TIDMKRS
RNS Number : 3922S
Keras Resources PLC
06 November 2019
Keras Resources plc / Index: AIM / Epic: KRS / Sector:
Mining
6 November 2019
Keras Resources plc ('Keras' or the 'Company')
Update on Nayega Manganese Project
Following the announcement on 21 October, Keras Resources plc,
the AIM listed mineral resource company, wishes to update
shareholders on progress relating to its 85% owned subsidiary
Société Générale de Mines ('SGM'), which currently holds an
exploration permit over the Nayega Manganese ('Mn') Project
('Nayega', or the 'Project') in Northern Togo.
The Council of Ministers ('CoM') of the Republic of Togo
convened on the 18(th) October where a decree was adopted and
published granting a license for large-scale exploitation of the
manganese deposit at Nayega to SGM. Keras and SGM have subsequently
met with the Togolese Ministry of Mines and are pleased to announce
that the ancillary documentation related to the Exploitation Permit
is expected to be concluded by year end allowing commercial
production to commence in the first quarter of 2020.
Initial operations will be based upon shipping of ore to smelter
end users, however, Keras believe that there is potential to add
significant value by the production of manganese sulphate for the
fertiliser and battery market as a second stage development. As a
result, Keras has appointed Perth based Simulus Engineers to
conduct a Scoping Study on the potential to develop such a refinery
for the Nayega Project. The decision was taken based on
confirmation of the CoM's decree and the excellent leaching results
from testwork completed on samples obtained from the Transitional
and deeper Saprolitic zones within the Nayega orebody.
Highlights
Exploitation Permit
-- All documentation, including the Mining Convention and
Exploitation Permit, expected to be completed by year end
-- Exploitation Permit will be a 20-year permit covering the
current 15-year life of mine ('LOM') and any potential increase in
Ore Reserve
-- 10% free carry to be issued to the Togo Government reducing
the Company's interest in Société Générale des Mines SARL to
76.5%
-- Will require the conversion of SGM to a higher governance SA company
Commercial Production
-- Operations expected to commence at nameplate capacity of
6,500 tonnes per month ('tpm') of saleable manganese ore in Q1
2020, targeting the detrital and laterite ore horizons
-- Construction of an additional 70 tonnes per hour ('tph')
scrubbing and screening plant to commence in Q2 2020 with steady
state production of 17,200tpm planned for Q3 2020 subject to
securing expansion capital
-- Expansion capital is expected to be funded through offtake agreements
Refinery Scoping Study
-- Initial leaching testwork completed in July 2019 on samples
obtained from the transitional and deeper Saprolitic zones within
the Nayega orebody
-- Leaching results have been encouraging with in excess of 90%
recovery being achieved in less than two hours from both ore
samples
-- Nayega manganese is an oxide ore which leaches more
favourably compared with South African carbonate ores
-- Solutions produced contained minimal concentrations of
impurities, indicating a reduced risk of issues in downstream
processing
-- Significant growth potential for manganese as a replacement
for cobalt in lithium-ion batteries as producers look to secure
cost competitive, responsibly mined long term raw material
supply
-- Potential to de-risk Nayega's exposure to the volatile steel
market by diversifying into the growing EV market
-- Commissioned Scoping Study expected to take nine weeks
Russel Lamming, CEO of Keras Resources, commented, "The Council
of Ministers Decree authorising the grant of the Exploitation
Permit for our flagship Nayega Manganese Project is
transformational and a major milestone for the Company. Our
strategy of proving up the Project through the fully funded
10,000-tonne bulk sample programme has been validated, and without
investing any further capital, Keras can transition seamlessly from
Explorer to Producer. The installed processing capacity allows us
to commence production of beneficiated 38% manganese ore at a rate
of 6,500tpm - this is planned for the first quarter of 2020.
"Concurrently, we will look to implement Phase 1 of the
expansion programme through the installation of a new 70tph
scrubber plant to be constructed in parallel with our existing
25tph plant. This gives us the flexibility to use the existing
plant as both a production plant in the short-term, but also as a
sampling plant when we start assessing the feasibility of producing
battery grade manganese. The Company is currently in discussions
with various offtakers to provide finance for the expansion
programme.
"In addition, with the inherently volatile nature of the
downstream manganese alloy market and the growing demand for a cost
effective, responsibly mined replacement for cobalt in the
production of lithium-ion batteries, we have commissioned a Scoping
Study on the potential to develop a refinery for the Nayega Project
to produce fertiliser and battery grade manganese sulphate.
