-
Overview
During the reporting period, the principal activities of Regal Resources Ltd ('Regal' or 'Company') were focussed on evaluating the Kalongwe Copper Project located in the Katanga Province of the DRC in order to determine if the deposit, hosting a resource of 302,000 tonnes ('t') contained Copper ('Copper' or 'Cu') and 42,000 t contained Cobalt ('Cobalt' or 'Co'), could be developed as a stand-alone mining operation.
Work programmes undertaken included the completion of: two phases of Diamond drilling for a total of 6000 metres ('m'), two (2) Joint Ore Reserves Committee ('JORC') Mineral Resource estimates, a metallurgical test work programme and a Scoping Study ('Scoping Study' or 'Study').
The results of the Scoping Study were extremely encouraging highlighting the potential for the establishment of a low capital expenditure ('CAPEX'), economically viable, robust project with low operational expenditure ('OPEX') and short payback period.
Key Outcomes of the Scoping Study are:
|
Project Net Present Value (NPV @ 10% discount rate)*
|
$77.9 million ('M')
|
|
Project Internal Rate of Return (IRR)*
|
81%
|
|
Payback*
|
13 months
|
|
Capital Cost to Initial Production
|
$38.9M
|
|
Operating Costs (per pound ('lb') Cu payable)
|
$1.01 lb
($1.38 per lb with transport costs included)
|
|
Production Target Profile
|
1.03 Megatonnes per annum ('Mtpa)' processed
through Heavy Media Separation ('HMS') plant
|
|
Total Sales Revenue
|
$397.3M
|
|
Estimated average annual Copper production**
|
21,249 t (tonnes of Cu in concentrate)
|
|
Life of Mine ('LOM'), strip ratio (t:t)
|
1.52
|
|
Timeline to initial production
|
12-16 months from approval of Mining Licence
|
|
Product Quality**
|
3.27% Cu avg. ore grade over LOM and HMS
concentrate grade >20% Cu
|
NOTE: The Scoping Study is based on low-level technical and economic assessments, and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Study will be realised.
* Base Case is stated on a post-tax basis assuming 100% project at a Copper price of $3.00/lb. All amounts are in US dollars unless otherwise stated.
** Forecast Cobalt grades will be defined in subsequent work on the Kalongwe Project.
After the completion of the economic and technical assessment of developing a mining operation at Kalongwe, Regal on behalf of the Kalongwe Mining Joint Venture ('JV') prepared an application to convert the exploration permit to a mining permit.
The Democratic Republic of Congo ('DRC') Ministry of Mines has advised that the application has been approved and that a recommendation has been sent to the Minister of Mines for the permit to be converted to a mining licence.
Kalongwe Mining SA is a DRC registered company currently jointly controlled by Regal (30%), the international commodities trading company Traxys (30%) and La Generale Industrielle et Commerciale au Congo SPRL ('GICC') (40%).
Traxys and Regal have agreed that the most effective approach to developing a mining operation at Kalongwe would be if Regal holds a 60% interest in the Project. Negotiations are at an advanced stage to finalise the terms and conditions under which Regal would acquire their 30% interest.
During the financial year the Company also successfully negotiated a farm-in agreement with Ivanhoe Mines Ltd to earn up to 98% interest in a block of five (5) permits that cover approximately 350 square kilometres ('sq. km). The permits surround and are generally contiguous to the Kalongwe deposit.
Ivanhoe Mines previously conducted regional exploration programmes over parts of the permits and identified numerous Prospects containing significant Copper mineralisation.
An amount of AUD 3.2M was raised through two (2) share placements. One was with an affiliate of Sprott Inc. ('Sprott') and the other with Tembo Mining Capital ('Tembo'). A further AUD 1.5M was provided by way of a convertible loan agreement with Tembo.
A number of board changes were made during the course of the year. Mr. Mark Savich and Tembo founder Dr. Peter Ruxton were appointed as non-executive Directors and two (2) non-executive Directors, Rohan Gillespie and Mr. Angus Edgar resigned. Mr. Savich has assumed the position of Chairman from Mr. Gillespie on an interim basis.
