TIDMEUZ
RNS Number : 6499F
Europa Metals Ltd
18 November 2020
18 November 2020
Europa Metals Ltd
("Europa Metals", the "Company" or the "Group") (AIM, AltX:
EUZ)
US$156m NPV and 31.3% IRR with a 49% Operating Margin
Demonstrated from Independent Preliminary Economic Study Toral Pb,
Zn & Ag Project, Spain
Europa Metals, the European focused lead-zinc and silver
developer, is pleased to announce results from an independent
Preliminary Economic Study (the "Study") in respect of its wholly
owned Toral lead, zinc and silver project ("Toral" or the "Toral
Project"), located in the region of Castilla y León, north-west
Spain. The Study has, inter alia, updated the economics from the
previous Scoping Study undertaken by Addison Mining Services
Limited ("AMS") in late 2018 (the "2018 Scoping Study"), and
incorporated the positive findings generated from the workstreams
conducted by the Company and its consultants over the last 12-18
months, including the results from ore-sorting undertaken by Bara
Consulting ("Bara"), metallurgical testwork by Wardell Armstrong
International, as well as reflecting a change in the selected
future mining method and a general improvement in metal prices
since 2018.
Highlights :
-- US$156m NPV at an 8% discount rate
-- 31.3% IRR
-- 17Mt @ 6.7% ZnEq (including Pb credits) resource (JORC 2012)
including indicated resource of 3.8Mt @ 8.1% ZnEq (including Pb and
Ag credits) - 4% cut off grade
-- Sub-Level Longhole Stoping ("SLOS") mining method selected
-- 700k tonnes per annum operation with a 7.6% ZnEq mined grade:
o SLOS with ramp/raise-bore shaft access;
o 10% dilution;
o 3.5m average mined mineralised widths
-- Processing comprises an ore sorting front-end using X-ray
Transmission ("XRT") followed by grinding and flotation
-- Grade/recovery: 3.3% Pb/87%; 4.2% Zn/86%; 26.7g/t Ag/85%
-- US$79m upfront Capex
-- 3-year trailing average metals prices of US$2,668/t for zinc,
US$2,099/t for lead and US$16.5/oz for silver
-- US$963m Revenue over Life of Mine ("LOM")
-- US$477m Opex over LOM
-- US$471m EBITDA over LOM
-- 49% Operating Margin (US$63.56/t all-in cost)
-- 12-year LOM scenario
-- Conceptual LOM production schedule incorporates 100% of the
existing Indicated resource in the early years, ending with
elevated zinc grades in the deep Inferred zones
-- Deposit open to the east and at depth for potential
production expansion during the mine's life
-- Project's 3-year Investigation Permit renewed until 15
November 2023 (as announced previously on 12 November 2020)
Key economic and production factors as summarised within the
Study are as follows :
-- Significant production expansion over the 2018 Scoping Study,
with enhanced economics derived from a change in the mining method,
increased ROM, the addition of ore sorting, and increased
understanding of the metallurgical characteristics of the
project
-- Production profile demonstrates a very robust project capable
of producing high grade saleable concentrates within an EU
jurisdiction
-- Conceptual production schedule terminates in elevated zinc
grades within the current Inferred resource areas that remain open
at depth as well as to the east. Such open areas have not yet been
subject to structured exploration
-- Bara recommends moving to the Pre-Feasibility Study ("PFS")
stage based on the current data, although notes that the mine plan
outlined in the Study would accommodate further production
expansion if further resource targets were successfully developed
prior to, or during, production
Outlook
The robust updated economics (+/- 30%) for Toral are well
supported by a global supply situation for lead and zinc, which the
Company's Board believes will put such higher grade potential
producers at a distinct commercial advantage.
Aided by the drawdown of the initial tranche ( EUR163,380) of
the recently announced innovation grant from the Centre for the
Development of Industrial Technology (CDTI), the Company will now
progress work streams towards a PFS and ultimately seek to make an
application for a mining licence, including:
-- Additional resource drilling to:
o Convert additional Inferred resources to the Indicated
category;
o Increase its knowledge base with respect to the potential
lower-grade mineralisation zones to potentially bring them into the
mining inventory through XRT ore-sorting; and
o Geometallurgical drilling
-- Further metallurgical testwork on the current ore types identified
-- Geotechnical assessment across all aspects of the project:
o Rock mechanics
o Waste management
o Plant location
-- Hydrogeological testwork:
o Drilling of a further two holes for piezometers
o Pump testing
o Water monitoring
-- Environmental assessment:
o Continuation of baseline studies
o Increase data gathering
-- Social/community aspects:
o Build on existing strong relationships with the local
community
Such workstreams will help determine the most value accretive
ways to develop the Toral project towards production.
