Trigon PEA pegs Kombat NPV at $96M (U.S.)
2018-03-23 07:41 ET - News Release
Mr. Stephan Theron reports
TRIGON METALS FILES AN UPDATED NI 43-101 TECHNICAL REPORT INCLUDING PEA RESULTS CONFIRMING A FURTHER IMPROVED NPV FOR THE KOMBAT MINE
Trigon Metals Inc. has filed its National Instrument 43-101-compliant technical report. This follows the Company's press release issued on February 6, 2018 announcing an updated Mineral Resource estimate at the Company's Kombat operations located in northern Namibia ("Kombat" or the "Kombat Mine").
The Company confirms its Mineral Resource estimate for the Kombat Mine, comprising both the surface accessible (targeted open pit) and underground, of 1.529 million tonnes of Indicated Mineral Resources at a grade of 1.14% copper, 0.72% lead and 2.88 g/t silver and 5.511 million tonnes of Inferred Mineral Resources at a grade of 3.05% copper, 1.25% lead and 22.93 g/t silver (collectively, the "Mineral Resource Estimate").
In conjunction with the technical report, the Company has also further optimized the preliminary economic assessment ("PEA") on the Kombat operations, the results of which are summarized in the technical report. The PEA confirms that the Kombat operations have a best-estimated net present value ("NPV") of US$96 million and a robust internal rate of return of 85.2%.
Stephan Theron, President and CEO of Trigon, commented: "We are extremely pleased to provide this positive information to the market, and to have achieved one more milestone towards our target of open pit production during 2018."
Technical Report
The Mineral Resource Estimate has been prepared and classified by Minxcon (Pty) Ltd ("Minxcon") in accordance with the reporting guidelines as required by the Canadian Securities Administrators.
The Mineral Resource Estimate as at February 28, 2018, as presented in detail in Tables 1, 2 and 3 below, is comprised of the surface accessible (targeted open pit) Mineral Resources of 1.529 million tonnes of Indicated Mineral Resources at a grade of 1.14% copper, 0.72% lead and 2.88 g/t silver and 1.582 million tonnes of Inferred Mineral Resources at a grade of 1.40% copper, 1.79% lead and 2.17 g/t silver, and the underground Mineral Resources of 3.929 million tonnes of Inferred Mineral Resources at a grade of 3.72% copper, 1.03% lead and 31.29 g/t silver.
Table 1 {A –} Mineral Resource Estimate as at February 28, 2018 {A –} open pit
Mine Area Mineral Resource ClassTonnesDensityCu Pb Ag Cu ContentPb ContentAg Content
Mt t/m3 % % ppm t t kg
Kombat East Indicated 0.951 2.82 1.030.921.019,806 8,721 961
Kombat CentralIndicated 0.578 2.81 1.320.415.967,623 2,341 3,440
Kombat West Indicated - - - - - - - -
Total Indicated 1.529 2.82 1.140.722.8817,428 11,062 4,401
Kombat East Inferred 0.318 2.81 0.910.421.872,888 1,322 593
Kombat CentralInferred 0.264 2.82 1.290.615.703,412 1,612 1,508
Kombat West Inferred 0.357 2.88 2.752.612.229,801 9,326 791
Total Kombat Inferred 0.939 2.84 1.711.313.0816,101 12,260 2,892
Otavi Inferred 0.643 2.84 0.932.500.856,006 16,053 546
Total Inferred 1.582 2.84 1.401.792.1722 107 28 313 3 437
Open pit Total 3.111 2.83 1.271.312.4739,535 39,375 7,838
Notes
1. The open pit Mineral Resource is declared to a depth of 150 m with a CuEq cut off of 0.6% for Kombat and 0.77% for Otavi.
2. For the updated Kombat open pit Mineral Resource, a commodity price of USD3.87/lb Cu and USD 1.22/lb Pb was used. No other environmental or permitting factors were applied.
3. A geological loss of 15 % for the Inferred and 10% for the Indicated Mineral Resource has been applied.
4. The Mineral Resources are exclusive of Mineral Reserves.
5. Mineral Resources are reported as total Mineral Resources and are not attributed.
6. Columns may not add up due to rounding
7. Inferred Mineral Resources have a large degree of uncertainty as to their existence and whether they can be mined economically. It cannot be assumed that all or any part of the Inferred Mineral Resource will be upgraded to a higher confidence category.
