TIDMBZT
RNS Number : 6955P
Bezant Resources PLC
12 February 2019
12 February 2019
Bezant Resources Plc
("Bezant" or the "Company")
Results of New Mining/Economic Study Demonstrate Robust High
Level Mining Options for the Mankayan Project, Philippines
Bezant (AIM: BZT), the copper-gold exploration and development
company, announces the results of an independent study assessing
the optimisation of potential future mine development for its
Mankayan copper-gold project, located on the Island of Luzon in the
Philippines (the "Mankayan Project"). The study was undertaken by
independent consultants, Mining Plus Pty Limited ("Mining Plus"),
using prevailing market conditions premised on the Snowden Mining
Industry Pty Limited ("Snowden") resource estimate prepared in 2009
under JORC (2004) which defined an indicated resource of 1.1
million tonnes of contained copper and 3.7 million ounces of
contained gold and an inferred resource of 0.2 million tonnes of
contained copper and 0.6 million ounces of contained gold.
Highlights
-- Alternative routes to production: The Mankayan copper-gold
porphyry supports different robust routes for potential future
development, including, for the first time, a Sub-Level Caving
("SLC") 'stepping stone' scenario, with two main Block Caving
("BC") routes identified for progression, from a total of 11
scenarios assessed, with both supporting an average production
grade in excess of 0.64% copper equivalent ("CuEq").
-- 5 year lead time to production: Under all four of the
representative options selected for further analysis in the study,
the time to initial production was approximately five years and the
first five years of production was sequenced in order to deliver
production from the higher grade areas of the deposit, in some
cases demonstrating average grades achievable of up to 0.77% CuEq*
during this initial period.
-- Off-site costs incorporated: For the first time, off-site
costs (for concentrate handling and smelting) were incorporated
into the project's economics to more accurately demonstrate
development viability.
-- Updated analysis: the study has built and improved upon the
historic 2014 scoping study update following analysis of the key
inputs and characteristics further to the Company's review of the
project during 2018.
The three main representative options summarised below, taken
from the 11 modelled scenarios, comprise two BC scenarios and one
SLC 'stepping stone' scenario (the option numbers being those used
in the study)
The two preferred BC scenarios
-- Option 4: medium production rate with lower start-up costs
than those associated with higher production rate models
-- US$1,181m net present value ("NPV")*, US$11,647m total
revenue, US$19.1/t average cost, 27% internal rate of return before
tax and royalty ("IRR"), US$896m start-up Capex
-- Option 8: lower start-up costs, coupled with a good overall
project value maintained by ramping-up the production rate after
the first footprint
-- US$797m NPV*, US$11,473m total revenue, US$19.7/t average
cost, 21% IRR, US$633m start-up Capex
SLC intermediary route
-- Option 9: a more flexible/low start-up cost SLC method has
been determined as an intermediary step towards full block caving
scenarios, with start-up Capex of US$529m, a slightly reduced time
to first production, a first phase period into higher grade core
and US$19.9/t average cost
Note: * - The NPV calculated is for comparative purposes only,
as full financial analysis was not undertaken for the study. A mean
copper price scenario of US$3/lb was used and all costs are mine
and processing combined. Due to the current uncertainty surrounding
the Philippine tax/royalty rates, neither have been included in the
comparison. Inclusion of tax and royalty would reduce the NPV and
IRR, but it is expected that the relative economic merits of each
scenario would not change significantly.
Commenting today, Laurence Read, CEO of Bezant, said:
"Mankayan is a major, well delineated copper-gold porphyry style
deposit and this latest Mining Plus study serves to demonstrate
potential robust development options able to sustain an average
mining grade above 0.64% copper equivalent at average costs below
US$20 per tonne. This potentially highly efficient, established
copper-gold source is situated on Luzon Island and accessible by
tarmac road only a day's drive from Manila.
