18th Sep 2007 07:03
Alexander Mining PLC18 September 2007 18 September 2007 Alexander Mining plc Leon Copper Project Status and Corporate Update • Executive, board and senior management changes - Richard Rossiter, Chief Executive Officer - Terence McConnachie, Non-executive director - Graham Parsons promoted to Head of Argentina Operations • Leon Feasibility Study - Project has robust economics - Standard Bank plc appointed as the exclusive Arranger and Underwriter, subject to due diligence, negotiation and execution of a detailed term sheet for a Leon project loan facility - Detailed engineering work underway - Soliciting quotes for treatment plant equipment - Environmental impact assessment report to be filed shortly • Leon Regional Exploration - Second tranche of drilling results at Arbol Solo highly encouraging - Initial resource calculation on northern structure to be prepared • AmmLeachTM - All corporate options to maximise shareholder value currently being reviewed, which may include an in specie distribution to shareholders to create a standalone business - Confidentiality agreements signed with two major mining industry companies - Third party company samples have been sent for metallurgical testwork - Consultancy agreement signed with Dr Nick Welham, Perth, Western Australia, an Editor-in-Chief of the international journal, Hydrometallurgy • New initiative with Sociedad Terral SA on small scale copper mining opportunities in Chile Alexander Mining plc ("Alexander", the "Company"), the AIM-listed copper, goldand silver mining company with projects in Argentina and Peru, is pleased toissue this corporate update and news on the status of its Leon copper project inSalta Province, northern Argentina. A separate comprehensive technical information document on the Leon Project isavailable for download as a pdf file from Alexander's website using the linkbelow: http://www.alexandermining.com/index.php?category=Investors&pageName=News Executive, board and senior management changes Richard David Rossiter, Chief Executive Officer The Company is delighted to announce the appointment of Richard Rossiter (aged50) as Chief Executive Officer, with effect from 1st October, 2007. Richard isan international resource sector specialist with experience and qualificationsin financial markets (corporate advisory, private equity, equity research, stockbroking and funds) and industry (management, geology, and new businessdevelopment). Most recently, from 2005, he worked with Standard Bank Plc in Australia as Director - Metals & Mining/Private Equity Asia. Prior to that, he held senior positions in natural resources research with JP Morgan (Australia), Macquarie Bank (Australia) and Fleming Martin (South Africa). In his earlier career he worked for General Mining Union Corporation/Gengold in South Africa in various positions, including New Business - Manager, Underground Manager (gold production) and Chief Geologist. Richard holds a B.Sc.(Honours)degree in geology from the University of Natal and an M.Sc. in mineral exploration from Rhodes University in South Africa. He is also Non-executive Chairman of AIM listed Sylvania Resources Limited, and a director of Morning Star Holdings Limited and Falcon Mining Services Limited. Terence Michael McConnachie, Non-executive director Terry McConnachie (aged 52) has been appointed a non-executive director ofAlexander with effect from the 1st October, 2007. He has 25 years' of experiencein the mining industry. He was the founder of South African Chrome & Alloys Ltd,a successful chrome mining company; black empowered and listed on theJohannesburg Stock Exchange. This company was built by Terry over a six yearperiod from scratch to a multimillion rand operation with assets worth well overa billion rand (circa US$350 million). He is well known for identifying miningopportunities and has started many new greenfield operations in gold, manganese,aluminium, graphite and tantalite. He served as CEO of Welprop Mining Servicesand more recently, until 2004, as CEO of SA Chrome and Alloys Limited. He iscurrently the major shareholder and CEO of Alumicor Pty Ltd which isconstructing a multi million rand Aluminium dross and scrap smelting facility inSouth Africa. He is also Chief Executive Officer of AIM listed SylvaniaResources Limited. The Company announces that there is no additional information required fornotification in accordance with Schedule 2 (g) of the AIM Rules. As a result of these new board appointments, Messrs Ashcroft, Lewis and Norwoodwill resign from the board of Alexander with effect from 1st October 2007.However, all will continue to act as advisers to the Company. Graham Parsons, new Head of Argentina Operations Graham Parsons, currently Leon