TIDMJAY
RNS Number : 5724D
Bluejay Mining PLC
27 June 2019
Bluejay Mining plc / EPIC: JAY / Market: AIM / Sector:
Mining
27 June 2019
Bluejay Mining plc ('Bluejay' or the 'Company')
Summary of Pre-Feasibility Study for the Dundas Ilmenite
Project
Bluejay Mining Plc, the AIM and FSE listed company with projects
in Greenland and Finland, is delighted to announce an update and
summary of the Pre-Feasibility Study ('PFS') for the Dundas
Ilmenite Project ('Dundas' or the 'Project') in Greenland, the
world's highest-grade mineral sands ilmenite project. The PFS,
which is based only on a JORC compliant mineral reserve of 67.1Mt
defined at the Project and not the current Mineral Resource of
117Mt (see below), was compiled to deliver two outcomes, firstly as
a high-level assessment of Dundas and secondly to accelerate the
exploitation permitting process in Greenland. To view the press
release with the illustrative maps and diagrams please use the
following link:
http://www.rns-pdf.londonstockexchange.com/rns/5724D_1-2019-6-26.pdf
Pre-Feasibility Study Executive Summary
Key Financial Numbers:
-- 32.8% IRR on base case post tax and post finance NPV5 of US$83.1MM
-- US$153.1MM undiscounted net profit over initial 9-year LOM
-- 34% IRR on upside case, post tax, post finance NPV5 of US$130.7MM
-- US$247.2MM undiscounted net profit if LOM extended by further
two years to include additional indicated resources identified
after 2017
Resources:
-- The PFS is based only on an initial JORC Compliant Ore
Reserve of 67.1Mt with a mean grade of 3.45% TiO2 (equal to 7.3%
ilmenite in situ) and taken from within the Moriusaq Project area
only (see figure 1). This figure was produced by SRK Consulting and
delivers an initial 9-year life of mine ('LOM')
-- The current Dundas Mineral Resource estimate is 117Mt with a
mean grade of 2.91% TiO2, following the addition of the Iterlak
East and West Mineral Resources announced during May 2019
-- The Shallow Marine JORC Exploration Target stands at between
300Mt and 530Mt with a mean grade of 0.4-4.8% ilmenite, providing
additional resource potential to extend the LOM
-- The Ore Reserve is presented at a 1.6% TiO2 cut-off grade
within an engineered pit design and includes loss and dilution of
4.1% and 4.3% respectively
-- The cut-off grade used to report the Ore Reserve, assumes a
selling price of US$232/t, all in sustaining C3 cost of US$113/t,
Greenland royalty of 2.5% and total TiO2 recovery of 79.7%
-- Sensitivity Analysis indicates positive financial impact of
adding extra mine life through resources to reserve work
Mining and Production:
-- Submission highlights a simple and proven development
scenario including dry mining, a wet concentrator and dry magnetic
separation of mineral assemblage.
-- US$245M estimated capital expenditure ('CapEx') inclusive of
mining, processing, storage of dried finished product and a near
shore direct ship loading facility due to increase from 300,000tpa
to 440,000tpa ilmenite production as well as balance sheet
management to account for shipping windows.
-- Project finance discussions have commenced with European
funding agencies which have stated that the Project's European
jurisdiction will allow for a competitive cost of capital and is
eligible for access to significant export credit grant
benefits.
-- CapEx inflated by c.20% to account for additional Greenland
costs necessary to ensure viable and safe operation. Given this
will be the first conventional mineral sand mining operation in
such conditions, the Company has elected to take a highly
conservative approach and is confident in achieving further
reductions via consultation with end users and Greenlandic logistic
specialists as well as assessing and implementing alternative power
and mining methods.
-- The Company is confident that further design optimisations
will generate significant cost savings and further value can be
achieved by increasing the yearly output as already identified
resources are added to the study mine plan.
-- CapEx includes contingencies commensurate with the current
study stage (see below) as well as sufficient reserves for balance
sheet and cash flow management between shipping windows.
-- Similarly, a conservative approach has been taken in
assessing the Operating Costs ('OpEx') outcomes given operating
conditions in Greenland. This has been assessed to account for at
least an additional 20% of the current total operating cost. The
Company and its consultants see significant scope for cost
optimisations, particularly with a larger scale project.