"Historic studies on the project were designed to optimise the
mining model without necessarily taking account of extremely
influential factors such as capital spread, the high grade core,
mining rates and footprint and possible intermediary routes in
order to achieve initial production from a significantly reduced
capital outlay. This latest study has therefore been most
informative and enables Bezant's management team to plan for
different potential production scenarios ranging from 6 million
tonnes per annum ("Mtpa") to 12 Mtpa without unduly affecting
financial ratios.
"The identification of a Sub Level Caving route also provides a
potential new way forward for Mankayan by way of an intermediary
step towards full block caving which, when combined with new
sequencing work, allows for first revenues to be achieved earlier
for significantly reduced start-up Capex. The inclusion for the
first time of estimated off-site costs in the project's economics
represents an important element in assessing margins from the
eventual future sales of concentrate.
"Our work with Mining Plus affords us great confidence that the
project lends itself to potential future development by medium size
mining companies, as well as the majors, seeking to secure a
long-term source of physical copper and gold.
"The Board remains positive regarding the fundamentals for
copper over the next three years and believes that signs of a
supply shortfall are already becoming evident."
Further Information
The Mining Plus study identified and assessed a number of
high-level alternative mining options for the Mankayan project as
well as substantially improving the underlying economics of the
proposed operations. The options considered were designed with the
objective of improving production processes, determining pathways
with reduced total start-up cost, identifying further potential
value from the project and correctly including off-site costs for
the first time. The options were based on the work undertaken by
GHD Group Pty. Limited ("GHD") and Mining Plus in their 2014
Scoping Study Update and were evaluated using the parameters
developed in that historic study.
This latest study has identified a broad range of mining options
that can be used to mine the deposit. Relative to the historic
study, these options included:
-- A focus on higher grade.
-- A focus on mining higher grade earlier.
-- Reduced start-up costs.
-- Accounting for the effect of off-site costs on revenue streams.
-- Better or equivalent returns on investment than previous studies.
-- Collective demonstration of the flexibility of the deposit to
be mined by a wider range of strategies.
In total, eleven options were investigated with four
representative options analysed in more detail in the study. Two
main options were chosen as preferential block cave development
routes at different scales and an SLC intermediary route towards
block caving was also determined. The key metrics for each of these
four options are set out in Table 1 below and include Option 3, a
high rate, major block cave comparator of 24Mtpa.
Preferred Block Cave routes
Option 4: Medium production rate, with four BC footprints in two
lifts. Each footprint was sized to meet the required production
rate, with the first footprint in each lift located in the highest
grade.
Option 8: Staged production rate, starting at 6Mtpa for a small
high grade BC, before mining three larger footprints at a
production rate of 12Mtpa.
SLC Intermediary route
Option 9: Low production rate, starting with a 6Mtpa low capex
high opex sublevel cave before mining three BC footprints (this
option could also be ramped up to 12Mtpa for the mining of the
three BC footprints).
Block cave comparator scenario
Option 3: High production rate, high rate of return, high
start-up cost two lift BC, where the full footprint of the BC is
undercut to enable a high production rate.
