Mr. Brad Marwood reports
TIGER RESOURCES LIMITED - POSITIVE SCOPING STUDY FOR STAGE 2 SXEW AT KIPOI COPPER PROJECT HIGHLIGHTS SIGNIFICANT CASH FLOW POTENTIAL
Tiger Resources Ltd. has completed a
scoping study (preliminary economic assessment) for a Stage 2 solvent
extraction electrowinning facility at the Kipoi copper project (60 per cent) located on the Katanga
copper belt in the Democratic Republic of Congo.
Tiger Resources managing director, Brad Marwood, said: "The results from
the preliminary economic assessment underline the robust economics of
the Kipoi copper project, and this should add further value for our
shareholders.
"The results are very encouraging and demonstrate that Kipoi has the
potential to generate significant cash flow based on its projected low-cash-operating costs," Mr. Marwood said.
The base-case economic analysis uses analysts' consensus forecasts of
the long-term copper price of $2.36 per pound over the Stage 2 project life,
generating an after-tax internal rate of return of 48 per cent and net present value (11 per cent) of $272-million. Using copper prices of $3 and $3.50, the NPVs increase to $437-million and $593-million, respectively, and the IRRs increase
significantly to 57 per cent and 69 per cent, respectively.
The existing infrastructure at Kipoi for the Stage 1 heavy media
separation facility acts as a capital springboard for the
development of Stage 2. The HMS plant is expected to produce an average
35,000 tonnes per annum of copper in a 25-per-cent concentrate over its 39-month life and will be superseded in mid-2014 by the Stage 2 SXEW
plant, which will produce LME Grade-A-quality copper cathode directly
at the mine site. Significantly, the Stage 2 operations will initially
process residues from the HMS plant (containing approximately 4.8 million tonnes at
3 per cent Cu), which provides immediate feedstock to Stage 2 operations so
that the mining schedule does not need to recommence until 2016.
Mr. Marwood said: "The company's immediate aim is to further improve the
Kipoi economics by expanding the resource, complete the feasibility
study and move Stage 2 into development thus further up the value
curve.
"It is important to note that the combined Kipoi Stage 1 and Stage 2
projects are fully funded on the basis of current average copper price
projections," he said.
Mr. Marwood added: "The biggest potential impact on the Kipoi project
value is likely to be realized through increasing the mineral resource
base available as feed to the Kipoi infrastructure. This will
potentially increase the mine life and/or annual plant throughput."
Stage 2 preliminary economic assessment
The preliminary economic assessment has been prepared based on the
scoping study prepared by engineering consultants Arccon Mining
Services and incorporating the inputs of other specialist consultants.
The scoping study objective was to provide capital costs and operating
cost estimates for a Stage 2 facility at the Kipoi copper project with
a plant circuit incorporating two separate 25,000-tonne-per-annum SXEW trains to be
commissioned sequentially, based on:
- Mining schedule: pit optimizations developed by Cube Consulting;
- Processing plant: flow sheet design and major equipment selection for
processing of Stage 1 HMS residues and mined ore from Stage 2 mining
schedule;
- Tailings dam: design and costing by Coffey Mining Pty. Ltd.
The cobalt present in the mineral resources has not been addressed in
the assessment. This will be addressed over the coming months and
announced separately.
Mineral resources and mine plan
The mining schedule compiled for the scoping study was based on all
Kipoi mineral resources. Mining is scheduled to commence in the fourth
year of Stage 2 operations, with sequential mining of Kileba and Kipoi
Central phases 1 and 2, followed by Kipoi North and the satellite pits
at Kipoi Central. Mining operations are proposed to commence during
2016, with first ore feed to the plant during 2017.
Pit optimization studies were undertaken on the three principal
deposits, namely Kipoi Central, Kipoi North and Kileba, and based on
the following input limits:
- Copper price $2.30 (U.S.) per pound;
-
Mining costs as per current mining contract;
- Metallurgical recovery: 82.5 per cent based on 80-per-cent recovery from heap leach and 90-per-cent recovery from tank leach.
The rest of the input limits have been taken directly from
current operations at Kipoi. All primary mineralization was assigned
zero recovery for purposes of the optimization analysis.
KIPOI OPEN PIT CONTAINED MINERAL RESOURCES
Oxide ore tonnes Copper % Contained copper (tonnes) Strip ratio
Kipoi Central 23,840,543 1.03 245,037 1.84
Kipoi North 3,979,800 1.46 58,192 4.28
Kileba 8,164,305 1.28 104,187 1.29
Economic open pit cut-off grades were estimated at 0.38 per cent copper for
Kipoi Central and Kipoi North and 0.41 per cent copper for Kileba.
Processing
The processing facility will be a conventional solvent extraction
electrowinning processing plant capable of 50,000-tonne-per-annum-copper cathode production through two parallel streams.
