sangdong project implementation
Project Implementation
In 2011, Woulfe embarked on an early-startup plan based on the exploitation of the remnant ore in the upper section of the mine. The recent resource estimate justifies this approach and will underpin the feasibility study to be completed in early 2012, with project construction to be fast-tracked. Detailed engineering of the process plant is well advanced.
Following mine approval in June 2010, Woulfe accessed the upper areas of the mine and this assisted in the compilation of the historical data. It was evident that there were substantial infrastructure pillars that could be exploited by modern mining methods, and significantly, there were areas of unexploited Main Zone ore that was not considered in the scoping resource estimate.
Woulfe commenced an aggressive drilling program in 2011 to upgrade the upper section resource to Indicated status for feasibility, and this is an ongoing program to progressively upgrade the resource estimate. The feasibility study is based on a mining rate of 1.2 million tonnes per annum with ore to be sourced initially from the Footwall and Main Zones using a drift and fill mining method. Access will be via a 6m by 6m adit and decline with extraction by conventional jumbos, shovels and haulage trucks.
The crushing circuit will be located within 100m of the adit and will comprise a jaw crusher, screens and a cone crusher. This will be followed by two-stage milling and classification, and three-stage flotation to produce moly, bulk sulphide and tungsten concentrates. The tungsten concentrate will be dried and passed to the APT plant for refining and sale.
The tailings will pass to a backfill plant to be used as paste fill underground, with excess tailings pumped to a dry stack storage facility. Site infrastructure will include a workshop/warehouse complex, mine and administration offices, a small accommodation complex, and utilities. Power will be tapped into the electrical grid with a purpose-built transmission line to be provided under an arrangement with local authorities.
The project implementation plan is based on an Owner Builder approach. A Project Team comprising personnel from Woulfe and its 100% owned Korean subsidiary Sangdong Mining Corporation is responsible for project design, engineering drawings, procurement and overall project management. The project construction manager is the major Korean group HanmiGlobal (formerly known as HanmiParsons).
HanmiGlobal is the largest construction and project management company in Korea and is ranked 18th worldwide, currently engaged in 120 projects in 40 countries. This appointment will accelerate the tendering and appointment of contractors and will contribute to building the mine and processing plants on a cost competitive and time efficient manner. HanmiGlobal have allocated key personnel and have commenced work on the tendering process.
Mine development is to be undertaken by Jinheung Mining Company, an experienced Korean mining contractor. Detailed engineering design of the process plant is being carried out by Contromation Energy Services of Jakarta, with the work reviewed by the Project Team and verified to Korean regulations by HanmiGlobal. The construction schedule will depend on the final plant design and the delivery of long lead items, with project commissioning anticipated in the second half of 2013.
The project capital cost is estimated at around US$140 million, including mine development and equipment, and the APT plant. This estimate has been derived using benchmark inputs, and the final cost is expected to be lower, quite possibly significantly lower, given the competitive Korean cost environment. The capital cost of other recent processing operations in Korea inspected by the Project Team supports this expectation.
At steady-state production, the Sangdong operation will produce around 5,000 tonnes of WO3 in APT and 500,000lb of Mo in concentrate. At the current APT price of US$425/mtu APT, this will generate revenue approaching US$200 million per annum, less discounts under the IMC agreement. There are no royalties payable on production, and the corporate tax rate is 22%. The estimated cash operating cost is less than US$200/mtu, less after moly credits, and the capital payback is under two years.
Overall, the Sangdong project is assessed as a very robust development with low inherent project risks given its long operating history and favourable country risk.