A recent $4.5-million financing will be used by
Once the feasibility study is completed late this year, EuroZinc will have the right to acquire a 75% interest in the former producer by providing sufficient capital to restart the project and by repaying debt remaining from a previous operation.
Pirites Alentejanas, a private company controlled by the Portuguese state mining company, Empressa de Desenvolvimento Mineiro, is the current owner of the Aljustrel project.
The fully permitted mining complex includes the already developed Moinho mine, a 1.2-million-tonne-per-year conventional flotation mill, rail loading and storage facilities, as well as a tailings disposal facility.
Aljustrel operated from 1991 to 1993, before closing because of low metal prices and operating difficulties. The mine was plagued by sub-optimal mining and processing methods, resulting in low throughput, high milling costs and low metal recoveries.
A prefeasibility study, completed in late 1998 by Rescan Engineering with input from Hallam Knight Piesold, suggests that selective mining of higher grades zones in the Feitais and Moinho deposits, combined with modifications to the mill and flotation circuits, should allow for production to resume at Aljustrel more cost effectively than in the past.
The prefeasibility study was based on the mining of 13 million tonnes grading 5.94% zinc and 2.02% lead, plus 66 grams silver per tonne from the Feitais deposit, and 4.6 million tonnes grading 5.44% zinc, 2.18% lead and 66 grams silver from the Moinho deposit. Reserves, as outlined, would support a 12-year mine life.
By converting the existing autogenous and pebble grind circuits to a semi-autogenous ball mill, EuroZinc can raise throughput to 1.5 million tonnes per year and eliminate the over-grinding problems of the past. The existing flotation circuit will be simplified to produce a zinc concentrate and a silver-bearing lead concentrate.
Annual production is forecast at 153,000 tonnes of zinc concentrate grading 50% zinc, and 30,000 tonnes of lead concentrate grading 50% lead and 50 oz. silver. This is equivalent to 168.7 million lbs. zinc, 33.1 million lbs. lead and 1.5 million oz. silver per year.
While pilot plant metallurgical tests are ongoing, zinc recoveries are expected to exceed 83%, while recoveries of lead and silver are both expected to be 50%. The potential for gold recovery is being investigated.
Preliminary estimates place capital costs at US$45 million, including working capital and payout of existing creditors. Cash costs are forecast at US33 cents per lb. zinc, net of byproduct credits.
Based on a long-term zinc price of US55 cents per lb., the internal rate of return (IRR) would be 43.9% on an aftertax basis, according to the prefeasibility study. The net present value would be US$65.4 million at a 10% discount rate, and the payback period is estimated to be 2.4 years. At US50 cents per lb. zinc, the IRR is projected at 34%.
With the completion of the infill program at Feitais, the company will focus its efforts on expanding the reserve. Based on geophysical information, the deposit has an interpreted strike length of about 1,200 metres. To date, only 680 metres of strike length have been drill tested. EuroZinc says the zinc and copper zones remain open along strike and down dip. The next phase of drilling will focus on expanding these zones, with an initial 3,000-metre program expected to begin shortly. Meanwhile SRK Engineering has begun to update the reserve estimate as part of the feasibility study.
Results from the infill drilling program have confirmed the continuity of the Feitais zinc and copper zones.
Highlights include hole 49, which intersected a 6.5-metre interval grading 0.05% copper, 1.86% lead and 5.49% zinc, as well as 0.69 gram gold and 72.6 grams silver per tonne. This was followed by a 48.7-metre, copper-rich interval averaging 1.68% copper, 0.07% lead, 0.31% zinc, 0.17 gram gold and 10.2 grams silver. Included within this intersection was 15.1 metres of 3.18% copper, 0.17% lead, 0.76% zinc, 0.11 gram gold and 20.8 grams silver.
Hole 50 intersected 30.4 metres averaging 0.15% copper, 2% lead, 6.14% zinc, 1.62 grams gold and 75.8 grams silver. This was followed by a 42.6-metre copper-rich section of 1.88% copper, 0.19% lead, 0.72% zinc, 0.18 gram gold and 14.9 grams silver. Included within this interval was 8.5 metres of 4.13% copper, 0.01% lead, 0.08% zinc, 0.21 gram gold and 11.5 grams silver.
Hole 52 cut 16.1 metres averaging 0.1% copper, 1.63% lead, 5% zinc, 1.12 grams gold and 50.8 grams silver. Farther down-hole, another intersection cut 14.5 metres averaging 2.4% copper, 0.24% lead, 1.02% zinc, 0.17 gram gold and 15 grams silver per tonne.
Hole 53 intersected 20.6 metres averaging 3.06% copper, 0.01% lead, 0.06% zinc, 0.18 gram gold and 4.8 grams silver. Hole 54 cut 43.4 metres averaging 0.12% copper, 2.06% lead, 5.63% zinc, 0.57 gram gold and 61.7 grams silver, followed by a 17.2-metre, copper-rich intersection averaging 2.35% copper, 0.3% lead, 0.88% zinc, 0.28 gram gold and 14.8 grams silver.
Hole 56 intersected 16.1 metres averaging 0.26% copper, 1.75% lead, 7.2% zinc, 0.48 gram gold and 80.8 grams silver. This was followed by a copper-rich intersection of 1.79% copper, 0.14% lead, 0.69% zinc, 0.4 gram gold and 12.5 grams silver over 50.5 metres, including 12.5 metres of 3.24% copper, 0.19% lead, 0.9% zinc, 0.14 gram gold and 15.4 grams silver.
In addition, two holes were sunk near the southeastern limit of the Feitais deposit, on sections 80 and 120. Both holes were collared on the Estacao concession.
Hole 57 intersected 17.4 metres averaging 0.23% copper, 1.6% lead, 4.13% zinc, 1.14 grams gold and 58.1 grams silver. Hole 58 cut 28.6 metres averaging 0.3% copper, 0.63% lead, 1.85% zinc, 0.75 gram gold and 26.1 grams silver. (Results from all holes are reported as true widths.) Drilling at the Moinho deposit is ongoing and results should be released soon.
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