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SEP - Sephaku Holdings - Definitive Feasibility Study On The Proposed Nokeng
Fluorspar Mine Completed And Approved As A Competent Person`s Report
Sephaku Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2005/003306/06)
Share code: SEP
ISIN: ZAE000138459
("Sephaku Holdings" or "the company")
Definitive Feasibility Study on the proposed Nokeng fluorspar mine completed and
approved as a Competent Person`s Report
In May 2009, the directors of Sephaku Holdings requested Venmyn Rand (Pty)
Limited ("Venmyn") to complete an independently compiled Definitive Feasibility
Study ("DFS") on the company`s proposed Nokeng fluorspar mine in the form of a
Competent Person`s Report ("CPR") in accordance with the requirements of:
- the South African Code for the Reporting of Exploration Results, Mineral
Resources and Mineral Reserves ("the SAMREC Code"); and
- the South African Code for the Reporting of Mineral Asset Valuation ("the
SAMVAL Code").
The Nokeng mine is held by Nokeng Fluorspar Mine (Pty) Limited, which is a
wholly owned subsidiary of Sephaku Fluoride (Pty) Limited, itself a wholly owned
subsidiary of Sephaku Holdings.
The Nokeng mine complex will comprise an open cast mining operation,
concentrator plant, tailings disposal facility ("TDF") and associated
infrastructure and services. Sephaku Holdings intends to develop the Nokeng
mine to produce on average 130,000tpa acid grade (97.2% CaF2) fluorspar (also
referred to as acidspar) by the second quarter of 2012.
The proposed Nokeng mine will be located immediately south of the Vergenoeg mine
in the Gauteng Province of South Africa. For purposes of the DFS, two locations
for the concentrator plant and TDF were considered:-
- the "Base Case", on portion 11 of the farm Kromdraai 209JR ("Kromdraai");
and
- the "Alternative Option", on portion 1 of the farm Naauwpoort 208JR
("Naauwpoort").
The Nokeng mine will exploit two geographically separated fluorspar deposits:-
- a haematite-fluorspar deposit in the northern region of Kromdraai,
immediately south of the Vergenoeg mine, which has been named the Plattekop
deposit; and
- a placer outwash fan further south, which straddles the Kromdraai and
Naauwpoort farm boundary. This deposit has been termed the Outwash Fan
deposit.
The Nokeng mine CPR focuses entirely on the "Base Case" option for the location
of the concentrator plant and TDF. In addition, the "Base Case" assumes:-
- mining will be performed entirely by the owner operator;
- road transportation of all construction materials, reagents and product to
and from the Nokeng mine; and
- the following high level mine schedule:-
- total life of mine ("LOM") of exactly 19 years, at an average run of
mine ("ROM") feed rate of 600,000tpa;
- maximum ROM throughput and CaF2 production rate of =708,000tpa and
=180,000tpa respectively;
- overall CaF2 recovery from material from the Plattekop and Outwash Fan
deposits of 85% and 75% respectively;
- CaF2 content in the product of 97.2%;
- feeding material solely from the higher grade Plattekop deposit for
the first 4 years (ore production is scheduled to commence in May
2012);
- feeding a blend of material from both the Plattekop and the Outwash
Fan deposits between years 5 and 9; and
- feeding material solely from the lower grade Outwash Fan deposit
between years 10 and 19 (ore production is scheduled for completion at
end of April 2031).
Steffen Robertson Kirsten Consulting Engineers and Scientists ("SRK") performed
Mineral Resource estimates on both Plattekop and Outwash Fan deposits. Mineral
Reserve estimates, based on the SRK Mineral Resource estimates, on both
Plattekop and Outwash Fan deposits were performed by Sound Mining Solutions
(Pty) Limited ("SMS") during the DFS, taking cognisance of all the required
modifying factors, as prescribed by the SAMREC Code and determined during the
DFS.
Mineral Resource Estimate
The following table outlines the Mineral Resources of the Nokeng mine, as
estimated by SRK according to the requirements of the SAMREC Code, and is
considered to appropriately reflect the nature and technical parameters of both
the Plattekop and Outwash Fan deposits:-
DEPOSIT TONNES (`000) CONTAINED CaF2 (%)
CaF2 (`000t)
Inferred Mineral Resources
Plattekop 361.0 138.0 38.4%
Outwash 0.0 0.0 0.0%
Fan
Sub-Total 361.0 138.0 38.4%
Indicated Mineral Resources
Plattekop 2,917.0 1,236.0 42.4%
Outwash 0.0 0.0 0.0%
Fan
Sub-Total 2,917.0 1,236.0 42.4%
Measured Mineral Resources
Plattekop 0.0 0.0 0.0%
Outwash 8,182.5 2,010.9 24.6%
Fan
Sub-Total 8,182.5 2,010.9 24.6%
Total Mineral Resources
Total 11,460.5 3,384.9 29.5%
Notes :
1. Quoted at a cut-off grade of 15% CaF2.
2. Plattekop based on April 2009 SRK Mineral Resource estimate. Outwash Fan
based on November 2008 SRK Mineral Resource estimate.
