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Message: Moto Gold Project-Optimised Feasibility Study Completed
| March 2, 2009 | |||||||||
| Moto Goldmines Limited-Moto Gold Project-Optimised Feasibility Study Completed | |||||||||
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PERTH, WESTERN AUSTRALIA--(Marketwire - March 2, 2009) - Moto Goldmines Limited ("Moto") (TSX:MGL)(AIM:MOE) is pleased to report the completion of the Optimised Feasibility Study (the "OFS") for the Moto Gold Project (the "Project") in the Democratic Republic of Congo ("DRC"). This study significantly enhances the December 2007 Feasibility Study with the Project being reconfigured and optimised, resulting in reduced pre-production capital expenditure, a significant increase in Mineral Reserves, higher annual gold output and improved economics. The OFS was principally completed by Lycopodium Minerals Pty Ltd ("Lycopodium"), Cube Consulting Pty Ltd ("Cube") and SRK Consulting Pty Ltd ("SRK"). The revised Project comprises a value driven open pit and high grade underground mining operation and is based on Probable Mineral Reserves of 42.3 Mt @ 4.0 g/t Au for 5.5 Moz of gold. The planned mine life at commencement of production is approximately 16 years and is based on a nominal plant throughput rate of 2.8 Mt per annum. Gold production over the first five years is expected to average 484,000 ounces per annum. Moto views the operational plan presented in the OFS as providing a sound development position to further exploit the excellent geological prospectivity of the Project. The successful infill drilling program at the KCD deposit undertaken during the second half 2008 provides a clear and compelling direction on which planning activities for the operation's expansion will focus. OPTIMISED FEASIBILITY STUDY - KEY FINDINGS In order to minimize the Payback Period and maximize the Project's return on capital, Moto has optimised mining and plant feed schedules by accelerating treatment of high net value per tonne feed material. Open pit mining is planned to proceed at a higher rate than that required to maintain plant feed to allow high grade material and value to be brought forward. Lower value material mined will be treated later in the mine life, with emphasis in the earlier years being on maintaining the highest value feed to the mill. This open pit mining strategy is enhanced by the integration of a new large scale underground mine. Decline development is planned to commence 18 months prior to plant commissioning, to accelerate cash generation from this production source. The key findings of the OFS are as follows: - Project economics are significantly enhanced by introducing a high grade underground mine and adopting a value acceleration strategy for the open pit mine scheduling; - Probable Mineral Reserves of 42.3 Mt at 4.0 g/t Au for 5.5 Moz of gold; - Life of mine gold production of 4.8 Moz with an average estimated Cash Cost of US$318/oz produced; - Average annual output of 484,000 oz of gold over the first 5 years at an average unit Cash Cost of $US303/oz produced; - Project Payback Period of 3.1 years at US$750/oz gold price; - Pre-production capital and infrastructure cost estimates total US$438M, including contingency (US$32M) and 18 months of underground development activities (US$32M); - Deferred and sustaining capital expenditure over the operation's 16 year life is estimated to total US$180M; and - Significant potential exists to further enhance the Project economics by increasing plant throughput with incremental capital expenditure, underpinned by potential increases to underground Mineral Reserves and accelerated treatment of open pit ore stocks. Key features of the planned underground mine are as follows: - 12 year mine life, with a steady state production level of approximately 1.5 Mtpa; - Mineral Reserves of 11.6 Mt at 6.2 g/t Au for 2.3 Moz of gold; and - Life of mine Cash Costs of US$281/oz produced. Key features of the planned open pits are as follows: - 7 year mining period (excluding pre-strip period), followed by a stock reclamation period of 9 years; - Mineral Reserves of 30.7 Mt at 3.2 g/t Au for 3.2 Moz of gold; and - Life of mine unit Cash Costs of US$343/oz produced. EXPLOITATION OF RESOURCE BASE AND FUTURE DIRECTION The OFS evaluated the Project's Indicated Mineral Resources of 112.4 Mt at 3.1 g/t Au for 11.3 Moz of gold and did not evaluate the Inferred Mineral Resource base of 107.2 Mt at 3.3 g/t Au for 11.2 Moz of gold. Since the completion of the Project's Pre-Feasibility Study in August 2006, the conversion rate of Inferred to Indicated Mineral Resources has been close to 100% within the key deposits. Further to the underground concept study completed by AMC Consultants Pty Ltd ("AMC") in February 2008, Moto has focused drilling efforts in the Chauffeur area of the KCD deposit which is largely an Inferred Mineral Resource. The main lodes in this area have an estimated Inferred Mineral Resource of 20 Mt at 6.8 g/t Au for 4.4 Moz of gold and have been identified as being amenable to exploitation by underground mining. Due to the high grade nature of this system, Moto intends to undertake work to convert this mineralization to Mineral Reserve status as a matter of course. The successful conversion of this material to Mineral Reserve would result in lower grade open pit material being deferred as mill feed and position the mine for anticipated future expansion. The table below provides a summary of the Mineral Reserves and Mineral Resources for the Moto Gold Project and the net attributable interest for Moto (being 70%): Table 1: Mineral Resource and Mineral Reserve Inventory (Mineral Resources
greater than 1.0 g/t Au)
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Gross Net Attributable to Moto
Category Tonnes Grade Metal Tonnes Grade Metal Operator
(Mt) (Au g/t) (koz) (Mt) (Au g/t) (koz)
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Mineral
Reserves
Proven - - - - - - Borgakim
Probable 42.3 4.0 5,470 29.6 4.0 3,829 Borgakim
Total Mineral
Reserves 42.3 4.0 5,470 29.6 4.0 3,829 Borgakim
Mineral
Resources
Measured - - - - - - Borgakim
Indicated 112.4 3.1 11,293 78.7 3.1 7,905 Borgakim
Inferred 107.2 3.3 11,226 75.0 3.3 7,858 Borgakim
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Source: Refer to Qualified Persons section for details of Qualified
Persons (NI 43-101)) or Competent Persons (AIM) with respect to the
quotation of Mineral Reserves and/or Mineral Resources.
Note: Mineral Reserves are INCLUDED within the Mineral Resources - they are
not additional.
The Moto Gold Project is located in the north-east of the DRC and is a joint venture between L'Office des Mines d'Or de Kilo-Moto ("OKIMO")(30%) and Borgakim sprl ("Borgakim", a Moto wholly-owned subsidiary)(70%). All figures referenced represent the Moto Gold Project, being 100% of the project, unless otherwise stated. Following the completion of the Feasibility Study in December 2007 and the delineation of an underground resource, Moto commissioned the OFS to reduce pre-production capital expenditure, whilst maintaining similar levels of annual gold output to improve project economics. Central to the OFS was the ability to reconfigure the Project by exploiting a portion of the high grade underground Mineral Resources of the KCD deposit. Lycopodium was retained as the principal engineering consultant, with Cube as the geological and open pit mining consultant. SRK was awarded the contract to undertake the underground feasibility assessment. Contributors to key components of the OFS are as follows:
Lycopodium - Metallurgical interpretation & process
plant design
- Infrastructure design
- Processing plant capital & operating
cost estimation
- Infrastructure capital & operating
cost estimation
- Project implementation planning
Cube - Geological database management
& validation
- Mineral Resource interpretation &
estimation
- Open pit mine design & scheduling
- Open pit mine Mineral Reserve
calculation
AMC - Open pit detailed scheduling & fleet
Resourcing
