C2-202, Level 2, Office Block C, La Croisette, Grand Baie, 30517, Mauritius The above media statement and accompanying material for media use are issued by ALPHAMIN RESOURCES CORP. ALPHAMIN ANNOUNCES CONTROL BUDGET ESTIMATE
RELEASE NEWS R
C2-202, Level 2, Office Block C, La Croisette, Grand Baie, 30517, Mauritius For more media information or please contact the Stone team interview requests, p consult.net or +2711 4470168 on alphaminteam@stonec
NCES COMPLETION OF DETAILED DESIGN AND ALPHAMIN ANNOUN CONTROL BUDGET EST TIMATE
- Alphamin Resources Corp. (AFM: TSXV, “Alphamin” or the “Company”)
MAURITIUS – February 6, 2017 – “FEED”) and Control is pleased to announce that it has completed the Front-End Engineering Design (“ he “Project”) in the Budget Estimate (“CBE”) for its 80.75% owned Bisie Tin Project (“Bisie” or th Democratic Republic of Congo.
HIGHLIGHTS
- Increase in proven and pr 3 Kt of tin robable reserves to 4.67 Mt @ 3.58% Sn containing 167.3
- Increase in LoM to 150 months (12.5 years)
- Optimised process flow sheet resulting in 6% higher annual average plant throughp put rates, and an increase in tin recoveries to 73%
- Cash margin per tonne of erage EBITDA of f tin sold of some US$ 11,040, resulting in LoM annual ave approximately US$ 110 m million (constant 2017 terms)
- Robust economic perform mance indicators:
- Net Present Valu ue 8% US$ 402.2 million
- Real, after tax, P Project IRR 49.1%
- Payback period 17 months from 1st tin production
metrics and potential of The completion of the FEED progr ram and associated CBE confirms the robust economic m first commercial mine, the Bisie Project and the developm ment of the Alphamin Bisie Tin Project into North Kivu’s f phamin explains: “The and a new premier global tin producing mine. Boris Kamstra, Chief Executive Officer of Alp as Alphamin advances completion of the FEED and CBE phase marks another important and exciting milestone a the Project towards becoming the f first industrial mine in DRC’s North Kivu Province.”
ow that the Project has A comprehensive process for estim mating capital costs was followed and the CBE results sho ofitable at lower tin prices, as well as at increased prices for key consumables. the potential to remain strongly pro The completed FEED and CBE increase proven and probable reserves to 4.67 Mt at 3.58% Sn containing The optimised process 167.3 Kt of tin while also increasin ng the life of mine (LoM) to 150 months or 12.5 years. T tin recoveries to 73%. flow sheet resulted in 6% higher an nnual average plant throughput rates, and an increase in t
al average EBITDA of A cash margin of some US$ 11,04 40 per tonne of tin sold is foreseen, yielding a LoM annua (constant 2017 terms). Alphamin is also pleased with the robust economic approximately US$ 110 million ( fter tax, Project IRR of performance indicators of a Net Pr resent Value (8%) of US$ 402.2 million as well as real, af min Bisie Tin Mine. 49.1%. The projected payback per riod is 17 months from the first tin production at the Alpham
s associated with the “The FEED program’s emphasis was to reduce the implementation and operational risks resulted in necessary increases in certain capital and operating costs. The Project wherever possible, and r
The above media sta atement and accompanying material for media use are issued by 1 ALPHAMIN RESOURC CES CORP without embargo unless an embargo is indicated above improved mine design, process flow sheet optimisation, and an improved tin price outlook, have enhanced the forecast economic performance indicators and overall robustness of Bisie significantly, despite the aforementioned cost increases,” explains Kamstra.
“These improvements along with the continued strong support from provincial and national government and the local communities confirm our view that Bisie forms the ideal foundation on which to build a mining company and associated infrastructure for mining in the tin-rich province of North Kivu. This mining project presents Alphamin shareholders with an attractive opportunity to participate in one of the highest grade known tin deposits in the world,” says Kamstra.
Kamstra explains “This CBE is by definition conservative and based on tenders, quotes and detailed estimates. Given the paucity of commercial operations and operating data in the area estimates used have been of necessity conservative. Once the Bisie mine is fully operational there is considerable scope to improve operational efficiencies and recoveries from the assumptions used in this study as well as to reduce costs, particularly in the areas of logistics. In addition, the exploration and resource delineation drilling that will continue after the Bisie mine is established is, given the open-ended nature of the existing Reserves upon which this CBE is based, expected to increase the Reserve inventory and thus LOM.”
