| Tue 1 Dec 2009, 9:00 | | AFE / AEA - African Eagle Resources Plc - Update On Metallugical Tests On |
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AEA
AEA
AFE / AEA - African Eagle Resources Plc - Update On Metallugical Tests On
African Eagle`s Dutwa Nickel Project In Tanzania
African Eagle Resources plc
(Incorporated in England and Wales, registered number 3912362)
AIM share code: AFE AIM ISIN: GB0003394813
JSE share code: AEA JSE ISIN: GB0003394813
UPDATE ON METALLUGICAL TESTS ON AFRICAN EAGLE`S DUTWA NICKEL PROJECT IN
TANZANIA
Preliminary Results from Phase 2 Metallugical Testwork Received
- Initial column test results show rapid leach kinetics
- Up to 70% nickel extraction after just 16 days acid leaching
- Low acid consumption of 200-230 kg/tonne
- Promising initial tank leach results
African Eagle`s Managing Director Mark Parker comments, "These results
are extremely encouraging, showing very fast reaction kinetics and
confirming the good nickel extraction and low acid consumption of the
Dutwa ores. The results show that the project is amenable to both heap
leach and tank leach, and point the way to further tests to determine the
optimum process parameters. The fast leaching reaction, low acid
consumption and good nickel extraction are extremely positive indicators
for the viability and profitability of the project."
African Eagle has received interim results from the current phase of
metallurgical testwork, which is being conducted by Mintek of South
Africa. The results include the first tank leach and column leach test
data, together with further "bottle roll" leach test results and rock
property test results.
The test results will help to determine the best extraction process and
to optimise parameters such as acid concentration, residence time and
leach temperature in the engineering design for the feasibility study.
Column tests
Three column tests are being conducted to investigate the likely
behaviour of the ore under heap leach conditions. Coarsely crushed ore
(25mm or less in size) is packed into vertical plastic pipes, 1 metre
high and 200mm diameter, and continuously irrigated with sulphuric acid.
The acid dissolves the nickel and other metals as it percolates down the
column.
After only 16 days, 60% to 70% of the nickel had been extracted, with low
net acid consumption of 200 to 230kg/t. This shows extremely fast
leaching reaction kinetics, much faster than most published nickel
laterite data. Although column test data cannot be simply scaled up to
determine full-sized heap behaviour, these results are extremely
encouraging.
Fast reaction kinetics has important profitability implications for the
heap leach method, as it means that working capital will not be tied up
for many months while the heap reaches full productivity. At Caldag in
Turkey, for example, operator European Nickel plc reports that almost one
year of leaching was required to extract 60% of the nickel from trial
heaps and 540 days to extract 80%. Mintek reports that other nickel
laterite ores it has column-tested have also taken much longer to achieve
comparable recoveries.
Tank leach tests
Three tank leach tests have been conducted to investigate the ore
behaviour under high temperature agitated vat leach conditions. The ore
samples were pulverised to three different particles sizes for these
tests. The tests were conducted over 24 hours, but again, very fast
reaction kinetics was seen and almost all of the nickel extraction
occurred within the first hour. The fast initial leaching exhausted the
acid quickly and nickel extractions reached 64%, but future tests using
higher initial acid concentrations should give better recovery.
Bottle roll tests
Three additional bottle roll tests were conducted to investigate the
effects of changing the acid concentration and the solids to liquid
ratio. The results showed that leaching efficiency falls if the acid
concentration is reduced.
Physical property tests
The results of the following tests have also been received:
- Bond impact work index
- Bond abrasion index
- Bond ball work index
- Bond rod work index
- Uni-axial compressive strength
- Agglomerate stability tests
- Bulk and true SG determination
- Moisture content
- Natural and complete sizing
The physical property test results will be used in the engineering design
for the feasibility study.
Technical terms
A glossary of technical terms used by African Eagle in this announcement
And other published material may be found at
www.africaneagle.co.uk/p/glossary.asp
For further information:
Mark Parker
Managing Director
African Eagle
+44 20 7248 6059
+44 77 5640 6899
Nicola Marrin
Seymour Pierce Limited, London
Nominated Adviser
+ 44 20 7107 8000
Charmane Russell
Russell & Associates, Johannesburg
+ 27 11 8803924
+27 82 8928052
Ed Portman / Leesa Peters
Conduit PR, London
+44 20 7429 6607
+44 77 3336 3501
1 December 2009
About African Eagle
African Eagle is a diversified mineral exploration and development
company operating in eastern and central Africa. The Company`s principal
advanced assets are the Dutwa nickel laterite discovery in Tanzania,
where the Company completed a scoping study in June 2009, and its 49%
interest in the Mkushi Copper Mines joint venture project in Zambia, for
which a draft feasibility study was completed in Q4 2008.
