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Re: Press Releases - Wednesday, November 02, 2011
Mindoro's Agata Nickel Project Scoping & Pre-Feasibility Studies
Underpin Strategy For Two-Stage Development & Near Term Cash Flow
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MELBOURNE, AUSTRALIA, 2 November 2011 - Mindoro Resources Ltd (TSXV:
MIO; ASX: MDO; Frankfurt: WKN 906167) has received positive results
from key development studies on the Agata Nickel Project (75% economic
interest), Surigao district, Mindanao, the Philippines. The Stage 1
Scoping Study indicates improved economics for direct shipping ore
(DSO) production and the potential to produce a high-value, upgraded,
nickel-iron concentrate. The Stage 2 hydrometallurgical project
Pre-feasibility Study (PFS) confirms a low operating cost (US$2.60/lb
Ni), 20-year project with a post-tax NPV of US$380 million and IRR of
14% assuming US$10/lb nickel, 8% discount rate, including estimate
contingency of 14% but excluding project contingency.
On the basis of the studies' positive results Mindoro plans to pursue
feasibility and permitting of DSO and pilot scale thermal-upgrading
prior to advancing hydrometallurgical processing options to pilot-scale
testing and feasibility study. In order to progress these options the
company is seeking a strategic partner.
Jon Dugdale, Mindoro President and CEO stated, "These studies confirm
that Agata is a robust, 20-year project with key strategic advantages
that allow us to pursue a lower risk path to near term cash-flow
production, as well as demonstrating the value of the low-operating
cost downstream processing developments."
The highlights of the studies are:Based on the study results Mindoro
has developed a series of strategic priorities as follows:The near term
cash flow from the proposed low capital cost (US$8 million) DSO
operation would help fund further studies and pilot scale testing of
downstream processing options as well as assist future permitting needs
under the staged development plan. Initial infrastructure established
for Stage 1, including roads, stockpile areas, wharf, camps etc. will
contribute towards capital requirements for the proposed Stage 2
hydrometallurgical processing project.
The Company has engaged Deloitte Corporate Finance Pty Ltd ("Deloitte")
as its financial advisor to assist the company to secure a strategic
partner to advance and finance the above objectives.
Regarding the appointment of Deloitte, Mindoro's President and CEO Jon
Dugdale stated, "Deloitte was selected because of their demonstrated
knowledge and experience working with leading nickel producers and
buyers, it's strong Beijing-based mining advisory team, familiarity
with the Asian markets Mindoro plans to serve, and ranking as one of
the largest Mergers and Acquisitions (M&A) franchises with offices
around the globe."
Jeremy South, Deloitte's Global Mining M&A Leader commented "Our team
of Mining M&A professionals in Asia, Australia and Canada will work
closely with Mindoro's management team to achieve its goal of
accelerating the development of the Agata Project via securing a
strategic financing partner."
Agata Nickel Project Strategic Advantages
Mindoro's Agata Nickel Project has a number of key strategic advantages
that make it one of the most promising pre-development nickel laterite
projects in the world today.Thermal Upgrading Scoping Study:
The just-completed study found that for a capital cost of US$88
million, (including DSO infrastructure costs), 600,000 tonnes per annum
of thermally upgraded sinter product could be produced at a cash
operating cost of approximately US$32 per tonne of upgraded product
(excluding mining costs).
The study was initiated based on the results of thermal upgrading
testing conducted by SGS in Perth as released by Mindoro on 28 July
2011. The earlier study indicated sintering-partial reduction upgrades
of over 25% (1.25 times) on a dry basis for both nickel and iron. On
this basis the ferruginous laterite at the top of the profile, grading
approximately 48% iron, 0.7% nickel could upgrade to 62% iron, 0.8%
nickel dry sinter product.
In addition, crushing and magnetic separation tests demonstrated
significant upgrades to nickel and iron content, indicating the
potential to further upgrade this material to a 1%Ni, 71%Fe product.
Similarly, limonite resources grading 1%Ni, 43%Fe on a dry basis could
be upgraded to a concentrate containing 3-4%Ni, 65%Fe. Total yield of
concentrate from 600kt of sintered product is approximately 175k tpa.
A marketing study conducted as part of the Scoping Study indicates that
there are potential markets for these upgraded products in China, based
on feed to nickel-pig iron production as well as iron products directly
applicable to the steel industry.
Capital and operating costs were estimated for a project producing
600,000 tonnes of iron-nickel sinter per annum. The accuracy of the
capital and operating costs in the study is �50%, therefore
substantially more work is required to establish the feasibility of
producing such products and to establish market pricing.
