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Finders ~94%* and earning through expenditure The Wetar Copper Project comprises two high grade deposits, Kali Kuning and Lerokis, which are located within 3km from the coast and suitable for open pit mining. | ||
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Copper mineral species at Kali Kuning and Lerokis are dominated by chalcocite and covellite, which are readily amenable to bacterial assisted leaching, and chalcopyrite which leaches faster at higher temperatures. The project is at the same location as an old gold mine which operated between 1989-1997 and benefits from having existing infrastructure in place, particularly a wharf, camp and roads. During 2009 Finders operated a 5 tonne per day solvent extraction electrowinning (SX-EW) demonstration plant to optimise process design and provide data required for the recently completed Definitive Feasibility Study (DFS). The test heaps are at heights similar to commercial operations worldwide and the SX-EW technology being used is industry standard. SX-EW technology is currently responsible for approximately 22% of the world's copper production. |
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Ore reservesOre Reserves have been independently assessed by Australian Mine Design & Development Pty Ltd in accordance with the JORC Code and set out in Table 1 below, based on a cut-off of 0.5% copper for two pits at Kali Kuning and Lerokis with an overall waste to ore ratio of 0.98:1. | ||
| Wetar Ore Reserves | |||||
| Category | Tonnes (m) |
Grade
% Cu |
Contained Copper (kt) | Contained Copper
Attributable to Finders (94%) (kt) | |
|---|---|---|---|---|---|
| Kali Kuning Pit | Proved | 4.91 | 2.5 | 123 | 116 |
| Probable | 0.85 | 2.2 | 19 | 18 | |
| Sub-Total | 5.76 | 2.5 | 142 | 133 | |
| Lerokis Pit | Proved | 2.05 | 2.4 | 49 | 46 |
| Probable | 0.37 | 2.3 | 9 | 8 | |
| Sub-Total | 2.42 | 2.4 | 58 | 55 | |
| Combined | Proved | 6.96 | 2.5 | 172 | 162 |
| Probable | 1.22 | 2.2 | 28 | 26 | |
| Total | 8.18 | 2.5 | 205 | 193 | |
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The tonnes and grades are stated to a number of significant digits reflecting the confidence of the estimate. Since each number and total is rounded individually the columns and rows in the above table may not show exact sums or weighted averages of the reported tonnes and grades. In addition there is a third deposit, Meron, located 2 km from Kali Kuning. This prospect has a potential size of 0.5 - 1.5 million tonnes at 1 - 3% Cu based on historical drilling results from the previous gold mining operation. This potential is an exploration target which is conceptual in nature and may or may not be converted into a Mineral Resource depending on future exploration and resource modelling work. Meron is not included in the current DFS due to its lack of technical definition, however, engineering plans do recognize the potential for later additional leach ore from Meron and additional leaching space is available in the DFS. Demonstration Plant OperationThe Wetar Demonstration Plant is a full scale SX-EW plant with a production capacity of 5 tonnes copper cathode per day. The plant was commissioned in February 2009. Production statistics to 31 December 2009 are as follows: | |||||
| Production statistics | |||
|---|---|---|---|
|
Jan-Jun 09 |
Jul-Dec 09 |
Total | |
| Ore crushed and stacked (1000 tonnes) | 100 | ||
| Grade (%Cu) | 4.2 | ||
| Contained copper (tonnes) | 4,192 | ||
| Copper cathode produced (tonnes) | 560 | 567 | 1,127 |
| Copper cathode sold (tonnes) | 489 | 416 | 905 |
The demonstration project incorporates all aspects of a heap leach SX-EW operation and forms a key part of the DFS discussed below.
Critical benefits for the Company during operation of the demonstration plant include developing better knowledge and introduction of management systems for logistics, power supply, irrigation and leach recovery rates, acid neutralisation, water balance control and production parameters required to produce LME Grade A copper cathode.
The demonstration stage provided key information to allow completion of the DFS as well as valuable operating experience for newly trained staff in preparation for running the full scale project.
Project Expansion
The DFS on the Wetar Copper Project completed during the period confirmed that the project is economically robust, with a mine life of approximately nine years.
Life of mine operating costs are estimated to be US$1.00/lb Cu and the project has a total funding requirement of approximately US$118 million.
The DFS envisaged three stages of project development as follows:
- Stage 1 - expansion of the current 1,800 tonnes per annum copper cathode demonstration plant to 5,000 tonnes per annum (since increased to 7,000 tonnes per annum). Stage 1 uses expanded heap leach areas all within the footprint of the existing disturbed area from previous mining at the Kali Kuning deposit. It has the distinct advantage of making Finders a profitable copper producer at the earliest opportunity, and of equal importance, it significantly reduces the construction risk in Stage 2.
- Stage 2 - final expansion to 23,000 tonnes per annum copper cathode utilizing the Whim Creek SX-EW plant acquired during the period and a newly constructed pad area in the adjacent Kali Kuning valley.
