Adamus Resources Limited - Decision to Proceed based on Improved Economics
Wed Jun 10, 1:50 AM
ca.news.finance.yahoo.com
PERTH, Western Australia, June 10 /CNW/ -
Project Highlights
- Significantly improved project economics
- Key points are :
- Estimated US$100M cash generated from first 2 years operation
- Up to 1.9 million tonnes annual ore throughput
- 100,000 ounces annual production
- 10 year proven initial mine life
- US$343M Net Operating Cash generated pre CapEx (at US$900 gold
price).
- $80-95M CapEx depending on contract EPCM or Fixed Price
- Year 1 and 2 Cash costs average US$408/oz
- Life-of-mine cash costs of US$489/oz
The Directors of Adamus Resources Limited (ASX:ADU, Adamus) are pleased to
announce the Company's current optimised feasibility study on its Southern
Ashanti Gold Project (Project or SAGP). The results of the Optimised
Feasibility Study (OFS) demonstrate enhanced economics and support the board's
decision to proceed to mine.
Current Project Economics
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Gold Price
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US$900 US$1,000
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Net Operating Project Cashflow (before CapEx
Years 1 & 2 recoupment US$100 M US$124 M
Net Operating Project Cashflow & tax) US$343 M US$431 M
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Internal Rate of Return (assuming 28 % 37 %
Payback US$95 CapEx) 28 months 22 months
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Construction & Commissioning Period 20 months
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Cash Cost Years 1 and 2 US$400
Cash cost per Ounce LOM US$489
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Waste / Ore Ratio for LOM 4:1
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Mill Feed Grade (g/t) 2.0
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Note : The above projected economics are at the Project level, on a 100%
project basis and exclude finance costs.
Optimisation Study
Market conditions have changed dramatically since the Company's last announced Feasibility Study. The resource and reserve base has been increased following exploration drilling conducted in 2008. Capital and operating costs have similarly moved. The reserve increase along with further detailed engineering studies have shown that an increase in milling throughput and a redesign of the processing circuit can produce significant operating unit cost reductions. In addition, revised testwork supported increased expected gold recoveries.
This OFS resets the economic expectations for the Project in line with the improved parameters of the 1.07Moz gold ore reserve update announced in April 2009. As part of the optimisation process costs were obtained for a larger process plant, metallurgy was reviewed and updated and the planned open pits were redesigned to accommodate the improved project economics.
Annual ore to be processed by the planned facility has increased to 1.9 Mtpa, although this is still considered conservative. The OFS includes updated estimates for capital as well as key operating costs, in particular electricity.
The OFS includes a detailed monthly mine plan and now includes the Bokrobo deposit for the first time.
The Update has been prepared by Adamus utilising information and documentation it has generated and combined with the results of studies undertaken by the following independent consultants :
SAGP Consultants
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Activity Company
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Resources Modelling Nic Johnson
- Hellman and Schofield Pty Ltd
(H&S)
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Pit Optimisation, Pit Design, Glenn Williamson and Clive Skelton
Mining Schedule and Reserve - Mining Resources Pty Ltd
estimation
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Metallurgical Testwork Ammtec Pty Ltd
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Tailings Geochemical Assessment Graeme Campbell and Associates (GCA)
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Metallurgical testwork assessment Peter Banovich
of results - Metallurgical Project Consultants
Pty Ltd
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Capital and Operating Cost Lycopodium Engineering Pty Ltd
Estimates, Mill Tender and (Lycopodium)
Schedule
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Tailings Storage Facility Knight Piesold Consulting (Ghana and
re-estimate of Capital Costs Australia) (Knight Piesold)
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Plant Options
Adamus has continued to assess proposals for design and construction of the processing plant and a number of engineering firms have been in advanced discussion with Adamus for this intended scope of work. Market conditions have moved in our favour with engineering firms quoting more aggressively resulting in positive changes to cost and schedule estimates as compared to the original Feasibility Study.
