After 24 years in development, Anglesey Mining’s (LON:AYM) Parys Mountain prospect in Wales took a major move forward recently with a new JORC resource.
Bill Hooley, Anglesey’s chief executive, said the recent statement consolidated its plans for the zinc, copper and lead deposit.
“We already had a JORC resource on White Rock. This has been reconfirmed, with a bit more work done that gives a potentially larger size but at a slightly lower grade,” he told Proactive Investors.
He added that the plans for Parys have not changed, but significantly the new resource estimate “reinforced what we intend to do”.
The Parys Mountain deposit is divided into a number of zones.
White Rock is one of these and likely to be the first developed, but the resource statement also included the Engine zone for the first time.
“We now want to follow on from White Rock into the Engine zone and run them both at the same time,” he said.
“Once we have got the Engine zone operation up and running, we can then look at the other zones the new resource quantified.”
These include Deep Engine, Garth Daniel and the Northern zone.
Hooley said the Parys Mountain development would be started by decline access into White Rock.
“We would be able to start that very quickly and use the cash flow to keep pushing the decline downwards to get to the Engine zone and start mining there.
“By then, we can increase the capacity of the processing plant, which likely will start at 500 tonnes per day [tpd] and rise to 1,000tpd in 2-3 years.
“That will give us a full blown operation running at the White Rock and Engine zones.
“White Rock is a zinc rich but lower copper deposit, while the Engine zone has much more copper and has more value per tonne than White Rock.
“So the sooner we can get to Engine zone the better we will be.”
Permitting is not an issue. Planning permissions were in place in the 1990s, when the idea of a mine at Parys was first floated, and approvals are still intact.
There is the odd operational licence required, but Hooley says “fundamentally all permits are in place".
“The only thing that is stopping us moving forward is financing. We are conducting a scoping study at the moment, which we expect to receive in the next few weeks.”
“We have to be a little bit clever. Times are not easy, but the project is fairly unique, in a good geographic position and with no political risk.”
Hooley adds the company has about £1mln in the bank, which will be enough for 2013.
“That will keep us going, but won’t fund the project itself.”
Hooley thinks there might be some help from the zinc market for a project finance deal.
“Base metal prices on which Parys is dependent are holding up very well and on the basis we believe there is going to be a shortage of zinc concentrate in the European market, particularly if we come on stream in 2014 and 2015, we are comfortable.”
Metal prices have not been as kind to Anglesey’s Canadian associate Labrador Iron Mines (LIM).
It was badly hit by the slump in iron prices in the autumn.
While the iron ore price has recovered substantially since then, Hooley does not expect to get any cash out of its 19.7% stake in LIM until 2016 at the earliest.
Anglesey is on its own when it comes to developing Parys, he adds.
On an upbeat note, he says 2012 was a good year for Anglesey, if not LIM, and the resource statement at Parys was the culmination of a number of small steps.
From this position, Anglesey is now “happily looking forward,” he concludes.