The operating cost estimate (excluding mining) for the 600k tpa plant
in US$ (2011 Basis) is summarised below:
The capital cost estimate for the 600k tpa plant in US$ (2011 Basis) is
summarised below:
Two key production opportunities were highlighted in the market study:
i) The market for high-iron (low-nickel) direct shipping ore products
has continued to improve to supply small blast-furnace nickel pig-iron
producers that would sell to series 200 stainless steel producers.
There is an opportunity to produce an upgraded, sintered version of
this product, with the right blend of fluxes and have the product
briquetted prior to shipment to minimize physical degradation and
moisture take-up.
i) The second opportunity is to produce a sintered and magnetically
upgraded limonite product, grading 3-4% Ni and >65% Fe, that may be
used by some Chinese stainless steelmakers as an alternative to nickel
pig iron (NPI). Due to incomplete reduction, this product would be
sold at a discount to its nickel pig-iron equivalent which at 4% Ni is
priced at around US$925/tonne landed (China) price. Operating costs
based on a 175k tpa yield are $110/t of concentrate product (not
including mining costs). Therefore, even at a substantial discount to
the equivalent nickel pig-iron price there is potential to generate a
substantial margin improvement over direct shipping of unprocessed
ores.
The recommended next stage from the study is to commence a
pre-feasibility study and further testing up to pilot scale (subject to
financing). There is an opportunity for Mindoro to upgrade permitting
to include not only direct shipping, but pilot scale thermal upgrading
then, pending the results of a pre-feasibility study, construct a small
pilot-scale thermal upgrading plant.
The Thermal Upgrading Scoping Study was completed by Mindoro, based on
the results of testwork carried out at SGS laboratories in Perth (SGS).
The study has been reviewed by Dr John Reid (F. AusIMM), an
independently qualified person as defined by National Instrument 43-101
(Canada) and a competent person as defined by the JORC Code
(Australia). Dr Reid has 40 years of experience as a Metallurgical
Engineer, including 20 years at Queensland Nickel, Yabulu in a variety
of roles including Executive Director and General Manager Production
and Marketing. He has been adjunct Professor of Metallurgy at the
Colorado School of Mines and has consulted to the mining industry for
the last 13 years. He holds four patents and is the author of 31
technical papers on mineral processing. He holds an MBA from the
Massachusetts Institute of Technology (MIT.) Dr Reid has authorised the
technical information detailed in this release.
NI43-101 technical report will be posted on SEDAR within 45 days.
Hydrometallurgical Processing Project Pre-Feasibility Study:
The hydrometallurgical processing Pre-feasibility Study was produced by
Ausenco Services Pty Ltd (Ausenco) and Ausenco Vector.
Capital and operating cost estimates have been developed to
approximately �20-25% precision. The inputs to the Pre-feasibility
Study including the process plant and infrastructure, general
infrastructure and residue storage facilities have been developed by
Ausenco and Ausenco Vector. Mining and limestone quarrying estimates
have been developed by Dallas Cox C.P. (AusIMM) of Crystal Sun
Consulting Limited (CSC). Testwork interpretation and the METSIM(r)
mass and energy balance model were produced by Boyd Willis (FAusIMM),
of Boyd Willis Hydromet Consulting (BWHC), representing a refinement of
the preliminary economic assessment release, March 2011 (NI 43-101
technical report filed on SEDAR May 2011).
Economic Assessment:
Installed capital cost estimates include the processing plant and plant
site infrastructure, sulphuric acid plant, initial residue storage
facility, general infrastructure, mining-related capital costs, duties
and taxes for equipment, technology fees/project support, sustaining
capital and an estimate of working capital. A 15% estimate contingency
has been allowed by Ausenco and 12% by Ausenco Vector within the
capital cost estimate. Note that estimate contingency is an allowance
for the limitations of estimating that is likely to be expended in the
development of a project rather than owner's project contingency, which
is an allowance for unpredictable events that may or may not occur. A
capital cost and NPV with an allowance of 10% owner's project
contingency, based on the pre-estimate-contingency installed capital,
is also presented.
Operating cost estimates include mining, processing, acid production,
residue and water management, infrastructure, sustaining capital costs,
government charges, royalties, contract expenses, administration, and
marketing costs. Cobalt and export power credits are also included but
presented separately in the table below. Cashflows are calculated on
an after-tax basis applying the taxation system generally applicable to
major projects in the Philippines.
The base case financial model includes key input parameters as follows:
- Sulphur price of $95/t landed, exported from Vancouver, Canada, based
on the upper end of long term pricing forecasts by Fertecon Research
Centre Ltd (July 2011).