-
Highlights
Kalongwe Copper-Cobalt Project
-
A thirty-four (34) hole Phase ll infill Diamond drilling programme was completed for a total of 4,287 m. Drill holes intersected broad widths of high-grade copper and cobalt mineralisation:
101.3 m @ 4.25% Cu & 0.42% Co from 10.10 m 57.30 m @ 4.58% Cu & 0.62% Co from 3.80 m
96.70 m @ 3.76% Cu & 0.53% Co from 15.00 m 92.10 m @ 5.24% Cu & 0.55% Co from 21.00 m
87.50 m @ 3.35% Cu & 0.37% Co from 48.30 m 80.50 m @ 4.27% Cu & 0.76% Co from 25.70 m
75.00 m @ 6.30% Cu & 0.73% Co from 12.00 m 69.00 m @ 5.29% Cu & 0.77% Co from 5.50 m
68.20 m @ 3.98% Cu & 0.53% Co from 6.00 m 62.90 m @ 3.26% Cu & 0.43% Co from 19.50 m
-
The results of the drilling programme were incorporated into a revised mineral resources model that was used to generate an upgraded and reclassified JORC Mineral Resource estimation of:
-
11.17 Mt ('Megatonnes') @ 2.70% Cu (0.5% Cu cut off), 302,000 t Cu including 29,700 t Co, and
2.29 Mt @ 0.57% Co (0.2% Co cut off), 13,000 t Co.
-
The revised resource estimate represents an almost 75% conversion of the Inferred Maiden JORC resource (ASX release: 5 February 2015) to a Measured and Indicated JORC classification. Average grade of Measured Resource category is 3.61% Cu.
-
Oxide mineralisation accounts for over 95% of the resource estimate.
-
The results of the Scoping Study have identified opportunities to improve the economics of the Kalongwe Project. All of these will be investigated during the course of the Definitive Feasibility Study ('DFS').
-
ALS Metallurgical Laboratories in Perth (Australia) has commenced a comprehensive metallurgical test work programme as part of the DFS. The results will enable the development of a detailed mineral processing flow sheet to be used for HMS plant design improvements.
-
A regional exploration programme was commenced to evaluate high value in-soil copper and cobalt results coincident with fragments of Lower Roan Mine Series rock units, mapped along strike from the Kalongwe deposit.
Regal-Ivanhoe Joint Venture / Fold and Thrust Belt Joint Venture ('FTBJV')
-
A detailed technical review of historic exploration results covering the five (5) exploration permits that form the JV was undertaken.
-
Five (5) Prospects, some with multiple zones of Copper mineralisation were identified from the database as meriting priority field investigation.
-
Follow-up field investigation was conducted over two (2) of the five (5) Prospects. At the Kambundji Prospect, Copper mineralisation was mapped in outcrop and artisanal workings over a distance of about 200 m. The structure hosting the mineralisation has an estimated strike extent of 8 kilometres ('km') Rock chip samples collected in the area returned values of up to 4.95% Cu.
Victoria Brown Coal Tenements
-
Rehabilitation works were concluded at the EL 4507 and EL 4510 sites in accordance with licence conditions and to the satisfaction of the Victoria State Department of Economic Development, Jobs, Transport & Resources.
Corporate
-
Completed a AUD 2M share placement with an affiliate of Sprott. Funds were used to advance the Kalongwe Phase II work programme and to make final payment to GICC for Regal's 30% interest in the Kalongwe Project.
-
Announced a AUD 6.3M share placement with the mining private equity fund group, Tembo Capital Mining Fund LP ('Tembo'). Tranche 1 of the placement completed on 12 February 2015, raised AUD 1.2M (at 5c per share).
-
Entered into an AUD 1.5M convertible loan financing agreement with Tembo to commence exploration work associated with the Regal-Ivanhoe JV, necessary metallurgical test work for the Kalongwe DFS and working capital.
-
Mr. Ian Pamensky was appointed Company Secretary and Financial and Commercial Manager in January 2015.
-
Dr. Peter Ruxton was appointed to the Regal Board of Directors as a non-executive Director in February 2015.
-
Messrs. Rohan Gillespie (non-executive Chairman and Director) and Angus Edgar (non-executive Director) resigned from the Board of Directors in June 2015. Mr. Mark Savich has been appointed interim Chairman.
