TIDMTHR
RNS Number : 1095A
Thor Mining PLC
07 September 2018
7 September 2018
THOR MINING PLC
TWELVE YEAR OPEN PIT LIFE FOR DESERT SCHEELITE
PILOT MOUNTAIN SCOPING STUDY
The Board of Thor Mining Plc ("Thor" or the "Company") (AIM,
ASX: THR) is pleased to announce results of Scoping Study for the
Pilot Mountain tungsten project in Nevada USA.
Scoping Study Parameters - Cautionary Statements
This Scoping Study has been undertaken to determine the
potential viability of an open pit and/or underground mining and
processing plant operation constructed onsite at the Pilot Mountain
Tungsten Project and to form a view of the order of magnitude
potential and a basis on which to complete further studies. The
Scoping Study has been prepared to an accuracy level of +/-35%. The
results should not be considered a profit forecast or production
forecast.
The Scoping Study is a preliminary technical and economic study
of the potential viability of the Pilot Mountain Tungsten Project.
In accordance with the ASX Listing Rules, the Company advises it is
based on low-level technical and economic assessments that are not
sufficient to support the estimation of ore reserves. Further
evaluation work including infill drilling, metallurgical testwork,
and other appropriate studies are ongoing and they will contribute
to our ability to estimate any ore reserves or to provide any
assurance of an economic development case. This study does not
warrant that reserves will be reported.
The total production target for Desert Scheelite is based on
Indicated resource with minor quantities of Inferred mineralisation
and unclassified mineralisation, while that for Garnet is based
upon inferred resources. The Company has concluded that it has
reasonable grounds for disclosing a production target.
The Scoping Study is based on the material assumptions outlined
elsewhere in this announcement. These include assumptions about the
availability of funding. While Thor considers all the material
assumptions to be based on reasonable grounds, there is no
certainty that they will prove to be correct or that the range of
outcomes indicated by the Scoping Study will be achieved.
To achieve the range outcomes indicated in the Scoping Study,
additional funding will likely be required. Investors should note
that there is no certainty that Thor will be able to raise funding
when needed. It is also possible that such funding may only be
available on terms that dilute or otherwise affect the value of the
existing shares in Thor Mining. It is also possible that Thor could
pursue other 'value realisation' strategies such as sale, partial
sale, or joint venture of the Project. If it does, this could
materially reduce the Company's proportionate ownership of the
Project.
The Company has concluded it has a reasonable basis for
providing the forward-looking statements included in this
announcement and believes that it has a reasonable basis to expect
it will be able to fund the development of the Project. Given the
uncertainties involved, investors should not make any investment
decisions based solely on the results of the Scoping Study.
Scoping Study Highlights
-- Desert Scheelite operational life of 12 years with open pit
mining over 11 years and one additional year to complete
processing;
-- Total Desert Scheelite forecast open pit production of 7.5 million tonnes;
-- Annual throughput of 650,000 tonnes from the Desert Scheelite
open pit, producing scheelite concentrates and copper silver
concentrates, plus zinc silver concentrates;
-- Preliminary analysis also suggests some potential for
economic mining and processing from the higher grade Garnet deposit
(inferred resource), supplementing production from Desert
Scheelite;
-- Pre-tax profit expectations from initial open pit operations
ranging from US$125m base case from Desert Scheelite, up to
US$317m, which includes improved Scheelite recovery, reduced mining
costs at greater throughput volumes and the potential inclusion of
Garnet mine production;
-- Study outcomes support a decision to commence a more detailed
Pre-Feasibility Study to progress the project along the development
pathway; and
-- No current primary tungsten production in USA where tungsten
is classified as a "Critical Mineral"
Mick Billing, Executive Chairman of Thor Mining, commented:
"I am delighted to release the results of the Scoping Study for
the Pilot Mountain project showing potential for at least a medium
term life on one, and potentially two, of the four tungsten
deposits at 100% owned Pilot Mountain."
"Closed circuit metallurgical testwork on Desert Scheelite ore
has commenced which will, hopefully, upgrade the results of open
circuit work previously conducted, which achieved 72% recovery of
scheelite and saleable quality concentrates. The impact of any
improvement is outlined below in this report."
"The Pilot Mountain project hosts four known deposits, and it is
anticipated that each of these has potential to contribute further
as we continue to explore their potential."
"With no US domestic production, and tungsten classified by the
US Department of the Interior as a Critical Mineral, our objective
is to re-start Unites States commercial mining and tungsten
concentrate production after a significant break."
"We look forward to providing regular updates on this project as
material developments occur."