Table 2 {A –} Updated Mineral Resource Estimate as at February 28, 2018 {A –} underground
Mine Area Mineral Resource ClassTonnesDensityCu Pb Ag Cu ContentPb ContentAg Content
Mt t/m3 % % ppm t t kg
Kombat East Inferred 0.079 2.86 1.932.250.71 1,521 1,773 56
Kombat CentralInferred 0.023 2.89 2.233.868.39 514 890 193
Kombat West Inferred 0.104 2.91 2.794.153.27 2,899 4,307 339
Kombat Inferred 0.206 2.89 2.403.392.86 4,934 6,971 588
Asis West Inferred 2.475 2.88 4.051.2832.36100,214 31,735 80,078
Asis Gap Inferred 0.166 2.83 2.350.3521.153,909 590 3,514
Asis Far West Inferred 1.082 2.85 3.420.1035.8137,000 1,036 38,763
Asis Inferred 3.723 2.87 3.790.9032.86141,122 33,361 122,355
Underground Total 3.929 2.87 3.721.0331.29146,056 40,331 122,943
Notes
1. The underground Mineral Resource (below 150 m) is declared at a CuEq cut off of 1.4%.
2. For the underground Mineral Resource, the previous commodity price of USD3/lb Cu and USD 1/lb Pb remained unchanged. No other environmental or permitting factors were applied.
3. A geological loss of 15% for the Inferred and 10% for the Indicated Mineral Resource has been applied.
4. The Mineral Resources are exclusive of Mineral Reserves.
5. Mineral Resources are reported as total Mineral Resources and are not attributed.
6. Columns may not add up due to rounding
7. Inferred Mineral Resources have a large degree of uncertainty as to their existence and whether they can be mined economically. It cannot be assumed that all or any part of the Inferred Mineral Resource will be upgraded to a higher confidence category.
Table 3 {A –} Updated Mineral Resource Estimate as at February 28, 2018 {A –} combined
Mine Area Mineral Resource ClassTonnesDensityCu Pb Ag Cu ContentPb ContentAg Content
Mt t/m3 % % ppm t t kg
Kombat East Indicated 0.951 2.82 1.030.921.01 9,806 8,721 961
Kombat CentralIndicated 0.578 2.81 1.320.415.96 7,623 2,341 3,440
Kombat West Indicated - - - - - - - -
Total Indicated 1.529 2.82 1.140.722.88 17,428 11,062 4,401
Kombat East Inferred 0.397 2.85 1.110.781.63 4,409 3,096 648
Kombat CentralInferred 0.287 2.84 1.370.875.92 3,926 2,502 1,701
Kombat West Inferred 0.461 2.88 2.762.962.45 12,700 13,633 1,130
Otavi Inferred 0.643 2.84 0.932.500.85 6,006 16,053 546
Asis West Inferred 2.475 2.88 4.051.2832.36100,214 31,735 80,078
Asis Gap Inferred 0.166 2.83 2.350.3521.153,909 590 3,514
Asis Far West Inferred 1.082 2.85 3.420.1035.8137,000 1,036 38,763
Total Inferred 5.511 2.86 3.051.2522.93168,163 68,644 126,380
Total (Indicated & Inferred) 7.040 2.85 2.641.1318.58185,591 79,706 130,781
Notes
1. The open pit Mineral Resource is declared to a depth of 150 m with a CuEq cut off of 0.77 % for Otavi and 0.6% for Kombat.
2. The underground Mineral Resource (below 150 m) is declared at a CuEq cut off of 1.4 %.
3. A geological loss of 15% for the Inferred and 10% for the Indicated Mineral Resource has been applied.
4. The Mineral Resources are exclusive of Mineral Reserves.
5. Mineral Resources are reported as total Mineral Resources and are not attributed.
6. Columns may not add up due to rounding
7. Inferred Mineral Resources have a large degree of uncertainty as to their existence and whether they can be mined economically. It cannot be assumed that all or any part of the Inferred Mineral Resource will be upgraded to a higher confidence category.
The Company still plans to undertake additional drilling with the goals of: (i) increasing the open pit Mineral Resource within the current pit boundaries, (ii) drilling the gap between the Central and East pits, which is outside of the existing pit boundaries, and (iii) testing potential to the north and west of these areas. The three phase drilling program to extend the current open pit Mineral Resource comprises a further 34 holes, with an aggregate of 1,437 meters to be drilled.
Updated PEA
The Company has further optimized the financial model in the updated PEA as announced in the press release issued on February 6, 2018 (the "Updated PEA").
The Updated PEA has been based on the Mineral Resource Estimate as set out above, and incorporates current forecast commodity prices, results of metallurgical testing undertaken in 2017 and offtake terms for copper concentrate as agreed with a major international trading house as announced on October 26, 2017. All other assumptions used in the PEA, including capital expenditure and operating costs, remain unchanged at this stage.
Using the discounted cash flow method to calculate the net present value ("NPV") in real terms, the Kombat operations are projected to have a further improved estimated NPV of US$96 million at a real discount rate of 10.92%, a payback period of 3.6 years and a highly attractive internal rate of return of 85.2%.
Production and processing
The combined open pits and underground mines have a potential life of mine ("LoM") of eight years mining 4,071 kt at an average mined grade of 2.84% copper as set out in the table below.
