Hungarian National Asset Management Inc., (“MNV”) has announced the public tender for the Recsk Deposit and assets in Hungary.
The Recsk Cu-Au-Pb-Zn-Ag-Mo property in Hungary hosts arguably one of the largest and highest-grade undeveloped copper-gold porphyry and skarn systems in Europe. With 240,000 metres of drilling, two 8 metre internal diameter, 1,200-metre-deep, concrete lined shafts and 9 kilometres of underground development, the Recsk deposit is estimated to contain 5.6 million tonnes (12 billion pounds) of copper and 4 million ounces of gold.
Cmi Capital is available to assist a suitable party to participate in the tender. Cmi Capital held extended discussions with the Government of Hungary prior to the announcement of the tender and as such has a unique understanding of the deposit and the political and economic environment. Cmi Capital or an associated corporation seeks a long-term concentrate offtake agreement on commercial terms and may at its sole discretion provide up to US$250 million in an offtake pre-payment repaid from production with the usual customary terms and conditions following completion of an advanced economic & technical study.
Natural Resource Governance Institute has issued a report on revenues received from listed mining companies in Ghana. As many who have done the cashflow analysis have long known that a free carried interest, funded out of cashflow is a less than effective tool for garnering rent from resource projects. Projects can often take many years to repay capital and if this period corresponds with low or stagnant commodity prices then dividend payments may be low. In effect the state is fully exposed to commodity price and operational risks. A better solution is a competitive royalty, fee and taxation environment which is adequately regulated.
One of the issues with a carried interest is that this often involves representation on the board of the operating entity and as such creates immediate conflicts of interest for directors and heated domestic competition for these positions. That said, there are often political arguments for a carried interest, arguments about national interest. In addition it has been argued that being represented on the board of the operating entity allows governments to “keep an eye on” the operator. A better solution is robust oversight by a suitably trained and funded Department of Mines.
In Ghana the majority of international mining companies, including Asanko Gold, Golden Star Resources, Endeavour Mining, Kinross Gold, Perseus Mining and Xtra-Gold Resources, have disclosed payments-to-governments reports under the Extractive Sector Transparency Measures Act (ESTMA) in Canada. In addition Gold Fields, AngloGold Ashanti and Newmont Mining have made voluntary disclosures regarding the payments they make to the Ghanaian government.
Data were sourced from companies complying with the Canadian, Extractive Sector Transparency Measures Act (ESTMA).
In 2017 nearly three quarters of the payments to Ghanaian government entities by ESTMA companies in the gold sector arose from royalties, with five companies paying a total of USD 57 million. A further 22 percent of the payments from these ESTMA companies were in the form of corporate income tax. While six operating companies paid royalties in 2017, only two, Kinross Gold Corporation and Endeavour Mining paid corporate taxes.
Ghana’s Vice President Mahamudu Bawumia has questioned the utility of the government’s 10 percent equity interest in mining operations, stating at the IMF’s Regional Economic Outlook for sub-Saharan Africa, that the lack of revenue generated from the government’s equity share was because “many of the mining companies say they are not making profits to pay dividends but they keep mining, notwithstanding the fact that they are unprofitable.”3‘
The government of Ghana holds these shares and the non-tax revenue unit of the Ministry of Finance collects the revenues. The government is provided this equity interest without having to make financial contributions to the development or operations of the project. The government has equity share interests in every gold mining operation in the country bar those owned by Newmont Mining or AngloGold Ashanti following the signing of updated mining development agreements. In the case of AngloGold Ashanti, the government has a stake of 1.55 percent in the global company AngloGold Ashanti Limited.
The NRGI report concludes that “the payments-to-governments disclosures made by international mining companies operating in the country suggest that if revenue generation is the primary purpose of this state equity participation, then the government may want to reconsider this approach”. This has been evident to many in the industry for a very long time.
To the Daily Alta California, it was “the great discovery of the age”. After emerging from the underground at the California Mine on the Comstock Lode Dan de Quille called it “the richest mineral discovery in the world’s history” and he named it The Big Bonanza. In a field of exceedingly high-grade mineralization the Big bonanza would generate immense wealth.