Table 1: Summary of the Representative Options
Option 3 4 8 9
(Comparator) (Medium (Scaled option) (SLC **
rate Option) Intermediary
route)
24Mtpa 2 12Mtpa 4 6Mtpa small 6Mtpa SLC
Description BC footprints BC footprints BC followed followed
over 2 lifts over 2 lifts by 3 12Mtpa by 3 6Mtpa
BC BC
------------------- --------------- --------------- --------------- ----------------- ---------------
IRR before
tax and Cu $3/lb
royalty Au $1,250/oz 29% 27% 21% 14%
--------------- --------------- --------------- ----------------- ---------------
Average
Cost per
t USD/t $19.1 $19.1 $19.7 $19.9
--------------- --------------- --------------- ----------------- ---------------
First Footprint
Start-up
Cost USD $1,402m $896m $633m $529m
--------------- --------------- --------------- ----------------- ---------------
First 5
years of
production Tonnes 92 M 54 M 29 M 28 M
--------------- --------------- --------------- ----------------- ---------------
Cu (%) 0.45 0.46 0.48 0.41
----------------------------------- --------------- --------------- ----------------- ---------------
Au (g/t) 0.51 0.54 0.62 0.45
----------------------------------- --------------- --------------- ----------------- ---------------
CuEq (%) 0.70 0.72 0.77 0.62
----------------------------------- --------------- --------------- ----------------- ---------------
Total production Tonnes 333 M 316 M 315 M 302 M
--------------- --------------- --------------- ----------------- ---------------
Cu (%) 0.42 0.43 0.42 0.41
----------------------------------- --------------- --------------- ----------------- ---------------
Au (g/t) 0.46 0.47 0.46 0.45
----------------------------------- --------------- --------------- ----------------- ---------------
CuEq (%) 0.63 0.65 0.64 0.63
----------------------------------- --------------- --------------- ----------------- ---------------
Mine Life Years 23 34 38 58
--------------- --------------- --------------- ----------------- ---------------
Time to
First Production 5 5 5 4.2
--------------- --------------- ----------------- ---------------
NPV before
tax and
royalty,
8.5% discount Cu $3/lb
rate* Au $1,250/oz $1,589m $1,181m $797m $361m
--------------- --------------- --------------- ----------------- ---------------
Notes:
* - the NPV used is for comparative purposes only, as full
financial analysis was not undertaken for the study.
** - SLC has been designed to be part of a continuation into a
full block cave scenario, however the standalone IRR and mine life
are included for continuity.
Analysis of the information in Table 1
The general trend is that the higher production rate options
(higher start-up costs) return higher rates of return and
discounted cashflows, due to the reduced effect of time discounting
over a shorter mine life. Other points of note include:
-- Options 3 and 4 have a very similar average cost per tonne,
due to the higher start-up cost of option 3 being offset by the
sharing of fixed production costs over a larger tonnage.
-- The options target higher grade first, which can be seen in
the comparison between the grade of the first 5 years versus the
total production. The lower production rate cases can be more
selective, thereby consequently returning a higher grade in the
first five years.
-- Option 9 (SLC) has a lower first five years grade than the BC
options. This is due to it being a top-down method (hence starting
in lower grade ore) and the higher dilution of the method, with
each level being mined next to the dilution from the level above.
This effect is mitigated by the greater selectivity of the SLC
footprint.
-- Option 9 (SLC) has a slightly lower lead time to first
production because mining starts at the top and advances downwards
(as opposed to the BC, which is bottom up).
-- Although not explicitly modelled in the study, the SLC is
less sensitive to geotechnical parameters than the BC, due to the
rock being broken-up by drill and blast, rather than breaking due
to the action of caving. Such drill and blast control of breaking
comes at a considerably higher mining cost.
Comparison to historic 2014 scoping/economic study
As a result of changes to the model (e.g. inclusion of off-site
costs, exclusion of tax and royalties and more accurate modelling
of cave mixing) it is difficult to compare the above options
directly with the 2014 Scoping Study Update. However, at equivalent
metals prices, the historic study achieved a maximum IRR of
21%.
Whilst aggregating parameters from the 2014 Scoping Study
Update, some discrepancies were found, which although not material
to the accuracy level of previous studies have been resolved in the
latest study. These included:
-- Off-site costs for concentrate handling and smelting not being included.
-- Timing of mill costs not being aligned to the start of production.
-- Draw strategy of caves targeting high grade without following
typical cave management rules for propagation.
-- Over estimate of the mining cost per tonne reduction at higher production rates.
-- Under estimation of mixing early and overestimate of dilution later.
Optimisation Methodology
Block caving (BC) mass mining methods are typically very low
cost, but also very inflexible in the geometry of ore that they can
mine. Accordingly, they typically have high planned dilutions or
low planned recoveries relative to stoping methods where there is
far greater flexibility to mine only the desired mineralisation.
They are also long mine life, such that the time discounting of
future revenues is significant and it therefore becomes very
important to mine higher value material early.
Sublevel caving (SLC) mass mining methods have similar
characteristics to block caves, but they are more flexible in their
geometry. This flexibility comes at a much higher mining cost.
To ensure that the options were compared equivalently, a mining
model was developed which used the following process to optimise
the options and therefore achieve a like with like comparison.
