KEY POINTS
- 2011 Mineral Resources and Reserves Statement released with Zinc Ore Reserves up 103.9% due to the inclusion of Dugald River in estimates.
- The Board has approved expenditure of A$157 million for the next stage of the Dugald River project.
- The Dugald River Environmental Impact Statement has received Queensland Government approval.
- All Mineral Resources, except zinc, have increased due to exploration success.
- Lead, silver and gold Ore Reserves have increased due to the conversion of Mineral Resources to Ore Reserves. This has partly offset mining depletion.
Minmetals Resources Limited (HKSE 1208) (“MMR”) today released its annual Mineral Resources and Ore Reserves Statement with highlights including the significant increase in zinc Ore Reserves with the inclusion of the Dugald River Ore Reserve. A copy of the full MMR Mineral Resources and Ore Reserves Statement is available at www.minmetalsresources.com
Dugald River Development
Dugald River is an undeveloped zinc deposit located in North West Queensland, Australia. When developed, the project is expected to produce approximately 2 million tonnes of ore and 200,000 tonnes of zinc in zinc concentrate per annum from an underground mine with a life of over 22 years.
Coinciding with Dugald River’s inclusion in the Ore Reserves for the first time, the Board was pleased to approve expenditure of A$157 million to develop the next stage of the project. In addition, the Environmental Impact Statement for the mine has now received approval from the Queensland Department of Environment and Resource Manager (DERM).
The next stage will progress project activities up to receipt of full Environmental Approval. Major work will include detailed engineering, metallurgical testwork, long-lead time major equipment procurement, continuation of early site works and underground decline development. Key local infrastructure development including load-out, power and accommodation will also be advanced during this period. Following completion of this phase the Board will consider final approval of project development and construction.
MMR CEO Mr Andrew Michelmore said “Dugald River is one of the largest undeveloped zinc deposits globally and a key feature of MMR’s future project pipeline.”
“If the project continues to move through the stages as planned, Dugald River could commence zinc production and be cash flow accretive in 2014,” he said.
MMR also operates Australia’s largest zinc mine, Century, which produces approximately 500,000 tonnes of zinc in zinc concentrate annually. Given the discrete nature of the Century ore body, current estimates put Century’s mine life ending in approximately 2015. Dugald River has the potential to replace nearly half this annual zinc production.
Mineral Resources
Mineral Resources additions exceeded mining depletion at Rosebery and Sepon gold and partly offset depletion at Golden Grove demonstrating the success of near mine exploration programs. Century and Sepon copper Mineral Resources have decreased in line with mining depletion
Mineral Resources (contained metal) as at 30 June 2011 are estimated to contain 16.4 million tonnes of zinc, 3.3 million tonnes of copper, 2.8 million tonnes of lead, 334.3 million ounces of silver, 7.4 million ounces of gold and 0.26 million tonnes of nickel. In general, Mineral Resources, except zinc have increased since the June 2010 estimate predominantly due to exploration success.
The Avebury Mineral Resource has increased with the extension of the East Avebury and Viking Deep deposits through recent drilling work. MMR will continue to study the economic configuration of Avebury in view of long term price assumptions while the mine remains on care and maintenance. This will include ongoing assessment of third party approaches following the completion of an Expression of Interest process during 2011.
Ore Reserves
Ore Reserves (contained metal) as at 30 June 2011 are estimated to contain 8.1 million tonnes of zinc, 0.9 million tonnes of copper, 1.3 million tonnes of lead, 102.4 million ounces of silver and 0.6 million ounces of gold. The total Ore Reserve estimate for June 2011 represents a significant increase in zinc up 103.9% with the inclusion of Dugald River in the Ore Reserves for the first time.
Other highlights of the Ore Reserves statement included the increase in other mineral ores. Lead was up 126.1% and silver was up 108.2%, there was a minor increase in gold of 1.1% and a 6.1% decrease in copper compared with the June 2010 estimate. Comparison to the 2010 estimate indicates an overall ore tonnage reduction of 11.2 million tonnes due to mill processing at all sites being offset by added Ore Reserves tonnage. This was significant with gold at Sepon up 2 million tonnes, Century up 0.9 million tonnes, Golden Grove up 4.2 million tonnes and Rosebery up 1.4 million tonnes. Sepon copper Ore Reserves decreased 1.6 million tonnes.