Pilot Mountain Scoping Study
In late 2017, Thor commissioned Andrew Vidale Consulting
Services (AVCS) to prepare a Scoping Study for the Pilot Mountain
tungsten project in Nevada USA to gain an understanding of the
potential viability of the project to sustain mining and
processing. The study terms of reference for AVCS were subsequently
refined to cover the Desert Scheelite deposit only.
An assessment by US based consultants Practical Mining LLC has
indicated possible additional open cut and underground potential
from the Garnet deposit nearby.
The results of these studies show:
Desert Scheelite
-- A twelve year life of processing ore from open pit operations at Desert Scheelite;
-- Contract mining over 11 years to deliver forecast mine
production to the proposed processing plant;
-- Annual forecast throughput of 650,000 tonnes from Desert
Scheelite, generating approximately 1,000 tonnes of scheelite in
concentrate per annum;
-- Capital Expenditure range of US$30 to US$35 million
-- Project payback of 36 months on the base case, reducing to
less than 18 if metallurgical testwork, currently under way, is
successful in improving recovery to 85% or above.
Cautionary Statement:
The Desert Scheelite mining inventory does include minor
quantities of Inferred Resources and unclassified mineralisation
that have resulted from the formation of a SMU (Selective Mining
Unit) and/or inclusion of edge dilution across the Indicated
Resource block boundary. There is a low level of geological
confidence associated with inferred mineral resources and there is
no certainty that further exploration work will result in the
determination of indicated mineral resources or that the production
target itself will be realised.
Garnet (based on Inferred resources)
-- Initial open pit transitioning to small scale underground,
-- Supplementary ore feed averaging 120,000tpa;
-- Reduction in project payback to less than 18 months
Cautionary Statement:
The Garnet deposit resource estimate is categorised as Inferred.
There is a low level of geological confidence associated with
inferred mineral resources and there is no certainty that further
exploration work will result in the determination of indicated
mineral resources or that the production target itself will be
realised.
The scoping study assumes the simultaneous exploitation of both
the Desert Scheelite and Garnet operations. For the purpose of the
study, project infrastructure and processing plant requirements
have been based on the production estimates of the larger Desert
Scheelite deposit with the additional ore feed from Garnet assumed
to be supplementary and not requiring plant nor infrastructure
expansion, nor significant additional capital expenditure.
The scoping 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 Resource Evaluation Services
Desert Scheelite Scoping AVCS Pty Ltd
Study
Desert Scheelite Mine AVCS Pty Ltd
Planning
Capital Costs AVCS, Thor
Operating Parameters & Mining costs NA Degerstrom Inc,
Costs other costs Thor
Metallurgical Processes Guangzhou Research Institute of
& Outcomes Non-Ferrous Metals
Garnet Evaluation Practical Mining LLC
While the consultants involved can be considered as independent,
a portion of the Report, including the economic analysis, has been
authored by the Company. The work as a whole is not considered
independent.
Commodity Outlook
Tungsten (chemical symbol W) is a vital mineral with multiple
applications & few substitutes and is considered a strategic
commodity in the USA, China & the European Union. It is used in
manufacture of hard metals, steels, alloys and mill products.
In February 2018 the United States Department of the Interior
confirmed that tungsten remains on the Federal Register of
commodities classified as critical by the Unites States
Government.
The outstanding & unique physical properties of tungsten
(melting point/hardness/tensile strength) and lack of substitutes,
makes tungsten critical in industrial, oil & gas, mining and
agricultural applications.
Tungsten is typically priced according to metric tonne units
(mtu) of APT (Ammonium Para Tungstate), where one mtu is equal to
10 kg of WO(3) . APT and concentrate prices are mainly based on
quotations published twice weekly by London's Metal Bulletin, Argus
Metals and other trade journals.
Mining
Contract mining at Desert Scheelite is planned using
conventional open cut mining methods; drill & blast, followed
by excavation and haulage. A series of pit cutbacks is scheduled to
deliver the forecast mine production.
An average pit slope of 45˚ currently provides for a waste to
ore ratio of 7.3:1. No geotechnical work has been carried out in
respect of the deposits to date, and this work will be carried out
during the pre-feasibility stage.
Mining cost estimates were provided by US based mining
contractor NA Degerstrom Inc, on the basis of a 500,000 tpa
operation. It is expected that some savings may be achieved at the
higher rates used in this study.
Processing
Mineral processing testwork to date has been carried out by the
Guangzhou Research Institute of Non-Ferrous Metals in Guangdong
province in China who conducted open circuit testing in 2013,
producing a scheelite concentrate, and a copper/silver concentrate
with the most successful trial using Wet High Intensity Magnetic
Separation (WHIMS) and flotation with recoveries of 72.2% for
scheelite, and 57.9% and 35.8% for copper and silver
respectively.
