Modern Mining: Featured News

Australian junior MOD Resources, listed on the ASX, reports that the pre-feasibility study (PFS) for a proposed open-pit mine and copper concentrator at its 70 %-owned T3 copper-silver deposit in Botswana has delivered outstanding results. Due to the robust financial outcomes indicated by the PFS, the boards of MOD and its joint venture partner, Metal Tiger (30 %), have agreed to proceed with a Feasibility Study (FS) commencing in the current quarter.

                      Disseminated T3 copper ore (photo: MOD).

The T3 project is a significant new sediment-hosted copper and silver deposit in the emerging Kalahari Copperbelt of Botswana. MOD has progressed T3 from discovery to completion of a PFS in under two years and has recently announced a major regional exploration campaign.

As drilling at T3 continues to deliver encouraging results, the PFS has been designed with flexibility to allow for process plant expansion capacity from 2,5 Mt/a to 4 Mt/a, ensuring that the full value of the asset can be extracted.

MOD has presented two cases for the PFS, with the Base Case based on a proved and probable ore reserve and an Expansion Case with a production target utilising the Base Case ore reserve and additional production from existing inferred, measured and indicated mineral resources from Year 4.

The PFS Base Case with plant throughput of 2,5 Mt/a indicates a technically sound and financially robust project generating approximately US$730 million EBITDA over nine years. It would produce an annual average of 23 kt of copper (cu) in concentrate and 690 kz of silver (Ag) in concentrate over a mine life of 9,6 years. Development capital is estimated at US$155 million with payback being achieved 2,7 years from the start of production.

The PFS concluded that T3 offers a low-risk, low capital pathway to copper production supported by improving confidence in the long-term consensus copper price.

A decision to proceed with the Expansion Case can be made after two years’ production, which is aligned with the staged pit plan, and could be funded from free cash flow. Under the Base Case, the project is expected to generate an average annual US$77 million free cash flow from first production.

Commenting on the PFS, Julian Hanna, MD of MOD Resources, said it clearly demonstrated the project’s strong technical foundation and exceptional financial returns as well as the opportunity for significant upside assuming the Expansion Case proceeds.

“This is our starting mine – and while it is an exciting milestone, we believe there is more to come with potential for satellite deposits around T3 and numerous other exploration targets to be tested along a 140 km corridor,” he said. “None of this potential upside has been included in the scope of the PFS.

“We are extremely lucky to be operating in such a favourable mining jurisdiction and look forward to transforming into a profitable long-life copper producer in Botswana.”

Along with the release of the PFS results, MOD has also announced a maiden ore reserve for T3 of 218 kt of contained copper and 7,1 Moz of contained silver.

In the Base Case the ore reserves are mined from a single, four-stage open pit with a waste to ore ratio of 4,76 using conventional hydraulic excavators and rear dump trucks. The optimised pit shell was modelled at US$2,91/lb Cu. It is envisaged that a contractor would be employed to undertake the mining under the technical and managerial direction of MOD.

The process plant comprises a conventional SAG/ball mill and flotation circuit and will process run-of-mine (ROM) ore to produce a copper concentrate and tailings. The process consists of crushing and grinding of the ore followed by sequential rougher and cleaner flotation. Concentrate will be thickened, filtered and stockpiled prior to being loaded into 2 tonne bulk bags for storage and subsequent transport to third-party smelters. The flotation tailings will be dewatered by thickening and disposed of at the Tailings Storage Facility (TSF).

Based upon core logging data, the copper mineral proportions across the deposit are estimated to be 60:30:10 for chalcopyrite, bornite, chalcocite respectively. On this basis and using metallurgical testwork data, recoveries are calculated to be 93,1% Cu and 86,2 % Ag.

Flow testing of seven water boreholes has demonstrated the potential (subject to further testing) for a sustainable water supply to meet the needs of the process plant and related activities. Water analysis indicates that the water is low in Total Dissolved Solids; consequently, there will be no adverse effects on ore processing.

Several options have been investigated in relation to the TSF and waste stockpile. The preferred option comprises a landform that integrates the TSF with the waste stockpile (Integrated Waste Landform). There is abundant gentle sloping room to allow for a significant increase in both tailings storage and waste stockpiling capacity. It is envisaged that the TSF would be lined with an HDPE membrane.

Allowance is made for on-site diesel power generation with a total installed capacity of 14,1 MW. MOD has been advised by the Botswana Power Corporation (BPC), the utility responsible for grid power generation and transmission in Botswana, that grid power will be extended along the Ghanzi Highway, 12 km from site, from 2020. MOD understands that contracts for the first stages of the transmission line have been awarded and procurement is underway.

All personnel will be based in the town of Ghanzi, approximately 80 km west of T3 along the sealed A3 Highway. MOD has begun construction of an accommodation village and operations base in Ghanzi. A 12 km graded road will run from the A3 to the site.

The Expansion Case considers mining and processing at a rate of 2,5 Mt/a for the first three years as per the PFS Base Case. The process plant will be upgraded to be able to process at a rate of 4,0 Mt/a during the fourth year.

Mining will be from a single, five-stage open pit with a waste to ore ratio of 4,28. The optimised pit was modelled as per the Base Case except for the inclusion of inferred mineral resources and the reduction in processing costs due to grid power. The T3 project will be able to commence operation as per the Base Case and can operate in this manner for two years without adversely affecting the option to implement the Expansion Case.

Processing is through the Base Case conventional SAG/ball mill and flotation circuit for the first three years. The process plant will then be upgraded – at an estimated capex of US$37 million – to process 4,0 Mt/a by the addition of a scats crushing circuit; rougher concentrate regrind mill; rougher flotation cells; concentrate storage tank; and a concentrate filter.

If the Expansion Case proceeds, the mine would have a life of 11,7 years from the start of production. Average life of mine production would be 28 kt/a of copper and 903 koz/a of silver.

Contact Modern Mining

Title: Editor
Name: Arthur Tassell
Email: mining@crown.co.za
Phone: +27 11 622-4770
Fax: +27 11 615-6108

Title: Advertising Manager
Name: Bennie Venter
Email: benniev@crown.co.za
Phone: +27 11 622-4770
Fax: +27 11 615-6108

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