Philippines

Fly-through videos for the Mankayan copper-gold project located North of Manilla on Luzon island, hosted on “Youku” in both Standard Chinese and English.

菲律宾Mankayan铜金矿生产开拓计划

The Chinese version is available on Youku and can be accessed via the following link: https://v.youku.com/v_show/id_XNDIyNTAwNTc0OA==.html

The English version is also available on Youku and can be accessed via the following link: https://v.youku.com/v_show/id_XNDIyNTM2MjA3Ng==.html

Mankayan has a copper-gold resource estimate completed by Snowden Mining Industry Pty Limited (“Snowden”) prepared in 2009 under JORC (2004) which defined an indicated resource of 1.1 million tonnes of contained copper and 3.7 million ounces of contained gold and an inferred resource of 0.2 million tonnes of contained copper and 0.6 million ounces of contained gold.

The 2019 Mining Plus study identified and assessed a number of high-level alternative mining options for the Mankayan project as well as substantially improving the underlying economics of the proposed operations. The options considered were designed with the objective of improving production processes, determining pathways with reduced total start-up cost, identifying further potential value from the project and correctly including off-site costs for the first time. The options were based on the work undertaken by GHD Group Pty. Limited ("GHD") and Mining Plus in their 2014 Scoping Study Update and were evaluated using the parameters developed in that historic study.

This latest study has identified a broad range of mining options that can be used to mine the deposit. Relative to the historic study, these options included:

  • A focus on higher grade.
  • A focus on mining higher grade earlier.
  • Reduced start-up costs.
  • Accounting for the effect of off-site costs on revenue streams.
  • Better or equivalent returns on investment than previous studies.
  • Collective demonstration of the flexibility of the deposit to be mined by a wider range of strategies.

In total, eleven options were investigated with four representative options analysed in more detail in the study. Two main options were chosen as preferential block cave development routes at different scales and an SLC intermediary route towards block caving was also determined. The key metrics for each of these four options are set out in Table 1 below and include Option 3, a high rate, major block cave comparator of 24Mtpa.

Preferred Block Cave routes

Option 4: Medium production rate, with four BC footprints in two lifts. Each footprint was sized to meet the required production rate, with the first footprint in each lift located in the highest grade.

Option 8: Staged production rate, starting at 6Mtpa for a small high grade BC, before mining three larger footprints at a production rate of 12Mtpa.

SLC Intermediary route

Option 9: Low production rate, starting with a 6Mtpa low capex high opex sublevel cave before mining three BC footprints (this option could also be ramped up to 12Mtpa for the mining of the three BC footprints).

Block cave comparator scenario

Option 3: High production rate, high rate of return, high start-up cost two lift BC, where the full footprint of the BC is undercut to enable a high production rate.

  Option 3
(Comparator)
4
(Medium rate Option)
8
(Scaled option)
9
(SLC ** Intermediary route)
  Description 24Mtpa 2 BC footprints over 2 lifts 12Mtpa 4 BC footprints over 2 lifts 6Mtpa small BC followed by 3 12Mtpa BC 6Mtpa SLC followed by 3 6Mtpa BC
IRR before tax and royalty Cu $3/lb
Au $1,250/oz
29% 27% 21% 14%
Average Cost per t USD/t $19.1 $19.1 $19.7 $19.9
First Footprint Start-up Cost USD $1,402m $896m $633m $529m
First 5 years of production Tonnes 92 M 54 M 29 M 28 M
Cu (%) 0.45 0.46 0.48 0.41
Au (g/t) 0.51 0.54 0.62 0.45
CuEq (%) 0.70 0.72 0.77 0.62
Total production Tonnes 333 M 316 M 315 M 302 M
Cu (%) 0.42 0.43 0.42 0.41
Au (g/t) 0.46 0.47 0.46 0.45
CuEq (%) 0.63 0.65 0.64 0.63
Mine Life Years 23 34 38 58
Time to First Production 5 5 5 4.2
NPV before tax and royalty, 8.5% discount rate* Cu $3/lb
Au $1,250/oz
$1,589m $1,181m $797m $361m

Analysis of the information in Table 1

The general trend is that the higher production rate options (higher start-up costs) return higher rates of return and discounted cashflows, due to the reduced effect of time discounting over a shorter mine life. Other points of note include:

  • Options 3 and 4 have a very similar average cost per tonne, due to the higher start-up cost of option 3 being offset by the sharing of fixed production costs over a larger tonnage.
  • The options target higher grade first, which can be seen in the comparison between the grade of the first 5 years versus the total production. The lower production rate cases can be more selective, thereby consequently returning a higher grade in the first five years.
  • Option 9 (SLC) has a lower first five years grade than the BC options. This is due to it being a top-down method (hence starting in lower grade ore) and the higher dilution of the method, with each level being mined next to the dilution from the level above. This effect is mitigated by the greater selectivity of the SLC footprint.
  • Option 9 (SLC) has a slightly lower lead time to first production because mining starts at the top and advances downwards (as opposed to the BC, which is bottom up).
  • Although not explicitly modelled in the study, the SLC is less sensitive to geotechnical parameters than the BC, due to the rock being broken-up by drill and blast, rather than breaking due to the action of caving. Such drill and blast control of breaking comes at a considerably higher mining cost.

Performance of representative options at US$3/lb, US$2.5/lb and US$3.5/lb for copper

  Option 3 4 8 9
  Description 24Mtpa 2 BC footprints over 2 lifts 12Mtpa 4 BC footprints over 2 lifts 6Mtpa small BC followed by 3 12Mtpa BC 6Mtpa SLC followed by 3 6Mtpa BC
IRR before tax and royalty Au @ $1,250/oz Cu $3/lb 29% 27% 21% 14%
Cu $2.5/lb 24% 22% 18% 11%
Cu $3.5/lb 34% 30% 24% 17%
Average Cost per t   $19.1 $19.1 $19.7 $19.9
Start-up Costs   $1,402m $896m $633m $529m
First 5 years of production Tonnes 92M 54M 29M 28M
Cu (%) 0.45 0.46 0.48 0.41
Au (g/t) 0.51 0.54 0.62 0.45
CuEq (%) 0.70 0.72 0.77 0.62
Total Tonnes 333M 316M 315M 302M
Cu (%) 0.42 0.43 0.42 0.41
Au (g/t) 0.46 0.47 0.46 0.45
CuEq (%) 0.63 0.65 0.64 0.63
Mine Life   23 34 38 58
Time to First Production   5 5 5 4.2
Total Cost   $6,356m $6,032m $6,200m $6,019m
Total Revenue before tax and royalty
Au $,1250/oz
Cu $3/lb $11,971m $11,647m $11,473m $10,776m
Cu $2.5/lb $10,612m $10,325m $10,170m $9,550m
Cu $3.5/lb $13,330m $12,970m $12,777m $12,004m
NPV before tax and royalty,
Au $1,250/oz, 8.5% discount rate*
Cu $3/lb $1,589m $1,181m $797m $361m
Cu $2.5/lb $1,116m $839m $534m $161m
Cu $3.5/lb $2,061m $1,524m $1,061m $562m