The Asia Miner

JAN-FEB 2017

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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Volume 14 • Issue 1 | 2017 | ASIA Miner | 85 South Pacific LION One Metals has signed an MoU with Ansteel-CapitalAsia Global Engineering for ongoing development of the Tuvatu Gold Project in Fiji. The MoU covers an engineering, procurement and construction (EPC) contract for a processing plant and a vendor financing agreement. The contract includes the design, construction, start-up testing and commissioning of the plant. Ansteel will furnish all materials, equipment, machinery, tools and consumables, provide quality control and admin- istration, and will develop the Health and Safety Plan. It will also provide vendor financing for up to 80% of the anticipat- ed value of the contract in the form of a deferred payment amount of US$39 million to $44 million. Lion One will fund a minimum of US$10 million, or approximately 20% of the anticipated value of the EPC contract. Ansteel-CapitalAsia Global Engineering is a JV company of Ansteel Group Engineering Technology Development Company and Capi- talAsia Consulting (Canada) Inc. The Ansteel Group is based in Lia- oning Province, northern China. Tuvatu is 17km from Nadi International Airport on the main island of Viti Levu. Lion One envisages a low-cost underground mining operation producing 352,931 ounces of gold at head grades of 11.30 g/t over an initial 7-year mine life, including 262,000 ounces at 15.30 g/t through year three, at cash costs of US$567 per ounce and AISC of US$779 per ounce. Total capex of US$48.6 million includes a contingency of US$6.1 million with an 18 month pre-production schedule and 18 month payback on capital. At a US$1200 gold price the project generates net cash flow of US$112.66 million and an IRR of 52% (after tax). Drilling, dewatering and development are ongoing with the drill program including infill and extensional targets. One surface drill rig is operating and an underground rig is ready to be mobilised as dewatering of the decline progresses. Initial infill drilling results include 71.41 g/t gold over 8.41 metres, including 126.67 g/t over 4.56 metres, drilled from surface to a vertical depth of 92 metres. The results confirm the high grades and continuity of near-surface mineralisation. The decline was developed during a previous feasibility study and consists of 1341 metres of decline, strike and rise development to a depth of 240 metres below surface. It can accommodate 15-tonne trucks and provides access to mineralisation targeted for extraction in years 1-3 of the mine plan. PACIFIC Bauxite has completed formal agreements to acquire a 50% interest in Au Capital Mining which holds two bauxite projects in the Solomon Islands. The primary target is Nendo Bauxite Project in Temotu province of the country's east with the arrangement also covering Choiseul project in the north. The company, which was recently renamed from Iron Mountain Mining, has conducted initial exploration on Nendo which has con- firmed extensive bauxite mineralisation. Pacific is targeting high-quality bauxite amenable to direct ship- ping and low-cost development. It says there is strong public sup- port for project activities, aided by ongoing community engagement and awareness. Au Capital holds 100% of the projects and is now in partnership with Pacific to explore and potentially develop the two projects. Pa- cific is manager/operator of the projects. The acquisition has been subject to extensive due diligence, in- cluding exploration and a condition precedent that Nendo has the capacity to host a minimum 8 million tonne bauxite resource at greater than 45% total alumina and less than 5% total silica. Pacific's comprehensive auger drilling and pit sampling program at Nendo has identified the presence of widespread high-quality bauxite mineralisation over a large area of uplifted paleo-limestone in the western part of Nendo Island, confirming the project as a quality asset prospective for direct shipping tenor (DSO) bauxite. The main target area defined by this work is about 12km by 2km and remains open to the east within similar terrain. Average sampling results include 41.21% alumina and 1.7% silica for laboratory tests and 43.35% alumina and 4.22% silica for field XRF tests. Results show the tenor of alumina content is fairly consistent. Upon completion of the acquisition, the company immediately started field work, including auger drilling in higher grade areas for the purpose of delineating a maiden JOCR resource estimate as well as trenching to validate auger sampling methodology and the identification of new areas favourable for bauxite mineralisation. The immediate future for bauxite looks promising, supported by speculation that a boom period for bauxite is imminent driven by demand from China. Pacific Bauxite believes there is good poten- tial to identify and develop a low capital cost, DSO bauxite mining operation at Nendo, which potentially offers a simple and very cost effective pathway to development and production. Pacific Bauxite gains Solomons projects Drilling at Lion One Metals' Tuvatu Gold Project on the Fijian island of Viti Levu. EPC signed for Tuvatu project

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