Thor Mining PLC (AIM, ASX: THR) Upgraded Definitive Feasibility Study – Molyhil

Further to its announcement of 21 August 2018, the Board of Thor Mining Plc (“Thor” or the “Company”) (AIM, ASX: THR) is pleased to announce results of an upgraded Definitive Feasibility Study (DFS) for the Molyhil tungsten and molybdenum project in the Northern Territory of Australia.

The study outcomes show materially enhanced financial returns and early payback of capital as a result of process improvements and longer operating life at the Molyhil open pit, with significant further upside potential from subsequent underground mining at Molyhil and from the nearby Bonya tungsten deposits.

 

Study Highlights

·     Total project revenue of in excess of A$500million over the current seven year life of mine.

·     EBITDA of A$239 million with project payback period of less than 18 months after payment of royalties and taxation.

·     All equity Net Present Value (NPV) of A$101 million at a discount rate of 5% with an Internal Rate of Return (IRR) of 59%, both after payment of taxation and royalties.

·     Project finance requirement of US$43 million.

·     Seven year mine life with first production targeted for early 2020, utilising simple open cut mining operation and conventional mineral processing techniques.

·     Substantial upside potential from subsequent underground mining at Molyhil and from the nearby Bonya tungsten deposits.

Mick Billing, Executive Chairman of Thor Mining, commented:

“I am delighted to release the results of the Definitive Feasibility Study update that shows a Net Present Value exceeding A$100 million and demonstrates the substantial value this project holds for the Company and its shareholders.”

“Of particular note, the sole focus of this study is on the open pit operation outlined in the ore reserve, and does not account for what the board believe will be significant additional mine life generated from the potential underground mining operation and the additional ore potential from the nearby Bonya deposits, as previously announced.”

“The Company now has an updated and upgraded Definitive Feasibility Study, incorporating the work over recent years at Molyhil with which it can continue to engage with third parties who have expressed a specific interest in the project.”

“Molyhil is 100% owned by Thor Mining and is construction ready subject to submission of an acceptable Mining Management Plan and finalisation of project level mine construction financing. Upon finalisation of project level financing, (which the Company hopes to conclude in the next few months), the construction phase for Molyhil is estimated at 12 months.”

Molyhil Definitive Feasibility Study

Following the publication in January 2018 of an updated Open Cut Ore Reserve Statement for Molyhil, Thor has completed the necessary mining and production schedules and capital and operating cost estimates, and incorporated these results into the feasibility model, along with previously published parameters (refer attachment “A”), to produce an optimised and positive feasibility study outcome with a mining and processing operation over a seven year life.

 

A full copy of the DFS shall be available on the Thor Mining website within one week of this announcement.

 

The results of the study show:

·    EBITDA returns totalling A$239 million along with post tax project payback period inside 18 months from first production, accelerated by very high tungsten grades in the first 2 years of open cut mining (Figure 1).

·    All equity Net Present Value (NPV) of A$101 million at a discount rate of 5% (A$77million @ 10%) after tax and royalty payments.

·    All equity Internal Rate of Return (IRR) of 59% after tax and royalty payments.

·    Production cost of US$90/mtu concentrate (after deduction of molybdenum bi-product credits), ensuring Molyhil will be a very low cost tungsten producer.

·    Mine life of seven years, derived from the updated open cut ore reserve statement published in January 2018.

·     A project finance requirement of US$43million comprising total capital expense of A$69 million (US$52 million), offset by approximately A$11 million for mining and power generation equipment and camp facilities, which are suitable for capital finance. Discussions with providers of this style of finance are at an early stage. 

 

A link to Figure 1., a graphical display of revenue and expenditure is shown below:

 

 

The feasibility study has been prepared by Thor Mining PLC using data and information supplied by third party consultants and suppliers for key components, including:

Resource Estimates

RPM Global

Open Cut Ore Reserve Statement

AVCS Pty Ltd

Mine Planning

AVCS Pty Ltd

Capital Costs

Rosetta Stone Ops

Operating Parameters & Costs

Various Suppliers, Thor

Metallurgical Processes & Outcomes

KYSPY Investments Pty Ltd

Environmental Studies

Keith Lindbeck & Associates

Economic Model

Mazars Global Infrastructure Finance (Australia) Pty Ltd

 

The feasibility study uses the results and new input parameters generated by these additional and comprehensive workstream conducted over the last 6 months.

While most of the consultants involved can be considered as independent, a portion of the Report, including the economic analysis has been authored by the Company. The work as a whole is not considered independent.

The feasibility study uses the results and new input parameters generated by these additional and comprehensive workstream conducted over the last 6 months.

While most of the consultants involved can be considered as independent, a portion of the Report, including the economic analysis has been authored by the Company. The work as a whole is not considered independent.

Table A: Key Production Metrics

Total

Yr 1

Yr 2

Yr 3

Yr 4

Yr 5

Yr 6

Yr 7

Yr 8

Mining

Ore Mined

‘000t

3,543

488

499

315

982

566

692

Waste Mined

‘000t

27,053

3,542

3,898

7,734

6,528

4,330

1,021

Processing

Ore Crushed & Sorted

‘000t

3,543

358

531

377

531

531

531

531

153

Ore treated

‘000t

2,152

256

350

225

329

314

313

283

82

Feed Grade WO₃

%

0.29

0.68

0.42

0.25

0.29

0.22

0.21

0.12

0.12

Feed Grade Mo

%

0.12

0.15

0.12

0.11

0.12

0.12

0.16

0.09

0.09

WO₃ Recovered

T

8,583

2,043

1,857

786

1,299

988

943

517

149

Mo Recovered

T

3,133

382

462

292

476

461

613

347

100

Cautionary Statement:

The Ore Reserve estimate does include minor quantities of Inferred Resources and unclassified mineralisation that have resulted from the formation of an SMU and/or inclusion of edge dilution across the Indicated Resource block boundary. This additional material is ~ 4% of the estimated reserve mass.  There is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realised.

 

Commodity Outlook

Tungsten (chemical symbol W) is a vital mineral with multiple applications & few substitutes and is considered a strategic commodity in the USA, China & the European Union.  It is used in manufacture of hard metals, steels, alloys and mill products.

In February 2018 the United States Department of the Interior confirmed that tungsten remains on the Federal Register of commodities classified as critical by the Unites States Government.

The outstanding & unique physical properties of tungsten (melting point/hardness/tensile strength) and lack of substitutes, makes tungsten critical in industrial, oil & gas, mining and agricultural applications.

Tungsten is typically priced according to metric tonne units (mtu) of APT, where one mtu is equal to 10 kg of WO3.  APT and concentrate prices are mainly based on quotations published twice weekly by London’s Metal Bulletin, Argus Metals and other trade journals (ITIA).

Molybdenum (chemical symbol Mo) is a key component of many of the higher quality stainless steels, along with nickel, and can be substituted for portion of the nickel component when nickel prices are elevated.  In consequence, when nickel prices climb, often molybdenum pricing will follow.

Much of global molybdenum supply is as co-product from a number of large porphyry copper mining operations.  Supply, therefore, can be somewhat non-elastic with over-supply in times where demand is weak, and conversely under-supply when demand is high.

A link to the tungsten and molybdenum price history graph is shown below:

 

Read: Full RNS Update

 


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