20th Jan 2009 11:30
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For Immediate Release |
20 January 2009 |
Braemore Resources Plc
RESULTS OF LEINSTER SCOPING STUDIES
Braemore Resources Plc ("Braemore" or "the Company"; AIM: BRR, JSE: BRE) is pleased to update the market on progress with the Leinster Nickel Tailings Project, following receipt of the preliminary results from the independent consultants and the completion of the scoping study.
A detailed overview of the scoping study is provided later in this announcement. In summary, the main findings are:
project viability confirmed at average production rate of 12,500 tonnes per annum (tpa) of nickel as intermediate product;
preliminary results indicate low operating costs in range of US$3.85/lb to US$4.07/lb; and
preliminary capital expenditure in range of US$415m to US$444m.
As previously announced, the final scoping report will be presented to BHP Billiton ("BHPB") by the end of January 2009 for review over the following months.
Leon Coetzer, Braemore's CEO, commented:
"Braemore is confident of Leinster's future given that the scoping studies have indicated a number of strategic advantages, including the potential low recovery cost of the tailings, low processing costs and high sulphur recovery rates.
"We believe that additional reductions in capital and operating costs are achievable in the future through the continued refinement of the project. In addition to copper and cobalt credits, there are significant by-product credits from the production of magnesium oxide (MgO) from the sulphur recovery circuit."
Scoping Study Overview
The revised scoping studies include independent validation by leading consultants of the flowsheets developed by Braemore and revised estimates of capital and operating costs to a +/- 35% accuracy. The scoping studies have assumed a conservative 66.65 million tonne resource at an average grade of 0.35% nickel for 235,318 tonnes of nickel over a life of mine of some 12.25 years. These studies were presented to the Braemore Board ahead of presenting the final review to BHPB by the end of January 2009.
The study was divided into five sub-projects, each with a responsible consultant:
1) Mineral Resource Estimate - CSA Global Pty Ltd
2) Tailings Recovery - AMC Consultants Pty Ltd
3) Sulphur Recovery - Atomaer / SNC Lavalin Pty Ltd
4) Acid Plant - SNC Lavalin Pty Ltd
5) Nickel Refinery - Bateman Engineering Pty Ltd
Each of these sub-projects have been evaluated in detail within this review, collating the results to facilitate a detailed analysis of capital and operating costs to enable selection of the most viable flowsheet for the project. The project has been investigated at different nickel dissolution rates (60% and 70%) and as either a nickel sulphide or nickel hydroxide producer. The ensuing anticipated acid consumption rate will be around 150 kg/t for 60% recovery and 250 kg/t for 70% nickel recovery, and the acid consumption costs will vary accordingly.
1) Mineral Resource Estimate - includes the updating of the previous Mineral Resource Estimate to include additional tailings deposited in the past two years and to consider the grade and deposition rate of future tailings over the expected mine life.
2) Tailings Recovery - studies were concluded over the most effective mining method from the three storage facilities. Different mining and transport methods were examined, with Slurrytrack being identified as the most cost efficient method.
3) Sulphur Recovery - current testwork for the acid recovery flowsheet and modelling by SNC indicates sulphur recovery at 70% of plant demand is achievable. A combination of SO2 recovery and burning elemental sulphur will determine the required scale of the acid plant, whose capacity is set by the percentage nickel dissolution selected.
4) Acid Plant - studies into scale and options for acid supply were investigated. These include burning elemental sulphur to generate SO2 gas, recovery of sulphur units from the waste leachate solution and direct purchasing of acid.
5) Nickel Refinery - various flowsheets have been investigated at different percentage nickel dissolution rates to produce either nickel hydroxide or nickel sulphide intermediate products. Braemore's flowsheets are well established in the industry and did not contain any fatal flaws.
Projected capital costs as per scoping studies
The percentage of nickel dissolution selected and the intermediate product produced (sulphide or hydroxide) are the main determining factors for capital costs. Estimates of total capital expenditure arising from these studies are in the range of US$415m to US$444m for intermediate nickel hydroxide and sulphide respectively. The acid plant is anticipated to cost between US$181m and US$185m depending on the scale of the plant and the sulphur source.
There remains significant scope to further reduce capital costs by tendering and specific engineering design to support the final flowsheet.
Projected operating costs as per scoping studies
Recovering the tailings using a Slurrytrack system will result in mining costs of between US$0.40/lb and US$0.50/lb. Braemore is confident that these are among the lowest mining costs for nickel sulphide in the industry.
Operating costs could be further reduced by:
a) substituting the sulphide precipitation stage with hydroxide precipitation;
b) substituting purchased limestone with by-product MgO from the sulphur recovery process; and
c) on-site generation of hydrogen sulphide (H2S)
The operating costs for the various sub-projects were combined and total operating costs range between US$3.85/lb and US$4.07/lb for intermediate nickel hydroxide and sulphide respectively.
There remains significant scope for reductions in operating costs through classification of the tailings and further optimisation of the leach circuit.
For further information please visit our website at www.braemoreresources.com or contact:
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Braemore Resources Plc |
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Leon Coetzer, Chief Executive Officer |
+27 11 875 6540 |
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WH Ireland: (Nomad and Joint Broker) |
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James Joyce |
+44 207 220 1666 |
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Mirabaud Securities: (Joint Broker) |
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Rory Scott |
+44 207 878 3360 |
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Qinisele Resources: (RSA Corporate Advisers) |
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Dennis Tucker |
+27 82 492 4957 |
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Russell and Associates: (RSA Public Relations) |
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Nicola Taylor/Charmane Russell |
+27 11 880 3924 |
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Parkgreen Commuications: (UK Public Relations) |
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Sue Scott/Leah Kramer |
+44 207 933 8780 |
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Sasfin: (RSA Corporate Sponsor) |
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Sharon Owens |
+27 11 809 7762 |
- ENDS -
Notes to Editors:
Braemore Resources offers investors an attractive opportunity to enter into the PGMs and nickel business, initially through the mid-stream processing of these metals and, in time, through mine-to-market production opportunities. Braemore Resources is principally involved in evaluating, establishing and operating independent facilities for the roasting, smelting and refining of concentrates containing PGM and associated base metals and for the reclamation and processing of sulphide nickel tailings. Diversified both geographically and in terms of product, the company is located in two key mining regions - Braemore Nickel in Western Australia and Braemore Platinum in South Africa. Braemore's access to proprietary technology, and in particular the Mintek ConRoast technology, which has successfully operated at test plant level, makes the company well-positioned to become a significant player in the burgeoning South African PGMs sector, offering a more cost-effective, environmentally friendly and accessible smelting option to many junior mining companies. Unlike conventional smelters, ConRoast is unaffected by the high-chrome content ores, which are increasingly being mined.
Braemore's management team, in South Africa and Australia, brings with them impressive credentials in their respective sectors, combined with a Board that has experience in metals processing, financial and commodities markets.
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