Bass Metals Ltd.: Operations Update and New Production Growth Initiative
(firmenpresse) - Bass Metals Ltd.: Operations Update and New Production Growth Initiative
13 October 2010
Highlights
•Mine development and Mill refurbishment on track for first concentrate sales in January 2011.
•25% increase in forecast earnings before interest and tax (EBIT) for Fossey Mine from $55M to $69M by incorporating current metal prices.
•Increased production by mining of lower grade disseminated mineralisation, possibly with a pre-concentration circuit is being investigated to increase mill utilisation, lower unit costs and increase cash flow.
Australian polymetallic miner, Bass Metals Ltd (ASX:BSM) is pleased to provide the following update on the mine development and mill refurbishment activities associated with its company transforming Hellyer Mine Project, as well as a new production growth initiative underway.
HELLYER MINE PROJECT (HMP)
Mining
The Fossey decline is at approximately 850 metres. Current mine development activity is focussed on connecting the decline to the pilot drill hole for the first of two vertical ventilation shafts to enable the commencement of 212 metres of raise boring of the shaft(Refer Figure 1). Drilling of the pilot hole for the second ventilation shaft is planned to commence shortly. Water ingress into the decline remains high but is being managed by the recently upgraded mine dewatering system and connection to grid power.
In the second half of October the mine development activity will widen to include development of the first ore extraction level (465mRL) as well as continuation of the decline. Bass expects first ore to be intersected by the development drives on the 465 level in mid November and stoping production to commence in late December.
Mill Refurbishment
The refurbishment of the Hellyer Mill is progressing well and is approximately 85% complete. Commissioning of some components of the Mill circuit has already commenced. Commissioning the entire circuit will commence in November; initially with waste rock and then approximately 20,000 tonnes of Que River mineralised waste. The processing of Fossey ore and concentrate sales are scheduled to commence in January 2011.
Financial Performance
Bass has revised its estimates of the Fossey component of the HMP to incorporate current metal prices and exchange rates, resulting in a 25% increase in forecast earnings before interest and tax (EBIT), as summarised in Table 1.
Bass Metals’ Managing Director, Mike Rosenstreich said, “This is a very positive outcome which further strengthens the robust project financials, particularly given that the underlying technical plan was updated for both adverse and beneficial changes since the Hellyer Operating Plan (HOP) was completed in March 2010.”
The base case prices are the metal prices and exchange rates assumed in the Definitive Feasibility Study (DFS) and current prices reflect prices as at 30 September 2010 as summarised in Table 2.
The HMP is forecast to generate EBIT of $25 to $35 million per year based on current metal prices and exchange rates. In the first two years alone, when Fossey is mined, the forecast EBIT is approximately $69 million.
“The strong earnings and cash generating potential of the HMP will provide the capital that Bass plans to employ to grow its business” Rosenstreich commented.
A further positive aspect is that the rise in co-product commodity prices has further reduced the benchmark C1 cost of production to US$0.12/lb payable zinc after credits; placing the HMP well into the lowest quartile of world production costs.
Table 1: Financial Forecast for current and base case price scenarios.
Base case pricesCurrent Prices
Financial OutcomesA$MA$/t oreA$MA$/t ore
Gross Revenue235268246280
Net Smelter Return171195185211
Site Operating costs65746574
Royalties16191720
EBITDA90102103117
Start-up Capital Costs25292529
Ongoing Capital Expenditure910910
EBIT55636978
EBIT Margin32%37%
C1 Cost-US$/lb Payable Zn after creditsUS$0.16US$0.12
Table 2: Metal Price and exchange rate assumptions
UoMBase Case (DFS )Current
(30/0/10)%
Change
Copper US$/t6000806434
LeadUS$/t2100230010
ZincUS$/t1950222514
SilverUS$/oz172229
GoldUS$/oz1000131031
AUDUSD0.870.9711
GROWTH PROJECTS
The production profile of the Hellyer operations is not “Mill” constrained. Bass has substantial growth potential through its existing infrastructure and resources, namely, an underutilised mill and extensive low-grade as well as high-grade Mineral Resources.
