Thor Mining (ASX: THR) has established a reserve ore estimate of 1.64 million tonnes at 0.42% tungsten and 0.13% Molybdenum at its Molyhil project in the Northern Territory, enough for an initial 4 year mine life.
The high grade tungsten is 50% above resource estimate grade and provides the opportunity for early payback of project capital.
Thor said the reserve represents just 35% of the resource tonnage, leaving the Molyhil Tungsten and Molybdenum Project with substantial upside potential to extend project life.
The company had in January 2012 released an updated indicated and inferred mineral resource estimate of 4.7 million tonnes at 0.28% tungsten and 0.22% Molybdenum, representing contained tungsten of more than 13,100 tonnes and Molybdenum of more than 10,400 tonnes.
It added the resource remains open at depth, with newly identified prospective extensions, and nearby targets adding additional potential for extension of mine life.
“A development decision for Molyhil is progressively becoming closer,” Thor executive chairman Mick Billing said.
“This updated reserve is very robust, and we have significant upside beyond this new ore reserve, both in the resource and from exciting exploration potential. This statement of ore reserves underpins a profitable mining plan for an initial period of approximately 4 years.”
Mining consultancy Runge Limited is currently preparing a detailed mining plan to provide Thor with a monthly mining schedule for the currently estimated life of the proposed Molyhil operation.
This will include tonnes of ore and waste removed and the grade of the material mined, and will be incorporated into the financial model for the project to estimate economic returns.
It is expected that this process will be completed during June 2012.
Thor said that while the mining plan will largely reflect the reserves statement, Runge’s pit optimisation studies had shown than a modest 7% improvement in economic factors have the potential to increase reserves and mine life by 50%.
Cash position, tungsten economics
The company had earlier this month raised just over A$1 million (£638,750) through a placement of 51.1 million shares to U.K. sophisticated clients of Simple Investments, Thor’s broker, to fund its working capital requirements.
Last month the company enhanced the economics of Molyhil, lifting tungsten recovery to 85%, up 27% on the figure estimated in the project’s Feasibility Study.
Previous estimates have shown $900,000 in additional revenue per each 1% of tungsten recovery is possible, providing for increasingly robust economics.
The increase has been achieved through adding a flotation step to the tungsten recovery process, after gravity separation.
This allows the extraction of the very fine tungsten particles that do not respond well to gravity separation methods.
Importantly, this could lead to projected revenues at Molyhil being enhanced by something like A$16 million per year over the life of mine.
Molyhil has clear value in today’s market, which will be demonstrated when the Definitive Feasibility Study is released.
Following the completion of the study, Thor will need to secure offtake agreements and finance for Molyhil before the company will move to tender for design, construct and EPCM work.
The company is on track for production from the project in late 2013.
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