African Eagle is evaluating a second promising nickel laterite deposit at
Zanzui in Tanzania and has defined a JORC gold resource estimated at half
a million ounces at its Miyabi gold project in Tanzania. The Company
holds a well-balanced portfolio of promising earlier stage gold, copper,
platinum and uranium projects, including the Ndola and Mokambo projects
in the Zambian Copperbelt and the Igurubi gold project in Tanzania.
Zambia, Tanzania and Mozambique, the sites of African Eagle`s projects,
are all countries which have highly prospective geology, relatively low
above-ground risks and track records of successful major investments in
the metals and minerals industries.
In December 2008, African Eagle resolved to prioritise the Dutwa project,
because the Board believes that, of all the Company`s projects, it
offered the greatest potential to add value. To take its other
discoveries into production, African Eagle is seeking industry partners
with records of successful mine development, by means of joint ventures,
farm-ins, spin-outs or other mechanisms.
About the Dutwa Project
African Eagle has discovered a significant nickel laterite deposit in the
Dutwa project area in the Lake Victoria Goldfield. Within Tanzania, the
project is favourably situated 100km east of the railhead at Mwanza and
close to the main Mwanza-Nairobi trunk road, a major power line and the
shore of Lake Victoria.
The Company holds a 90% interest, with option to acquire 100%, over the
Dutwa laterite deposit and in 2009, signed a Letter of Intent for an
option and joint venture over another nickel laterite at Ngasamo, 5km
west. In all, African Eagle has explored a total area of more than 750km2
in the project area.
Since the discovery of the Dutwa nickel deposit in June 2008, African
Eagle has explored the project very quickly and cost-effectively,
including resource drilling and an independent resource estimate;
laboratory metallurgical and mineralogical tests which revealed that the
deposit could be processed efficiently by sulphuric acid leaching. On 24
June 2009, the Company announced the results of its "proof of concept"
scoping study. The study, by GRD Minproc of Perth, Western Australia,
indicated that the project can be economically viable, and African Eagle
has now begun work towards a definitive feasibility study.
The Study indicates that Dutwa, if it were in production today, would be
profitable. Earnings, on an EBIT basis, would be of the order of $110
million per annum on average over the life of mine, giving an internal
rate of return around 20%.
As a potentially low-cost producer, the upside for the Dutwa project is
considerable if nickel prices are above the $7/lb used in the base case.
The following table shows the key metrics for several upside cases.
Ni price US$/ 9.00 8.50 8.00 7.50 7.00 6.50
lb
Life of mine $M 2,600 2,300 2,000 1,800 1,500 1,200
EBIT
Pre-tax IRR % 31 27 24 21 17 13
Post-tax IRR % 27 24 21 18 15 11
Pre-tax NPV $M 640 530 420 310 200 90
Post-tax NPV $M 430 350 270 190 110 30
Base case: Abbreviations:
Nickel price = US$ 7/lb EBIT = Earnings before
($15,430/tonne) interest and tax
Cobalt price = US$ 10/lb IRR = Internal Rate of
Discount rate = 10% Return
Transport cost = US$100/tonne NPV = Net Present Value
(8Cents (USD)/tonne/km) DCF = Discounted cash flow
Tax rate = 30%, fiscal analysis
incentives not accounted
Royalty = 3% All numbers stated to 2
significant digits
The financial modelling was
conducted in US dollars with
an estimated accuracy of +/-
30%
The Study adopted a fairly broad brush approach to many of the costs, to
demonstrate "proof of concept" and provide indicative economics. GRD
Minproc estimated individual capital and operating costs to +/- 30%,
based on their considerable experience with nickel laterites. These
variables will be determined with more accuracy and confidence during the
forthcoming feasibility work.
The Study identified several key areas where further testwork and
detailed study are especially likely to result in improvements to the
"bottom line" or to important gains in confidence. These areas include:
- Improved global deposit model and the potential for early "high-
grading". The Ngasamo resource will be drilled and incorporated into
a more sophisticated global resource model and mining plan. From
this, it will be possible to establish whether richer ore can be mined
first, giving increased early cash-flow and an improved NPV.
- Ore beneficiation and project scale. The capital and operating costs
of the plant would be reduced if mechanical beneficiation of the ore
prior to leaching yields a smaller tonnage of richer material for
processing through the plant.
- Advanced leaching testwork. Column and vat leach tests at bench and
pilot scale will determine the best operating conditions to optimise
nickel extraction, including acid concentration, residence time and
temperature.
