JML 0.00% 75.5¢ jabiru metals limited

tastarga

  1. 364 Posts.
    Morning Tas. Thanks for your comments on JAK last night. By the time I'd read them, you were gone.

    JML have just released their BFS. Your thoughts on this one would be appreciated.

    Cheers, Marchello

    JAGUAR BANKABLE FEASIBILITY STUDY UPDATE
    The Directors of Jabiru Metals Limited ("Jabiru") (ASX: JML) are pleased to announce that all
    components of a base case Bankable Feasibility Study ("BFS") for the Jaguar Project (“the Project”)
    are complete and that the Project's development is attractive. Although further value adding work is
    continuing the BFS is now ready for consideration by financiers and off-take parties.
    The financial model indicates that the Project is robust. In addition, the Directors believe that the
    ongoing design and process optimisations and the new focus on exploration will add further value to
    the Project at a time when copper and zinc demand is escalating.
    HIGHLIGHTS
     Jaguar Resource 2,514,172 tonnes at 4.87% copper equivalent
     Mining Reserve – 1,890,037 tonnes at 6.92% copper equivalent
     Project net cash flow of A$64.7 million after capital in a 6 year mine life
     A Project NPV of A$41.4 million and IRR of 35.3%
     Project Capital of A$40.6 million
     Project copper CI operating cost of US$0.12/lb
     Copper and zinc concentrates – off-take proposals received
     Significant upside from numerous identified drill targets anticipated to add to mine life
    PROJECT FINANCIAL PERFORMANCE
    The Directors are pleased with the estimated financial performance of the Project. The BFS includes
    what should be a conservative accumulation of the various elements of the Project, from metallurgical
    ramp-up, underground development programming, cost and pricing, and offsite treatment costs. The
    major strength of the Project is that Jaguar is located in an extremely prospective province with
    significant potential for additional resources to be discovered and that the resource is within the top
    5% of world VMS projects by grade, thus putting it well within the lowest quartile C1 copper cost per
    pound when compared with all other copper projects in the world (C1 cost US$0.12/lb of copper
    including zinc and silver credits).
    Jabiru Metals Limited 2
    Project capital required through to production of concentrates is A$40.6 million.
    Recent increases in fuel costs, labour costs and contract mining costs have impacted upon the financial
    performance of the Project. Where possible, more cost effective alternatives will be sought to add
    further value to the Project.
    CONCENTRATE OFF-TAKE AGREEMENT
    Jabiru has received several offers for marketing of the two concentrates from the Jaguar operation
    (copper and zinc). The proposals have been received from both concentrate traders and smelters.
    Jabiru is also considering the offer from a number of these parties to provide a component of
    subordinated project financing (subject to due diligence) for the development of Jaguar. The Board
    expects to finalise the preferred concentrate off-take agreement in the March 2005 quarter.
    METALLURGY
    In order to optimise concentrate grade and recovery, Jabiru has conducted more than 100 bench tests
    on all areas of the resource using the complete spectrum of reagents. A review of the operating history
    of the Teutonic Bore mine has also been conducted, including interviews with many of the people who
    worked on site, to ensure that the Company learns from the operating and metallurgical experience of
    a similar resource located only four kilometres along strike.
    In addition, the Board has elected to include a conservative 18 month ramp up period for concentrate
    grades and recoveries to achieve an average zinc concentrate grade of 48% at 80% recovery and
    copper concentrate grade of 24.5% at 88% recovery. While much higher grades and recoveries have
    been achieved during a number of the bench tests, none of these have been reflected in the BFS.
    RESOURCES AND RESERVES
    Remodelling of the resource after inclusion of the latest drill intersections provides a global indicated
    and inferred resource at 0.3% Copper Equivalent (Cu Eq) cut off as follows:
    Tonnes Cu Eq Cu Zn Ag Pb Global
    Resource 2,514,172 4.87% 2.22% 8.45% 87.31g/t 0.54%
    A mining reserve using a 2% Cu Eq has been estimated from the global resource:
    Tonnes Cu Eq Cu Zn Ag Pb
    Reserve
    1,651,137 7.4% 2.86% 11.23% 114.01g/t 0.69%
    Tonnes Cu Eq Cu Zn Ag Pb TB Surface
    Stockpiles 238,900 3.63% 1.99% 3.24% 66.0g/t 0.52%
    The global resource gives the Project significant upside potential and has dictated that the concentrator
    and milling circuit of the plant be designed with as much flexibility as possible to take advantage of
