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PRAIRIE LITHIUM LIMITED Capital/Financing Update 2012
65572_rns_2012-10-01_f5ab4b32-7d15-4d85-80dd-bb7e33ed5384.pdf
Capital/Financing Update
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ASX RELEASE 2 October 2012
MBILA BANKABLE FEASIBILITY STUDY
SCOPE TO BE EXPANDED TO INCORPORATE FURTHER DEVELOPMENT OPTIONS
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- ZYL to expand the scope of the Bankable Feasibility Study ("BFS") at the Mbila project to take advantage of the greater understanding built around the project since acquisition. The expanded scope will incorporate the following;
- o Extended Footprint – to access additional resources that are outside of the original feasibility study target area that have been identified by ZYL drilling and further technical work during 2012
- o Revised Mine Development – to enable the most optimal approach to the development of the overall resource across a greater project area
- Project development permitting/approval processes remain on schedule - the overall development timetable is not expected to be affected nor will the existing project approvals granted
- The completion of the BFS will therefore be necessarily extended to evaluate and incorporate the most favourable development option based on todays enlarged resource base and the potential of an open-pit component
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Mbila Project
ZYL Limited ("ZYL" or the "Company") (ASX: ZYL), the Perth-based emerging anthracite producer with key projects in development in South Africa, announced the Mbila transaction in September 2011, which was an instrumental step in progressing the Company's aim of becoming one of the world's leading anthracite producers.
The Mbila Project is located approximately 150km north west of the Richards Bay Coal Terminal. Key infrastructure required for the development of an anthracite mine, such as electricity, roads and railway sidings and lines are located in close proximity. The Mbila Project consists of a Mining Right covering 19,180ha (Mbila Mining Right Area) and a Prospecting Right covering 52,946ha (Msebe Prospecting Right Area). The two areas share a common boundary and are located approximately 15km to the east of the town of Nongoma.
Corporate Office:
Level 8, 225 St Georges Terrace, Perth 6000,Western Australia Tel: +61 8 9486 4036 Email: [email protected] PO Box 7653, Cloisters Square, Perth 6850, Western Australia Fax: +61 8 9486 4799 Web: www.zyllimited.com.au
The diagram below shows the Mbila Mining Right Area in relation to the Msebe Prospecting Right Area.
In 2008 a Feasibility Study (the "Badger Study") was undertaken on the project by the vendors' team of technical consultants. This Badger Study focused on the resources contained only within the Mbila Mining Right Area located in G Block, the southern section of S Block, and some portions of the A and K Blocks, which totalled 20.11 Mt at the time. The Mining Right, Environmental Management Programme, and Social and Labour Plan approvals were granted based upon this study.
Since this time, the resources have grown considerably due to additional drilling campaigns and geological modelling and the resource now sits at 154.2 Mt (see table below) and have extended beyond the Mbila Mining Right Area into the Msebe Prospecting Right Area.
| Mbila Project: JORC-Compliant Resource Estimates - GTIS (Mt) | ||
|---|---|---|
| 2008 – GeoCoal ResourceEstimate | August 2012 – PC MeyerResource Estimate* | |
| Total measured coal resource | 13.03 | 36.2 |
| Total indicated coal resource | 0.97 | 23.2 |
| Total inferred coal resource | 6.11 | 94.8 |
| Total JORC-compliant coal resources | 20.11 | 154.2 |
* Resource includes the Mbila Mining Right and Msebe Prospecting Right Areas
Mbila Project BFS Strategy and Scope Expansion
At the outset of ZYL's involvement in the Mbila project, a strategic decision was made to focus initially on validating and updating the Badger Study to a Bankable Feasibility Study ("BFS") within the confines of the relevant approvals granted.
While working on the various components of the Mbila BFS, the Company's technical team and RSV ENCO (the independent project manager) have developed a greater understanding of the Mbila Project and it has become apparent that the appropriateness of the Badger Study has become less relevant and has inherent limitations as the resource continues to grow in size. The studies have identified potential alternatives to exploit the resources in a more efficient manner, both from a technical, production and financial perspective.
One of the key activities conducted during the updating of the Badger Study in 2012 was the conversion of the 2-dimensional geological model into a 3-dimensional model, which has provided greater definition and understanding of the structural geology. This understanding was further enhanced through the geotechnical drilling programme and the LIDAR survey (digital laser terrain survey) conducted in July 2012. Ultimately, this information has provided the technical team more certainty when evaluating the detailed mine planning and scheduling.
