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Mineral & Financial - Investment Update

RNS Number : 6687K
Mineral & Financial Invest. Limited
23 April 2020
 

 

 

Mineral & Financial Investments Limited

 Investment Update: Redcorp Outlines 2020 Exploration Program at Its Highly Prospective Lagoa Salgada Project In Portugal

 

HIGHLIGHTS:

 

·     Extensive 8,000m drill program and IP program planned at Lagoa Salgada for 2020

·     Drilling in the North Zone will focus on converting and upgrading Mineral Resources with the goal of increasing overall tonnage and ZnEq grade of the resource

·     Exploration Program on the highly prospective copper-rich South Zone expected to expand and upgrade the Mineral Resources

·     Drilling contractor on standby to begin drill program

 

 

George Town, Cayman Island - 23 April 2020 - Mineral & Financial Investments ("M&FI" or the "Company"), the AIM quoted resources investment company, is pleased to announce Ascendant Resources Inc's ("Ascendant Resources") 2020 exploration plans for the Lagoa Salgada VMS project. This project is owned by M&FI's 75% subsidiary Redcorp Empreedimentos Mineiros Lda. ("Redcorp").

Ascendant Resources' exploration program has been planned on the back of the robust Preliminary Economic Assessment results released on January 14, 2020. The exploration program includes downhole IP (Induced Polarity) and, subject to funding, drilling aimed at expanding and upgrading the Central and South Zones and the copper-rich resource. Additional drilling of the southern extension of the high-grade massive sulphide mineralization of the North Zone is also planned to expand the Indicated Mineral Resources, again this is subject to funding being sourced. The program includes four metallurgical drill holes for further metallurgical testing. The work to be completed by Ascendant Resources and Redcorp, is to be funded and guided by Ascendant Resources, as part of Ascendant's previously announced earn-in agreement with M&FI.

The main objective of the proposed program is to increase and upgrade tonnage at the copper-rich South Zone while increasing and upgrading tonnage and grade in the North Zone.  Ascendant Resources intends to use the positive results from this exploration program to form the basis for an updated Mineral Resource Estimate in the latter half of the year which Redcorp will use to commence a Feasibility Study ("FS") by the end of the year.  Ascendant Resources and Redcorp are engaged with the drilling company and subject to funding, the drilling is set to commence as soon as the labour restrictions due to the COVID-19 pandemic are lifted. Ascendant is currently talking to financial partners to source the funding for this programme and is hopeful that the drill program can be funded by alternative non-dilutive measures for its shareholders.

Jacques Vaillancourt, Chairman of Mineral and Financial Investments Limited "Given the success and knowledge gained from the 2019 exploration campaign , which increased the Measured and Indicated resource to over 10.3 million tonnes and added 10.3 million tonnes of Inferred resources, we have a great degree of confidence in Ascendant Resources' ability to substantially expand and upgrade the Mineral Resources in 2020.  We are especially interested in the South and Central Zones where Ascendant hope to greatly improve CuEq tonnage and grade, as drilling in these zones has been very limited to date. Data suggests that these zones have the potential to be larger than the North Zone and may also be connected at depth in one large deposit. Though Lagoa Salgada is in the early stages of exploration, it has the hallmarks of being a comparable project to its large neighbors on this World Class mineral belt."

He continued, "With the expectation to replicate the exploration success achieved in previous programs, Redcorp and Ascendant Resources plan to complete an updated Mineral Resource Estimate in the latter half of the year and commence a Feasibility Study by the end of the year following up on the robust results of the Preliminary Economic Assessment that was announced on January 14, 2020. "

 

 

Targeted Drilling Program Details

The planned 2020 exploration program is set to include approximately 8,000 meters of drilling with the majority of drilling targeting the South and Central Zones where Ascendant Resources and Redcorp believes there is significant opportunity to expand the current copper-rich Resource.

Drilling allocated to the North Zone will focus on converting and upgrading Mineral Resources with the goal of increasing overall tonnage and ZnEq grade of the resource.