The current capital estimates cover the design and construction of the process facility, together with onsite and offsite infrastructure requirements, including power, water supply and support services. Owners' costs include village resettlement, roads, mine pre-development and other necessary infrastructure.
Adamus has received design and construction proposals from engineering companies on both an EPCM and a fixed price basis. The quoted total capital expenditure estimates range between US$80M on an EPCM basis and approaching US$95M on a fixed price basis.
Engineering award will commence upon finance completion.
Project Development Timeline
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PROGRESS TO DATE
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Mining Licenses - Awarded Done
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Feasibility Study Update Done
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All Permitting & Environmental Assessment for Final Reviews Done
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EPA Public Forums Done
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EIS Finalisation for Environmental License Done
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EPA Environmental Permit - Awarded Done
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CURRENT PROJECT DEVELOPMENT SCHEDULE
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Final Government Approvals for Investment Stability
Agreement 1st Half 2009
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Final Ministerial Approvals 1st Half 2009
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Financing 3rd Qtr 2009
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Production (estimated) +18 months
from financing
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Adamus has now initiated steps to assemble a strong owners' team to manage Project development. Ghana has a well developed industrial base and all services expected to be required during construction are available. The Company expects to announce key specialist project and operating expertise additions to its management team within the next few weeks.
A broad activity schedule has been developed covering the various phases of the projects design and construction.
Decision to Proceed
Based on the results from the OFS, the Directors of Adamus have resolved to proceed with development of the SAGP, subject to receipt of project financing on terms acceptable to the Company. The Company is currently in advanced negotiations with a number of prospective debt and equity financiers which it expects to finalise shortly.
With all permits required for mining in place, and project financing discussions nearing completion, the SAGP remains on track for first production within 20 months of completing its project finance.
Ore Reserve / Mineral Resource
Free Milling Gold Ore Reserve Estimate
83% Proven
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Tonnage Grade Contained
(Mt) (g/t) (oz)
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Proven Ore 13.52 1.96 854,000 83%
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Probable Ore 3.02 2.21 214,000
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Total 16.54 2.01 1,068,000
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Notes :
1. Mineral resource estimation calculated by Multiple Indicator Kriging
methodologies as detailed in the Feasibility Study announcement dated
14 June 2007 and Technical Reports dated 31 October 2007 and 21
August 2008 (Study Reports). The Ore Reserve estimation has been
prepared by Mining Resources Pty Ltd using cost estimates derived
from third party contractor and consultant quotations and based on a
gold price of US$900/oz. All metallurgical recoveries for
conventional CIL and CIP circuits are based on testwork as previously
detailed in the Study Reports.
2. For further details please refer to the announcement of 16 April
2009.
Growing Gold Mineral Resource Estimate
85% Measured and Indicated
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Tonnage Grade Contained
(Mt) (g/t) (oz)
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Measured & Indicated 30.2 1.80 1,750,000 85%
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Inferred 6.98 1.62 362,000
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Notes :
1. The Measured and Indicated mineral resource estimate is inclusive of
current Ore Reserves.
2. Au cut-off grade 0.8g/t. For further details on the key assumptions,
parameters and methods used to estimate the mineral resource, please
refer to the Study Reports.
Upside Exploration Potential
The future profitability of the SAGP is expected to be enhanced
substantially by the identification of further mineable ore reserves within
trucking distance of the proposed mill site.
The Company has identified the following as key areas / targets for
potential additions to the current ore reserve estimate for the Project within
the next 12 - 36 months :
- Conversion of inferred mineral resources within current pit designs
to ore reserves.
- Potential for satellite deposits to provide a higher grade blend of
ore into the production schedule as evidenced by the initial ore
reserve estimate for the Bokrobo prospect of 115,000oz Au @
3.86g/t.
- Option acquired over Hotopo prospecting license and Banso
reconnaissance license, being a combined area of 162 square
kilometers of prospective tenure.