Europa Metals will host a webinar, for analysts and industry
specialists , further to the release of this announcement, on
Tuesday, 24 November 2020 at 3.00 p.m. London time; 4.00 p.m.
CET.
The webinar will include a question and answer session following
a presentation. To access this event, please email
europametals@tavistock.co.uk no later than two hours prior to the
scheduled start time.
A recording of the webinar and copy of the presentation, will be
made available on the Company's website at www.europametals.com
following the event.
Commenting today, Laurence Read, CEO of Europa Metals, said
:
"Today's economic report proposes a significantly expanded
potential mining operation at the Toral lead, zinc and silver
project with a 700k tonnes per annum production rate over a 12-year
mine life, within a highly robust operating regime, with a
projected 49% operating margin. With a mining grade of 7.6% zinc
equivalent and as a potential high margin operator, Toral has the
scope to generate over US$470m EBITDA from US$963m of revenue over
the life of mine from upfront capex of US$79m and estimated payback
in year 4.
"Having recently secured a new three-year Investigation Permit
for Toral and with today's updated economics attributing a US$156m
NPV and a 31.3% IRR, the Board shall progress Europa's strategy to
secure the most value-accretive pathway to advance the project.
"With work towards a PFS for Toral now underway, we look forward
to updating the market in due course on our hydrogeology programme,
planned resource and metallurgical drilling and geotechnical
work.
"We are also pleased to confirm that the initial EUR163,380
tranche of the CDTI grant has been drawn down and received by the
Company and look forward to contributing to our technology
partnership with SPI drilling and Salamanca University during the
forthcoming drill campaign. "
Commenting today, Myles Campion, Chairman of Europa Metals, said
:
" Today's release of the new economic numbers is a culmination
of two years' work covering many aspects of the Toral deposit. All
necessary programmes needed to move the project towards a PFS have
been completed and we now look forward to advancing all these
studies to put the Company in the best position to assess all
options. "
For further information on the Company, please visit
www.europametals.com or contact:
Europa Metals Ltd
Dan Smith, Non-Executive Director and Company Secretary
(Australia)
T: +61 417 978 955
Laurence Read, CEO (UK)
T: +44 (0)20 3289 9923
Linkedin: Europa Metals ltd
Twitter: @ltdeuropa
Vox: Europametals
Strand Hanson Limited (Nominated Adviser)
Rory Murphy/Matthew Chandler
T: +44 (0)20 7409 3494
Tavistock (PR and IR)
Emily Fenton, Barney Hayward, Oliver Lamb
T: +44 (0)20 7920 3150 / EuropaMetals@Tavistock.co.uk
Turner Pope Investments (TPI) Limited (Broker)
Andy Thacker
T: +44 (0)20 3657 0050
Sasfin Capital Proprietary Limited (a member of the Sasfin
group)
Sharon Owens
T (direct): +27 11 809 7762
Tavistock (PR)
Emily Moss/ Oliver Lamb
T: +44 (0) 207 920 3150 / +44 (0)7920 100 161
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.
Summary of the Study
The Study was prepared by Bara Consulting ("Bara") and Addison
Mining Services Limited ("AMS") for Europa Metals. Since the
compilation of the initial scoping study in 2018 significant
further work programmes have been undertaken on the Toral Project
including diamond drilling, metallurgical sampling and testwork.
Accordingly, Bara and AMS were commissioned to produce this latest
technical report to, inter alia, assess an updated mine design,
production scheduling, process design and cost estimation, market
studies and financial modelling and thereby combine the findings to
date to determine revised mining and metallurgical parameters for
the project.
There have been several notable changes versus the 2018 Scoping
Study, including adoption of a revised mining method of sub-level
longhole stoping (SLOS), and the introduction of ore sorting to the
flowsheet in order to improve metallurgical response and reduce
costs.
The Study presents the results of the updated scoping study,
including details on mine design, process design, and updated
financial parameters of the Project.
