Alara Resources (ASX: AUQ) has defined a maiden JORC Proven Ore Reserve of 17.7 million tonnes at 3.4% copper and 0.29% copper for the Khnaiguiyah Zinc-Copper Project in Saudi Arabia.
The project also has Probable Ore Reserves of 8.4Mt at 3.1% zinc and 0.13% copper.
Khnaiguiyah entails the development and excavation of three open pit mines within a radius of 2 kilometres and a central 2 million tonne per annum processing facility.
It will produce both zinc and copper concentrates for export to overseas smelters and ultimately for Saudi domestic smelters.
The project schedule contemplates mining the entire orebody over 9.5 years with a further 4 years processing of residual long-term and low grade stockpiles.
Average grade of the feed to the process plant for the first 7 years is expected to be 4.36% zinc and 3.95% zinc in the first 9.5 years.
Considerable upside potential remains for the project.
Alara expects to soon release the results of the Definitive Feasibility Study, which will justify the economics of the project.
Khnaiguiyah
Khnaiguiyah is located about 170 kilometres southwest of Saudi Arabian capital Riyadh and just north of the village of Al-Khnaiguiyah.
The nearest regional centre is Al-Quwayiyah, located on the Riyadh to Jeddah Expressway some 35 kilometres from the site.
Khnaiguiyah will be operated by the Khnaiguiyah Mining Company, an equal joint venture between Alara and privately owned Saudi Arabian mining company United Arabian Mining Company.
Support infrastructure for the project will include a power station; a bore field and an 18 kilometre long process water pipeline; administration offices and mine workshops; a 475 person accommodation village; and various mine infrastructure to support the day to day operations.
Rock will be mined from the pit using a combination of 5 metre and 10 metre high benches. Backhoe style excavators will be used to load blasted rock onto off-highway dump trucks. The ore will then be trucked to surface stockpiles for processing.
The plant comprises a single stage primary jaw crusher feeding a coarse ore stockpile. The stockpile will feed a comminution circuit comprising a SAG and ball mill and pebble crusher.
A two stage differential float circuit, equipped with regrind mills, will recover copper then zinc concentrates from the process streams.
Concentrates will be loaded into covered half-height-containers before being transported to the port of Dammam for transport to various overseas smelters.
Total preproduction capital is estimated to be US$257 million including all mining, processing and surface infrastructure and working capital while operating costs are estimated at about US$43.59 per tonne of ore.
Alara had $8.6 million in cash as of 31 December 2012.
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