"These are exciting times for our shareholders. In tandem with
the expected start of full-time production at Nayega in 2020 over a
current mine life of 15 years and resultant defined cashflow, we
are also in the process of distributing our 33.8% interest in ASX
listed gold focused Calidus Resources Limited, resulting in a
distribution of approximately GBP9.9m. Post the distribution
shareholders will have direct exposure to a cash generative
manganese focussed company."
Details
Keras' key focus has been on advancing its Nayega Manganese
Project in Togo, West Africa, to commercial production. Post the
award of the Exploitation Permit, the Company will hold an 76.5%
interest in Société Générale des Mines SARL, which holds the
1,385-hectare ("ha") Exploitation Permit and the 9,427ha Borgou
Research Permit. The Project hosts a current JORC Compliant Mineral
Resource of 13.5Mt @ 11.1% Mn and an Ore Reserve of 8.48Mt @ 14.0%
Mn with additional upside identified through exploration work. The
known deposit at Nayega covers 2.2km by 500m and averages 3.3
metres in thickness. An internal Definitive Feasibility Study
demonstrated the current LOM of 15 years, however, with ongoing
exploration on the Ogaro anomaly, located approximately 5.5km east
of the Nayega Resource, the Company is confident that there is the
potential for the LOM to increase.
Commercial operations at Nayega are expected to commence in Q1
2020 with production ramping up to the installed bulk sample
operational capacity of approximately 6,500tpm of saleable
manganese ore. The beneficiation process has already been proven up
following a 10,000-tonne bulk sampling metallurgical testwork
programme successfully concluded earlier this year, which was
tested by an end user with positive saleable results announced in
Q3 2019. Crucially, the Company has established and proven up the
logistics network required to transport bulk manganese to Lomé, the
only deep-water port in the region and the gateway to the "Togo
Corridor" seen as the main artery for imports into Burkina Faso,
Niger and Mali. Importantly, cheaper backloading rates reduce
logistics costs significantly.
Concurrently with initial production, Phase 1 of the expansion
programme is anticipated to be implemented with the procurement and
fabrication of a new 70tph scrubbing and screening plant planned
for Q1 2020, subject to financing, with steady state production of
17,200tpm expected in Q2 2020. This will also include ancillary
water, power and logistics infrastructure comprising additional
generator capacity, new water supply boreholes with associated
overland piping, tailings dam with water reclamation system, and
weighbridge. To ensure that grade control is efficiently managed,
an onsite laboratory with sample preparation equipment and
bench-top X-ray fluorescence ('XRF') analyser will also be
installed.
The objective of the leach test programme in July 2019 was to
assess whether the manganese in the ore could be extracted by
sulphur dioxide leaching. Samples of the underlying Transitional
and Saprolitic geological horizons were tested in Perth, Australia
by Simulus (Pty) Ltd in Welshpool, with the exception of
mineralogical analysis by X-Ray Diffusion ('XRD'), which was
performed by ALS Metallurgy Services. Analysis indicated that the
dominant manganese minerals detected were in oxide materials in the
form of Cryptomelane and Birnessite (with Quartz and Kaolinite
being the two major gangue minerals), suggesting that the samples
are likely amenable to sulphur dioxide leaching. Sulphur dioxide
leaching of the samples achieved extractions of 96% and >99% for
the Transitional and Saprolitic samples respectively within two
hours. A longer leach time and/or more efficient residue washing
would likely lead to further manganese extraction from the
Transitional ore.
The Company has now commissioned Simulus Engineers to complete a
Scoping Study on the potential to develop a refinery for the Nayega
Project to produce fertiliser and battery grade manganese
sulphate.
Links to the relevant documents on the Republic of Togo's
website as follows:-
-- Council of Ministers Meeting
https://presidence.gouv.tg/article/le-chef-de-letat-preside-le-17e-conseil-des-ministres-de-lannee-0
-- Project Explanation
https://www.republicoftogo.com/Toutes-les-rubriques/Economie/Manganese-la-SGM-decroche-un-permis
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of Russell Lamming, Chief Executive Officer. This
announcement contains inside information for the purposes of
Article 7 of Regulation (EU) 596/2014.
**S**
For further information please visit www.kerasplc.com, follow us
on Twitter @kerasplc or contact the following:
Russell Lamming Keras Resources plc info@kerasplc.com
Nominated Adviser & Broker
Ewan Leggat / Charlie SP Angel Corporate Finance +44 (0) 20 3470
Bouverat LLP 0470
Financial PR
Isabel de Salis / Cosima +44 (0) 20 7236
Akerman St Brides Partners Ltd 1177
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END
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