Key economic and production factors as summarised in the report
are as follows:
-- Significant improvement from the 2018 Scoping Study with
enhanced economics derived from the change in the mining method,
increased ROM, addition of ore sorting and increased understanding
of the metallurgical characteristics of the project;
-- Production profile demonstrates a very robust project capable
of producing high-grade saleable concentrates within an EU
jurisdiction;
-- Conceptual production schedule terminates in elevated zinc
grades within the current Inferred resource areas that remain open
at depth as well as to the east. Such areas have not yet been
subject to structured exploration; and
-- Bara recommends moving to the PFS stage based on the current
data, although notes that the mine plan outlined in the Study would
accommodate further production expansion if further resource
targets were successfully developed prior to, or during,
production.
Comparison of the key parameters from the 2018 Scoping Study
with the equivalent 2020 Study's parameters are presented in Table
1 below.
Table 1 : Comparison of 2020 and 2018 Scoping Study Key
Parameters
2020 2018
Resource Indicated Tonnes 3.8m -
========================= ======================= ======================
Inferred Tonnes 13m 16m
====================================== ======================= ======================
Total Tonnes 17m 16m
====================================== ======================= ======================
Av. ZnEq.% 7.3 7.5
====================================== ======================= ======================
Av. Zn% 4.2 3.9
====================================== ======================= ======================
Av. Pb% 3 3.1
====================================== ======================= ======================
Av. Ag g/t 24 24
====================================== ======================= ======================
Mining Rate tpa 700,000 450,000
========================= ======================= ======================
Grade ZnEq% 7.6% 7.5%
====================================== ======================= ======================
Method SLOS Cut&Fill
========================= ======================= ======================
Approach Contractor Owner
========================= ======================= ======================
Cost US$36/t US$36/t
========================= ======================= ======================
LOM 12 years 15 years
========================= ======================= ======================
Metallurgy Process Sorting+Flotation Flotation
========================= ======================= ======================
Recovery (Average) 85% Zn, 87% Pb, 86% Ag 93% Zn, 89% Pb, 80%Ag
========================= ======================= ======================
Cost US$22/t US$25/t
========================= ======================= ======================
Capex Mine US$86m US$46m
========================= ======================= ======================
Plant US$30m US$33m
========================= ======================= ======================
Infrastructure US$4m US$5m
========================= ======================= ======================
Other US$11m -
========================= ======================= ======================
LOM Capex US$131m (Y1-12) US$159m (Y1-15)
========================= ======================= ======================
Upfront (to production) US$79m US$94m
========================= ======================= ======================
Financials NPV US$156m US$110m
========================= ======================= ======================
IRR 31.3% 24.4%
====================================== ======================= ======================
Payback Year 4 6
====================================== ======================= ======================
Scoping-level economic analysis of the project is presented in
Table 2 below based on the parameters determined in the Study.
Inputs to the economic analysis include the change in mining
method, the updated mining schedule, preliminary metallurgical
parameters including ore sorting and flotation responses and
updated capex and opex estimates. Three-year trailing average metal
prices of US$2,668/t for zinc, US$2,099/t for lead and US$16.5/oz
for silver were used for calculation of the cut-off grade and
revenue inputs.
Table 2 : Toral Project's Key Financial Metrics
Total Revenue $ 962,082,494 USD
=============== ======
Operating Cost $ 477,642,087 USD
=============== ======
EBITDA $ 470,994,169 USD
=============== ======
LOM Capex $ 130,000,000 USD
=============== ======
Net Cashflow $ 340,193,508 USD
=============== ======
Pre-Tax NPV (8%) $ 156,272,268 USD
=============== ======
Pre-Tax IRR 31.3 %
=============== ======
Tax rate 0.0 %
=============== ======
Post-Tax NPV (8%) $ 156,272,268 USD
=============== ======
Post-Tax IRR 31.3 %
=============== ======
Operating Margin 48.9 %
=============== ======
Payback Period 5 Years
=============== ======
Peak Funding Requirement $ 73,030,551 USD
=============== ======
http://www.rns-pdf.londonstockexchange.com/rns/6499F_1-2020-11-17.pdf
Upfront Capex for the project is estimated at US$79m (and a
US$73m peak funding requirement) with an IRR of 31.3% and NPV of
US$156m at a discount rate of 8%. The operating margin, indicating
a very robust project, is 49%. Payback is calculated as occurring
in year 4, however it must be noted that this is extended somewhat
by the low mining rate and low grades in the early years, and
belied by higher rates and grades in the intermediate years of the
project.
