Overland mining study opts for Andrew and Darcy open pits
THE BOURSE WHISPERER: A mining study being conducted by Overland Resources at its 90 per cent-owned Yukon base metal project in Canada has concluded the company’s best investment returns can be provided by developing separate open pits at the Andrew zinc deposit and the Darcy zinc deposit.
Overland Resources ground holding showing at the Yukon base metal project. Source: Company announcement
The study determined a total of eight million tonnes of ore at an average grade of five per cent zinc and 1.5 per cent lead would be recovered over a seven year mine life.
The mine site development would entail establishment of a 1,000,000 tonne per annum SAG and ball mill crushing, grinding and flotation circuit to produce separate zinc and lead concentrates.
According to Overland the estimated capital cost to develop such an operation is $227 million with a further 20 per cent contingency allowance of $45 million and an estimated pre-strip cost of $20 million.
The mining operation would be expected to produce, annually, approximately 95,000 wet metric tonnes of zinc concentrate grading 58 per cent zinc and 28,000 wet metric tonnes of lead concentrate grading 62 per cent lead for the life-of-mine (LOM).
Concentrates would be transported by truck to the port of Skagway, Alaska where they would be loaded onto bulk carriers and shipped to a customer’s selected discharge port.
The study also ascertained operating costs to deliver the concentrate to the ore loading terminal at Skagway would equate to US$0.70 per pound of payable metal (zinc or lead), inclusive of all mining and processing costs and transport charges to the port, yet exclusive of stevedoring, shipping, treatment and refining costs, taxes, permitting costs, government or community fees and charges.
“The results of this economic evaluation indicate a sustained long term improvement in both zinc and lead metal prices will be required to provide a suitable return to the company and its shareholders from a mine development,” Overland Resources said in its ASX announcement.
“The company remains confident that the outlook for long term metal prices, particularly zinc, are positive and that they will increase over the next three to five years as demand increases following the recovery in global economies and with the anticipated closure of several zinc mines, thereby reducing supply.”
Having said that Overland indicated the results of the recent economic study had given it pause to the current uncertainly in the global equity and financial markets.
Having given these subjects some careful consideration, the company has elected to suspend all further mine permitting work for its Yukon base metal project.
“Importantly there are no expenditure obligations for the company to maintain the claims that host the Andrew and Darcy Deposits in good standing until at least 2026,” Overland explained.
“Hence the company can monitor the global economic situation without risk of losing an extremely valuable asset.”