Alecto Minerals (IM, June 2016 pp8-12), the African-focused gold and copper exploration and development company, reports that production is now ongoing on a full-time basis at the Mowana mine in Botswana following completion of the first blast on 29 April 2017 and a successful trial period, which saw the company produce saleable concentrate up to 28% copper. To date, over 1,900 t of copper concentrate has been produced, which is being sold to Alecto’s offtake partner Fujax Minerals and Energy Ltd.
Alecto continues to advance the acquisition of the project by way of a reverse takeover and is also reports that the Competent Persons Report (CPR) on Alecto’s African assets and the producing Mowana mine has now been completed by Wardell Armstrong International, representing an important milestone towards the publication of the admission document required to enable Alecto to recommence trading on AIM.
The CPR reports a current resource of circa 172 Mt at 0.84% Cu, of which 26 Mt sits within two existing pre-stripped 350 m-deep pits. These pits represent the main areas of current operation. Allowing for an element of overlap in the original modelling on which the CPR is based, the company estimates the resource at 162 Mt at 0.84% Cu (equating to 481,000 t copper in the Measured and Indicated categories and a732,000 t in the Inferred). Alecto intends to ramp up to an annualised rate of 12,000 t of copper in Q3 2017. Production costs are expected to average $1.5/ lb over the mine life based on an average metallurgical recovery of 91%. The CPR reports an NPV of $87.5 million for the initial 12,000 t Cu production scenario based on an average copper price of $2.8/ lb at a discount rate of 10%.
In tandem with its current mining activities, the company intends to undertake additional test work over the coming months to finalise its decision on the installation of a Dense Media Separation (DMS) unit at Mowana. If pursued, this technology is anticipated to facilitate a <100% increase in throughput to 2.6 Mt/y for ~23,000 t Cu by Q3 2018, which will dramatically enhance the mine economics and increase the project’s NPV to $245 million. As announced in December, the company has conditional funding for a DMS with Fujax and NHI of $20 million. Additional upside potentially exists by developing an underground operation in the future, subject to studies, to access the rest of the resource, which is located down dip and along strike from the open pits currently being mined. An underground operation has the potential to increase the life of mine to 20 years.
Mark Jones, CEO of Alecto: “Mowana is now a full-time copper production operation and we look forward to gaining ownership of the project subject to shareholder approval at which point, we believe, our company will benefit from a significant value re-rating. Once effected, we will have taken control of a significant asset which has been subject to more than $150 million of investment in the past for an acquisition price of approximately $10 million.
“We are delighted that the CPR demonstrates the compelling economics of our project even without the installation of a DMS, now that the asset is unencumbered by debt. Even better is that it starts to show the tremendous potential upside available using modern techniques identified by our experienced industry partners. There is a hive of activity on site, and having already delivered on our stated operation objective, we look forward to providing further updates in the coming weeks.”
Alecto also has gold exploration projects in Mali, Burkina Faso and Mauritania and a development project with near-term gold production in Zambia. There the historical Matala and Dunrobin gold mines have, in aggregate, a 760,000 oz Au JORC Code compliant resource estimate in the Measured, Indicated and Inferred categories at an average grade of 2.3g/t Au. The company is focused on bringing Matala into low-cost production in the near to mid-term.
