Anvil Reports Updated Economic Analysis of Kinsevere Stage II
TSX, ASX: AVM
Common shares outstanding 150.4 million
All amounts are expressed in US dollars, unless otherwise stated.
AMCK has an exclusive "Contrat d'Amodiation" (Lease Agreement) with La Générale des Carrières et des Mines ("Gécamines"), the title holder of the mineral rights. In
Key outcomes of the updated economic analysis of Kinsevere Stage II:
- A Net Present Value ("NPV"), at 95% equity of $683 million after tax;
- Internal Rate of Return of 79%;
- A payback period of less than 2.5 years after final loan drawdown;
- Cash cost of $0.89/lb Cu (C1);
- Total operating cost of $1.33/lb Cu (C3);
- Commercial production expected to be achieved during the second quarter
of 2011;
- Proven and Probable Mineral Reserve of 20.8 million tonnes at an
average grade of 3.9% total copper ("TCu") available for Stage I and
Stage II processing;
- Contained acid soluble copper of approximately 690,000 tonnes;
- Peak mill throughput of 1.6 million tonnes per annum; and
- Operational life of 14 years.
Applying a discount rate of 10%, the economic analysis has been based on a Stage II project construction capital cost of
The outcomes associated with the economic analysis are highly sensitive to variations in copper price, with every 10% change in the copper price resulting in a change of
Capital Cost Estimate
The capital cost estimate for construction of Kinsevere Stage II of
At
Kinsevere Stage II Operating Parameters
The revised life of mine plan has a Stage II mining life of approximately eight years, during which time approximately 18 million tonnes of ore will be mined to produce a total of approximately 631,500 tonnes of contained copper metal. Processing of material from long-term stockpiles is expected to continue for another six years following the completion of mining of the current reserves. The peak ore processing rate is 1.6 million tonnes per year. A summary of the key operating parameters for Stage II is shown in Table 1.
Table 1: Summary of Kinsevere Stage II Operations
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Description Stage II
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Ore mined (million tonnes) 18.0
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Average grade (%ASCu) 3.5
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Waste mined (million tonnes) 22.4
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Waste to ore ratio 1.2:1
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Processing life (years) 14
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Ore processed (million tonnes)(1) 21.9
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Average processed grade (%ASCu) 3.2
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Recovery (%)(2) 91.9
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Cu metal produced (tonnes) 648,500
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1. Total ore processed exceeds the total ore mined due to reclamation
from existing long-term stockpiles (refer to Table 3), plus floats and
effluent stockpiled from Stage I processing.
2. Average recovery over the term of Stage II reflects a period of
reduced recovery during production ramp-up.
Operating Cost Estimate
Table 2 lists the updated Stage II unit cash operating cost estimates, in real terms.
Table 2: Average Stage II Unit Operating Costs
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Average Stage II Operating Costs Cash Costs ($/lb)
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Mining and Technical Services Costs $0.15
Processing Costs $0.34
Maintenance Costs $0.07
Administrative Costs $0.11
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Cash Cost at Mine Gate $0.67
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Transport and Marketing Costs $0.20
Export Duties $0.02
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Total C1 Cash Costs $0.89
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Royalties - Paid $0.11
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Depreciation & Amortisation $0.33
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Total C3 Operating Cost $1.33
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Progress with Kinsevere Stage II
Following the receipt in
- Steel erection - 213 tonnes of pre-fabricated pipe rack steel have been
erected, representing approximately 9% of the total requirement.
- Contracts - security, catering and earthworks contracts negotiated by
Ausenco are in an advanced stage of documentation and are expected to
be finalised shortly.
- Critical path issues - steel for the sulphuric acid tanks has been
ordered and fabrication of a variety of other tanks is near completion.
- Stockpiles of cement, sand and aggregate - orders and initial payments
for the total stock requirement of cement and additives for the
remainder of the project have been made and the first two of four
deliveries of cement were received in November 2009.
- New orders - purchase orders have been prioritised according to
schedule requirements and are being prepared and committed.
- Transportation of goods in storage - equipment items held in storage
since Kinsevere Stage II was placed on hold have been reviewed and
categorised according to priority. Delivery of these goods to site is
underway and the Company expects to take delivery of the majority of
this equipment before March 31, 2010.
- Work permit applications - Ausenco has assumed full responsibility for
obtaining work permits and the process is underway for identified
staff.
- Camp refurbishment - significant progress has been made in relation to
the junior and senior accommodation, laundry and messes.
Group Five Projects ("Group Five") is being engaged by Ausenco to undertake the Kinsevere Stage II construction and fabrication works. Prior to
Group Five and Ausenco have already begun mobilising to site and it is expected that by
The engineering and design works which recommenced during the third quarter of 2009 are approximately 95% complete, with 2,057 drawings of the total of 2,160 now completed. In addition, a substantial amount of vendor data has been received.
With the commencement of the Early Works Program, the engagement of Group Five, the near completion of the engineering and design works and the mobilisation already underway, the Company is well positioned to allow for a timely recommencement of full-scale construction and fabrication works at Kinsevere Stage II.
