Flinders' Woxna Graphite Project Delivers Positive Preliminary Economic Assessment
03 9월 2013 - 10:24PM
Marketwired Canada
Editors Note: There is one figure associated with this press release.
Flinders Resources Limited ("Flinders") (TSX VENTURE:FDR) is pleased to report
positive results from its preliminary economic analysis ("PEA") of the
100%-owned and fully permitted Woxna graphite project in Sweden.
Financial Highlights
Estimated in the PEA:
-- Low start-up capital costs of $16.7 million1 ("M") including contingency
and working capital
-- Average production costs of $662 per tonne of graphite concentrate
-- $26.6M post tax net present value ("NPV") (8% discount);
-- 34% post-tax internal rate of return ("IRR")
-- Payback period of 3.9 years
-- Conservative average graphite sales price of $1, 199 per tonne used
-- Post tax NPV increases to $37.3M (8% discount) in a sensitivity analysis
when 10% higher graphite prices of $1,318 per tonne are used. (see table
7)
Operational Highlights
Estimated in the PEA:
-- 155, 000 tonnes / year of mined material delivered to Run of Mine
("ROM") with 10.3% average graphite head grade
-- Design production rate of 16, 600 tonnes / year of graphite concentrate
-- Excellent graphite recovery of 96%
-- 88% to 95% graphite purity and 40% by weight as premium large or extra-
large flake graphite
-- 13 year mine life
-- Stripping ratio of 5.3:1 overall, starting at 4:1
Mr Martin McFarlane, President and CEO states, "We are very encouraged by the
positive results from the Woxna PEA, which demonstrate a very low capital, low
operating cost project that generates good returns for shareholders. Flinders'
on-going sales of stockpiled flake graphite has enabled us to establish
relationships with consumers, providing a firsthand view of the graphite market
demand in Europe. The PEA assumes conservative graphite prices and requires an
initial capital investment that is an order of magnitude lower than peer
projects."
1. Unless otherwise noted, all monetary figures presented in this document are
in United States dollars.
"The PEA demonstrates Woxna's strengths in the flake graphite market, which
include its full operating permit allowing immediate restart, an established
processing plant and related mine infrastructure, and close proximity to the
European markets. With Canadian $12.3 million cash on hand as at July 31 2013,
Flinders has a substantial portion of the start-up capital available. We thank
GBM and our other consultants for their input into this exciting project."
The PEA was prepared by GBM Minerals Engineering Consultants of the United
Kingdom (Mineral Project Engineering), with contributions from Golder Associates
AB of Sweden (Mining Plan), Reed Leyton Consulting (Mineral Resource), Aminpro
Metallurgical Services of Chile (Metallurgical Test Work and Process Design),
Tailings Consultants Scandinavia (TCS) (Tailings Facility Design) and Woxna
Graphite AB/Flinders Resources Limited (Project Owners).
MINERAL RESOURCES
Woxna Graphite AB, Flinders' 100% owned Swedish subsidiary, owns 4 mining
concessions over graphite deposits (Kringel, Gropabo, Mattsmyra and Mansberg -
the Woxna Project) located along a 40km trend in central Sweden. The PEA
considers only one of these deposits, the Kringel deposit. The partially mined
Kringel deposit lies adjacent to the processing plant, tailings dam and related
infrastructure, and is fully permitted for an immediate restart. Woxna is
currently reprocessing graphite and last mined graphite in 2001.
The Kringel mineral resource estimate was completed by independent geologist,
Mr. Geoffrey Reed of Reed Leyton Consultants in April 2012. The resource
estimate was recalculated for the PEA using more accurate drill hole collar
locations and this has resulted in a moderately increased resource tonnage with
higher grades.
