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Intermin Resources Limited (ASX:IRC) ("Intermin" or the "Company") is pleased to provide the results of the Teal Stage 2 Feasibility Study ("FS" or "Study") and advises that mining has now commenced. Teal Stage 2 comprises the oxide and transitional material contained in the updated Mineral Resource announced to the ASX on 22 March 2017. The 100% owned and fully permitted Teal gold project is located 12km north west of Kalgoorlie in Western Australia (see Figure 1 in the link below).
HIGHLIGHTS
- Feasibility Study completed for Teal Stage 2
- Free milling oxide and transitional material within the Measured and Indicated Resource Categories (JORC 2012) excluding Teal Stage 1 currently totals ~ 7,600 ounces (see Note 1 below)
- Study findings indicate a financially viable cutback to the existing Teal Stage 1 eastern pit wall with the following results (see Note 2 below):
o Open pit mine design producing 31,000t at a fully diluted grade of 3.1g/t for 3,100 ounces over a 5 month period
o Third party milling at 94% for oxide and 80% for transitional metallurgical recovery produces 2,775 ounces recovered
o Capital development costs of A$0.9m
o All in costs of A$1,069/oz
o At A$1,600/oz gold price, project generates A$1.1m in free cash flow to Intermin
- East wall cutback further reduces geotechnical risk as mining progresses at Teal Stage 1
- Additional ore has been identified for mining within the design but is excluded from the results pending further grade control drilling (see Note 1,2 below)
- Mining operations being conducted by RM Contracting under existing mining alliance (see Note 3 below)
- Ore treatment agreement in place with a third party processing facility
- All statutory approvals in place and project fully funded
- Intermin Board has approved development and mining has commenced in parallel with the completion of Teal Stage 1
Commenting on Teal Stage 2, Intermin's Managing Director, Mr Jon Price said:
"The potential for further stages of the Teal gold mine have always been a part of our future mining project pipeline and the excellent performance of Teal Stage 1 to date has provided additional confidence to commence development of Stage 2.
"Stage 2 delivers incremental cash flow to the business and enables continuity of mining into the March Quarter 2018 when we expect to have the Goongarrie Lady and Teal Stage 3 Feasibility Studies complete for a development decision shortly thereafter."
Overview
Mining of Teal Stage 2 will occur concurrently as Teal Stage 1 is completed and will extend mining operations at the site to the March 2018 quarter.
Feasibility Study Parameters
The FS is based on the following key parameters:
- The March 2017 JORC 2012 compliant Teal gold project Mineral Resource update of 1.49Mt at 2.18g/t Au for 104,443oz (at a 1g/t Au cut-off grade) as announced to the ASX on 22 March 2017.
- Expected depletion of Mineral Resources from mining at Teal Stage 1 of 17,723 ounces (see Note 4 below).
- Oxide and transitional material in the Measured and Indicated Resource Categories of 7,600 ounces (see Note 4 below).
- Open pit mining operations and road haulage conducted by contractors.
- Processing through a conventional third party carbon in leach plant in close proximity.
- Project implementation and oversight by Intermin's own team in conjunction with contractors.
Study Team
The key consultants and companies engaged during the FS and their areas of responsibility were:
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- Geology and Resource estimates Hawker Geological Services and BMGS
- Geotechnical - Mining Pells Sullivan Meynink
- Mining and Ore Reserves Intermine Engineering Consultants
- Metallurgical Test work Metallurgy Pty Ltd
- Processing Facility In house negotiations with third party
milling operators
- Ethnographic / Wayne Glendenning
Archaeological Study (Anthropologist/Archaeologist)
- Environmental GHD and Botanica
Key outcomes of the Feasibility Study (see Note 5 below)
The key FS outcomes for the Project are included in Table 1 (see the link below). The estimated Ore Reserve, which constitutes more than 99% of the production target, has been prepared by competent persons in accordance with JORC Code 2012 (see Note 6 below).
The gold price used to calculate the Mineral Resource, Ore Reserve and financial modelling was set at A$1,600 per ounce.
100% of the material to be processed is classified as Probable Reserve. No material to be processed is currently classified as Inferred Mineral Resource. No material classified as Inferred Mineral Resource is included in the Ore Reserve Estimate.
Mineral Resource
The JORC Code 2012 Mineral Resource estimate for Teal as released to the ASX on 22 March 2017 is summarised in Table 2 (see the link below). This update was compiled by independent consultant Hawker Geological Services.
The Resource estimate is constrained within a nominal +1g/t Au mineralised wireframe with a maximum of 2m internal dilution to determine the portion of the total mineralised inventory within the geological model that has a reasonable prospect of eventual economic extraction. The optimisation utilised mining, geotechnical and processing parameters derived from actual contract rates, an independent geotechnical assessment, metallurgical test work and processing parameters from third party processing agreements.