The project team has recently completed the optimisation of the mine and process plant design for Bisie, which has resulted in the following changes to the mine design. The fundamental mining method has not changed but, the layout and mine design parameters have changed notably from the updated feasibility study issued in June 2016.
The mine design was developed based on the revised criteria, including a reduction in cut off grade from 1.8% to 1.4% due to a far higher tin price, that resulted in a 30% increase in ore tonnes mined, a 10% increase in tin tonnes mined, and a LoM extension of 2.5 years. The capital footprint has been defined as mine development and associated infrastructure that will take place up to and including December 2018. This includes approximately 64,000 tonnes of ore from the ore drive development, which will be stockpiled prior to plant commissioning. Stoping will commence outside the capital footprint.
The Mineral Resource estimates were updated in May 2016. The Mineral Resource estimate contains 19 600 tonnes of tin of Measured Mineral Resources, 188 400 tonnes of tin in Indicated Mineral Resources and 22 800 tonnes of tin in Inferred Mineral Resources declared at a 0.5% tin cut-off grade. The Mineral Reserve estimate contains 15 896 tonnes tin in the Proven Reserve category and 151 448 tonnes tin in the Probable Reserve category at a 1.4% tin cut-off grade.
Contractors will mine the Mpama North orebody using proven underground mechanised mining methods to deliver ore to the process plant at an expected rate of 25 - 35ktpm. A comprehensive programme of metallurgical testing was executed to support the CBE. An overall metallurgical recovery of 80% was achieved under laboratory conditions. Factoring in operating conditions, operator skill levels, and an element of conservatism, an overall recovery of 73% has been applied in the evaluation of the Project economics. The process design is based on recovery of tin into concentrate through conventional gravity separation methods. The Bisie Tin Project process plant design capacity is 360 - 400ktpa.
Alphamin is committed to develop the first large commercial tin mine in the eastern DRC that will produce conflictfree tin concentrate, while promoting community development, safety, health and environmentally sound practices. “The Bisie operation will supply conflict-free tin from eastern DRC and the Alphamin operation will be the manifestation of what conflict mineral advocacy and legislation aimed to achieve. Alphamin’s conflict-free tin concentrate and social initiatives should therefore be of interest to international trading and smelting companies and multinational brands which use tin in their products, including laptops, mobile and smart phones and cars,” explains Kamstra.
“The complexities of certifying tin concentrates as conflict free also make the product less appealing to armed groups and so reduces the risk of threats to the mine or transporters with the intention to forcefully gain occupation of the mine site or appropriate final product,” he says. Alphamin is a member of the Conflict-Free Sourcing Initiative, a global end-user grouping of companies who develop conflict-free certification standards and protocols, and is also a member of the International Tin Research Institute which is involved in global conflict-free sourcing initiatives.
In April, 2016 a Memorandum of Understanding was signed between Alphamin and the Walikale Community to collaborate in creating the Lowa Alliance. The Lowa Alliance will invest, along with the community itself and other development partners including the Government of the DRC, in 120 projects over the initial five years, which will include schools and technical training, primary health care services, agriculture and fish-farming, small scale renewable energy, small and micro enterprise, community infrastructure, town zoning and road articulation to help manage growth, and women’s empowerment.
Alphamin through its exploration and development phase has already created 480 new jobs, invested in road and telecommunications infrastructure to unlock the isolated Walikale territory, developed 25 participatory local development plans representing the long-term needs of the 14,000 households living closest to the mine, and recently completed the construction of a quality primary school with solar powered lighting. An artisanal and small scale miner (ASM) strategy is being implemented to work with all levels of government to optimize incentives for ASM miners to work legally off the Alphamin concession, reduce impunity for illegal activity and assure optimal security for operations, personnel and local residents.
Alphamin is responsible for consistent monitoring of all community initiatives, including the artisanal strategy, and will work with all involved stakeholders to assure respect for and compliance with the Voluntary Principles on Security and Human Rights guidelines. Alphamin, therefore has a robust and proactive programme of community outreach and engagement in place.
Alphamin has completed the required environmental studies and is in full compliance with IFC Performance Standards and Equator Principles. Comprehensive management plans have been developed to mitigate the potential negative environmental impacts of the Project.
FOR MORE INFORMATION, PLEASE CONTACT:
Boris Kamstra Alphamin Resources Corp.
