TIDMGGG
RNS Number : 1672U
GGG Resources PLC
19 December 2011
19 December 2011
GGG Resources plc
(the "Company" or "GGG")
Bullabulling Scoping Study Completed
Highlights
-- 230,000 ounces of annual recovered gold production targeted
-- 7.5 million tonnes per annum base case plant size
-- Capital costs of A$366 million
-- Significant OPEX cost reduction potential
-- IRR of 29% at A$1,500/oz (IRR of 42% at A$1,700/oz)
-- Reduced CAPEX costs being studied with external consultants
-- Ten year plus mine life targeted
-- Full pre-feasibility study underway, reporting in Q3 2012
Commenting on the Scoping Study Results, Jeff Malaihollo, GGG's
Managing Director said:
"With over 200,000 ounces of annual gold production targeted,
the Joint Venture is proceeding with a full pre-feasibility study,
which it expects to complete by the third quarter of 2012. This
will be initially based on a 7.5 Mtpa processing operation and a
new resource model due in Q1 2012 that will be upgraded to include
the current infill drilling results. The pre-feasibility study will
refine the costs estimation and allow the establishment of a maiden
reserve for the project."
Overview
The Bullabulling Joint Venture is pleased to announce the
completion of an initial Scoping Study prepared by the joint
venture at the Bullabulling Gold Project that has delivered
positive and encouraging results. The aim of the Scoping Study was
to examine the potential economic and technical viability of a
large tonnage - low grade open cut mining operation at
Bullabulling. The study is an initial attempt to estimate the
capital and operating costs based on the current inferred and
indicated resources and the estimated costs have an accuracy of
+/-30%.
The 6.0km long Bullabulling Trend (between Bacchus and
Bonecrusher pits) has been the focus of the Study where resource
drilling and assessment programmes to date have been concentrated.
Based on the current Indicated and Inferred Resources at
Bullabulling the Scoping Study base case suggests that a large
scale open pit mining and carbon-in-leach (CIL) operation producing
7.5 million tonnes per year of ore with a run of mine (ROM) grade
of 1.04 g/t Au could generate approximately 2.1 million ounces of
gold recovered at a cash cost of A$968/ounce and deliver a before
tax NPV of A$389M and IRR of 29% using a gold price of A$1,500.
The main results from the study suggest that:
-- The project has sufficient resources to target an operation
with a minimum 10 year mine life.
-- The metallurgy has no issues and recoveries for the operation
should range from 92.5% to 94.0%.
-- Annual production should average around 230,000 ounces with a
life of mine production of 2.15 million ounces.
-- Initial estimates of operating costs of approximately A$30
per tonne of ore treated, with potential for significant
improvements in both mining and processing operating costs.
-- Capital costs of approximately A$366 million, again with potential for improvements.
-- Using a 6% discount rate and gold price of A$1,500/ounce the
NPV is A$389M with an IRR of 29%(NPV of A$703M and IRR of 42% at
A$1,700/ounce).
-- No identified environmental or social issues to developing the project.
-- Current infrastructure including water bores, haul roads and
pit voids are in good condition and can be used for the proposed
operation, although for some it needs upgrading and expansion.
Scoping Study Details
Mineral Resources and mining inventory
The Bullabulling Mineral Resource as previously released to AIM
and the ASX in August 2011 was used as the basis for the scoping
study and included both Indicated and Inferred resources. The
Bullabulling estimate was compiled by Snowden in 2011, the
Gibraltar estimate was compiled by CSA Global in 2010 while the
Laterite dump estimate was compiled by the Joint Venture from data
taken from previous company reports dated 1998. The Gibraltar and
Laterite dump resources have been excluded from the resource
inventory for this study.