-- Revenue to Cost Ratio ('R:C') on base case scenario for
Dundas is 2.01, using industry accepted ilmenite pricing forecasts
and OpEx (mining, processing, infrastructure and G&A) for an
operation based entirely in Greenland. This is significantly above
an R:C of 1.7 which is considered a minimum metric by leading
industry consultants TZMI for new projects to be brought
online.
-- Current study assumes year-round mining and processing and a spring/summer shipping window.
Upside Potential:
-- The PFS and Ore Reserve will be updated as the mine plan is expanded
-- Bluejay has commenced a value engineering process with IHC
Robbins and Inuiplan A/S to identify further operational
improvements in parallel with adding additional resources to the
mine plan
-- Geological Survey of Denmark and Greenland study (announced
to market 22 May 2017) indicates potential for up to 700Mt of
ilmenite may be contained within the Company's licence holding
The PFS was submitted in its entirety to the Mineral Licence and
Safety Authority, Government of Greenland on 5 June 2019 and
includes a maiden JORC compliant Ore Reserve.
Bluejay CEO Roderick McIllree said: "The Pre-Feasibility Study
demonstrates Dundas' commerciality and all stakeholders,
shareholders and the Government and people of Greenland will
benefit from this development.
"The base case positive 32.8% IRR and US$83.1MM NPV are just a
starting point being based only on the current 67.1Mt resource and
does not include the May 2019 resource increase to 117MT nor any
future resources defined within the broader JORC compliant
exploration target of between 300Mt and 530Mt. With demonstrable
potential for additional resources both on and offshore along the
entire >30km of licence holdings the opportunity to
significantly increase the initial 9-year mine life and/or rate of
production is clear.
"We are confident that the conservative CapEx figure can be
materially improved upon. Recent cost items that were received were
not able to be included in the study and will further reduce some
of the higher cost and capital items used. The Company will also
now initiate a detailed costings assessment for capital items used
in the study. It is clear to the Company there are many ways to
further enhance project economics, which we will continue to
evaluate.
"The PFS has been lodged with the Government of Greenland as
part of an exploitation application. The current study stands as
the platform from which we continue to improve both OpEx and CapEx
through inclusion of more detailed equipment sourcing, labour
management and review of alternative sources of power, all of which
will be undertaken in parallel to the permitting process. In
addition, we will investigate expanding initial production in light
of increased resource figures.
"Dundas has now been proven as a viable and economically
mineable deposit, and we continue to explore project financing
packages with European funding agencies who recognise the secure
nature of the jurisdiction, which has positive implications for the
cost of capital. However, to truly understand Dundas' worth, one
must also look at the value it could add to higher grade finished
products because of the potential for blending with lower quality
feedstocks."
Figure 1 Location of existing JORC Reserves, Resources
Exploration Targets as well as areas of future work.
Additional information
Dundas Titanium A/S ("Dundas" or the "Company") is a Greenland
based mineral exploration and mining company. Dundas is 100% owned
by Bluejay Mining Plc ("Bluejay") which is listed on the London
Stock Exchange AIM market. Dundas is focused on developing its 100%
owned Dundas Ilmenite Project (the "Project") which is situated on
the northwest coast of Greenland in the Municipality of
Avannaata.
Dundas has undertaken studies and prepared a PFS as part of an
application for an exploitation license to develop the Project. The
mineral of interest is ilmenite, which is found in the so-called
black sands. Ilmenite has a high content of titanium oxide (TiO ),
an important commodity used for making pigments and other products
containing titanium.
The Project will produce a premium ilmenite product, which will
be sold mainly to customers in the chloride slag industry. Chloride
slag produced from this route would then be sold to chloride TiO
pigment producers. Also, some of the ilmenite could be sold as a
direct feed into the sulphate TiO pigment production segment of the
market.
Background
Black (ilmenite-rich) sands were first described in the Thule
area in 1916. However, it was not until the 1970s that systematic
exploration was conducted by geoscientists from the Greenland
Geological Survey.
The black sands on the south coast of the Steensby Land
peninsula (Figure 1 -1) are contained in three types of
deposits:
-- Raised beaches - Inland from the frontal dunes, up to a
kilometre in width, along more than 30 km of coastline;
-- Active beaches - The area seaward of the frontal dunes which
includes the beach, the tidal zones and the surf zone. Historically
samples from this area have contained up to 70% ilmenite by weight;
and
-- Drowned beaches - The areas seaward of active beaches, where
raised beaches were previously formed during periods of lower sea
level.
