Mt Cattlin
50% after sale of 50% operating cash flow
The Mt Cattlin mine was placed on care and maintenance in July ‘12. The plant had achieved close to its design run-rate of 1 mt pa of ore during the June ’12 quarter with an annualised rate of 876,000 tpa recorded over that entire quarter.
General Mining (GMM: ASX), controlled by Galaxy’s founding MD Michael Fotios, is preparing to restarting the mine in March ’16 to produce tantalum and spodumene concentrates from higher grade remaining ore. Galaxy has negotiated payment from GMM of $25 million, staged over 3 years and will receive 50% of the project’s operating cash flow from mineral sales.
Start-up at Mt Cattlin will benefit from an open pit that has already had 60% of its waste removed. It holds the potential to reprocess tailings from past mining, has about 70,000 tonnes of ore at the crusher on the run of mine pad, plus ore in the pit that has already been blasted on two benches and is ready to take to the concentrator. The plant has functioning administration offices, a laboratory plus water and power connected and also has stores of consumables worth about $3 million, ready for use.
Mt Cattlin’s total global mineralisation target, calculated to a maximum depth of ~60 metres has been estimated at nearly 25 million tonnes, containing 2 mt of spodumene and 6.6 m lb of Ta2O5. When applying a cut-off grade of 0.4% Li2O or 5.9% spodumene, remaining Reserves of 10 million tonnes containing 1.47 million tonnes of spodumene and 3.3 million lbs of tantalite is estimated.
Mt Cattlin Resource & Reserve Estimates
Mt Cattlin mt Spodumene Li2O Ta2O5
Resource 16.4 14.7% 1.08% 0.016% Containing 2.41 mt 390 m lb 5.7 m lb
High Grade Reserve 9.97 14.7% 1.04% 0.015% Containing 1.47 mt 229 m lb 3.3 m lb
Source:Galaxy, Strachan Corporate Pty Ltd
Strachan Corporate believes that the Mt Cattlin mine will not be resource constrained. Drilling to the west and northwest of known mineralisation expanded known zones of relatively shallow lithium mineralisation. Bore-hole GX849 recorded an intercept of 14 metres from 50 metres depth, grading 25% spodumene and bore-hole GX850 hit 10 metres from 53 metres depth grading 26% spodumene, showing much higher grades than the Reserve average at slightly deeper extensions. The project should be able to look forward to at least a 20 year project life with further extensions reliant on applying capital to drilling and the presumption of commercial grades and supportive commodity prices over the projected project life.
Mt Cattlin Location Map
Source:Galaxy, Strachan Corporate Pty Ltd
The Mt Cattlin ore zone occurs within a layered volcanic sequence of rocks containing hard and brittle, mineralised pegmatite sandwiched between equally hard basalt layers. Mining to depths of about 50 metres will present little difficulty, despite a need for drill and blast mining operations virtually from the surface. Drilling to about 120 metres has shown repetitions of flat lying, mineralised pegmatite below the presently defined open pit mineralisation. This mineralisation could enable mining operations to be extended at depth, either by deepening open pits or by application of underground mining extraction techniques. On balance, underground methods may prove to be more profitable than deepening open pits, provided that deeper mineralisation with sufficient lithium and tantalum grades can be established. Mining plans envisage the eventual low cost disposal of waste and tailings into mined voids, following a period of surface disposal.
Tailings material or crushed waste rock may ultimately find a market as aggregates for road building or other industrial materials, representing an additional revenue stream for the project.
When last in operation, the mine produced a lithium oxide concentrate via heavy medium separation from ore crushed to 100% less than 12 mm, using a specific gravity cut of 2.9 gram per cubic centimetre. The light fraction was subject to further grinding followed by wet magnetic and gravity separation. Prior to commissioning, GMM plans to improve the crushing circuit to reduce size to 6 mm and add a mica scavenging circuit to improve spodumene concentrate quality. With these improvements, shipping out of the nearby port of Esperance should be possible, resulting in considerable transport cost savings.
GMM will target annual spodumene production of 111,500 tonnes plus 85,924 tonnes of tantalite from processing 800,000 tpa of ore. Strachan Corporate calculates a pre-tax NPV8 of $170 million for Galaxy’s interest in Mt Cattlin.
A peak recovery target of 75% for spodumene and +65% for tantalum has been set for operations by 2017, which is close to rates achieved when the plant was put on care & maintenance in July ‘12.
http://galaxylithium.businesscatalyst.com/Investor/reports/GXY-SC-Nov-2015.pdf
