The Asia Miner

OCT-DEC 2017

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

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Volume 14 • Issue 4 | 2017 | ASIA Miner | 21 Philippines THE Runruno gold operation of Metals Ex- ploration plc continues to experience diffi- culties in the BIOX circuit ramp-up. Oper- ationally all other aspects of the project continue to strengthen with the mining and non-BIOX aspects operating at or around design levels. On September 19, Metals Ex issued a statement that said, "After encouraging results when the BIOX circuit ramped-up strongly to around 50% throughput it has again passivated with currently limited ma- terial being processed through the BIOX circuit." It said the setback had been disappointing following the relatively good progress made during August. It is the latest in a series of delays and setbacks that has plagued the project. Metals Ex said, "Initial test work points to- wards the presence of algae in the return process water which has interfered with the performance of BIOX bacteria, at higher throughput levels. "Engineering solutions have been identi- fied to manage the presence of the algae and are being implemented, while further investigations and test work are being un- dertaken as a basis to continuously mitigate the impacts of algae in the process." The AIM-quoted company said ramp-up of the BIOX circuit would commence once the engineering solutions had been imple- mented, after which there would be a period WITH mining activity at Siana Gold Project halted, Red 5 Limited has carried out engineering studies which have demonstrated the potential to enhance the financial outcomes of the proposed under- ground mine development. The studies have continued after the first phase of underground development was suspended in May. An internal review of the June 2016 feasibility study completed by Mining One is ongoing, with the aim of identifying opportunities to further reduce capital and operating costs associated with the proposed underground operation. Key outcomes include: • Forecast production remains at 504,000 ounces at an annual rate of about 60,000 ounces over an initial 8-year production mine life; • Forecast life-of-mine All-in Cost of approximately US$900- US$950 per ounce, previously US$930-US$980, and All-in Sustaining Cost of approximately US$790-US$840 per ounce, previously US$800-US$850; and • Updated maximum draw-down capital cost, staged over 27 months, is now estimated at US$46 million, including a US$3 million contingency and US$3.5 million already expended, com- pared to US$60 million CAPEX outlined in the June 2016 study. Red 5 is investigating further opportunities to reduce costs. Paramina, a Philippines underground mining contractor, made good progress with underground development before the suspen- sion, utilising low-cost methods including hand-held rock drills and small loaders, with a peak workforce of 80. Combined development of the main, escape way and ventilation declines, including sundry development, reached approximately 445 metres. Incline development from Portal 3 broke through to join up with the main Portal 1 decline prior to the completion of activities, marking a significant milestone in underground development. On April 18, Red 5's Philippine-affiliated company, Greenstone Resources, advised the Mines and Geosciences Bureau that open pit mining operations at Siana would be suspended with immediate effect. This decision was made as a result of: • The operational impact which the ongoing uncertainty regarding regulatory and government mining policy in the Philippines has had on the group's operations; and • The group's assessment of the likely resulting changes to open pit operations after taking into account the delay in the approv- al of the Environmental Compliance Certificate amendment for the long-term Tailings Storage Facility (TSF) and other mining challenges. Studies improve Siana underground potential A section of the processing facilities at Runruno Gold Project. BIOX circuit setback at Runruno of time required for the bacteria to recover sufficiently to allow feeding to recommence. Metals Ex is being assisted by Biomin, the intellectual property owners of the BIOX pro- cess, who have a presence throughout di- agnostic and remediation works, and during early feeding. Meantime, the project has obtained a third tree cutting permit and works have com- menced preparing the access to the over- flow waste dump site. All required blasting permits have also been obtained, which provides the project with the flexibility to schedule blasting as required. The company has recently finalised a US$21 million mezzanine debt facility with its two major shareholders Runruno Hold- ings Ltd and MTL (Luxembourg) Sarl. The documentation was completed on Septem- ber 29 and funds were drawn down to re- pay two short term loans received from the shareholders totaling $12 million. The bal- ance was utilised to facilitate a capital and interest payment to senior lenders. The two shareholders will participate throughout the facility on a pro-rata basis to their current shareholding.

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