The recalculated mineral resource at Kringel is drilled across an area
approximately 1200 metres ("m") length by 100m to 200m width. Mineralization was
intersected on all drill sections and continues to at least 150m below the
surface. Mineralization strikes east-west, and dips between 60 and 80 degrees to
the south. Mineralization is present as four main and five smaller mineralized
bodies. The thickness in the section of the plane is usually more than 10m, but
varies between 5m and more than 15m. Mineralization at Kringel remains open
along strike and at depth, and geophysical data suggests potential for
significant expansion.
A total of 90 diamond drill holes for 6,581m drilled between 1988 and 2012 were
included in the current mineral resource estimation. Hole spacing is on a 50
metre by 50 metre drill pattern. A lower cut-off grade of 7% graphite was used
as the base case to calculate the resource. Flinders considers the cut-off grade
to be conservative.
----------------------------------------------------------------------------
Classification Tonnes (Mt) Graphite ("Cg")
----------------------------------------------------------------------------
Measured 1.0 10.7%
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Indicated 1.8 10.7%
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Total 2.8 10.7%
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Table 1 - Kringel Mineral Resource Estimate (7 % Cg lower cut-off grade)
Cautionary Note: Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability. The PEA is preliminary in nature and there is
no certainty that the PEA will be realized.
In addition to the Kringel graphite resource, the Gropabo, Mattsmyra and
Mansberg flake graphite deposits contain historic resources. These will continue
to be classified as historic resources until Flinders has the opportunity to
upgrade them to NI43-101 standards. These historic resources are not included in
the economic analysis of the PEA.
MINING
The PEA estimates for the life of the mine ("LOM"):
-- Mining costs of $240/tonne of graphite; $25.80/tonne to ROM; $4.1/tonne
mined
-- Average graphite grade to ROM 10.3%
-- Graphite mineralization mined per year 155,000 tonnes
-- Average stripping ratio 5.3:1
-- Mine life 13 years
Golder Associates AB (Golder) completed the mining study for this PEA. Pit
optimisation, pit design and mine production schedules were performed using
industry standard Gemcom Whittle(TM) 4x optimisation software, Maptek Vulcan(TM)
and Gemcom Surpac(TM) mine planning software using only graphite under Measured
and Indicated mineral resources categories within the provided resource model.
The model produced a quantity of mineralized material and waste tonnes,
distributed over the life of the mine. Inferred resources were not used in the
mining or economic models produced in the PEA.
The model shell was then used to generate operational pit designs. Two distinct
open pits were designed around the Whittle shells. The pits included haulage
ramps located on the south wall of the pits.
----------------------------------------------------------------------------
Mineralised Graphite Waste Total Stripping
Source Material (Mt) Grade % (Mt) (Mt) Ratio
----------------------------------------------------------------------------
East Pit 8.9 10.5 3.8 4.8 4.4
----------------------------------------------------------------------------
West Pit 9.3 11.4 5.7 6.6 6.1
----------------------------------------------------------------------------
Total 1.8 11.0 9.6 11.4 5.3
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Table 2: Materials contained in proposed pits
The pits were then scheduled over the LOM by months for the first year, quarters
for years 2 and 3 and then annually for the remainder of the life of the
project. The Whittle production schedule was set at 100 000 t/a ROM however, for
the purposes of economic modelling, the mine throughput was increased to 155,000
t/a ROM, and therefore the Whittle production schedule was accelerated on a pro
rata basis accordingly. The waste to mineralised material ratio increases over
time due to the depth of the pits and designed strip ratios until the final
years when the benches are predominantly mineralised material.
The Company plans to use contract mining and the operating costs were derived
from contractor quotes obtained by Golder.
PROCESSING & RECOVERY
The PEA estimates:
-- Processing costs $662/tonne of graphite concentrate, $71/tonne of
material processed
-- Annual average processing rate 155,000 tonnes
-- Annual average production 16,600 tonnes of graphite concentrate
-- Average graphite recovery 96%
The Woxna project has an existing graphite processing plant which was last fully
operated in 2001. A comprehensive metallurgical test work programme by Aminpro
led to a new process flow sheet designed by Aminpro and GBM. This flow sheet
predicts a significant improvement in quantity, grade and graphite flake size
distribution compared to historic production. Engineering under the PEA proposes
utilising as much of the existing facilities and infrastructure as possible in
line with the new design, to minimise the initial capital cost and enable
production to commence in the shortest possible time.
