Simberi Sulphide PFS Underpins Production Increase
November 10 2010 - 5:39AM
UK Regulatory
TIDMAGLD
RNS Number : 9382V
Allied Gold Limited
10 November 2010
FOR IMMEDIATE RELEASE 10
November 2010
allied gold limited
("Allied", "Allied Gold" or "the Company")
SIMBERI SULPHIDE PFS UNDERPINS INCREASE IN GROUP PRODUCTION TO 320,000 OZPA BY
2015
· Sulphide Pre-Feasibility Study completed:
- Net Project Cash Flow A$750 million (pre tax)
- Sulphide PFS Project NPV (10%) A$334 million (pre tax)
- Cash Costs A$678/oz (US$542/oz)
· Bankable Feasibility Study (BFS) has commenced and will assess increased
sulphide throughput option from 1.5 Mtpa to 2.5 Mtpa
· Subject to BFS completion Group production planned to increase to an
average 320,000 ozpa by 2015 including combined Simberi oxide plant expansion
(100,000 ozpa) and sulphide production (100,000 ozpa), and Gold Ridge
redevelopment (120,000 ozpa)
Comment by Executive Chairman Mark Caruso; "The growing oxide and sulphide
resource endowment at Simberi, which currently stands at 6.2 million ounces,
warrants a production platform of at least 200,000 ounces per annum. The
sulphide prefeasibility study highlights robust project economics, and as part
of the bankable feasibility study over the next 12 months we will look at
throughput options to increase the sulphide circuit from a proposed 1.5 Mtpa to
2.5 Mtpa with the potential for the Simberi oxide/sulphide circuit to produce
circa 250-300,000 ounces of gold per annum. We are also confident that the
sulphides and oxides resource inventory will increase as a result of the planned
aggressive drilling program."
The preliminary evaluation of developing the Simberi sulphides through a 1.5
Mtpa process circuit has been completed.
The Pre-Feasibility Study (PFS) has demonstrated that the development of the
sulphides is technically feasible and economically viable.
The study has also indicated that a larger treatment plant (2.5 Mtpa) may be
appropriate given additional sulphide resources that may be discovered and to
allow the Company leverage and exposure to future gold price movements.
Process: The PFS investigated the processing of refractory gold ore via the
roasting of a concentrate. The flotation plant was scaled at 1.5 Mtpa
throughput and high level test work has resulted in 93% gold recovery in a
pyrite concentrate. The mass recovery from flotation was approximately 14%.
Concentrate grade is approximately 22 g/t gold, 23% contained sulphur and low
levels (0.3%) of arsenic.
Laboratory test work has shown that the concentrate is amenable to mineral
roasting followed by thickening of the calcine (roaster ash) and conventional
leach/CIP treatment to recover the gold.
The overall gold recovery through the entire process is approximately 82%.
The sulphur contained within the concentrate feed acts as fuel for the roaster.
The sulphur dioxide gas produced in the roasting process is captured and reacted
with the concentrate tailing to produce a stable sulphate compound to be
disposed via the existing DSTP tailing system.
Resources: The sulphide resources that form the basis of the study occur at
Pigiput and Pigibo deposits and to a lesser extent the Samat deposits.
During the course of the study over 38,000 metres of drilling has been completed
and a recent Resource upgrade (June 2010) and Reserve estimation (September
2010) has resulted in substantial increase in both oxide and sulphide gold
inventory. The Simberi Reserves table is in the Appendix.
Current Measured, Indicated and Inferred Mineral Resources total 6.2 Moz and
include total Proven and Probable Reserves of 2.2 Moz of which approximately
half are sulphide hosted.
Under-explored known sulphide resources also occur at the largest oxide deposit
at Sorowar and also at the Botlu deposit. Both these areas require additional
exploration drilling to define extent and resource size and grade.
Further exploration for additional oxide resources is also planned, particularly
in the Sorowar and Pigibo areas.