“Not a pebble in the crosscut was worth less than US$600 per ton and no small sample could be reasonably assayed for fear of grabbing a sulphuret nodule that would run the chunk into the thousands of dollars a ton.” Bear in mind these are 1870 dollars, likely worth US$20,000 per tonnes in today’s dollars.
“Sometime in the first half of 1875, as cross cuts on the 1,500 foot level reveled that the ore body did indeed span the entire length of the California mine, John Mackay must have realised that The Big bonanza would make him one of the richest men in the world.”
The Bonanza King is a well researched history of the Comstock Lode and characters involved. The book underlines the importance and occasional reward for focused hard work in the industry. Strongly recommended for mining folks.
Pyrargyrite is a sulfosalt mineral consisting of silver sulfantimonide, Ag3SbS3. Known also as dark red silver ore or ruby silver, it is an important source of the metal.
Morgan Stanley report today that they expect lithium carbonate prices to drop from the current level of US$ 13,375/t to US$ 7,030/t by 2020. This is far lower than the consensus view after lithium prices surged 100% in the last 2 years.
Substantial supply increases are driving their forecast, with Morgan Stanley reporting that the largest producers in Chile are planning on adding 500,000 tonnes per year in new mine supply by 2025. This supply would swamp the anticipated growth in demand from battery production. Indeed Morgan Stanley predict that the lithium market will go into surplus in 2019… and stay there.
Most of the lithium hopefuls listed on western stock-exchanges have used lithium carbonate prices in the range of US$11,000 and 13,500/t in economic studies and the majority of these projects would struggle if prices were to tumble. Given the rush to lithium of recent times and the nature of commodity markets we suspect that Morgan Stanley are likely correct. Even a dramatic increase in market penetration for electric cars (which now seems increasingly unlikely given the growing trend away from government subsidies) would do little to change the supply demand dynamic in the coming few years unless the fall in price is sufficiently steep as to stop or delay some of the larger projects now being contemplated. Now that is always a possibility.
An exception may be spodumene producers like Pilbara Minerals Limited (ASX: PLS) which showed a >50% return on investment in a planned expansion at a spodumene price of US$550/t, a 60% discount to the current spot.
Following the publication of the paper (noted below) on the epithermal portion of the Recsk metallogenic system in Hungary here are 3D models from the entirely concealed Cu-Au mineralized intrusive bodies and related Cu-Au skarns and outbound Zn-Pb replacement bodies.
A 3D fly-though of the Recsk Cu-Au deposit showing the drilling, channel samples and interpolated copper grade shells. A full set of 100 metre spaced section steps through the deposit from north to south over several kilometres.
A section through the Recsk deposit with drilling and copper grade shells. The section is 200 metres thick and the 0.3% grade shell is 800 metres high and 1,000 metres wide. The Cu-Au skarn mineralisation can be seen dipping gently away from the large intrusive body. The intrusion is open at depth below 1,200 metres. The top of the 10.3% copper grade shell is approximately 400 metres below the surface.
The Recsk metallogenic centre consists of a deep and entirely preserved mineralised intrusive and intermediate and high sulphidation epithermal deposits exposed at surface. The epithermal deposits are located close to the apex of the intrusion. The diorite intrusion is hosted by a thick sequence of Eocene carbonates unconformably overlain by a volcanic edifice. Adjacent to the intrusion the carbonates host thick Cu-Au skarns. Outbound of the Cu-Au skarns, Zn-Pb replacement bodies have been intersected in wide spaced drillholes. In this video we present a section through the deposit. The 3D model is based upon 156,000 metres of drilling from surface, 9 km of underground sampling on the 700 and 900 metre levels and 89,000 metres of underground diamond drilling. Underground access was provided by two 1,200 metre deep shafts, 2,000 metres apart. The shafts have an 8 metre internal diameter and are concrete lined. No mining has been undertaken at the deeper Recsk mineralisation aside from bulk metallurgical sampling.
Ivanhoe Mines has released its much anticipated DFS on its US$1.544 billion Platreef 4 Elements (4E-platinum, palladium gold and rhodium) project in South Africa (DFS yet to be released on Sedar).