Chief Executive Officer Tel: +230 269 4166
Grand Baie, Mauritius E-mail: [email protected]
Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this News Release.
FIN
EXPLANATORY AND MORE DETAILED INFORMATION
KEY OUTPUTS OF FEED & CBE PHASE Upon completion of the Updated Feasibility Study (“UFS”) in June 2016, the Project team appointed DRA Projects as EPCM contractor on a limited scope basis. The Project team has recently completed the optimisation of the mine and process plant design for Bisie, which has resulted in the following changes
MINE DESIGN
The mine design was reviewed by geotechnical and sublevel caving specialists, and although the fundamental mining method has not changed, the layout and mine design parameters have changed notably from the updated feasibility study. The Life of Mine (LoM) design has been developed based on the revised criteria and illustrated below.
Figure 1: Mpama North Life of Mine Design and Layout
These revised criteria have resulted in a 30% increase in ore tonnes mined, a 10% increase in tin tonnes mined, and a LoM extension of 2.5 years.
The capital footprint has been defined as mine development and associated infrastructure that will take place up to and including December 2018. This includes approximately 64 000 tonnes of ore drive development which will be stockpiled prior to plant commissioning. Stoping will commence outside the capital footprint.
Figure 2: Mining Capital Footprint
PROCESS PLANT DESIGN
The original flow sheet was further developed with the support of an additional test work campaign:
- Engineering of the comminution circuit remained predominantly unchanged. The pre-concentration circuit remains the same as in the UFS with Gekko jigs employed for the task.
- Shaking tables were added as cleaners to both spiral gravity concentration circuits allowing for, amongst other things, high grade bypasses directly to the final product.
- The oxide flotation stream in the low grade regrind circuit was replaced with a bank of shaking tables as flotation test work was unable to produce saleable grade products at acceptable recoveries.
- The sulphide flotation remains unchanged and is critical for final product contamination control.
- A low intensity magnetic separator remains in the circuit to remove any free iron added to the process during the various grinding processes.
The optimised process flow sheet has been simplified to produce only a single high grade product and the dewatering system for the product stream has been changed from plate and frame filters to vacuum filters due to the coarse high grade gravity concentrate produced early in the process plant.
Figure 3: Bisie Process Flow Sheet
These optimisations have resulted in a 6% higher annual average plant throughput rate, and an increase in tin recoveries to 73%
ESTIMATED CAPITAL COSTS
The capital cost estimate has an accuracy level of -10% to 10%, is stated in Q1 2017 terms, and was compiled on the following basis:
- Equipment and material quantities were based on the design as depicted below:
Figure 4: 3D View of Overall Block Plan
- Mining and process plant components were priced using quotations from reputable South African suppliers and vendors.
- Foreign currency elements of quoted prices were converted to United States Dollars, using the following key rates of exchange:
- USD1 : ZAR13.60
- USD1 : AUD1.30
- USD1 : EUR0.90
- All applicable duties and taxes have been included in the capital cost estimate with the exception of Value Added Tax (which has however been included in the Project peak funding requirement)
CBE – OPERATING HIGHLIGHTS AND PROJECT PERFORMANCE
| ECONOMIC ASSUMPTIONS | ||
|---|---|---|
| Tin price | $ 21 400/t(1) | |
| Oil price | $54/barrel | |
| Delivered cost of diesel | $1.50/litre | |
| Explosives cost | $3 400/t |
(1) Current equivalent of ITRI’s long run equilibrium tin price of US$ 22,500/t (2020 terms)
| PRODUCTION ASSUMPTIONS | ||
|---|---|---|
| Plant throughput | Up to 36ktpm | |
| Plant recovery | 73% |
| OPERATING COSTS (US$ per tonne tin) | |||||
|---|---|---|---|---|---|
| Activity | CBE(1) | UFS(1) | |||
| Mining(2) | 2 909 | 1 951 | |||
| Processing(3) | 348 | 584 | |||
| Site infrastructure | 1 394 | 1,208 | |||
| • Power | 961 | 744 | |||
| • Other | 433 | 464 | |||
| Sustaining capital cost(4) | 297 | 130 | |||
| Administration and general | 1 253 | 1 102 | |||
| • Community development (including LOWA alliance) | 245 | 220 | |||
| • Health, Security & IT | 243 | 186 | |||
| • Other | 765 | 696 | |||
| Logistics cost | 1 081 | 1 036 | |||
| Treatment charges(5) | 1 555 | 1 385 | |||
| Cash cost of tin produced | 8 837 | 7 396 | |||
| Export duties & fees(6) | 529 | 748 | |||
| DRC Government royalty(7) | 416 | 340 | |||
| Marketing commissions(7) | 577 | 451 | |||
| Cash cost of tin sold | 10 359 | 8 935 |
(1) CBE costs are denominated in 1 January 2017 terms, whereas the UFS costs were stated in 1 January 2016 terms. Inflationary
cost escalation thus needs to be borne in mind when comparing the CBE costs to the UFS costs.
