Eastern Platinum releases NI 43-101 report on Barplats
2017-09-18 06:49 ET - News Release
Ms. Diana Hu reports
EASTPLATS REPORTS ON AN INDEPENDENT TECHNICAL REPORT ON
BARPLATS ZANDFONTEIN UG2 TAILINGS RETREATMENT PROJECT
TO RECOVER CHROME
An independent technical report (ITR), including chrome mineral
reserve estimate and economic assessment, by Sound Mining
(Pty.) Ltd. on Eastern Platinum Ltd.'s Barplats Zandfontein UG2
tailing storage facility (TSF), located at Crocodile River mine, has
been completed and is effective Sept. 1, 2017.
Highlights:
- Previously announced mineral resource estimate of 13.68 million tons at an average grade of 20.72 per cent chromium oxide (see Aug. 11, 2017, news release);
- Mineral reserve estimate of 6.42 million tons, containing 1.44 million tons of chromium oxide at an average grade of 22.36 per cent;
- Estimated after-tax net present value of 42.2 million South African rand ($3.25-million (U.S.)) using 13-per-cent discount rate;
- Estimated operating costs of 71.26 South African rand (run of mine)/($5.49 (U.S.)) per ton processed;
- Estimated after-tax internal rate of return of 24 per cent with a 33-month mine life;
- Estimated capital costs for the project of 219 million South African rand ($16.87-million (U.S.));
- Recommendation to prepare platinum group minerals (PGM) feasibility study.
Diana Hu, chief executive officer, commented: "Eastplats is pleased with Sound Mining's confirmation of the mineral reserves and project economics, which can enable near-term revenue opportunities for the company. The recommendation to further investigate the PGM opportunities provides additional upside for this project creating greater opportunities for Eastplats and its stakeholders."
Mineral reserve
A total proven and probable mineral reserve estimate of approximately 6.42 million tons of tailings material containing 1.44 million tons of chromium oxide at an average grade of 22.36 per cent.
MINERAL RESERVE ESTIMATE AS AT SEPT. 1, 2017 Category Quantity Grade Cr203 Content Cr203 (mt) (%) (mt) Proved mineral reserve 6.25 22.42 1.40 Probable mineral reserve 0.18 20.28 0.04 Total mineral reserve 6.42 22.36 1.44 Notes: Cut-off grade of 20.5 per cent. Mineral reserves include mineral resources; mineral resources that are not mineral reserves do not have demonstrated economic viability; no inferred mineral resources are included in mineral reserve estimate. PGMs are excluded from the mineral reserve estimate. Material risks include chrome price fluctuation, politically motivated unrest, illegal squatting and failure of the TSF wall.
The chrome mineral reserve estimate has a high confidence level, with 97.3 per cent of the estimate falling into the proved category and 2.7 per cent falling into the probable category.
Economic assessment
Sound Mining is of the opinion that the company will be able to get the chrome cost-efficiently into the Chinese market, where demand is the highest. Chrome prices were adjusted as the metals are sold as a 40-per-cent concentrate, and therefore only attract a percentage of the metal value.
At a free-on-mine price of 870.79 South African rand/ton for concentrate of 40 per cent chrome, the project could achieve a cash margin of 10 per cent and an operating margin of 14 per cent. Average total cost of production after capital, operating cost and royalties, excluding further exploration drilling, corporate overhead and financing costs is estimated to be 110.03 South African rand (rom)/ton processed. Sound Mining added additional contingencies to the operating cost models, as set out in the ITR.
The net present value of the project, discounted at 13 per cent per annum, is estimated to be 42.2 million South African rand, with an annualised internal rate of return of 24 per cent over a 33-month period. The project is forecast to generate a positive cash flow in month 10 and break-even in month 25. Positive cash flows averaging 12.9 million South African rand/month, after payment of royalties, are forecast over the remaining life of mine.
Recommendation
Sound Mining recommends that Eastern Platinum consider a feasibility study on PGM recovery in the TSF as there may be substantial value in same.
Qualified person
The information contained in the associated table conforms to the requirements of National Instrument 43-101 -- Standards of Disclosure for Mineral Projects -- and was prepared and verified by Vaughn Duke, PrEng, PMP, MBA, BSc, mining engineering (honours), who is a qualified person as defined in NI 43-101. Full details of the methodology used in the estimation of the chrome mineral reserves, project summary and economic analysis are set out in a technical report entitled "Zandfontein tailings retreatment project to recover chrome" to be filed on Eastern Platinum's SEDAR profile.
The qualified person for the purposes of NI 43-101 who approved the contents of this news release is Dr. Bielin Shi, PhD, MSc, FAusIMM, MAIG.
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