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GALENA MINING LTD. (“Galena” or the “Company”) (ASX: G1A) announces that the Abra Base Metals Mine (“Abra” or the “Mine”) has updated its JORC Code 2012 Mineral Resource Estimate (“July 2023 Resource” or “MRE”). This update is the first MRE annual update including all underground diamond drilling up to 5 May 2023, and all underground geological mapping, and mining and processing up to 30 June 2023.
HIGHLIGHTS
- Revised total Abra MRE of 33.4Mt at 7.1% Pb and 17g/t Ag (5% Pb cut-off grade):
- Measured 0.3Mt at 7.3% Pb and 32g/t Ag,
- Indicated 16.2Mt at 7.3% Pb and 19g/t Ag,
- Inferred 16.9Mt at 6.9% Pb and 15g/t Ag.
- No material difference from the previous MRE (April 2021), supporting Abra’s long-term mining plans.
- Includes 26,277m (163 holes) of underground diamond drilling, geology mapping associated with 7,319m underground development, and includes mining depletion.
- Identification and understanding of potential new lead and silver mineralisation associated with Carbonatic Dome structures within the Apron Zone and strong conversion of Inferred Mineral Resources to Indicated Mineral Resources in the eastern end of the mine.
Managing Director, Tony James commented, “The updated Abra MRE reflects substantial work achieved at Abra over the last 12-months, greatly improving the understanding of the deposit. Importantly, it shows no material difference from the April 2021 MRE, and therefore continues to support our long-term mining plans. The Resource update work also confirms that mining and processing grades seen during Abra’s commissioning and ramp-up, which is dominated by mine development, are not representative of the total MRE at Abra. As mining areas open- up, grades through the mill continue to improve, particularly as we move away from the upper northern margin near the Abra Fault.”
SUMMARY
Since June 2022, 26,277m (163 holes) of underground diamond NQ drilling has been completed and during commissioning and ramp-up of the mine, 325,924 tonnes at 4.8% lead and 20g/t silver has been mined and processed (note the early stages of mining is development focussed with 244,332t (75%) associated with development which is subject to a mining cut-off grade of 3.3% lead). Material mined and processed also includes both high-grade and sub-grade material produced during commissioning and early stages of ramp-up. A total of 7,319m of underground development has also been completed to 30 June 2023 in the Apron Zone section of the ore body allowing access for detailed mapping and geological interpretation.
The 2023 Mineral Resource estimate (MRE) takes into account the ore losses seen on the upper- northern margin of the orebody, as outlined in April 2023 (see Galena ASX announcement of 20 April 2023).
To complete and update the 2023 MRE with the latest technical understanding and confidence, drilling data was cut-off on 5 May 2023 and mine production data cut-off on 30 June 2023. Table 1 (below) states the Abra July 2023 Resource at a 5.0% lead cut-off grade, as at 30 June 2023. The July 2023 Resource has been independently reviewed by Snowden Optiro Pty Ltd (“Snowden Optiro”).
Table 1: Abra JORCMineral Resource estimate at 5% Pb cut-off grade(July 2023 MRE)1
Notes: 1. Calculated using ordinary kriging method at a 5.0% lead cut-off grade. Tonnages are rounded to the nearest 100,000t, lead grades to one decimal place and silver to the nearest gram. Rounding errors may occur when using the above figures.
The previously published MRE is dated April 2021 (5% lead cut-off grade) based entirely on surface drilling and interpretation, and comprised a total of 34.5Mt at 7.2% lead and 16g/t silver (see Galena ASX announcement of 28 April 2021).
Click here for the full ASX Release
This article includes content from Galena Mining, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
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Galena Mining
Overview
Galena Mining Limited (ASX:G1A, Galena) owns 60 percent of the Abra base metals mine located in the Gascoyne region of Western Australia - home to one of the largest lead and silver deposits in the world, set to produce the highest-grade, cleanest lead concentrate available globally. The company is capitalizing on its Tier 1 asset in a Tier 1 jurisdiction, strengthened by and leveraging partnerships with Japan's largest zinc and lead smelter, as well as with one of the top base metals trading firms in the world.
The company also owns 100 percent of the Jillawarra Project, which covers 76 kilometers of strike extension directly to the west of Abra. The Jillawarra Project contains several large-scale analogous exploration targets including the Woodlands Complex, Quartzite Well and Copper Chert areas.
Galena's major partnerships include Toho Zinc (TSE:5707), Japan's largest zinc and lead smelter, and IXM SA, one of the world's top three base metals trading firms. Toho provided AU$90 million project equity and has a long-term offtake agreement to purchase 40 percent of Abra's production; while IXM has entered into a 10-year take-or-pay offtake contract to purchase the remaining 60 percent.
The company's management team brings decades of experience in the mining and base metals industry and has a proven track record of success throughout all stages of exploration, from development to production.
In November 2020, Galena put in place US$110 million in finalized debt facilities arranged by Taurus Funds Management. The facilities include a US$100-million project finance facility plus a US$10-million cost overrun facility.