NPV at US$156m is significantly improved over the 2018 Scoping
Study equivalent figure of US$110m, with the IRR also improved
markedly at 31.3% versus 24.4% in the 2018 Scoping Study. The
improvements are primarily the result of accessing shallower
resources with consequently a shorter time to production, mining
rate optimisation supported by the move to SLOS, as well as capital
and operating cost optimisation afforded by the adoption of sorting
to reject barren waste ahead of more cost-intensive grinding and
flotation stages.
One of the major contributors to the enhanced project economics
is the capital efficiencies achieved from both production scale and
adaptions to the mining process as outlined within the section
below. The 2018 Scoping Study modelled a scenario of US$94m upfront
Capex to production, with payback in Year 6 and US$159m LOM total
Capex. The revised 2020 economic model reduces the upfront capital
required to production to US$79m thereby allowing for payback in
year 4 and a reduced US$131m LOM total capex.
Mining
Further to the findings of a geotechnical study completed in
early 2020, the previous Mechanised Cut and Fill (MCAF) mining
method was reviewed. Sub-Level Longhole Stoping (SLOS) has now been
determined as being the preferred mining option which affords a
more cost/time efficient method for underground mining. While the
preferred mining method in the 2018 Scoping Study was determined to
be cut and fill based on the extant data on mining widths and rock
strength, more detailed data on ore zone widths, as well as
geotechnical sampling, testwork and analysis conducted since then
supports a move to adopt the higher productivity and lower cost
SLOS method.
http://www.rns-pdf.londonstockexchange.com/rns/6499F_2-2020-11-17.pdf
Access to the mine will be by both ramp (labour, equipment,
rock) and vertical shaft (rock hoisting only). During the initial
years of the mine life, access will be by ramp developed
conventionally from a boxcut on surface providing access for all
labour, equipment and ore haulage from the upper levels to
approximately 450mRL. A four metre shaft for rock hoisting only, is
then planned from a pilot raise-bore over 18 months from Year 4.
Such a shaft will be equipped with a 700kW double drum hoist for
rock hoisting in 2 compartments only. Ramp development will then
continue to 900m RL from Year 4 until the end of life of mine. 3.5m
x 3.5m sublevel drifts will be developed laterally from the ramp at
20 metre intervals in order to access stopes for mining.
http://www.rns-pdf.londonstockexchange.com/rns/6499F_3-2020-11-17.pdf
Table 3 : Summary Mining Schedule (Years)
Key observations:
-- Payback in Year 4;
-- Year 12 ends in high grade zinc; and
-- Resource expansion potential exists at depth and along strike to the east.
Totals 0 1 2 3 4 5 6 7 8 9 10 11 12
Development
tonnes
('000s) 747 - 9 37 119 84 99 79 145 118 57 - - -
======= === ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
LHOS
tonnes
('000's) 6,459 - 129 321 504 615 601 622 556 583 644 698 700 487
======= === ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Total
Ore
tonnes
('000's) 7,206 - 138 358 623 699 700 701 701 701 701 698 700 487
======= === ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Waste
tonnes
('000's) 3,035 89 178 334 401 405 378 393 364 352 140 - - -
======= === ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
RoM
Content
======= === ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Zn
tonnes
('000's) 301 - 3.2 8.5 18.5 27.8 29.5 28.9 31.0 33.8 28.3 31.0 33.1 27.6
======= === ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Pb
tonnes
('000's) 241 - 2.9 8.5 24.6 30.4 25.7 24.8 22.5 24.0 24.7 23.6 17,6 11.9
======= === ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Ag
Oz
('000's) 6,152 - 80 267 648 719 583 554 594 618 641 621 492 335
======= === ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
RoM
Content
======= === ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Zn% 4.2 - 2.4 2.4 3.0 4.0 4.2 4.1 4.4 4.8 4.0 4.4 4.7 5.7
======= === ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Pb% 3.3 - 2.1 2.4 4.0 4.4 3.7 3.5 3.2 3.4 3.5 3.4 2.5 2.4
======= === ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Ag
g/t 26.6 - 18.1 23.3 32.4 32.0 25.9 24.6 26.4 27.4 28.5 27.7 21.8 21.4
------------- ------- --- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
http://www.rns-pdf.londonstockexchange.com/rns/6499F_4-2020-11-17.pdf
Metallurgy and Process Design
Updates to the metallurgical approach and process design were
driven by a desire to improve the economics of the narrower and
lower grade areas in the upper zones of the resource. Ore sorting
delivers several benefits to projects, including reducing capital
costs for the same metal production, increasing metal production
for the same capital cost, or reducing the overall costs of
production. This proven method of pre-concentration was considered
key to increasing the value of material mined from such zones prior
to subjecting it to conventional flotation.
