Positive Result From Wetar Copper Project DFS
12 November 2009 - 8:50AM
UK Regulatory
TIDMFND
Positive Result From Wetar Copper Project DFS
Finders to order long lead items for Stage 1 expansion
Highlights
Results of the Wetar Copper Project Definitive Feasibility Study
(DFS) indicate an economically robust project with a mine life of
approximately nine years.
Life of mine operating costs are estimated to be US$1.00/lb Cu and
the project has a total funding requirement of up to US$118 million.
After review of the DFS results, the Finders board has approved:
* Ordering of long lead items to fast track Stage 1
(Expanded Demonstration Plant); and
* A further review of mining schedules, waste and ore
movement, and mining indirect costs relating to the
Stage 2 expansion with the expectation of being able to
reduce the funding requirement.
Land compensation and community assistance agreements are in place.
Project development will comprise three stages, with Stage 1 being
the expansion of the current 1,800 tpa copper cathode demonstration
plant to 5,000 tpa (referred to as the Expanded Demonstration Plant,
or EDP), followed by final expansion to 23,000 tpa copper cathode
utilizing the Whim Creek SX-EW plant under option to Finders. Stage
3 is the development of the Lerokis pit and haulage of Lerokis ore to
the Kali Kuning plant to maintain copper cathode production at 23,000
tpa.
Stage 1 uses expanded heap leach areas all within the footprint of
the existing disturbed area from previous mining at the Kali Kuning
deposit. It has the distinct advantage of making Finders a
profitable copper producer at the earliest opportunity, and of equal
importance, it significantly reduces the construction risk in Stage
2. The timeline for achieving Stage 1 production is expected to be
five months after completion of the permitting process.
Stage 2 comprises expansion to 23,000 tpa copper cathode, comprising
on-going production of 5,000 tpa from the expanded demonstration
plant plus an additional 18,000 tpa, utilizing a newly constructed
pad area in the adjacent Kali Kuning valley and the Whim Creek SX-EW
plant. Subject to obtaining project finance, full capacity cathode
production is expected to be reached within 12 months of Stage 1
completion.
Stage 3 development envisages additional ore feed from the Lerokis
deposit to maintain full production levels at the existing plant and
is expected to commence in Year 3 of operations.
Finders and its local partner, PT Batutua Kharisma Permai, have been
working closely with the appropriate authorities in preparation of
all supporting documents ready for an application for a mining
permit. The requirements under the new 2009 Indonesian Mining Law are
similar to those under the previous legislation, except for new
articles relating to local communities.
Finders currently foresees no material impediments to the grant of
the necessary permits once final implementing rules and regulations
are issued by the Government. Finders is pleased to report that land
compensation and community development agreements have already been
signed.
Key results from the DFS on a 100% project basis, using the
approximate current spot copper price of US$6,500/t are summarized
below.
+-------------------------------------------------------------------+
| Ore Tonnes* | 8.4 | Million tonnes |
|---------------------------------------+----------+----------------|
| Strip Ratio | 1.0 | |
|---------------------------------------+----------+----------------|
| | | |
|---------------------------------------+----------+----------------|
| Life of Mine (LOM) Production | 146,000 | Tonnes cathode |
|---------------------------------------+----------+----------------|
| Mine Life | 8.7 | Years |
|---------------------------------------+----------+----------------|
| Average Grade (LOM) | 2.5% | Cu |
|---------------------------------------+----------+----------------|
| Average Recovery (LOM) | 71% | |
|---------------------------------------+----------+----------------|
| | | |
|---------------------------------------+----------+----------------|
| Average operating cost (LOM) | US$ 1.00 | per lb Cu |
|---------------------------------------+----------+----------------|
| Capital - Stage 1 / EDP | US$ 12 | million |
|---------------------------------------+----------+----------------|
| - Stage 2 / incl. | | |
| Whim Ck | US$ 91 | million |
|---------------------------------------+----------+----------------|
| Working capital | US$ 15 | million |
|---------------------------------------+----------+----------------|
| | | |
|---------------------------------------+----------+----------------|
| Pre-tax Payback (Stages 1 & 2) | 1.4 | years |
|---------------------------------------+----------+----------------|
| Pre-tax NPV10 | US$ 240 | million |
|---------------------------------------+----------+----------------|
| Pre-tax IRR | 60% | |
+-------------------------------------------------------------------+
* Includes 0.2Mt of Inferred Resource within the pit shell
These capital estimates include a total of almost US$40 million in
indirect costs included in vendor and contractor quotations,
principally for the earth-moving component of the initial pre-strip
and pad construction and for EPCM (overall management and delivery)
for Stage 2.
Finders' management considers that significant savings to capital
estimates are possible on the basis of its review of the DFS and have
identified changes to the leach pad design, alternative waste dump
locations and improvements to the mining schedule which are likely to
achieve these savings.
Furthermore, funding required for the project includes US$12 million
for extra production capacity in the EDP and US$10 million for an
acid neutralisation plant which were not considered in preliminary
studies and are included in the DFS as a means of de-risking the
project for debt finance and based on experience from the
demonstration plant.