Project Manager has been promoted, with immediateeffect, to Head of Argentina Operations, which will include his continued roleas the Leon Project Manager. The board has approved the granting of anadditional 250,000 Alexander ordinary share options (see below) because of hisincreased responsibility. For personal reasons, Fred Van Dongen, currently ChiefOperating Officer has tendered his resignation and will be leaving the companyin six months' time. Graham Parsons is an MBA qualified mining engineer graduate from the Universityof Nottingham with over 13 years' mining industry experience. He has worked inseveral countries, including Spain, Venezuela and Russia in a range of miningenvironments, including precious metals, base metals, coal and industrialminerals. His experience encompasses both the financial and practical aspects ofthe mining industry. This includes the supervision of operations, as well asforecasting, budgeting and financial modelling. He is fluent in Spanish with amoderate level of Russian. Matt Sutcliffe, CEO and Executive Chairman, who will remain as Alexander'sExecutive Chairman and step down as CEO upon Richard Rossiter starting work,said: "The board welcomes both Richard and Terry to the Company. They willstrengthen our capacity to deliver on our corporate objective of becoming adiversified mid-tier mining company and we will benefit considerably fromRichard and Terry's international natural resources' sector and financialmarkets' experience. Moreover, these appointments will strengthen the Company'scompliance with The Combined Code on Corporate Governance for listed companies.We would also like to thank James Ashcroft, David Norwood and Gordon Lewis fortheir invaluable input to the board and I am pleased that we will be able tobenefit from their advice in the future. In addition, thanks are due to Fred VanDongen for his contribution to the Company." Leon Feasibility Study Standard Bank project financing mandate The Leon feasibility study has been compiled internally by Alexander's seniortechnical personnel and it reviews and summarises the studies carried out byvarious specialist consultants and contractors (see appendix). The key findingsand aspects of the report are summarised below. They show a project with robusteconomics. As a result, a mandate has been signed appointing Standard Bank plc,London, as the exclusive Arranger and Underwriter, subject to due diligence,negotiation and execution of a detailed term sheet, for a Leon project loanfacility. Detailed engineering work Detailed engineering work is underway by Sociedad Terral SA (Terral) and it issoliciting for companies to supply definitive offers on the distinct componentsof the plant construction and engineering. Community Relations Meetings have been held, presentations given and site visits carried out withthe local mayors, the provincial water authority, representatives from a localnational park, the press from the town of Metan and other entities. Further site visits are planned, with amongst others, local teachers and medical staff. Environmental impact assessment All chapters of the circa 600 page report have now been completed and thedocument will be presented to the authorities shortly. Over fifty, primarilylocal, specialists have been involved with the study and report. Project economics It should be noted that although the study is complete to an internalfeasibility study status, in order to satisfy a potential lender's requirementsit is currently being enhanced and optimised for the prevailing taxation regime,ongoing detailed engineering design and costings and the conclusion of someoutstanding technical optimisation work. Accordingly, some of the key figuresare subject to revision. Moreover, we remain confident about extending the Leonmine life from satellite deposits within an economic radius. • A reported JORC compliant resource with 6.43 Mt at 0.64% copper and 17.86 g/t of silver. The design and optimisation for the mining of two open pits and production schedules for an optimised mineable reserve of 4.73 Mt of ore grading 0.66% copper and 17.9g/t silver. • The identification and development of a novel metallurgical process (AmmLeachTM) for the life of mine recovery of approximately 25,000t contained copper and 1.9Moz silver; recoveries of 75% for copper and 70% for silver respectively. • The preparation for the submission to the local authorities of the Environmental Impact Assessment report necessary for the approval for the project's eventual operation. • Engineering studies, carried out to a conceptual level and beyond, including site layout plans, designs for the leach pad and process plant, designs for all other infrastructure and schedules for a 12 month project construction