Two low-grade samples, TOD-024 and TOD-025L, were subjected to
sorting testwork at TOMRA GmbH a leading provider of ore sorting
technology. Overall, the sorting results for both samples were
excellent, with between 45%-50% of the mass rejected at 98% Pb
recovery, 96% Zn recovery and 87% Ag recovery. Based on these
results it was decided to adopt sorting as a pre-flotation stage
for all material generated in the Toral mine plan in order to fully
exploit the benefit of this technology.
Grinding and flotation testwork including grind calibrations,
bond work index determination, and froth flotation was then
undertaken on two fresh samples, TOD-023 and TOD-025H, as well as
on the products of the abovementioned sorting testwork undertaken
on TOD-024 and TOD-025L.
The high-grade TOD-025H met sample was also subjected to a
programme comprising open circuit rougher and cleaner flotation
tests. Again, test conditions were optimised for residence time and
reagent dosage. TOD-025H demonstrated zinc recovery of 87.7% to a
zinc concentrate grading 60.0% Zn, with lead and silver recoveries
of 97.4% Pb and 87.8% Ag to a lead-silver concentrate grading 72.3%
Pb and 512 g/t Ag respectively. While test results in terms of
concentrate grade and recovery to concentrate can be attributed in
part to high feed grades in the test sample, the test still
demonstrated the potential for excellent recovery of lead, silver
and zinc to a concentrate assaying lead and zinc values
significantly above those typically found in the market for these
ore types.
The TOD-024 low-grade silicified sample was subjected to a total
of three rougher flotation tests to investigate flotation
performance. While this shallower, silicified ore type was not
considered in the 2018 Scoping Study, the sorting testwork
undertaken suggests that this ore type may indeed be amenable to
beneficiation by sorting plus flotation of the sorted products.
Flotation returned recoveries of 72% Pb, 84% Zn and 80% Ag to a
combined concentrate grading 15.6% Pb, 18.4% Zn and 158 g/t Ag.
The TOD-023 low-grade fresh sample was subjected to
characterisation work including detailed mineralogy, comminution
testwork, as well as open and closed-circuit flotation tests to
investigate flotation performance. Zinc recoveries of 77.0% to a
zinc concentrate grading 59.1% Zn were achieved, with lead and
silver recoveries of 83.7% and 87.1% to a lead concentrate grading
60.0% Pb and 1,350g/t Ag respectively. The sample demonstrated
acceptable recoveries to readily marketable lead-silver and zinc
concentrates, with the possibility of higher recoveries for
material free of the silicate and carbonate alteration that was
observed. The high grade of silver in the lead concentrate was
considered to be particularly encouraging. Further work including
metallurgical optimisation to recover non sulphide species, as well
as grade/recovery optimisation to Pb and Zn concentrates is
planned.
The results are considered to fairly reflect the average grade
of the resource in terms of lead, zinc and silver. Overall, the
results indicate average lead, zinc and silver recoveries of 87%,
85% and 85% respectively to a marketable concentrate grading on
average >50% Zn, >60% Pb and >600 g/t Ag. A block
flowsheet for the selected process is shown in Figure 7.
http://www.rns-pdf.londonstockexchange.com/rns/6499F_5-2020-11-17.pdf
Mineral Resource Estimate
The latest mineral resource estimate (as of 30 October 2020) for
the Toral lead-zinc-silver deposit reported in accordance with the
JORC code (2012 edition) above a cut-off grade of 4% Zn equivalent
(including Pb and Ag credits) comprises:
-- An Indicated resource of approximately 3.8Mt @ 8.1% Zn
Equivalent (including Pb credits), 4.7% Zn, 3.9% Pb and 30g/t Ag,
including:
o 180,000 tonnes of zinc, 150,000 tonnes of lead and 3.7 million
ounces of silver.
-- An Inferred resource of approximately 13Mt @ 6.4% Zn
Equivalent (including Pb credits), 4% Zn, 2.7% Pb and 23 g/t Ag,
including:
o 540,000 tonnes of zinc, 360,000 tonnes of lead and 10 million
ounces of silver.