- Option acquired over Kanyankaw prospecting license (17.5 square
kilometres) where encouraging first pass results included 88m @
1.16g/t Au from surface sampling.
- Significant depth potential at both Salman and Anwia.
- Exploration at other known prospects, including Akropon, Avrebo,
Aliva and Nfutu.
About Adamus
Adamus Resources Limited is a Perth-based mineral exploration company, listed on Australian Securities Exchange (ASX), TSX Venture Exchange (TSX-V) and Frankfurt Stock Exchange Open Market (FSE).
The Company's primary focus is on exploring, realising and expanding the economic potential of the Southern Ashanti Gold Project in Ghana, West Africa. The Project encompasses approximately 644km(2) of tenure in the Ashanti Gold Belt - host to over 100moz of gold and the Project boasts excellent access to port and road infrastructure. Ghana is a stable West African country with a long history and some of the world's largest gold mining operations. Gold production is vital to the national economy. Members of the Adamus Board and management team have proven records in mineral exploration, project development and project financing.
Kind regards
(signed)
Mark Bojanjac
Managing Director/CEO
Information in this announcement pertaining to ore reserves was compiled by Glenn Williamson an employee of Mining Resources Pty Ltd, who is a Member of The Australasian Institute of Mining and Metallurgy. He qualifies as a "Qualified Person" under Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Glenn Williamson 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 JORC Code. Glenn Williamson consents to the inclusion in the announcement of the matters based on this information in the form and context in which it appears.
Information in this announcement pertaining to mineral resources was compiled by Nic Johnson, an employee of Hellman & Schofield Pty Ltd, who is a Member of The Australian Institute of Geoscientists and has more than 5 years experience in estimation of recoverable resources in gold deposits. He qualifies as a "Qualified Person" under Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Nic Johnson 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 JORC Code. Nic Johnson consents to the inclusion in the announcement of the matters based on this information in the form and context in which it appears.
Information in this announcement pertaining to exploration results was compiled by Ron Heeks, an employee of Adamus Resources Limited, who is a Member of The Australasian Institute of Mining and Metallurgy and has more than 5 years experience in estimation of recoverable resources in gold deposits. He qualifies as a "Qualified Person" under Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Ron Heeks 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 JORC Code. Ron Heeks consents to the inclusion in the announcement of the matters based on this information in the form and context in which it appears.
The TSX-V and ASX does not accept responsibility for the adequacy or
accuracy of this release. No stock exchange, securities commission or
other regulatory authority has approved or disapproved the information
contained herein.
Caution Regarding Forward Looking Information.
Certain statements included in this announcement, including information regarding Adamus' plans with respect to its mineral properties, constitute forward-looking information. Forward-looking information includes, among other things, statements regarding expected operations and projected economics. Forward-looking information is based upon a number of estimates and assumptions made by the Company in light of its experience, current conditions and expectations of future developments, as well as other factors that the Company believes are appropriate in the circumstances. While these estimates and assumptions are considered reasonable by the Company, they are inherently subject to business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking information provided by the Company, or on behalf of, the Company. Such factors include, among other things, risks relating to additional funding requirements, metal prices, exploration, development and operating risks, competition, production risks, regulatory restrictions, including environmental regulation and liability and potential title disputes. Investors are cautioned that forward-looking information is no guarantee of future performance and, accordingly, investors are cautioned not to put undue reliance on forward-looking information due to the inherent uncertainty therein. Forward-looking information is made as at the date of this announcement and the Company disclaims any intent or obligation to update publicly such forward-looking information, whether as a result of new information, future events or results or otherwise.
Contacts
Mark Bojanjac - Managing Director/CEO
+61 8 9322 5943
email: mark@adamusresources.com.au
Mark Connelly - Executive Director/COO
+61 8 9322 5943
email: mark.connelly@adamusresources.com.au
For media enquiries contact: Brian Thornton - Farrington National
+61 2 9332 4448
email: bt@farrington.com.au |