The project finance facility consists of a 69-month term loan primarily to fund capital expenditures for the development of Abra. Key terms include:
- Fixed interest of 8 percent per annum on drawn amounts, payable quarterly in arrears.
- 1.125 percent net smelter return royalty.
- No mandatory hedging.
- Early repayment allowed without penalty.
- 15 quarterly repayments commencing on 31 December 2023.
The cost overrun facility is a loan to finance identified cost overruns on the project in capital expenditure and working capital. Fixed interest of 10 percent per annum applies to amounts drawn under the cost overrun facility.
The Taurus debt facilities have been fully drawn and are secured against Abra Project assets and over the shares that each of Galena and Toho own in Abra.
Company Highlights
- Positioned to realize value for shareholders:
- Abra mine construction completed in December 2022, on time and on budget.
- First in-specification concentrate shipment achieved in March 2023.
- Abra is one of the largest and cleanest lead-silver deposits in the world (high-grade, high-value concentrate 1/10th typical deleterious elements).
- Exciting exploration ground and known copper-gold mineralisation below the Abra lead-silver deposit.
- JV between Galena (60 percent) and Japan's largest zinc and lead smelter Toho Zinc (40 percent) underpins long mine life (10+ years) in an exciting new mineral province in Western Australia.
- Galena has a 10-year offtake agreement with IXM, one of the world’s largest base metals traders.
- Annual steady-state guidance:
- Mill throughput of more than 1.3 million tonnes per annum (Mtpa), producing +90,000 tonnes per annum lead and +550,000 ounces per annum silver.
- Annual average lead C1 direct cash cost of US$0.55 to US$0.65/lb.
- Annual average EBITDA (earnings before interest, taxes, depreciation, and amortization) of AU$90 million to $100 million.
- The Abra mine is located in the Gascoyne Region of Western Australia, home to one of the largest undeveloped lead deposits in the world and the highest-grade lead concentrate available, globally.
- The Abra mine carries a JORC mineral resource estimate (July 2023) of 16.2 million tons (Mt) at 7.3 percent lead and 19 grams per ton (g/t) silver in the indicated category, and 16.9 Mt at 6.9 percent lead and 15 g/t silver in the inferred category.
- Abra has been named the world's lowest-cost primary lead mine by Wood Mackenzie, a leading mining research and consultancy group.
- US$110 million of project financing debt facilities from leading mining-specialist lending fund Taurus Funds Management.
- Galena's management team brings decades of experience in the mining and base metals industry and has a proven track record of success throughout all stages of exploration, from development to production.
Key Projects
Abra Mine
The Abra Mine is a 60:40 joint venture between Galena and Japanese lead producer Toho Zinc. It is a globally significant lead-silver project located in the Gascoyne region of Western Australia, between the towns of Newman and Meekatharra approximately 110 kilometers from the DeGrussa copper mine owned by Sandfire Resources (ASX:SFR).
Abra Mine Site Location
The Abra mine carries a total JORC mineral resource estimate published in July 2023 of 33.4 Mt at 7.1 percent lead and 17 g/t silver (5 percent Pb cut-off grade), which includes 0.3 Mt at 7.3 percent lead and 32 g/t silver in the measured category; 16.2 Mt at 7.3 percent lead and 19 g/t silver in the indicated category; and 16.9 Mt at 6.9 percent lead and 15 g/t silver in the inferred category.
All permits for the Abra project have been obtained from the appropriate Western Australian regulatory bodies. The project is also subject to an existing land use and heritage agreement with the Jidi Jidi Aboriginal Corporation. The Abra property is well-serviced by public roads and highways, and all the necessary infrastructure has been developed to transport lead-sulphide concentrates to the Port of Geraldton, Abra's primary export port.
Abra Processing Plant
A final investment decision to complete the Abra Project was made in June 2021 and construction was completed in December 2022, on time and on budget. Several important milestones were achieved in the March 2023 quarter, including the commissioning of the processing plant, first ore fed into the plant and first concentrate produced in January 2023.
The processing plant achieved in-specification concentrate production from the commencement of concentrate production and during the 2023 calendar year, 967,622 tons of ore was processed and 61,800 tons of lead concentrate was produced.
The company is currently undertaking detailed technical work to develop an updated production plan for 2024 production targets and guidance.
Jillawarra Project
Exploration and growth associated with the 100 percent Galena-owned Jillawarra Project covers a highly prospective elongated tenement package covering approximately 76 kilometers of continuous strike length and 508 square kilometers directly to the west of Abra.
The Jillawarra Project hosts many base metals prospects which have had limited shallow exploration work completed since the 1970s by various companies. The bulk of the exploration work was completed by Amoco, Geopeko, Apex Minerals and Abra Mining Limited. The work completed to date has identified several base metals, manganese and gold prospects, of which the Woodlands Complex, Quartzite Well, Manganese Range, Copper Chert, TP and 46-40 were subject to early-stage exploration. Most of the drilling completed within the Jillawarra Project investigated the first 100 to 200-meter depth which, based on recent knowledge of Abra, may not have reached the depths required.