-- A total resource of approximately 17Mt @ 6.7% Zn Equivalent
(including Pb credits), 4.2% Zn, 3% Pb and 24 g/t Ag,
including:
o 720,000 tonnes of zinc, 510,000 tonnes of lead and 14 million
ounces of silver.
http://www.rns-pdf.londonstockexchange.com/rns/6499F_6-2020-11-17.pdf
The estimation of metal equivalent values used updated inputs
from metallurgical test work and modifying factors identified
during the 2020 updated Study. These values differ slightly from
the values used in the previous Mineral Resource Estimate of 12
August 2020, however the use of the updated parameters has not
resulted in any material change.
It is the Company's opinion that all elements included in the
metal equivalent calculation (Zn, Pb and Ag) have a reasonable
potential to be recovered and sold.
The August 2020 resource update identified potentially economic
mineralisation ranging from surface to approximately 1,100m below
surface. The latest block model currently extends for a strike
length of 3,600m and is still open to the east and west along
strike and also at depth where it has not yet been closed off.
The Inferred and Indicated resource for the Pb-Zn-Ag
mineralisation located on the Toral Project's licence area
estimated at various cut-offs is shown in Table 4 below.
Table 4 : Summary of mineral resources for the Toral property
reported at a 4.0% Zn equivalent cut-off grade (including Pb and Ag
credits) and estimated grade and tonnages at the various cut-off
grades . Figures are rounded to reflect the accuracy of the
estimations .
Cut-Off Tonnes Density Zn_Eq Zn Eq Zn % Pb % Ag g/t Contained Contained Ag Troy Oz
Zn Eq (Millions) (Pb)% (PbAg)% Zn Tonnes Pb Tonnes (Millions)
(PbAg)% (000s) (000s)
Indicated
-----------------------------------------------------------------------------------------------------------
6 2.8 2.9 9.3 10 5.4 4.5 34 150 130 3.1
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
5 3.3 2.9 8.7 9.4 5 4.2 32 170 140 3.4
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
4 3.8 2.9 8.1 8.8 4.7 3.9 30 180 150 3.7
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
3 4.1 2.9 7.7 8.4 4.4 3.8 29 180 150 3.8
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
Inferred
-----------------------------------------------------------------------------------------------------------
6 8 2.9 7.6 8.3 4.7 3.4 29 360 260 7.2
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
5 10 2.9 7 7.6 4.4 3 26 450 310 8.6
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
4 13 2.9 6.4 6.9 4 2.7 23 540 360 10
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
3 17 2.9 5.8 6.2 3.7 2.4 20 610 400 11
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
Total
-----------------------------------------------------------------------------------------------------------
6 11 2.9 8.1 8.8 4.9 3.7 30 510 390 10
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
5 14 2.9 7.4 8 4.5 3.3 27 620 450 12
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
4 17 2.9 6.7 7.3 4.2 3 24 720 510 14
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
3 21 2.9 6.2 6.7 3.8 2.7 22 790 550 15
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
Transitional Oxide Material
-----------------------------------------------------------------------------------------------------------
4 3 2.9 5.7 5.1 2.6 2.9 27 75 83 2.5
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
Unsilicified Fresh Rock
-----------------------------------------------------------------------------------------------------------
4 14 2.9 7.6 7.1 4.5 3 24 640 430 11
----------- -------- ---------- ---------- ----- ----- ------- ---------- ---------- -----------
Notes:
1. No mineral reserve calculations have been undertaken. Mineral
resources that are not mineral reserves do not have demonstrated
economic viability.
2. Numbers are rounded to reflect the fact that an Estimate of
Resources is being reported. Rounding of numbers may result in
differences in calculated totals and averages. All tonnes are
metric tonnes.
3. Zn equivalent calculations were based on 3-year trailing
average price statistics obtained from the London Metal Exchange
and London Bullion Market Association giving an average Zn price of
US$2,668/t, Pb price of US$2,099/t and Ag price of US$16.5/Oz.
Recovery and selling factors were incorporated into the calculation
of Zn Eq values. It is the Company's opinion that all the elements
included in the metal equivalents calculation (zinc, lead and
silver) have a reasonable potential to be recovered and sold.
4. Zn Eq (PbAg)% is the calculated Zn equivalent incorporating
silver credits as well as lead and is the parameter used to define
the cut-off grade used for reporting resources (Zn Eq (PbAg)% = Zn
+ Pb*0.877 + Ag*0.022).
5. Zn Eq is the calculated Zn equivalent using lead credits and
does not include silver credits (Zn Eq = Zn + Pb*0.877).