-
The former business office in Melbourne (Australia) was vacated for a smaller and less expensive office as part of a corporate cost-saving strategy.
-
Project Reviews
-
Kalongwe High Grade Copper-Cobalt Project
The Kalongwe deposit is located at the western end of the DRC Copperbelt within 15 km of the Ivanhoe Kamoa Project.
Drilling has confirmed that the geology of the deposit has characteristics typical of the majority of the stratabound Congolese Copperbelt type deposits which host over 90% of operating mines in the Katanga Province, DRC (Figure 1).
Figure 1: Map of the Central African Copperbelt showing the location of the Kalongwe Project relative to principal Cu-Co deposits.
The R2 series Lower Roan rocks hosting mineralisation at Kalongwe extend for about 400 m to 450 m in an east-north- east direction, (Figure 2). The eastern limit is confirmed by drilling and the western extent appears fault-bounded. The R2 rocks are not closed off at depth.
Figure 2: Simplified geological map of PR 12198 and the location of the Kalongwe deposit area.
Mineralisation is hosted in a recumbent fold structure with a hanging-wall limb that has been faulted along several axial plane, parallel reverse faults that has resulted in structural repetitions, 'stacking' and strong fracturing and mineralisation of Roan rocks. Copper-Cobalt mineralisation extends down-dip and is broadly conformable with dipping strata seen in surface exposures.
Mineralisation occurs in two (2) settings: stratabound mineralisation and structurally controlled breccias and veins. Oxide mineralisation is found in veins and breccias and as disseminated blebs and grains in stratigraphic horizons, (Figure 3).
The predominant secondary minerals in order of relative abundance are malachite, chrysocolla and azurite for Cu and heterogenite for Co.
Minor structural stratigraphic offsets are present, however there is good lateral and down-dip continuity of supergene mineralisation along both limbs of the fold, suggesting that supergene remobilisation is primarily controlled by stratigraphy.
Figure 3: Style, mineral type and host rock examples - (LHS) void filling Cu-oxide mineralisation (malachite) in silicified stromatolitic ex-dolomite; (Centre) vein style mineralisation including malachite, chrysochola and heterogenite in fractures, weathered ex-carbonaceous siltstone; (RHS) botriodal high-grade Cobalt mineralisation, (width of core is 8 cm).
Diamond drilling programmes
On 20 June 2014, Regal announced the completion of a Phase I Diamond drilling programme for a total of 1,785 m (ASX release: 20 June 2014). A total of twelve (12) Diamond holes were drilled during this campaign with the objective of:
-
Replicating results of the historic (2006 / 2007) Ivanhoe Diamond drill holes,
-
Replicating results of historic (reverse circulation / percussion) holes,
-
Replicating results in areas of high-grade and low-grade mineralisation,
-
Confirming high-grade results in key resource areas, and
-
Ultimately, establishing a high level of confidence in the historic data for the purpose of resource estimation.
The overall Phase I results were highly encouraging, confirming the historic Ivanhoe drill intersections. All available drill results were used to generate a maiden JORC-compliant Mineral Resource estimate for the Kalongwe fragment 'ecaille'.The resource estimate (Table 1) was released to the ASX on the 11th July, 2014.
Table 1: Kalongwe Maiden JORC Mineral Resource estimate (July 2014).
|
JORC
Classification
|
Domain
|
Tonnage
(Mt)
|
Cu (%)
|
Co (%)
|
Tonnes Cu
|
Tonnes Co
|
|
Inferred
|
Cu Only 1
|
6.37
|
2.34
|
-
|
149,000
|
-
|
|
Inferred
|
Mixed 3
|
4.04
|
3.14
|
0.72
|
127,000
|
29,100
|
|
Inferred
|
Total Cu
Domains
|
10.41
|
2.65
|
-
|
276,000
|
-
|
|
Inferred
|
Co Only 2
|
1.94
|
-
|
0.69
|
-
|
13,400
|
|
Inferred
|
Total Co Domains
|
1.94
|
-
|
0.69
|
-
|
13,400 + 29,100
(Co credits in Mixed zone)
|
-
The Cu only domains were reported by selecting blocks with Cu >= 0.5%.
