The world-class Admiral Bay deposit is a major undeveloped lead-zinc-silver deposit located 250 kilometres south of Broome in Western Australia, and represents a key strategic growth opportunity for Kagara Ltd.
The deposit was discovered in 1981 by Meridian Oil NL, and was subsequently acquired by CRA Exploration which spent over A$20 million between 1986 and 1992, completing 37,472m of diamond and rotary drilling, 132 line kilometres of seismic surveying, airborne magnetic surveys, detailed gravity surveys, preliminary metallurgical testing and conceptual mining studies.
Kagara Ltd acquired the Admiral Bay Project from CRA Exploration in 2004 and commenced drilling in April 2007, with the objective of delineating an Inferred Resource of between 50 and 75 million tonnes of zinc-lead-silver mineralisation.
Mineralisation at Admiral Bay can be broadly divided into two zones - an upper zinc-lead-silver-barite zone and a lower high-grade lead-silver-barite zone.
A highly successful A$35 million exploration program was completed in early 2008, producing some spectacular intersections and confirming a continuous lead-zinc-silver-barite mineralised zone over a strike length of 2.1 kilometres and likely to extend over at least 18 kilometres. In August 2008 the Company unveiled a maiden Inferred resource for the Admiral Bay deposit of 72 million tonnes grading 3.1% Zinc, 2.9% Lead, 18g/t Silver and 20% Barite.
A Pre-Feasibility Study (PFS) for Admiral Bay was completed by RSV Australia Pty Ltd in July 2010, which recommended that Kagara Ltd move ahead with a BFS. The BFS is projected to cost around $184.5m and will include the sinking of a 6.7m diameter shaft to 1,428m depth, and the drilling out to reserve status of a 1.2km section of the Admiral Bay deposit to support financial modelling.
Funding arrangements are expected to be completed within the next six months. A project of this size is clearly beyond the balance sheet of Kagara Ltd and these arrangements are likely to include a suitable joint venture structure to enable the Project to move forward as rapidly as possible while retaining significant ownership for Kagara Ltd.
Admiral Bay PFS - Key Financial and Production Outcomes:
Based on processing an initial 25.2 million tonnes of ore over a 10.2 year time frame and using lead and zinc prices of US$2,600 per tonne, a silver price of US$18 per ounce and an exchange rate of 0.85, the PFS estimated:
Pre-production capital (excluding BFS costs) of A$812.2 million Revenue of A$4,964 million Net cash flow (inclusive of BFS costs) of A$675 million IRR of 12.5% Net Present Value at 8% discount of A$159.8 million Payback of 3.8 years Lead concentrate production of 1.552 million tonnes grading 70% lead Zinc concentrate production of 1.539 million tonnes grading 55% zinc Silver production of 18.97 million ounces contained in concentrates
The Admiral Bay deposit is a Tier One asset which has been demonstrated to be continuous over a 2.1 kilometre strike length.
Overview Exploration Development Projects North Queensland Western Australia Admiral Bay Operations Image Gallery Resource & Reserves Table Temporary Library
Sign up to our Email Alerts service.
KZL Price at posting:
19.0¢ Sentiment: Hold Disclosure: Held