A plan view of the Teal gold deposit Resource block model and pit design is included as Figure 2 (see the link below).
Mining (see Note 7 below)
RM Contracting will conduct the mining activities using the existing conventional truck and shovel fleet with technical and managerial oversight provided by Intermin. Waste will be mined using a Caterpillar PC1800 excavator and 777 dump trucks with ore mining using the smaller PC1250 excavator. RM will fund 50% of the up-front costs and receive 25% of the net cash flow.
The FS reflects the mining of approximately 150,000 BCM of waste overburden to reach the ore zone followed by ore mining post grade control drilling and modelling for ore mark out. Mining rates will be reduced during ore mining to minimise dilution and maximise ore recovery in accordance with ore geometry. Ore mined will be delivered to the ROM pad for haulage to the processing facility in batches in the 10-15kt range. Pre-stripping is expected to take six weeks followed by grade control and ore mining and treatment over the subsequent fourteen weeks (see Note 7 below).
The FS assumes that the calcrete layer just below the surface and all material below the 321mRL will be blasted.
Ore Reserve (see Note 7 below)
Intermin engaged Intermine Engineering Consultants to conduct the Reserve Study and was completed with the following material assumptions:
- Pit optimisation using slope parameters based on detailed geotechnical assessment by Pells Sullivan Meynink with an allowance for a ramp.
- Mining and haulage costs based on actual rates provided by RM Contracting and local haulage contractors.
- Detailed metallurgical test work from samples collected from recent drilling representing all ore domains within the project. Recoveries of 94% for oxide and 80% for transitional material were applied and are consistent with actual recoveries being achieved from the processing of ore from Teal Stage 1.
- Toll treatment of the ore through a third party processing facility on standard commercial terms.
- Mining recovery and mining dilution based on deposit width and geometry. A mining recovery of 97% and mining dilution of 15% was applied based on experience with Stage 1. All Inferred resources were excluded from the optimisation for estimation of Ore Reserve.
- An Australian dollar gold price of $1,600 per ounce was applied. WA state royalties were subtracted from the gold price as part of the optimisation process.
- Bulk densities were derived from test work and confirmed by data from Teal Stage 1.
- No discount factors have been used due to the less than one year mine life.
The Ore Reserve for the project is reported according to the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, JORC Code 2012. The Mineral Resource was converted to Ore Reserve in consideration of the level of confidence in the Mineral Resources estimate and reflecting modifying factors.
Ore Processing and Production (see Note 8, 9)
Ore mined will be trucked to a third party processing facility where the ore will be processed on a campaign basis or blended with other ore after grade determination through dedicated ore sampling facilities under an agreed sampling protocol. After the removal of approximately 150,000 BCM of waste overburden, ore and waste mining will commence at approximately 10kt per fortnight of ore with ore haulage and treatment to commence immediately.
Metallurgical test work completed on representative ore samples in house and by Independent Metallurgical Operations (Metallurgy Pty Ltd) estimated recoveries for the oxide at 94% (representing 90% of the ore mined) and the transitional at 80% (representing 10% of the ore mined). Reagent consumptions are low to moderate and ore viscosity is low with the ore exhibiting a high gravity recoverable component estimated at 30%.
Metallurgical results indicate ore treatment through a conventional crushing, grinding and gravity circuit followed by standard carbon in leach gold extraction is suitable and appropriate for the ore type. This is supported by the treatment of ore from Teal Stage 1.
Waste and ore mining and ore processing is scheduled to be completed within a five month time frame from commencement with approximately 30m of waste overburden to be cut back in the first one to two months.
Infrastructure, Transport and Services (see Note 8, 9)
The Teal Project is 12km North West of the City of Kalgoorlie Boulder and access is via either the sealed Menzies Highway to the East or the sealed Great Eastern Highway to the South. Site access roads are established via the unsealed fire break to the east and west.
Mine dewatering is in place and based on a number of in pit pumping stations as part of the Teal Stage 1 mining operations. Site establishment has been completed by the mining contractor (see Figure 4 in the link below) comprising site offices, maintenance workshop and fleet go line. Due to the close proximity of Kalgoorlie - Boulder, all staff and external service providers will continue to be based in town.
Capital Expenditure (see Note 8, 9)
The capital cost estimate of A$0.9m represents costs for pre-stripping of approximately 150,000 BCM of waste overburden on the current east wall. The capital cost estimate has been developed with inputs from mining contractors and the Company's management team. It is based on actual mining rates being achieved at Teal Stage 1.
Operating Expenditure (see Note 8, 9)
The operating cost estimates used in the FS are derived from actual costs from the mining contractor RM Contracting, local haulage contractors and the third party mill operator. Contractor rates are of a commercially sensitive nature and have not been disclosed in detail for this reason.