- Open pit mine capital & operating
cost estimation
SRK - Underground mine design & scheduling
- Underground mine capital & operating
cost estimation
- Underground mine Mineral Reserve
calculation
AMMTEC Ltd - Metallurgical testwork
Knight Piesold Pty Ltd - Hydro-electric power assessment
and design
- Tails storage facility design
- Geochemical assessment of waste rock
and tails
- Site geotechnical & hydrogeological
assessment
- Site civil design - roads, water
management
Synergy Global Consulting Ltd, - Social impact assessment
and Resettlement & Development - Resettlement planning
Solutions Pty Ltd
NewFields LLC - Health impact and health risk
assessment
SGS Ghana Ltd - Environmental impact assessment
Following the closure of the December 2007 Feasibility Study drilling database, an extensive infill drill program focussed on the Sessenge Deeps area of the KCD deposit. This program successfully upgraded a large portion of this high grade Mineral Resource from Inferred to Indicated classification which underpins the underground mining feasibility assessment. Geological logging, sample preparation, assaying, resource modelling and estimation works associated with the OFS were conducted in accordance with Moto's QA/QC systems. Interpretation and geostatistical analysis of data formed the basis of Mineral Resource estimates using Uniform Conditioning ("UC") and Ordinary Kriging ("OK") methods for open pit and underground mining areas respectively. Classification and reporting of all Mineral Resources is in accordance with the JORC Code reporting guidelines which are equivalent to the guidelines adopted for the Canadian National Instrument 43-101. Snowden Mining Industry Consultants Pty Ltd ("Snowden") was commissioned in 2008 to independently audit Moto's geological QA/QC systems and Cube's estimation of Mineral Resources for the Project. Snowden concluded that the QA/QC systems are in line with industry standard and also found Cube's estimates to be an appropriate reflection of the Project's Mineral Resources. Project Mineral Resources for open pit mining assessment in the OFS are listed below:
Table 2: Mineral Resources greater than 1.0 g/t Au (UC Estimation)
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Indicated Mineral Resources Inferred Mineral Resources
Deposit Tonnes Grade Metal Tonnes Grade Metal
(Mt) (g/t Au) (koz Au) (Mt) (g/t Au) (koz Au)
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Pakaka 16.9 2.5 1,379 - - -
Gorumbwa - - - 8.3 5.2 1,374
Kibali - - - 17.1 2.2 1,206
Mengu Hill 8.8 3.0 847 - - -
Mengu Village 1.2 1.9 69 0.1 1.4 4
KCD (incl.
Sessenge Deeps) 66.7 3.6 7,705 73.8 3.4 8,127
Megi - - - 4.1 2.1 277
Marakeke - - - 2.4 1.7 134
Kombokolo 2.3 2.4 176 - - -
Sessenge 8.6 2.3 637 - - -
Ndala - - - 0.3 4.0 34
Pamao 7.9 1.9 480 1.2 1.9 71
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Global Resource 112.4 3.1 11,293 107.2 3.3 11,226
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Several other discrete lodes within the KCD deposit were modelled for the purposes of underground mining assessment, the majority of which were located in the pit / underground mine interface area and are collectively known as the 'Upper Lodes'. Mineral Resources associated with this refined interpretation are listed below: Table 3: Mineral Resources Assessed for Underground Mining greater than
1.0 g/t Au (OK Estimation)
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Indicated Mineral Resources Inferred Mineral Resources
Lodes Tonnes Grade Metal Tonnes Grade Metal
(Mt) (g/t Au) (koz) (Mt) (g/t Au) (koz)
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Sessenge Deeps
HG Core 9.9 6.7 2,149 2.1 3.4 233
Sessenge Deeps
LG Halo 6.0 1.9 362 4.5 1.9 275
Minor Lodes 5.7 5.5 1,016 6.4 7.0 1,428
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Total UG
Assessment 21.7 5.1 3,527 13.0 4.6 1,937
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Note: These Mineral Resources are INCLUDED in the relevant category global
listing for the KCD deposit in Table 2. They are not additional.
