TIDMTHR
RNS Number : 7770B
Thor Mining PLC
12 January 2015
12 January 2015
THOR MINING PLC
Thor Mining PLC ("Thor" or the "Company")
UPGRADED MOLYHIL FEASIBILITY STUDY
IMPROVES FINANCIAL RETURNS AND CONFIRMS EARLY CAPITAL
PAYBACK
The Board of Thor Mining Plc ("Thor") (AIM, ASX: THR) is pleased
to advise that a just completed upgraded Feasibility Study for the
Company's wholly-owned Molyhil tungsten project in Australia's
Northern Territory ("Molyhil") has confirmed that the project will
deliver attractive financial returns as well as an early payback of
the capital required for its development.
Study Highlights
-- Project payback period of 18 months after payment of royalties and taxation
-- All equity Net Present Value (NPV) of A$67 million with an
Internal Rate of Return (IRR) of 44%, after taxation & royalty
payments.
-- EBITDA of A$201 million
-- Cash production cost of US$112/mtu concentrate compared with revenue of US$358/mtu
-- Capital expenditure (CAPEX) of A$70 million (US$56 million)
-- Six year mine life
-- Simple open cut mining operation followed by standard mineral processing techniques
-- Operation substantially permitted
Next steps
-- Secure project development finance agreements
-- Detailed engineering studies
-- Complete permitting
Molyhil Feasibility Study
Following the publication in July 2014 of an updated JORC 2012
compliant open cut ore reserve statement for Molyhil, Thor has
completed the necessary mining and production schedules and capital
and operating cost estimates, and incorporated these results into
the feasibility model, along with previously published parameters
(refer attachment "A"), to produce an upgraded and attractive
feasibility study outcome with a mining and processing operation
over a 6 year life.
The results of the study show:
-- EBIT returns provide for 18 month payback period
-- All equity Net Present Value (NPV) of A$67 million at a
discount rate of 8% (A$53million @ 12% or A$80 million @ 5%) after
tax and royalty payments
-- All equity Internal Rate of Return (IRR) of 44% after tax and royalty payments
-- Production cost of US$112/mtu concentrate (after deduction of
molybdenum bi-product credits) compared with revenue of
US$354/mtu
-- Mine life of 6 years, derived from the updated open cut ore
reserve statement published in July 2014
-- Capital expense of A$70 million (US$56 million)
-- EBITDA of A$201million.
The feasibility study has been prepared by Thor Mining PLC using
data and information supplied by third party consultants and
suppliers for key components, including:
-- Resource estimates and open cut ore reserve statement;
-- Mine planning;
-- Capital and operating costs;
-- Metallurgical processes and outcomes;
-- Commodity prices and exchange rates;
-- Environmental studies.
Mining
Mining is planned using conventional open cut mining methods;
contract drill & blast, followed by owner operated excavation
and haulage.
An average pit slope of 48˚ currently provides for a waste to
ore ratio of 5.2:1. There may be an opportunity to improve this
ratio during operations and via targeted geo-technical
drilling.
The resource estimate extends below the level of the open cut
ore reserve used in this study providing potential to extend the
project life either by deepening the open pit, or via underground
mining methods depending upon subsequent costs and metal
prices.
Processing
Mineral processing involves:
-- Two stage crushing to -55mm:
-- X-Ray (XRT) ore sorting at two sizes -55mm to +25mm, and -25mm to +10mm
-- Tertiary crushing
-- Two stage grinding using a rod mill followed by a ball mill
-- Three stage flotation circuit
o Molybdenum flotation
o Sulphide flotation
o Scheelite flotation
-- Concentrate dressing
The revised process flowsheet involves replacing the previous
scheelite gravity recovery method with flotation which has achieved
substantial improvements in economic recovery and also in reducing
levels of some deleterious elements in final concentrate compared
with the original circuit. The scheelite concentrate dressing
process which follows the flotation step has been tested but is not
yet optimised. It is expected that this optimisation process will
be completed during the detailed design phase.
Project Infrastructure
Molyhil is located 220 kilometres north-east of Alice Springs in
Australia's Northern Territory. Access is via the Plenty Highway a
partially sealed road off the Stuart Highway which connects Alice
Springs and Darwin.
The project will operate as a fly-in fly-out operation with
provision for camp and electricity generation facilities provided
in the cost estimates.
The project has ample water from underground aquifers
nearby.
Product Off-take sale agreements
In October 2013 Thor received a Letter of Intent from US based
Global Tungsten & Powders (GTP) in respect of 70% to 75% of
total tungsten concentrate production for the life of the proposed
Molyhil operation. The Directors of Thor are working towards sales
agreements for the balance of those concentrates and also for the
molybdenum by-product concentrates.
Next steps
The next steps for the Molyhil project involve securing the
balance of concentrate sales (off-take) agreements and finance for
the project development, after which it is planned to commence
detailed engineering studies, along with completion of the Mine
Management Plan and onsite civil works in preparation for mine and
process plant construction and development.