period to build a mine with a five year life producing 5,000tpa of cathode copper and 408,000 oz pa silver. • Detailed capital costing of all necessary project investments currently totalling US$25.0m (US$27.5m with a 10% contingency). • Detailed operating costs for all aspects of the operation resulting in a calculated copper cash production cost of US$1.10/lb (versus a current copper price of around US$3.35/lb; note operating costs are before tax and include mining, processing, sales costs, site administration and are after silver credit at the recent price). • The development of a full financial model for the development and life of the project, including cash flows and sensitivities, which, using recent metal prices, shows the project has a payback of approximately one and a half years. Leon Regional Exploration The Company's strategy is aggressively to seek satellite copper deposits to takeadvantage of a mineral processing facility at Leon and to increase the minelife. Currently the most promising prospect is the Arbol Solo property, some23km due south of Leon. The first phase of diamond drilling at Arbol Solo, totalling 3,473m in 55boreholes, was completed on the northern structure. Data is being compiled andverified, enabling an initial inferred resource calculation. Assay results forthe following holes have been received. +-----------------------------------------------------------------+|Results of first phase drilling on Arbol Solo northern structure || |+--------------------------+--------+--------+------------+-------+| | | |Intersection| || | FROM | TO | WIDTH |COPPER || BOREHOLE NUMBER | Metres | Metres | Metres | (%) |+--------------------------+--------+--------+------------+-------+| ASP07_01 | 20,20 | 32,10 | 11,90 | 0,43 |+--------------------------+--------+--------+------------+-------+| ASP07_02 | 41,00 | 48,45 | 7,45 | 0,52 |+--------------------------+--------+--------+------------+-------+| or | 39,00 | 51,45 | 12,45 | 0,40 |+--------------------------+--------+--------+------------+-------+| ASP07_03 | 23,20 | 34,79 | 11,59 | 0,49 |+--------------------------+--------+--------+------------+-------+| or | 23,21 | 38,21 | 15,01 | 0,43 |+--------------------------+--------+--------+------------+-------+| ASP07_04 | 20,10 | 32,10 | 12,00 | 0,41 |+--------------------------+--------+--------+------------+-------+| ASP07_05 | 41,77 | 48,45 | 6,68 | 0,45 |+--------------------------+--------+--------+------------+-------+| ASP07_06 | 50,40 | 59,21 | 8,81 | 0,36 |+--------------------------+--------+--------+------------+-------+| ASP07_07 | 60,80 | 65,80 | 5,00 | 0,29 |+--------------------------+--------+--------+------------+-------+| ASP07_08 | 57,77 | 63,77 | 6,00 | 0,44 |+--------------------------+--------+--------+------------+-------+| ASP07_09 | 18,70 | 21,70 | 3,00 | 0,59 |+--------------------------+--------+--------+------------+-------+| or | 18,70 | 23,60 | 4,90 | 0,40 |+--------------------------+--------+--------+------------+-------+| ASP07_10 | 34,46 | 38,87 | 4,41 | 0,61 |+--------------------------+--------+--------+------------+-------+| or | 34,46 | 40,51 | 6,05 | 0,48 |+--------------------------+--------+--------+------------+-------+| ASP07_11 | 10,38 | 13,80 | 3,42 | 0,54 |+--------------------------+--------+--------+------------+-------+| ASP07_12 | 29,03 | 39,00 | 9,97 | 0,60 |+--------------------------+--------+--------+------------+-------+| ASP07_13 | 54,00 | 63,40 | 9,40 | 0,45 |+--------------------------+--------+--------+------------+-------+| ASP07_14 | 44,03 | 53,10 | 9,07 | 0,41 |+--------------------------+--------+--------+------------+-------+| ASP07_15 | 42,30 | 50,20 | 7,90 | 0,47 |+--------------------------+--------+--------+------------+-------+| or | 41,10 | 51,40 | 10,30 | 0,40 |+--------------------------+--------+--------+------------+-------+| ASP07_16 | 42,20 | 53,77 | 11,57 | 0,50 |+--------------------------+--------+--------+--------- --+-------+| ASP07_17 | 36,80 | 45,70 | 8,90 | 0,44 |+--------------------------+--------+--------+------------+-------+| ASP07_18 | 40,00 | 41,00 | 1,00 | 0,12 |+--------------------------+--------+--------+------------+-------+| ASP07_19 | 25,00 | 34,00 | 9,00 | 0,44 |+--------------------------+--------+--------+------------+-------+| or | 25,00 | 39,80 | 14,80 | 0,33 |+--------------------------+--------+--------+------------+-------+| ASP07_20 | 10.32 | 26.10 | 15.78 | 0.51 |+--------------------------+--------+--------+------------+-------+| or | 10.32 | 28.30 | 17.98 | 0.47 |+--------------------------+--------+--------+------------+-------+| ASP07_21 | 40,70 | 43,47 | 2,77 | 0,48 |+--------------------------+--------+--------+------------+-------+| ASP07_22 | 44,00 | 