As a result of the BFS work, the current belief is that due to the expanded size of the Mbila resource, a mining plan tied to the Badger Study could result in the resource not being optimally mined. It is believed that the incorporation of the resources outside of the Badger Study area (including the Msebe Prospecting Right Area) into the BFS will provide greater flexibility and the opportunity to exploit larger blocks of anthracite with fewer adits, including the possibility of defining an open pit area in the Beaufort zone. An open pit will allow the mining of multiple seams in the Beaufort package and hence greater extraction of the mineable resource. The establishment of an open pit would potentially support a quicker build up to sustainable production with lower operating costs.
A further factor that has been taken into consideration in the study process has been the strong level of interest in securing off-take due to the increasing demand for anthracite in both South Africa and internationally. This interest has been demonstrated by the expressions of interest that have been received by the Company from third parties who have indicated a desire to secure off-take, provide debt finance, project funding and infrastructure solutions. These potential strategic partners have articulated a favourable view on exploiting more tonnes of anthracite at a lower cost in a mining operation that incorporates a simple open pit component. These parties may have an influence on the development options that the Company will consider.
Permitting and Overall Development
The continued evaluation of development scenarios should not affect the overall development timeline for the Mbila Project and the final permitting process (water permit) is on schedule for completion in mid-2013
It should be noted that the majority of the BFS work completed to date can be incorporated into this additional feasibility work which will focus mainly on the geological model and the mine scheduling to determine the optimal development approach. Components of the BFS not likely to be materially affected include infrastructure, power and water, process plant design, discard disposal and logistics.
Conclusion
In summary, the Board is excited about the prospect of improving the BFS metrics despite the delay to BFS completion that the expansion creates. ZYL's priority is to ensure an optimum development strategy that avoids sterilizing recently identified resources from future exploitation and to ensure the strategy takes into account all of the latest technical information.
The BFS for the Kangwane project remains on track for November completion and ZYL is very optimistic about the findings of this study.
ENDS
Contact:
Ian Benning, CEO, ZYL LIMITED
- T: +27 (0) 87 350 2751
- M: +27 (0) 10 591 0634
- E: [email protected]
Head Office - Perth Australia
- T: +61 (0) 8 9486 4036
- E: [email protected]
Media - Australia
Annette Ellis, Purple Communications
- M: +61 (0) 458 200 039
- E: [email protected]
About ZYL Limited
ZYL Limited is listed on the Australian Securities Exchange (ASX) and aims to become one of the world's leading anthracite coal producers. The mission of ZYL is to develop high-margin metallurgical coal deposits for domestic and export markets. Flagship projects are the Mbila and Kangwane projects in South Africa, located close to rail, port, power and water infrastructure.
Important information
The information in this announcement is an overview and does not contain all information necessary to make an investment decision. To the extent permitted by law, no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information contained in this announcement, any of which may change without notice. This document is not a prospectus, disclosure document or offering document under Australian law or under any other law. It does not constitute an offer or invitation to apply for securities. It is for information purposes only. This announcement is not an offer of securities for subscription or sale in the United States or any other jurisdiction in which such an offer or solicitation is not authorised or to any other person to whom it is unlawful to make such an offer or solicitation. Some of the information contained in this announcement constitutes forward-looking statements that are subject to various risks and uncertainties, not all of which may be disclosed. These statements discuss future objectives or expectations concerning results of operations or financial condition or provide other forward-looking information.
Prospective investors should make their own independent evaluation of an investment in the securities. The material contained in this document does not take into account the investment objectives, financial situation or particular needs of any particular investor. No recommendation to investors regarding the suitability of the securities has been made and the recipient must make its own assessment and/or seek independent advice on financial, legal, tax and other matters, including the merits and risk involved. This announcement and its contents have been distributed to you, in confidence, solely for your information and may not be retransmitted or otherwise reproduced or disclosed to third parties or made public in any way, in whole or in part, for any purpose without written permission.
Competent Persons Report
Information in this report that relates to exploration results and minerals resources is based on information compiled by Mr Peet Meyer, who is a consultant to the company. Mr Meyer, a member of the Geological Society of South Africa, a Recognised Overseas Professional Organisation, has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activities he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australian Code of Reporting of Exploration, Mineral Resources and Ore Reserves'. Mr Meyer consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.