TIDMMTR
RNS Number : 1393J
Metal Tiger PLC
01 April 2015
Metal Tiger Plc
("Metal Tiger" or the "Company")
Scoping study update from Ariana Resources plc
Metal Tiger (LON: MTR), the natural resources investing company
is pleased to note the announcement today by Ariana Resources plc
("Ariana") (LON:AAU) noting the positive results of a scoping-level
assessment of its Salinbas Project. An extract of the Ariana
announcement is provided below. The full text can be found at:
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/12302411.html
Extract of the Ariana announcement:
EXCELLENT RESULTS FROM SALINBAS SCOPING STUDY
Ariana Resources plc ("Ariana" or "the Company"), the
Anglo-Turkish gold exploration and development company focused on
Turkey, is pleased to announce the completion of a scoping-level
assessment for the Salinbas Project* ("Salinbas" or "the Project")
undertaken by independent geological, metallurgical and mining
consultants.
Highlights
-- Scoping-study based on an approximately 650,000 ounce
Indicated and Inferred JORC gold resource, with an average grade of
2.0 g/t Au and 10.2 g/t Ag.
-- Results show potential for strong financial returns, with NPV
(8%) at US$108M, with payback secured within approximately 3.3
years over the Life of Mine ("LoM") at a gold price of
US$1,250/oz.
-- Average LoM production of approximately 50,000 ounces of gold
and 100,000 ounces of silver per annum over 10 years.
-- Capital expenditure estimated at US$53.3 million.
-- LoM C1 gold equivalent cash-cost of US$768/oz, with a pre-tax IRR of 28%.
-- Data room being established to enable qualified parties,
which have expressed interest in acquiring the project, to assess
the technical data.
Dr. Kerim Sener, Managing Director, commented:
"This is an excellent result which fully underpins the value of
our Joint Venture strategy in Turkey. The scoping work demonstrates
the significant development potential of the project, in parallel
with the considerable additional exploration upside that exists in
the region.
"Salinbas demonstrates potential for the development of a
low-cost mine, with up to 10 years of production, assuming the
current resources can be converted eventually to the Indicated and
Measured categories through further drilling. Ample exploration
opportunity exists in the vicinity to identify further resources,
which could materially add to the current project.
"Our focus now is on translating this highly compelling and
commercial asset into tangible value for the Company. Ariana holds
a 49% interest in the Project through its joint venture, and
considering the potential value of this asset in comparison to
Ariana's current market capitalisation of GBP5.6 million, the
upside to the Company is clearly evident."
* All figures relating to Mineral Resources, including the
financial model, are quoted gross with respect to the Joint
Venture; Ariana holds 49% of the project through a JV company.
Scoping Summary
Ariana and its consultants have completed a scoping-level
assessment for the development of the Company's JV project at
Salinbas, in Artvin Province, north-eastern Turkey. The scoping
study provides initial estimates for costs and financial returns,
based on the current Mineral Resource base, which includes JORC
Indicated and Inferred resources. The Company has completed this
work in advance of entering further discussions with third parties
that have expressed interest in acquiring the Project from the
Joint Venture.
Project scoping was conducted independently by mining
consultancy Auralia Mining Consulting Pty. Ltd. ("Auralia"), which
has extensive experience in gold mining project development and
assessment worldwide. For more information visit
www.auralia.net.au.
Mineral Resource Estimate
A revised in-situ, undiluted Mineral Resource was estimated
independently by Odessa Resources Pty. Ltd. for the Salinbas
gold-silver deposit (Table 1) for the purposes of project scoping.
The estimate is constrained by 3D wireframes that were interpreted
using a nominal 0.5 g/t Au cut-off. A total of 86 drill-holes
(11,709m) were used to construct the wireframes. The resource dips
towards the east at 25 degrees over a vertical extent of
approximately 540m. Mineral Resource grades have been estimated
using an inverse distance squared interpolation of assay data
within each wireframe composited to 1m intervals. Several
geological controls were noted during the construction of the
resource model. However, apart from an interpreted cross-cutting
mafic dyke, the geology was not modelled in detail. A topographic
surface was constructed from the available surveyed drill-hole
collars and combined with a larger regional digital terrain model
that was corrected to match the surveyed collars. An average bulk
density of 2.6 g/cm(3) , based on 178 determinations, was used to
determine tonnages. A top cut of 12.5 g/t Au was applied to the
gold estimate. No top cut was applied to the silver grades.