A subsequent series of locked circuit testwork has recently
commenced at this facility with the objectives of improving these
recoveries, and providing sufficient information to allow flowsheet
development, plus equipment sizing and specifications to
pre-feasibility level.
Processing cost estimates were derived by Thor using benchmarks
developed in the recently announced definitive feasibility study
for the Molyhil tungsten project in Australia's Northern Territory,
adjusted for known local issues.
Project Infrastructure
Pilot Mountain is situated in central-western Nevada, USA,
approximately 200km SE of Reno.
The project is relatively well serviced with services and
infrastructure, being linked by a good gravel road (34 km) to the
township of Mina on highway US95 (intrastate highway 362) thence a
little over 50km to the town of Hawthorne (pop. 3,000).
A low capacity power line runs within 14 kilometres of the site,
and discussions with local power authorities are in progress for
the supply of mains power to the project.
Water supply would be sourced from a closed basin immediately to
the east of the project area. This aquifer has previously supplied
water for the project. Initial indications are that the aquifer has
sufficient capacity to supply a proposed treatment plant and that
there are no competing demands. Further test work is required.
Capital Costs
Capital costs for the proposed development have been estimated
by AVCS using cost optimizer Sherpa(TM) at US$25million. In
addition, Thor have been provided with a preliminary estimate by a
US power utility with a budget level estimated for the
establishment of a power line & associated infrastructure for
the site in a range of between US$4.0million and US$6.0
million.
Mining equipment capital expense is included in the budget
estimate for mining costs by mining contractor NA Degerstrom
Inc.
Project Permitting
Initial flora and fauna studies were carried out in 2013, with
no adverse findings. The Company is finalising scopes of work for
the balance of all environmental and other regulatory approvals
with the US Federal Bureau of Land Management, and the Nevada
Department of Environmental Planning.
Table A. Desert Scheelite Key Assumptions
Capital Costs
Mining plant & equipment n/a Included in mining contractors
estimate
Provision of Power supply US$4.0M to Preliminary advice from
US$6.0M a US utility
Processing plant & associated US$25M to AVCS using cost optimizer
infrastructure US$30M Sherpa(TM), and Thor
Mining Costs
Ore Mining US$3.40/tonne Estimate from US mining
contractor based on 500ktpa
ore. May reduce at these
30% higher levels
---------------------------------
Waste Mining US$2.06/tonne
---------------------------------- ------------------------ --------------- ----------------
Processing + G & A US$122/mtu Thor Mining estimate adjusted
(inc any notional by-product for known project specific
credit for Cu / Ag / Zn) conditions, including
by-product credits. Compares
with US$115/mtu at Molyhil
before molybdenum credits
---------------------------------- ------------------------ ---------------------------------
Scheelite Recovery 72% Recovery achieved with
open circuit testwork
in 2013. Compares with
76% recovery by Union
Carbide in 1970's.
---------------------------------- ------------------------ ---------------------------------
Tungsten Concentrate Price US$350/mtu Thor Mining
/ mtu estimate
---------------------------------- ------------------------ --------------- ----------------
Average feed grade 0.22% WO AVCS for Desert Scheelite
only
---------------------------------- ------------------------ ---------------------------------
Operating throughput
Milling/Flotation etc 650,000 tpa Thor Mining est' for Desert
Scheelite only
---------------------------------- ------------------------ ---------------------------------
Garnet Scheelite Deposit
A separate assessment of the Garnet Deposit suggests the
potential to supplement production from Desert Scheelite with up to
120,000 tonnes pa, from both open pit and underground activities,
which would increase the throughput at the processing plant and
provide additional scheelite and other concentrates.
For the purposes of this study, Thor has assumed open pit mining
with a waste to ore ratio of 7:1 with mining and processing costs
consistent with those for Desert Scheelite.
Cautionary Statement:
The Garnet deposit resource estimate is categorised as Inferred.
There is a low level of geological confidence associated with
inferred mineral resources and there is no certainty that further
exploration work will result in the determination of indicated
mineral resources or that the production target itself will be
realised.