The process flow sheet incorporates conventional mineral processing technology
starting with 2 stage crushing of the run-of-mine material followed by grinding
in the existing rod mill. The ground product is treated by flash and rougher
flotation to maximise the recovery of large flake. The rougher tailings are
treated in a scavenger flotation circuit to maximise recovery. The flash and
rougher concentrates then undergo 2 stages of regrinding and cleaner flotation
while scavenger concentrate has 3 stages of regrinding and cleaner flotation.
Most of the flotation section uses new equipment. Graphite concentrate is
dewatered in a new filter press then dried in the existing drier. Screening and
packing of graphite product largely utilises existing equipment. A new flake
product exceeding 250 micron and 94% purity is produced in addition to the
graphite grades produced historically.
The nominal throughput of the plant is 155,000 tonne/year based on the maximum
rate that can be milled in the existing rod mill. There is potential to
significantly increase throughput by using an existing re-grinding mill as a
ball mill in the primary milling circuit along with commensurate expansions of
the flotation, drying, screening and packing sections. An expansion of capacity
would be considered once markets permit.
GRAPHITE MARKETS, PRICES & SALES REVENUE
The European graphite market is estimated to consume approximately 20% of the
global demand for natural flake graphite of circa 500 000 tonnes/year. Today
more than 90% of Europe's graphite demand is imported, mainly from China.
The Woxna graphite project will primarily target the European graphite market
due to its proximity to Sweden, short transit times and low transport costs. At
16,600 tonnes/year, the design production volume in the Woxna PEA is
deliberately sized so that graphite sales may be readily absorbed into the
European market without creating an oversupply situation. Further expansion of
the Woxna graphite project is possible and will be evaluated when European
market conditions permit.
Graphite prices have risen considerably since the Woxna mine was last operated
in 2001. In 2010, following a long period of flat prices, graphite prices,
particularly for flake grades, rose rapidly as a result of a surge in demand due
to restocking, growth from China and lithium batteries. Simultaneously, the
imposition of taxes and permits on Chinese graphite exports restricted supply.
Graphite prices peaked in 2012 and eased to today be approximately double the
level seen in 2001. Graphite market commentators predict that prices may be
approaching the bottom and with signs of economic recovery in the USA and the
worst of the recession behind Europe, graphite prices may again strengthen.
Graphite is not an openly traded mineral with prices negotiated privately
between customers and producers under spot or term contracts. The sale price
used in the PEA was based on graphite prices published by Industrial Minerals
magazine ("IM").
It has been common practice to use a 24 month trailing average graphite price in
graphite PEAs. The Woxna PEA utilized a 12 month trailing average graphite price
so as to exclude the peak price period occurring in 2011/12. Applying Woxna's
planned product distribution to IM's 12 month trailing average graphite prices
produces an average selling price of $1,199/tonne for the Woxna PEA. This
selling price is considered to be conservative when compared to the 24 month
trailing average graphite price of $1,548/tonne or prices used in other graphite
project PEAs.
----------------------------------------------------------------------------
1 year
trailing Annual
Size Proportion of average Quantity Revenue
(um) Purity Production ($/t) (t) ($M/year)
----------------------------------------------------------------------------
+ 250 95 % 18 % 1 824 2 990 5.5
----------------------------------------------------------------------------
+ 180, - 250 94 % 22 % 1 526 3 650 5.6
----------------------------------------------------------------------------
+ 100, - 180 92 % 28 % 1 009 4 650 4.7
----------------------------------------------------------------------------
- 100 88 % 32 % 787 5 310 4.2
----------------------------------------------------------------------------
Average / Total 1 199 16 600 20.0
----------------------------------------------------------------------------
Table 3: Woxna average sale price and revenue estimated in the PEA
INFRASTRUCTURE AND PERMITS
The Woxna mine site is fully permitted and has a partially exploited open pit,
waste rock dump areas, mine site roads, processing facility, tailings management
facility and clarification ponds. Woxna is connected to public roads and has a
sufficient water and electricity supply.