Environmental and Permitting (see Note 8, 9)
The Teal Project mostly contains land systems supporting vegetation types that are common throughout the Eastern Goldfields. There are no identified threatened ecological communities of national or sub-regional significance within the project area. No rare species of flora have been collected on project areas.
GHD's qualified ecologist conducted the fauna investigation concurrently with the flora investigation in September 2010. No habitats were recorded that are considered to be exclusive to the study area. No fauna habitats recorded within the Study Area are considered to be significant. All habitats observed are widespread within the region. Species of birds, reptiles, amphibians and mammals present or likely to visit the site would also be present or visit other similarly vegetated areas in the region. Botanica Consulting prior to the commencement of mining Teal Stage 1 conducted a specific Mallee Fowl survey with no habitats identified.
An ethnographic survey was conducted over the project area in October 2010 by Wayne Glendenning on behalf of Intermin Resources Ltd. Representatives of the Widji Native Title Claimant Group were invited to attend the survey. No ethnographic sites were located within the surveyed area. The Widji Native Title Claimant Group representatives were satisfied that no ethnographic sites will be impacted upon by the Teal Project.
While no native title exists over the project area, the Company recognises that members of the Aboriginal community may hold native title rights over certain areas and may, in the future, lodge new native title claims. The Company will however not be required to enter into any new access/compensation agreements in relation to the areas covered by the Leases. The Company will continue to foster a spirit of cooperation amongst local aboriginal communities and, to the extent possible, will engage members of the communities in its proposed operations.
The Teal Mining Project is located on the Black Flag Pastoral Station, held by Northern Star Resources. This section of the Black Flag station is de-stocked.
All required statutory approvals are in place for mine development. These include:
- Granted Mining Leases - M26/499 and M26/621.
- Granted Miscellaneous License L26/261 for ore transport.
- Mining Proposal/Mine Closure Plan - May 2013 Addendum approved in July 2016.
- Clearing permit - Updated Clearing permit approved in June 2016.
- Project Management Plan (PMP) - September 2015.
- Licence to Take Water (5C) - February 2015.
- Licence to Construct or Alter a Well (26D) - January 2016.
- Approval to access the site and for ore haulage including, crossing a gas and water pipeline, the Kalgoorlie to Leonora rail line, construct a highway entry to the Goldfields Highway and operate in the vicinity of powerlines - 2011- 2013 and updated for 2016.
Economic Evaluation (see Note 8, 9)
The economic evaluation of the project, summarised in Table 3 (see the link below) was conducted by Intermin management based on actual operating experience in the region and actual contract rates received as part of the FS. As project life is five months, the evaluation was conducted on a cash basis with the following key assumptions:
- Australian gold price of $1,600 per ounce.
- Actual contract costs from mining, haulage and third party milling contractors.
- State royalty of 2.5% of revenue.
Funding (see Note 8, 9)
Intermin has a current market capitalisation of $21 million, has $4.9 million cash at bank and investments in ASX listed Companies with a current market value of $1.14 million. Teal Stage 1 is forecast to generate $7-8m with completion in the December Quarter. RM Contracting will fund 50% of the mine pre-strip costs (see Table 3 in the link below).
The Board is confident the Company will be able to finance the Teal Project from existing cash reserves.
Next Steps (see Note 8, 9)
Mining has now commenced at Teal Stage 2. Additional ore has been identified within the mine design and grade control drilling will commence on completion of the east wall cutback to evaluate the economics of mining and processing this material.
Notes:
1 As announced to the ASX on 22 March 2017, see Table 1 and 2 and also Competent Persons Statement on page 9 and Forward Looking and Cautionary Statement on pages 1 and 10.
2 See Appendices 1 and 2 on pages 10 and 11 (see link below)
3 As announced to the ASX on 19 July 2016.
4 See Resource Table 1 and 2 and Competent Persons Statement on page 9 and Forward Looking and Cautionary Statements on page 10 (see link below)
5 As announced to the ASX on 22 March 2017, see also Qualification and Competent Persons Statement on page 9
6 See Competent Persons Statement on page 9 and JORC Code 2012 Table 1 in Appendix 2 (see link below)
7 See Forward Looking and Cautionary Statements on Page 10 and Appendix 1 (see link below)
8 As announced to the ASX on 22 March 2017, see also Competent Persons Statement on page 9
9 See Resource Table and Competent Persons Statement on page 9 and Forward Looking and Cautionary Statements (see link below)
To view tables and figures, please visit:
http://abnnewswire.net/lnk/OJ7P32LR
Jon Price
Managing Director
Tel: +61-8-9386-9534
E: jon.price@intermin.com.au
Lorry Hughes
Director - Business Development
Tel: +61-8-9386-9534
E: lorry.hughes@intermin.com.au
Michael Vaughan
Media Relations - Fivemark Partners
Tel: +61-422-602-720
E: michael.vaughan@fivemark.com.au
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