| Tue 27 Aug 2002, 0:00 | | Messina Limited - News Release |
|
Messina Limited - News Release
MESSINA LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 1950/035912/06)
Share Code: MES ISIN: ZAE 000004438
News Release
Johannesburg, 27 August 2002
SRK Completes Positive Phase 2 Feasibility Study for Messina Platinum
Phase 2 Resource Increases by 12 Percent to 6.3 Million Ounces
Messina Limited announced today the successful completion of the Bankable
Feasibility Study for the Messina Phase 2 Project on the Doornvlei property by
SRK Consulting, a leading international engineering consulting group. The
Doornvlei property is 100 percent owned by Messina Limited, which in turn is
70.4 percent owned by SouthernEra Resources Limited.
Doornvlei is located on the Bushveld Igneous Complex, a geological formation
well known for its production of Platinum Group Metals (PGM`s) as well as
chromite ores. The project is located about 12 kilometres to the east of
Messina`s 100 percent owned Voorspoed Mine, which is currently under development
and in early production, and immediately adjacent to the newly acquired Dwaalkop
property. The PGM reefs are continuous over these three properties - Voorspoed
(Phase 1), Doornvlei (Phase 2) and Dwaalkop.
The Bankable Feasibility Study estimates an after tax internal rate of return
(IRR) of 22.6 percent with a net present value (NPV) of US$73.3 million at a 10
percent discount rate for the Messina Phase 2 Project. The expected annual
average production rate is approximately 173,000 ounces of 5PGM+Au at an average
estimated operating cost of US$172 per ounce over the life of mine, gross before
nickel and copper by-product credits. The metal splits for the two reefs are as
follows:
ELEMENTS MEREKNSKY REEF UG2 REEF
Platinum 53.7% 39.5%
Palladium 27.4% 36.9%
Rhodium 2.8% 6.2%
Iridium 1.4% 2.5%
Ruthenium 6.9% 13.0%
Gold 7.8% 1.8%
Platinum / Palladium 1.96: 1 1.07: 1
Ratio
Platinum / Rhodium 19.18: 1 6.37: 1
Ratio
The peak capital requirement for the project is US$84.7 million, which is
estimated will be paid back approximately 5 years after production start-up. The
expected operating mine life is 23 years with full production of 120,000 tonnes
per month to be achieved by mid-2005 following a 24 month construction period.
Messina CEO Patrick Evans stated: "We are proving, step by step, that the
Messina Project in its various phases will make Messina one of the world`s
leading and most profitable producers of PGM`s. Once we have achieved full
production from Phase 2, PGM production from Messina will total approximately
400,000 ounces per year at a cash production cost of approximately $100 per
ounce."
At an annual production rate of 173,000 ounces, average annual revenues (net of
smelter and refining charges) are estimated at US$64.7 million based on an
average price of $374 per ounce of 5PGM`s+Au. Metal prices used for the Bankable
Feasibility were based on London Metal Prices at August 16, 2002. The following
table summarises the metal prices and expected annual metal output.
Metals Feasibility Prices Annual Output
Platinum $556 per ounce 76,800 ounces
Palladium $320 per ounce 58,200 ounces
Rhodium $740 per ounce 8,700 ounces
Iridium $280 per ounce 3,700 ounces
Ruthenium $125 per ounce 18,900 ounces
Gold $312 per ounce 6,700 ounces
Nickel $6650 per tonne 1,670 tonnes
Copper $1473 per tonne 1,000 tonnes
South African-based operating and capital cost estimates were converted at an
exchange rate of R10.5 = US$1.00 for 2002, increasing to R11= US$1.00 by the end
of 2003 and this rate was maintained over the remainder of the project life.
The previous Phase 2 resource estimate was 15.180 million tonnes at a grade of
5.81 grams per tonne of 5PGE+Au (2.83 million ounces) in the Indicated category,
plus an additional 15.030 million tonnes grading 5.80 grams per tonne (2.80
million ounces) in the Inferred category. As part of the Bankable Feasibility
Study, SRK re-estimated the Phase 2 resource using the histogram method, which
assigns a global mining grade and width. The mining widths selected, excluding
dilution, were 1.05 metres for the Merensky Reef and 2.0 metres for the UG2.