Table 1: JORC Mineral Resource estimate for Salinbas, modelled
on the basis of geology and a lower cut-off of 0.5 g/t Au. Numbers
may not sum due to rounding.
JORC Classification Tonnage (Mt) Grade Au (g/t) Grade Ag (g/t) Ounces Au Ounces Ag
-------------------- ------------ -------------- -------------- --------- ---------
Indicated 2.29 2.11 11.9 155,500 877,700
-------------------- ------------ -------------- -------------- --------- ---------
Inferred 7.67 2.00 9.7 493,300 2,396,400
-------------------- ------------ -------------- -------------- --------- ---------
TOTAL 9.96 2.03 10.2 648,900 3,274,200
-------------------- ------------ -------------- -------------- --------- ---------
Mine Scoping Works
A base case and set of range runs were carried out on the
Salinbas project utilising the Whittle optimisation software
package. The base case inputs applied to the Whittle works are
outlined below:
-- Overall Slope Angle: 45 Degrees
-- Reference Mining Cost: US$2.20/t
-- Mining Losses: 5%
-- Mining Dilution: 10%
-- Sell Price Gold: US$1,250/oz
-- Sell Price Silver: US$17/oz
-- Sell Costs: Royalties as required
-- Discount Rate: 8%
-- Mill Constraint: 1Mpta
Although 1Mtpa mill constraint was applied, the Whittle runs
indicated the project to be mill constrained when applying a
standard 90 tonne rigid-body truck fleet. Given this constraint,
further conceptual design and high-level schedule work was
completed based on a smaller mill capacity of 0.85Mtpa.
This base-case run resulted in a single continuous Whittle shell
for the Revenue Factor (RF) 1 output, the summary of which is
displayed in Table 2 below.
Table 2: Summary outputs of the Whittle base case
optimisation.
Parameter Output
---------------------- --------------
Total Rock 87.9 Mt
---------------------- --------------
Ore 8 Mt
---------------------- --------------
Strip Ratio 10:1
---------------------- --------------
Average gold grade 2.0 g/t
---------------------- --------------
Average silver grade 9.8 g/t
---------------------- --------------
Gold ounces recovered 481,900 ounces
---------------------- --------------
For the purposes of determining mining inputs into the Whittle
base-case run, the study assumed conventional drill, blast and haul
methods with excavation planned to be carried out by a single 90
tonne rigid body truck fleet. Due to the geometry of the
mineralisation in relation to the topography, a flat US$/t unit
rate mining cost was applied; to allow for future contingency, the
mining cost was inflated by approximately 25% of actual costs
tendered for Ariana's Red Rabbit Gold Project from US$1.75/t (all
inclusive) to US$2.20/t (all inclusive) for the purposes of this
study.
Whittle range runs were carried out as part of the study. They
displayed standard expected linear movement and sensitivities to
altering input parameters. Although only at a scoping level, the
resulting runs indicate the project is most sensitive to sell price
fluctuations, but is physically robust to change on variance away
from key base-case parameters. This can be seen in Table 3
below.
Table 3 (please see attachment): Whittle range run outputs, RF 1
worst-case shells used for comparison purposes.
Mine Design
The topography at the Salinbas Project is dominated by a
depression between two hill-tops (Figure 1). Substantial vertical
relief exists between the top of the mineralisation at Salinbas
Peak (1,320m above sea level) to the lower limits of the current
resource (780m above sea level) in the vicinity of the Ardala
porphyry (Figure 1). As the topography runs sub-parallel to the
gently dipping mineralised structure, the bulk of the current
resource varies in depth from 0m to 70m below the surface.
