MARKET RELEASE 9 th July 2013

Transcription

1 ACN MARKET RELEASE 9 th July 2013 ROCKLANDS COPPER PROJECT (CDU 100%) TEST CRUSHING TO INVESTIGATE POSSIBILITY OF PRODUCING PRODUCT SUITABLE FOR DIRECT SHIPPING ORE (DSO) HAS BEGUN INTERIM PRODUCT LIKELY TO BE A COMBINED CHALCOCITE & NATIVE COPPER CONCENTRATE, WITH COBALT, GOLD & MAGNETITE CREDITS, TO BE SHIPPED DIRECT TO SMELTERS IN CHINA CRUSHING OF HIGH-GRADE NATIVE COPPER AND CHALCOCITE ORE THROUGH THE COMPANY S SANDVIK CRUSHING CIRCUIT, TO INVESTIGATE THE POSSIBILITY OF PRODUCING A CONCENTRATE SUITABLE FOR DSO HAS PROVED HIGHLY-SUCCESSFUL, WITH LESS THAN EXPECTED GANGUE ROCK RESULTING IN POTENTIALLY HIGHER CONCENTRATE GRADES. Figure 1: Examples of native copper masses being liberated during test-crushing through the Company s mobile crushing circuit...chalcocite ore (blue-grey) also rich in native copper can be seen in the background. It appears a DSO concentrate of 20% Cu or more will be possible that includes both chalcocite and native copper species. The DSO will also include cobalt, gold and magnetite credits. Unit 34, Brickworks Annex,19 Brolga Avenue, SOUTHPORT 4215 Phone: Facsimile: admin@cudeco.com.au

2 Figure 2: Crushing commences - final crush size after stage-2 of the crushing process using the Company s mobile crushing circuit. It appears a DSO concentrate of 20% Cu or more will be possible that includes both chalcocite and native copper species in the interim. The DSO will also include cobalt, gold and magnetite credits. Test Crushing Has Begun to Investigate the Possibility of Producing Product Suitable for Direct Shipping Ore (DSO) CuDeco has visited several smelters in China accompanied by representatives of Sinosteel our EPC Contractor and major shareholders of CuDeco, to discuss early sales of native copper concentrate and/or the possibility of a DSO product that could possibly be available well before the Rocklands Process Plant is fully operational. The smelters are particularly interested in the prospect of obtaining a high-grade concentrate of copper metal in the form of native copper metal concentrate from Rocklands grading 90-95% copper metal, which like scrap copper is likely to command premium prices at the smelters over typical copper concentrates. Significant interest was also extended to the possibility of supplying an interim DSO product that contains both native copper and chalcocite ore types. CuDeco has off-take agreements in place for its primary copper ore concentrates, but to date has not committed its native copper product in order to maintain flexibility regarding the path to market for what amounts to a premium copper concentrate. The Rocklands Process Plant has been designed specifically to treat native copper in all fraction sizes Page 2

3 Figure 3: Examples of native copper masses being liberated in the first-stage of test-crushing through the Company s mobile crushing circuit...chalcocite ore also rich in native copper can be seen in the background. It appears a DSO concentrate of 20% Cu or more will be possible that includes both chalcocite and native copper species. The DSO will also include cobalt, gold and magnetite credits. expected at Rocklands, with German designed and manufactured alljig native metal recovery systems included at a cost of more than A$20m. This same alljig process plant is used globally by companies for the recovery of primary and native metals including BHP Billiton and Anglo American. The process plant can treat up to 20% Cu (200kg per tonne Cu) in the form of native copper, whilst concurrently processing oxide, supergene and primary sulphide ores in a continuous, single-circuit copper recovery process flow-sheet. As an interim measure to generate early cash-flows whilst the Rocklands Process Plant is being completed, trials are underway to use the Company s mobile crushing circuit to produce a concentrate product suitable for use as DSO. Obtaining the required ore is a relatively simple process of visual beneficiation within the pit. Suitable highgrade ore is set aside during mining, then sent to a temporary DSO stockpile for crushing and later shipment. Containers to export a trial shipment of DSO have been purchased and are in-transit to site. High-grade native copper and chalcocite ore is currently being crushed through the mobile crushing circuit and screened out using our Sandvik jaw crusher after two passes. We believe that once the ore is Page 3

