Elementos Limited (ASX:ELT) has revealed underground operations would extend the Cleveland mine life in Tasmania by eight years, doubling the life of the project and adding an additional $90 million to the project’s pre-tax cash flows.
An integrated tailings-pit-underground operation would generate revenue of A$638 million over the 15-year mine life.
This has been revealed in an independent Underground Scoping Study by AMC Consultants. The mine is located at Luina, 60 kilometres from the port of Burnie in North-west Tasmania.
However, apart from the tin at Cleveland, there is also a significant tungsten asset. A 4 million tonne Inferred resources applied to the underground study is only a small part of a large porphyry of unknown extent.
It follows an earlier pre-feasibility study on reprocessing the tin-copper tailings from historical mining operations and an independent open pit scoping study on mining the near-surface, high-grade tin-copper resource.
The 15 year mine could be expanded with further exploration.
Significantly, the positive cash flow from stage 1 would fund the investment in stage 2 in 2018, and then the positive cash flows from both stages 1 and 2 fund the investment in stage 3 in 2021.
The underground study examined the technical and economic viability of mining and processing the previously developed tin-copper deposit and a separate tungsten deposit.
As such, the viability of the underground operation was assessed as an extension to the proposed tailings and open-pit operations with shared services, plant and infrastructure.
Elementos CEO Tim McManus said, “The results of this and other recent studies on the Cleveland deposits elevates Elementos to mine developer status.”
“The integrated financial analysis clearly demonstrates how our staged development strategy reduces up-front capital and maximises shareholder value. The integration of all three stages extends the projected mine life to over 15 years, and we have barely started exploring the potential of the Cleveland deposits.
"I am very confident that the drilling program planned to for early next year will add to our resource base, underpinning a long-life, globally significant tin deposit.” Mr McManus said.
“In addition to Cleveland’s significant tin potential, we also believe that Elementos has a globally significant tungsten asset in its own right. The 4 million tonnes of Inferred resources applied to the underground study is only a small part of a large porphyry of unknown extent.
With multiple historical drill intersections of greater than 150 metres grading 0.3% WO3, and open in all directions, we are eager to further explore and test the limits of this tungsten mineralisation.”
Underground infrastructure, orebody geometries and ground conditions are amenable to low-cost mechanised bulk mining with large machinery.
More detail
- Refurbishment of the existing 3.5 kilometre decline and 9.7 kilometres of the existing 25 kilometres of underground development minimises the required development capital.
Underground infrastructure, orebody geometries and ground conditions are amenable to low-cost mechanised bulk mining with large machinery.
Mining inventory of 1.9 million tonnes (Mt) at 0.61% tin (Sn) and 0.22% copper (Cu) and 1.7 Mt at 0.31% tungsten oxide (WO3).
Underground ore production peaks at 650,000 tonnes per annum, with potential capacity up to 900,000 tonnes per annum.
Analysis
Some salient points perhaps missed by some investors:
Cleveland is a low capital investment strategy which produces cash at today's prices. Whilst the tin-copper orebody is a globally significant tin deposit, the tungsten porphyry deposit is a potential Tier 1 strategic metal asset that is double the grade of Wolf Minerals' Hemerdon tungsten and tin project which recently entered production and has a market cap of $298 million.
Cleveland has significant government and stakeholder support including approvals and a mining lease application is submitted.
The board and management of Elementos have a project delivery history.
All the infrastructure is in place at Cleveland including power, water, communication along with workforce and accommodation.
Elementos will drill and we expect there to be significant resource upside at Cleveland.
Elementos is on the path to becoming a mine developer. The current sub $7 million market cap valuation does not begin to do this justice.
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