Eurasia Mining plc (AIM: EUA)
("Eurasia" or the "Company")
Russian State Subsoil Agency approves Maiden Reserves at the Monchetundra Project
Eurasia Mining plc ("Eurasia" or the "Company"), the platinum and gold production company, announces that the Reserves Report and Feasibility Study for the Monchetundra palladium and platinum Project, submitted in late December 2016 (see RNS dated 22 December 2016), have now been approved by the Russian State Agency for Subsoil Use ("Rosnedra").
These Maiden Reserves are the first to be approved on the Monchetundra License. The notice regarding their approval at the State Commission on Mineral Reserves ("GKZ") was given on the 03 April 2017 (see RNS dated 03 April 2017) after which the report progressed to Rosnedra. These Reserves and Resources are attributable to Eurasia's 80 per cent owned Terskaya Mining Company ("TGK").
Highlights:
· Global, state approved Reserves and Resources within the Monchetundra Project comprise Russian standard C1 and C2 categories of 55.9 tonnes ("t") (1.9 million ounces) palladium equivalent (palladium and platinum) with major additional gold and base metal credits, at two open pittable locations.
· The Reserves are now fully compliant, as defined under GKZ standards, and final approval has been received at Rosnedra and the Reserves and Resources have been entered to the state balance.
· An application for a Discovery Certificate attributing mining rights to the holder is to be lodged shortly.
Christian Schaffalitzky, Managing Director of Eurasia commented,
"This is an incredibly important development at our Monchetundra Project which we have been working on for more than 10 years now.
"Much of the 30 kilometers ("km") of drilling on the license was financed through a Joint Venture with Anglo American Platinum who sold their equity to Eurasia in 2014. Since that time, Eurasia have managed to continue to advance the project through to the Feasibility Study and Reserves approval, Engineering Procurement and Construction ("EPC") contract and financing - a considerable undertaking for an exploration company with a very limited budget.
"This excellent result has come considerably quicker than we had anticipated, as the Reserves Report and the Feasibility Study were only submitted for approval on the 31st December 2016.
"The application for the award of a Discovery Certificate has already commenced, and following that, Eurasia will be entitled for a Production License, thus following the same route as our West Kytlim project which we brought in to production in 2016. In parallel, we are working on creating partnerships with qualified firms to help realise the potential of this significant platinum, palladium, gold, copper and nickel mine, with the bonus of having an EPC contract with the financing inside it already in place.
"Our proposed route to development is similar to the model applied to our already producing mine at West Kytlim. As the Monchetundra open pit mine is significantly larger, a management company with experience in beneficiating platinum group metals ("PGM") ores will be employed. These discussions have been underway for almost one year and are now advanced.
"In 2016, Eurasia made the transition from an exploration company to a production company and, in 2017, the West Kytlim mine will achieve its first year of production, with a further ramp up in production every year to 2020 and Life of Mine to 2028. West Kytlim may therefore underpin the Company going forward, as we further advance our Monchetundra Project and, indeed, the Semenovsky tailings project. We are pleased to announce that these Reserves comprise almost two million ounces total contained PGM."
Details
The TEO document, considered equivalent to a Feasibility Study, describes the economic extraction of the Reserves identified at two open pit targets on Eurasia's 80 per cent owned Monchetundra License. These Reserves are approved as Russian standard C1 and C2 Reserves. Two open pittable targets have been identified, one at Loipishnune and another at West Nittis, occurring approximately two kilometers apart. Open pit Reserves are underlain by material of similar grade but at deeper horizons, and therefore, not within the current optimised open pits. These Reserves are also assigned to the state balance as the current open pit boundaries may change with changes in other parameters, such as metal prices, and/or, mining costs.