4 Figure 4 (left to right): Pit geologist (below drill rig in distance) identifies high-grade ore suitable for DSO; Rotary Air Blast (RAB) drilling over the high-grade chalcocite zones helps define geological and/or grade boundaries and; drill chips logged and assayed in 3m composites. processed though the Rocklands Process Plant large TRIO crushing circuit, which is a three stage Jaw and two rolls crushers, the product will be significantly cleaner than from the mobile crushing circuit, with less attached gangue rock material, and should increase the interim DSO concentrate grades even further. It is important to note these are interim measures to generate early cash-flows from ore identified as suitable for use as DSO with little if any beneficiation, other than visual during mining. It is anticipated DSO grades will be over 20% copper, and contain significant credits for cobalt, gold, pyrite and magnetite. Resource Update The company recently embarked on a new drilling programme at Rocklands South, aimed at delineating an unexpected high-grade copper zone that was identified from pit dewater drilling in late This programme will be incorporated into an updated resource estimate for Rocklands, that will also include the inclusion of drilling at Fairfield and more than 50,000m of drilling that has been completed since the May 2011 resource estimate. Early Production Options The company is also looking at two options for the mining and production, due to the quantity of mining equipment that the company owns purchased during the last GFC. Currently the company is mining approximately 40,000 tonnes of ore and waste per day on a single 12 hours day shift, utilising less than 50% of our mining fleet. The current mining schedule employs a mining rate 1.5 times that required, (ie. 4.5m tonnes of ore per annum is mined instead of 3mt), which facilitates high-grading the front end of the mill feed process. Extensive economic studies show that this approach results in a net increase in revenues even after the higher costs of mining, but in doing so also results in the added bonus of leaving free ore at surface on the stockpiles for later processing, resulting in significantly reduced mining costs in later years. Accelerated aging studies show negligible loss in recoveries of stockpiled ore with a simple adjustment of the flotation regime. The higher mining rate and stockpiling scenario also provides additional benefits, including maintaining a contingent ore supply should the pit be inaccessible for any reason, and/or alternative monetisation options such as crushing and simple beneficiation of stockpiled ore to concentrate grades as a separate programme to ore being directly fed into the process plant. The Crushing circuit is capable of crushing up to 5 million tonnes of ore per annum. Page 4

5 Figure 5 (left to right): Sampling of crushed native copper ore. The current strategy, based on the increased mining rate, is to mine the first 30mt of ore in just 6 years instead of 10 years. After high-grading the ore-feed to the mill, remaining ore will be stockpiled, resulting in 12mt tonnes of ore on the stockpiles at the end of year 6. At this point we have several options; Decommission the mining fleet, retaining only required plant to shift the remaining free ore from the stockpiles to the ROM pad, resulting in significant cost reductions. Keep mining past year 6 and continue to high-grade the mill feed as per the first 6 years - requires amendment to the EA. Increase the process plant capacity to 5 million tonnes per annum or more and subsequently extend mining beyond 10 years based on our measured and indicated resource of 97.9 million 0.96% CuEq (0.4% CuCoAu cut-off - see notes to the resource statement from page 6) - requires amendment to the EA. The company is also investigating the option of beneficiation mined ore prior to mill-feed, utilising specially designed ore-sorters that will at least double the grade of mill-feed ore presented to the mill. Whilst these ore-sorters are capable of generating beneficiated ore to well over 20%, the plan is to limit this to between 2.5-3% head-grades by blending high-grade native copper and supergene ore from Las Minerale and Rocklands South, with run-of-mill ore from the remainder of the pit. Associated high-grade coarse native copper will be additional to the above, as the Rocklands plant is capable of accepting head grades up to 25% Cu (20% native copper and 5% other ore types concurrently). In the interim, the ore sorters can be used to beneficiate any high-grade ore coming directly from the pit to generate a Direct Shipping Ore (DSO) product for early sales, either using the Company s mobile crushing circuit, or soon to be commissioned three-stage Crushing Circuit. Recent test-crushing of native copper ore through the mobile crushing circuit exceeded all expectations and was completely incident free, further enhancing the possibility of generating near-term DSO ore. The company is currently in discussions with smelters in relation to this possibility. Yours faithfully Wayne McCrae Chairman. Page 5

