31st Oct 2007 07:01
Centamin Egypt Limited31 October 2007 31 October 2007 Centamin Egypt Limited ("Centamin" or "the Company") Quarterly Report for the Quarter Ended 30 September 2007 Highlights • Sukari Mineral Resource upgraded to 6.84 million ounces of gold Measured and Indicated and 3.6 million ounces of gold Inferred • Record Increase of 800,000 oz Measured and Indicated and 600,000 oz Inferred for the 3 month period • Amun Deeps discovery continues to add significant high grade ounces • Drilling continues to encounter significant mineralization in the Pharaoh Zone • 28,807.63 metres of drilling was completed during the quarter • Commencement of Grade Control Drilling • Dismantling of the Kori Kollo Processing Plant in Bolivia completed • Dismantling of 28MW Isparta Power Plant Turkey completed • Delivery and Assembly of Mining Fleet Commences • Significant drill intersections for the quarter Amun Zone (9900N - 10700N) • RCD1177 - 65m @ 18.31g/t Au . RCD1165 - 17m @ 3.98g/t Au . RCD1166 - 23m @ 6.23g/t Au . RCD 1178 - 105m @ 4.10g/t Au and 17m @ 12.45 g/t Au . RCD1187 - 51m @ 4.45g/t Au and 14m @ 4.44g/t Pharaoh Zone (>11200N) . D1164 - 53m @ 3.21g/t Au . RCD756 - 58m @ 3.76g/t . D1179 - 15m @ 4.19g/t Au from surface . D1203 - 148m @ 1.33g/t Au from surface RESOURCE ESTIMATION AND DRILLING PROGRAM The final September Quarter Sukari global resource estimate was calculated to be148.45Mt @ 1.43g/t Au for 6.84 Moz Au Measured and Indicated, and 64.4Mt @ 1.7g/t for 3.6 Moz Inferred, at a 0.5g/t Au cut off grade (Table 1), a 16%increase on the previous quarter. The resource was updated twice during thequarter, the most recent upgrade showed the largest month-on-month increasesince drilling started in 1997; with 660,000oz being added in a 5 week period,highlighting the significance of the Amun Deeps resource extensions, which addedover 80% of the increase. Also of significance is the average grade at the0.5g/t cut off has increased 2.8% for the Measured and Indicated portion (from1.39 g/t to 1.44 g/t) and 6% in the Inferred grade (from 1.6 g/t to 1.7 g/t)during the quarter. Table 1 - Current Sukari Project Mineral Resource Estimate Mineral Resource (September 2007) Total Measured Indicated (Measured + Indicated) Inferred Cut-off Mt g/t Moz Mt g/t Moz Mt g/t Moz Mt g/t Moz 0.5 57.43 1.40 2.6 91.02 1.45 4.2 148.45 1.43 6.84 64.4 1.7 3.6 0.7 41.13 1.72 2.3 65.46 1.79 3.8 106.59 1.76 6.04 47.6 2.2 3.3 1.0 26.50 2.21 1.9 42.57 2.30 3.1 69.07 2.27 5.03 32.7 2.8 2.9 Note to Table: Figures in table may not add correctly due to rounding The resource estimate was independently calculated by Hellman and Schofield PtyLtd ("H&S") and is an estimate of recoverable tonnes and grade using MultipleIndicated Kriging with block support correction. Measured resources exist inareas where drilling is available at a nominal 25 x 25 metre spacing, Indicatedresources occur in areas drilled at approximately 25 x 50 metre spacing andInferred resources exist in areas of broad spaced drilling. The resource modelextends from 9700mN to 12200mN and to a maximum depth of 350RL (a maximum depthof 950 metres below the crest of Sukari Hill). The estimate has been adjustedto present land surfaces and previous underground mining. It was based on110,239 two metre down hole composites and surface rock chip samples, from datareceived up to 12 September 2007. Measured and indicated resources account for 65% of total. Significant growth of the gold resource occurred from 10000N to 10500N,associated with robust and high grade intersections of the down dip extension ofthe Hapi Zone and several deeper mineralisation zones. Gold mineralisation isstill open at depth. Resources are also being added in the Ra and PharaohZones. Recent drilling has intersected strong surface mineralisation in the farnorth of the hill. Amun Deeps (9900 - 10700N) Drilling at Amun Deeps continued to intersect strong mineralisation, addingresource ounces down dip of current geological data, infilling resource blockand geological data gaps at and beneath the pit margins and increasingunderstanding of the mineralisation trends, particularly the high grade HapiZone. Thick zones of strongly mineralised porphyry have been intersected in