-- The geological model was regularised and then vertically
mixed to model the dilution/recovery of the block caving
process.
-- The model was separated (manually) into zones in plan view for different footprints.
-- Within each zone potential footprints were found based on the
mining costs and grade, with the aim to maximise the undiscounted
cash flow.
-- Different combinations of lifts were tested in each zone,
scheduled, and the combination that generated the highest
discounted cash flow selected.
-- Based on the selected combination of lifts, the opportunity
cost (delay to the rest of the project due to mining low but
payable grade) was calculated for all time periods.
-- The zones and footprints were refined to maximise the cash flow less the opportunity cost.
-- The lift positions were refined to maximise the cash flow less the opportunity cost.
-- The opportunity costs were re-calculated from the updated schedule and the process repeated.
To generate the SLC shapes, the Datamine process "minable
reserves optimiser" (MRO) was used to create an optimised SLC shape
before selecting the levels, which, when combined with the
remaining block cave levels returned the best discounted project
value.
Assumptions and variable economics used in the study
A breakdown of the key assumptions used by Mining Plus and the
effects of a copper price range of US$2.5 - US$3.5/lb is provided
below.
Performance of representative options at US$3/lb, US$2.5/lb and
US$3.5/lb for copper
Option 3 4 8 9
Description 24Mtpa 2 12Mtpa 4 6Mtpa small 6Mtpa SLC
BC footprints BC footprints BC followed followed
over 2 lifts over 2 lifts by 3 12Mtpa by 3 6Mtpa
BC BC
--------------------------------- --------------- --------------- ------------- ------------
IRR before
tax and
royalty
Au @ $1,250/oz Cu $3/lb 29% 27% 21% 14%
------------- --------------- --------------- ------------- ------------
Cu $2.5/lb 24% 22% 18% 11%
--------------------------------- --------------- --------------- ------------- ------------
Cu $3.5/lb 34% 30% 24% 17%
--------------------------------- --------------- --------------- ------------- ------------
Average
Cost per
t $19.1 $19.1 $19.7 $19.9
--------------- --------------- ------------- ------------
Start-up
Costs $1,402m $896m $633m $529m
--------------- --------------- ------------- ------------
First 5
years of
production Tonnes 92M 54M 29M 28M
------------- --------------- --------------- ------------- ------------
Cu (%) 0.45 0.46 0.48 0.41
--------------------------------- --------------- --------------- ------------- ------------
Au (g/t) 0.51 0.54 0.62 0.45
--------------------------------- --------------- --------------- ------------- ------------
CuEq (%) 0.70 0.72 0.77 0.62
--------------------------------- --------------- --------------- ------------- ------------
Total Tonnes 333M 316M 315M 302M
------------- --------------- --------------- ------------- ------------
Cu (%) 0.42 0.43 0.42 0.41
--------------------------------- --------------- --------------- ------------- ------------
Au (g/t) 0.46 0.47 0.46 0.45
--------------------------------- --------------- --------------- ------------- ------------
CuEq (%) 0.63 0.65 0.64 0.63
--------------------------------- --------------- --------------- ------------- ------------
Mine Life 23 34 38 58
--------------- --------------- ------------- ------------
Time to
First Production 5 5 5 4.2
--------------- --------------- ------------- ------------
Total Cost $6,356m $6,032m $6,200m $6,019m
--------------- --------------- ------------- ------------
Total Revenue
before tax
and royalty
Au $,1250/oz Cu $3/lb $11,971m $11,647m $11,473m $10,776m
------------- --------------- --------------- ------------- ------------
Cu $2.5/lb $10,612m $10,325m $10,170m $9,550m
--------------------------------- --------------- --------------- ------------- ------------
Cu $3.5/lb $13,330m $12,970m $12,777m $12,004m
--------------------------------- --------------- --------------- ------------- ------------
NPV before
tax and
royalty,
Au $1,250/oz,
8.5% discount
rate* Cu $3/lb $1,589m $1,181m $797m $361m
------------- --------------- --------------- ------------- ------------
Cu $2.5/lb $1,116m $839m $534m $161m
--------------------------------- --------------- --------------- ------------- ------------
Cu $3.5/lb $2,061m $1,524m $1,061m $562m
--------------------------------- --------------- --------------- ------------- ------------
Note:
* - The NPV used is for comparative purposes only, as full
financial analysis was not undertaken for the study.