Key features of the Platreef DFS include:
Indicated Mineral Resources at a 2 g/t 4E COG are 346 million tonnes at 1.7 g/t Pt, 1.7 g/t Pd, 0.1 g/t Rh and 0.3 g/t Au for 42 million ounces of Pt, Pd, Rh and Au with an additional 53 million ounces in Inferred Resources;
Mineral Reserve containing 17.6 million ounces of platinum, palladium, rhodium and gold;
Development of a large, mechanized, underground mine with an initial 4 Mtpa concentrator and associated infrastructure with plans to increase production incrementally to 12 MTPA;
Planned initial average annual production rate of 476,000 ounces of Pt, Pd, Rhand Au(3PE+Au), plus 9,500 tonnes of nickel and 5,900 tonnes of copper in concentrates;
174 kt of concentrate will be produced at 38 g/t Pt, 39.1 g/t Pd, 2.4 g/t Rh, 5.3 g/t Au, 3.35 Ni and 5.5% Ni;
Estimated pre-production capital requirement of approximately US$1.544 billion, at a ZAR:USD exchange rate of 13 to 1.
After-tax Net Present Value (NPV) of US$916 million, at an 8% discount rate.
After-tax Internal Rate of Return (IRR) of 14.2%.
The 14% IRR is less than appealing and they only got there by using some snappy metal prices: US$1,250 per ounce (current price $945) for Pt, $815/Oz ($835) for Pd, $1,300/ozs ($1,270) for Au and $1,000/oz ($900-990) for Rh.
So how to finance this project. Ivanhoe owns 64%, their Black Economic Empowerment (BEE) partner 26% and a Japanese consortium 10%. New legislation would see the BEE percentage increase to 30% and that has to be financed. Given the evolving political uncertainty in SA there might be some investor hesitation for a project in that country and which has a 14% IRR. We will watch with the usual interest.
Exciting news for Barrick and Antofagasta, after years of frustration. B&A reportedly spent US$500 million on this project and were refused a mining lease and licence to operate by the Government of Baluchistan. Compensation for loss is going to be a most interesting hearing. This is a remarkably robust project and a very long lived mine. This is why we offered B&A US$200 million a few years ago in an attempt to resolve the matter – Good for them they they stuck out the challenge of arbitration.
TORONTO, March 21, 2017 — Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) (“Barrick” or the “Company”) announced that an arbitration tribunal of the World Bank’s International Center for Settlement of Investment Disputes (“ICSID”) yesterday issued a decision on the arbitration claims that Tethyan Copper Company Pty Limited (“TCC”), a joint venture between Antofagasta plc and Barrick, filed against the Islamic Republic of Pakistan, in relation to the unlawful denial of a mining lease for the Reko Diq project in 2011.
Yesterday’s decision by the ICSID tribunal rejected Pakistan’s final defense against liability, and confirmed that Pakistan had violated several provisions of its bilateral investment treaty with Australia, where TCC is incorporated.
The damages phase of the proceedings will begin on March 22, during which the tribunal will consider submissions from the parties to determine the amount that Pakistan must pay TCC. A ruling on the quantum of damages is expected in 2018.
The Reko Diq project, located in the Balochistan province of Pakistan, was expected to require an initial capital investment of more than $3 billion. It is one of the world’s largest undeveloped copper and gold deposits, with a potential mine life of more than 50 years.
Reko Diq is a large (10×10 km) volcano-magmatic complex located in the western Chagai magmatic belt in Pakistan. Over 48 porphyry Cu-Au centres are recognized in the Chagai belt. Twenty of them, including the world-class H14-H15 cluster, are located in the Reko Diq district. These deposits are largely associated with four consecutive episodes of magmatism during the Miocene. The porphyry centres are characterized by stocks and dyke swarms of diorite, quartz diorite and granodiorite composition. The deposits offer no technological development challenges. Reko Diq is located 50 kilometres to the east of the 300 million tonne Saindak porphyry copper gold deposit being operated by Metallurgical Corporation of China since 2002 under a lease agreement with the Government of Pakistan.