Table B: Desert Scheelite production supplemented with 120,000
tpa from Garnet, and improved recovery and cost factors
Net Pre-Tax Opex - US$/mtu Payback
Income (US$ produced Period
million)
---------------------------- -------
Base Case US$125 242 36 months
------------- ------------- --------------- ----------
Add Contribution 120,000tpa US$202 215 18 months
from Garnet ore
------------- ------------- --------------- ----------
Scheelite Recovery
improvement plus
Garnet 85% US$297 182 15 months
------------- ------------- --------------- ----------
Mining costs lower
with higher volumes 15% US$317 171 12 months
------------- ------------- --------------- ----------
Table C: Desert Scheelite Scoping Study Sensitivity Analysis
Net Pre-Tax Opex - US$/mtu Payback
Income (US$ produced Period
million)
------------------------- ------
Base Case US$125 242 36 months
----------- ------------- --------------- -----------
Revenue +10% US$172 242 21 months
----------- ------------- --------------- -----------
-10% US$77 242 45 months
----------- ------------- --------------- -----------
Scheelite Recovery 75% US$141 233 12 months
----------- ------------- --------------- -----------
85% US$197 206 <12 months
----------- ------------- --------------- -----------
Operating Costs -10% US$153 218 21 months
----------- ------------- --------------- -----------
+10% US$97 266 450months
----------- ------------- --------------- -----------
Capital Costs +10% US$124 242 42 months
----------- ------------- --------------- -----------
-10% US$124 242 33 months
----------- ------------- --------------- -----------
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Enquiries:
Mick Billing +61 (8) 7324 1935 Thor Mining PLC Executive Chairman
Ray Ridge +61 (8) 7324 1935 Thor Mining PLC CFO/Company
Secretary
Colin Aaronson/ +44 (0) 207 383 Grant Thornton UK Nominated Adviser
Richard Tonthat/ 5100 LLP
Ben Roberts
Nick Emerson +44 (0) 1483 413 SI Capital Ltd Joint Broker
500
David Hignell +44 (0)20 3861 Northland Capital Joint Broker
/ Rob Rees / 6625 Partners Limited
Isabella Pierre
Tim Blythe/ Camilla +44 (0) 207 138 Blytheweigh Financial PR
Horsfall 3222
Competent Persons Statement
The information in this report that relates Technical Assessment
and Valuation of Mineral Assets reflects information compiled and
conclusions derived by various consulting practitioners referred to
earlier in this report. This report has been reviewed by Richard
Bradey who has found it to be based on and fairly reflects the
information and supporting documentation prepared by the
practitioners. Mr Bradey holds a BSc in applied geology and an MSc
in natural resource management and is a Member of The Australasian
Institute of Mining and Metallurgy. Mr Bradey is an employee of
Thor Mining PLC. He has sufficient experience which is relevant to
the style of mineralisation and type of deposit under consideration
and to the activity which he is undertaking 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'. Richard Bradey consents to the
inclusion in the report of the matters based on his information in
the form and context in which it appears.
About Thor Mining PLC
Thor Mining PLC (AIM, ASX: THR) is a resources company quoted on
the AIM Market of the London Stock Exchange and on ASX in
Australia.
Thor holds 100% of the advanced Molyhil tungsten project in the
Northern Territory of Australia, for which an updated feasibility
study in August 2018(1) suggested attractive returns.
Thor also holds 100% of the Pilot Mountain tungsten project in
Nevada USA which has a JORC 2012 Indicated and Inferred Resources
Estimate(2) on 2 of the 4 known deposits. The US Department of the
Interior has confirmed that tungsten, the primary resource mineral
at Pilot Mountain, has been included in the final list of Critical
Minerals 2018.
Thor is also acquiring up to a 60% interest Australian copper
development company Environmental Copper Recovery SA Pty Ltd, which
in turn holds rights to earn up to a 75% interest in the mineral
rights and claims over the resource(3) on the portion of the
historic Kapunda copper mine in South Australia recoverable by way
of in situ recovery.
Thor has a material interest in USA Lithium Pty Limited, an
Australian private company with a 100% Interest in a Lithium
project in Nevada, USA.
Finally, Thor also holds a production royalty entitlement from
the Spring Hill Gold project of:
-- A$6 per ounce of gold produced from the Spring Hill tenements
where the gold produced is sold for up to A$1,500 per ounce;
and
-- A$14 per ounce of gold produced from the Spring Hill
tenements where the gold produced is sold for amounts over A$1,500
per ounce.