Item Unit Updated PEA
Ore Tonnes Mined kt 4,071
Average Cu Grade Mined % 2.84%
Average Pb Grade Mined % 1.00%
Average Ag Grade Mined g/t 21.85
Total Cu Concentrate kt 361
Total Pb Concentrate kt 30
Total Cu Metal Recoveredkt 105
Total Pb Metal Recoveredkt 13
Total Ag Metal Recoveredkoz 2,385
LoM Years8
The estimated saleable product tonnes over the LoM are illustrated in the graph below.
Capital
The start-up capital required for first production of the open pit amounts is estimated at US$7.16 million. Total direct capital expenditure over the LoM is estimated at US$67.69 million (excluding contingencies and stay in business capital) with the peak capital expenditure during years 2021 and 2022, and peak funding requirement of an estimated USD$30.15 million during 2021.
Operating costs and commodity prices
Direct cash costs (C1) for the Kombat operations consist of plant and mining operating costs, concentrate transport costs, treatment costs and refining costs. Other cash costs (C3) include corporate overheads and the Namibian revenue royalty of 3%. Kombat has an estimated all-in sustainable cost of US$1.81/copper equivalent pound ("CuEq lb"). The turnover, cost and earnings numbers are displayed in the table below per milled tonne and per recovered copper equivalent pound.
Item Unit Updated PEA
Copper Equivalent Tonnes Tonnes 106,629
Net Turnover US$/CuEq lb 3.01
Mine Cost US$/CuEq lb 0.62
Plant Costs US$/CuEq lb 0.20
Other Costs US$/CuEq lb 0.50
Direct Cash Costs (C1) US$/CuEq lb 1.33
Capex US$/CuEq lb 0.36
Production Costs (C2) US$/CuEq lb 1.68
Royalties US$/CuEq lb 0.08
Corporate Overheads US$/CuEq lb 0.05
All-in Sustainable Costs (C3)US$/CuEq lb 1.81
EBITDA US$CuEq lb 1.55
The following commodity price forecasts have been used in the Updated PEA.
Item Unit 2019 2020 2021 2022 2023 Long-term
SilverUSD/oz. 17.6 17.9 18.1 18.3 18.2 19.0
CopperUSD/tonne6,7586,6826,7406,6886,5956,551
CopperUSD/lb 3.07 3.03 3.06 3.03 2.99 2.97
Lead USD/tonne2,4102,2312,1152,0501,9901,966
Lead USD/lb 1.09 1.01 0.96 0.93 0.90 0.89
The Updated PEA is preliminary in nature, and includes inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the results of the Updated PEA will be realized.
A further update of the Updated PEA will be undertaken as part of the feasibility study referred to below.
The technical report entitled "NI 43-101 Technical Report on the Kombat Copper Project, Namibia", dated March 22, 2018 with an effective date of February 28, 2018, was prepared for Trigon by Uwe Engelmann (BSc (Zoo. & Bot.), BSc Hons (Geol.), Pr.Sci.Nat. No. 400058/08, MGSSA) of Minxcon, and is available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.trigonmetals.com.
Feasibility Study
As previously announced by the Company, the Mineral Resource Estimate will form the basis for a feasibility study, including a feasibility analysis on the surface mining areas and a pre-feasibility design on the Asis Far West underground mine.
The feasibility study was initiated in January 2018 and is progressing well. The process is anticipated to take approximately five months to complete, during which time, the Company intends to commence with the refurbishment of the mill and concentrator to facilitate timelines for commencement of open pit mining and the processing of ore therefrom.
The Company does not currently have a feasibility study in respect of the Kombat Mine and production restart activities are based on internal management forecasts.
Environmental Permitting
The Environmental Impact Assessment reports, including required specialist studies and an Environmental Management Plan, are in the process of being finalized. The Company will then apply to secure the Environmental Clearance Certificate required for open pit mining and associated activities, as well as that needed for exploration activities for underground mining.
Qualified Person
Mr. Uwe Engelmann (BSc (Zoo. & Bot.), BSc Hons (Geol.), Pr.Sci.Nat. No. 400058/08, MGSSA) of Minxcon, is a "qualified person" as such term is defined in NI 43- 101 and has reviewed and approved the technical information and data included in this press release. As a director of Minxcon, Mr. Engelmann is considered independent.
Trigon Metals Inc.
Trigon is a publicly traded Canadian exploration and development company with its core business focused on copper operations in Namibia, one of the world's most prospective copper regions, where it has substantial assets in place with significant upside. The Company continues to hold an 80% interest in five mining licenses in the Otavi Mountain lands, an area of Namibia widely recognized for its high-grade copper deposits. Within these licenses are three past producing mines including the Company's flagship property, the Kombat Mine.
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