Results of the Copper Bay DFS

18 January 2017

 

 

CENTRAL ASIA METALS PLC

("CAML" or the "Company")

 

Results of the Copper Bay Definitive Feasibility Study

 

 

Central Asia Metals plc (AIM: CAML) today announces the results of the definitive feasibility study (DFS) for its 75% owned Copper Bay tailings project in Chile.

Summary

·	Mineable resource of 34.8 million tonnes at a copper grade of 0.24%, containing 84,635 tonnes of copper metal;
·	DFS envisages average annual copper production of 8,640 tonnes for seven years;
·	Average C1 cash cost of $1.37 per pound of copper produced;
·	Initial capital of $88.5 million;
·	Post-tax net present value (NPV) at an 8% discount rate of $34.1 million, at a copper price of $3.00 per pound;
·	Significant additional resource potential in surf and bay zones;
·	Copper Bay development on hold pending an internal review of options.

 

Project overview

Following the completion of the pre-feasibility study (PFS) in 2015, CAML made the decision to undertake a DFS on its 75% owned Copper Bay tailings project in the Atacama Region of northern Chile. Copper Bay Limited effectively holds the exploitation licence comprising 15.25km².

The project is a site of historic tailings disposal on the beach at Chañaral Bay. This resulted from the Potrerillos and El Salvador copper mines releasing tailings residues from their respective mineral processing operations into the Rio Salado, which outflows into Chañaral Bay. Between 1938 and 1975, it is believed that some 250 million tonnes of tailings were discharged and now sit in the beach, surf and bay zones.

The DFS utilises a dredging operation to recover the copper tailings, a solvent extraction and electro- winning (SX-EW) plant to produce copper cathode and a flotation circuit to produce a copper in concentrate product that could be marketed to nearby smelters.

The DFS was undertaken by Copper Bay with detailed input from the following international consultants:

·	Cube Consulting Pty Ltd, Australia - geology, resources, mineable resources, engineering and financial analysis
·	IHC BV Mining Advisory Services, The Netherlands - dredge study and mine design
·	M&F Consultores, Chile - environmental impact assessment (EIA), environmental baseline studies
·	Wardell Armstrong International, UK - metallurgical testwork
·	Propipe S.A., Chile - engineering, processing plant design and capital cost estimation

 

Mineral Resource estimate

As part of the study, Cube Consulting undertook a Mineral Resource estimate to JORC (2012) standards and demonstrated contained copper of 125,820 tonnes at a 0.1% Cu cut-off grade.

Mineral Resource	Tonnes (kt)	Copper grade (%)	Contained copper (t)
Measured and Indicated	39,042	0.24	92,166
Inferred	14,398	0.23	33,654
Total	53,440	0.24	125,820

 

In addition, historical work obtained in 2008 estimated a non-compliant resource of about 190,000 tonnes of copper within the surf and bay zones.

The mineable resource comprises 34.8 million tonnes of tailings material at a copper grade of 0.24%, containing 84,635 tonnes of copper. The overall mineable resource includes 7% of material that has been classified as an inferred resource and which forms part of the overall dredging production plan.

The difference between Mineral Resource and mineable resource tonnages arises due to material remaining in-situ during the dredging process to form a berm between the operation and the sea, and due to removal from the mine plan of a high acid-consuming lower shell-rich horizon. 

Operational summary

The study envisages a nine year project, comprising two years of construction followed by seven years of operation, which would process five million tonnes of material annually at a copper grade of 0.24%. Total copper recoveries in the processing plant are expected to be 72%, yielding an annual average of 7,080 tonnes of copper cathode and 1,560 tonnes of copper in a concentrate grading 20%.

Capital cost

Total initial capital expenditure has been estimated at $88.5 million. This figure excludes contingency of $6.8 million.

The table below shows capital expenditure components and costs:

Component	$m
Dredging	10.8
Site preparation / earthworks	3.2
Plant equipment	39.7
Plant construction	25.6
Pre-production operating costs	3.0
First fills	1.4
Engineering, procurement and construction management (EPCM)	4.8
Total initial capex, excluding contingency	88.5

 

Operating cost

The study estimates a C1 life of mine cash cost of copper production in the lower half of the global cost curve at $1.37 per pound, excluding contingency costs of $0.05 per pound.

Component	Per year ($m)	Per pound ($/lb)
Plant	18.0	0.93
Dredging	2.5	0.14
G&A	3.0	0.16
Sales and marketing	2.6	0.14
Total	26.1	1.37

 

NPV and internal rate of return (IRR)

On the current mine plan, the post-tax NPV of the project is $34.1 million at an 8% discount rate and a flat copper price of $3.00 per pound. The project's post-tax IRR is 19.1%.

Gavin Ferrar, Business Development Director, commented:

"We are pleased that the Copper Bay team has delivered the DFS and that following the Company's total investment in Copper Bay of $6.2 million, CAML has added significant value in delivering a project worth $34.1 million based on a copper price of $3.00 per pound.

"Given the current uncertainty with regard to the near and medium term expectations for copper, the CAML Board has recommended that the project remains in our development pipeline while we review our options. We will update the market as and when appropriate."

For further information contact:

Central Asia Metals plc	Tel: +44 (0) 20 7898 9001
Gavin Ferrar, Business Development Director Nick Clarke, Executive Chairman Nigel Robinson, CFO Louise Wrathall, Investor Relations [email protected]
Peel Hunt (Nominated Adviser & Joint Broker)	Tel: +44 (0) 20 7418 8900
Matthew Armitt Ross Allister
Mirabaud Securities (Joint Broker)	Tel: +44 (0) 20 7878 3362
Peter Krens
Bell Pottinger (PR Advisers)	Tel: +44 (0) 20 3772 2500
Lorna Cobbett Aarti Iyer Marianna Bowes

 

Qualified Person Statement 

 

The technical information contained in this announcement has been reviewed and approved by Brian Gregory Fitzpatrick, a consultant working for Cube Consulting Pty. Ltd. Mr. Fitzpatrick is a Competent Person as defined by the JORC code, 2012 Edition, having five years' experience that is relevant to the style of mineralisation and type of deposit described in the announcement, and to the activity for which he is accepting responsibility. Mr. Fitzpatrick consents to the inclusion in the announcement of the matters based on the work undertaken and context in which it appears.

 

Note to editors

 

About CAML

Central Asia Metals, an AIM-listed UK company based in London, owns 100% of the Kounrad SX-EW copper project in Kazakhstan. The Company also has a 75% equity interest in Copper Bay Ltd, which is a private company that has conducted a definitive feasibility study at its copper project in Chañaral Bay, Chile. In November 2016, Central Asia Metals signed a framework agreement to acquire an effective 80% interest in the Shuak copper exploration property in northern Kazakhstan. For further information, please visit www.centralasiametals.com.

 

Glossary

 

Cu	Copper
Inferred Mineral Resource	That part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity.  An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.
Indicated Mineral Resource	That part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation.  An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource.
Measured Mineral Resource	That part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit.  Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation.  A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource.
Mineral Resource	A concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction.  The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.