(2) The mine design has been modified and allows for an additional 14,610m of underground development. This additional
development allows for greater operation flexibility and reduces the dilution risk.
(3) Tin flotation removed from process flow sheet and replaced with lower operating cost and complexity shaking tables.
(4) Additional allowance made for repairs and maintenance of access road, mining equipment and process plant.
(5) Greater tonnes treated per tonne of tin produced owing to increased moisture in tin concentrate
(6) Removal of certain fees not applicable to an industrial mine
(7) Linked to tin price assumption
| CAPITAL COSTS (US$’MILLION) | |||||
|---|---|---|---|---|---|
| Area | CBE(1&2) | UFS(1&2) | |||
| Mining | 29.7 | 22.0 | |||
| Process plant(3) | 32.9 | 45.2 | |||
| Infrastructure | 28.5 | 22.8 | |||
| Project indirects(4) | 22.3 | 9.8 | |||
| Contingency | 8.0 | 7.6 | |||
| Owners costs(5) | 30.0 | 17.0 | |||
| Total capital costs | 151.4 | 124.4 |
(1) CBE costs are denominated in 1 January 2017 terms, whereas the UFS costs were stated in 1 January 2016. Inflationary cost
escalation thus needs to be borne in mind when comparing the CBE costs to the UFS costs.
(2) A significant portion of the Project’s capital costs are denominated in ZAR. The strengthening of the ZAR relative to the US$
since the date of the UFS (15.98 vs 13.40 at or about the date of this press release) contributed to the increase in CBE capital
cost relative to the UFS cost.
(3) Process flowsheet optimised, reduced total equipment requirements, reduced plant footprint and associated earthworks costs
(4) Withholding taxes, power generation costs during construction and import inspection fees omitted in error in UFS cost.
(5) CBE estimate based upon a 25-month period @ US$ 1.2 million per month whereas the UFS estimate was based upon a 17-
month period @ US$ 1million per month. Includes those costs set out under “Administration & General” above e.g. community
development, health, insurance, IT, security and site management, for the period to commencement of processing operations,
as well as the direct costs of the owners team.
| FISCAL ASSUMPTIONS | |
|---|---|
| Export duties and fees (effective US$ per t of tin) | 529 |
| DRC Government royalty (% of revenue) | 2% |
| VAT rate | 16% |
| Corporate tax rate (%) | 30% |
| FINANCIAL ANALYSIS | |||||
|---|---|---|---|---|---|
| Economic indicator | Units | Value | |||
| Ungeared Project NPV (real after tax) 8 | US$ million | 402.2 | |||
| Ungeared Project IRR (real after tax) | % | 49.1 | |||
| Payback period from first tin production | months | 17 | |||
| Peak funding (nominal terms) | US$ million | 152.0 | |||
| Average production | tpa | 9 642 | |||
| Average EBITDA per annum | US$ million | 110.0 |
The Project NPV at various tin prices and discount rates is set out in the table below:
| PROJECT NPV | |||||||
|---|---|---|---|---|---|---|---|
| US$’million | US$ 19,000/t | US$ 20,000/t | US$ 21,400/t | ||||
| 8% real discount rate | 301.0 | 343.2 | 402.2 | ||||
| 10% real discount rate | 250.7 | 287.7 | 339.5 | ||||
| 12% real discount rate | 209.2 | 241.8 | 287.4 | ||||
| 15% real discount rate | 159.5 | 186.8 | 225.0 |
ECONOMIC SENSITIVITIES
The CBE results show that the Project has the potential to remain strongly profitable at lower tin prices, as well as at increased prices for key consumables.