The Reko Diq porphyry district hosts a cluster of 20 Cu-Au porphyry centres in an area approximately 10×10 km bounded by the NW trending fault systems of Drana Koh in the north and Tuzgi Koh in the south.
The underlying volcano-sedimentary rocks at Reko Diq consist of thin-bedded shale, siltstone, shallow marine to fluviatile sandstone and minor discontinuous conglomerate and lava flow of the late Oligocene Dalbandin and Eocene Saindak Formations. The porphyry Cu-Au centres at Reko Diq are spatially and genetically associated with early to late Miocene calc-alkaline diorite, quartz diorite and granodiorite intrusions.
Hydrothermal alteration at Reko Diq is typical of porphyry Cu deposits. The porphyry centres at H14-H15 are characterized by a central potassic zone surrounded by phyllic (quartz-sericite-pyrite) and outer propylitic (chlorite-epidote) alteration. The main ore stage (chalcopyrite±bornite) mineralization is generally disseminated in host the porphyries and occurs in veinlets with a total sulphide content of 2-3 vol. percent. The chalcopyrite to pyrite ratio decreases at shallow levels. A distinct late stage pyrite+chacopyrite±molybdenite assemblage associated with D-veins is common in most of the porphyry systems at Reko Diq. The bornite to chalcopyrite ratio increases with the intensity of potassic alteration and magnetite content, which gives rise to higher Cu-Au grades (0.8% Cu; 0.6 g/t Au) in the deep central part of the deposits. A high sulfidation type assemblage of covellite+bornite+pyrite in association with quartz+sericite±kaolinite alteration is identified mainly in the sandstone and conglomerate units of the H15 system. Overall, a metal zoning from Cu-Au at the center and depth with potassic alteration and increasing Mo in the margins and upper parts of the porphyry system at H14-H15, can be defined.
The supergene oxidation is commonly very weak in the district with leached zone of less than a few meters. The only supergene enriched Cu blanket at Reko Diq is preserved in the central Tanjeel porphyry Cu deposit in which an irregular, 50 to 100m-thick chalcocite blanket, is developed beneath a 40-50m-thick leached cap dominated by jarosite and local hematite. The chalcocite blanket (0.5-1.0% Cu) has a gradational lower contact with low grade hypogene Cu-Fe-sulfide mineralization at depth.
Regional exploration for porphyry copper mineralization was initiated in 1993, when BHP Minerals signed a joint venture mineral exploration agreement with the Baluchistan Development Authority, over an area of 13,000 km2. Following an orientation survey over the Saindak deposit, regional geochemical exploration using −80 mesh and the bulk leachable gold (BLEG) method was conducted from 1993 to 1995, with the collection of approximately 5,000 samples. Sixteen anomalous areas were defined and follow-up work, including geologic mapping and standard rock geochemistry, was carried out over them. This work delineated 14 prospective areas, of which Reko Diq, Ziarat Pir Sultan, Ting-Dargun, Kirtaka, Machi, Dasht-e-Kain, Koh-i-Sultan, Durban Chah, and Ganshero were judged to be the most promising. Additional mapping, rock geochemistry, and ground magnetics were completed from 1996 to 1998, followed by 20,000 m of reverse circulation and core drilling. This program resulted in the discovery of the Reko Diq porphyry copper cluster, including the supergene enrichment blanket at Tanjeel (originally named H4) and the nearby hypogene copper-gold deposits at H14-H15 (also referred to as Western Porphyries), H8, and H13.
Geophysical surveys, both induced polarization and magnetics, were completed over them. These and other targets were drilled in several short programs during 2003 to 2006, for a total of approximately 48,000 m, including 24,000 m of infill drilling at Tanjeel. The new resource for Tanjeel, announced in late 2006, was 126 million metric tons (Mt) at 0.7 percent Cu, all leachable supergene-enriched sulfides. In 2006, a joint venture between Antofagasta Minerals S.A. and Barrick Gold Corp. acquired 100 percent of Tethyan Copper Company and its 75 percent interest in the Reko Diq and regional licenses and initiated an aggressive infill drilling program and scoping study at H14-H15. Resource drilling during 2006 to 2009 at Reko Diq totaled approximately 136,000 m resulting in completion of a feasibility study during 2010 for a 110,000 tonne per day operation producing copper-gold concentrate for export.