- Stage 3 - development of the Lerokis pit and haulage of Lerokis ore to provide additional ore feed to the Kali Kuning plant to maintain copper cathode production at 23,000 tonnes per annum.
Key results from the DFS on a 100% project basis are summarized in the following table:
| Definitive Feasibility Study - Key Results | ||
|---|---|---|
| Ore Tonnes1 | 8.4 | million tonnes |
| Strip Ratio | 1.0 | |
| Life of Mine (LOM) Production | 146,000 | tonnes cathode |
| Mine Life | 8.7 | years |
| Average Grade (LOM) | 2.5% |
Cu |
| Average Recovery (LOM) | 71% | |
| Average operating cost (LOM) | US$ 1.00 | per lb Cu |
| Capital -Stage 1 / EDP2 | US$ 12 | million |
| - Stage 2 | US$ 91 | million |
| Working capital | US$ 15 | million |
| Pre-tax Payback (Stages 1 & 2)3 | 1.4 | years |
| Pre-tax NPV10310 | US$ 240 | million |
| Pre-tax IRR3 | 60% | |
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These capital cost estimates include a total of approximately US$34 million in indirect costs included in vendor and contractor quotations, principally for the earth-moving component of the initial pre-strip, pad construction and EPCM (overall management and delivery) for Stage 2.
Finders management considers that significant savings to capital estimates are possible on the basis of its review of the DFS and optimization studies are on-going based on results of the DFS. These include: targeting a reduction in the earthworks in the Kali Kuning valley associated with the disposal of waste from mining operations; reduction in EPCM and indirect capital costs through the use of more Indonesian contractors and improving the cost effectiveness of integrating the Whim Creek process plant into the overall 23,000 tonnes per annum cathode development plan. In addition, a new waste dump site was located and this will significantly reduce the cost of waste material handling.
Stage 1 Expanded Demonstration Plant (EDP)
Stage 1 of the Wetar Project development involves the brownfields expansion of the existing demonstration plant. The Stage 1 expansion of the demonstration plant under the DFS has been optimised and will have an annual production capacity of 7,000 tonnes copper cathode (up from 5,000 tonnes per annum).
The Company is in the advanced stages of planning for the Stage 1 expansion of the Wetar demonstration plant. The scope of work for the EDP includes the following:
- Expansion of the demonstration heap leach pad and construction of the Gold Pit leach pad;
- Integration of the Gold Pit leach pad with the EDP;
- Construction of the Gold Pit ROM pad and associated access road upgrade;
- Relocation of the demonstration crushing plant and agglomerator to the Gold Pit ROM pad;
- Expansion of the demonstration SX-EW Plant from 1,800 tonnes per annum to 7,000 tonnes per annum;
- Expansion of the acid neutralisation plant;
- Construction of the raw water pipeline; and
- Construction of an airfield.
The construction period for Stage 1 is expected to be six months and will commence after obtaining finance and mine permitting.
Stage 2 Expansion to 23,000 tonnes copper cathode per annum
Finders exercised its option to acquire the Whim Creek SX-EW plant located in Western Australia from a subsidiary of Straits Resources Limited in December 2009. Consideration for the SX-EW plant was satisfied by the issue of 13,421,439 fully paid ordinary shares in the Company. These shares represented the total consideration of $5.25 million, being $5.0 million for the plant plus $0.25 million for the option fee.
The Whim Creek SX-EW plant is capable of producing 18,000 tonnes of copper cathode per annum and is well suited to Finders needs for both Stage 1 & 2 expansions of the Wetar Copper Project.
Securing the Whim Creek SX-EW plant represents another major step towards development of the full scale project, by providing certainty of supply for key components of the development for both Stages 1 & 2, as well as significant cost and time savings compared to the purchase of new equipment. The plant has been dismantled and preparations are being made to relocate it to Wetar in the coming months.
Subject to obtaining project finance, full capacity cathode production is expected to be reached within 12 months of Stage 1 completion.
Competent Person Statement
The information in this report that related to exploration potential, mineral resource and ore reserve estimation is the responsibility of Dr Russell Fountain. Dr Fountain is a Director of Finders and a Fellow of the Australian Institute of Geoscientists. Dr Fountain has sufficient experience that is relevant to the styles of mineralisation and types of deposits under consideration and to the activity that he is undertaking to qualify as Competent Person in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) and as a Qualified Person as defined in the AIM Rules. He consents to the inclusion in this report of the matters based on his information in the form and context in which they appear. All assaying of drill core samples was undertaken by the ITS laboratory in Jakarta. ITS is one of the world largest product and commodity testing, inspection and certification organisations. The Jakarta laboratory is ISO 17025 accredited and employs a Laboratory Information Management System (LIMS) for sample tracking, quality control and reporting.