Plant feed will be crushed and washed to separate the positive 300 Amicro fraction
from the slimes and the fines. The positive 300 Amicro fraction will be sent to heap
leach pads, where recoveries are anticipated to be 80 per cent of contained copper while the slimes and fines will be directly fed to a
tank leach system where the anticipated recoveries will be 90 per cent.
This allows flexibility in the process pathway offering options for
high-, medium- and low-grade ores. The HMS generates streams of feed
material available for processing in Stage 2: 1.5 million tonnes float at 3 per cent,
900,000 tonnes slime at 3 per cent and 2.4 million tonnes medium-grade at 2.6 per cent.
The plant feed schedule will allow the HMS stockpile of the float
rejects to be processed through the heap leach facility followed by the
slimes processed through the tank leach facility. The medium-grade
stockpile developed during the first three years will then be depleted.
Capital costs
Costs are estimated to an accuracy of plus/minus 30 per cent, including contingency, are
unescalated, include a 3-per-cent import duty and are expressed in U.S. dollars.
The breakdown of costs in the attached Kipoi Stage 2 project capital costs table demonstrates $151.4-million of
cost to first production, with a total life-of-mine capital costs, including
sustaining capital of $422.4-million.
KIPOI STAGE 2 PROJECT CAPITAL COSTS TO START-UP
(in U.S. $ millions)
To first production Life of mine (full cost)
Accommodation, power supply, initial heap leach pads $20.0 $102.9
SX/EW train 1, 25,000 tpa 69.2 69.2
Tank CCD circuit 19.6 78.3
SXEW train 2, 25,000 tpa 42.3 84.6
Crushing and washing -- 15.1
Tailings facility -- 22.9
Sustaining capital 0.3 49.4
Total 151.4 422.4
Operating costs
Costs are estimated to an accuracy of plus/minus 30 per cent, including contingency, are
unescalated, exclusive of duties and taxes, and expressed in U.S.
dollars.
The operating costs will be 63 cents per pound during the initial three years of
operations, during which the stockpiles from the Stage 1 HMS operation
will be treated. Thereafter, run-of-mine material will be
processed at an average operating cost of $1.07 per pound. The average LOM operating cost is 92 U.S. cents per pound.
The low gangue acid consumption of the Kipoi deposits, coupled with the
low cost of electricity, results in process operating costs within the
lowest quartile of industry standards.
OPERATING COST SUMMARY (INITIAL THREE YEARS)
U.S.$/a $/t ore $/lb Cu
Mining -- -- --
Process plant $45.182 $27.11 $0.41
General & administration 11.400 6.84 0.09
Marketing & product transport 10.619 6.37 0.11
Export costs 1.847 1.11 0.02
Total 69.048 41.43 0.63
OPERATING COST SUMMARY (ROM)
U.S.$/a $/t ore $/lb Cu
Mining $28.365 $6.30 $0.31
Process plant 46.554 10.35 0.50
General & administration 11.400 2.53 0.12
Marketing & product transport 10.619 2.36 0.12
Export costs 1.847 0.41 0.02
Total 98.785 21.95 1.07
Economic assessment
The economic assessment was prepared using the expected capital and
operating costs show. Modelling incorporates
fiscal aspects of the DRC mining laws and conventions applicable to the
Kipoi project, including:
- A total of 30-per-cent DRC corporate tax rate;
- A 2-per-cent DRC state royalty;
- A total of 3-per-cent import duties;
- A 60-per-cent depreciation rate of capital expenditure (in year of occurrence and
straight line thereafter);
- A 2.5-per-cent Gecamines royalty.
A financial model was developed for a base-case scenario using a
long-term consensus copper price forecast of $2.36 (U.S.) per pound. Upside cases use
copper prices of $2.50, $3 and $3.50 to demonstrate a measure of the
sensitivity of the project economics to copper prices.
Project implementation and timing
Tiger has already commenced preliminary work on a definitive feasibility
study.
Metallurgical testwork sample selection, sampling and metallurgical
laboratory selection have commenced, and metallurgical testwork is
under way.
Programs for infill drilling leading to an upgrade of classification of
mineral resources have commenced and will proceed over the next two
years. It is anticipated that a feasibility study to support a project
implementation decision will be completed during the first half of
2012.
Preliminary indications are that first copper cathode production can be
achieved 24 months after project approval. Through meeting these
timelines, Tiger anticipates achieving a steady cash flow through the
transition from Stage 1 to Stage 2 of the Kipoi copper project.
Project opportunities: exploration upside
The biggest impact on the Kipoi project value is likely to be achieved
through increasing the mineral resource base available as feed to the
Kipoi processing facilities, which potentially will increase the mine
life and/or annual plant throughput. Tiger is therefore committed to
active exploration programs with anticipated program costs in
excess of $10-million (U.S.).
Over the next two years, Tiger plans to define all significant
mineralization within the Kipoi project area and undertake sufficient
drilling to convert this mineralization into mineral reserves.
At the same time, Tiger will be actively pursuing opportunities to
increase landholdings within economic haulage distance of the central
processing facility at Kipoi.
