"An economic evaluation forecasts the Project to generate A$199 million in net cash pre-tax and provide an Internal Rate of Return (IRR) of 33% over its 7.5 year mine life based upon development capital costs of approximately A$92.8 million (US$96.5 million).
PROJECT HIGHLIGHTS
The Base Case Scenario indicates an above average return and on invested capital and is based upon forward curve metal prices and foreign exchange rates as at February 27 2012.
Mineral Reserves: 11.2 million tonnes at 2.2% Zn, 1.3% Pb, 0.5% Cu, 31 g/t Ag, 0.3 g/t Au Mining: 4,300 tonnes per day (1.5 Mtpa) utilising hydraulic mining Mine Life: 7.5 years Processing: Conventional milling and flotation to produce Cu, Zn, and Pb concentrates containing Ag and Au Development Capital: $92.8 million including a $5.6 million contingency Site Operating Costs: $22 per tonne processed Total NSR Revenue: $586 million Pre- Tax Net Cash Flow: $199 million Pre-Tax NPV10: $81 million C1 Unit Cost: $0.12/lb payable zinc (post by-product credits) Pre-Tax Project IRR: 33%
Capital Costs
The construction capital cost estimate is provided below.
Woodlawn Retreatment Project Construction Capital Cost Estimate
Working capital of A$5 million is required to cover pre-revenue operating costs in addition to the construction capital. Minimal sustaining capital will be required during the 7.5 year mine life.
Closure costs have been estimated at A$4.5 million.
Operating Costs
PROCESS PLANT AREA CAPITAL COST A$M
Process Plant $53.5 Infrastructure $11.3 Engineering, P&G, Commissioning, First Fills $18.1 Contingency $5.6 TSF 4 Construction (non GRES) $2.6 Mining Capital + Mobilisation (non GRES) $1.7
TOTAL CONSTRUCTION CAPITAL ESTIMATE $92.8 (US$96.5)
Project Enhancements
Interestingly, the Company has identified a number of opportunities to further enhance the financial performance of the WRP through improved metallurgical recoveries and mining costs could be reduced through the application of owner operated mining.
The project has established water, power, and road access, and enjoys local community and state government support.
The Tailings Retreatment Project presents a low risk reserve, mining and processing project with attractive economics at metal prices significantly below current and forecast future levels. An additional key feature of the Project is the short lead time from construction to production.
WOODLAWN UNDERGROUND MINING PROJECT
The Woodlawn Underground Mining Project is 100% owned and hosts an independently calculated JORC compliant Measured and Indicated Mineral resource of 8.6 million tonnes at 10.3% zinc, 4.0% lead, 1.8% copper, 84 g/t silver, and 0.5 g/t gold; plus an additional Inferred Resource of 1.5 million tonnes at 9.6% zinc, 4.1% lead, 1.7% copper, 87 g/t silver, and 0.6 g/t gold.
This resource contains in-situ metal of 1.03 million tonnes of zinc, 0.41 million tonnes of lead, 0.18 million tonnes of copper, along with 27 million ounces of silver and 167,000 ounces of gold.
TriAusMin has completed a detailed technical analysis of the historic mining lodes within the underground mine and has targeted a conceptual 200 to 300 metre extension to the most prolific mineralised lodes for additional resource definition. Diamond drilling commenced in February 2012.
Re-development of the Woodlawn Underground Mining Project has a number of key development advantages that include access to previous underground mining areas with extensive infrastructure still in place. The mined ore also has known processing characteristics that reduce the potential risks in assessing metallurgical performance and the potential for ore extensions at depth is very high. Importantly, this will allow the mine to be fast tracked back into production at lower capital expense. "