Reserves and Resources
Reko Diq is one of the largest known undeveloped copper-gold porphyries with resources of 5.9 billion tonnes at 0.41% copper and 0.22 g/t gold for 54 billion pounds of copper and 42 million ounces of gold. Within this resource is a high grade zone with 400 million tonnes at 0.9% copper and 0.6 g/t gold and a supergene resource at Tanjeel of 214 million tonnes at 0.6% copper. Significant potential exists within the Reko Diq porphyry cluster for expansion of this resource and a number of targets remain only lightly explored.
The planned development included a conventional open pit mining operation utilizing hydraulic face shovels and trucks feeding a conventional concentrator utilizing industry standard crushing, grinding and flotation. Tailings will be deposited in a engineered TMF.
Power will be provided by a purpose-built 190 MW power station adjacent to the mill faculty.
The Reko Diq deposit produces a clean high grade concentrate with 28-31% copper and 7-22 g/t gold. Concentrate at a 52% pulp density will be pumped via a 682 km buried slurry pipeline to the port of Gwadar presently being redeveloped by a Chinese company.
At Gwadar Port a de-watering facility using high pressure filters will produce a concentrate with 7.5% water, which will be conveyed to a portside warehouse. A conveyor and ship loader will also be constructed.
Project Cashflow Analysis
Cmi Capital constructed a cashflow model based upon available information with costs from comparable recent projects. Two models were evaluated, a base case model with an open pit mine and conventional mill treating 120,000 tonnes per day (TPD) and an expanded model with a production rate of 200,000 TPD after year 5. These models with mine lives of 30 years consume only 21% to 33% respectively of the existing resource. In addition there is potential for the exploitation of higher grades in the early years, the discovery of additional reserves and the addition of a dump leach SXEW facility to treat the large Tanjeel supergene copper deposit (240 Mt at 0.6% leachable copper).
This analysis (with the cashflow models limited to 30 years) indicates that Reko Diq is an economically robust, long life project as can be seen below (metal prices used were a few years ago).
Copper Production: 162,000 to 257,000 TPY
Gold Production: 260KOz to 408kOz PA
NPV (08): US$2 to 3.4 billion (at long term metal pricing)
IRR: 15% to 17%
An outstanding project that has potential to significantly improve the outcomes for the peoples of Baluchistan and bring much needed development to a very challenging part of the country.
Mining Journal is remarkably bullishon the Ilovitza project in Macedonia. John C. Menzies, CEO of Cmi Capital Limited was previously the CEO of Euromax and built the company and its exploration assets over an 8 year period.
The Ilovitza mine is planned for the back of the large bald mountain behind the villages of Ilovitza and Stuka in Macedonia\n\n\”Multi-billion-dollar returns from a world class gold-copper resource are usually the preserve of mining’s majors, not a minnow. But they are exactly what investors in Euromax Resources (TSX: EOX) have to look forward to from the US$475 million Ilovica project in Macedonia, which is ready to move forward in what president and CEO Steve Sharpe describes as an ideal environment for building major new mining projects.\n\n“This is exactly the time to be building a copper-gold mine of this size because the amount of chits that are being offered to us now in terms of major capital items that would normally be the long lead stuff,” he says. “The offers are coming from mining companies, from suppliers that have cancelled orders, and this is all brand new equipment at a fraction of the retail price or list price. So I expect to see some fairly chunky capex and operational savings.”
Production is slated at 83,000 oz pa of gold and 16,000tpa of copper, starting in 2018, with overall average process recoveries at 83.3% for gold and 81.3% for copper”.
Ilovitza is a Tertiary porphyry copper-gold deposit and is ideally situated for development being close to services, water and infrastructure. The measured and indicated resources total 250 million tonnes containing 2.6 M ounces of gold and 550,000 tonnes of copper. While the grade is low, the low stripping ratio, low infrastructure capital and operating costs and proximity to rail and smelters reports an attractive NPV and IRR in the feasibility study.
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