- Reagent cost reductions. The cost of reagents, notably sulphur and
lime, will be a significant component of operating costs and
profitability will increase considerably if these costs are
minimised. Transport is a substantial part of the reagent costs and
ways to minimise this will be investigated, as will the availability
of more local sources, particularly of lime.
- More sophisticated fiscal and economic modelling. Tanzania offers a
number of tax incentives for exploration and mine development, which
were not fully accounted in the Study economic model.
In August, the Company raised GBP3.3M additional capital through a
Placing and Offer, to address these issues and progress the project
towards feasibility. Further metallurgical testing has commenced on
drill core samples at Mintek laboratories in South Africa and the Company
has started infill drilling at Dutwa and resource drilling at Ngasamo.
African Eagle acquired the Dutwa project for its gold potential, but the
Company`s exploration team quickly recognised that there was significant
nickel laterite potential. There is very little outcrop, so the Company
conducted extensive ground magnetic surveys to reveal the underlying
structure and geology. The Company also compiled historical data,
including detailed geological maps and trench results dating from 1956,
when rock chip samples from the trenches over the ultramafic rocks were
reported as yielding up to 1.9% nickel.
Greenstones and granites underlie the project area. The greenstones, of
Archaean Nyanzian age, are mostly metamorphosed volcanic and sedimentary
rocks, with some banded iron formation in the east. Several large
ultramafic bodies occur within the greenstones and the nickel laterites
form a blanket up to 60m thick on top of these.
To investigate the nickel discovery, the Company undertook trial drilling
in June 2008. The results were very encouraging and a 139-hole reverse
circulation (RC) drilling programme was completed to delineate the
resource. African Eagle also undertook a 10-hole diamond drill programme
to obtain core samples for metallurgical testing and density
measurements.
In November 2008, African Eagle announced an initial Inferred Mineral
Resource estimate of 31 million tonnes at an average grade of 1.1% nickel
and 0.034% cobalt. At a cut-off grade of 0.5% nickel, this gives Dutwa a
contained metal endowment of some 340,000 tonnes of nickel and 11,000
tonnes of cobalt. The estimate was prepared by independent consultants
SRK Consulting (UK) Ltd in line with the Australasian Code for Reporting
of Mineral Resources and Ore Reserves (the JORC Code). A little
additional drilling and more advanced geostatistics and deposit modelling
will be needed to upgrade the resource to Indicated category.
Ngasamo Hill, 5km west of the Dutwa deposit, is geologically very similar
and holds a laterite deposit of the order of 15 to 20 million tonnes,
which would increase the global resource at Dutwa from the currently
defined 31 million tonnes at 1.1% nickel, to some 45 - 50 million
tonnes. Drilling and metallurgical tests will be needed to confirm the
size, grade and compatibility of Ngasamo. Under its agreement with
Ngasamo`s owners, (Safina a.s. of the Czech Republic and its Tanzanian
subsidiary Precious Metals Refinery Company Ltd), African Eagle can earn
an interest of at least 50% and up to 75% in Ngasamo by carrying out
exploration and evaluation work, up to a feasibility study.
Mintek Laboratories in Johannesburg investigated the mineralogy and
metallurgy of mineralised drill samples from the deposit, including
extended `bottle roll` sulphuric acid leach tests to investigate metal
recoveries and acid consumption. Mintek also carried out mineralogical
characterisation by X-ray diffraction (XRD), scanning electron microscopy
(SEM) and polished section work.
The bottle roll test results showed nickel extractions of 70-90% with an
average of 83%. Cobalt extractions were mostly in the range 70 to 85%.
The acid consumptions, averaging 209kg/t, are very low compared to other
Ni laterite ores worldwide.
The mineralogical investigations show that the laterite is extremely
silica-rich, with low iron and magnesium content, indicating that Dutwa
is not a typical laterite nickel deposit. Mintek believes that much of
the nickel and cobalt occurs in "wad" with manganese content of 20-60%,
nickel content of up to 20% and cobalt content of up to 10%.
The unusual mineralogy of the deposit is highly beneficial, as it results
in lower acid consumption and is expected to give good heap leach
permeability or favourable liquid-solid separation in tank leaching. The
concentration of nickel and cobalt in the manganese wad offers the
possibility that mechanical selection of high-grade material may allow
reduced throughput and hence a lower cost processing plant.
The Company is also investigating other potential nickel laterite
deposits in Tanzania, and has completed a trial programme of RC drilling
to test a laterite at its Zanzui project, 60km to the south of Dutwa.
Results included 42m at 1.05% nickel (including 6m at 2.80%) and 33m at
0.91% nickel (including 9m at 1.41%).
Date: 01/12/2009 09:00:03 Produced by the JSE SENS Department.
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