    potential additional ore. No further drilling of Jaguar deposit is currently planned from the surface.
    Upgrade to the global resource by underground drilling will be undertaken as part of the mining
    development program.
    In addition, the independent geologist's report commissioned for the Pilbara Mines Limited (now
    named Jabiru Metals Limited) IPO Prospectus in January 2000 identified the potential for a substantial
    resource envelope, comprising the footwall stringer zone mineralisation and minor massive sulphide
    Tonnes Cu Eq Cu Zn Ag Pb Total
    Processed 1,890,037 6.92% 2.75% 10.22% 107.94g/t 0.67%
    Jabiru Metals Limited 3
    lenses remaining at the Teutonic Bore mine. Jabiru will undertake further drilling of the footwall zone
    with a view to providing additional resources for the Project.
    MINING
    The Jaguar resource commences 320 metres below surface and will be accessed by a decline.
    Geotechnical drilling has confirmed footwall and hanging wall material competence, thus providing
    high recoveries and good dilution control. Hydrological testing predicts minimal water inflows which
    should result in low pumping and water management costs.
    The current mine plan sees the initial development phase of the mine being conducted over an 18
    month period. During this time the box cut, decline, main ventilation rise and associated infrastructure
    will be installed and commissioned. Mine life on the current mine reserves is 6 years, at a design
    throughput of 350,000 tpa of ore.
    Excellent ground conditions combined with favourable orebody geometry enables long-hole open
    stoping techniques to be employed providing favourable underground operating costs.
    A significant saving of capital expenditure has been realised with the purchase of the Kapok
    underground conveyors, crushers and other equipment including ventilation, electrical cabling,
    pipework, fire suppression, magazines etc. These items will be re-furbished prior to installation in the
    Jaguar mine.
    DEVELOPMENT PROGRAM
    The BFS financial analysis is now in a form which will allow Jabiru to commence final negotiations
    with various financial institutions to provide debt financing for the development of the Project. The
    Company anticipates completing these negotiations in the June 2005 quarter, allowing construction
    and underground development to begin immediately thereafter.
    PRICING
    Jabiru has elected to use uniform pricing through the financial model based on longer term average
    metal prices and exchange rates. Metal prices employed in the BFS are US$1.25/lb for copper,
    US$0.47/lb for zinc, US$7.20/lb for silver, at a US/A$0.70 exchange rate.
    Treatment, refining and shipping charges are based on current benchmark and offered market contract
    rates, and while this reflects a copper Treatment Charge and Refining Charge (TC/RC) which has
    more than doubled this year, the zinc TC/RC has reduced slightly. Consequently, Jabiru considers that
    these rates should be consistent with what can be expected with the metal prices projected, or
    alternatively, any increase would be offset by improved metal prices.
    EXPLORATION POTENTIAL
    A review of the Teutonic Bore Mine exploration database (1977-1985) and of exploration carried out
    in the Jaguar area by previous tenement holders (1973-1997) and by former joint venture partner
    Inmet Mining Australia Pty Ltd (Inmet) (2001-2004) has identified a number of drill targets at depth,
    along strike, and across strike from both the Jaguar and Teutonic Bore VMS deposits. The directors
    are especially optimistic about the depth potential in the Teutonic Bore mine area as planned
    exploration programs below 200 metres from surface was never approved by the original BP
    Seltrust/MIM joint venture. (The top of the Jaguar deposit is 320 metres below surface with the
    massive sulphide lens being detected by modern EM survey techniques in 2002).
    Jabiru Metals Limited 4
    The incremental value of either extending the Jaguar deposit at depth, or discovering extensions to the
    previously mined Teutonic Bore orebody would be substantial, as would be discovery of new deposits
    in the highly prospective zones along strike both north and south of the Teutonic Bore and Jaguar
    deposits.
    PROJECT UPSIDE
    The Board believes that given the buoyant metal prices, together with the significant exploration
    upside created by the acquisition of Inmet Mining Corporation's joint venture interest, (giving Jabiru
    100% ownership of the highly prospective Jaguar/Teutonic Bore strike plus other ground) the
    development of the Jaguar Project will occur at a time of maximum opportunity.
 
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