Potential also exists to add to the resources at the 100-per-cent-owned Lupoto
copper project just 25 kilometres from Kipoi, where a maiden mineral resource
was recently declared for the Sase Central deposit.
Technical report
A Canadian NI 43-101 technical report on the scoping study is in
progress and will be filed on the company's profile on SEDAR within 45
days of this announcement.
Background
The Kipoi project covers an area of 55 square kilometres and is located 75 km
north-northwest of the city of Lubumbashi in the Katanga province of
the DRC. The project contains a 12-kilometre sequence of mineralized roan
sediments that host at least five known deposits: Kipoi Central, Kipoi
North, Kileba, Judeira and Kaminafitwe.
The company has reported Joint Ore Reserves Committee standard resources at three of the
deposits. The principal deposit is Kipoi Central, which contains a zone
of high-grade copper mineralization within a much larger, lower-grade
global resource.
The company proposes a staged development at the Kipoi copper project.
The high-grade zone of mineralization at Kipoi Central will be
exploited during the Stage 1 development. During the three-year
operation of Stage 1, 900,000 tonnes per annum of 7 per cent Cu are planned to be processed
through an HMS plant with a recovery rate of 60 per cent, to produce the
equivalent of approximately 35,000 tonnes per annum of copper.
The company is currently undertaking a feasibility study to evaluate the
economic viability of constructing a SXEW plant (Stage 2), targeted to
come on stream within three years of the start of the HMS operation. It
is envisaged that ore from Kipoi Central, Kipoi North and Kileba South
and the other deposits within the Kipoi project and within the nearby
Lupoto project would be processed during the Stage 2 phase.
Technical information
Additional information on Tiger and its projects and operations is
contained in technical reports filed under the company's profile on the
SEDAR website.
The scoping study, preliminary economic assessment and the
Stage 2 SXEW are based on indicated and inferred mineral resources. The
PEA is preliminary in nature, and the inferred mineral resources are
considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized
as mineral reserves. There is no certainty that the outcomes described
in the PEA will be realized. Mineral resources that are not mineral
reserves do not have demonstrated economic viability.
The indicated and inferred mineral resources referred to in this
announcement and pertinent to the PEA are reproduced in the attached resources tables.
KIPOI CENTRAL DEPOSIT
(grade tonnage reported above a cut-off of 0.50-per-cent copper)
Category Tonnes (Mt) Copper grade (%) Cobalt (%) Ag grade (g/t) Copper (000 t) Cobalt (000 t) Ag (000 oz)
Measured 9.18 3.78 0.14 3.68 347 13 1,085
Indicated 14.28 1.31 0.07 2.29 181 9 1,052
Measured & indicated 23.46 2.28 0.09 2.83 535 22 2,138
Inferred 12.02 0.85 0.05 0.47 102 6 182
KIPOI NORTH AND KILEBA SOUTH INFERRED MINERAL RESOURCE ESTIMATE
(lower cut-off 0.5 per cent copper)
Tonnes (M) Copper % grade Cobalt % grade Silver g/t Copper (000 t) Cobalt (000 t) Silver (000 oz)
Kipoi North 5.3 1.36 0.03 8.1 71.6 2.6 1,372
Kileba South 9.5 1.4 133
Total 14.8 1.38 204.6 2.6 1,372
Competent and qualified person's statement
Information in this news release that relates to the scoping study has
been prepared under the supervision of John McCowan, a director and
employee of Arccon (WA) Pty. Ltd., a registered professional engineer of
Queensland and a professional member of SME. The mining engineering section of the scoping study, which includes open
pit optimization and production schedules, was prepared under the
supervision of Quinton de Klerk of Cube Consulting Pty. Ltd. Mr. de
Klerk has sufficient experience which is relevant to the activity
which he is undertaking to qualify as a competent person as defined in
the JORC code and a qualified person as such term is defined in the
Canadian National Instrument 43-101. Mr. de Klerk has reviewed and
approved the contents of this news release relevant to this section. Scientific or technical information in this news release other than
relates to the scoping study has been prepared by Mr. Marwood,
managing director, a full-time employee of the company, and a member
of the Australasian Institute of Mining and Metallurgy. Mr.
Marwood has sufficient experience which is relevant to the activity
which he is undertaking to qualify as a competent person as defined in
the JORC code and to qualify as a qualified person under Canadian
National Instrument 43-101. Mr. Marwood consents to the inclusion in
this news release of the matters based on the information in the form
and context in which it appears. Scientific or technical information in this news release other than
relates to the scoping study has been prepared by Mr. Marwood,
managing director, a full-time employee of the company, and a member
of the Australasian Institute of Mining and Metallurgy. Mr.
Marwood has sufficient experience, which is relevant to the activity
which he is undertaking to qualify as a competent person as defined in
the JORC code and to qualify as a qualified person under Canadian
National Instrument 43-101. Mr. Marwood consents to the inclusion in
this news release of the matters based on his information in the form
and context in which it appears.
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