A full geotechnical assessment of expected underground mining conditions was undertaken for the OFS which included an oriented drill core program, laboratory based rock property testing, 3D extraction sequence modelling and a hydrogeological assessment. Results indicate manageable groundwater inflow and generally good ground conditions for mining. The results of these findings, combined with the massive nature and geometry of the mineralisation, has allowed underground design work to focus on a high productivity, low cost bulk mining concept. The principal mining method will be longhole open stoping using cemented paste fill to maximise recovery of high grade Mineral Resources. Designs have focused on simplicity and repeatability to reduce production risk. Ore hoist will be via decline utilising conventional underground diesel mining equipment. To allow early access to higher grade underground ore, decline development is planned to commence 18 months prior to process plant commissioning with underground ore production anticipated to reach a steady state of approximately 1.5 Mtpa after the second year of processing operations. Mining productivities and capital and operating costs were generated from first principles assuming an 'owner operator' approach (with mobile fleet maintenance by original equipment manufacturers on a maintenance and repair contract ("MARC") basis) and compared to similar operations to ensure estimation integrity. Detailed studies will be undertaken in the value engineering stage of project implementation to assess the benefits of using mining contractors to develop and establish the underground mine. Moto recognises the potential benefits of using contractors in the early stages of project development to defer capital expenditure, and reduce operating performance risk. The OFS also included an assessment of the economic interface between the KCD open pit and the underground mine. The assessment was conducted over a range of gold revenue prices and concluded that the optimum economic depth for the KCD open pit is approximately 170m. The reduction in pit size from the previous 340m depth has delivered tangible benefits for the Project including a significant reduction in KCD pit waste movements and accelerated processing of high grade ore from the interface area. Stope designs were based on a gold price of US$600/oz. SRK calculated underground Probable Mineral Reserves to be 11.6 Mt at 6.2 g/t Au for 2.3 Moz of gold (these Mineral Reserves are INCLUDED within the Mineral Resources of Table 3 - they are not additional). The underground mine plan for the OFS considered only Indicated Mineral Resources in the Sessenge Deeps deposit, however the design process has made allowance for the presence of significant high grade Inferred Mineral Resources located in the Karagba-Chauffeur region of the KCD deposit. The major lodes in this area are estimated to contain Inferred Mineral Resources totalling 20 Mt at 6.8 g/t Au for 4.4 Moz of gold which Moto considers to be an attractive target. Options include expansion of underground operations at incremental capital cost, or acceleration of underground steady state feed given the shallower depth of the Inferred Mineral Resources compared to the bulk of the current underground Mineral Reserves. Open Pit Mine Planning, Scheduling and Costing The December 2007 Feasibility Study's open pit mine plan was revised as a result of re-estimated Mineral Resources, collection of additional geotechnical data, revised unit processing and mining costs and a reduction in mill feed requirements driven by the inclusion of the underground mine. Whittle open pit optimisations were undertaken on each deposit based on Indicated Mineral Resources only. Ultimate pit designs used Whittle shells selected using a value focus and pits have been staged where practical to enhance value. All ultimate pit designs are within the nominal US$600/oz Whittle shell generated for each deposit. Mining costs were calculated from first principles, assuming an 'owner operator' approach with the maintenance of the mobile fleet conducted by original equipment manufacturers under a MARC arrangement. Consideration was given to similar operations with comparative equipment to ensure integrity of cost estimates. In line with Moto's objective to enhance economics in the early years of the Project, the schedule for the open pit mine has been constructed to maximise the value of feed material on a period by period basis. Total annual ex-pit material movements average 19 Mt over the 8 years of planned open pit life (including pre-strip period) followed by an average of 2.2 Mtpa of stockpile reclamation over the remaining 9 years of the Project's life. This strategy uses grade differentiated stockpiling and creates material value for the Project by promoting high grade plant feed. The strategy also reduces the life of open pit mining operations and the related fixed costs associated with mine general and administration charges. Cube calculated total Probable Mineral Reserves from the 6 open pits to be 30.7 Mt at 3.2 g/t Au for 3.2 Moz of gold. The Probable Mineral Reserves are based on the Indicated Mineral Resource base only. It follows that significant upside exists for the Project with the potential for conversion of the 11.2 Moz Inferred Mineral Resource base as a result of additional drilling. The breakdown per project area is listed below: Table 4: Moto Gold Project - Open Pit Probable Mineral Reserves by Deposit
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Deposit Ore Tonnage Grade Metal
(Mt) (g/t Au) (koz Au)
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KCD Pit 14.2 3.6 1,642
Kombokolo Pit 0.5 3.0 47
Mengu Hill Pit 5.4 3.4 592
Pakaka Pit 6.1 2.7 539
Pamao Pit 1.5 2.1 104
Sessenge Pit 2.9 2.5 239
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Total 30.7 3.2 3,163
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Note: Mineral Reserves are INCLUDED within in the Mineral Resources
of Table 2. They are not additional.