46,00 | 2,00 | 0,51 |+--------------------------+--------+--------+------------+-------+| ASP07_23 | 42,30 | 45,80 | 3,50 | 0,35 |+--------------------------+--------+--------+------------+-------+| ASP07_24 | 40,90 | 44,50 | 3,60 | 0,13 |+--------------------------+--------+--------+------------+-------+| ASP07_25 | 45,40 | 47,40 | 2,00 | 0,16 |+--------------------------+--------+--------+------------+-------+| ASP07_26 | 56,72 | 61,89 | 5,17 | 0,35 |+--------------------------+--------+--------+------------+-------+| ASP07_28 | 45,70 | 48,70 | 3,00 | 0,34 |+--------------------------+--------+--------+------------+-------+| or | 45,70 | 50,20 | 4,50 | 0,27 |+--------------------------+--------+--------+------------+-------+| ASP07_29 | 44,50 | 54,50 | 10,00 | 0,31 |+--------------------------+--------+--------+------------+-------+| or | 39,26 | 56,15 | 16,89 | 0,27 |+--------------------------+--------+--------+------------+-------+| ASP07_30 | 47,50 | 56,50 | 9,00 | 0,40 |+--------------------------+--------+--------+------------+-------+| or | 41,00 | 60,90 | 19,90 | 0,27 |+--------------------------+--------+--------+------------+-------+| ASP07_31 | | | | |+--------------------------+--------+--------+------------+-------+| ASP07_32 | 10,54 | 14,40 | 3,86 | 0,39 |+--------------------------+--------+--------+------------+-------+| or | 10,04 | 14,40 | 4,36 | 0,36 |+--------------------------+--------+--------+------------+-------+| ASP07_34 | | | | |+--------------------------+--------+--------+------------+-------+| ASP07_35 | 9,70 | 16,90 | 7,20 | 0,39 |+--------------------------+--------+--------+------------+-------+| ASP07_36 | 8,00 | 17,00 | 9,00 | 0,45 |+--------------------------+--------+--------+------------+-------+| or | 7,44 | 21,50 | 14,06 | 0,35 |+--------------------------+--------+--------+------------+-------+ Note that there is no discrimination between oxides and sulphides. A second phase of drilling is to be completed by using the Company's recentlyacquired man portable 'Sandy' drilling rig. The objective is to improve theconfidence of the resource category. Both the east and west limbs of thenorthern structure are open ended and extensions are currently beinginvestigated on surface. An access road has been partially completed on thesouthern structure and evaluation drilling will commence once the Sandy hascompleted the infill drilling on the northern structure. Systematic detailed surface mapping and rock chip sampling is in progress on thecopper occurrences between Leon and Arbol Solo. A minimum of seven separateoccurrences are known to date. It is planned to do a preliminary 3-D evaluationof these using the Sandy drill. Two mineralised zones to the northwest of Leon and two to the southwest havebeen discovered and are also to be drill evaluated in the future by the Sandy. AmmLeach Limited In order to accelerate the growth of the AmmLeach business, and to realise valuefor shareholders, the Company is reviewing a range of corporate options. Thismay include a potential in specie distribution of shares to shareholders and thecreation of a separate standalone business. Alexander believes that, with the prevailing strength of the mining industry,now is an ideal time aggressively to capitalise on the potential for AmmLeachTMtechnology. The industry is under extraordinary operating and capital costpressure. Hence, the desire for major companies to embrace new cost savingtechnologies has never been higher. Especially for technology with environmentalbenefits like AmmLeachTM, which has the potential for major breakthroughs incopper, zinc and nickel oxides processing. The intention is to use AmmLeachTM asan intellectual property (IP) vehicle to create a mining technology royaltybusiness. AmmLeach has been in discussion with several major mining industry companiesabout its technology and currently confidentiality agreements have been signedwith two. Separately, negotiations are taking place with numerous juniorcompanies about potential specific projects/deposits amenable to processing withAmmLeachTM technology. Two companies have already commissioned AmmLeachTM tocarry out metallurgical testwork in Australia. This will be carried out underthe direction of Dr Nicholas Welham B.Eng. (Hons-Leeds), Ph.D (ImperialCollege, London), DIC, FMES, MAusIMM. Dr Welham is currently a senior lecturerin hydrometallurgy at Murdoch University, Perth, Western Australia and is anEditor-in-Chief of the international journal, Hydrometallurgy. Dr Welham has agreed to be a technical consultant to AmmLeach in the developmentof the technology. He has been granted 1,500,000 Alexander Mining plc ordinaryshare options at an exercise price of £0.30 each. These are exercisable for aperiod