Wrap Text
AEA - African Eagle Resources Plc - Scoping Study Indicates Potential Economic
Viability of African Eagle`s Dutwa Nickel Project, Tanzania
African Eagle Resources Plc
(Incorporated in England and Wales, registered number 3912362)
AIM share code: AFE & AIM ISIN: GB0003394813
JSE share code: AEA & JSE ISIN: GB0003394813
SCOPING STUDY INDICATES POTENTIAL ECONOMIC VIABILITY OF AFRICAN EAGLE`S DUTWA
NICKEL PROJECT, TANZANIA
Feasibility study to begin immediately
- Draft Scoping Study indicates economic viability of project
- Indicative life-of-mine pre-tax earnings US$1.5 billion at nickel price
US$7/lb
- Atmospheric tank leaching likely to be optimum process
- Capital cost estimate US$435 million (2 million tonne per annum tank leach
plant)
- African Eagle to begin feasibility study immediately
African Eagle Resources today announces the results of a "proof of concept"
scoping study on the Dutwa Nickel Laterite Project in Tanzania. The study was
undertaken by GRD Minproc of Perth, Western Australia, under contract to African
Eagle.
African Eagle`s Chairman John Park commented, "This study clearly demonstrates
that the Dutwa project can be economically viable. The Company will now begin
work on further feasibility studies. I also believe that the implementation of
GRD Minproc`s recommended work programme to investigate the potential to reduce
capital and operating costs and to improve revenues will demonstrate both the
robustness of the project and our ability to improve the project economics."
For the study, GRD Minproc reviewed information provided by African Eagle
relating to the geology, resources, setting, mineralogy and metallurgy of the
deposit, and the infrastructure in Tanzania and neighbouring countries. GRD
Minproc used this information, combined with its own internal data and
experience, to develop mining and process plant plans for ten alternative
process options and to calculate preliminary economics of each. The economic
modelling was an iterative process, feeding back into the mining plans and the
process designs.
The study showed that the optimum process option is likely to be atmospheric
tank leach, but the project may also be viable using heap leaching. High-
pressure acid leach with direct solvent extraction of the nickel is also
potentially economically feasible.
Preliminary financial analysis indicates that the base case post-tax net present
value (NPV) of the best option is US$109 million and its internal rate of return
(IRR) is 14.5% based on a discount rate of 10%, a nickel price of US$7/lb and
transport costs of US$100/tonne. The NPV rises to $209 million and an IRR of
15.5% at an 8% discount rate and $75/tonne transport costs. The equivalent pre-
tax NPVs are US$202 million and US$354 million respectively.
The results of this study fully justify commencement of further feasibility
studies on the project.
GRD Minproc modelled ten process options based on the deposit model produced by
SRK for the November 2008 JORC compliant resource of 31 million tonnes at 1.1%
nickel and 0.034% cobalt. GRD Minproc used Whittle mine modelling to optimise
the mining plan and cut-off grade for each process option, including a 50%
upside to take into account the nearby Ngasamo laterite, which potentially adds
an additional 15-20 million tonnes.
The study determined that atmospheric leaching with production of intermediate
hydroxide or sulphide products is likely to be the optimum process route,
although heap leaching is also viable. High Pressure Acid Leach (HPAL) with
direct solvent extraction (DSX) and electrowinning of nickel metal also appears
to be viable.
The cost of reagents, especially sulphur and lime, is a major component of
operating costs and sensitivity analysis shows that returns can be considerably
increased if these costs can be minimised. As anticipated, transport costs will
be a significant contributor to operating costs and ways to minimise these will
be investigated. For the atmospheric tank leach processing option, pre tax NPV
will increase by $50 million to US$252 million if transport costs can be reduced
to $US75/t against the base case of $US100/t.
GRD Minproc concluded that the results of the study justify commencement of
further feasibility studies on the project. Initial work on this should be
directed towards investigating variables which could lead to costs reductions
and revenue increases.
