Anglesey Mining has reported the results of its recently completed 2017 scoping study on its wholly owned Parys Mountain copper-lead-zinc project in North Wales. The study was prepared by Micon International and Fairport Engineering. The selected base case envisages a mining rate of 1,000 t/d, to produce an average annual output of 14,000 t of zinc concentrate at 57% Zn, 7,200 t of lead concentrate at 52% Pb and 4,000 t of copper concentrate at 25% Cu, annually, over an initial mine life of eight years.
The overall net smelter return (NSR) for the three concentrates, including the silver and gold precious metals contributions, is expected to total more than $270 million at the forecast metal prices used for the base case models.
The base case yields a pre-tax NPV of $33.2 million, or £26.6 million, at a conservative 10% discount rate, using present day metal prices of $1.25/lb for zinc, $1.00/lb for lead, $2.50/lb for copper, $17.50/oz for silver and $1,275/oz for gold and at an exchange rate of £1.00 = $US1.25. With an estimated pre-production capital cost of $53 million, or £42 million, this results in an indicated IRR of 28.3%.
Using longer term metal price projections of $1.35/lb for zinc and $3.00/lb for copper the NPV10 would be $43.2 million, or £34.6 million. At an 8% discount rate, used to reflect the relatively low risks of the project given its advanced level of development and low political risk in the UK, the NPV8 would be enhanced to $41 million, or £32.8 million, for the base case metal price scenario and to $53 million, or £42 million for the higher long-term metal prices, with an IRR of 33%
To illustrate the comparison and put the results of the scoping study into context, the market capitalisation of the company at the close of trading on 21st July was £8.9 million.
Importantly, the study was based on only the 2.1 Mt of Indicated resources reported by Micon in 2012. Micon had also reported a further 4.1 Mt of Inferred resources which were not incorporated into the study. It is expected that a high proportion of these Inferred resources will be converted to Indicated once exploration drilling from underground takes place. These additional resources would be processed through the same concentrator plant and would significantly increase the projected life of the mine, to perhaps double the mine-life to 15 or 18 years, and enhance the NPV.
Bill Hooley, Chief Executive commented “We are very pleased with the results of the study which demonstrate a viable mine development at Parys Mountain and a healthy financial internal rate of return. The base case economic model at 1,000 t/d indicates a robust project at consensus forecasts for the long-term prices of zinc and copper. This is the first detailed economic study of the Parys Mountain project for a number of years and, based on the current availability of reconditioned process plant, the estimated pre-production capital cost for the project is at a level that could be financeable.”