Bass has commenced work with Como Engineering to assess an exciting opportunity to increase metal production and cash-flow. The large 1.5 mtpa capacity of the Hellyer Mill provides Bass with the operational flexibility to process any additional amenable ore delivered to the Run of Mine (ROM) stockpile. It is therefore possible to achieve additional production growth from existing hard-rock resources by lowering the mine cut-off grade to include disseminated/lower grade ore types, either on a “stand-alone” or an incremental ore basis. This scenario could be further optimised with the inclusion of a pre-concentration module such as a Heavy Media Separation (HMS) plant which would up-grade the metal content of the feed grade into the flotation circuit of the plant, reducing processing costs (Refer Figure 2).
This growth opportunity has potential near term application at Fossey where the total mineralised zone comprises 2.3 million tonnes at approximately 5% Pb + Zn of which 0.8 million tonnes is the high grade massive base metal sulphide lens (15% Pb + Zn) comprising the Ore Reserve. The Hellyer Mineral Resource also has a significant stringer zone style mineralisation with typical grades of 0.3% Cu, 3% Pb, 5% Zn, 52 g/t Ag and 0.9 g/t Au, which could be viable without pre-concentration. This material is could be amenable to pre-concentration and has significant potential for major resource upgrades as it has not been targeted specifically for resource drilling.
Inclusion of lower grade material on either a “stand-alone” or incremental cost basis has the potential to add ore tonnes to the processing schedule resulting in better mill utilisation and an increase in metal production. Inclusion of a pre-concentration module could improve metal recoveries, lower costs and reduce utilisation of the tailings dam.
Commentary
“Bass Metals is clearly on the cusp of a major growth phase based on existing resources and proven technologies,” Bass Managing Director, Mike Rosenstreich said.
“Our next mine - Fossey - is poised to commence production, with mine development and Mill refurbishment activities on track to start processing Fossey ore and achieve first concentrate sales in January 2011. Furthermore, we are assessing several exciting opportunities with strong potential to more fully utilise the large Hellyer Mill and increase metal output and cash flow,” Mr Rosenstreich added.
Contact
Mike Rosenstreich
Managing Director – Bass Metals Ltd
Tel: (+61-8) 6315 1300
Media
David Brook
Professional Public Relations
Mob: (+61) (0) 415 096 804
About Bass Metals Ltd (ASX: BSM)
Bass Metals Ltd is a growth focussed and profitable Australian base and precious metal producer with a portfolio of high quality zinc, lead, copper and gold assets in the rich Mount Read Volcanic mineral belt in northwest Tasmania.
Listing in 2005, Bass delivered its maiden profit in 2008 from its profitable base metals production hub at Que River in Tasmania, which has generated $25 million in cash flow over the last two years.
The Company’s larger transformational Hellyer Mine Project is on track to commence production toward the end of 2010. With an initial through-put rate of 400,000 tonnes per annum (tpa), the 1.5 million tpa capacity Hellyer Mill will produce 53,000 tpa of zinc concentrate, 27,000 tpa of lead concentrates and 4,500 tpa of copper—silver-gold concentrates.
The Company also has an active and successful exploration programme and is currently following up on recent discoveries at Switchback and Fossey East which are high-grade and located in close proximity to existing mine and milling infrastructure.
Bass has an experienced Board and operating team who have a strong track record of delivering profitable production underpinned by exploration success and are highly motivated to improve on that record.
Leseranfragen:
Bass Metals Ltd
16 Thelma Street
West Perth WA 6005
Mike Rosenstreich,
Managing Director
Tel.: +61 8 9322 8044
Fax: +61 8 9481 2846
E-Mail: admin(at)bassmetals.com.au
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