Intermin Resources Limited (ASX:IRC) ("Intermin" or the "Company") is pleased to announce the results of the Goongarrie Lady Feasibility Study ("FS" or "Study"). The proposed mining project comprises the predominantly oxide material contained within the project's maiden Ore Reserve. The 100% owned project is located 85km north of Kalgoorlie-Boulder in Western Australia (see Figure 1 in link below).
- Positive scoping study released in April 2017 and additional infill drilling completed and released in October 2017 to increase geological confidence (see Note 1 below)
- Updated JORC 2012 Mineral Resource Estimate now completed totalling 0.31 Mt @ 2.40 g/t Au for 24,000 ounces (1.0g/t Au lower grade cut-off) (see Note 2 below)
- Over 87% of the Mineral Resource Estimate now in the Measured and Indicated categories (see Note 2 below)
- Maiden Ore Reserve of 0.135Mt at 2.94g/t for 12,700 ounces (see Note 3 below)
- Metallurgical test work completed on representative samples from all ore zones with estimated recoveries of 94%
- Statutory approvals well advanced and study assumes contract mining and haulage and ore processing at one of three nearby third party facilities
- Feasibility Study findings indicate a technically strong and financially viable project with the following results (see Note 4 below):
o Open pit mine design producing 135,000t at a fully diluted grade of 2.94g/t Au for 12,700 ounces over a 7 month mine life
o Third party milling at 94% metallurgical recovery produces 11,938 ounces recovered
o Low up-front capital costs of A$0.73m
o Attractive C1 Costs of A$1,131/oz and All In Sustaining Costs of A$1,164/oz
o Project generates A$5.7m in free cash flow in seven months at A$1,700/oz gold price
- Study confirms Goongarrie Lady as Intermin's next mining project in the production pipeline to enable continued aggressive, self-funded Goldfields exploration growth strategy
- Next steps include:
o Completion of statutory approvals in the September and December quarters
o Review of development options and negotiation with mining and haulage contractors and third party toll milling operators
o Board approval for mine development in 2019
Commenting on the Goongarrie Lady Study outcomes, Intermin Managing Director Mr Jon Price said:
"The Goongarrie Lady Feasibility Study has delivered robust economic results with strong projected cash margins and reduced geological risk. As with the successful Teal gold mine, the Company has taken a conservative approach to both Resource estimation and development studies with the infill drilling increasing geological confidence and mine optimisation studies adopting conservative cut off grades to ensure acceptable cash margins."
"The Company now looks forward to completing final statutory approvals and determining the optional development pathway to maximise and realise value for Intermin shareholders as Goongarrie Lady is confirmed as the next development in the production pipeline to enable our self-funded organic growth."
Feasibility Study Parameters
The FS is based on the following key parameters:
- JORC 2012 compliant Goongarrie Lady gold project Mineral Resource update of 310,600t at 2.40g/t Au for 24,000oz (at a 1g/t Au cut-off grade) (see Note 5 below)
- Open pit mining operations and road haulage conducted by contractors
- Processing through a conventional third party carbon in leach plant in close proximity
- Project implementation and oversight by Intermin's own team in conjunction with contractors
The key consultants and companies engaged during the FS and their areas of responsibility were:
- Geology and Resource estimates: HGS (Hawker Geological Services) Australia
- Geotechnical - Mining: Pells Sullivan Meynink
- Mining and Ore Reserves: Auralia Mining Consulting
- Metallurgical Test work: Independent Metallurgical Operations
- Processing Facility: In house review of third party processing plants
- Anthropological Study: Dr James Taylor (Anthropologist)
- Environmental: Botanica Consulting
Key outcomes of the Feasibility Study (see Note 6 below)
The key FS outcomes for the Project are included in Table 1 below (see link below). The estimated Ore Reserve, which constitutes 100% of the production target, has been prepared by competent persons in accordance with JORC Code 2012 (see Note 2 below).
The FS reflects the mining of approximately 15m of free dig waste overburden to reach the ore zone followed by ore mining post grade control drilling and modelling for ore mark out. Mining rates will be reduced during ore mining to minimise dilution and maximise ore recovery in accordance with ore geometry. Ore mined will be delivered to the ROM pad for haulage to the processing facility in batches of 30-50kt per month. Pre-stripping is expected to take three months followed by ore mining and treatment over the subsequent 3-4 months (see Note 7 below).
The FS assumes that over 30% of the material mined will be free dig oxide material that does not require blasting while the remaining 70% of oxide and transitional material may require some blasting as the mine approaches the harder material at depth. Final pit depth is designed at 43m from surface (see Note 5 below).
The gold price used to calculate the Ore Reserve is based on A$1,650/oz and financial modelling was set at A$1,700/oz
All of the material to be processed is classified as Proven and Probable Ore Reserve. No material to be processed is currently classified as Inferred Mineral Resource. No material classified as Inferred Mineral Resource is included in the Ore Reserve Estimate.