Chris Farmer, Managing Director, said:
"The staged expansion route chosen for the Wetar project provides a
minimum development risk approach, and also greatly increases the
company's options to secure favourable financing terms for the full
scale project while retaining the maximum value for shareholders. The
EDP will be an economic mine on a stand alone basis at current and
lower copper prices, and the full scale operation will have cash
costs at the mid point of world copper producers."
For further information please contact
Finders Resources Ltd:
Russell Non-Executive Chairman +61 2 9211 8299
Fountain
Chris Farmer Managing Director info@findersresources.com
Financial PR:
Doug Macdonald Capital Group (in +61 424 255 959
Australia)
Nick Elwes College Hill (in the UK) +44 20 7457 2020
RFC Corporate Finance Ltd - Nomad:
Rob Adamson Managing Director +61 2 9250 0000
Stuart Laing Executive Director +61 8 9480 2500
FinnCap - Finders' Broker for the AIM market:
Mathew Robinson Corporate Finance Director +44 20 7600 1658
Joe Lunn Analyst +44 20 7600 1658
Competent Person Statement
The information in this report that relates mineral reserve
estimation is based on work completed by Mr John Wyche who is a full
time employee of Australian Mine Design and Development Pty Ltd and a
member of the Australasian Institute of Mining and Metallurgy. Mr
Wyche has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the 'Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves'. Mr Wyche
consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
Background Information on the Wetar Copper Project
(FND 94% and earning through expenditure)
The Wetar Copper Project comprises two high grade deposits, Kali
Kuning and Lerokis, which are located within 3km from the coast and
suitable for open pit mining with a low waste:ore ratio. Ore
reserves, independently assessed by Australian Mine Design &
Development Pty Ltd (AMDAD) and in accordance with the JORC Code, are
as follows:
Wetar copper reserves
Category Tonnes Grade % Contained Contained
(m) Cu Copper (kt) Copper
Attributable to
Finders (94%)
(kt)
Kali Kuning
Pit Proved 4.91 2.5 123 116
Probable 0.85 2.2 19 18
Sub-Total 5.76 2.5 142 133
Lerokis Pit Proved 2.05 2.4 49 46
Probable 0.37 2.3 9 8
Sub-Total 2.42 2.4 58 55
Combined Proved 6.96 2.5 172 162
Probable 1.22 2.2 28 26
Total 8.18 2.5 205 193
100% project basis. The tonnes and grades are stated to a number of
significant digits reflecting the confidence of the estimate. Since
each number and total is rounded individually the columns and rows in
the above table may not show exact sums or weighted averages of the
reported tonnes and grades.
These Reserves were estimated using a cut-off of 0.5% copper for two
pits at Kali Kuning and Lerokis with an overall waste to ore ratio of
0.98. The results represent a 94% and 97% conversion of Measured and
Indicated Resources to Reserves at Kali Kuning and Lerokis
respectively, and form the basis for the production schedules used in
the DFS.
In addition there is a third deposit Meron, located 2 km from Kali
Kuning. This prospect has a potential size of 1mt @ 2.3% Cu
(Non-JORC compliant) based on historical drilling results from the
previous gold mining operation.
Copper mineral species at Kali Kuning and Lerokis are dominated by
chalcocite and covellite, which are readily amenable to bacterial
assisted leaching, and chalcopyrite which leaches faster at higher
temperatures. A two year laboratory test program indicated copper
recoveries of up to 80%.
As part of a definitive feasibility study, a demonstration SX-EW
plant with 5 tonnes per day copper cathode capacity has been
operational since February 2009 and is permitted to process 100,000
tonnes of ore from the Kali Kuning deposit. The test heaps are at
heights similar to commercial operations worldwide and the SX-EW
technology being used is industry standard.
SX-EW technology is currently responsible for approximately 22% of
the world's copper production.
The project is at the same location as an old gold mine which
operated between 1989-1997 and benefits from having existing
infrastructure in place, particularly a wharf, camp and roads.
Disclaimer
This announcement may or may not contain certain "forward looking
statements". All statements, other than statements of historical
fact, which address activities, events or developments that Finders
believes, expects or anticipates will or may occur in the future, are
forward looking statements. Forward looking statements are often, but
not always, identified by the use of words such as "seek",
"anticipate", "believe", "plan", "estimate", "targeting", "expect",
and "intend" and statements that an event or result "may", "will",
"can", "should", "could", or "might" occur or be achieved and other
similar expressions. These forward looking statements reflect the
current internal projections, expectations or beliefs of Finders
based on information currently available to Finders. Statements in
this document that are forward-looking and involve numerous risks and
uncertainties that could cause actual results to differ materially
from expected results are based on the Company's current beliefs and
assumptions regarding a large number of factors affecting its
business. Actual results may differ materially from expected results.
There can be no assurance that (i) the Company has correctly measured
or identified all of the factors affecting its business or the extent
of their likely impact, (ii) the publicly available information with
respect to these factors on which the Company's analysis is based is
complete or accurate, (iii) the Company's analysis is correct or (iv)
the Company's strategy, which is based in part on this analysis, will
be successful. Finders expressly disclaims any obligation to update
or revise any such forward looking statements.
=--END OF MESSAGE---
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