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EUROPA METALS LIMITED - Product Marketing Agreement Toral Pb Zn and Ag Project Spain

Release Date: 11/08/2020 08:05
Code(s): EUZ     PDF:  
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Product Marketing Agreement Toral Pb Zn and Ag Project Spain

Europa Metals Ltd
(Formerly Ferrum Crescent Limited)
(Incorporated and registered in Australia
and registered as an external company in
the Republic of South Africa)
(Registration number 4459850)
(External company registration number 2011/116305/10)
Share code on the ASX: EUZ
Share code on AIM: EUZ
Share code on the JSE: EUZ
ISIN: AU0000014342
("the Company")

Product Marketing Agreement Toral Pb Zn and Ag Project Spain

Europa Metals, the European focused lead-zinc and silver developer, is pleased to announce that it
has signed an agreement with concentrate marketing agent, Conrad Partners (the “Marketing
Agreement”), in relation to the Company’s wholly owned Toral lead, zinc and silver project (“Toral”
or the “Toral Project”) situated in the region of Castilla y León, north-west Spain. Pursuant to the
Marketing Agreement, Conrad Partners has agreed to work with the Company to source commercial
terms for the potential future supply and sale of concentrate products from Toral.

Conrad Partners is a leading Hong Kong based concentrate agent within the industrial metals space,
with a track record of structuring agreements and managing concentrate sales for a series of pre-
production and producing companies worldwide. Further information on Conrad Partners is available
on its website at: www.conradpartners.com.hk

Europa Metals believes it prudent to engage with Conrad Partners at the current time, in order to
access its valuable advice and proven expertise in delivering successful offtake relationships for
global mining companies. The Marketing Agreement is non-exclusive and thereby permits the Board
of Europa Metals to pursue other potential product relationships as appropriate.

Laurence Read, CEO of Europa Metals, commented:
“The Toral lead zinc and silver project has reached the stage where operations can be advanced
through the use of the potential concentrate output from the project. Accordingly, we have been
engaged in a process with the Conrad Partners’ team over recent months, which has included their
review of our project data room. I am delighted that, following this review period, we have now
executed the Marketing Agreement, which serves to appoint Conrad Partners as a marketing agent
for the Toral Project.


“The marketing agreement is also in place ahead of our next round of metallurgical results and a
new resource, both of which we look forward to announcing shortly.”


For further information on the Company, please visit www.europametals.com or contact:
Europa Metals Ltd
Dan Smith, Non-Executive Director and Company Secretary (Australia)
T: +61 417 978 955
Laurence Read, CEO (UK)
T: +44 (0)20 3289 9923
Strand Hanson Limited (Nominated Adviser)
Rory Murphy/Matthew Chandler
T: +44 (0)20 7409 3494

Turner Pope Investments (TPI) Limited (Broker)
Andy Thacker/Zoe Alexander
T: +44 (0)20 3657 0050

Sasfin Capital Proprietary Limited (a member of the Sasfin group)
Sharon Owens
T (direct): +27 11 809 7762

The information contained within this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.

United Kingdom
11 August 2020

Appendix: Further information on the Toral Project

JORC (2012) Mineral Resource Estimate
The Toral Project is a traditional polymetallic (lead-zinc-silver) deposit, which is hosted over 6km of strike length of the prospective Lower
Cambrian Vegadeo Limestone formation, that is regionally mineralised along more than 40km of its extent. The deposit represents a
carbonate hosted, structurally controlled deposit type, demonstrating fault-controlled contact, vein, carbonate replacement and breccia
styles of mineralisation situated close to and along the boundary between footwall slates and hanging wall limestones and dolomites. Sub-
ordinate lead-zinc-silver mineralisation also occurs wholly within the hanging wall limestones and dolomites, approaching the contact with
the slates.

Historic drill hole re-logging undertaken by the Company in 2018 provided improved geological, structure, alteration and
weathering/oxidation information, which was incorporated into the interpreted geological and mineralised models for the current JORC
(2012) mineral resource estimate. Surface mapping and remote data interpretation by Europa Metals has enabled the development of an
interpreted fault model, also incorporated into the aforementioned updated geological and mineralised models used in the mineral resource
estimate.

