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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (18059)	4/20/2008 10:31:09 AM
From: LoneClone	Read Replies (1) \| Respond to of 193039

Metals Exploration Can Go At Runruno Without The Moly, But Would Rather Keep It In By Rob Davies minesite.com Jonathan Beardsworth, chief executive of Metals Exploration, says he looks forward to the day when he can address a Minesite forum and tell the audience his company’s shares are too expensive. But that’s certainly not how it feels right now. His company is capitalised at £20 million and is the 100 per cent owner of the Runruno gold property in the Philippines. Not only does it have a resource of 2.1 million ounces of gold but it also has 37 million pounds of molybdenum as well. There is no doubt in his mind that the project is viable as a stand-alone gold mine. But Jonathan has a concept that could make shareholders a whole lot better off. The key, he says, lies in the molybdenum content of the orebody. Although it’s only present at an average grade of 0.062% there is the potential to produce it at the rate of two million pounds a year. The attraction of that is twofold. The most obvious impact is to dramatically reduce the operating costs for the gold production from about US$400 an ounce to US$300 an ounce. But the most significant effect would be the ability to use that stream of molybdenum output to secure a life of mine offtake contract with a large steelmaker that could help finance the capital cost. That detail was not included in a concept study released on 15th April by the company. The concept study outlined the major parameters involved in developing a mine at Runruno and announced that the company has had appointed Ausenco to complete a scoping study. The scoping study will concentrate on the molybdenum recovery. So far trials have gone very well and recovery rates have been better than expected, according to Mr Beardsworth, but he declined to be specific until more work is done. The concept study suggests that capital costs would be of the order of US$200m with or without the molybdenum recovery. Mr Beardsworth is keen to point out that no separate circuit would be required. Testing so far shows that 30 per cent of the gold would be recovered by a gravity circuit and the remainder from a flotation plant. Molybdenum recovery rates at this stage of the process look to be of the order of 50 per cent. But the trick will be to maximise the recovery from the oxidation circuit, so that’s where the focus will be. Whatever happens with the molybdenum, Metals Exploration is confident that it now has enough information to take the project forward on a gold-only basis. A resource of 27 million tonnes at a grade of 2.41 grammes per tonne, of which 775,000 of the 2.1 million contained ounces is to JORC indicated status, ought to be enough to sustain projected annual production of 200,000 ounces. A mining rate of three million tonnes a year at a strip ratio of 7:1 would have a cash cost of US$400 an ounce. Adding in molybdenum production at a molybdenum price of $30 per pound would reduce that significantly Even at US$15 molybdenum, the net production cost would still only be between US$190 and US$320 an ounce. Such a relatively simple operation could be built in less that two years, at least according to the concept study. Things never work out that simple. But as far as concerns about the Philippines go, Mr Beardsworth thinks that that is no longer an issue. He points to a number of junior resource companies who are developing operations there, alongside bigger companies like Xstrata. Mr Beardsworth is now focussed on getting the scoping study completed by the summer and then rolling it into a feasibility study. And after that it will be a presentation to Minesite.