Oxides: The existing Simberi oxide process plant has a nameplate capacity
of
2 Mtpa to produce on average 70,000 ounces of gold per year. At this
production rate treatment of the oxides would take approximately 13 years. More
importantly the sulphides ores at Pigiput and Pigibo are overlain by
approximately half the current oxide reserves which would at existing processing
rates take over 6 years to treat.
Given the large oxide resource, the current gold price, and the requirement to
access sulphide ore the Company has embarked on an oxide plant upgrade to 3.5
Mtpa, throughput although further expansion to 5 Mtpa plus will be reviewed. The
3.5 Mtpa upgrade will result in average annual gold production of 100,000 ounces
per year and allow access to the sulphide ores by 2015.
The expansion consists of a new ore reclaimer, a 2.5 MW SAG mill, additional
leach tanks, a 26m diameter thickener as well as pump, piping and services
upgrade commensurate with the increased throughput.
The oxide upgrade will cost A$32 million including owners costs and
contingencies and the expansion will be completed December quarter 2011.
Work in progress and completed to date includes;
· Engineering design, 75% completed
· Site earthworks leach tanks, in progress
· Foundation investigation for SAG mill, leach tanks and thickener,
drilling completed laboratory testing and reporting in progress
· Procurement of SAG mill and delivery to site, in progress
· Fabrication of tank plate and structural steel, in progress
· Rerouting of services (power, water & communication cables), completed
· Other upgrades in the existing plant to expansion capacity including
elution and intertank screens completed, and lime slaking plant in progress
BFS: The timetable forward to complete a Bankable Feasibility Study (BFS) on
the sulphide development is to continue exploration drilling on Simberi Island
and other targets within the Company's exploration licence over Tatau and Tabar
Islands.
The Company plans to initially carry out sulphide targeted drilling over the
Sorowar deposit in 2011. This deposit is strategic to the Simberi operations
because once mining is completed the void will be used to hold mine waste.
Before this can be done the area needs to be sterilised.
Other technical work includes a pilot plant roaster test work to optimise
roaster design and define capital and operating costs.
The Company plans to have the BFS completed for an investment decision by early
2012 and construction completed by December 2014. Should gold prices strengthen
further in 2011, Allied could potentially accelerate the BFS and bring forward
the sulphide development.
Key metrics: The sulphide key metrics and financial results are shown in table 2
of the full release. The table shows the sulphide and oxide operations as
combined operation. The oxides and sulphides are intrinsically related, with
the development of the sulphides dependent on removal of the oxides.
Capex: The estimated A$278 million capital cost (summarised in table 1 of the
full release) is inclusive of the current A$32 million oxide plant expansion,
mining fleet and haul roads that are required for the upgraded oxide/sulphide
operation.
Modelling: The financial modelling demonstrates that the sulphide operation in
conjunction with the oxide operation is financially positive with pre-tax NPV
(10%) of A$334M and total project cash flow before tax of approximately A$750M.
The analysis is based on US$1,000 gold price and AUD/USD exchange rate of
A$0.80. The project is sensitive to gold price and this is demonstrated in the
sensitivity chart included in the full release.
Material Movement: Based on 1.5 Mtpa, the sulphide operation will process 14.8Mt
of ore at an average grade of 2.41 g/t gold. Before the sulphide ore can be
mined approximately 20 Mt of oxide ore and about 24 Mt of oxide waste needs to
be removed. In addition approximately 9.1 Mt of lower grade oxide ore will be
stockpiled for processing at the end of the mine life.
The life of mine waste to ore strip ratio for all materials mined is 1.2.
The expansion of the oxide plant to 3.5Mtpa throughput in conjunction with
stockpiling will allow access to the sulphide ores by start 2015.
The open pit mining will be undertaken using ridged frame haul trucks loaded by
hydraulic excavators. Drill and blasting of the sulphide ore and waste will be
undertaken however blasting requirements in the oxides will be minimal.
The oxide ore will be trucked to the existing rope conveyor at Sorowar which has
been upgraded as part of the expansion to deliver 3.5 Mt (dry) to the process
plant at Pigiput Bay. A waste repository located near the load end of the rope
conveyor will accommodate Sorowar oxide waste (approximately 12 Mt) and this
area estate will be used to stockpile the low grade oxide waste.