3. All tabulated data has been rounded to one decimal point for tonnage, grade
and contained CaF2.
4. Mineral Resources are quoted inclusive of Mineral Reserves.
Mineral Reserve Estimate
The Mineral Reserve estimation by SMS was restricted to the two open pit designs
(Plattekop and Outwash Fan). The pit shells were determined from an open pit
optimisation exercise, which indicated:-
- for the Plattekop pit, the mining sequence removes the Plattekop Hill, and
results in the establishment of a new surface topography; and
- the Outwash Fan pit can be mined to a maximum pit depth of 60m below
surface.
The following table outlines the Mineral Reserves of the Nokeng mine, as
estimated by SMS according to the requirements of the SAMREC Code. The total
Mineral Reserves for the Nokeng mine are estimated at 12,194.7kt at an average
grade of 27.2% CaF2, with 3,314.1kt of contained CaF2:-
DEPOSIT TONNES (`000) CONTAINED CaF2 (%)
CaF2 (`000t)
Proven Mineral Reserves
Plattekop 0.0 0.0 0.0%
Outwash Fan 9,065.1 2,055.1 22.7%
Sub-Total 9,065.1 2,055.1 22.7%
Probable Mineral Reserves
Plattekop 3,129.6 1,259.1 40.2%
Outwash Fan 0.0 0.0 0.0%
Sub-Total 3,129.6 1,259.1 40.2%
Total Mineral Reserves
Total 12,194.7 3,314.1 27.2%
Note:
Based on an air dried basis
Capital and Operating Cost Estimates
Capital and operating cost estimates were compiled by the respective Specialist
Consultants, and only co-ordinated by Venmyn. The total initial (pre-
commissioning) capital expenditure required for the Nokeng mine was estimated at
a base date of 1 October 2009 at ZAR810.071m (+10%-10% accuracy) and excludes:
growth allowance, escalation, contingencies, accuracy provisions, allowances for
ongoing capital expenditure and working capital. In addition, a total additional
capital provision of ZAR17.442m was allowed for in later years to purchase
additional mining equipment to mine the Outwash Fan pit.
The total operating cost, based on an average annual concentrator plant
throughput of 600,000tpa ROM, producing on average 130,000tpa acidspar, was
estimated at ZAR1,333.09/t CaF2 produced (+10%-10% accuracy) at a base date of 1
October 2009.
Valuation
The valuation of the Nokeng mine conducted by Venmyn was based on the cash flow
and market valuation approaches, using the following parameters:-
- a CaF2 price of USD314.48/t;
- a real discount rate of 12.0%; and
- an exchange rate of ZAR8.20/USD.
Using the cash flow approach, Venmyn determined a "fair" (attributable) value
for the Nokeng mine of ZAR279.338m, with an upper and lower valuation range of
ZAR365.515m and ZAR193.161m respectively.
The total Mineral Reserve tonnage for the Nokeng mine of 12.195Mt of ore, at an
average grade of 27.2% CaF2, equates to 3.314Mt of contained CaF2. Applying the
total Mineral Reserve tonnages for the Nokeng mine of 3.314Mt contained CaF2 to
the respective ZAR/t CaF2 values determined from the recent disposal by Metorex
Limited ("Metorex") of its interest in the Vergenoeg mine, the "fair"
(attributable) value for the Nokeng mine using the market approach was
determined as ZAR374.708m, with an upper and lower valuation range of
ZAR401.892m and ZAR347.524m respectively.
Venmyn, as the Competent Valuator, is of the view that the 25.5% discount to the
"fair" value when comparing the cash flow approach to the market approach is
justified for the following reasons:-
- the Vergenoeg mine is a production property with a long history, compared
to the Nokeng mine which is a development property;
- the Mining Right Application and the Environmental Impact Assessment have
been submitted and accepted but the Environment Management Programme Report
is in process and has not been approved; and
- the funding required for the Nokeng mine has not yet been secured.
The Competent Valuator prefers the results of the cash flow approach to the
market approach since there was only one transaction which was comparable with
the Nokeng mine valuation i.e. the disposal by Metorex of its interest in the
Vergenoeg mine. Consequently, the concluding opinion of value for the Nokeng
mine is based on the cash flow approach as follows:-
- a "fair" value of ZAR279.338m; and
- an upper and lower valuation range of ZAR365.515m and ZAR193.161m
respectively.
The "fair" value of ZAR279.338m equates to an internal rate of return (IRR) for
the Nokeng mine of 20.9%.
Venmyn has approved the information presented above, in writing, to the board of
Sephaku Holdings.
Pretoria
10 December 2009
Sponsor
QuestCo Sponsors (Pty) Limited
Date: 10/12/2009 17:00:06 Supplied by www.sharenet.co.za
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