Specifically, GRD Minproc recommended that the following further work be
undertaken:
- Resource drill the Ngasamo deposit
- Improve and upgrade the resource model, incorporating the Ngasamo drill
data
- Investigate beneficiation of the ore prior to leaching
- Conduct advanced metallurgical testing for tank and heap leach options
- Investigate ways to minimise transport costs
- Investigate sources and costs of reagents, especially lime and sulphur
- Investigate water balance at the project site
- Conduct a marketing study for the alternative products
- Complete an environmental impact assessment
- Conduct hydrogeological surveys
- Review power supply and co-generation options
- Review requirements and time frames for statutory permits
Additional metallurgical test work is currently being undertaken by Mintek
Laboratories in South Africa. This work includes column leach test work, heap
leach test work, sizing analysis and physical test work to establish more
definitively the optimum processing routes. Resource definition drilling of the
Ngasamo laterite deposit is planned to commence in August.
Technical terms
A glossary of technical terms used by African Eagle in this announcement and
other published material may be found at www.africaneagle.co.uk/african-eagle-
projects-glossary.html
For further information:
Mark Parker
Managing Director
African Eagle
+44 20 7248 6059
+44 77 5640 6899
Nicola Marrin
Seymour Pierce Limited, London
Nominated Adviser
+ 44 20 7107 8000
Charmane Russell
Russell & Associates,
Johannesburg
+ 27 11 8803924
+27 82 8928052
Ed Portman / Leesa Peters
Conduit PR, London
+44 20 7429 6607
+44 77 3336 3501
About African Eagle
African Eagle is a diversified mineral exploration and development company
operating in eastern and central Africa. The Company`s principal advanced
projects are the Dutwa nickel laterite discovery in Tanzania, where the Company
completed a scoping study in June 2009, and the Mkushi Copper Mines project in
Zambia, for which a draft Feasibility Study was completed in Q4 2008.
African Eagle has also defined a gold resource estimated at half a million
ounces at the Miyabi gold project in Tanzania, and is evaluating a second
promising nickel laterite deposit which it recently discovered in Tanzania. The
Company holds a well-balanced portfolio of promising earlier stage gold and base
metal projects, including the Ndola and Mokambo projects in the Zambian
Copperbelt.
Zambia, Tanzania and Mozambique, the sites of African Eagle`s projects, are all
countries which have highly prospective geology, relatively low above-ground
risks and track records of successful major investments in the metals and
minerals industries.
African Eagle specialises in project generation and exploration. To take its
discoveries into production, it seeks to sign up industry partners with records
of successful mine development. These joint ventures and, in time, the revenue
from advanced projects, will finance future exploration and new discoveries.
About Dutwa
African Eagle has discovered a significant nickel laterite deposit within the
Dutwa project area, which lies in the Kilimafedha belt (Swahili for "money
hills") of the Lake Victoria Goldfield.
Operationally, the project is favourably situated, 100km east of the railhead at
Mwanza and close to the main Mwanza-Nairobi trunk road, a major power line and
the shore of Lake Victoria.
Greenstones and granites underlie the area. The greenstones, of Archaean
Nyanzian age, are mostly metamorphosed volcanic and sedimentary rocks, with some
banded iron formation in the east. Several large ultramafic bodies intrude the
greenstones and the nickel laterites form a blanket up to 60m thick on top of
these.
African Eagle has explored several prospecting licences in the Dutwa project
area, covering a total area of more than 750kmSquared. The Company holds 90%
interests, with options to acquire 100%, over the Dutwa laterite deposit. In
April 2009, African Eagle signed a Letter of Intent for an option and joint
venture over the Ngasamo licence, which contains another nickel laterite 5km
west of the Dutwa project.
African Eagle acquired the Dutwa project for its gold potential, but its
exploration team quickly recognised that there was significant nickel laterite
potential. Geochemical soil surveys carried out by African Eagle over the whole
of the project area identified a promising 5km-long nickel anomaly and a number
of gold anomalies. There is very little outcrop, so the Company conducted
extensive ground magnetic surveys to reveal the underlying structure and
geology. The Company has also compiled historical data, including detailed
geological maps and trench results dating from 1956, when rock chip samples from
the trenches over the ultramafic rocks were reported as yielding up to 1.9%
nickel and 10% chromium.