Figure 1 (please see attachment): Conceptual open-pit design at
Salinbas, looking south-west. The Salinbas mineralised zone is
shown in yellow, sitting within the conceptual pit design shown in
brown. The Ardala porphyry, which was the primary geological driver
of the mineralised systems in the vicinity, is shown in red.
This topographic setting would potentially enable the
development of an open-pit which would be initiated from the lowest
most point, with mining progressing sequentially up the
mountain-side with side-casting of waste behind the working face
(Figure 2). The open-pit could essentially be back-filled as mining
progresses minimising environmental impact and eliminating the
requirement for a large permanent waste rock dump, which would also
keep capital costs to a minimum. The overall strip ratio for the
project is approximately 10:1, so reduction of waste movement via
this method would be highly beneficial.
Figure 2 (please see attachment): Conceptual open-pit design at
Salinbas, created for the purposes of high level scheduling carried
out during the study. The conceptual design was based upon the side
casting and back-filling premise as discussed above. Resources at
>0.5g/t gold are displayed in pink in the diagram on the
right.
Mine Schedule
A high-level mining schedule has been constructed as part of the
scoping study. The mining schedule assumed a bottom-up waste
backfill scenario of the conceptual mine design, and has a 10 year
Life of Mine ("LoM"). The schedule confirmed that after an initial
first year ramp up, a the 0.85Mtpa mill could be kept running at
full capacity for a further 7 years, over the 10 year LoM
period.
Figure 3 (please see attachment): High level mining schedule
including tonnes processed, input gold and silver grades and
stockpile balance.
Process Route
An independent review of processing options including
Carbon-in-Leach ("CIL") and Heap Leach, based on preliminary
metallurgical data, was undertaken by Independent Metallurgical
Operations Pty. Ltd. ("IMO"). Assessments were completed for both
1Mt and 0.5Mt per annum Heap Leach options in addition to a 0.85Mt
per annum CIL option. Scoping-level processing inputs and costs
were derived for the final scoping-level mining study based on the
0.85Mt per annum CIL option. The latter option was selected because
the project development risks associated with CIL are considered to
be somewhat lower than either of the two Heap Leach options, due
primarily to topographic and climatic factors, in addition to
established processing precedent for this style of mineralisation
in Turkey.
Preliminary metallurgical test-work confirmed that conventional
processing using CIL leach methods would be suitable for the
Salinbas mineralisation. Recovery rates of 91% for gold and
approximately 30-45% for silver are expected, although further test
work is required. The scoping study projected a 10 year milling
schedule, with the life of mine gold:silver ratio being 1:5 (based
on an all-materials schedule). At this point, the silver contained
in the Mineral Resource is not economic on its own, but adds
credits as an output given the requirement to mine and process it
along with the gold recovered (where the gold grade exceeds the
economic cut-off). Of approximately 530,000 ounces of gold input to
the planned CIL mill, approximately 482,000 ounces of gold is
recovered at a 91% gold recovery rate.
Infrastructure
The Salinbas project benefits from well-developed infrastructure
and an established mining culture in the vicinity of the proposed
mine. A combination of sealed and un-sealed roads provide access to
the project from the nearby towns of Artvin (12km away) and Ardanuc
(11km away). These towns and nearby villages provide a source of
both skilled and un-skilled labour for the project. Labour costs
are significantly lower in Turkey than in comparable
jurisdictions.
Power would be supplied from the grid, though there is scope for
some power to be derived from the nearby Deriner hydro-electric
dam. Grid power costs are expected to be approximately 11 c/kWh.
High-voltage overhead power lines pass through the project licences
and are located 1.5km from Salinbas. Water supply would likely be
derived from a lake nearby.
Project Costs
Capital costs have been estimated by both Auralia and IMO for
the mining and processing components of the operation,
respectively. The cost estimates have been compiled based on
metrics demonstrated by similar mining operations in Turkey and
elsewhere. The capital cost for the process plant plus tailings dam
is US$48.3 million including a 20% contingency and at an estimated
accuracy of +/-30%. The capital cost for the mine and ancillary
infrastructure is estimated at US$5.0 million.
