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Lunnon Metals Limited (ASX: LM8) (the Company or Lunnon Metals) is pleased to announce the completion of the Preliminary Feasibility Study( PFS) and the initial Probable Ore Reserve for the Baker deposit of 612,000 tonnes at 2.86% Ni for 17,500 contained nickel tonnes1.
KEY POINTS
- Strong financial returns with low start-up capital requirements.
- Initial Probable Ore Reserve of 612kt averaging 2.86% Ni for 17.5kt contained nickel1.
- Indicated Mineral Resource converted 73% to Ore Reserve.
- Pre-tax and post-tax free cash flow generation of $196 million and $145 million.
- Pre-tax NPV8% of $164 million and 324% internal rate of return (IRR).
- Pre-production capex of $18.6 million, maximum cash drawdown of $26.4 million including working capital.
- A premium sulphide concentrate, averaging ~14.6% Ni, Fe:MgO ratio of ~18.8 and low arsenic of ~440ppm.
- Detailed offtake discussions can now commence for Baker’s high grade nickel sulphide ore.
- Significant upside potential from the initial base case outlined in the PFS:
- No Inferred Mineral Resources included in PFS
- Likely future extensions to Baker with the deposit remaining open down plunge
- Potential contribution from East Trough deposit (approx. 450m from Baker)
- Scale and synergies with Foster’s Mineral Resources.
The PFS confirms that the Baker Project is a commercially robust high-grade nickel sulphide orebody (2.86% Ni), with a modest pre-production capital cost ($18.6 million), located in a Tier 1 jurisdiction in the heart of Kambalda, Western Australia. The PFS also confirms that Baker will produce a premium nickel concentrate, the results of which now enable detailed offtake discussions for the Project. The PFS leaves significant future upside potential, with a depth of mining of less than 200m below surface and the deposit remaining open down plunge. Lunnon Metals will now continue further studies (including reviewing scale and synergy benefits with Foster’s Mineral Resources), as the Company looks to build on its initial Ore Reserve for the Kambalda Nickel Project, which comes less than two years since listing and 18 months after Baker’s discovery.
Key PFS Outcomes and Assumptions
A summary of the initial physical and financial evaluation of the Project is shown in Table A, with additional details provided in the PFS Executive Summary.
1 Refer to Section 7 of the Preliminary Feasibility Study – Executive Summary below for a full breakdown of the Ore Reserve.
Table A: Key Production and Financial Outcomes and Assumptions
Notes:
1: Life of Mine is calculated from first stope ore, being approximately four months into Project commencement.
2: C1 Cash Costs includes Operating Costs, including mining, processing (excluding penalties), surface haulage, G&A, less by-products, divided by ore tonnes for processing. Excludes pre-production and sustaining capital expenditure, rehabilitation cost and royalties.
3: Gross Revenue excludes deduction of penalties from revenue and excludes revenue credits to Pre-Production Capital. 4: Pre-Production Capital Expenditure is to first stope ore, not commercial production.
5: Total LOM Expenditure includes Operating Costs, Royalties, Sustaining Capital, Closure Costs and Pre-Production Capital.
It excludes any by-product or revenue credits.
6: Free Cash Flow is Gross Revenue (less penalties) minus Operating Costs, Capital Expenditure (pre-production and sustaining), Royalties, and Closure Costs.
7: Post-Tax includes an assumption of $30 million in accumulated tax losses to 31 March 2024 and 30% Corporate Tax Rate.
8: NPV is based on real cash flow forecasts and represents value as at projected start date of 1 April 2024.
9: Corporate Tax Rate may be less, with a tax rate of 25% if aggregated turnover is less than $50 million in any financial year.
Managing Director, Ed Ainscough, commenting said:
“Kambalda has been one of Australia’s most prolific nickel production centres for over 55 years. Despite this long history, the district is still a globally relevant nickel belt and remains an important strategic source of high-grade, premium quality nickel sulphides. Baker continues this proud Kambalda tradition and the Company is likewise proud to report the results for that deposit’s PFS and initial Ore Reserve. These impressive results come within two years of listing on the ASX and at a time when Kambalda is once again in the headlines, this time as a sought after key production centre driven by its many positive attributes including its high-grade, superior concentrate quality and consequent low energy and capital intensity to exploit.
I would like to thank the Lunnon Metals’ team who have worked to deliver these outcomes over the past two years. They more than anyone know that this is just the start, these are very much initial results, with plenty more to come from our growing Mineral Resource base already defined at Baker and Foster but also from the many exciting exploration programs across the rest of our portfolio. To have access to such high-quality tenure in the heart of Kambalda is truly amazing and sets the Company and its shareholders up for a bright future.”
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This article includes content from Lunnon Metals Limited, 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.