The Sorowar pit will, once exhausted, be used as a repository for acid producing
sulphidic waste. Initially the sulphide ores will be delivered to the processing
plant at Pigiput bay by haul truck but later after 2020 when oxide mining is
finished, the ore will be transferred by the rope conveyer.
Some portion of the mine wastes have been nominated for marine disposal and the
material will be trucked to the coastal tip head. The production profile chart
in the Appendix shows the material movements.
A copy of the full announcement can be viewed on the company's website and as a
link this announcement:
http://www.rns-pdf.londonstockexchange.com/rns/9382V_-2010-11-10.pdf
For more details please contact:
Simon Jemison Investors and Media (Aust) + 61 (0) 418 853 922
Rebecca Greco Investors (North America) +1
416 839 8610
David Simonson Merlin PR (UK) + 44 (0) 20 7726
8400
Beaumont Cornish Limited
Roland Cornish
Beaumont Cornish Limited
T: +44 (0) 20 7628 3396
Competent Persons
The information in this Stock Exchange Announcement that relates to Mineral
Exploration results and Mineral Resources, together with any related assessments
and interpretations, have been verified by and approved for release by Mr C R
Hastings, MSc, BSc, M.Aus.I.M.M., a qualified geologist and full-time employee
of the Company. Mr Hastings has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person as defined in
the 2004 Edition of the "Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves". Mr Hastings consents to the inclusion of
the information contained in this release in the form and context in which it
appears. Mr. C. R. Hastings is also a Qualified Person as defined by Canadian
National Instrument 43-101.
Forward-Looking Statements
This press release contains forward-looking statements concerning the projects
owned by Allied Gold. Statements concerning mineral reserves and resources may
also be deemed to be forward-looking statements in that they involve estimates,
based on certain assumptions, of the mineralisation that will be found if and
when a deposit is developed and mined. Forward-looking statements are not
statements of historical fact, and actual events or results may differ
materially from those described in the forward-looking statements, as the result
of a variety of risks, uncertainties and other factors, involved in the mining
industry generally and the particular properties in which Allied has an
interest, such as fluctuation in gold prices; uncertainties involved in
interpreting drilling results and other tests; the uncertainty of financial
projections and cost estimates; the possibility of cost overruns, accidents,
strikes, delays and other problems in development projects, the uncertain
availability of financing and uncertainties as to terms of any financings
completed; uncertainties relating to environmental risks and government
approvals, and possible political instability or changes in government policy in
jurisdictions in which properties are located. Forward-looking statements are
based on management's beliefs, opinions and estimates as of the date they are
made, and no obligation is assumed to update forward-looking statements if these
beliefs, opinions or estimates should change or to reflect other future
developments.
Not an offer of securities or solicitation of a proxy
This communication is not a solicitation of a proxy from any security holder of
Allied Gold, nor is this communication an offer to purchase or a solicitation to
sell securities. Any offer will be made only through an information circular or
proxy statement or similar document. Investors and security holders are
strongly advised to read such document regarding the proposed business
combination referred to in this communication, if and when such document is
filed and becomes available, because it will contain important information. Any
such document would be filed by Allied Gold with the Australian Securities and
Investments Commission, the Australian Stock Exchange and with the U.S.
Securities and Exchange Commission (SEC).
The technical information in the Announcement was prepared under the
"Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves" (JORC).
Allied owns 100% of the Simberi Island gold project.
Glossary of terms used in the Announcement:
A 'Mineral Resource' is a concentration or occurrence of material of intrinsic
economic interest in or on the Earth's crust in such form, quality and quantity
that there are reasonable prospects for eventual economic extraction. The
location, quantity, grade, geological characteristics and continuity of a
Mineral Resource are known, estimated or interpreted from specific geological
evidence and knowledge. Mineral Resources are sub-divided, in order of
increasing geological confidence, into Inferred, Indicated and Measured
categories.