Proven and Probable Reserve Estimate at Year-end 2009
The Proven and Probable Mineral Reserve estimate at year-end 2009 shown in Table 3 totals 20.8 million tonnes at an average copper grade of 3.3% ASCu, representing approximately 690,000 tonnes of contained acid soluble copper. The copper price used for the Mineral Reserve estimate was
Table 3: Kinsevere Copper Project: Mineral Reserve Estimate
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Kinsevere oxide Mineral Reserve statement as at December 31, 2009
(based on $1.43/lb Cu)
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Deposit Category Tonnes TCu ASCu Contained
(M t) (%) (%) ASCu (k t)
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Tshifufia Proven 7.14 4.12 3.51 250.5
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Probable 4.40 5.09 4.05 178.3
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Tshifufiamashi Proven 1.65 3.56 3.21 52.8
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Probable 1.20 4.02 3.68 44.3
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Kinsevere Hill Proven - - - -
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Probable 4.02 3.42 3.07 123.5
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Subtotal Pits Proven and
Probable 18.41 4.14 3.53 649.5
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Stockpiles Proven - - - -
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Probable 2.40 1.99 1.67 40.1
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Subtotal Proven and
Stockpiles Probable 2.40 1.99 1.67 40.1
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Total Pits and Proven and
Stockpiles Probable 20.81 3.89 3.31 689.5
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Note: The Total Mineral Reserve is available for both HMS and
SX-EW processing.
The Mineral Reserve has declined from 2008, as a result of ore extraction to feed the Kinsevere HMS plant, together with mineral resource model density and grade estimation differences.
Measured and Indicated Resource Estimate at Year-end 2009
The Measured and Indicated Mineral Resource for oxidised mineralisation at year-end 2009 (Table 4), using a 0.7% TCu cut-off grade is estimated at 25.7 million tonnes at an average grade of 3.1% ASCu, representing approximately 807,000 tonnes of contained acid soluble copper. The Proven and Probable Mineral Reserves included within the Measured and Indicated Mineral Resource are for oxidised mineralisation. The oxide and sulphide Inferred Mineral Resource is estimated at 14.2 million tonnes at an average grade of 3.6% TCu for approximately 507,000 tonnes of additional contained total copper.
Table 4: Kinsevere Copper Project: Mineral Resource Estimate
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Kinsevere oxide Mineral Resource statement as at December 31, 2009
(0.7%TCu cutoff)
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Deposit Category Tonnes TCu ASCu Contained
(M t) (%) (%) ASCu (k t)
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Tshifufia Measured 7.37 4.30 3.64 268.4
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Indicated 5.81 5.00 3.95 229.3
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Tshifufiamashi Measured 1.97 3.45 3.06 60.3
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Indicated 4.18 2.70 2.08 87.0
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Kinsevere Hill Measured - - - -
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Indicated 6.41 2.88 2.53 162.2
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Total Oxide Measured and
Deposits Indicated 25.74 3.78 3.14 807.1
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Kinsevere sulphide Mineral Resource statement as at December 31, 2009
(0.7%TCu cutoff)
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Deposit Category Tonnes TCu ASCu Contained
(M t) (%) (%) ASCu (k t)
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Tshifufia Measured 0.06 2.16 0.97 0.6
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Indicated 3.09 3.99 2.60 80.4
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Tshifufiamashi Measured - - - -
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Indicated 0.61 2.40 1.59 9.7
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Total Sulphide Measured and
Deposits Indicated 3.76 3.70 2.41 90.6
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Total Oxide and
Sulphide Measured and
Deposits Indicated 29.50 3.77 3.04 897.7
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The Mineral Reserve estimate has been classified and reported using the guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2004). These guidelines are generally consistent with those required by Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). The estimate was prepared by Mr
The Mineral Resource estimate was prepared under the supervision of Mr
A revised NI-43-101 Technical Report will be lodged on the SEDAR website at www.sedar.com within the prescribed timeframe.
The shares of Anvil Mining Limited are listed for trading on the
Additional Notes: Information in this news release regarding Mineral Resources is based on information compiled by
Caution Regarding Forward Looking Statements: This news release contains "forward-looking information" that is based on assumptions and judgements of management regarding future events and results. Such forward-looking information includes, but is not limited to, statements regarding the updated economic analysis of Kinsevere Stage II (including NPV, internal rate of return, payback period, cash costs, capital cost estimates, mill throughput and mine life), the future price of copper and updated mineral reserve and mineral resource estimates for the Kinsevere Copper Project. The purpose of forward-looking information is to provide the reader with information about management's expectations and plans. Readers are cautioned that forward-looking information involves known and unknown risks, uncertainties and other factors, many of which are not in the control of Anvil, which may cause the actual results, performance or achievements of Anvil and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, the actual market price of copper, the actual results of future mining, processing and development activities, changes in project parameters as plans continue to be evaluated, and the possibility of cost overruns, as well as those factors disclosed in the Company's filed documents, including under the heading "Risk Factors" in the Company's most recently filed AIF, which is available under the Company's profile on SEDAR at www.sedar.com. Although Anvil has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that the Stage II expansion of the Kinsevere copper mine will proceed as planned and within expected time limits and budgets or that, when completed, the expanded Kinsevere Copper Project will operate as anticipated.
%SEDAR: 00020549E
For further information: Craig Munro, Senior Vice President Corporate & CFO, +61 (8) 9481 4700, [email protected] (Perth); Robert La Vallière, Vice President Corporate Affairs, (Office): (514) 448 6664, (Cell): (514) 944 9036, [email protected] (Montréal); www.anvilmining.com
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