Although the reefs outcrop at surface on Phase 2, the resource tonnage has been
estimated from 100 metres below surface to 1 000 metres and by applying a bulk
density of 3.2 tonnes per cubic metre for the Merensky reef and 3.8 tonnes per
cubic metre for the UG2 reef.
SRK has applied a 25 percent geological loss for both reefs at Phase 2, in close
concordance with common industry practice. Incorporating the abovementioned
mining widths, SRK estimates the Merensky resource is 11.89 million tonnes at a
grade of 4.47 grams per tonne (5PGM+Au). The corresponding UG2 values are 26.9
million tonnes at 5.35 grams per tonne. This 6.3 million ounce resource, at an
average grade of 5.08 grams per tonne, has been placed in the Indicated category
in terms of South Africa`s SAMREC Code of reporting of mineral resources and
mineral reserves, which conforms to the requirements of Canada`s National
Instrument 43-101 and the equivalent United Kingdom code for reserve and
resource classification. Comparing the SRK resource to the previous estimate,
total 5PGM+Au resources have increased by 12 percent.
SRK has estimated a mining reserve by discounting the new resource tonnage for
mining layout losses and diluting the resource grade. The mining layout calls
for an extraction of 78 percent, including shaft pillars. Dilution has been
added at 0.20 metres to the stoping width for both reefs giving 19 percent and
10 percent dilution for the Merensky and UG2 reefs respectively. Further
tonnage increases at the expense of grade have been included to account for all
development dilution. The effects of all these additions resulting from
dilution and subtractions for pillars is to lower the resource tonnage by 21.4
percent for Merensky reef and 29.5 percent for the UG2.
Accordingly, the reserves for Phase 2 are 11.12 million tonnes at 3.69 grams per
tonne for the Merensky reef and 20.85 million tonnes at 4.81 grams per tonne for
the UG2. This total reserve of 4.5 million ounces at an average diluted grade of
4.42 grams per tonne has been classified in the Probable Reserve category. The
Independent Competent Person in respect of the Phase 2 reserve and resource
statement is Dr. Anthony Martin, B.Sc., D.Phil. of SRK Consulting.
Both the Merensky and UG2 reefs will be mined at a combined rate of 120 000
tonnes per month. The sublevel open stoping mining method has been proposed, as
it is the safest and most practical for this environment. A total of 11.12
million Merensky and 20.85 million UG2 reef tonnes will be mined over a life of
25 years, resulting in a total production tonnage of 31.97 million tonnes.
The development strategy is to first access the ore bodies by means of two
decline ramp systems, each of which will cater for one half of the 3.7-kilometre
strike available at Phase 2. The top three levels (175 metres, 250 metres and
325 metres) will be mined via the declines, with reef being trucked up to
surface for processing in the plant. The portion of the ore body between 400
metre level and 700 metre level will be accessed via a vertical shaft to 700
metres, the sinking of which will begin in Year 5 and will be operational by
Year 7. The shaft will then be deepened in Years 14 and 15 in order to access
the remainder of the resource between 700 and 1 000 metres. The project
reserves, those above 1 000 metres, are depleted in project Year 25. Potential
exists however, to extend the project life beyond this date, by considering
resources below this level.
The plant has been designed as a two-stage milling and flotation (MF2) type
plant capable of treating 120 000 tonnes of ore per month at a UG2: Merensky
feed ratio of 65:35. A single flotation will be produced as a filter cake and
will be transported by road for smelting and refining. The average life of mine
head feed grade is 4.42 grams per tonne 5PGM+Au resulting in an average plant
recovery of 84 percent. Concentrate production will be approximately 2 400
tonnes per month, based on a mass pull of 2 percent.
Subject to the securing of the necessary government permits and the conclusion
of financing, the Company plans to commence development of the Messina Phase 2
in January 2003. It is expected that the mine will be in full production by mid
2005.
FOR FURTHER INFORMATION PLEASE CONTACT:
Messina Limited
Patrick C. Evans, CEO; or
Mike Kritzinger, Secretary
Telephone: (011) 442-6923
Fax: (011) 442-6993
Date: 27/08/2002 04:30:00 PM Produced by the JSE SENS Department