The JORC Code 2012 Mineral Resource estimate for Goongarrie Lady as released to the ASX on 16 August 2016 has been updated by independent consultants HGS (Hawker Geological Services) Australia and is summarised in Table 2 below (see link below).
The Resource estimate is constrained within a nominal +1g/t Au mineralised wireframe with a maximum of 2m internal dilution to determine the portion of the total mineralised inventory within the geological model that has a reasonable prospect of eventual economic extraction. The optimisation utilised mining, geotechnical and processing parameters derived from contract budget quotations, an independent geotechnical assessment, metallurgical test work and processing parameters from third party processing budget proposals.
A plan view of the Goongarrie Lady gold deposit Resource block model and pit design is included as Figure 2 (see link below).
Mining (see Note 8 below)
A mining contractor will conduct the mining activities with technical and managerial oversight provided by Intermin. Mining will be open cut using conventional truck and shovel operations and will initially be free dig near surface. Approximately 15 metres of waste overburden will be removed over a three month period followed by a staged grade control drilling program through the entire ore zone (see Figure 3 in link below).
Ore mining will then commence on a reduced bench height and smaller bucket size to minimise dilution and maximise ore recovery. Total volume moved is approximately 0.76M BCM.
Ore Reserve (see Note 8 below)
Intermin engaged Auralia Mining Consulting to conduct the Ore Reserve Study which was completed with the following material assumptions:
- Pit optimisation using slope parameters based on detailed geotechnical assessment by Pells Sullivan Meynink with an allowance for a ramp.
- Mining and haulage costs based on detailed quotations provided by a local WA based mining contractor currently undertaking work of this nature.
- Detailed metallurgical test work from samples collected from recent drilling representing all ore domains within the project. Recoveries of 94% for oxide, transitional and fresh material were applied.
- Toll treatment of the ore through one of three processing facilities in close proximity. Processing costs based on the estimated average price received on commercial terms.
- Mining recovery and mining dilution based on deposit width and geometry. A mining recovery of 95% and mining dilution of 10% was applied. All Inferred Resources were excluded from the optimisation for estimation of the Ore Reserve.
- An Australian dollar gold price of A$1,650/oz was applied. WA state royalties were subtracted from the gold price as part of the optimisation process.
- Bulk densities were assumed based upon test work on geologically similar ore bodies in the Goldfields.
- No discount factors have been used due to the mine life being less than one year.
The Ore Reserve for the project is reported according to the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, JORC Code 2012. The Mineral Resource was converted to an Ore Reserve in consideration of the level of confidence in the Mineral Resource estimate and reflecting the modifying factors.
Ore Reserves are reported inclusive of Mineral Resources. Mineral Resource material classified as Measured were converted to Proven Ore Reserves. Mineral Resource material classified as Indicated were converted to Probable Ore Reserves. The maiden Ore Reserve statement for Goongarrie Lady Stage 1 is presented in Table 3 below (see link below):
Ore processing and production (see Note 9, 10 below)
Ore mined will be trucked to a third party processing facility where the ore will be processed either on a campaign basis or blended with other ore after grade determination through dedicated ore sampling facilities under an agreed sampling protocol. After the removal of approximately 0.406M BCM of waste overburden, ore and waste mining will commence at approximately 30-50kt per month of ore with ore haulage and treatment to commence immediately.
Metallurgical test work completed on representative ore samples in house and by Independent Metallurgical Operations (Metallurgy Pty Ltd) estimated recoveries for the oxide at 99.1% (representing 91% of the ore mined) and the transitional and fresh also at 92.9% (representing 9% of the ore mined) over 24 hours. Reagent consumptions are low to moderate and ore viscosity is low with the ore exhibiting a high gravity recoverable component estimated at 60%. An average metallurgical recovery of 94% was used in this study.
Metallurgical results indicate ore treatment through conventional crushing, grinding and gravity circuit followed by standard carbon in leach gold extraction is suitable and appropriate for the ore type.
Pre-production works include establishing drainage channels and levy bunds for flood management, in addition to removing the majority of the existing waste dump which encroaches on the pit development and within the abandonment bund. This work is expected to take approximately two months. Waste and ore mining and ore processing shall follow and is scheduled to be completed within a seven month time frame (see Figure 5 in link below) from commencement with approximately 15m of waste overburden to be removed in the first three months.
Infrastructure, Transport and Services (see Note 10, 11 below)
The Goongarrie Lady Project is 80km north-north west of the City of Kalgoorlie - Boulder and access is via the sealed Goldfields Highway to the west. Site access is established via the unsealed existing site road from the highway south east to site. A minor upgrade of this road is planned to enable road train haulage at the intersection of the highway for transport of the ore to the third party processing plant.
Mine dewatering will commence ahead of ore mining with a surface water storage dam for mine and haul road dust suppression. Excess water, if any, will be pumped and discharged into the lake system to the east in accordance with water abstraction and discharge licenses.