The latest mineral resource estimate (as of 25 October 2019) for the Toral deposit comprised, at a 4% cut-off:

     •       An Indicated resource of approximately 2.7Mt @ 8.9% Zn Equivalent (including Pb credits), 5% Zn, 4.2% Pb and 32g/t Ag
                  o    Including 130,000 tonnes of zinc, 110,000 tonnes of lead and 2.8 million ounces of silver
     •       An Inferred resource of approximately 16Mt @ 7.2% Zn Equivalent (including Pb credits), 4.5% Zn, 2.9% Pb and 22g/t Ag
                  o    Including 690,000 tonnes of zinc, 450,000 tonnes of lead and 11 million ounces of silver
     •       Total Resources of approximately 18Mt @ 7.4% Zn Equivalent (including Pb credits), 4.5% Zn, 3.1% Pb and 24g/t Ag
                  o   Including 830,000 tonnes of zinc, 570,000 tonnes of lead and 14 million ounces of silver

The latest resource update identified potentially economic mineralisation ranging from surface to approximately 1,100m below surface.
The block model currently extends for a strike length of 3,600m and is still open to the east and west along strike and also at depth where
it has not yet been closed off.


    Cut-Off                                                                                   Contained        Contained         Ag Troy
                    Tonnes                   Zn Eq        Zn Eq       Zn     Pb       Ag
     Zn Eq                      Density                                                       Zn Tonnes        Pb Tonnes           Oz
                   (Millions)                (Pb)%      (PbAg)%       %      %        g/t
   (PbAg)%                                                                                      (000s)           (000s)         (Millions)

                                                                 Indicated
         6            2.1           3          10          11          6     4.7      35          120              100             2.4
         5            2.3          2.9        9.6          10          5     4.5      34          130              100             2.6
         4            2.7          2.9        8.9          9.5         5     4.2      32          130              110             2.8
         3            3.0          2.9        8.3          8.9         5     3.9      31          140              120             2.9
                                                                  Inferred
         6            11           2.9        8.4          8.9         5     3.5      26          550              360             8.8
       5             12           2.9         7.9         8.4         5     3.2      24          610              400             9.7
       4             16           2.9         7.2         7.6         5     2.9      22          690              450             11
       3             18           2.9         6.7         7.1         4     2.7      21          740              480             12
                                                                   Total
       6             13           2.9         8.7         9.2         5     3.7      28          670              460             11
       5             15           2.9         8.2         8.6         5     3.4      26          740              510             12
       4             18           2.9         7.4         7.9         5     3.1      24          830              570             14
       3             21           2.9         6.9         7.3         4     2.9      22          880              600             15
                                                    Transitional Oxide Material Total
       4             3            2.9         5.8         6.3         3     3.2      27           87              97              2.6
                                                    Unweathered Fresh Rock Total
       4             15           2.9         7.8         8.2         5     3.1      23          740              470             11

Table 1: Summary of mineral resources for the Toral property reported at a 4.0% Zn equivalent cut-off grade (including Pb and Ag
credits) and estimated grade and tonnages at the various cut-off grades. Figures are rounded to reflect the accuracy of the estimate and
as such totals may not cast.

Notes for table 1:
1. No mineral reserve calculations have been undertaken. Mineral resources that are not mineral reserves do not have demonstrated
   economic viability.
2. Numbers are rounded to reflect the fact that an Estimate of Resources was reported as stipulated by JORC 2012. Rounding of
   numbers may result in differences in calculated totals and averages. All tonnes are metric tonnes.
3. Zn equivalent calculations were based on 3 year trailing average price statistics obtained from the London Metal Exchange and
   London Bullion Market Association giving an average Zn price of US$2,780/t, Pb price of US$2,200/t and Ag price of US$16.4/oz.
   Recovery and selling factors were incorporated into the calculation of Zn Eq values. It is the Company’s opinion that all the elements
   included in the metal equivalents calculation (Zinc, Lead and Silver) have a reasonable potential to be recovered and sold.
4. Zn Eq (PbAg)% is the calculated Zn equivalent incorporating silver credits as well as lead and is the parameter used to define the cut-
   off grade used for reporting resources (Zn Eq (PbAg)% = Zn + Pb*0.935 + Ag*0.018).
5. Zn Eq is the calculated Zn equivalent using lead credits and does not include silver credits (Zn Eq = Zn + Pb*0.935).
6. The mineral resource estimate set out above for the zinc, lead and silver mineralisation in the Toral Project area is based on a 3D
   geologic model and wireframe restricted block model that integrated the exploration work on the Toral Project up to 30 September
   2019. The block model used uniform cell size of 50x4x50m to best suit the orientation of the mineralisation and sample spacing. The
   block model was rotated by 20° in plan view to best match the trend of mineralisation. Sub cells were applied to better fit the wireframe
   solid models and preserve accurate volume as much as possible. Cells were interpolated at the parent block scale using an ordinary
   kriging.
7. Top cuts were applied to the composite assay grades for 20% Zn, 17% Pb and 125 g/t Ag, any value above the top cut value was
   reduced to that grade.
8. The Indicated and Inferred mineral resource category for the Toral lead-zinc-silver project set out in Table 2 (at cut-off grades less
   than 4% Zn Equivalent) comply with the resource definitions as described in the Australasian Code for the Reporting of Exploration
   Results, Mineral Resources and Ore Reserves. The JORC Code, 2012 Edition. Prepared by: The Joint Ore Reserves Committee of
   The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC).
9. The tonnes and grades reported at a cut-off grade of 3% Zn equivalent are below the economic cut-off grade of 4% and as such
   should not be considered mineral resources, they are shown here for comparison purposes only.