Bullabulling Mineral Resource (August 2011) at a 0.5 g/t cutoff
(JORC, 2004)
Mineralisation Cut Class Tonnes (Mt) Gold grade Contained
Type off g/t Ounces
(g/t
Au)
----------------------- ------ ---------- ------------ ----------- ----------
Bullabulling Laterite 0.5 Inferred 1.6 0.89 45,700
----------------------- ------ ---------- ------------ ----------- ----------
Bullabulling Fresh 0.5 Indicated 21.0 1.01 691,000
----------------------- ------ ---------- ------------ ----------- ----------
0.5 Inferred 50.9 1.03 1,683,900
----------------------- ------ ---------- ------------ ----------- ----------
*Bullabulling
Trend Total 73.8 1.02 2,420,600
----------------------- ------ ---------- ------------ ----------- ----------
Gibraltar 0.5 Inferred 4.5 1.12 161,900
----------------------- ------ ---------- ------------ ----------- ----------
Laterite Dumps 0.5 Indicated 0.5 1.20 20,700
----------------------- ------ ---------- ------------ ----------- ----------
Grand Total 78.8 1.03 2,603,100
----------------------- ------ ---------- ------------ ----------- ----------
*Note: The Bullabulling Trend resource is quoted for blocks with
a grade of greater than 0.5 g/t and the tonnage figures for the
fresh mineralisation have been discounted by 7% to allow for the
impact of barren pegmatite dykes.
Grade-tonnage table for the current resource of Bullabulling
Trend
(excluding Gibraltar and Laterite Dumps)
Cut Off Tonnes Au g/t Ounces Gold
1.5 10,788,169 2.36 819,500
1 23,053,536 1.74 1,292,600
0.9 28,301,988 1.60 1,453,300
0.8 35,647,859 1.44 1,653,400
0.7 44,424,667 1.30 1,863,100
0.6 56,511,541 1.16 2,112,700
0.5 73,875,494 1.02 2,417,500
0.4 102,359,462 0.86 2,826,500
0.3 145,928,029 0.71 3,310,300
================= ===================== ================ =====================
The current planned infill drilling programme has been designed
to convert the predominantly Inferred resource at Bullabulling to
Indicated resource category and this new resource estimate,
targeted for Q1 2012, will be used in the pre-feasibility
study.
Mining
This Scoping Study is based on the development of a large scale
open pit mining operation using bulk mining methods and assuming
mining cost inputs independently sourced from equivalent large
scale Eastern Goldfields operations. The bulk mining approach also
strongly influenced the parent block size utilised in the resource
estimate. Significant historical open pit voids already exist and
these provide early access to ore production, and some ability to
blend fresh and oxide ore early in the mine schedule. Excavation,
load and haul costs are based on dry hire rates. It is assumed that
stockpiling of marginal low grade ore will be adopted and that
backfilling of pit voids with waste rock will be conducted wherever
possible. The study also assumes that RC drilling will be utilised
for grade control.
Mining costs of $3.41/tonne of material mined were developed by
consultants using databases from large scale operations in the
Eastern Goldfields. The Joint Venture believes this estimate is
conservative and can be improved during the pre-feasibility
study.
Whittle optimisations were conducted at various gold price and
throughput scenarios. The optimisations produced waste to ore strip
ratios of 3.7:1. A very high percentage of the current resources is
included in all the pit shells, which results in all scenarios
having long mine life. The large quantity of mineralisation
captured in the pit shells and long mine life allows for the
implementation of stockpiling and cut-off grade management
strategies to increase project value.
Two waste dumps have been planned to be centrally located to
minimise waste haulage costs, assuming that waste dumps can be
constructed to 30m height. Once the pit void waste disposal program
has been defined with greater confidence, final dump designs can be
finalised.
Propriety consultant software was utilised to develop a mining
sequence and stockpiling and backfilling schedule. This assessment
identified that mining should commence at the Phoenix and Bacchus
areas, and confirmed that stockpiling marginal ore and backfilling
pit voids will materially increase project value.
The open pit areas defined by the scoping study extend over a
7km strike and reach 160m to 180m final depth. Importantly the bulk
of the material will come from two large pits, which will reduce
the project strip ratio. The main pit that contains 70% of the
material to be mined stretches four kilometres from Bacchus South
to Hobbit and the second pit that contains 15% of the material to
be mined covers a one kilometre strike of the Bullabulling trend at
Bonecrusher to Dickson.
The scoping study did not include detailed pit designs and this
work and a more detailed study using variable mining costs related
to distance from the plant and ore stockpiles will be included in
the pre-feasibility study.
Processing
Historical processing of predominantly oxide and transitional
ore indicates that the ore is free milling with the gold readily
recoverable using conventional cyanidation technologies. As the
resource estimate for this study contains a high percentage of
fresh mineralisation, the recently released (14 November 2011)
metallurgical testwork programme specifically focused on fresh rock
mineralisation with the results being used as the basis for the
scoping study. The following conclusions were drawn from the
scoping study recovery testwork and historical data:
-- No significant deleterious elements identified.
