.  Thepitoptimisation incorporatedsensitivityanalysesonminingcost,processingcost,revenue,slope angleandgeo-metallurgicalrecovery. 
                                                        TheOreReserveestimateassumesconventionaltruckandshovelopenpitmining practices,X-Rayoresortingandconventionalflotationandgravityprocessing practices. Pit designslopeparametersweresourcedfrom areportbyPells SullivanMeynik; "Molyhil,GeotechnicalOpenPit       
                                                        SlopeDesignAug2012.  Overallslopeanglesforpit optimisationwereadjustedforthelikelyimpactof ramps-theseoverallangles alignedwell withfinalpit designs. TheresourceblockmodelprovidedbyThorhasblockdimensionsof 1.25minthe east-westdirectionx 2.5m inthenorth    
                                                        -southdirectionx 2.5m inelevation. Aminingblockmodelwaspreparedfrom theresourceblockmodel,theminingmodel incorporatesestimatesformininglossanddilution,geo-metallurgicalstage recoveries, costsandrevenue. Theminingmodel                                       
                                                        wasregularisedtoa5mbenchheightandablockedgedilutionof0.5m wasapplied.  Valuebasedoreselectivityanalysisassuminga5mx 5mSMUwascarriedouttodetermineoreboundaries.Thenetimpactof regularisation,miningdilutionandSMUis 103%massrecoveryof                          
                                                        1mineralisedmaterial,98%massrecoveryofWO3andMo,headgradeof 96%of in- situ.       Theproposedpit is developedintwostages.  Minimumdimensionof thefirststage pitflooris 170mx 65m.  Thesecondstageminingwidthis typically60m to100m withaminimumwidthof 30m.      
                                                        Thefinalpit is approximately150mdeep withthefinal 45m utilisingasinglelaneramp.  Finalpitfloordesignincludesa "goodbye"cut whichnarrowsto between25m and35m in width.                                                                                           
 Metallurgical factorsor assumptions                    Oreprocessingwillconsistof crushing,X-Raysortingforpre-concentration,grinding, flotationandgravityseparation.  Thesetechnologiesareindustrystandardsforthe typeof deposit. Drilling,bulksamplingandmetallurgicaltestworkbyThorhasbeenongoingsince2005.          
                                                        Metallurgicalrecoverieswereestimatedintheblockmodelbasedonthetestwork andtrialdataprovidedbyThor.  Theseindicate:o  15%of ROMmassrejectedbyoresortingwithalossof 0.4%WO3 massand1.1%Momasso  85.0%recoveryofWO3inmillfeed(84.6%of ROMfeed)o  77.8%recoveryof    
                                                        Moinmillfeed(77.0%of ROMfeed) Copperis apotentialpenaltyelementin theMolybdenumconcentrate.  Testwork indicatesthecoppergradewillnotexceedtheallowablelimitinpreviousoff-take agreementshenceno pricepenaltyhasbeenapplied. Molybdenumis                        
                                                        apotentialpenaltyelementin the Scheeliteconcentrate.  Testwork indicatesthemolybdenumgradeis likelytobe abovethepenaltythreshold.  Price penaltiesareappliedin; thecalculationof NSR,thepit optimisationandthefinancial modelbasedon estimatesfrom off          
                                                        -takepartners.                                                                                                                                                                                                                                                  
 Environmental                                          ApprovalfortheMiningManagementPlan wasgrantedbytheNorthernTerritory Directorof Miningand PetroleumAuthorisationsandEvaluationsin 2008butwaslet lapsebyThor. TheMiningManagementPlan wasre-submittedin June2012,Thorarecurrently awaitingaresponse.              