alldrilling. Drilling will continue in this area for the next few months. Studieshave commenced of the underground mining potential for the deeper parts of themineralisation. Several holes returned strong assays over significant widths (Table 2); mosthave visible gold specks in the high grade Hapi Zone quartz veins, stronglydisrupted geological contacts and areas of higher intensity arsenopyrite andpyrite mineralisation. Recent hole RCD1177 on 10200N, drilled down dip of hole RCD1163 (23m @ 2.60g/tAu from 334m), intersected the Hapi Zone at the hangingwall margin of theporphyry, in a zone of strongly disrupted and altered porphyry and serpentinitewith abundant quartz veining and sulphides, returned extremely high gradeintersection of 65m @ 18.31g/t Au, including the first 5m @ 209.43g/t. RCD1173 was drilled to test at depth the southern extension of the porphyry at10000N, following up mineralisation in holes RCD384 and RCD499. Strongmineralisation was intercepted within the porphyry below the Hapi Zone including26m @ 3.59g/t from 384m and 33m @ 2.37g/t from 431m. RCD1173 was not includedin the September resource upgrade, so will add ounces next quarter. Furtherholes RCD1262 and RCD1263 in the same area await diamond drilling tails to testthe mineralised porphyry and infill the resource blocks. Hole RCD1187 was drilled on 10450N to infill the resource model at the pit shellmargin, up dip of high grade hole D1073, and confirmed the position of the HapiZone, intersecting 51m @ 4.45g/t Au from 299m, including a high grade core zoneof 9m @ 15.51g/t from 322m, in a zone of disrupted quartz veining, strongsericite, silica, pyrite and arsenopyrite alteration. Data from this hole wasalso not included in the latest resource upgrade. Mineralisation intercepted in hole RCD1178 on 10300N added significant ounces tothe September resource model, with 105m @ 4.10g/t from 380m and 17m @ 12.45g/tfrom 500m being returned. The hole targeted the down dip extension of themineralisation in RCD1125 (49m @ 1.86g/t from 340m and 20m @ 1.17g/t from 498m).A further step out hole is planned. Overall drilling and assay results from the Amun Deeps program indicate thethick, strongly mineralised down dip extension of the Hapi Zone in the mainporphyry is very consistent over 500m of strike currently drilled, and willcontinue to add significant ounces to the gold resource. In addition, furtherstep out holes down dip of those described above have been pre-collared for DDtailing to determine down dip width of the porphyry and continuity of the strongmineralisation already intersected. Pharaoh Zone - >11200N Drilling continued in the Pharaoh Zone during the quarter, testing the deeperextensions of the Hapi and deeper zones, the footwall contact area at depth andthe shallow, west dipping, surface outcropping Cleopatra and Antonymineralisation zones in the north of the hill. Holes successfully intersectedcontinuous gold mineralisation and added resource ounces in the targeted areas(Table 2). D1164 on 11250N intersected the Hapi Zone at 544m (20m @ 1.33g/t Au), but thebest intersection was at depth, with 53m @ 3.21g/t Au from 711m (including 8m @9.36g/t and 3m @ 11.27g/t) being intersected to the footwall contact. HoleRCD756 on 11425N also intersected a very strong, high grade zone of 58m @ 3.76g/t Au from 791m, including higher grade zones. This and several othersimilar intersections in the area highlights the underground potential at Sukarithroughout the deposit. Holes D1203 on 11950N and D1205 on 12000N intersected strong near surfacemineralisation, attributed to the outcropping, west dipping, stronglysericite-silica-pyrite-arsenopyrite altered and quartz veined Cleopatra andAntony Zones. D1203 intersected 148m @ 1.33g/t Au from surface, with severalhigher grade zones included; and D1205 returned 14m @ 1.32g/t Au from 9m and112m @ 1.30g/t Au from 48m. Drilling on the NE and NW sides of the northernpart of the hill continues to define these zones. Regional Exploration Drilling is continuing on several near mine prospects, following up anomalousrock chip sample geochemistry, mapped alteration and geological structures. Onehole, SRC002, 900m north of the hill at the Student prospect, returned 2m @9.78g/t