Initially, the Project will focus on the raised and active
beaches at Moriusaq (Moriusaq Bay) where the ilmenite will be
separated from black sands for further processing. The key Project
components include:
-- Excavation of the beach sands using continuous surface miners (CSM);
-- A modular and relocatable wet concentrator plant (WCP),
-- A fixed ilmenite dry plant (IDP);
-- Product storage and ship-loading facilities; and
-- Associated infrastructure and services.
Dundas commenced exploration at the Project in 2015, and has
carried out additional field programmes in 2016, 2017 and 2018. The
work programmes included auger, vibracore and sonic core drilling,
geochemical sampling, marine geophysical and aerial photogrammetric
surveys, trenching and general prospecting.
Geochemical sampling was conducted on raised, active and drowned
beaches. Samples have been used, both qualitatively and
quantitatively, for grade determination, metallurgical test work
and the development of sample product concentrates.
Dundas has developed this PFS in a collaborative fashion,
utilising its own internal technical, marketing and local
Greenlandic based resources and outsourcing key engineering and
mining related studies to recognised industry specialists.
The major contributors to the PFS, and their specific
contributions are set out below:
-- Dundas Titanium A/S: Provision of information related to
Project background, history and location, environmental and social
studies, marketing strategy and financial modelling;
-- SRK: Regional geology and exploration, hydrogeology and
hydrology, geotechnical, mine design and ore schedule, mining
costs, resource estimation and ore reserves, and the design for
residue management facilities;
-- IHC Robbins: Metallurgical test work, design and engineering
of the wet and dry processing plants, and processing plant capital
and operating costs;
-- Wood (formerly AMEC Foster Wheeler): Design and engineering
of site infrastructure, logistics and shipping, project
infrastructure capital and operating costs, development of the
Project execution plan and the EPCM costs.
Resources
Table--1: JORC Mineral Resource Statement for the Dundas
Ilmenite Project, December 2018, reported at a 0.0% in-situ TiO(2)
cut-off grade
Classification Location Tonnes Density >5mm >2mm <63<MU>m THM (%) In-Situ
(kt) (t/m(3) (%) (%) (%) TiO(2)
) (%)
---------------- ----------- -------- --------- ----- ----- --------- -------- --------
Indicated Moriusaq 88,000 2.24 27.5 36.1 4.2 27.0 3.1
---------------- ----------- -------- --------- ----- ----- --------- -------- --------
Inferred Moriusaq 5,000 2.30 15.7 23.0 5.7 34.2 4.4
Iterlak
West 1,000 2.12 23.8 30.5 6.0 25.2 2.9
Iterlak
East 7,000 2.12 14.6 23.1 5.6 39.4 5.8
---------------------------- -------- --------- ----- ----- --------- -------- --------
Total
Inferred 13,000 2.19 15.7 23.6 5.7 36.3 5.0
TOTAL MINERAL RESOURCE 101,000 2.23 26.0 34.5 4.4 28.2 3.4
----------------------------- -------- --------- ----- ----- --------- -------- --------
1. The effective date of the Mineral Resource is 11 December 2018;
2. The numbers are presented at a 0.0% in-situ TiO2 cut-off grade;
3. "THM" and "HM" mean Total Heavy Minerals and Heavy Minerals respectively;
4. HM have been separated from a -2 mm +63 um size fraction
using heavy liquid separation at a density of 2.95 g/cm3;
5. Mineralogical assessments indicate that ilmenite is the only
mineral of value in the assemblage. The remainder of the heavy
minerals is dominated by pyroxene and amphibole.
6. % TiO2 in-situ assumes that all recoverable TiO2 is in the HM
component of the -2 mm +63 um size fraction;
7. % Ilmenite In-situ assumes that all TiO2 is within ilmenite
and that the ilmenite contains 47.65% TiO2, based on historical
exploration data.
Project Description
Dundas is applying for an exploitation license to develop the
Project. The PFS is the culmination of the initial step in the
document preparation phase in the process towards the grant of an
exploitation license. Dundas will be working to improve the
accuracy of the data in the PFS to bring it up to the quality
required for a bankable feasibility study ("BFS").