Modest upgrades are contemplated to the infrastructure with the most significant
change being the upgrade of the tailings storage facility to both increase its
capacity and improve environmental performance to current best practice. As this
work has to be performed when the ground is not frozen, this task is the
critical item in a re-start schedule.
The Woxna project is fully permitted to extract 100,000 tonnes / annum of
mineralised rock for processing. The PEA proposes increasing production to
155,000 tonnes / annum of mineralised rock. The PEA assumes that production can
commence under the existing permit (concession) while an increase in capacity is
sought. Expanded capacity is assumed in the second year once the permit is
obtained.
CAPITAL & OPERATING COSTS, FINANCIAL ASSUMPTIONS & SENSITIVITY
----------------------------------------------------------------------------
Item Cost $M
----------------------------------------------------------------------------
Mining 0.2
----------------------------------------------------------------------------
Processing 6.4
----------------------------------------------------------------------------
Tailings and Water Management 2.9
----------------------------------------------------------------------------
Infrastructure 1.0
----------------------------------------------------------------------------
Direct Capital 10.5
----------------------------------------------------------------------------
Indirect Capital including Contingency 3.8
----------------------------------------------------------------------------
Working Capital 2.4
----------------------------------------------------------------------------
Total 16.7
----------------------------------------------------------------------------
Table 4: Initial Capital Breakdown
----------------------------------------------------------------------------
Item Cost $/ tonne
----------------------------------------------------------------------------
Mining 240
----------------------------------------------------------------------------
Reagent 18
----------------------------------------------------------------------------
Labour 217
----------------------------------------------------------------------------
Grinding Media 17
----------------------------------------------------------------------------
Power 37
----------------------------------------------------------------------------
G&A 34
----------------------------------------------------------------------------
Fuel 39
----------------------------------------------------------------------------
Maintenance 49
----------------------------------------------------------------------------
Tailings Management 10
----------------------------------------------------------------------------
Total 662
----------------------------------------------------------------------------
Table 5: LOM Average operating cost breakdown per tonne graphite concentrate
----------------------------------------------------------------------------
Item Value
----------------------------------------------------------------------------
Plant availability 85%
----------------------------------------------------------------------------
Swedish Kronor: US $ exchange rate 6.54
----------------------------------------------------------------------------
Swedish corporation tax rate 22%
----------------------------------------------------------------------------
End of mine life rehabilitation cost $6.0M
----------------------------------------------------------------------------
Discount rate 8%
----------------------------------------------------------------------------
Historical loss and depreciation carry forward $8.7M
----------------------------------------------------------------------------
Table 6: Key financial model assumptions
----------------------------------------------------------------------------
Item Base Case + 10% Case -10% Case
--------------------------------------------------------
Value NPV ($M) Value NPV ($M) Value NPV ($M)
----------------------------------------------------------------------------
Graphite Price $/t 1 199 26.6 1 319 37.3 1 079 15.9
----------------------------------------------------------------------------
Exchange Rate 6.54 26.6 7.19 32.0 5.89 20.0
----------------------------------------------------------------------------
Capex $M 16.7 26.6 18.4 24.8 15.0 28.5
----------------------------------------------------------------------------
Mining Costs $/t Cg 240 26.6 264 24.5 216 28.7
----------------------------------------------------------------------------
Labour Costs $/t Cg 217 26.6 239 24.7 196 28.6
----------------------------------------------------------------------------
Table 7: Woxna Project Financial Sensitivity (8% discount rate)
WOXNA PROJECT LOCATION
The Woxna project is located some 8 kilometres ("km") WNW of the town of Edsbyn
in the Kingdom of Sweden, approximately 3.5 hour drive north of Stockholm.
