26 November 2018 LSE:AYM
Anglesey Optimisation Study on Parys Mountain Mine Project
Agreement with mining contractor, QME, on mine development
Anglesey Mining plc (“AYM”) is pleased to announce a major development on the path forward for the advancement of its Parys Mountain copper, zinc, lead, gold and silver project, located on the island of Anglesey in North Wales.
Under a Project Development and Cooperation Agreement (“Agreement”) entered into with QME Mining Technical Services, a division of QME Ltd, (“QME”), QME will, at no cost to AYM, carry out an agreed programme of design, engineering and optimisation studies relating to the future development of Parys Mountain.
Over the period to the end of June 2019, QME will carry out a detailed review of various development and mining alternatives for Parys Mountain. The primary objective is to determine the optimum production plan for Parys Mountain, utilising all available and potential means of accessing both the indicated resources and inferred resources, (as currently defined and estimated by Micon International) at various “cut-off” grades.
Anglesey Chief Executive, Bill Hooley, said: “We consider this to be a very important and positive step forward in the development of the Parys Mountain mine. QME is experienced in underground mine development and has developed and recruited the necessary skills in mine planning to deliver local and relevant underground mining expertise to Parys Mountain that will assist Anglesey to move forward with the development of the Parys Mountain project at no direct cash cost to Anglesey or dilution of its shareholders.”
AYM has agreed to grant QME various rights and options relating to the future development of Parys Mountain. On completion of the optimisation study and delivery to AYM of the results thereof:
(i) AYM will award QME, on an exclusive basis, contracts for the development of the decline and underground mine development, including rehabilitation of the shaft. This will be done on terms to be agreed following a decision by AYM to proceed with the development of Parys Mountain;
(ii) In the event Anglesey and QME are not able to agree terms AYM may offer such contracts to third parties, subject to a right of first refusal in favour of QME, and subject to a payment by AYM to QME, upon the award of such contracts to a third-party, of a break-fee; and
(iii) In addition, AYM will grant to QME the right and option, upon completion of a Prefeasibility Study (“PFS”), to undertake at QME’s cost and investment, the mine development component of the Parys Mountain project, including decline and related underground development and shaft development, with a scope to be agreed, to the point of commencement of production, in consideration of which QME would earn a 30% undivided joint venture interest in the Parys Mountain project.
Parys Mountain – 2017 Scoping Study Recommendations
In July 2017 a Scoping Study on Parys Mountain, was prepared by Micon International Limited (Micon) and Fairport Engineering Ltd. The Scoping Study envisages a mining rate of 1,000 tonnes per day, to produce an average annual output of 14,000 tonnes of zinc concentrate at 57% Zn, 7,200 tonnes of lead concentrate at 52% Pb and 4,000 tonnes of copper concentrate at 25% Cu, over an initial mine life of eight years.
Following completion of the positive 2017 Scoping Study, Anglesey has been working to progress the Parys Mountain project towards production. The 2017 Scoping Study recommended further work as interim steps towards undertaking a PFS, including more detailed mine planning and design, more engineering studies, additional metallurgical test work and a review of tailings management and environmental and planning permissions, all of which will require new and further financing. The Agreement with QME announced today is a major component of this and is a very positive development that will significantly advance the Parys Mountain project.
Optimisation Studies and Revised Mine Plan
The 2017 Scoping Study was based on mining only the 2.1 million tonnes of indicated resources reported by Micon in 2012. Micon had reported a further 4.1 million tonnes of inferred resources which were not incorporated into the Scoping Study. Development of even half of these inferred resources not included in the Scoping Study, would significantly increase the projected life of the Parys Mountain mine with potential positive outcomes on the project economics.
Under the Agreement QME will examine a revised mine model with the objective of incorporating some of the inferred resources, including part of the higher-grade Engine Zone inferred resources, into the earlier years of the mine plan with the intention of bringing forward cashflows and increasing the life of the mine to at least 10 years.
The 2017 Scoping Study was based on the initial development and production from the White Rock zone using a newly developed decline eventually leading to development of the deeper Engine zone and then the rehabilitation and use of the Morris Shaft as a hoisting facility.
The QME review will examine whether different approaches to accessing the orebodies, particularly by early dewatering, rehabilitation and recommissioning of the Morris Shaft, could provide early access to the higher-grade Engine zone resources. This should have a beneficial effect upon both the net present value of the operation and the pay-back period.
It is expected that these optimisation studies will be completed by the middle of 2019 and, subject to financing being available, would then form the basis for commissioning of a Preliminary Feasibility Study to lead to an overall project financing package.
Following delivery of the optimisation studies pursuant to the Agreement, and the subsequent completion of a PFS, QME will have the option to undertake at QME’s investment, the mine development component of the Parys Mountain project, including decline and related underground development and shaft development, in consideration of which QME would earn a 30% undivided joint venture interest in the Parys Mountain project, thereby significantly reducing AYM’s capital cost requirements.
QME Limited, founded in 1987 by its current Managing Director Peter McParland, is based in Navan, County Meath, Ireland from which it operates several divisions and provides a wide range of services in the fields of both mine development and mine operations to the local and international mining community.
QME Mining Technical Services division undertakes contract mining projects and employs an ‘in-house’ team of highly experienced operations managers, underground supervisors, miners, fitters and electricians. QME has carried out both large- and small-scale underground mine development contracts, providing all technical evaluation and budgeting services, personnel, management, equipment and maintenance.
Current and past clients include: Boliden Tara Mines, Navan, Ireland; Dalradian Gold Limited, Curraghinalt, Northern Ireland; Lafarge Holcim, Glensanda Super Quarry, Scotland; Lundin Mining Galmoy Mine, Ireland; Vedanta Lisheen Mine, Ireland; Irish Base Metals Ltd., Tynagh Mine and Gortdrum Mine, Ireland; Saint Gobain, Gyproc, Ireland; Northgate Exploration Ltd, Canada; and Campbell Resources, Canada.
QME Equipment Division is a large provider of new and re-manufactured underground and open pit mining equipment to the international mining industry worldwide, employing a highly skilled workforce of mechanical and technical staff with the capability to repair or fully overhaul a wide range of mining equipment.
About Anglesey Mining plc
Anglesey is carrying out feasibility and development work at its 100% owned Parys Mountain copper, zinc, lead deposit in North Wales, UK with a reported resource of 2.1 million tonnes at 6.9% combined base metals in the indicated category and 4.1 million tonnes at 5.0% combined base metals in the inferred category.
Anglesey holds a 6% interest and management rights to the Grangesberg Iron project in Sweden, together with a right of first refusal to increase its interest by a further 51%. Anglesey also holds 12% of Labrador Iron Mines Holdings Limited which holds direct shipping iron ore deposits in Labrador and Quebec.
For further information, please contact:
Bill Hooley, Chief Executive +44 (0)7785 572517
Danesh Varma, Finance Director +44 (0)7740 932766
For further information on QME, please contact:
Peter McParland, Managing Director QME: +353 (0) 87 2566601 www.qme.ie