-- The base case grind size selected is a P(80) of 75 microns.
-- Gold recovery of 92.5% to 94.0%.
-- No Gravity circuit.
-- CIL residence time of 24 hours.
-- Oxygen and lead nitrate addition to leach.
-- 0.4 kg/t cyanide consumption.
-- 4.0 kg/t lime consumption.
-- Carbon loading 2,500 g Au/t.
The main findings of the comminution testwork indicated
that:
-- The samples are reasonably competent with (A * b) values between 32 - 47,
-- Ball work indices are low to moderate at 10 - 15 kWh/t,
-- Variability between samples was quite low,
-- The Abrasion index was low to moderate,
Capital, Infrastructure and Operating Costs
The Bullabulling project has excellent road access with the
Great Eastern Highway bisecting the project and the large
population centres of Coolgardie (25km) and Kalgoorlie-Boulder
(60km) in close proximity. The Western Power grid power line passes
the site and the Perth to Kalgoorlie water pipeline is situated
alongside the highway. There is an existing small site camp
supporting the current resource drilling programme. Services to
support the operation will be provided from Kalgoorlie and Perth.
However, infrastructure will have to be installed to provide
facilities for plant and infrastructure maintenance and provision
of power and water supplies.
The cost estimation for the CIL process plant and associated
services are based on a typical gold plant flowsheet. Two grinding
circuit alternatives have been considered:
1) single stage crushing and a SABC comminution circuit; and
2) three stage crushing followed by ball milling.
The remainder of the circuit in each case comprises CIL,
thickening, AARL desorption, gold room, reagents and air and water
services. The plant infrastructure also includes site roads and
buildings and tailings storage facility. Assumptions include
-- water will be sourced from the known borefield located 2 km from the proposed plant site
-- an EPCM contract approach will be adopted for CIL plant construction
-- the construction workforce will be accommodated in Kalgoorlie and travel by bus to the site
-- power will be sourced from the grid (a specific power supply study has yet to be conducted)
-- a conceptual TSF design has been used for the purposes of
preliminary capital cost estimation and site layout planning
Capital and operating cost estimates have an accuracy of +/-30%,
with a number of conceptual sources of costs adopted from
assumption derived from current similar operations and from advice
from the consultancy groups involved in the study. The most
important assumptions are that grid power will supply 100% of the
power supply required and that the required water supply will be
acquired or found locally. The study also does not include funding
costs or tax.
Capital and operating cost estimates for process and
administration were generated for 3.5, 5.0, 7.5 and 10.0Mtpa
processing scenarios. For each of the four process rate scenarios,
alternative comminution circuit arrangements, namely single stage
crush SAG and ball mill (SABC circuit) and three stage crush and
ball mill were assessed.
The process operating cost estimate of $13.65/t ore treated has
been compiled from a variety of sources including consultant price
databases, modelling testwork undertaken, and employment levels and
conditions from current operations.
Financial Outcomes
The financial model developed for the Study assumed a production
rate of 7.5 Mtpa, and a base case gold price of A$1,500/oz. The
financial model indicates that the project will produce 2.1M ounces
over a 9.2 year mine life, averaging gold production of 233,000
ounces per year with cash costs of gold production averaging A$968
per ounce over the mine life. Project start-up capital costs total
A$366.5M. The pre-tax NPV of the project at 6% discount rate is
A$389M and the IRR 29%.