- Nickel price of $10/lb based on a forecast for 2015/16 of $22,000 to
$23,000/t ($10/lb) which is the median of APEX forecasts published in
the Metal Bulletin (July 2011); Cobalt price applied 1.66 x Ni.
- Payability of Nickel in mixed hydroxide product (MHP) of 77% for Ni
and 50% for Cobalt, based on history of negotiated contracts.
- Cash flow discount rate of 8% based on the positive outlook for
mining in the established Surigao region and the Philippines generally.
A NPV has also been estimated at 10% discount rate as applied to the
March PEA.
A summary of the Agata Nickel Project Pre-feasibility Study Economic
Assessment results are tabulated below:
Mr Chris de Guingand, of Mineral Commerce Services Pty Ltd, has
negotiated offtake contracts with several buyers for products including
MHP, but there is risk associated with the establishment of off-take
contracts for MHP because it represents only a proportion of the nickel
market, and there is no guarantee that the product will be marketable
and/or at the payability quoted in the PFS. Frame contracts are to be
established during the feasibility study.
Metallurgy:
Two bench-scale testwork programs were undertaken. The first program
was performed between August 2010 and March 2011 by SGS Lakefield
Oretest in Perth (SGS Perth), an ISO 9001:2008 certified facility.
This program included mineralogy, beneficiation (scrubbing), ore slurry
settling, atmospheric leaching (AL), high pressure acid leaching
(HPAL), saprolite neutralisation (SN) and CCD settling on composites of
different ore types from the deposit, as well as limestone testing. The
second program was performed between March and September 2011 by SGS
Minerals Services of Lakefield, Canada (SGS Lakefield), also an ISO
9001:2008 certified facility,. This program included ore size fraction
analysis, ore slurry rheology and settling, AL, HPAL and SN testing on
composites of different ore types from the deposit, including
variability testing, as well as CCD settling and locked cycle testing
for iron/aluminium removal and mixed hydroxide precipitation, and
reactivity and calcination testing of local Agata limestone samples.
Ore slurry settling tests demonstrated that HPAL feed ore could be
thickened to 39-40% solids, AL feed ore (medium Mg saprolite) could be
thickened to 38-39% solids and SN feed ore (high Mg saprolite) could be
thickened to 45% solids. HPAL testing of a limonite/low Mg saprolite
ore blend at 255�C demonstrated exceptionally fast leaching rates,
establishing that over 97% nickel and 97% cobalt extraction could be
achieved within 30 minutes. Separate testing revealed that 95% nickel
extraction was possible in just 5 minutes. Atmospheric leach testing
of saprolite ore achieved over 98% nickel extraction and over 92%
cobalt extraction, in less than 4 hours.
Saprolite neutralisation of combined HPAL and AL discharge slurries
demonstrated that residual free acid levels could be reduced to 11-17
g/L with simultaneous nickel extraction from the SN feed ore of 61-95%
(cobalt 70-100%).
The metallurgical process design criteria for the Pre-feasibility Study
were derived from these testwork programs. These criteria have been
used to develop an optimised limonite-saprolite processing model and
METSIM mass and energy balance.
Mineral Resources and Mineral Reserve Estimates:
The Mineral Resources estimate for the Agata Nickel Project released on
the 16 September 2011 forms the basis of the Mineral Reserves estimate
in the Pre-feasibility Study. The resource estimation method applied
to the Mineral Resources was Ordinary Kriging. Cut-off grades applied
to the Mineral Resources were 0.5% nickel within the Limonite zone and
0.8% nickel within the Saprolite zone.
The Mineral Reserves estimate has been produced following a review of
PFS processing and administration operating costs and metallurgical
recoveries, and geotechnical considerations, and is based on open pit
optimizations and designs by Dallas Cox of Crystal Sun Consulting
Limited (CSC), an accredited AusIMM Chartered Professional (CP) under
the Discipline of Mining, reflecting the economic parameters in the
PFS.
Mineral Reserves estimate is presented in the table below:
Process Plant and Infrastructure:
The process design for the leach plant is based largely on the
hydrometallurgical processing route proven for over 50 years by
Sherritt International Corporation at the Moa Bay Project in Cuba and
at the Coral Bay Nickel Project in the Philippines operated
successfully by Sumitomo/Nickel Asia since 2005.
The Pre-feasibility Study is based on a project model processing
limonite and low magnesium grade saprolite by conventional HPAL and
medium magnesium grade saprolite by a parallel atmospheric leach (AL)
circuit. Atmospheric (pressure) acid leaching is a well-established
technology practiced in many industries over several decades. The
project model also includes a sulphuric acid plant capable of meeting
all acid requirements for the project and of exporting excess power
into the local grid.