-
The Co only domains were reported by selecting blocks with Co >= 0.2%.
-
The Mixed Domains (blocks located within overlapping Cu and Co domains) were reported by selecting blocks with Cu >= 0.5%. The Co grade from these blocks was also recorded.
-
It is assumed for the purposes of this Mineral Resource that Cu grades in the Co only domains, and Co grades in the Cu only domains are 0%, although low grade mineralisation was recorded in sample.
Phase II Drilling Programme
A 34-hole Phase II Diamond drilling campaign commenced in August 2014 and was completed by the end of November 2014 for a total of 4,213 m. One of the objectives was to close the drill spacing from a 100 m along-strike x 100 m down-dip grid pattern (in places 50 m x 50 m), to the current nominal grid pattern of 50 m x 50 m (in places 25 m x 50 m) across the deposit, (Figure 3).
Significant drill results included:
• 92.1 m at 5.24% Cu and 0.55% Co from 21.0 m,
• 69.0 m at 5.29% Cu and 0.77% Co from 05.5 m,
• 96.7 m at 3.76% Cu and 0.53% Co from 15.0 m,
• 62.3 m at 4.29% Cu and 0.58% Co from 06.0 m,
• 47.9 m at 4.05% Cu and 0.51% Co from 19.5 m,
• 45.0 m at 3.64% Cu and 0.20% Co from 17.4 m,
• 40.2 m at 3.98% Cu and 0.53% Co from 23.3 m, and
• 14.0 m at 8.00% Cu and 0.36% Co from 14.0 m.
All assay results for the Phase II programme are presented in (Table 2).
Table 2: Phase II drilling programme Copper and Cobalt assay results for all drill holes.
|
Hole ID
|
From
(m)
|
To (m)
|
Down hole
interval (m)
|
Cu%
|
Co%
|
Recovery
(%)
|
Comments
|
|
DKAL_DD088
|
108.2
|
112.4
|
4.2
|
2.67
|
0.56
|
89
|
Down hole length
|
|
123.3
|
137.3
|
14.0
|
1.21
|
0.19
|
83
|
Down hole length
|
|
147.9
|
197.9
|
50
|
2.03
|
0.57
|
95
|
Down hole length
|
|
DKAL_DD089
|
48.3
|
135.8
|
87.5
|
3.35
|
0.37
|
91
|
Down hole length
|
|
150.5
|
157.25
|
6.75
|
1.64
|
0.41
|
99
|
Down hole length
|
|
Hole ID
|
From
(m)
|
To (m)
|
Down hole
interval (m)
|
Cu%
|
Co%
|
Recovery
(%)
|
Comments
|
|
DKAL_DD090
|
103.2
|
125.4
|
22.2
|
4.76
|
0.08
|
78
|
Down hole length
|
|
150.4
|
157.1
|
6.70
|
1.30
|
0.11
|
57
|
Down hole length
|
|
DKAL_DD091
|
139.9
|
145.4
|
5.5
|
2.56
|
0.29
|
77
|
Down hole length
|
|
165.8
|
173.8
|
8
|
0.33
|
0.37
|
60
|
Down hole length
|
|
DKAL_DD092
|
51.5
|
101.6
|
50.1
|
3.33
|
0.16
|
70
|
Down hole length
|
|
114.6
|
119.4
|
4.8
|
3.10
|
0.37
|
92
|
Down hole length
|
|
133.1
|
142.4
|
9.3
|
1.41
|
1.44
|
92
|
Down hole length
|
|
DKAL_DD093
|
25.7
|
106.2
|
80.5
|
4.27
|
0.76
|
91
|
Down hole length
|
|
132.0
|
144.0
|
12.0
|
6.05
|
0.08
|
59
|
Down hole length
|
|
DKAL_DD094
|
12
|
87
|
75
|
6.30
|
0.73
|
94
|
Down hole length
|
|
DKAL_DD095
|
3.8
|
61.1