Au from 31m. Field investigation continues of other prospects on theexploitation licence such as Umm Kola, and Sukari North. First pass rock chip sampling and geochemistry at the greenfields Sami Southprospect, 5km south along strike of Sukari Hill, returned two 15 - 20m wide goldanomalous zones, 200m apart, in sheared, ferruginous hydrothermally alteredsediments and igneous rocks, with narrow quartz veins and weathered pyriteevident. Peak assay was 1.1g/t Au. Follow up work is continuing. Grade Control Grade control drilling was carried on all available benches during the quarter;in the Amun Zone at 1185RL and 1222RL and 1300RL. 3,547 metres were drilled bythe contractor, Capital Drilling. All assay results were returned by the end of September. Gold mineralisationestimated from grade control modelling corresponds to expected mineralisation inthe resource model; assay results highlight shallow easterly and westerlydipping structures. Project Finance During the quarter, the due diligence process with Barclays Capital, theinvestment banking division of Barclays Bank PLC, continued with the drafting ofvarious project facility and supporting agreements. Completion of the project financing schedule has been moved out to the firstquarter of next year to accommodate the work schedule of all parties involved inthe process. Construction Camp Completion of the 700 man accomodation facility is nearing finalisation withseveral of the first accomodation parcels being ready for occupation during themiddle part of quarter four. The accomodation facilities are a combination ofthe traditional dome style bricked facility and conventional demountable style. Concrete has been poured for the kitchen facility, fit out equipment ordered andthe Company is scheduled to take possession of the new facility towards the endof the year. Site Works Upgrading of the 10km access road to the Sukari site, container lay downfacilities and security hut complex facilities have all been completed.Earthworks have been completed for the mine lay down area for the mining fleet. Tailings Storage Facility Knight Piesold Pty Ltd has been appointed to carry out the design andconstruction supervision of the Tailings Storage Facility. Design work isongoing with Knight Piesold staff on site during the quarter performinggeotechnical investigations. Final design and appropriate bid documentation willbe completed during the quarter. Project Engineering and Design A contract for the engineering and design work for the process plant was awardedin mid-March to MetPlant Engineering Services Pty Ltd, an Australian-basedcompany. A technical team visited Bolivia (April 2007) to review the Kori Kolloprocessing plant dismantling progress and travelled onto Egypt in early May tothe Sukari plant site location. Data and information gathered from these visitswill be used to finalise design and engineering work. Completion of this work isscheduled for the fourth quarter of 2007. Seawater Supply System Tender documents were distributed during the quarter for the Seawater SupplySystem which will, draw in and transport raw seawater, via a staged pumpedpipeline, to the Sukari site where it will be processed through a desalinationplant for end use as process plant water, mine site dust suppression water andafter secondary processing and treatment for construction camp drinking water. Finalisation of the tender responses will occur during the fourth quarter of2007. Kori Kollo Process Plant / Isparta Power Station On 24 October 2007, the Company announced that both the Kori Kollo processingplant and the Isparta power plant had arrived safely at the Egyptian seaport ofAlexandria and their cargoes had been discharged. The dismantling of the KoriKollo processing facility in Bolivia and the Isparta 28MW power plant in Turkeywas completed in September and both sites were closed and signed off. All stafffrom Bolivia and Turkey have now relocated to Egypt to continue with thereassembly of the plants at Sukari. The Isparta power plant consisted of 24pieces of break bulk and 56 containers containing more than 900 individualpackages. The Kori Kollo processing plant comprised 270 pieces of break bulk and55 containers. Trucking of freight has