of five years subject to the achievement of certain ammoniacalmetallurgical milestones as follows: a) 500,000 Options: exercisable following a Successful Pilot Plant Demonstration for the extraction of zinc from a zinc deposit or resource. b) 500,000 Options: exercisable following a Successful Pilot Plant Demonstration for the extraction of nickel from a nickel deposit or resource. c) 500,000 Options: exercisable following a Successful Pilot Plant Demonstration for the extraction of uranium that may also include the extraction of other metals from a uranium ore deposit or resource. AmmLeachTM has potentially significant advantages for treating copper oxide andbase metals deposits, especially those deposits where existing mineralprocessing methods do not work or are uneconomic. These advantages includeoperational, economic and environmental criteria. In particular, initiallaboratory testwork results on zinc have been promising and there is potentialfor a major breakthrough in the processing of previously untreatable zinc oxidedeposits, with the development of the first heap leach zinc mines. Initiative with Terral Alexander is pleased to announce that it has agreed in principle an initiativewhich has already commenced with Terral, the Leon Project metallurgicalconsultants and supplier of the Leon solvent extraction electro-winning pilotplant, to review small scale copper mining opportunities for the Company inChile. Terral is an engineering company based in Santiago, Chile. It has acomprehensive mining industry client base and particular experience of coppermining opportunities in Chile. It is highly specialised in the development ofprocesses, engineering design, the application of technology and the deliveryof supplies and services for hydrometallurgical projects. Granting of management and directors' options In addition to the 1,500,000 options set out above granted to Dr Welham, theboard has approved the granting of the following options: Richard Rossiter: 1,000,000 optionsTerry McConnachie: 250,000 optionsGraham Parsons: 250,000 options All options have a ten year total life, a two year vesting period, and anexercise price of £0.30 each. Appendix The following independent consultants and specialists, with their areas ofresponsibility, have contributed to the compilation of the feasibility study: A.C.A. Howe Geology and Resource EstimationAdam Wheeler Mine Planning, Pit design and SchedulingAlex Stewart (Assayers) Argentina S.A Metallurgical testworkALTA Metallurgical Services Processing conceptual design reviewBM Asesoria Ambiental* EIA preparationBob Dowdell Financial modelingCerro Azul Ltda Haul road designDerk Ltda Chile Geotechnical analysisIndependent Metallurgical Laboratories Metallurgical testworkKnight Piesold Pty. Ltd Geotechnical analysisNicholas Welham Metallurgical consultingRafael Arganaraz* EIA preparationSGS Mineral Services (Canada) Metallurgical testworkSGS Lakefield Research Chile S.A Metallurgical testworkSociedad Terral S.A Conceptual process plant design Metallurgical testworkSterling Process Engineering Processing costs reviewVector Argentina S.A.* Environmental Baseline StudyVector Chile Ltda Conceptual engineering * These consultants have been supported by numerous local and national specialist consultants Qualified person Angus Innes, Alexander's Head of Latin American Exploration, has reviewed andapproved this news release as the Company's qualified person. Angus Innes holds a degree in geology from the University of Witwatersrand inSouth Africa and has over 30 years' experience in exploration and mininggeology. Prior to joining the Company in 2005, he was, for six years, aconsulting geologist to mining companies in South America. He has also worked asExploration Manager for Billiton in Argentina and Bolivia. Before moving toSouth America, Angus was employed as a Senior Geologist for Gencor in SouthAfrica in the Witwatersrand Sedimentary Basin. He has extensive exploration andmine geology experience in sedimentary hosted and hydrothermal copper depositsin South Africa and Namibia. For further information please contact: Matt Sutcliffe Chairman and Chief Executive OfficerAlexander Mining plc1st Floor35 PiccadillyLondonW1J 0DW Tel: +44 (0) 20 7292 1300Fax: +44 (0) 20 7292 1313Mobile: +44 (0) 7887 930758Email: [email protected]: www.alexandermining.com Nominated Advisor and BrokerAlasdair Younie/John PriorArbuthnot Securities LimitedArbuthnot House20 Ropemaker StreetLondonEC2Y 9ARTel: +44 (0) 20 7012 2000 Public/Media RelationsTim BlackstoneBritton Financial PR62 Britton StreetLondonEC1M 5UYTel: +44 (0) 20 7251 2544Mobile : +44 (0) 7957 140 416 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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