EIS Grant for Minnie Springs Copper Porphyry Drilling
- Augustus Minerals has been granted a co-funded drilling grant of up to $110,000 for 2 x 700m deep diamond drill holes under the WA Government’s Exploration Incentive Scheme (EIS) for the Minnie Springs prospect.
- The deeper diamond drill program is designed to test and to provide a 550m deep, 1km wide geological/geochemical/structural cross-section through the large 3km long by 1km wide copper moly porphyry system, linking the Mo mineralised leucogranite to the extensive Cu in soil anomaly to the northeast.
- Previous RC drilling at Minnie Springs intersected mineralisation, geology and alteration halo consistent with the zoning of a large porphyry copper / moly system.
Andrew Ford, GM Exploration
“The Company is pleased to receive an EIS grant to complete deeper drilling at the Minnie Springs Copper Molybdenum Project. The resultant data will enable mapping of the lithology and alteration to a depth of 550m and potentially intersect, or provide vectors to, higher grade Mo-Cu mineralisation using a Mo-Cu porphyry geological model”.
Minnie Springs
Minnie Springs hosts porphyry related copper molybdenum mineralisation previously drilled and defined by Catalyst Metals. A molybdenum Exploration target has been defined for the historicdrillingareacomprisedofbetween12-84Mtasoutlinedbelow (Table 1 and Figure 1, 2.)1.
Table 1. Exploration target size estimate for Minnie Springs Molybdenum depositNote: Based on ~300 ppm cut-off at 100% recovery.
The potential quantity and grade of the exploration target is conceptual in nature, there has been insufficient exploration to estimate a Mineral Resources, and it is uncertain if further exploration will result in the estimation of a Mineral Resource.
The planned diamond drilling will complement the recently completed 3,200m RC drilling program that infilled around hole MSRC012 (18m @ 0.37% Cu and 9.7 g/t Ag from 94m downhole, and 16m @ 0.38% Cu and 19.4g/t Ag from 121m downhole2) and tested the northern half of the 2km long copper-in soil anomaly. Assays from this program are expected to become available over the next month.
The limited exploration in the region, highlighted by 95% of the Ti-Tree project having no previous exploration, demonstrates the prospectivity of this underexplored mineral province.
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Quarterly Activity Report 31 March 2024
Figure 1. Fiery Creek Copper Prospect/Yataga Granodiorite summarizing rock (brown diamonds) and termite mound sample results (black crosses)
Continuing with its primary exploration focus on the Georgetown project in the latter half of 2023, EMU received assay results during the quarter from its second, in field reconnaissance work. The geochemical sampling programme covered the Fiery Creek high grade copper vein swarm and the Snake Creek prospects with significant element results returned from the Fiery Creek Copper (elevated Cu-Au-Ag-Bi-In-Pb-Sb-Te) and Snake Creek (elevated Pb-Ag-Au-Sb).
Whilst the survey was cut short due to inclement weather, EMU was encouraged by the significant success reflected in the assays results. The results from mineralogical studies confirmed EMU’s interpretation of an indicative, scale Copper-Porphyry system at the Fiery Creek prospect and was a highlight of the survey with new information building on the scale and potential of the prospect1.
Assay results returned included:
- Fiery Creek rock assay results up to 23.5% Cu, 0.27ppm Au, 460ppm Ag, 1.9% Bi, 89ppm In, 2.7% Pb, 667ppm Sb, 1470ppm Zn2.
- evidence of strong potential for the presence of critical and strategic minerals (Cu, Bi, In), with precious and base metals.
- evidence of alteration mineralogy, mineralisation geochemistry and areal extent of the Fiery Creek quartz-Cu-Bi vein swarm strongly suggesting a previously unrecognised subjacent porphyry Cu-Mo system.
- Yataga Granitoid Complex termite mound and coincident rock chip sampling returned several anomalous polymetallic zones for follow up.
- Snake Creek Prospect assays returned 0.20ppm Au, 390ppm Ag, 22.4% Pb, 464ppm Sb1.
Significant results were returned from the Fiery Creek Copper prospect with elevated Cu-Au- Ag-Bi-In-Pb-Sb-Te and from the Snake Creek prospect with elevated Pb-Ag-Au-Sb.
The elevated pathfinder element results and a macro-petrology assessment3 of rock samples completed by Mr Nigel Maund, Consulting Economic Geologist, from the previously unexplored Fiery Creek Prospect, point to the discovery of a porphyry copper system.
The sampling program assessed a number of high-priority prospects within the Georgetown Project tenements utilising termite mound and outcrop rock chip geochemistry. A total of 46 rock chip and 489 termite mound samples were collected across eight prospects.
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This article includes content from EMU NL, 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.
