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Reservoir Minerals (TSXV:RMC) announced results of a preliminary economic assessment (PEA) for its 45 percent owned Timok JV and Cukaru Peki deposit in Serbia. As quoted in the press release, highlights of the PEA included: High quality resource: The deposit comprises a copper-gold epithermal mineralised body, preserved under ~400m of sedimentary and volcanic cover rocks. There …
Reservoir Minerals (TSXV:RMC) announced results of a preliminary economic assessment (PEA) for its 45 percent owned Timok JV and Cukaru Peki deposit in Serbia.
As quoted in the press release, highlights of the PEA included:
- High quality resource: The deposit comprises a copper-gold epithermal mineralised body, preserved under ~400m of sedimentary and volcanic cover rocks. There is a zone of very high grade massive sulphide (HGMS) within a shell of lower grade, semi massive sulphide (SMS) mineralisation. The combined HGMS and SMS comprises and indicated resource of 1.7Mt @ 13.5% Cu and 10.4g/t Au and inferred resource of 35.0Mt @ 2.9% Cu and 1.7g/t, would support an initial mine life of 12 years at an initial projected extraction rate of 0.6 Mtpa during the DSO operation, ramping up to 2 Mtpa at the Phase 2 Main Mine.
- Demonstrable economic upside: The base case main mine production may be extended by a further 7 years by mining additional 13.8 Mt of material (average grade of 3.7% Cu and 2.3 g/t Au) providing economic upside to the project.
- Strategic development plan: This is designed to minimize development risk, generate higher up-front margins, and reduce initial capital funding requirements, by development of the high grade DSO starter mine, followed by the Phase 2 Main Mine.
- Robust project economics and access to early cash flows: Mining and selling the DSO from the starter mine, following a 3 year development period, results in significant operating cash flow which is used to fund the Phase 2 Main Mine. The initial establishment capex requirement of US$213m (100% basis) results in a rapid payback of 0.6 years and significant post-tax IRR of 106%.
- Existing infrastructure & reduced risk: Close proximity to the existing Bor mine smelter provides existing infrastructure including power, road, rail, water. Though not a requirement of the Mining Law in Serbia, there is also potential to treat, as yet undefined quantities of DSO material and concentrate, at the flash smelter at RTB Bor which currently has significant spare capacity.
- Cash operating costs: Low cash operating costs driven by high quality of resource base. Total payable Cu of 1.54 billion lbs and total payable Au of 744koz over life of mine. Base case C1 Costs(1) of US$0.55/lb. Fully allocated costs of US$0.97/lb.
- Supportive government and jurisdiction: Serbia is pro-foreign investment and the local mining community is strongly supported at all levels in government. Mining projects in Serbia benefit from competitive fiscal and legal regulations including a net smelter return (NSR) royalty of 5% and a corporate tax of 15%.
- Block Caving Opportunity: The underlying large scale Lower Zone (LZ) porphyry mineralisation, which has a current footprint of approximately 1,400m by 600m. The vertical extent of the mineralisation is unknown, as holes terminate in mineralisation. Mineralised intervals up to 900m have been reported. This presents a long term block caving opportunity.
Reservoir President and CEO, Simon Ingram, said:
The positive results of the PEA are very encouraging – particularly the fact that the project has the potential to generate extremely robust economics even at spot prices and can be fast-tracked towards early production through the starter mine and DSO operation, but with modest upfront capex. The current development plan enables Cukaru Peki to potentially emerge as one of the lowest cost high quality producing mines in the world. The Lower Zone Porphyry mineralisation presents the potential of a future long life world class development in the heart of Europe.