Operating costs for the CIL plant are estimated at US$17.31/t.
It should be noted that the mine optimisation work utilised a
processing cost of US$23/t ore based upon initial expectations and
in comparison with the Red Rabbit Feasibility Study; this price
difference entails a potential US$5.69/t in additional recovered
revenue per ore tonne processed.
C1 gold equivalent cash costs are expected at US$768/oz for the
(averaged) LoM.
Financial Model
A pre-tax financial evaluation showing sensitivity to gold price
(Table 4) was prepared on the basis of the Whittle outputs for the
NPV (8%) scenario and the modelled NPV (10%) based on the RF1
Whittle shell derived at NPV (8%). Total capital expenditure on the
project has been deducted from the NPV figures. All values were
derived pre-tax due to the complexity and variability of tax on
mining projects in Turkey that are subject to investment incentives
provided by the Government of Turkey.
Table 4: Summary model and sensitivity of the project to gold
price. The NPV at 8% and 10% discount rates are shown after
deduction of the total capital expenditure.
Gold Price NPV (US$M) Pre-Tax inc. CAPEX IRR% Approx. Ave. Payback (Years)
(Pre Tax)
------------- ------------------------------- ----------- ----------------------------
8% D/R 10% D/R
------------- -------------- --------------- ----------- ----------------------------
US $1,000/oz 24 16 7 6.9
------------- -------------- --------------- ----------- ----------------------------
US $1,125/oz 66 55 18 4.4
------------- -------------- --------------- ----------- ----------------------------
US $1,250/oz 108 94 28 3.3
------------- -------------- --------------- ----------- ----------------------------
US $1,375/oz 152 134 37 2.6
------------- -------------- --------------- ----------- ----------------------------
US $1,500/oz 188 165 44 2.2
------------- -------------- --------------- ----------- ----------------------------
Approvals and Incentives
The Joint Venture holds the relevant mining licences for the
project through Pontid Madencilik San. ve Tic. Ltd., but would
require an Environmental Impact Assessment ("EIA") to be completed,
in addition to other permits required for mining, in order for the
project to be developed. Preliminary EIAs are already in place for
additional exploration.
Turkey has adopted policies aimed at encouraging development of
the mining sector through specific incentives. Corporate tax rates
are competitive, with a headline rate of 20% but with various tax
incentives potentially reducing effective rates to 4% or less for
initial periods of production.
Data Room
A virtual data room is now being set up in order to house all of
the Company's technical data relating the Salinbas project and to
assess the expressions of interest we have received from third
parties. Access will be limited to qualified interested parties,
following a screening process and the signing of Confidentiality
Agreements. Based on their examination of the technical data,
interested parties may wish to engage the Company in further
discussions with a view to acquiring the Project from the Joint
Venture.
For further information on the Company, visit:
www.metaltigerplc.com:
Cameron Parry Tel: +44 (0)207
(CEO) 099 0738
Paul Johnson Tel: +44 (0)7766
(Executive 465 617
Director)
Sean Wyndham-Quin Spark Advisory Partners Tel: +44 (0) 2033
Neil Baldwin Limited 683 555
(Nominated Adviser)
Notes to Editors:
Metal Tiger Plc is a natural resources focused investing company
listed on the London Stock Exchange AIM Market ("AIM") with the
trading code MTR and two investment divisions, Direct Equities and
Direct Projects.
The Direct Equities division invests in listed natural resource
explorers and developers, with a combination of shares and warrants
providing a potential non-debt financing instrument and enhanced
return potential. The Direct Projects division invests in
operational mineral exploration projects with current investments
in Spanish Gold & Tungsten, Thai Gold, Copper & Antimony,
and Tanzanian Gold and Uranium. The Direct Projects investment
division also has working collaborations to identify new investment
opportunities in Russia (platinum focus) and Turkey (gold focus),
in association with experienced in-country partners.
Metal Tiger's target is to deliver a high return for
shareholders by investing in significantly undervalued and/or high
potential opportunities in the mineral exploration and development
sector timed to coincide where possible, with a cyclical recovery
in the exploration and mining markets.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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