To investigate the nickel anomaly, the Company undertook trial drilling in June
2008. The results were very encouraging and a 139-hole reverse circulation (RC)
drilling programme was completed to delineate the resource. African Eagle also
undertook a 10-hole diamond drill programme to obtain core samples for
metallurgical testing and density measurements.
In November 2008, African Eagle announced an initial Inferred Mineral Resource
estimate of 31 million tonnes at an average grade of 1.1% nickel and 0.034%
cobalt. At a cut-off grade of 0.5% nickel, this gives Dutwa a contained metal
endowment of some 340,000 tonnes of nickel and 11,000 tonnes of cobalt. The
estimate was prepared by independent consultants SRK Consulting (UK) Ltd in line
with the Australasian Code for Reporting of Mineral Resources and Ore Reserves
(the JORC Code). SRK classified the estimate as an Inferred Mineral Resource in
terms of the JORC code, but noted that the deposit is a continuous mineralised
body of simple geometry, which has been well delineated by the drilling, and
could be promoted easily to Indicated category with more density measurements
and improved knowledge of the metallurgy.
Ngasamo Hill, which lies 5km west of the Dutwa deposit appears geologically very
similar, probably holds a laterite deposit of the order of 15 to 20 million
tonnes, which would increase the global resource at Dutwa from the currently
defined 31 million tonnes at 1.1% nickel, to some 45 - 50 million tonnes.
Drilling and metallurgical tests will be needed to confirm the size, grade and
compatibility of Ngasamo, but first indications are very promising. Under its
agreement with Ngasamo`s owners, (Safina a.s. of the Czech Republic and its
Tanzanian subsidiary Precious Metals Refinery Company Ltd), African Eagle can
earn an interest of 50% and up to 75% in Ngasamo by carrying out exploration and
evaluation work, up to a feasibility study.
The Company despatched mineralised drill core and RC chip samples to Mintek
Laboratories in Johannesburg for investigations into the mineralogy and
metallurgy of the deposit, especially tests of the amenability of the material
to sulphuric acid leaching. Mintek carried out mineralogical characterisation by
X-ray diffraction (XRD), scanning electron microscopy (SEM) and polished section
work, to determine the nature of the ore body, and extended `bottle roll` acid
leach tests on ten samples, to investigate metal recoveries and acid
consumption.
The bottle roll test results show nickel extractions of 70-90% with an average
of 83%, based on assays of the samples prior to the test and of the solid
residues at the end of the test. Cobalt extractions were mostly in the range 70
to 85%. The acid consumptions, averaging 209kg/t, are very low compared to other
Ni laterite ores worldwide.
The mineralogical investigations show that the laterite is extremely silica-
rich, with low iron and magnesium content, indicating that Dutwa is not a
typical laterite nickel deposit. Mintek believes that much of the nickel and
cobalt occurs in "wad" with manganese content of 20-60%, nickel content of up to
20% and cobalt content of up to 10%.
The unusual mineralogy of the deposit is beneficial, as it results in lower acid
consumption and would be likely to give good heap leach permeability or
favourable liquid-solid separation in tank leaching. The concentration of nickel
and cobalt in the manganese wad offers possibilities that mechanical selection
of high-grade material may allow reduced throughput and hence a lower cost
processing plant.
As the next step in the process, African Eagle commissioned a Scoping Study to
investigate the key operating parameters and to assess the economic potential of
the project. The results of the study became available in mid-June 2009 and are
described in the main news release above.
The Company has also completed a trial programme of RC drilling to test a
laterite at its Zanzui project, 70km to the south of Dutwa. Results included
42m at 1.05% nickel (including 6m at 2.80%) and 33m at 0.91% nickel (including
9m at 1.41%).
24 June 2009
Sponsor
Nedbank Capital
Date: 24/06/2009 11:00:03 Supplied by www.sharenet.co.za
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