Financial Model Summary
Bullabulling Gold Project, November 2011
Gold price A$1500oz
Mining Physicals
Total material movement Mbcm 148.4
Waste tonnes mined Mt 260.1
Ore mined Mt 69.4
Ore grade mined g/t 1.04
Waste:ore strip ratio t:t 3.7
Mine life years 9.2
Maximum marginal ore in stockpile kt 1,750
Waste backfilled to pit void Mlcm 114.91
Processing Physicals
Total CIL ore processed Mt 69.4
Annual process rate Mt 7.5
CIL grade g/t 1.04
CIL Au recovery % 92.5
Total recovered gold koz 2,149
Ave. recovered gold per annum koz 233.6
Operating Costs
Average mining unit cost $/t material 3.41
Average CIL process & admin
unit cost $/t ore 13.65
Total operating unit cost $/t ore 29.98
Capital Costs
Preproduction & working capital $M 22.5
Start-up capital $M 366.5
------------------------------------ -------------- -------
Cash operating cost per ounce
produced A$oz 968
NPV (6% discount rate) $M 389
IRR% % 29
------------------------------------ -------------- -------
Feasibility Studies and Improving Project Economics
As a low grade high tonnage project, Bullabulling requires
further investigation of opportunities where project performance
can be improved. There is the potential to reduce power
consumption, and thus operating costs, by installing HGPR
comminution technology. The exploitation of potential additional
resources at Gibraltar, CKGM and Jervois heaps needs to be included
in the mine scheduling. Grind optimisation testwork may indicate
that a coarser grind may be able to be utilised with a net economic
benefit. Investigation of alternative CIL process plant design
options will be carried out in the pre-feasibility study that may
reduce capital or operating costs. It is possible that the project
can move towards more project specific design and cost estimation
in high cost areas such as mining costs, TSF design, and plant
design. The project economics are highly sensitive to metallurgical
recovery, therefore further PFS CIL testwork on representative
samples consistent with the average grade of ore mined over the
mine life should be prioritised to determine if higher recoveries
than the 92.5% recovery assumed are possible, and to determine if a
coarser grind size can be utilised.
The mining, excavate, load and haul cost input to this study was
very simplistic with only one unit cost estimate utilised
irrespective of mining depth, haulage distance and material being
mined. Whilst this conceptual approach is broadly adequate for a
scoping study, it is inadequate for detailed scheduling. There is
strong scope for a large variation in mining costs once more
detailed mining cost models are developed. Sourcing or developing a
more detailed cost model and re-running the Whittle optimisations
and Evaluator results should be a high priority in the
pre-feasibility study.
Studies relating to power supply are a high priority and
additional CIL variability testwork is required on samples with
head grades of less than 1.0g/t Au. Additional sources of process
water need to be acquired or found to meet the required base case
requirement. The mining schedule has utilised the Whittle pit
shells rather than pit designs and the conversion of pit shells to
pit designs, which include pit haul ramps, typically results in
some loss of mineralisation and some gain of additional waste.
Additional follow-up mining studies looking at using strategic
cut-off grade is also justified.
The scoping study has provided confidence in moving to the next
stage of project assessment and the JV management board has agreed
to commence a detailed pre-feasibility study that addresses the
issues highlighted by the scoping study. Some of the
pre-feasibility work has already commenced with both water and ore
samples collected for the recommended metallurgical testwork. These
results should be available in Q2 2012, with the pre-feasibility
study due for completion during Q3 2012.
Competent Person Statement
The information in this report that relates to Exploration
Results, Mineral Resources and Ore Reserves is based on information
compiled by Jeff Malaihollo PhD who is a full-time employee of the
Company and Member of The Australasian Institute of Mining and
Metallurgy and the Geological Society of London. He is 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".
Further information, please contact:
Dr. Jeffrey Malaihollo David McArthur
MD, GGG Resources plc (UK) GGG Resources plc (Australia)
Tel: + 44 1992 531820 BBG Management Pty Ltd
www.gggresources.com 41 Stirling Highway
Nedlands, WA 6009, Australia
Tel: + 61 8 9423 3200
----------------------------- -------------------------------
Westhouse Securities Limited Collins Stewart Europe Limited
(UK Nominated Adviser) (Broker)
Tom Price / Martin Davison John Prior / Adam Miller
Tel: + 44 20 7601 6100 Tel: + 44 20 7523 8350
----------------------------- -------------------------------
Neil Boom David Brook
MD, Gresham PR Ltd (UK). Professional Public Relations
Tel: + 44 7866 805 108 (Australia media)
T: + 61 8 9388 0944/ +61 433
112 936
E: david.brook @ppr.com.au
----------------------------- -------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
JVETFBITMBBBBPB
GGG Resources (LSE:GGG)
Historical Stock Chart
Von Dez 2024 bis Jan 2025
GGG Resources (LSE:GGG)
Historical Stock Chart
Von Jan 2024 bis Jan 2025