6 Resource Statement reported according to JORC guidelines The resources for the Rocklands area at May 2011 have been estimated and are tabulated below at various cut-off grades. The tables need to be read in conjunction with the Notes to the Resource Estimate (see following page). Table 16 Measured Resource Estimate May 2011 at various cut-off grades , Table 17 Indicated Resource Estimate May 2011 at various cut-off grades Table 18 Total Measured and Indicated Resource Estimate May 2011 at various cut-off grades Table 19 Inferred Resource Estimate May 2011 at various cut-off grades Table 20 Total Measured Indicated and Inferred Resource Estimate May 2011 at various cut-off grades Page 6

7 Notes to the Resource Estimate: The Rocklands tenements are owned 100% by CuDeco Limited (ASX:CDU). The mineral resource estimate is based on all 3,793 drill holes (306,671.2m) including 305 diamond drill holes (69,521.0m) and 1,458 RC drillholes (225,207.5m). MA conducted a review of the data and sample collection of the historic drilling. MA has reviewed the EAM Procedures and visited site on 4 occasions during the course of the current Drill Programme. The geological resource is constrained by domains consisting of 3D models. The mineralised domains were digitised on cross sections defining boundaries for High-grade Cu as >0.5%Cu, Low-grade Cu as >0.1% Cu and Cobalt as >100ppm Co. The domains are nested. There are a total of 36 currently defined domains. Drill intercepts within each lode are flagged in a database table and composited for each assay element separately to 2m downhole giving 39,157 informing two metre composites for Cu in the domained areas and 20,780 in the undomained from drillholes. A grade cap was applied to informing composites to remove outliers. Cu grades were capped at 23%, Co grades at 5,000ppm, Au grades at 10ppm and Magnetite% at 44%. Density was determined on 3,002 samples throughout the ore body using the e\immersion method. Bulk density is related to the oxidation state of the rock and extent of mineralisation. The geologists have logged three oxidation states between totally oxidised to un-oxidised fresh rock. The oxidation states of each block were defined by wireframes based on sectional interpretation. Density was assigned based on the weathering profile and copper and magnetite grades. Block model parent block size selection of XYZ 50 x 8x 20m was chosen The estimation block size was varied by resource category down to the sub-block size of 12.5 m (E) by 2 m (N) by 5 m (RL) was used against all wireframes for volumes. The model was screened for topography by block. Grade was interpolated into a constrained block model in 3D space by domain using Ordinary Krige estimation with parameters based on directional variography by domain. Estimates were validated against informing samples and with nearest neighbour and inverse distance squared. The block model was also checked against recent CuDeco Drilling. Informing samples were composited to 2 m within domains and 10 m in undomained areas. A minimum of 10 composites for both a maximum of 20 samples for domained and 10 samples for undomained. Resources have been classified as Measured, Indicated and Inferred for the domained areas based on the number of informing samples, average distance and the kriging variance for each block. All undomained blocks are classed as Inferred. Lower cutoff grade of 0.2% CuCoAu and only blocks above -250m RL were applied to blocks in reporting the resource estimates in a range of cut-off grades. Magnetite has not been included in the cut-off grade as it is not directly related to the mineralisation, but will be produced as a by-product so is included in the final Block Model report and estimates. Lower cutoff grade of 0.2% Cu and only blocks above -250m RL were applied to blocks in reporting the resource estimates in a range of cut-off grades. Copper equivalents have been calculated assuming average metal prices and recoveries. A copper price of USD2/lb and recovery of 95%; a cobalt price of USD26/lb and recovery of 90%; a gold price of USD900/oz and recovery of 75% and a magnetite price of $US185/t. The CuCoAu for selection of cut-off grades does not include the magnetite, but it is included for calculation of final metal equivalents, as follows. It is the company's opinion that all the elements included in the metal equivalents calculation have a reasonable potential to be recovered. CuCoAu% = cu_perc_krig + co_ppm_krig* au_ppm_krig* CuEqu% = cu_perc_krig + co_ppm_krig* au_ppm_krig* mag_perc* It is the company's opinion that all the elements included in the metal equivalents calculation have a reasonable potential to be recovered. Reported Tonnage and grade figures have been rounded off to the appropriate number of significant figures to reflect the order of accuracy of an inferred estimate. Minor variations may occur during the addition of rounded numbers. Page 7