                                                        Geologicaldataindicatesthewasterock is not likelytobe acidconsuming,consequently nofurtherstudieshavebeenundertakenonwasterockcharacterisationorselective placement.                                                                                            
 Infrastructure                                         Infrastructureforallactivitieswillneedtobeinstalled/constructedbeforethe commencementofmining. Siteaccessfrom thePlentyHighwaywillrequireupgradingof an existingroadfor bothtransportof constructionmaterialsandconcentrateshipment.  Agreementsare             
                                                        inplacewiththelandholderforuseof thisroad. Acommunityassessmentof stakeholderswasconductedin2007.  Stakeholders consultedinidentifyingopportunitiesandriskswere:o   CentralLandCouncil(CLC)o   IndigenousCoordinationVentureo                                   
                                                        IndigenousBusinessandIndustryServiceso   AliceSpringsTownCouncilo   Mining,PetroleumandDefenceSupportGroupo   DesertKnowledgeAustraliao   CentreforAppropriateTechnologyo   ArltarlpiltaCommunityGovernmentCouncilo                                             
                                                        Jinka/JervoisstationAnagreementisinplacewiththeCLCto provideindigenousemployment opportunities                                                                                                                                                                  
 Costs                                                  FullprojectvaluationhasbeenconductedbyThor.  TheCompetentPerson understandsthatCapitalcostshavebeensourcedfromsuppliersandcontractors duringtheDFSprocessandsinceupdatedbyThor. OperatingcostshavebeenbasedonsupplierquotesandextrapolationfromThor             
                                                        andCompetentPersonexperienceelsewhere. Projectvaluationcostsincludetailingsretention.  TheDFSincludeddesignsfora tailingsstoragefacility(TSF)neartheeasternsideofML24429.  Thesubsequent increaseinOreReserveandpitsizenecessitatestheplacementofwasterock      
                                                        dumpsinthatarea,andit is plannedtorelocatetheTSFimmediatelytothenorthof theexistingMLs.  Theproposedlocationlies withinThor'sexplorationlease EL22349. Anexchangerateof 0.83USD/AUDhasbeenusedinthepitoptimisationand calculationof                             
                                                        theNSR.RoyaltytoNorthernTerritorygovernmentandCentralLandCouncilhavebeen calculatedin thefinancialmodel.                                                                                                                                                        
 Revenue factors                                        NSRcalculationandpit optimisationused:o  US$408/mtuforWO3o  US$12.76/lbforMo TheWO3pricewasdeterminedbydiscountingtheaveragemarketpredictionof US$458/mtufor2APTfor2014~2018sourcedfrom anindependentreportby TungstenMarketResearchLtd(Jan2014.  TheMoprice    
                                                        wasdeterminedby discountingtheLMElongterm pricesestimateof 3$16.47/lb.                                                                                                                                                                                          
 Market assessment                                      Neithertungstennormolybdenumhavepotentialsubstitutesfortheirmainapplication andconsumptionforbothis expectedtocontinuetogrow.  Molybdenumis oftena secondaryproductfrom CuorCu/Auminesandproductioncanbe readilyturnedon or off asdemandandprice dictates.      
                                                        Marketpredictionsfortungstenbeyond2014arefordemandtoexceedsupplyand priceto increase. Marketpredictionsformolybdenumbeyond2013arefordemandto increasewith globalGDPandpricesincreasebeyond2015                                                                  
 Economic                                               Economicinputssuchasforeignexchangerates,royalties,costs,discountrateetc aresetbyThorandhavebeentestedin theprojectvaluationmodel. ProjectassessmentbyThorindicatesa veryattractivepositivenetpresentvalueandIRR.                                               
 Social                                                 Consultationhasoccurredwiththerelevantstakeholders,includingaboriginal peopleswhoclaimaffinitywiththe landupon whichtheplantwillbe located. TripartiteDeedof Agreementhas beenexecutedin 2008betweentheNTgovernment,Thor,theCentralLandCouncilandthe            
                                                        ArrapereGroup. Thorobtainedthe AboriginalAreasprotectionAuthorityCertificatein March2012.                                                                                                                                                                       
 Classification                                         TheentireOreReserveis classifiedas Probable. OnlyIndicatedMineralResourceswereconsideredinthecalculationof theNSRfor thepurposesof pitoptimisationandReservesestimation. TheOreReserveestimatedoesincludeminorquantitiesof InferredResourcesand                 
                                                        unclassifiedmineralisationthathaveresultedfrom theformationof anSMUand/or inclusionof edgedilutionacrosstheIndicatedResourceblockboundary.          This additionalmaterialis<3%of theestimatedReservemassandcontains approximately1% of theWO3andMo.           
                                                        Noportionof the ProbableOreReserveshavebeenderivedfrom MeasuredResources-therearenoMineralResourcesof Measuredclassification.                                                                                                                                   
 Auditsor reviews                                       TheOreReserveshasnotbeenexternallyaudited.                                                                                                                                                                                                                      
 Discussionof relative accuracy/ confidence             Thepitdesignsandminescheduleon whichtheOreReserveis basedhavebeen preparedtoFeasibilityStudylevelwithacorrespondinglevelof confidence. ThemineralisationatMolyhilcomprisestwonear verticallydippingironrichskarn lobesin granitehostrock.                       
                                                        Thedefinedoreboundariesare,withineachlobe, continuousand in theorderof 50m wide(eastto west)by100m long(northtosouth) forthewesternlobeand40m wide(eastto west)by80 mlong(northtosouth)forthe easternlobeoverall. Minimumminingwidthacrosstheore                
                                                        zonesrarelyapproachestheassumedSMUlimitof 5mandis moretypicallygreaterthan20m. Theexternaloreboundaryis typicallyatthecontactbetweentheskarnandthehost granitesandthuseasilyvisuallyidentified.  Theinternalwasteboundariesand                                  
                                                        externalboundariesthatarewithintheskarnwillrequireblastholesamplingand/ora fieldXRFforgradecontrol. Miningmodifyingfactors,pitdesignsandschedulereflectthescaleof theintended equipmentandplannedoperation.                                                     
 
 
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