6. The Mineral Resource Estimate set out above for the zinc,
lead and silver mineralisation in the Toral project area is based
on a 3D geologic model and wireframe restricted block model that
integrated the exploration work on the Toral project up to 21
January 2020. The block model used uniform cell size of 25x10x25m
to best suit the orientation of the mineralisation and sample
spacing. The block model was rotated by 20deg in plan view to best
match the trend of mineralisation. Sub cells were applied to better
fit the wireframe solid models and preserve accurate volume as much
as possible. Cells were interpolated at the parent block scale
using an Ordinary Kriging.
7. Top cuts of 125g/t Ag were applied to the data. Zn and Pb were cut to 25%.
8. The Indicated and Inferred mineral resource category for the
Toral zinc-lead-silver project set out in Table 4 (at cut-off
grades >4% Zn Equivalent) comply with the resource definitions
as described in the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves. The JORC Code, 2012
Edition. Prepared by: The Joint Ore Reserves Committee of The
Australasian Institute of Mining and Metallurgy, Australian
Institute of Geoscientists and Minerals Council of Australia
(JORC).
9. The tonnes and grades reported at a cut-off grade of 3% Zn
equivalent are below the economic cut-off grade of 4% and as such
should not be considered mineral resources, they are shown here for
comparison purposes only.
Infrastructure
The Toral Project is located approximately 400km northwest of
Madrid, near Ponferrada in the province of León. The city of León,
the capital of the province, is around 140km to the east by road.
The Toral exploration licence 15.199 referred to as a Permiso de
Investigation (P.I.) covers an area of 20.29km(2), centred on
co-ordinates 682467E, 4708159N. The minerals for investigation are
lead, zinc, silver and limestone. The current licence period
extends to November 2023 and is held by Europa Metals Iberia, S.L.
which is wholly owned by Europa Metals Ltd.
The distance from León to Ponferrada is approximately 113km via
motorway (AP-71) and dual-carriageway (A-6). The Toral Project
licence is well serviced by the sealed roads A-6 and N-120 from
Ponferrada. Connections by rail are serviced by the nearby station
at Toral de los Vados, with access to the Asturiana lead-zinc
smelter 200km north by rail via León, and HT power is available
along the road alignment.
Underground mine infrastructure will include ventilation,
dewatering, power and communications. Power will be provided from a
main substation located at the portal, and reticulated underground
via the service raises at 3,300V with section transformers
3300V/525V for use on ventilation and pumping equipment in the main
and sub-levels. A charging station, planned to be moved every year,
will be located at the intersection of the main sub-level drive and
the ramp for the re-charging of load, haul, dump machines (LHDs).
Recharging of other electric fleet (trucks, drill rigs, utility
vehicles) will be via a main charging station located at the
surface mine workshop. Communications and control will be by
pervasive underground WLAN backbone with WiFi in operating
sections. A mine control room is planned at the portal, connected
to the main control room via WLAN.
Main structures include the hoist headgear, portal
office/workshop, and plant building/workshop. Dry-stacking of
tailings is anticipated, with inherent maximum recirculation of
water to the process.
Environmental
Desktop environmental studies, as well as initial biodiversity,
geochemical, water and land classification surveys have now been
completed. Land-use designation modification, and potential
acquisition to suit project development parameters, has also been
initially considered. Further environmental and social items,
including permitting requirements, surface and groundwater impacts,
archaeological aspects and occupational health and safety aspects
were also reviewed. A review of the 2018 closure estimate
confirming adequate closure provisions of US$6m in Year 12 was also
conducted. Recommendations for further ongoing work towards a PFS
include: comprehensive weather, traffic, water, soil and air
quality baselining; stakeholder surveys and consultations; visual
impact assessments; and non-mining waste generation assessments.
The development of an Emergency Response plan is also
recommended.
Conclusions
The overall project economics have improved versus the 2018
Scoping Study. The update shows a revised NPV of US$156m with an
IRR of 31.3% based on all-in cash operating costs of US$66/t, total
capex of US$130m including a US$5m royalty and US$6m closure cost,
using 3-year trailing average metal prices of US$2,668/t for zinc,
US$2,099/t for lead and US$16.5/oz for silver. An operating margin
of 49% describes a very robust project.