Notes
-- (1) Refer ASX and AIM announcement of 23 August 2018
-- (2) Refer AIM announcement of 22 May 2017 and ASX announcement of 23 May 2017
-- (3) Refer AIM announcement of 10 February 2016 and ASX announcement of 12 February 2018
-- Refer AIM announcement of 26 February 2016 and ASX announcement of 29 February 2017
Annexure A:
Pilot Mountain Resource Summary 2017 (Reported on 21 May
2017)
Resource WO(3) Ag Cu
MT Grade Contained Grade Contained Grade Contained
% metal g/t metal (t) % metal
(t) (t)
------------------- ------- ------ ----- ---------- ------ ---------- ------ ---------
Garnet Indicated - -
Inferred 1.83 0.36 6,590
-------------- ------ ----- ---------- ------ ---------- ------ ---------
Sub Total 1.83 0.36 6,590
-------------- ------ ----- ---------- ------ ---------- ------ ---------
Desert
Scheelite Indicated 8.41 0.27 22,700 21.3 179 0.14 11,800
Inferred 1.49 0.23 3,430 9.07 13 0.17 2,500
-------------- ------ ----- ---------- ------ ---------- ------ ---------
Sub Total 9.90 0.26 26,130 19.39 192 0.14 14,300
-------------- ------ ----- ---------- ------ ---------- ------ ---------
Summary Indicated 8.41 0.27 22,700
Inferred 3.32 0.30 10,020
-------------- ------ ----- ---------- ------ ---------- ------ ---------
Pilot Mountain
Total 11.73 0.28 32,720
---------------------------- ------ ----- ---------- ------ ---------- ------ ---------
Notes
-- Thor Mining PLC holds 100% equity interest in this resource.
-- Mineral Resource reported at 0.1% WO(3) Cut-off
-- Minor rounding errors may occur in compiled totals.
-- The Company is not aware of any information or data which
would materially affect this previously announced resource
estimate, and all assumptions and technical parameters relevant to
the estimate remain unchanged.
Annexure B: Forward Looking Statement
The announcement may contain certain forward-looking statements.
Words "anticipate", "believe", "expect", "forecast", "estimate",
"likely", "intend", "should", "could", "may", "Target", "plan",
"potential" and other similar expressions are intended to identify
forward-looking statements. Indication of, and guidance on, future
costings, earnings, and financial position and performance are also
forward-looking statements.
Such forward looking statements are not guarantees of future
performance, and involve known and unknown risks, uncertainties,
and other factors, many of which are beyond the control of Thor
Mining PLC, its officers, employees, or agents and associates,
which may cause actual results to differ materially from those
expressed or implied in such forward-looking statements.
Actual results, performance, or outcomes may differ materially
from any projections or forward-looking statements or the
assumptions on which those statements are based.
You should not place any undue reliance on forward-looking
statements and neither Thor nor its directors, officers, employees,
servants or agents assume any responsibility to update such
information.
The stated production target is based on the Company's current
expectations of future results or events and should not be relied
upon by investors when making investments decisions. Further
evaluation work and appropriate studies are required to establish
sufficient confidence that this target will be met.
This announcement has been prepared in compliance with the JORC
Code 2012 edition and the current ASX Listing Rules.
Annexure C: Reasonable Basis
Thor believes that it has a reasonable basis for making the
forward-looking statements in this announcement, including with
respect to the production target and forecast financial
information.
The following information is specifically provided in support of
the Board's belief:
1. The Scoping Study has been prepared to what the Company
considered equal or better than a Scoping Study level of accuracy
of +/-35%. Furthermore, the Company believes that the level of
detailed work carried out for this study meets or exceeds what is
required/expected at a Scoping Study level.
2. The production targets referred to for the Desert Scheelite
deposit, are based on Mineral Resources which are predominantly
classified as Indicated with only minor quantities of Inferred
Resources and unclassified mineralisation.
3. The production targets referred to for the Garnet deposit,
are based on Mineral Resources which are classified as Inferred,
and these comprise 15.5% of any production targets expanded to
include the Garnet deposit.
4. The Mineral resource estimates for the Pilot Mountain project
were updated and published on 21 May 2017, and the material
assumptions used in these estimates continue to apply and have not
changed.
5. All the mineral claims and licences for Pilot Mountain are
confirmed to be in good standing and the Company has access
agreements in place with all stakeholders authorising exploration
activities.
6. AS declared in this document, the Company is advancing
towards a Pre-Feasibility Study (PFS). The results of the PFS will
be released to the market on completion.
Annexure D: Project Risks
Key risks identified during the Scoping Study work include, but
are not limited to:
-- Adverse movements in commodity process, particularly the price of tungsten concentrates;
-- Conversion of existing Mineral resources to Ore Reserves;
-- Access to project funding;
-- Timely approval by Government authorities of the various licences and permits required;
-- General global economic conditions that may adversely affect
the Company's growth and future prospects; and
-- Results of future Pre-Feasibility and Definitive Feasibility Studies.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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