Bulk density
The resource database contains 2,373 bulk density measurements, with a total of 177 within the mineralised wireframe.

The mean for the mineralised domain transitional zone is 2.75 g/cm3 and the mean for the mineralised domain fresh material is 2.85 g/cm3.
A broad linear relationship between Pb+Zn grade and bulk density was identified from scattergrams and the formula 2.75 + 0.02(Pb+Zn%)
used to estimate block density within the block model.

Second Phase metallurgical test results from Wardell Armstrong International (“WAI”) (April 2020)
The metallurgical results contained arise from a testing programme that culminated in a second locked cycle test. Such testwork achieved
the following recoveries:
               o 83.7% Pb recovery to a 60.0% Pb concentrate;
               o 87.1% Ag recovery to 1,350ppm Ag within Pb concentrate; and
               o 77.0% Zn recovery to a 59.1% Zn concentrate.
These results show that the amount of lead recovered has remained broadly unchanged versus the lead recoveries obtained from the first
locked cycle test. However, there has been a 2.5% increase in the Pb concentrate grade and zinc recovery has increased by 6.3% with a
3.3% increase in Zn concentrate grade.

Economic highlights from the Company’s selected development scenario
Estimated economic forecasts for the Toral Project based on the current level of work (+/-30%) from the Scoping Study (December 2018-
excludes subsequent work including resource upgrades, metallurgical analysis, geotechnical studies) comprise:
•   US$110 million net present value (NPV) using a discount rate of 8%;
•   24.4% internal rate of return (IRR);
•   Estimated US$33 million CAPEX for a proposed 450ktpa design capacity plant, including associated auxiliary costs, with infrastructure
    being situated near portal entrance on the north side of the deposit;
•   Estimated total CAPEX of US$110 million;
•   US$25 per tonne indicative OPEX processing cost at steady state conditions;
•   US$36 per tonne indicative OPEX mining cost utilising mechanised cut and fill; and
•   15-year production plan, with significant potential for extension.

Basis for announcing economics

The factors that lead the Company to believe that it has a reasonable basis for announcing a production target and forecast financial
information are detailed in the Scoping Study and can be summarised as follows:

Three conceptual underground mining development and production scenarios were considered and developed throughout the Scoping
Study, resulting in the identification of a preferred scenario, highlights from which are set out below:
•   decline ramp access to the north of the deposit, targeting mine production within the higher-grade core towards the centre of the
    planned mining blocks;
•   entry to mine via a principal decline reaching various levels;
•   series of internal mining inclined ramps constructed to access levels;
•   mechanised cut and fill (MCAF) mining method proposed;
•   4x4 metre mine standard development size;
•   a ventilation raise would be drilled (raise-bored) to provide both adequate ambient conditions underground and a second, emergency
    means of access/egress into the mine;
•   ore transported to a flotation process plant by conveyor or haul truck from the mine and crushed to a suitable product for milling;
•   milled ore floated by standard flotation technology to provide lead and zinc concentrate, with silver probably reporting to the lead
    concentrate for sale as a combined product; and
•   4% Zn Eq cut-off used with potential for mine life extension.

Date: 11-08-2020 08:05:00
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