In addition, further upside potential has been identified
relating to the following:
-- Extensive and shallow high-grade silicified material was
excluded from the mine plan on account of insufficient
metallurgical support for the production of saleable concentrate
from such material. However, only low-grade instances of this
material have thus far been tested, and with additional sampling
and testwork on high grade instances of silicified material it is
deemed likely that substantial additional inventory could be added
early in the mine life;
-- The project economics are fundamentally constrained by
several factors, including the location and depth of the main
portion of high-grade mineralisation relative to the point of
access on surface and the relatively narrow and limited width of
upper areas accessed early in the present mine plan. Alternative
ramp development approaches, including tunnel boring machines
(TBM), while representing increased and earlier capex versus the
current plan, could access these deeper high-grade resources
earlier and therefore significantly improve project economics.
Increased vertical rate of advance would also assist in increasing
the planned mining rate in excess of the current 700,000 tpa, again
improving project economics; and
-- The deposit remains extensive along strike, as well as
extensive at depth beyond the extents of the current conceptual
production schedule. Additionally, grades and continuity of the
orebody at the current limit of drilling data suggest that deeper
drilling, although capital intensive and not currently planned,
could potentially define further deep high-grade resources which
could potentially profitably extend the current conceptual mine
life.
Recommendations from Bara and AMS
The Study describes a robust, high value project with
significant upside potential, including extension along strike and
depth of the current resource and substantive possible optimisation
of both the mine design and metallurgical design. It is therefore
recommended to progress towards a PFS for the project. Substantial
further work is required in order to successfully move the project
towards the PFS stage:
-- Infill and step-out drilling in order to provide Indicated
resources sufficient to support at a minimum the mine plan
described in the report;
-- Targeted drilling to better define and develop near surface
mineralisation and shallow extensions to the conceptual production
schedule;
-- Improved interpretation of the fault models, with an aim of
generating inclined fault planes and correlation of surface fault
expressions with drillhole observations;
-- Further deposit characterisation and mineralogical studies to
confirm the number and characteristics of ore types to be sampled
and tested for PFS metallurgy;
-- An advanced metallurgical sampling and test programme
including production of LOM composites of all principal ore types
and testing of those composites for both sorting and flotation
response;
-- Confirmation of levels of deleterious elements in feed ore and concentrates;
-- Advanced geotechnical work including confirmatory drilling,
logging, sampling and testwork in zones of major infrastructure
such as ramps and shafts, as well as additional drilling, logging,
sampling and testwork within the orezone in order to complete
detailed stope design;
-- Advanced geohydrological work including drilling, logging and
air-lift tests to determine aquifer extents, and to support
groundwater modelling for inflow determination and dewatering
design;
-- Complementary resource drilling programmes, to increase
confidence in extensions along strike as well as, if deemed
economically feasible, to define potential extension at depth;
and
-- Commencement of comprehensive weather, traffic, water, soil
and air quality baselining; stakeholder surveys and consultations;
visual impact assessments; and non-mining waste generation
assessments.
Competent Person's Statement
The Study for Toral was prepared by Dr A. Bamber, PhD. P.Eng.,
MCIM, Principal Process Engineer for Bara Consulting; Mr. C. Brown
B.Sc. Pr. Eng., FSAIMM, Principal Mining Engineer for Bara
Consulting; Mr J.N. Hogg, MSc. MAIG Principal Geologist for AMS; Mr
R. J. Siddle, MSc, MAIG Senior Resource Geologist for AMS; and Dr
S. Struthers CEnv, FIMMM, Associate Environmental Consultant for
Bara Consulting together being independent Competent Persons within
the meaning of the JORC (2012) code and qualified persons under the
AIM Note for Mining and Oil & Gas Companies. Dr Bamber, Mr
Brown, Mr Hogg, Mr Siddle and Dr. Struthers have reviewed and
verified the technical information that forms the basis of, and has
been used in the preparation of, the Study and this announcement,
including all analytical data, assumed and acquired technical and
economic inputs, diamond drill hole logs, QA/QC data, density
measurements, and sampling, diamond drilling and analytical
techniques, and consent to the inclusion in this announcement of
the matters based on the information, in the form and context in
which it appears. Dr Bamber, Mr Brown, Mr Hogg, Mr Siddle and Dr.
Struthers have also reviewed and approved the technical information
in their capacities as qualified persons under the AIM Rules for
Companies.
Additionally, Dr. Bamber confirms that the entity is not aware
of any new information or data that materially affects the
information contained within the Company's previous announcements
referred to herein.
ENDS
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