The rapid leaching rates and reactivity of the Agata resource allow for
recovery of additional nickel and cobalt via innovative saprolite
neutralization of the combined discharge from the HPAL and atmospheric
leach circuits. This process will consume much of the free acid.
Neutralization of the remaining acid will be achieved using limestone
from local sources.
After saprolite neutralization, the nickel and cobalt will be recovered
from the leach solution by conventional counter-current decantation
(CCD), followed by limestone neutralization of excess acid and
precipitation of iron, aluminium and other metals. Nickel and cobalt
are recovered into a saleable mixed hydroxide intermediate product
(MHP).
Leach residue and barren solution will be neutralized prior to being
pumped, at about 30% solids, to a residue storage facility (RSF), via
an overland slurry pipeline. The tailings impoundment area will consist
of an impervious dam wall enclosing a lined valley. A substantial
installed and sustaining capital cost allowance has been developed by
Ausenco Vector for an industry leading residue management facility.
The plant site location is considered sub-optimal due to poor
geotechnical conditions and mountainous terrain resulting in
significant risk of land slip failures and high earthworks costs. An
opportunity exists to identify an alternate plant site location and
reduce the geotechnical risk and earthworks costs.
Other infrastructure includes a permanent accommodation village,
dedicated access and other roads, a purpose-built port and loading
facilities, water and sewerage treatment plants, limestone quarry and a
waste area.
There is ample, accessible seawater and river water to meet the
project's water requirements for mining, processing and other uses.
The project will have a dedicated steam turbine power station to
provide electrical power for the operation of the process plant,
services and utilities, as well as for the accommodation village and
all other related infrastructure. The normal source of high pressure
superheated steam will be from waste heat boilers in the sulphuric acid
plant. Fuel-oil fired boilers will supply supplementary high pressure
superheated steam to maintain operations and power generation when the
acid plant is not operating. During normal operations the
sulphuric-acid plant will produce sufficient steam to meet all of the
project's heating and power requirements plus surplus power for export
to the local grid, providing a power credit to the operation.
Mindoro Resources has prepared the economic assessment included in this
release. The Excel based economic assessment model has been
independently tested for mathematical integrity by Deloitte Touche
Tohmatsu.
The Pre-feasibility Study has been prepared under the direction of Ruth
Sherrit, an independent qualified person as defined by National
Instrument 43-101 (Canada). Ms Sherrit has 19 years of experience as a
Metallurgist. Ms Sherrit has authorised the technical information
detailed in this release.
The NI43-101 technical report will be posted on SEDAR within 45 days.
On behalf of the Board of Directors
Jon Dugdale,
President and CEO
Australia: Nathan Ryan, NWR Communications, Tel: +61420 582 887
Canada: Jeremy Hill, CHF Investor Relations, Tel: +1 416 868 1079 ext
238
Germany: Robert Sarcher, Aprendo Capital, Tel: +49.821.6089051
Website: www.mindoro.com
ABOUT MINDORO
Mindoro is a Tier 1 Issuer trading on the TSX Venture Exchange (MIO),
Australian Securities Exchange (MDO) and Frankfurt Stock Exchange (WKN
906167). Mindoro is focused on nickel, gold and copper-gold exploration
and development in the Philippines.
Mindoro has NI 43-101 Mineral Resource estimates on its Agata Nickel
Project, in the Surigao District, Mindanao, that include Measured and
Indicated resources totalling 42.76 million tonnes at 1.01% nickel, for
430,000 tonnes contained nickel, and Inferred resource estimates
totalling 2.435 million tonnes at 0.99% nickel. In addition the
Company has NI 43-101 Mineral Resource estimates on its Lobo (2005) and
Archangel (2010) gold-silver projects, as well as 10 key porphyry
copper-gold prospects at varying stages of advancement.
In March 2011 Mindoro released a preliminary economic assessment (PEA)
on the Agata Nickel Project where the Company controls major nickel
laterite resources and is drill testing regional targets. In this
release the Company has announced the results of a prefeasibility study
(PFS) into an integrated on site nickel processing project, based on
the PEA, and the results of a scoping study into the development of a
thermally upgraded (sintered) iron-nickel ore operation. The company
already has an environmental compliance certificate (ECC) to produce up
to 2 million tonnes of laterite direct shipping ore per annum from
Agata and released the preliminary economic assessment indicating a
viable DSO operation in March 2011.