Access is via 10 km of all-weather forest road from Highway 301.
To view the figure associated with this press release, please visit the
following link: http://media3.marketwire.com/docs/flin0903.pdf
A National Instruments 43-101 Technical Report for the Woxna PEA will be posted
on Flinders' website at www.flindersresources.com and filed on SEDAR at
www.sedar.com within 45 days following this news release.
Quality Control and Assurance
Chris Stinton, BSc (Hons) (Minerals Engineering), CEng MIMMM, Senior Process
Engineer with GBM Minerals Engineering Consultants of the United Kingdom, an
independent consultant to the Company, is the qualified person as defined under
National Instrument NI 43-10 and has reviewed and approved the PEA disclosure
within this release.
Geoffrey Reed of Reed Leyton Consulting completed the verification of data on
which the Kringel Resource Estimate was based. This verification included an
assessment of QA/QC data, sample preparation and assay methodologies, density
data, data inputs and survey data used in the estimate. Data was validated by
using field checks, statistical methods and evaluating the Company's protocols.
On behalf of the Board
Martin McFarlane, President and CEO
Certain information set out in this news release may constitute forward-looking
statements or forward-looking information within the meaning of applicable
securities laws (collectively, "Forward-Looking Statements"). All statements,
other than statements of historical fact, that address activities, events or
developments that the Company believes, expects or anticipates will or may occur
in the future including the PEA are Forward-Looking Statements. Forward-Looking
Statements are often, but not always, identified by the use of words such as
"seek," "anticipate," "believe," "plan," "estimate," "expect," and "intend" and
statements that an event or result "may," "will," "can," "should," "could," or
"might" occur or be achieved and other similar expressions. Forward-Looking
Statements are based upon the opinions and expectations of the Company based on
information currently available to the Company. Forward-Looking Statements are
subject to a number of factors, risks and uncertainties that may cause the
actual results of the Company to differ materially from those discussed in the
Forward-Looking Statements including, among other things, the Company has yet to
generate a profit from its activities; there can be no guarantee that the
estimates of quantities or qualities of minerals disclosed in the Company's
public record will be economically recoverable; uncertainties relating to the
availability and costs of financing needed in the future; competition with other
companies within the mining industry; the success of the Company is largely
dependent upon the performance of its directors and officers and the Company's
ability to attract and train key personnel; changes in world metal markets and
equity markets beyond the Company's control; the PEA mineral reseources are, in
the large part, estimates and no assurance can be given that the anticipated
tonnages and grades will be achieved or that the indicated level of recovery
will be realized; production rates and capital and other costs may vary
significantly from estimates; unexpected geological conditions; delays in
obtaining or failure to obtain necessary permits and approvals from government
authorities; all phases of a mining business present environmental and safety
risks and hazards and are subject to environmental and safety regulation, and
rehabilitation and restitution costs; the Company does not maintain insurance
against environmental risks; and management of the Company have experience in
mineral exploration but may lack all or some of the necessary technical training
and experience to successfully develop and operate a mine.
Although the Company believes that the expectations reflected in the
Forward-Looking Statements, and the assumptions on which such Forward-Looking
Statements are made, are reasonable, there can be no assurance that such
expectations will prove to be correct. Readers are cautioned not to place undue
reliance on Forward-Looking Statements, as there can be no assurance that the
plans, intentions or expectations upon which the Forward-Looking Statements are
based will occur. Forward-Looking Statements herein are made as at the date
hereof, and unless otherwise required by law, the Company does not intend, or
assume any obligation, to update these Forward-Looking Statements.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS SUCH
TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE
FOR FURTHER INFORMATION PLEASE CONTACT:
Flinders Resources Limited
Jim Powell
+1 647-478-5806
info@flindersresources.com
www.flindersresources.com
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