All Reserves are quoted at an optimised cut-off grade of 0.8 grammes per tonne ("g/t") palladium equivalent (reserves, i.e. mining grades are given per metal in the table below). PGM mineralisation on the Monchetundra license has a high palladium to platinum ratio, such that ore bodies at both open pits are delineated based on a palladium equivalent cut-off grade taken as a basket of palladium and platinum only. A factor is applied to platinum grade and tonnage to allow for its higher price and also better recovery. A palladium equivalent grade and tonnage is given in the table below, though it should be noted that the tonnage of palladium equivalent does not include the tonnages of gold, copper and nickel, which must be added to arrive at a total in-situ value of metal.
Some Reserves at West Nittis are approved as C1 category Reserves, as drilling density was greater in areas within West Nittis. A higher-grade reef which outcrops at surface was identified at West Nittis in the 2014 drilling programme. The proposed open pit at West Nittis extracts this higher-grade zone, as well as a lower grade, but more continuous, mineralised zone surrounding it.
Additional Resources are identified at West Nittis and Loipishnune, beneath and also surrounding the current and approved contours of the open pits. These Resources are considered in the Feasibility Study and are assigned to the state balance. In addition, the open pit at Loipishnune which proceeds to 350m depth is underlain by further mineralisation which may be extracted by underground mining methods. This mineralised zone will not be quantified at this time as the material becomes available beyond year 20 of the operation.
The Feasibility Study and contained Reserves and Resources have now received final approvals and shall be recorded on the state balance sheet. These Reserves and Resources in platinum ("Pt"), palladium ("Pd"), gold ("Au"), nickel ("Ni") and copper ("Cu") are set out in Figure 1 below, for the Monchetundra Project.
Figure 1 (below) - Total global Reserves and Resources within the Monchetundra project.
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Grade |
Contained metal |
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Ore |
Pt |
Pd |
Au |
Cu |
Ni |
Pd eq |
Pt |
Pd |
Au |
Cu |
Ni |
Pd (eq) |
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M tonne |
g/t |
g/t |
g/t |
% |
% |
g/t |
Kg |
Kg |
Kg |
tonnes |
tonnes |
Kg* |
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C1 |
428 |
0.18 |
1.31 |
0.07 |
0.1 |
0.18 |
1.62 |
79.4 |
561.8 |
31 |
429.9 |
779.8 |
694.4 |
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C2 |
27,377 |
0.56 |
1.08 |
1.08 |
0.1 |
0.11 |
2.01 |
15,415 |
29,457 |
2107.5 |
27,695 |
29,630 |
55,200 |
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C1+C2 |
27,805 |
0.56 |
1.08 |
0 |
0.1 |
0.11 |
2.02 |
15,495 |
30,019 |
2,139 |
28,124 |
30,410 |
55,894 |
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Net attributable to Eurasia through its 80% owned subsidiary TGK |
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Grade |
Contained metal |
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Ore |
Pt |
Pd |
Au |
Cu |
Ni |
Pd eq |
Pt |
Pd |
Au |
Cu |
Ni |
Pd (eq) |
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M tonne |
g/t |
g/t |
g/t |
% |
% |
g/t |
Kg |
Kg |
Kg |
tonnes |
tonnes |
Kg |
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C1 |
342.4 |
0.18 |
1.31 |
0.07 |
0.1 |
0.18 |
1.62 |
63.52 |
449.44 |
24.8 |
343.92 |
623.84 |
555.52 |
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C2 |
21,902 |
0.56 |
1.08 |
1.08 |
0.1 |
0.11 |
2.01 |
12,332 |
23,566 |
1686 |
22,156 |
23,704 |
44,160 |
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C1+C2 |
22,244 |
0.56 |
1.08 |
0 |
0.1 |
0.11 |
2.02 |
12,396 |
24,015 |
1,711 |
22,499 |
24,328 |
44,715 |
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*Note: As per GKZ guidelines, palladium equivalent, both grade and tonnage of metal is calculated based on platinum and palladium only. Copper and nickel tend to occur separately to precious metals and are therefore not considered in defining ore bodies using a g/t cut-off. For in situ value calculations the value of gold and base metals copper and nickel should be added to the value attributed to the palladium equivalent tonnage. The factor applied to platinum grade and tonnage, in the official protocol approved by Rosnedra is 1.67, which allows for both platinum's greater price and also platinum's better recovery through the proposed gravity float circuit.