Metallurgical testwork, performed by AMMTEC Ltd under the direction of Lycopodium, indicates that a simple flowsheet, incorporating primary crushing, SAG milling to a product size of 80% passing 106 microns followed by a carbon in leach circuit will yield optimum recovery for oxide ores. Transition and fresh ores will utilise the same comminution circuit followed by flotation to produce a concentrate that will be reground to 12 microns and then leached in a dedicated CIL circuit. The float tail will be leached separately through the CIL circuit. No preg-robbing issues are expected and tested composites yielded approximately 20% gravity recoverable gold. Table 5: Predicted Metallurgical Recoveries by Source
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Feed Source Au Predicted Recovery(%) Feed Proportion
Oxide Transition Fresh (tonnage basis)
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KCD Pit 85.5 90.1 83.9 34%
KCD Underground - - 91.3 27%
Kombokolo 95.6 95.9 74.6 1%
Mengu Hill - 89.3 71.6 13%
Pakaka 88.7 81.7 81.7 14%
Pamao 90.9 85.0 85.0 4%
Sessenge 90.3 75.9 80.6 7%
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The optimised mill feed schedule yields significant metal production in the early years of the operation as listed below: Table 6: Project Gold Production Profile --------------------------------------------------------------------------- --------------------------------------------------------------------------- Year 1 2 3 4 5 6 7 8 Gold Output (oz) 397,955 432,338 525,812 513,060 552,474 430,700 391,673 325,362 --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Year 9 10 11 12 13 14 15 16 Gold Output (oz) 284,629 217,896 175,948 135,643 117,144 92,370 81,159 94,474 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Project infrastructure development includes roads, staff housing and messing facilities, workshops, airstrip refurbishment, power generation facilities (hydro-electric scheme and a supplementary diesel fired facility) and infrastructure items for environmental management. The planned run-of-river hydro-electric power scheme has been configured to match plant and mine demand and it is planned to be built in two stages, with stage one comprising two turbines producing 13.4 MW of electric power and stage two adding a third turbine to increase power output to 20.1 MW. The hydro-electric scheme is expected to provide approximately 85% of the annual power consumption. Diesel generated power will supplement the hydro-electric scheme during the dry season and will assist during peak load periods. The OFS assumes that the necessary approvals and permits for the hydro-electric scheme will be obtained. A high density polyethylene lined tailings storage facility has been designed for a staged construction throughout the Project's life. A material amount of tailings will be used in the underground paste fill and should additional storage capacity be required, it will be possible to undertake further lifts of the facility. Moto intends to conduct all development activities in conformity with internationally accepted standards with project development focusing on sustainability including the empowerment of local communities and business. Community baseline studies have been undertaken along with impact assessment and mitigation planning in line with IFC guidelines. These studies involved significant field work including household asset surveys, community profiling and the establishment of community stakeholder forums. A Resettlement Policy Framework has been developed as part of the OFS which will form the basis of detailed village relocation planning and execution. Principal and district access roads have been, and will continue to be, upgraded to support the local communities and future operating activities. These upgrades will greatly benefit and promote the development of regional and local industries and communities. Costs Estimates and Financial Evaluation Cost estimates for capital and operating expenditure have been estimated from first principles using basic engineering and/or working designs and industry benchmarking for confirmation of productivity calculations. Supplier quotations generally form the basis of consumables and equipment cost estimates. Nominal allowances have been made where appropriate in the context of cost estimation accuracy. All costs are expressed in United States Dollars and are of Q3/Q4 2008 basis and can be considered to have an estimation confidence level of +/- 15%. Cost estimates include provisions for DRC government royalties, taxes, charges, levies and duties applicable under the DRC Taxation Code (1969) and/or DRC Mining Code (2002). Pre-production Project development costs are estimated at US$438M as detailed in the following table. This includes open pit mining fleet (US$47M), open pit pre-stripping (US$19M), underground mining fleet and establishment (US$12M) and 18 months of underground development activity (US$21M), treatment plant, tailings storage facility and water dams, services, infrastructure, a hydro-electric power scheme (US$61M), pre-production general and administration, working capital and contingency. Underground