-20% -10% Base case 10% 20%
Revenue Operating costs Capital costs
BISIE PROJECT COMMENTARY
PERMITTING The Bisie Project is contained within Permis de Exploitation (mining permit) PE13155. The permit was issued in February 2015 and is valid until 2045. In terms of the DRC Mining Code, the holder of a mining permit is entitled to
- build the installations and infrastructure required for mining exploitation;
- use the water and wood within the mining area for the requirements of the mining operation, subject to the conditions of the environmental management plan;
- use, transport and freely sell the products originating from the mining area; and
- proceed with concentration, metallurgical treatment, as well as the transformation of mineral substances extracted from the deposit within the mining area.
Alphamin also holds the legal title to additional exploration permits (PR4246, PR5270, PR10346, PR5266 and PR5267) adjacent to PE13155.
MINERAL RESOURCES The Mineral Resource estimates were updated in May 2016. The Mineral Resource estimate contains 19 600 tonnes of tin of Measured Mineral Resources, 188 400 tonnes of tin in Indicated Mineral Resources and 22 800 tonnes of tin in Inferred Mineral Resources declared at a 0.5% tin cut-off grade. These remain unchanged from those reported in the UFS.
| Classification | Tonnes (millions) | Tin % | Tin tonnes (thousands) | Copper % | Zinc % | Lead ppm | Silver g/t |
|---|---|---|---|---|---|---|---|
| Measured | 0.46 | 4.31 | 19.6 | 0.22 | 0.12 | 70 | 1.4 |
| Indicated | 4.14 | 4.55 | 188.4 | 0.32 | 0.16 | 100 | 2.8 |
| Total M&I | 4.60 | 4.52 | 208.1 | 0.31 | 0.15 | 100 | 2.7 |
| Inferred | 0.54 | 4.25 | 22.8 | 0.16 | 0.09 | 130 | 1.4 |
MINERAL RESERVES A mining cut-off grade of 1.4% tin was calculated for the proposed Sub-Level Caving mining method and was applied to the Mineral Resources declared to determine the volume of Mineral Resources that would be payable, based on the cut-off calculation assumptions.
The modifying factors applied to convert the Mineral Resource estimate to Mineral Reserves are based on the Sub-Level Caving mining method selected and the mining designs generated are as follows:
- Cut-off grade 1.4% tin
- Ore recovery 85%
- Planned dilution 14.5%
- Unplanned dilution 35%
The Mineral Reserve estimate contains 15 896 tonnes tin in the Proven Reserve category and 151 448 tonnes tin in the Probable Reserve category at a 1.4% tin cut-off grade. Inferred Mineral Resources were totally omitted from the reserve estimate. There are a number of mineable areas within the life of mine plan, where the Mineral Resource contained a combination of Indicated and Inferred Mineral Resources. In these areas, the Mineral Resources have been totally omitted.
| Classification | Tonnes | Tin | Tin tonnes | ||
|---|---|---|---|---|---|
| (millions) | (%) | (thousands) | |||
| Proven | 0.38 | 4.17 | 15.9 | ||
| Probable | 4.29 | 3.53 | 151.4 | ||
| Total Measured and Indicated | 4.67 | 3.58 | |||
| 167.3 |
Notes:
1. The reserves were based on applying the Datamine Mineable Shape Optimizer (MSO) software that determines stope shapes that are economical based on the applied cut-off grade and mining parameters.
2. The Bisie orebody contains areas where the dip of the ore footwall is less than the standard 70° normally required for the method. In these areas, the footwall mining drive and a portion of the stope ring was placed partially in the waste footwall as long as the MSO reading remained economic. This waste reports as planned dilution.
3. The waste dilution entering the run of mine ore stream from the drawpoints during extraction of the blasted stope rings has been termed unplanned dilution. It is generally experienced in standard SLC that the dilution is ±35% for an ore recovery of 85%.
4. The general level of ore loss experienced in the cave area in longitudinal SLC is ±15%.
5. A delayed draw SLC extraction methodology was applied to the top 3 sub levels of the mining layout to cater for potential air blasts if the caving process is delayed. The delayed draw application establishes an ore blanket or cushion above and behind the rings being blasted to protect the drawpoints being drawn. The methodology entails limiting draw of the blasted rings to 30% on the top level, 50% on the 2nd level and 90% on the 3rd level. On the assumption that general caving has been established by the time the 4th level mining commences the ore cushion can be drawn to a normal SLC cut off. The dilution in this process is considerably less and was nominally estimated at 10% ore with recovery, assuming the ore cushion is drawn on the 4th level estimated at 90% for the 4 levels combined.
No Inferred Mineral Resources have been included in the estimation of Mineral Reserves.