Release: Herald Resources: Update definitive FS results for Dairi zinc/lead project
Thursday, January 17 2008 - 08:11 AM WIB
As previously stated, the DES is based purely on the Anjing Hitam deposit, with no account taken of other deposits at the Project such as Lae Jehe (Resources of 6.5MT @ 11% Zn, 6% Pb) which is currently the subject of a pre-feasibility study.
Given these positive results, the Board of Herald is confident of the Project?s ability to deliver strong returns for shareholders.
Key parameters and highlights from the updated DES are set out below:
Post production after tax cashflows: US$1,051 m
Net present value @ 9%: US$416m
Internal rate of return: 48%
Cash cost / lb Zinc (after lead credits): US$0.15
Quantity of ore treated: 6,530,000 tonnes
Head grades: 14.4% Zn; 8.7% Pb
Treatment rate at full capacity 1,000,000 tonnes per annum
Mine life: 7 years
Capital cost: US$227m
Already spent: US$50m
Remaining: US$1 77m
Metal prices used per tonne (Ib)
Zinc: US$2,390 ($1.08)
Lead: US$2,565 ($1.16)
Note: The above results should be read in conjunction with the attached Explanatoiy Notes.
Herald Chairman Terry Allen said the review re-affirmed the Company?s belief that Dam is an outstanding zinc-lead project.
?These figures are based solely on the Anjing Hitam deposit where we have reserves of 6.5 million tonnes grading 14% zinc and 9% lead,? said Mr Allen.
?We have an initial mine life at Dam of 7 years but are very hopeful this can be extended substantially with additional mill feed from other deposits in the area?.
?For example, our nearby Lae Jehe deposit, which has Resources of 6.5 million tonnes at 11% zinc and 6% lead, (Indicated 4.6MT @ 11.6% Zn, 6.2% Pb & Inferred 1.9MT @ 10.6% Zn, 5.9% Pb) is presently the subject of a pre-feasibility study, with positive metallurgical tesiwork already to hand and mining studies ongoing.?
Mr Allen said the Company?s board was finalising its Target?s Statement in relation to PT Bumi Resources Tbk?s hostile and unsolicited offer for shares in Herald.
The Target?s Statement with the Directors? recommendations will be sent to shareholders by the 23rd of January 2008 and shareholders are advised to TAKE NO ACTION with respect to the PT Bumi offer before they receive and have considered the recommendation in the Target?s Statement.
EXPLANATORY NOTES TO DFS RESULTS
General
- All monetary figures in US$ unless otherwise stated
- All figures prepared on an ungeared / 100% equity basis
- All figures are 100% project totals
Capital costs
Total estimated capital costs for the project have increased by some US$6m from US$221 m to US$227m since the last guidance by the Company on 28 September 2007, which followed a re-estimate of costs as advised by project engineers Ausenco. Upon reviewing the Ausenco re-estimate after that guidance, the Company found no significant variations. As these re-estimates are costly and time-consuming to prepare, it is not planned to do any further re-estimates until new information comes to hand which would necessitate such a further re-estimate, although it would not be unexpected for there to be additional increases given current market conditions and if delays due to lack of forestry approval are ongoing.
The US$6m increase above is limited to a review of estimated costs of exclusions from the Ausenco scope estimates, re-estimate of underground development costs, owners costs and delay costs to 31 January 2008.
Mining costs, tonnes & grades
The mining costs and schedules that have been adopted are based on the mining model prepared by independent consultants AMC for the DFS, updated to include current contracted capital and operating costs.
The Company is currently developing a new mining model, which improves the management of geotechnical issues and continues to improve mine safety Access drives to the ore body have been increased which will allow improved extraction of the ore body and minimize dilution. While this model is incomplete, however some facets from this model that are complete have been included in the AMC model where compatible and practical. An example is the return airway that will now have 2 main ventilation fans situated in an underground excavation (tunnel), rather than stationed outside a ventilation shaft.
A fresh air intake airway was also designed into the model to allow for a second egress and to provide uncontaminated air to the lower (room and pillar) section of the mine. The main decline was designed closer to the ore body to minimize waste capital development and reduce capital costs.
Metal prices
Long term metal prices (5 years) have been applied, as supplied by a leading international bank utilizing and extrapolating the official forward curve of the London Metal Exchange. (end of release)