Drilling is in progress testing the Southwest Breccia (SWB) epithermal
gold shoot at Lobo, Batangas and the company also plans to test deeper
high-grade gold "feeder" structures under the Archangel gold resources,
also at Batangas. The recently drill tested Pan de Azucar gold-copper
massive sulphide remains open with depth to the southeast. A
metallurgical testing program has commenced on Pan de Azucar samples
examining acid producing capacity for nickel laterite processing as
well as copper and gold flotation and leaching. Mindoro is also
evaluating and prioritizing its many high-potential copper-gold
porphyry targets prior to further drill targeting.
ABOUT AUSENCO
Ausenco sets high global standards for leading edge engineering and
project management services in the resources and energy sectors. We're
a growing company with big ambitions that thrives on reaching into new
markets. Across 29 offices in 19 countries, our people seek ingenious
solutions for our clients in the Energy, Environment & Sustainability,
Minerals & Metals, Process Infrastructure and Program Management
sectors. We're inspired to make a genuine positive impact on the world
around us and in the communities in which we operate.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
The Company's development and production objectives are intended to
provide an indication of management's current expectations and are
still conceptual in nature. It is uncertain that sufficient resources
will be established and if established that these resources will be
converted into economically viable mining reserves. Until a feasibility
study has been completed, there is no certainty that these objectives
will be met.
Mindoro's exploration programs are prepared and/or designed and carried
out under the supervision of Tony Climie, P.Geo., who is a qualified
person as defined by National Instrument 43-101 and is a competent
person as defined by the JORC Code, and who has reviewed and verified
the pertinent disclosure of exploration related technical information
contained in this news release. Mr. Climie is an executive and a
director of Mindoro and is a member of the Alberta Professional
Engineers, Geologists and Geophysicists Association. Mr. Climie has
more than five years of experience which is relevant to the style of
mineralization and type of deposit under consideration and to the
activity which he has undertaken. Mr. Climie has consented to the
release of the pertinent exploration related technical information in
the form and context in which it appears.
Boyd Willis, FAusIMM, a qualified person as defined by National
Instrument 43-101 has reviewed and verified the disclosure of a
development and metallurgical processing nature contained in this news
release. Mr Willis has more than thirty years of experience which is
relevant to the activity which he has undertaken and he has consented
to the release of the pertinent development related information in the
form and context in which it appears.
The Company's resource estimates were originally prepared in accordance
with Canadian National Instrument 43-101 Standards of Disclosure for
Mineral Projects of the Canadian Securities Administrators ("NI
43-101") and the Canadian Institute of Mining, Metallurgy and Petroleum
classification system. NI 43-101 is a rule developed by the Canadian
Securities Administrators that governs how Canadian issuers disclose
scientific and technical information about mineral projects. All
resource information is also expressed in terms of the JORC Code.
This release may contain forward-looking statements including
management's assessments of future plans and operations, and
expectations of future production. These statements are based on
current expectations that involve a number of risks and uncertainties,
which could cause actual results to differ materially from those
anticipated. These risks include, but are not limited to, the risks
associated with the mining and exploration industry (e.g. operational
risks in development, exploration and production; delays or changes in
plans with respect to exploration or development projects or capital
expenditures; the uncertainty of reserve estimates; the uncertainty
with respect to results of exploration, the uncertainty of estimates
and projections relating to production and the uncertainty of the
availability of capital). The assumptions used in the preparation of
such statements, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements. The Company does
not undertake to update forward looking statements except where
required to do so by law.
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Copyright (c) 2011 MINDORO RESOURCES LTD. (MIO) All rights reserved.
For more information visit our website at http://www.mindoro.com/ or
send mailto:log@mindoro.com
Message sent on Wed Nov 2, 2011 at 5:43:32 AM Pacific Time
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Mindoro Resources Ltd
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DEVELOPMENT STAGE |
CODE : MIO.V |
ISIN : CA6029131050 |
CUSIP : 602913105 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Mindoro Res. is a nickel and copper exploration company based in Canada. Mindoro Res. develops nickel, copper, cobalt and iron in Philippines, and holds various exploration projects in Philippines. Its main asset in development is AGATA in Philippines and its main exploration properties are LOBO, ARCHANGEL, TAPIAN MAIN and TAPIAN SAN FRANCISCO in Philippines. Mindoro Res. is listed in Australia, in Canada, in Germany and in United States of America. Its market capitalisation is CA$ 1.5 millions as of today (US$ 1.1 millions, € 1.0 millions). Its stock quote reached its highest recent level on June 22, 2007 at CA$ 1.31, and its lowest recent point on July 05, 2016 at CA$ 0.01. Mindoro Res. has 297 437 399 shares outstanding. |