EPC Contract
An EPC contract was agreed in October of 2016 (see RNS dated 10 October 2016) between TGK and Sinosteel, a state owned Chinese corporation focused on mining, trading, equipment manufacturing and engineering. The proposed contract would provide for Sinosteel to undertake mine and processing plant turnkey construction and commissioning on a commercial arms-length basis. 85 per cent (or US$149,600,000) of the contract value has been arranged as debt-based by Sinosteel and this element of plant construction costs remains on the Sinosteel balance sheet until such a time when the plant is operating at full capacity. Approval of Reserves and the Feasibility Study governing the extraction of the Reserves was a condition to this agreement and this has now been fulfilled.
Consent for release
Christian Schaffalitzky, FIMMM, PGeo, CEng, is a director of the Company. He has reviewed the update and consents to the inclusion of the exploration information in the form and context in which it appears here. He is a Competent Person for the purposes of the reporting of these results.
Note on classification of Reserves and Resources and correlation to Russian standard:
Reserves (in western classifications such as JORC) will generally contain material of categories A, B, and C1, but adjacent to existing or planned mining operations (where technical and economic studies have been carried out), C2 will often also be considered as part of the Reserves. In exploration areas (where no mine planning has been done), C2 might more appropriately be thought of as indicated Resources. For material to be included in A, B, and C1 categories there has generally been sufficient technical and economic studies carried out to interpret them as Reserves. C2, as noted above, depending on the circumstances, may correspond to indicated Resources or to a probable Reserve, though the Russian rules for acceptance of C2 also require a substantial amount of additional work to have been done. Under the Russian system of approvals, GKZ, and Rosnedra are state agencies consisting of panels of experts in mine engineering, geology, economics and resource calculations which interrogate reports from companies operating in the industry. Operators defend and review assessments of their exploration programmes before approval is granted by the state.
Glossary of Key Terms
A,B, C1 and C2 - Categories of ore body defined under the Russian Standard as having met minimum requirements of exploration information and knowledge.
Cut-off grade - Grade of a commodity, measured as an amount per unit mass, used to delineate the outer limits of a proposed ore body.
JORC - The Australian code for reporting of exploration results, mineral resources and ore reserves, as published by the Joint Ore Reserves Committee of the Australian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.
GKZ - Russian state commission on mineral reserves which ensures Gosstandart compliance.
Reserves - Probable and Proven Reserves (or equivalent depending on the Standard used). Closely comparable to Russian Standard C1 but may contain material of Russian Standard categories A, B, C1 and C2.
Resources - Inferred, Indicated and Measured Resources (or equivalent depending on the Standard used). Closely comparable to Russian Standard C2 but may contain material of Russian Standard categories A, B, C1 and C2.
Russian Standard - Referring to the Gosstandart of Russia, the national Russian standard on mining and minerals as published by the National Certification Body of the Russian Federation and adhered to by GKZ and
Rosnedra. - Russian federal agency for subsoil use which oversees the work of GKZ and manages the state balance of mineral resources.
Russian Standard - Referring to the Gosstandart of Russia, the national Russian standard on mining and minerals as published by the National Certification Body of the Russian Federation and adhered to by GKZ and Rosnedra.
This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.
Enquiries:
Eurasia Mining Plc
Christian Schaffalitzky/Michael de Villiers
+44 (0)207 932 0418
WH Ireland Limited
Katy Mitchell/Nick Prowting
+44 (0)161 832 2174
Beaufort Securities
Elliot Hance
+44 (0)207 382 8300
Blytheweigh
Tim Blythe/Camilla Horsfall
+44 (0)207 138 3204