An 'Inferred Mineral Resource' is that part of a Mineral Resource for which
tonnage, grade and mineral content can be estimated with a low level of
confidence. It is inferred from geological evidence and assumed but not verified
geological and/or grade continuity. It is based on information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes which may be limited or of uncertain quality and reliability.
An 'Indicated Mineral Resource' is that part of a Mineral Resource for which
tonnage, densities, shape, physical characteristics, grade and mineral content
can be estimated with a reasonable level of confidence. It is based on
exploration, sampling and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits, workings and drill
holes. The locations are too widely or inappropriately spaced to confirm
geological and/or grade continuity but are spaced closely enough for continuity
to be assumed.
A 'Measured Mineral Resource' is that part of a Mineral Resource for which
tonnage, densities, shape, physical characteristics, grade and mineral content
can be estimated with a high level of confidence. It is based on detailed and
reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes. The locations are spaced closely enough to confirm geological
and grade continuity.
Reserves - The portion of the Mineral Resources which can be extracted from the
Earth at a profit.
Proven Reserves - Ore reserves for which: (a) the quantity is computed from
dimensions revealed in outcrops, trenches, workings or drill holes, and grade is
computed from the results of detailed sampling; and (b) the sites for
inspection, sampling and measurement are spaced so closely and the geologic
character is so well defined that size, shape, depth and mineral content of
reserves are well established.
Probable Reserves - Ore reserves for which quantity and grade are computed from
information similar to that used for proven reserves, but the sites for
inspection, sampling and measurement are farther apart or are otherwise less
adequately spaced. The degree of assurance, although lower than that for proven
reserves, is high enough to assume geological continuity between points of
observation.
Tonnage - An expression of the amount of material of interest irrespective of
the units of measurement (which should be stated when figures are reported)
Grade - Any physical or chemical measurement of the characteristics of the
Analysis (Value) material of interest in samples or product
Cut off grade - The lowest grade, or quality, of mineralised material that
qualifies as economically mineable and available in a given deposit. May be
defined on the basis of economic evaluation, or on physical or chemical
attributes that define an acceptable product specification
Mineralisation - Any single mineral or combination of minerals occurring in a
mass, or deposit, of economic interest
Others
Assay - The proportion of a particular metal (eg Au and Ag) in a sample derived
by laboratory analytical techniques.
Analysis limits of detection for Au is <0.01 g/t. Au assays are determined by a
50gm fire assay and an AAS (Atomic Adsorption Spectrometry) finish. Any interval
recorded as being below detection has been recorded in the database as having a
grade of half the detection limit, which in this case is 0.005 g/t. The Ag
detection limit is 0.2g/t, and is derived from a 0.5g charge Aquaregia digest,
with assay via ICP (Induced Coupled Plasma) AES.
[Company] mineralisation types are:
Oxide - extremely weathered material (cyanide leach recoveries > 90%), 0.5 g/t
Au cutoff
Transitional - distinctly weathered material (cyanide leach recoveries 50-90%),
0.5 g/t Au cutoff
Sulphide - Slightly weathered to fresh material (cyanide leach recoveries
generally <50%), 0.5 or 1.0 g/t Au cutoff
Ounce - 1 troy ounce = 31.10348 grams
Tonnes - Are estimated on a dry basis and defined as a measurement of mass equal
to 1000kg which is equivalent to 2204.622 pounds.
Tuff - A rock composed of pyroclastic materials that have been ejected from a
volcano. In many instances these fragments are still hot when they land,
producing a "welded" rock mass.
Mineral Resource estimate - An estimate of tonnage and grade (mineral content)
of a deposit by a variety of techniques including geometrical classical methods
and or geostatistical methods.
Mt - Million Tonnes
Moz - Million Ounces
Andesite - A fine-grained, extrusive igneous rock composed mainly of plagioclase
with other minerals such as hornblende, pyroxene and biotite.
Ordinary kriging (OK) - is a geostatistical approach to modeling. Instead of
weighting nearby data points by some power of their inverted distance, OK relies
on the spatial correlation structure of the data to determine the weighting
values. This is a more rigorous approach to modeling, as correlation between
data points determines the estimated value at an unsampled point.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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