8 Competent Person Statement The information in this report that relates to Exploration Results is based on information compiled by Mr Andrew Day. Mr Day is employed by GeoDay Pty Ltd, an entity engaged, by CuDeco Ltd to provide independent consulting services. Mr Day has a BAppSc (Hons) in geology and he is a Member of the Australasian Institute of Mining and Metallurgy (Member #303598). Mr Day has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ores Reserves. Mr Day consents to the inclusion in this report of the information in the form and context in which it appears. The information in this report insofar as it relates to Metallurgical Test Results and Recoveries, is based on information compiled by Mr Peter Hutchison, MRACI Ch Chem, MAusIMM, a full-time executive director of CuDeco Ltd. Mr Hutchison has sufficient experience in hydrometallurgical and metallurgical techniques which are relevant to the results under consideration and to the activity which he is undertaking to qualify as a Competent Person for the purposes of this report. Mr Hutchison consents to the inclusion in this report of the information, in the form and context in which it appears. Rocklands style mineralisation Dominated by dilational brecciated shear zones, throughout varying rock types, hosting coarse splashy to massive primary mineralisation, high-grade supergene chalcocite enrichment and bonanza-grade coarse native copper. Structures hosting mineralisation are sub-parallel, east-south-east striking, and dip steeply within metamorphosed volcanosedimentary rocks of the eastern fold belt of the Mt Isa Inlier. The observed mineralisation, and alteration, exhibit affinities with Iron Oxide-Copper-Gold (IOCG) classification. Polymetallic copper-cobalt-gold mineralisation, and significant magnetite, persists from the surface, through the oxidation profile, and remains open at depth. Notes on Assay Results All analyses are carried out at internationally recognised, independent, assay laboratories. Quality Assurance (QA) for the analyses is provided by continual analysis of known standards, blanks and duplicate samples as well as the internal QA procedures of the respective independent laboratories. Reported intersections are down-hole widths. Au = Gold Cu = Copper Co = Cobalt Zn = Zinc CuEq = Copper Equivalent Copper Equivalent (CuEq) Calculation The formula for calculation of copper equivalent is based on the following metal prices and metallurgical recoveries: Copper: $2.00 US$/lb; Recovery: 95.00% Cobalt: $26.00 US$/lb; Recovery: 90.00% Gold: $ US$/troy ounce Recovery: 75.00% CuEq = Cu(%) x Co(ppm) x Au(ppm) x In order to be consistent with previous reporting, the drill intersections reported above have been calculated on the basis of copper cut-off grade of 0.2% Cu, or a copper equivalent grade of 0.35%, with an allowance of up to 4m of internal waste. The recoveries used in the calculations are the average achieved to date in the metallurgical test-work on primary sulphide, supergene, oxide and native copper zones. The Company s opinion is that all of the elements included in the copper equivalent calculation have a reasonable potential to be recovered. Page 8

9 Disclaimer and Forward-looking Statements This report contains forward-looking statements that are subject to risk factors associated with resources businesses. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including, but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delays or advancements, approvals and cost estimates. Page 9