|
57.3
|
4.58
|
0.62
|
91
|
Down hole length
|
|
64.1
|
74.1
|
10.0
|
4.90
|
0.74
|
48
|
Down hole length
|
|
110.2
|
121.2
|
11.0
|
5.65
|
0.53
|
92
|
Down hole length
|
|
DKAL_DD096
|
10
|
13
|
3
|
3.52
|
0.31
|
91
|
Down hole length
|
|
19
|
21
|
2
|
2.28
|
1.44
|
85
|
Down hole length
|
|
28
|
60
|
32
|
1.77
|
0.22
|
90
|
Down hole length
|
|
DKAL_DD097
|
14.7
|
37.8
|
23.1
|
3.35
|
0.46
|
85
|
Down hole length
|
|
DKAL_DD098
|
11
|
19.2
|
8.2
|
0.25
|
0.41
|
82
|
Down hole length
|
|
19.2
|
49.9
|
30.7
|
2.77
|
0.48
|
80
|
Down hole length
|
|
DKAL_DD099
|
5.1
|
9.1
|
4
|
0.71
|
96
|
Down hole length
|
|
10.1
|
113.4
|
103.3
|
4.25
|
0.42
|
90
|
Down hole length
|
|
DKAL_DD100
|
17
|
23.1
|
6.1
|
2.38
|
0.18
|
83
|
Down hole length
|
|
60.1
|
67.5
|
7.4
|
1.41
|
40
|
Down hole length
|
|
74.7
|
76
|
1.3
|
1.73
|
0.27
|
67
|
Down hole length
|
|
DKAL_DD101
|
73.9
|
83.2
|
9.3
|
2.02
|
0.34
|
83
|
Down hole length
|
|
88.2
|
109.2
|
21
|
1.56
|
0.25
|
83
|
Down hole length
|
|
141.7
|
150.7
|
9
|
1.41
|
83
|
Down hole length
|
|
DKAL_DD102
|
7
|
34
|
27
|
5.14
|
0.81
|
87
|
Down hole length
|
|
42.9
|
49.1
|
6.2
|
0.87
|
0.4
|
83
|
Down hole length
|
|
113
|
120.7
|
7.7
|
5.55
|
0.13
|
66
|
Down hole length
|
|
DKAL_DD103
|
65.2
|
79
|
13.8
|
0.25
|
87
|
Down hole length
|
|
85
|
90
|
5
|
0.68
|
87
|
Down hole length
|
|
115.2
|
120.2
|
5
|
0.62
|
0.39
|
81
|
Down hole length
|
|
126.2
|
129.2
|
3
|
1.02
|
0.39
|
81
|
Down hole length
|
|
DKAL_DD104
|
12.2
|
22.2
|
10
|
0.27
|
83
|
Down hole length
|
|
27.2
|
43.6
|
16.4
|
2.76
|
0.28
|
82
|
Down hole length
|
|
56.6
|
84.3
|
27.7
|
1.87
|
0.32
|
80
|
Down hole length
|
|
DKAL_DD105
|
8
|
39.2
|
31.2
|
0.43
|
54
|
Down hole length
|
|
46.2
|
55
|
8.8
|
0.22
|
60
|
Down hole length
|
|
63.1
|
97.4
|
34.3
|
1.71
|
0.14
|
85
|
Down hole length
|
|
104.4
|
114.6
|
10.2
|
3.30
|
89
|
Down hole length
|
|
121.6
|
135.6
|
14
|
3.58
|
88
|
Down hole length
|
|
DKAL_DD106
|
65
|
91
|
26
|
0.29
|
85
|
Down hole length
|
|
DKAL_DD107
|
6
|
20.5
|
14.5
|
0.48
|
50
|
Down hole length
|
|
DKAL_DD108
|
104.6
|
108.6
|
4
|
0.20
|
84
|
Down hole length
|
|
Hole ID
|
From
(m)
|
To (m)
|
Down hole
interval (m)
|
Cu%
|
Co%
|
Recovery
(%)
|
Comments
|
|
149.5
|
155
|
5.5
|
1.11
|
40
|
Down hole length
|
|
DKAL_DD109
|
6
|
21
|
15
|
0.48
|
100
|
Down hole length
|
|
21
|
113.1
|
92.1
|
5.24
|
0.55
|
82
|
Down hole length
|
|
118.3
|
122.5
|
4.2
|
1.14
|
0.35
|
22
|
Down hole length
|
|
DKAL_DD110
|
14
|
28
|
14
|
8.00
|
0.32
|
80
|
Down hole length
|
|
DKAL_DD111
|
8
|
17.2
|
9.2
|
0.29
|
95
|
Down hole length
|
|
19.2
|
54.4
|
35.2
|
2.17
|
0.55
|
97
|
Down hole length
|
|
54.4
|
64.4
|
