The results of new studies have given Metals X Limited (ASX: MLX) a positive to its outlook for the Renison Tin Operation in Tasmania.
An Area 5 Mining Optimisation Study and updated Life-of-Mine Plan for Renison, in which Metals X has a 50% interest through the Bluestone Mines Tasmania Joint Venture (BMTJV), have expanded the mine life of the Tasmanian operation to 10 years.
Metals X CEO, Mike Spreadborough, said the Area 5 Ore Reserve has now been declared at 3.30 Mt at 1.87% tin (Sn) for 61,900 tonnes of contained tin, with total Renison Ore Reserve increasing by 46% to 120,300 tonnes of contained tin.
Area 5 is an outstanding addition to our already substantial Ore Reserves at Renison,” Mr Spreadborough said.
“With a mine life of 10 years, 82% of which is at Proved and Probable Ore Reserve status, an increasing production profile driven by the high- grade Area 5, and an operating margin expected to fund the required investment, Renison is well set to deliver substantial returns to Metals X over coming years.
“With completion of the Area 5 Study and 2020 LOM Plan, the operational focus is now on detailed mine design, engineering and execution planning for the Area 5 Project, and continued metallurgical and margin improvement.”
Studies have also identified:
- Two-year Area 5 project capital investment of $50 – $55 million into ventilation, backfill, electrical and pumping infrastructure, as well as additional mobile equipment together with additional asset integrity sustaining capital, is funded by operating cashflow based on modelled tin prices of A$23,500 – A$24,500 per tonne of tin.
- All-in sustaining costs, initially $19,000 – $20,000 per tonne of tin during ramp-up, reducing to $16,500 – $17,500 per tonne of tin from FY25 when steady state production of over 10,000 tonnes of tin per annum is achieved.
- Total cash flow of $300 million, EBITDA of $476 million and net present value (8% discount rate) of $185 million (all Metals X’s 50% share on a pre-tax, pre-debt basis) achieved at LOM average price of A$24,800/t Sn (Spot price at 15 June 2020 was A$24,970).
The current Ore Reserves represent only 47% of defined Measured and Indicated Mineral Resources. The 2020 LOM Plan assumes $5 Mpa expenditure for the first five years for replenishment of Ore Reserves and to maintain the 10-year mine life through resource definition and extensional exploration drilling.
The high-grade Bell 50 Mineral Resource extension to Area 5 represents additional upside as does the Leatherwood, South Bassett and Regnans Trends.