Site establishment will be conducted by the mining contractor (see Figure 4 in link below) comprising site offices, maintenance workshop and fleet go line. All staff and external service providers will be based in Kalgoorlie - Boulder or Menzies.
Capital Expenditure (see Note 10, 11 below)
The capital cost estimate of A$0.73m represents costs for initial site establishment including mobilisation, office and workshop setup, haul road refurbishment and intersection upgrade, ROM pad upgrade and preproduction pit works.
Operating Expenditure (see Note 10, 11 below)
The operating cost estimates used in the FS are derived from budget quotations from local and regional mining contractors, budget quotations from local haulage contractors, proposed budget rates from potential third party mill operators and in house data based on actual operating experience in the region. Contractor rates are of a commercially sensitive nature and the FS used the average costs received from multiple parties for the economic evaluation.
Environmental and Permitting (see Note 10, 11 below)
Goongarrie Lady mostly contains land systems supporting vegetation types that are common throughout the Eastern Goldfields. There are no identified threatened ecological communities of national or sub-regional significance within the project area. No rare species of flora have been collected on project areas.
Botanica's qualified ecologist conducted the fauna investigation concurrently with the flora investigation in November 2016. No habitats were recorded that are considered to be exclusive to the study area. No fauna habitats recorded within the Study Area are considered to be significant. All habitats observed are widespread within the region. Species of birds, reptiles, amphibians and mammals present or likely to visit the site would also be present or visit other similarly vegetated areas in the region.
An Anthropological Heritage Survey was conducted over the project area by Dr James Taylor on behalf of Intermin and in conjunction with the Goldfields Land and Sea Council on 11th August 2017 with a nominated team of seven senior Wongai/Wangkayi Aboriginal Consultants, regarded as traditional custodians in the respective survey area. In summary, the Aboriginal Consultants had no objection to the proposed development in the specified work area. The Department of Aboriginal Affairs (DAA) listed heritage place No.19938, situated to the southwest of the work area clearance, was not considered by the knowledge-holders to be a concern for the purpose of the proposed mine developments and access road improvements located within tenements M29/420 & L29/109. The Company will continue to foster a spirit of cooperation amongst local aboriginal communities and, to the extent possible, will engage members of the communities in its proposed operations.
The Goongarrie Lady Mining Project is located on the Goongarrie Pastoral Lease. In 1995, the station was bought by the State Government and run by the Department of Biodiversity Conservation and Attractions (formerly Department of Parks and Wildlife). The station is destocked.
The status of the required statutory approvals for mine development include:
- Granted Mining Lease - M29/420
- Granted Miscellaneous License L29/109 for access and ore transport
- Mining Proposal/Mine Closure Plan - 95% drafted
- Clearing permit - CPS 7468/1 approved
- Project Management Plan (PMP) - being drafted
- Works approval and Operating Licence to discharge mine dewater - being drafted
- Licence to Take Water (5C) - being drafted
- Licence to Construct or Alter a Well (26D) - being drafted
Economic Evaluation (see Note 10, 11 below)
The economic evaluation of the project, summarised in Table 4 below (see link below) was conducted by Intermin management based on actual operating experience in the region and budget quotations received as part of the FS. As project life is seven months (after two months of predevelopment works), the evaluation was conducted on a cash basis with the following key assumptions:
- Australian gold price of $1,700 per ounce
- Budget quotations from mining, haulage and third party milling contractors
- State royalty of 2.5% of revenue
Funding (see Note 10, 11 below)
Intermin has a current market capitalisation of $41 million, has $10 million cash at bank (as at March 30 2018) and investments in ASX listed companies with a current market value of $1.1 million.
The Board is confident the Company will be able to finance the Goongarrie Lady Project utilising existing cash reserves.
Next Steps (see Note 10, 11 below)
The immediate next steps are the assessment and finalisation of mining, haulage and milling contracts, finalising and submission of final statutory approvals and seeking Board approval for potential development in 2019.
1 As announced to the ASX on 3 April and 03 October 2017.
2 See Table 2 on Page 4 and JORC Tables and competent persons statement on Pages 16-18 and in Appendix 1,
3 See Table 3 on Page 7 and JORC Tables in Appendix 1,
4 See Forward Looking and Cautionary statement on Pages 1 and 17 and Appendix 1.
5 See Table 2 on Page 4 and JORC Tables in Appendix 1,
6 See Table 3 on Page 7 and JORC Tables in Appendix 1,
7 See Forward Looking and Cautionary statement on Pages 1 and 17
8 See Forward Looking and Cautionary Statements on Page 1 and 16 an JORC Tables in Appendix 1 on page 18
9 See Competent Persons Statement on pages 15- 17 and JORC Code 2012 Table 1 in Appendix 1 on page 18
10 See Forward Looking and Cautionary Statements on Pages 1 and 17 and JORC Tables in Appendix 1 on pages 18
11 See Competent Persons Statement on page 15 and JORC Code 2012 Table 1 in Appendix 1 on page 18
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