Discovery Metals
www.discoverymetals.com.au
www.discoverymetals.com.au
Discovery Metals is focused on developing the Boseto Copper Project in north west Botswana. The company also controls the Dikoloti Nickel Project in north east Botswana.
Discovery Metals advances Boseto Copper Project - lower costs and improved returns
Discovery Metals (ASX:DML/AIM:DME) had a highly successful quarter in terms of: development work, reduced costs and improved returns for the Boseto Copper Project, as well as an increase in total mineral resource at Boseto.
Boseto Copper Project Bankable Feasibility Study
- The overall Bankable Feasibility Study (‘BFS’) is now scheduled for completion in the first quarter of
2010 to incorporate recent positive exploration results. Other BFS work, including ore processing,
infrastructure and the environmental assessment, will be completed in mid 2009 in line with the
original BFS schedule.
- Based on BFS work to date and changes in the external environment, updated financial evaluation of
the Boseto project shows:
* operating costs are expected to be significantly lower than reported in the Pre Feasibility Study
(‘PFS’) with the updated 10 year average cost of $1.06/lb vs $1.43/lb in the PFS, due to higher
grades and lower site and transport costs more than offsetting reduced metallurgical recovery and
higher treatment charges.
* capital costs should be reduced by approximately 25% based on current lower supplier quoted
costs for capital equipment and engineering.
* overall project economics are improved, with the copper price at which the project provides a 10%
discounted cash flow rate of return now being less than $1.50/lb (break even NPV).
Exploration & Infill Drilling
Renewal of the seven Botswana prospecting licences originally granted in 2005 has been obtained. This gives Discovery Metals Limited (“Discovery”) continued access to 1,300 strike kilometres of prospective mineralisation, with the total area now covering more than 10,100 square kilometres;
- At the Petra prospect, Niton (XRF) soil geochemistry has identified a new 3.6 kilometre long surface
copper anomaly immediately south‐west of the current Petra prospect;
- At the Plutus prospect, the strike length of mineralisation increased by 1,000 metres to 8,500 metres
while remaining open to the south west, towards the Petra prospect. Compared to the previous
resource estimate, the new Plutus Inferred Mineral Resource of 15.9Mt @ 1.6% copper (Cu) and 16.4
g/t silver (Ag) at a cut off grade of 0.6% Cu, delivers more than a 35% increase in contained metal,
with tonnage increase of 10%, copper grade increase of 25% and silver grade increase of 30%;
- At the Zeta prospect, the new Mineral Resource estimate shows copper grade increased by 22% and
silver grade increased by 10%. The Zeta Indicated and Inferred Mineral Resource is now 25.2Mt @
1.5% Cu and 20.1g/t Ag at a cut off grade of 0.6% Cu;
- The total Mineral Resource at the Boseto Copper Project is now 45.6Mt @ 1.5% Cu and 18.7g/t Ag at a
cut of grade of 0.6% Cu with contained metal of approximately 684,000 tonnes of copper and 27
million ounces of silver.
Power & Water requirements
New power projects coming on stream will increase Botswana’s power grid capacity to 645MW in 2011 and 795MW in 2012, against demand of 720MW in 2011 and 750MW in 2012. These dates fit well in the context of the Boseto Copper Project power requirements. Nevertheless, the BFS capital includes allowance for self generation of power at this stage.
Current assessment is that the fractured‐rock aquifers of the Ghanzi Group, the Kgwebe Formation and the Ecca Group in an area surrounding the proposed Mine Site are likely to have sufficient capacity to meet the required annual water demand for the mining and plant operations. The water that is being targeted as suitable for treatment for process plant water is saline (similar to sea water) and significantly less saline to that used in the gold fields of Western Australia. Therefore, Discovery will not be competing with other users for higher quality water. Further drilling is being undertaken to ensure there is an adequate water supply for the project’s requirements and this water exploration programme is expected to be completed in early 2009.
There was no exploration or testwork for the Dikoloti nickel project during the quarter. At the end of the quarter, Discovery held AUD $6.4 million in cash.
Boseto Copper Project Bankable Feasibility Study
- The overall Bankable Feasibility Study (‘BFS’) is now scheduled for completion in the first quarter of
2010 to incorporate recent positive exploration results. Other BFS work, including ore processing,
infrastructure and the environmental assessment, will be completed in mid 2009 in line with the
original BFS schedule.
- Based on BFS work to date and changes in the external environment, updated financial evaluation of
the Boseto project shows:
* operating costs are expected to be significantly lower than reported in the Pre Feasibility Study
(‘PFS’) with the updated 10 year average cost of $1.06/lb vs $1.43/lb in the PFS, due to higher
grades and lower site and transport costs more than offsetting reduced metallurgical recovery and
higher treatment charges.
* capital costs should be reduced by approximately 25% based on current lower supplier quoted
costs for capital equipment and engineering.
* overall project economics are improved, with the copper price at which the project provides a 10%
discounted cash flow rate of return now being less than $1.50/lb (break even NPV).
Exploration & Infill Drilling
Renewal of the seven Botswana prospecting licences originally granted in 2005 has been obtained. This gives Discovery Metals Limited (“Discovery”) continued access to 1,300 strike kilometres of prospective mineralisation, with the total area now covering more than 10,100 square kilometres;
- At the Petra prospect, Niton (XRF) soil geochemistry has identified a new 3.6 kilometre long surface
copper anomaly immediately south‐west of the current Petra prospect;
- At the Plutus prospect, the strike length of mineralisation increased by 1,000 metres to 8,500 metres
while remaining open to the south west, towards the Petra prospect. Compared to the previous
resource estimate, the new Plutus Inferred Mineral Resource of 15.9Mt @ 1.6% copper (Cu) and 16.4
g/t silver (Ag) at a cut off grade of 0.6% Cu, delivers more than a 35% increase in contained metal,
with tonnage increase of 10%, copper grade increase of 25% and silver grade increase of 30%;
- At the Zeta prospect, the new Mineral Resource estimate shows copper grade increased by 22% and
silver grade increased by 10%. The Zeta Indicated and Inferred Mineral Resource is now 25.2Mt @
1.5% Cu and 20.1g/t Ag at a cut off grade of 0.6% Cu;
- The total Mineral Resource at the Boseto Copper Project is now 45.6Mt @ 1.5% Cu and 18.7g/t Ag at a
cut of grade of 0.6% Cu with contained metal of approximately 684,000 tonnes of copper and 27
million ounces of silver.
Power & Water requirements
New power projects coming on stream will increase Botswana’s power grid capacity to 645MW in 2011 and 795MW in 2012, against demand of 720MW in 2011 and 750MW in 2012. These dates fit well in the context of the Boseto Copper Project power requirements. Nevertheless, the BFS capital includes allowance for self generation of power at this stage.
Current assessment is that the fractured‐rock aquifers of the Ghanzi Group, the Kgwebe Formation and the Ecca Group in an area surrounding the proposed Mine Site are likely to have sufficient capacity to meet the required annual water demand for the mining and plant operations. The water that is being targeted as suitable for treatment for process plant water is saline (similar to sea water) and significantly less saline to that used in the gold fields of Western Australia. Therefore, Discovery will not be competing with other users for higher quality water. Further drilling is being undertaken to ensure there is an adequate water supply for the project’s requirements and this water exploration programme is expected to be completed in early 2009.
There was no exploration or testwork for the Dikoloti nickel project during the quarter. At the end of the quarter, Discovery held AUD $6.4 million in cash.