Summary of Mining Parameters
Parameter Value Comments
Recovery/Dilution
-------------------------------------------
Matches the values from the Laubscher
Mixing Chart in the historic Scoping
BC Mixing 100m Vertical Study
--------------- -------------------------------------------
Typical values for a neutral drawn
SLC Recovery 80% SLC over multiple levels
--------------- -------------------------------------------
SLC Dilution 25%
--------------- -------------------------------------------
Chosen as the highest grade for a
SLC Cut-off 0.75% CuEq footprint that could maintain 6Mtpa
--------------- -------------------------------------------
0.21% CuEq
+ Opportunity Typically much higher than 0.21% CuEq
BC Cut-off Cost especially at the beginning of project
--------------- -------------------------------------------
Block Cave Dimensions
-------------------------------------------
Maximum Height
of Draw 500m
--------------- -------------------------------------------
Minimum Width 150m
--------------- -------------------------------------------
Rates
-------------------------------------------
Reduced from 300m per year in the
previous study based on recent experience
Decline Vertical 240m per of developing a twin access/conveyor
Advance year decline
--------------- -------------------------------------------
Footprint Access/Setup Set-up footprint, before starting
time 1 year undercutting
--------------- -------------------------------------------
BC Undercut 6,000m(2) Typical scheduled undercut rate for
Rate per month a large block caving project
--------------- -------------------------------------------
BC Rate of Vertical Up to 70m Typical height of draw rate for a
Draw per year block caving project.
--------------- -------------------------------------------
SLC Sink Rate 70m per year Mining Plus Estimate
--------------- -------------------------------------------
SLC Lateral 180m per Mining Plus Estimate, equivalent to
Advance year 500t/d/drawpoint (15m spacing)
--------------- -------------------------------------------
Summary of Revenue Parameters
Cu Au
------------------------ -----------
Metal Price $3/lb $1,250/oz
----------- ----------
Metallurgical Recovery 94% 74%
----------- ----------
31.103
Metal units 2,205 lb/t g/oz
----------- ----------
Equivalent Factor %
to g/t 0.478
----------- ----------
Concentrate Grade 30%
----------- ----------
Concentrate Shipping $30/con
Cost tonne
----------- ----------
$70/con
Smelting Cost tonne
----------- ----------
as a % of gross value 5%
----------- ----------
Smelter Deductions 5% 2%
----------- ----------
$0.07/lb $1.5/oz
Refining Charge metal metal
----------- ----------
as a % of gross value 2% 0.1%
----------- ----------
Gross value per grade
unit (% or g/t) $66.2 $40.2
----------- ----------
NSR per milled grade
unit (% or g/t) $58.1 $39.3
----------- ----------
NSR per mined grade
unit (% or g/t) $54.6 $29.1
----------- ----------
Royalty and tax excluded
A full financial analysis was not undertaken and, due to the
current uncertainty surrounding the Philippine tax/royalty rates,
tax and royalty were not included in the comparison. Inclusion of
tax and royalty would reduce the NPV and IRR, but it is expected
that the relative economic merits of each scenario would not change
significantly.
Recommendation
Mining Plus recommends that the respective options are studied
in more detail as part of a future multi-disciplinary
pre-feasibility study to include updating of the parameters/cost
data which were taken from the 2011 conceptual study.
Historic Resource Estimate
The study was based on a JORC (2004) resource estimate from
Snowden reported in July 2009 as set out below:
JORC (2004) Tonnes (Mt) Copper (CU)% Gold (Au) Contained Contained
Resource g/t Copper Tonnes Gold Ounces
Category (Million) (Million)
------------ ------------- ---------- --------------- -------------
Indicated 221.6 0.49 0.52 1.10 3.7
------------- ------------ ------------- ---------- --------------- -------------
Inferred 36.2 0.44 0.48 0.20 0.6
------------- ------------ ------------- ---------- --------------- -------------
The model also included mineralisation that sits outside of the
stated JORC resources presented within the geological block
model.