now commenced to the Sukari site and is expected to takeseveral weeks. This latest development represents an exciting phase for theCompany as it takes another step towards the commissioning of the first moderngold mine in Egypt which is scheduled for the fourth quarter of 2008. Mining Caterpillar, through their Egyptian authorised dealer Mantrac, has been selectedas the supplier of haulage trucks, articulated dump trucks, excavators, gradersand dozers. The initial mining fleet will largely comprise: CAT 365 BLME Excavator (1) RH 120E Excavator (1) CAT 785C Rear Dump Truck (5) CAT 14H Grader (1) CAT 834H Wheel Dozer (2) H180D Rock Breaker (1) CAT 16M Grader (1) CAT D10R Dozer (2) Atlas Copco has been selected to supply grade control and blast hole drillingequipment. Initial fleet selection comprises: ROC F9 Pioneer Drill (1) L8 MKII Production Drill (1) L8 MKII RC Rig (1) During the quarter assembly of the five CAT 785C Rear Dump Trucks and one RH120E Excavator commenced after successful arrival of the equipment in the Portof Alexandria and subsequent transportation to the Sukari site. In October, theCompany took active possession of the RH 120E Excavator after a successfulcompletion test and handover to Company personnel. During the fourth quarter theCompany will take possession of the balance of the mining fleet and is scheduledto commence mining activity in December 2007. Owners Team The Company's organisational structure continues to grow with several keyappointments being made in the quarter. In a booming resource market, theCompany is very pleased with the quality of the personnel that have beenattracted to the project and the positions below have now been filled. TheCompany will continue with its large "owners team" approach. - Project Manager - Deputy Project Manager (HSE/Infrastructure) - Construction Manager - Construction Supervisor - GIS & Data Base Manager - Senior Surveyor - Mining Manager - Senior Mine Engineer - Mill Superintendent - Logistics Manager - Power Plant Superintendent - Engineering Manager - Project Controller - Manager Procurement Services - Purchasing Officer Sukari Gold Project Sukari Gold Project - Background Centamin is a mineral exploration and development company that has been activelyexploring in Egypt since 1995. The principal asset of Centamin is its interestin the Sukari Gold Project, located in the Eastern Desert of Egypt. The SukariGold Project is at an advanced stage of development, with construction havingcommenced in quarter two of 2007 and first gold production expected during thefourth quarter of 2008. A definitive feasibility study (the "DFS") for the development to commercialproduction of the Sukari Gold Project was completed in February 2007. A summary of the findings of the DFS were: • the DFS concluded that a 4mpta plant producing on average 200,000 ounces per annum, over 15 years of mining, is economically robust; and • total Capital Construction costs are estimated at US$216m with average cash operating costs of US$290/oz (inclusive of 3% royalty) over the 15 year mining period. The Sukari Gold Project will be the first large-scale modern gold mine to bedeveloped in Egypt. Centamin's operating experience in Egypt gives it asignificant first-mover advantage in acquiring and developing other goldprojects in the prospective Arabian-Nubian Shield. The Sukari Gold Project is hosted by a large, sheeted vein-type andbrittle-ductile shear zone hosted gold deposit developed in a granitoidintrusive complex. Gold mineralization is hosted exclusively by a granitoid bodyof granodiorite - tonalite composition referred to as the Sukari Porphyry. TheCompany has entered into a Concession Agreement with the Egyptian Governmentthat provides for exploration and exploitation rights at the Sukari Gold Projectand whereby the Operating Company, owned 50% by the Company's wholly ownedsubsidiary, Pharaoh Gold Mines NL ("PGM") and 50% by Egyptian Mineral ResourceAuthority ("EMRA"), has been established. Centamin is entitled to recover all ofits exploration, operating and capital costs from operating surpluses of theoperating company. The Sukari Mining License covers an area of 160 km2 and is for a period of 30years, with an option for a