Table 1. Molyhil Key Features
Project NPV post A$67 million
tax & Royalties
Project IRR after 44% All Equity
tax & royalties Case
Project Capex A$70 million All Equity
Case
Life of Mine C1 US$112/mtu
Cash Cost
Life of Mine EBITDA A$201 million
Payback from 1(st) 18 months
production
Project Life 6 years
Average feed grade 0.31% WO 0.41% WO after ore
sorting
0.12% Mo 0.12% Mo after ore
sorting
Operating throughput
Crushing & Sorting 500,000
Milling/Flotation tpa After ore sorting
etc 400,000
tpa
Annual Production 130,000 Approximately 1.3%
Average mtu * of global market
* 1mtu = 10Kg of
contained WO
--------------------- -------------- ----------------------
Mr Mick Billing, Executive Chairman of Thor Mining:
"The Molyhil project has taken a significant step forward with
this enhanced feasibility study. The returns are very attractive,
and cash flow available for debt servicing of 2.5 times project
capital cost. Substantial work has been undertaken to improve costs
and we believe that Molyhil has a very attractive cost structure
and a low start-up capital expense. We do not underestimate the
task in securing project finance, however we believe these upgraded
project economic outcomes are compelling"
Enquiries:
Mick Billing +61 (8) 7324 Thor Mining Executive
1935 PLC Chairman
Ray Ridge +61 (8) 7324 Thor Mining CFO/Company
1935 PLC Secretary
Colin Aaronson/ +44 (0) 207 Grant Thornton Nominated
Jamie Barklem 383 5100 UK LLP Adviser
Andrew Monk/ +44 (0) 20 VSA Capital Broker
Bhavesh Patel 3005 5000 Ltd
Alex Walters +44 (0) 7771 Cadogan PR Financial
713608 PR
+44 (0) 207
839 9260
Updates on the Company's activities are regularly posted on
Thor's website www.thormining.com, which includes a facility to
register to receive these updates by email.
Attachment A: Molyhil Feasibility Study Input Parameters
1. Mineral Resource estimate of 4.7 million tonnes averaging
0.28% WO(3) & 0.13% Mo in Indicated and Inferred categories
2. Open Cut Ore Reserve for the Molyhil deposit of 3.0 million
tonnes averaging 0.31% WO(3) & 0.12% Mo categorised as
Probable
3. Revenue factors:
-- Revenue / mtu scheelite concentrate = US$354/mtu after concentrate discount
-- Revenue / pound molybdenum concentrate = US$10.56
-- A$1.00 = US$0.77 over life of mine
APT Tungsten 2015 2016 2017 2018+
Price Forecast
*
------ ----- ----- ------
US$/mtu 471 481 446 466
* Source: Tungsten Market Research Ltd
January 2014
4. Metallurgical recovery (post ore sorting)
-- Tungsten = 85%
-- Molybdenum = 77.8%
5. Capital cost = A$70 million
6. Operating Factors
-- Mining waste to ore ratio = 5.2 : 1
-- Mining costs = A$19.35 / tonne ore milled
-- Processing & admin costs = A$65 / tonne ore milled
-- Ore Sort reject = 25% of ore crushed
The Molyhil Mineral Resource is summarised in Table 2 Below:
Table 2: Summary of Molyhil Mineral Resource Estimate: (Reported
on 30 January 2014)
Classification Resource WO(3) Mo Fe
Tonnes Grade Tonnes Grade Tonnes Grade
% % %
---------------- --------- ----- ------ ----- ------- ------
Indicated 3,820,000 0.29 10,900 0.13 4,970 18.8
Inferred 890,000 0.25 2,200 0.14 1,250 15.2
---------------- --------- ----- ------ ----- ------- ------
Total 4,710,000 0.28 13,100 0.13 6,220 18.1
---------------- --------- ----- ------ ----- ------- ------
Notes
-- Compliant with JORC 2012
-- Thor Mining PLC holds 100% equity interest in this reserve.
-- Mineral Resource reported at 0.1% combined Mo + WO(3) Cut-off and above 200mRL only.
-- Minor rounding errors may occur in compiled totals.
The Molyhil Open Cut Ore Reserve Statement is summarised in
Table 3 below
Table 3: Molyhil Open Cut Ore Reserve Statement (Reported on 29
July 2014)
Classification Reserve WO(3) Mo
'000 Tonnes Grade Tonnes Grade Tonnes
% %
---------------- ------------ -------- --------- -------- -------
Probable 3,000 0.31 9,200 0.12 3,600
Total 3,000 0.31 9,200 0.12 3,600
---------------- ------------ -------- --------- -------- -------
Notes:
-- Compliant with JORC 2012
-- Thor Mining PLC holds 100% equity interest in this reserve.
-- Estimate has been rounded to reflect accuracy.
-- All estimates are on a dry tonne basis.
-- The reserve estimate extends to a maximum depth below surface of 150 metres.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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