Data room and access to full report
Full access to the Company's established data room on its
Mankayan Project and the full Mining Plus study can be granted to
interested industrial or professional groups on application to the
Company: lread@bezantresources.com.
Dr Evan Kirby has reviewed and approved the technical
information contained within this announcement in his capacity as a
qualified person as required under the AIM rules. Dr Kirby is a
Non-Executive Director of the Company and a Member of the
Australian Institute of Mining and Metallurgy.
For further information, please contact:
Bezant Resources Plc Tel: +44 (0)20 3289
Laurence Read 9923
Chief Executive Officer
Colin Bird
Executive Chairman
Strand Hanson Limited (Nomad) Tel: +44 (0)20 7409
James Harris / Matthew Chandler / James 3494
Dance
Novum Securities Limited (Broker) Tel: +44 (0)20 7399
Jon Belliss 9400
or visit http://www.bezantresources.com
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014.
Notes to Editors:
Mining Plus
Mining Plus (www.mining-plus.com) is an international mining
services provider specialising in geology, mining engineering and
geotechnical engineering, covering a broad range of mineral
commodities and project types, enhanced by strategic alliances in
other core disciplines. Mining Plus has advised on over 1,850
projects for 630 customers in 40 countries over a range of
different commodities.
Bezant's Copper-Gold Project Portfolio
The Mankayan Project, Philippines
The deposit is principally hosted by a 900m long by 400m wide
north-south striking intrusive stock complex composed largely of
quartz diorite porphyry. The igneous rocks have intruded a thick
sequence of andesitic volcanics and a basement of biotitequartz
schists and mafic flows. The size, grade and mineralogy of the
Guinaoang deposit are typical of porphyry copper deposits.
From October 2011 to January 2014, the Mankayan Project was held
under option by Gold Fields Netherlands Services BV ("Gold Fields")
for a total exercise price of US$70m (of which US$9.5m was received
by the Company by way of initial non-refundable option payments).
The option ultimately lapsed, as Gold Fields began new operations
in Australia, and all exploration data, including the results of
the high-grade BR 60 drill hole completed by Gold Field during the
option period, was transferred to Bezant.
Eureka Project, Argentina
The Eureka project covers in excess of 10 thousand hectares and
is located in the north-west corner of the Jujuy province in
northern Argentina, adjacent to the border with Bolivia and at an
altitude of approximately 3,600 to 4,400 metres (above sea level).
The tenements are situated within the Argentinean portion of the
regionally extensive Bolivian-Argentinean Tertiary Belt
(Puna-Altiplano high-plateau) and there are two major metallogenic
associations present.
The property hosts the historical "Eureka Mine", which had been
exploited by the Jesuits since the 17th century, with an artificial
dam having been constructed for washing the gold extracted. Further
industrial-style gold exploitation commenced in circa 1885
(Novarese 1893), alongside exploitation of the "La Perdida" (now
called "El Torno") and the "San Francisco" mines. The most recent
copper extraction occurred in circa 1949 and continued in sporadic
form to 1975 (Coira et al 2002). The latest exploration activities
in the area (1980-2001), were carried out by Mantos Blancos,
Paramount Ventures and Finances and most recently, by Minera
Penoles and Codelco. The Company is interested in 11 exploration
licences covering the tenements.
Historic exploration resulted in non-compliant resource
estimates from Minera Penoles in the order of 62 million tonnes
grading at approximately 1% for copper (620,000 tonnes of copper)
and from Mantos Blancos, of 600,000 tonnes grading at approximately
2.7 g/t of gold (52,000 ounces of gold).
The Company is currently developing and pursuing potential Joint
Venture options for the project.
This information is provided by RNS, the news service of the
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contact rns@lseg.com or visit www.rns.com.
END
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