further 30 years. The Sukari Gold Project has been scheduled for open pit mining over an initial15-year period. During that time 78 Mt ore @ 1.5 g/t Au is expected to be mined,producing 3.7 Moz gold. A further 374 Mt of waste material is also expected tobe mined resulting in a waste to ore strip ratio of 4.8:1. Ore and waste will be mined using conventional open pit mining methods. Theoperation is planned to utilize selective mining techniques to separate ore andwaste. Provision has been made for drilling and blasting all primary and oxidematerials. Ore will be hauled to the run of mine pad next to the processingplant and either direct tipped to the crusher or stockpiled for future reclaimat the 4 Mtpa process plant throughput rate. Mining will be progressed at an increased rate compared to processing;approximately 5 Mt of ore is expected to be mined and 4 Mt of ore will beprocessed annually. Operating at an increased mining rate allows the cutoffgrade for feed to the plant (referred to as "cutover" grade) to be increased inthe early years of the schedule. This in turn increases the metal output andproject revenue in these early years, thus increasing the discounted operatingsurplus cashflow. According to current schedules, the low-grade stockpileproduced as a result of applying a cutover grade, will be processed after mininghas ceased, extending the current operating life of the project for a furthersix years. As a result, the average milled grade during the mining period isforecast to be 1.87 g/t Au, compared to 0.66 g/t Au for the low-grade stockpile. Centamin will own and operate its mining fleet. The production fleet will bebased on 380 t class excavators and 150 t class rigid body trucks. At fullproduction, three production fleets, each comprising a single excavator andsharing a maximum of 21 trucks, will be required. The capital cost of theinitial mining fleet has been estimated by AMC at US$48.8 million. The proposed process route entails: • crushing; • stockpiling crushed ore; • grinding; • flotation of a (bulk sulphide) concentrate containing the precious metals; • thickening of the concentrate; • fine milling of the concentrate; • leaching the precious metals from the concentrate in a dilute cyanide solution; • absorbing the precious metals onto activated carbon; • stripping the precious metals from the carbon; • recovering the precious metals as gold dore; and • placing the concentrate tailing in the tailings storage facility. Tailings from the treatment of weathered oxide ore early in the mining schedulecontain too much gold to discard. Hence, the bulk flotation tail is furthertreated by: • thickening; • leaching the precious metals into a dilute cyanide solution; • adsorbing the precious metals onto activated carbon; • stripping the precious metals from the carbon; • recovering the precious metals as gold dore; and • placing these tailings in the tailings storage facility. Process water will be drawn from the Red Sea. The seawater will be pumpedapproximately 25 km to the mine site to satisfy all process plant and miningrequirements. Most of the seawater will be pumped into a raw water pond locatednear the processing plant, whilst around 500m(3)/day will be pumped to a watertreatment plant for potable and fresh water supplies. Power will be generated on site by a 28 MW power station, operated on heavy fueloil. A temporary construction camp facility will be required to cater forapproximately 500 construction employees and 20 senior staff. This will beconstructed at the Sukari Gold Project. An overall schedule has been developed covering all phases of the project; keydates are listed below: Project Go-Ahead Decision Feb 2007 (Completed) Construction Camp Q4 2007 Commence Site Works Q3 2007 Commence Tailings Storage Facility Q4 2007 Kori Kollo Plant Arrives Egypt Q4 2007 (Completed) Commence Mining Pre-strip Q4 2007 Project Finance Q1 2008 Commissioning and Production Q4 2008 Progress pictures can be viewed on the Company's website - www.centamin.com. On behalf of Centamin Egypt Limited Josef El-RaghyManaging Director/CEO Information in this report which relates to exploration, geology, sampling anddrilling is based on information compiled by geologist