 

 

Figure 1: South Zone 2020 Planned Drill Holes

 

http://www.rns-pdf.londonstockexchange.com/rns/6687K_1-2020-4-23.pdf

 

Figure 2: North Zone 2020 Planned Drill Holes

 

http://www.rns-pdf.londonstockexchange.com/rns/6687K_1-2020-4-23.pdf

 

Figure 3:  LS West Region (incl. North & South Zones) Planned Drill Holes 2020

 

http://www.rns-pdf.londonstockexchange.com/rns/6687K_1-2020-4-23.pdf

 

Geophysics Program

Redcorp and Ascendant Resources's planned 2020 exploration program will also include extensive follow on work on the geophysical anomalies identified from Induced Polarization ("IP") resistivity and chargeability surveys conducted in 2019, as this has been a very useful tool to date in identifying mineralization and possible extensions at Lagoa Salgada.

IP surveys at depth in the North Zone shows the massive sulphide as a clearly outlined conductivity anomaly defined by the blue area  that extends deeper and to the northwest, beyond the 2019 drilling. It also extends 150m to the south and 100m deeper than the North Zone Massive Sulphide mineralization known from the 2019 drilling indicated the potential for. 

Figure 4: IP Resistivity and Chargeability Anomalies

 

http://www.rns-pdf.londonstockexchange.com/rns/6687K_1-2020-4-23.pdf

 

 

As part of the drill program Redcorp and Ascendant Resources are planning four large diameter metallurgical drill holes to support additional metallurgical test work to improve of the PEA results.  Redcorp and Ascendant Resources plan to complete an updated Mineral Resource Estimate with the new drilling and commence a Feasibility Study by year-end focused on mine development at the North Zone based on the results of this program.

 

Mineral Resource Estimate

As outlined in the Mineral Resource Estimate (see announcement dated September 25, 2019), with an effective date of September 5, 2019, Lagoa Salgada currently has 10.33 million tonnes of Measured and Indicated Resources at 9.06% ZnEq[1] and 2.50 million tonnes of Inferred Resources at 5.93% ZnEq in the North Zone. In the South Zone, there is 2.47 million tonnes of Indicated Resources at 1.54% CuEq and 6.08 million tonnes of Inferred Resources at 1.37% CuEq. An additional, 1.71 million tonnes of Inferred Resources at 1.66% CuEq sits in the Central Zone, which lies between the other two larger zones.

The Lagoa Salgada Project represents a potentially high-grade, VMS exploration opportunity in a low risk, well established and prolific jurisdiction. The Project covers 10,700 hectares with numerous gravity anomalies identified with only the LS West area having been significantly tested.

 

Preliminary Economic Assessment Highlights Recap

The Technical Report entitled, "Technical Report and PEA for the Lagoa Salgada Property, Setúbal District, Portugal", supporting the robust results from the maiden Preliminary Economic Assessment ("PEA") for the North Zone only at the Lagoa Salgada VMS project was prepared in accordance with Canadian National Instrument 43-101 ("NI 43-101") with an effective date of December 19, 2019. This is available on the Company's website.

The report outlines the economic assessment for Lagoa Salgada as it assumes a two-stage underground mining development scenario, with single trackless ramp access, transverse sub-level open stoping method with paste backfill. Ventilation and secondary escape ways are planned through raise-bored holes to surface. Milling rates of 2,700 tonnes per day in a standard process circuit is anticipated, with primary crushing, grinding, flotation and leaching of tailings to produce concentrates including lead, zinc, copper and tin, as well as gold and silver doré. There is ample opportunity for extensive expansion from future exploration work to define additional resources to extend the mine life or increase the scale of the outlined operation.

Highlights from the PEA for the North Zone include:

·     After-tax IRR of 31% and NPV8% of $106M (C$139M @$1.31CAD/USD)

·     Nine-year mine life with production scenario of 2,700 tpd

·     Average annual EBITDA of $54.2 million

·     Four-year payback period of initial Capex of $162.7 million

·     Average operating costs of $49.43/t milled represents low cost production scenario

·     Low average annual cash costs of $0.44/lb ZnEq and average annual All-In Sustaining Cost (AISC) of $0.66/lb ZnEq

·     Significant upside opportunities remain with near-resource exploration targets identified with multiple deposits open laterally and at depth, and broader targets untested

 

Highlights of the key project metrics are provided in the following table on a 100% basis:

PEA Key Highlights

 

Metrics

Project IRR pre-tax

37%

NPV8% pre-tax

$137 million

Project IRR after-tax

31%

NPV8% after-tax

$106 million

Life of mine pre-tax cash flow

$ 250 million

Life of mine after-tax cash flow

$ 202 million

Construction period

2 years

Payback period

4 years

Life of mine

9 years

Average Annual Production

1.0 million tonnes

Initial Capital Expenditure

$ 162.7 million

LOM Sustaining Capital Expenditure & Closure

$ 20.2 million

Average annual operating costs

$ 49.43 /t milled

Average Annual operating costs (C1)

$0.44 /lb ZnEq

Average annual All-In Sustaining Costs (AISC)

$0.66 /lb ZnEq

Metal Price Assumptions1

 

Zinc

$1.20/lb

Lead

$1.05/lb

Copper

$2.70/lb

Silver

$18/oz

Gold

$1,400/oz

Tin

$7.50/lb

Recovery Assumptions

 Massive Sulphide

Zn

80%

Pb

    65%

Cu

25%

Ag

75%

Au

75%

Sn

30%

Recovery Assumptions

 Gossan

Pb

65%

Sn

40%

Ag

66%

Au

86%

Average Annual Metal Production

 

Zn

12.5kt

Pb

13.7kt

Cu

0.2kt

Ag

1.1Moz

Au

13koz

Sn

0.3kt

 

Notes to Table:

1 The project economics have been calculated using consensus prices at the time of the Resource Estimate report in September 2019.

The PEA was prepared by AMC Mining Consultants (Canada) Ltd (AMC) with contributions from Resource Development Inc (RDI) for Mineral Processing and Micon International Limited (Micon), who estimated the Mineral Resources.

The PEA is preliminary in nature, as it includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the preliminary economic assessment will be realized.

The Technical Report is available for review under the Company's profile on SEDAR and on the Company's website.

 

Technical Disclosure

The  PEA summarized in this press release is intended to provide only an initial, high-level review of the project potential and design options. The PEA mine plan and economic model include numerous assumptions and the use of Inferred Mineral Resources. Inferred Mineral Resources are considered to be too speculative to be used in an economic analysis except as allowed for by Canadian Securities Administrators' National Instrument 43-101 in PEA studies. There is no guarantee that Inferred Mineral Resources can be converted to Indicated or Measured Mineral Resources, and as such, there is no guarantee the project economics described herein will be achieved. 

 

Review of Technical Information

The scientific and technical information in this press release has been reviewed and approved by References in this announcement to exploration results and resource updates have been approved for release by Joao Barros, BSc (Engineering), MSc (Geology), who has more than 16 years of relevant experience in the field of activity concerned. Mr. Barros is a Member of the Portuguese Engineers Association. Mr. Barros is employed by Redcorp Empreedimentos Mineiros, Lda., a 75% owned subsidiary of M&FI, and has consented to the inclusion of the material in the form and context in which it appears.

 

COVID 19

By way of general update, the Company confirms that it has been advised that all operations at Lagoa Salgada remain suspended due to the lockdown imposed in Portugal. The Company understands that Ascendant Resources continue to run desktop work remotely, and a further update will be provided when the restrictions on activity at site is lifted.

 

 

FOR MORE INFORMATION:

James Lesser, Mineral & Financial Investments Ltd.                 +44 777 957 7216

Katy Mitchell, WH Ireland Group Limited                                 +44 161 832 2174

Jon Belliss, Novum Securities Limited                                       +44 207 399 9400

 

 

 

 

ABOUT MINERAL AND FINANCIAL INVESTMENTS LIMITED.:

Mineral and Financial Investments Limited is a Cayman Island based investment company quoted on AIM, a market of the London Stock Exchange. M&FI has 22 investments in the natural resource sector with the majority in the metals and minerals sector and has about 29% of its investment portfolio in precious metal investments. M&FI's Net Asset Value per share (NAVPS)is 15.19p, as of December 31, 2019. M&FI's NAVPS has risen at a Compound Annual Growth Rate (CAGR) of 34.4% over the past 3 years.

 

[1] See notes to Mineral Resource Estimate tables below for ZnEq calculation.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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