The raised and active beach deposits extend some 30 km along the
coast within the Dundas exploration license area. Initially, the
Project will focus on the raised beaches within the Moriusaq Bay
area which is the basis for the current mineral resource. Another
potential target area is near Iterlak delta, 13 km southeast of
Moriusaq, where significant upside grade potential is found within
the raised beaches. There are also further significant resources
offshore ("drowned beaches") which are currently under
evaluation.
The Project area is comprised of beaches, separated by rocky
headlands, behind which are numerous low-lying terraces or raised
beaches gradually rising to a coastal scarp approximately 2 km from
the sea. The terraces are dissected by drainage patterns at regular
intervals. These drainage channels carry summer melt water to the
sea. Small coastal lagoons have developed behind the dune systems.
The vegetation is generally sparse and limited to the lowlands
where it consists mostly of dwarf shrub heaths with numerous
lichens.
Dundas is focused on increasing the total mineral inventory at
the Project to demonstrate the global significance of the Project
in terms of tonnage. There is considerable upside potential within
the Iterlak delta itself, the offshore ("drowned") beaches, and
additional raised beach areas which have not yet been included in
the mineral resource calculation.
It is currently expected that the mining will occur all year
round. Shipping of ilmenite product will occur over the summer
months (mid-July to mid-October). Navigation by boat is generally
for three to four months, utilising an ice class vessel. However,
years where the sea ice breaks up earlier are becoming more
frequent, allowing the future possibility of longer periods of
access.
The PFS considers two business cases, which were run through the
Financial Model, being the Base Case and an Upside Case. The key
assumptions used, and the main inputs and the outputs for each case
are presented below:
The Base Case
The Base Case represents the Project economics based on
exploiting the current Indicated Mineral Resources as defined by
SRK in their Mineral Resource Estimate (dated 11th December
2018).
The Base Case is defined geologically by active and raised
beaches along the Moriusaq bay area which host the mineral sand
occurrences. The ilmenite-enriched heavy mineral sand tends to
occur in the raised and active beach sediments.
The heavy mineral sands are expected to be extracted using
surface mining techniques due to the shallow nature of the orebody.
The material will be transported to a wet plant for initial
processing to produce a heavy mineral concentrate (HMC). The HMC
will be transported to a dry plant to produce two ilmenite
concentrates, premium and standard, which will be loaded onto ships
for transport to customers.
Oversize material and tailings reject will be transported to the
mined-out areas for disposal, allowing for continuous
rehabilitation of the raised beaches.
The Project site is currently accessible by boat during the
summer months and, depending on weather conditions, by helicopter
all year round. There are no roads or serviceable trails in the
immediate Project area.
The Project will require the following:
-- An airstrip to facilitate the year-round movement of personnel and consumables;
-- A jetty from which bulk carriers will be loaded with ilmenite product for export;
-- Site roads for general construction and operations traffic;
-- A barge ramp for unloading construction and mining equipment
and modules of plant and equipment constructed offshore; and
-- Mine haul roads for access to mining areas and for transport of ore to processing facilities.
Site construction works is expected to commence in June 2020.
Mining and processing of the ore is expected to commence in
September 2021. First product shipment will occur in late October
2021.
Upside Case
The Upside Case represents the Project economics based on
exploiting the current Indicated and Inferred Mineral Resources as
defined by SRK in its Mineral Resource Estimate (dated 11th
December 2018).
As per the Base Case, the Upside Case is defined geologically by
active and raised beaches along the Moriusaq bay area. In this
case, the mine life has been extended by the addition of Inferred
Resources to the mine schedule. The majority of these are located
south of the Iterlak delta and are consequently not mined until the
latter years of mine life.
As per the Base Case, for the Upside Case the heavy mineral
sands are expected to be extracted using surface mining techniques
due to the shallow nature of the orebody. The material will be
transported to a wet plant for initial processing to produce a
heavy mineral concentrate ('HMC'). The HMC will be transported to a
dry plant to produce two ilmenite concentrates, premium and
standard, which will be loaded onto ships for transport to
customers.
Oversize material and tailings reject will again be transported
to the mined-out areas for disposal, allowing for continuous
rehabilitation of the raised beaches.