10
|
0.31
|
0.33
|
74
|
Down hole length
|
|
64.4
|
88.4
|
24
|
1.64
|
0.44
|
82
|
Down hole length
|
|
DKAL_DD112
|
NSI
|
Down hole length
|
|
DKAL_DD113
|
2
|
6
|
4
|
0.22
|
0.65
|
100
|
Down hole length
|
|
6
|
74.2
|
68.2
|
3.98
|
0.53
|
95
|
Down hole length
|
|
DKAL_DD114
|
165.5
|
176.5
|
11
|
1.15
|
0.38
|
88
|
Down hole length
|
|
182.5
|
188.5
|
6
|
1.12
|
77
|
Down hole length
|
|
DKAL_DD115
|
5.5
|
74.5
|
69
|
5.29
|
0.77
|
87
|
Down hole length
|
|
74.5
|
103.1
|
28.6
|
2.27
|
0.27
|
44
|
Down hole length
|
|
112.1
|
130.5
(EOH)
|
18.4
|
2.69
|
0.16
|
70
|
Down hole length
|
|
DKAL_DD116
|
11
|
15
|
4
|
0.30
|
99
|
Down hole length
|
|
15
|
111.7
|
96.7
|
3.76
|
0.53
|
86
|
Down hole length
|
|
DKAL_DD117
|
5
|
13
|
8
|
0.73
|
91
|
Down hole length
|
|
13
|
30
|
17
|
5.02
|
0.54
|
71
|
Down hole length
|
|
39
|
65 (EOH)
|
26
|
4.67
|
0.69
|
84
|
Down hole length
|
|
DKAL_DD118
|
8.5
|
19.5
|
11
|
0.37
|
0.46
|
94
|
Down hole length
|
|
19.5
|
82.4
|
62.9
|
3.26
|
0.43
|
88
|
Down hole length
|
|
DKAL_DD119
|
9.6
|
38.3
|
28.7
|
3.50
|
0.29
|
92
|
Down hole length
|
|
46.8
|
50.5
(EOH)
|
3.7
|
2.14
|
0.53
|
77
|
Down hole length
|
|
DKAL_DD120
|
17.4
|
62.4
|
45
|
3.64
|
0.20
|
75
|
Down hole length
|
|
DKAL_DD121
|
5
|
20.3
|
15.3
|
0.41
|
89
|
Down hole length
|
|
23.3
|
63.5
|
40.2
|
3.98
|
0.53
|
94
|
Down hole length
|
NOTES: 1. All holes are Diamond drill holes containing PQ and HQ core. 2. Samples are quarter core for PQ and half core for HQ.
3. Assaying is conducted at ALS Chemex Laboratories, Johannesburg, South Africa using industry standard analysis for Copper and Cobalt (ME-ICP61). 4. Certified reference materials, blanks and quarter core duplicates are inserted into the sample stream and monitored by CSA Global UK. 5. Down hole intercepts are quoted to two decimal places using a >0.5% lower cut-off for Cu and 0.2% cut off for Co which includes no more than 5m of internal dilution but rarely exceeds 2m (>0.5% Cu). 6. No high cut- off grade has been applied. 7. True widths are approximately 80-90% of the reported down-hole interval. 8. NSI - no significant intercept.
The overall results of the Phase II programme confirmed the following:
Excellent continuity of mineralisation between the 50 m spaced section lines, along strike and down-dip, and
The validity of the previous geological model, substantiating a very significant, very high grade, shallow mineralisation, (Figures 4 and 5), that should be amenable to supporting a low strip ratio, open pit mining operation.
Figure 3: Geological map of the Kalongwe deposit area showing the layout of completed Phase II drilling and referenced cross sections.