Mr R Osman who is a fulltime employee of the Company, and is a member of the Australasian Institute ofMining and Metallurgy with more than five years experience in the fields ofactivity being reported on, and is a 'Competent Person' for this purpose and isa "Qualified Person" as defined in "National Instrument 43-101 of the CanadianSecurities Administrators". His written consent has been received by the Companyfor this information to be included in this report in the form and context whichit appears. The assay samples were analysed by Ultra Trace Pty Ltd, CanningVale, Western Australia. The information in this report that relates to mineral resources is based onwork completed by Mr Nicolas Johnson, who is a Member of the AustralianInstitute of Geoscientists. Mr Johnson is a full time employee of Hellman andSchofield Pty Ltd and has sufficient experience which is relevant to the styleof mineralisation and type of deposit under consideration and to the activitywhich he is undertaking to qualify as a "Competent Person" as defined in the2004 edition of the "Australasian Code for Reporting of Exploration Results,Mineral Resources and Ore Reserves" and is a "Qualified Person" as defined in "National Instrument 43-101 of the Canadian Securities Administrators". MrJohnson consents to the inclusion in the report of the matters based on hisinformation in the form and context in which it appears. Table 2 - Significant Intersections September 2007 Quarter HOLE NORTH EAST DIP AZI EOH FROM TO INTERVAL Au ppm RCD714 11225 10957 -90 0 296.8 208 217 9 7.50 incl. 209 211 2 28.70 RCD756 11425 10620 -90 0 877.5 791 849 58 3.76 incl. 809 816 7 7.05 incl. 820 825 5 14.84 RCD778 11825 10895 -75 270 599.6 76 128 52 1.09 RCD1125 10300 10700 -86 270 590.6 340 389 49 1.86 incl. 348 349 1 30.00 396 425 29 1.00 498 518 20 1.17 RCD1162 10250 10700 -87 270 570.5 347 422 75 1.94 incl. 349 351 2 5.48 incl. 362 363 1 13.6 incl. 403 407 4 10.04 RCD1163 10200 10650 -85 270 573.3 334 361 27 2.33 incl. 336 339 3 12.73 D1164 11250 10672 -90 0 764.5 361 371 10 1.98 incl. 361 365 4 3.09 544 564 20 1.33 711 764 53 3.21 incl. 728 736 8 9.36 incl. 752 755 3 11.27 RCD1165 10150 10663 -80 270 719.4 338 366 28 1.40 incl. 348 349 1 10.70 371 388 17 3.98 incl. 375 376 1 12.30 incl. 382 383 1 41.60 RCD1166 10100 10611 -87 270 534.5 279 302 23 6.23 incl. 279 281 2 13.40 incl. 288 289 1 14.90 incl. 296 297 1 14.70 309 377 68 1.89 incl. 336 337 1 9.93 incl. 363 364 1 11.20 419 469 50 1.07 RCD1173 10000 10675 -77 270 571.00 364 368 4 3.04 384 410 26 3.59 incl. 384 385 1 27.30 incl. 405 406 1 35.70 415 464 49 1.79 incl. 432 433 1 8.75 incl. 438 439 1 9.32 incl. 445 447 2 6.27 incl. 454 455 1 6.47 RCD1177 10200 10706 -87 270 727.1 367 432 65 18.31 incl. 367 372 5 209.43 incl. 370 371 1 1040.00 RCD1178 10300 10758 -85 270 617.6 380 485 105 4.10 incl. 380 382 2 29.20 incl. 412 413 1 71.90 incl. 424 426 2 12.36 incl. 466 469 3 14.24 incl. 472 474 2 17.24 500 517 17 12.45 incl. 501 503 2 76.35 incl. 516 517 1 12.45 D1179 11850 10825 -40 270 265.15 0 15 15 4.19 incl. 6 8 2 15.3 incl. 12 13 1 6.96 134 153 19 1.45 RCD1186 10400 10749 -85 270 639.5 341 377 36 1.91 incl. 341 342 1 5.32 incl. 358 359 1 5.87 incl. 371 372 1 6.30 incl. 374 375 1 16.10 449 455 14 3.32 RCD1187 10450 10750 -70 270 452.7 299 350 51 4.45 incl. 304 305 1 36.00 incl. 322 331 9 15.51 383 397 14 4.44 incl. 383 384 1 43.50 RCD1189 10050 10560 -87 270 485.6 155 180 25 1.71 incl. 173 174 1 7.49 219 239 20 2.46 incl. 234 237 3 6.45 251 282 31 1.62 incl. 273 275 2 6.06 D1203 11950 10820 -45 270 248.72 0 148 148 1.33 incl. 55 56 1 5.93 incl. 62 66 4 5.25 incl. 90 91 1 6.43 D1205 12000 10823 -45 270 165.12 9 23 14 1.32 48 160 112 1.30 incl. 60 61 1 9.94 incl. 75 76 1 5.95 incl. 85 86 1 12.70 incl. 99 100 1 13.60 incl. 109 110 1 6.15 D1208 11775 10848 -90 0 153.58 47 78 31 1.23 D1209 11800 10806 -60 270 598.6 465 490 25 2.33 incl. 485 487 2 7.26 incl. 465 466 1 15.30 incl. 473 474 1 11.20 RCD1213 10500 10500 -75 270 289 108 136 28 2.56 incl. 123 126 3 10.75 166 192 26 4.28 incl. 170 171 1 13.70 incl. 174 177 3 20.97 245 264 19 1.57 incl. 246 247 1 6.69 SRC004 12827 10914 -60 150 180 31 33 2 9.78 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Centamin PLC