In addition to the infrastructure and sustaining capital
requirements for the Base Case, the Upside Case Project will
require the following:
-- A causeway across the Iterlak delta and access around the
steep headland north of the delta, and;
-- Mining fleet rebuilds in Year 8, to allow for the extension on mine life.
To account for these expenses, an additional $13.2M was provided
in Year 8 under Sustaining Capital.
Figure 2 Process flow sheet at Dundas Ilmenite Project
Breakdown of capital items
Total direct costs for the project are $143,030,426. This is
made up of $24,360,000 for mining direct costs, $57,695,044 for
processing direct costs and $60,975,382 for infrastructure direct
costs. The breakdown of direct costs into categories is provided
below:
Cost Category Mining Processing Infrastructure
(US$M) (US$M) (US$M)
Earthworks & General
Services 0.360 6.217 2.449
-------- ----------- ---------------
Civils & Buildings 15.067 15.258
-------- ----------- ---------------
Structural 8.465 3.776
-------- ----------- ---------------
Platework 1.743 2.302
-------- ----------- ---------------
Mechanical 24.000 13.884 22.102
-------- ----------- ---------------
Electrical & Instrumentation 3.951 7.587
-------- ----------- ---------------
Piping & Valves 2.807 2.809
-------- ----------- ---------------
First Fills & Spares 0.121
-------- ----------- ---------------
Vendor Representatives 0.180 0.084
-------- ----------- ---------------
Contingency 1.1 1.2 2.18
-------- ----------- ---------------
Total 24.360 57.695 60.975
-------- ----------- ---------------
Total indirect costs for the project are $87,333,001. The
breakdown of indirect costs into categories is provided below:
Cost Category Indirect Cost
(US$M) (% of Total Direct
Cost)
------- -------------------
Owner's Costs 3.712 2.6
------- -------------------
Engineering & Procurement 9.717 6.8
------- -------------------
Construction Management Costs 5.503 3.8
------- -------------------
Vendor Reps, Spares & First
Fills 5.240 3.7
------- -------------------
Indirect Construction Costs 18.156 12.7
------- -------------------
Indirect Contractors Costs 3.475 2.4
------- -------------------
Freight, Duty & Taxes 19.463 13.6
------- -------------------
Insurances 1.360 1.0
------- -------------------
Contingency & Escalation 20.705 14.5
------- -------------------
Total 87.333 61.1
------- -------------------
Cost per Tonne Operating Costs
Discipline Cost (US$) Cost (US$)
per tonne per tonne of
of ROM Ilmenite
Mining 2.63 44.45
----------- --------------
Processing 1.82 30.80
----------- --------------
Infrastructure, Services
and G&A 2.23 37.56
----------- --------------
Total 6.68 112.81
----------- --------------
The information in this press release that relates specifically
to onshore Mineral Resources and Ore Reserves is based on
information compiled under the direction of Dr Mike Armitage C
Geol., C Eng., who is a Member of the Institute of Materials,
Minerals and Mining which is a Recognised Overseas Professional
Organisation ('ROPO') included in a list promulgated by JORC from
time to time. Dr Armitage is a full-time employee of SRK Consulting
(UK) Ltd and has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and
to the activity which he has undertaken 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) and for the purposes of the AIM Rules. Dr
Armitage has reviewed this press release and consents to the
inclusion in the press release of the matters based on his
information in the form and context in which this appears.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
**ENDS**
For further information please visit http://www.titanium.gl or
contact:
+44 (0) 20 7907
Roderick McIllree Bluejay Mining plc 9326
SP Angel Corporate Finance +44 (0) 20 3470
Ewan Leggat LLP 0470
------------------------------ ----------------
SP Angel Corporate Finance +44 (0) 20 3470
Soltan Tagiev LLP 0470
------------------------------ ----------------
Hannam & Partners (Advisory) +44 (0) 20 7907
Ingo Hofmaier LLP 8500
------------------------------ ----------------
Hannam & Partners (Advisory) +44 (0) 20 7907
Andrew Chubb LLP 8500
------------------------------ ----------------
+44 (0) 20 7236
Hugo de Salis St Brides Partners Ltd 1177
------------------------------ ----------------
+44 (0) 20 7236
Cosima Akerman St Brides Partners Ltd 1177
------------------------------ ----------------
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END
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