mine establishment capital costs (defined as capital expenditure until full production levels are reached) is estimated to be US$89M. The majority of this cost is incurred after process plant commissioning and will be funded by the Project's cashflow. Working capital and 'first-fill' consumables stock values have not been returned at end of mine life. Salvage values of equipment, plant and other high value items have not been included. Site closure costs are excluded, although progressive rehabilitation costs for mining areas have been included in operating cost estimates. This is consistent with the findings of the OFS indicating that the Project has significant potential to extend past the evaluated mine life. Table 8: Cost Breakdown - CAPEX to Plant Commissioning
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Description US$M
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Construction Indirects (mobilisation, preliminaries
and generals, plant freight) 26.5
Treatment Plant Costs 83.1
Reagents & Plant Services 17.3
Infrastructure 105.4
Mining - UG (incl. fleet and capital development) 32.3
Mining - OP (incl. fleet and pre-stripping, maintenance &
administration facilities) 72.1
Management Costs 48.6
Owners Project Costs 51.1
Owners Operations Costs 1.6
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Grand Total 438.0
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Contingency amount included in above items 32.2
Energy costs were calculated using a US$60/barrel oil price regime.
Details of key estimated unit costs (averaged over life of mine) are
included below:
Table 7: Activity Cost Listing
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Cost Item Unit Cost
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Underground mining operating cost US$29.33 / ore tonne
Underground mining capital development cost US$4.29 / ore tonne
Open pit mining activity cost
(incl. stock reclaim) US$2.52 / pit tonne excavated
Processing + general & admin.
cost - oxide feed US$15.45 / ore tonne processed
Processing + general & admin. cost
- fresh & transition feed US$18.77 / ore tonne processed
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Note: Costs exclude capital ownership charges for mobile fleet.
Project sunk costs of US$90.8M to the end of December 2008 have been included in the financial analysis for the calculation of taxation. As the financial analysis models future project related cash expenditure and returns, sunk costs are excluded from the calculation of total capital expenditure for the Project and Payback Period. Accelerated depreciation provisions allowed under DRC legislation have been incorporated where applicable. Evaluation of the OFS was undertaken on a project basis and excludes non-project costs related to agreements between Moto and OKIMO. No forward sales of product are assumed and a gold sale price of US$750/oz was used for base case financial evaluations. Net project cashflows are listed below for various gold price environments. These cashflows include sustaining and deferred capital expenditure. Table 9: Project After-Tax Cashflow Profile
@ US$750/oz Gold Price BASE CASE
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Year 0 1 2 3 4 5 6 7 8
US$M -438 135 127 161 159 188 122 120 113
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Year 9 10 11 12 13 14 15 16
US$M 94 61 52 43 35 18 14 32
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Table 10: Project After-Tax Cashflow
Profile @ US$900/oz Gold Price
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Year 0 1 2 3 4 5 6 7 8
US$M -438 193 156 213 212 245 166 160 146
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Year 9 10 11 12 13 14 15 16
US$M 123 83 70 57 47 27 23 42
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Table 11: Project After Tax Cashflow
Profile @ US$600/oz Gold Price
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Year 0 1 2 3 4 5 6 7 8
US$M -438 76 64 126 124 132 78 80 79
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Year 9 10 11 12 13 14 15 16
US$M 65 38 34 29 23 8 5 23
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Table 12: Project Payback Period Sensitivity
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Base Case US$750/oz 3.1 years
US$900/oz 2.4 years
US$600/oz 4.4 years
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Moto wishes to thank the government of the Democratic Republic of Congo and OKIMO for their ongoing support and looks forward to working with all stakeholders to successfully develop the Moto Gold Project. The successful development of the Project will result in significant benefits to all the stakeholders, including the state and the local community, and will add to the reputation of the Democratic Republic of Congo as a major participant in the international resources sector. With the conclusion of the contract review process and the signing and approval of Consolidated Lease and related agreements, the Board looks forward to the development phase of the Moto Gold Project once the joint venture agreement with OKIMO has been finalised and approved. |
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