The main prospective corridor within the Jillawarra Project lies within the margins of the Quartzite Well – Lyons River Fault zones which extend east-west along the entire tenement package. Also, the contact between the dolomitic sediments of Irregully Formation and the lower sedimentary unit, polymictic conglomerate, of the Kiangi Creek Formation represents an important marker for the occurrence of base metal mineralisation as seen at Abra.
The Woodlands Complex is an Australian scaled geophysical anomaly which represents a significant target area with the anomaly being 12 kilometers long and 10 kilometers wide. Limited work and technical evaluation have occurred at Woodlands which presents a great opportunity for Galena in the years to come. Ongoing geophysical and exploration drilling will occur concurrently with the development of Abra. The knowledge and understanding of Abra due to its development will provide a significant exploration advantage at Jillawarra.
Management Team
Tony James – Managing Director and CEO
Tony James is a mining engineer with over 30 years’ mine operating and project development experience predominantly in Western Australia. He also has previous experience at managing director level of three ASX-listed companies with two of those companies successfully guided through a merger and takeover process benefiting the shareholders. He has a strong mine operating background (examples being the Kanowna Belle gold mine and the Black Swan nickel mine) and a strong feasibility study / mine development background (examples being the Pillara zinc/lead mine and the Trident/Higginsville gold mine).
Adrian Byass – Non-executive Chairman
Adrian Byass has more than 25 years of experience in the mining industry both in listed and unlisted entities globally. He has served as non-executive and executive director of various listed and unlisted mining entities, which have successfully transitioned to production in bulk, precious and specialty metals around the world. He currently serves on the boards of ASX gold, base metals and lithium companies.
Neville Gardiner – Non-executive Director
Neville Gardiner has over 30 years of experience advising boards on mergers and acquisitions,
equity and debt capital markets, transaction structuring, capital allocation and complex
commercial arrangements. His career achievements include senior executive leadership
roles in Deloitte, Torridon Partners, and at Bank of America Merrill Lynch, where he spent five years as the head of its Australian Natural Resources Team. He also spent nine years with Macquarie Bank, where he had responsibility for its Western Australian Corporate Finance business and its Australian Oil and Gas Advisory business. He has a very strong experience and knowledge base associated with the resources sector in Australia.
Stewart Howe – Non-executive Director
Stewart Howe has more than 40 years of experience in the global resource industry including 18 years in mining. He was chief development officer at Zinifex, one of the world’s largest miners and smelters of lead and zinc. He led the spin-off of Zinifex’s smelters to create Nyrstar NV, and restarted the development of the Dugald River mine.
Craig Barnes – Chief Financial Officer
Craig Barnes has over 25 years of experience in senior finance and financial management within the mining industry and previously the financial services industry. He has considerable experience in project financing, mergers and acquisitions, joint ventures, treasury and implementation of accounting controls and systems.
Before joining Galena, he held the position of CFO of Paladin Energy for more than five years and was part of the team that successfully completed the company's capital restructuring in 2018. Prior to that, he was the chief financial officer of DRDGOLD (NYSE and JSE:DRD) and its affiliated subsidiaries for more than seven years.
Aida Tabakovic – Company Secretary
Aida Tabakovic has over 11 years of experience in the accounting profession, which includes financial accounting reporting, company secretarial services, ASX and ASIC compliance requirements. She has been involved in listing several junior exploration companies on the ASX and is currently company secretary for numerous ASX-listed companies
Abra Construction At 97% Complete – First Ore Stockpiled For January Processing
Managing Director, Tony James commented, “Record underground development in November with delivery of the first 9,000t of ore to the ROM pad along with successful plant commissioning to date puts Abra on the verge of a quick transition into production. Recruitment and other operational readiness activities are well advanced in preparation for January production”.
Figure 1 – First material being tipped into the crusher during commissioning (Photo 26 November).
Figure 2 – Crushing and screening plant commissioning (Photo 26 November).
The following link will show a short video of the Abra crusher commissioning. https://youtube.com/shorts/iSG58MiW_3o
Update on Abra Project progress
Overall progress continues as planned, with first concentrate production expected in Q1 CY2023, following ore commissioning in January 2023. Practical completion of the processing plant is now expected ahead of schedule in December 2022. The processing plant engineering, procurement and construction has reached 99% complete. Piping and electrical works have made significant progress and at the end of November were 96% and 92% complete, respectively. Mechanical items installation is almost complete at 99%.
In November, the first material was crushed and screened as part of the staged commissioning process. The crushing plant ran at design capacity and all commissioning milestones were successfully achieved. Dry commissioning also progressed in most areas of the plant including water and air services, tailings and concentrate thickening, grinding and reagents. Dry commissioning of the remaining areas will be completed in December. Water commissioning commenced in the tailings and concentrate thickening areas of the plant and the remaining areas are expected to be wet commissioned by the end of December. The remaining commissioning schedule is unchanged from the last update and is shown below in Table 1.
Click here for the full ASX Release
This article includes content from Galena Mining, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
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