PRE-FEASIBILITY STUDY RESULTS BOOST POTENTIAL FOR ROBUST OPERATION AT MOUNT PEAKE
http://www.asx.com.au/asxpdf/20120709/pdf/4279tlfv4p9hcv.pdf
HIGHLIGHTS
Pre-Feasibility Study (PFS) results demonstrate exceptionally robust cash flows and positive returns from Mount Peake Iron-Vanadium-Titanium Project (NT):
o Pre-tax Nett annual cash flow of $294M
o Life-of-mine revenues of $11.8B
o Pre-tax IRR of 31.8%
o Exchange rate 1USD to 1AUD
o Initial 20-year life with significant extensions available
o 2.5Mtpa operation expanding to 5Mtpa after 3 years
o Average annual production of 15,300tpa V2O5, 375,000tpa TiO2 concentrate and 1.13Mtpa Fe2O3
o Year 1 pre-production capital cost estimate of A$339M
o Year 2 pre-production capital cost estimate of A$224M
o Potential pay back in 4 years
PFS compiled by independent consultants Snowden Mining, Sinclair Knight Merz (SKM) and METS.
Robust project at exchange rate of 1USD to 1AUD.
TIVAN™ a hydrometallurgical process that is being proven to be commercially viable: achieves excellent product recoveries of high purity vanadium and iron which will attract premium pricing.
Potential offshore location for the TIVAN™ processing facility to be considered, optimising CAPEX and OPEX and bringing additional strategic and financial benefits.
Potential to further value-add by downstream processing to produce higher-value Ferrovanadium (FeV) and Titanium products.
Chinese partners provide significant competitive advantage in ability to access Chinese finance, EPCM and end user markets.
Discussions with commodity traders and potential end-users has commenced.
2012 Pre-Feasibility Study Results
The 2012 Pre-Feasibility Study was prepared by key consulting companies Snowden Mining Industry Consultants Pty Ltd (“Snowden”), Mineral Engineering Technical Services (“METS”) and Sinclair Knight Mertz (“SKM”) to an accuracy level of ±25 per cent, required for PFS.
The Pre-Feasibility Study (PFS) is based on the updated JORC Indicated and Inferred Resource for Mount Peake published on 12 October 2011 of 160Mt @ 0.3% V2O5, 5% TiO2 and 23% Fe (Indicated 110Mt @ 0.29% V2O5, 5.3% TiO2 and 23% Fe; Inferred 48Mt @ 0.24% V2O5, 4.5% TiO2 and 21% Fe).
In addition to this resource, TNG has published an Exploration Target1 of 500-700Mt grading 0.2-0.4% V2O5 and 25-35% Fe.
The updated resource model compiled by Snowden Mining Consultants revealed that the Mount Peake deposit itself remains open to the east. In addition, recent regional drilling has highlighted the potential to further increase the Company’s resource inventory in the region.
The key points of the final PFS are:
● Total material mined: 147.9Mt
● Total waste movement: 72Mt
● Total ore mined: 75.9Mt
● Strip ratio: 0.95
● Mine life: 20 years (including pre-production)
● Processing rate (life-of-mine): 2.5Mt/annum, increasing to 5Mt/annum in year 4
● Average head grade: 0.39% V2O5, 27.09% Fe, 7.02% TiO2
● Average recoveries: 80% V2O5, 66% Fe, 55% TiO2
● Total metal production: 236kt V2O5, 17.4Mt Fe, 5,822kt TiO2
The key financial outcomes of the final PFS are:
● Total revenue (life-of-mine): A$11.8 billion
● Operating cash flow (life-of-mine): A$5.8 billion
● Nett cash flow (life-of-mine): A$5.05 billion
● Pre-production capital cost estimate (including all infrastructure: A$563 million
● Total operating costs (including mining, processing, transport & royalties): A$75.5/tonne of plant feed
● Nett annual cash flow: A$294M2
● IRR pre-tax: 31.8%
Key assumptions at commencement of operations include:
● Operating costs and pit slope angles related to mining estimated to a Pre-Feasibility Study level ( ±25%)
● V2O5 price of US$19,841/tonne (>99% grade)
● TiO2 price of US$400/tonne (> 64% grade)
● Fe2O3 price of US$200/tonne (>99.9% grade)
● Royalty rate of 2.5% per tonne of plant feed
● Discount rate of 8%
● A$/US$ exchange rate of 1 US$ = 1A$