Breakaway Resources Limited (ASX: BRW)
ELOISE COPPER MINE PERFORMING
STRONGLY WITH PLAN TO EXPAND FOLLOWING DEVELOPMENT AND RESOURCE UPGRADES
HIGHLIGHTS
- Major
capital development initiatives at Eloise completed.
- Production
rapidly returns to nameplate 600,000tpa throughput and expected to
increase further.
- A$3M
plant expansion initiated to increase throughput to about 740,000tpa.
- Substantial
increase in Indicated and Inferred Resources to 3.5Mt @ 3.1% Cu including
a fully developed Probable Ore
Reserve of 2.4Mt @ 2.6% Cu with excellent potential for further increases.
- Current
life-of-mine base case value of about A$40M estimated for future
accumulated royalty earnings from Breakaway?s 30% net profit interest,
with earnings expected to resume in mid-calendar 2009.
Breakaway Resources
Limited (ASX: BRW ? ?Breakaway?) is pleased to update the market on
a number of positive developments at the Eloise Copper Mine located in
North Queensland, in which Breakaway has a 30% net profit interest. These
developments, which will reinvigorate the operation and better position it to
benefit from current high copper prices, include the completion of major
capital developments, increased ore production to exceed the current plant
processing capacity, approval for a 23% expansion of
the plant throughput and a substantial increase in Indicated and
Inferred Mineral Resources to 3.5M tonnes @ 3.1% Cu
increasing the potential mine life beyond five years.
As a consequence of
these advances, current life-of-mine, future accumulated earnings from
Breakaway?s 30% net profit royalty interest in the operation are estimated to
have a base case value of about A$40M EBITDA (undiscounted) based on
a production forecast of 3.3M tonnes @ 2.6% Cu and an average copper price of
US$6,200/tonne Cu (US$2.80/lb Cu = A$3.16/lb Cu using forward price
estimates of Macquarie Research Commodities, 14 July 2008 ). At the current
copper price of about US$8,000/tonne the estimated accumulated royalty earnings
would total about A$80M. Based
on the mine?s production forecasts, the expectation is that royalty earnings
will resume in about mid-calendar 2009, after all capital costs have been
offset against profits in the 2008-09 financial year.
The base case estimate including the
Company?s cash reserves at 30 June 2008 are approximately equivalent to the
current market capitalisation of the Company, without consideration of the
Company's extensive nickel and base metal assets and recent discoveries.
Capital Development and Production Expansions
Breakaway has been advised by the mine owner,
FMR Investments Pty Ltd (?FMR?) that all previously announced capital
development initiatives at Eloise are complete, including the establishment of
additional ventilation capacity and importantly the full development of a
substantial number of new ore blocks ? including the first major stoping block
of the Eloise Deeps ore zone ? and expansion of the tailings dam.
These initiatives underpin the longevity and
future profitability of the operation. Production has ramped-up rapidly since
May 2008 to a rate equivalent to 600,000 tonnes per annum representing the
current throughput capacity of the processing plant.
Stope production, adopting a bulk mining
approach utilising a modified shrink stoping technique, has commenced on the
upper portion of the Eloise Deeps ore block (1.3M tonnes of the Ore Reserve)
and is expected to provide further improvements in ore production with
associated reductions in waste dilution and operating costs.
As a consequence of predicted production
increases, it is planned to expand the processing plant to treat approximately
740,000 ore tonnes per annum at a modest capital cost of about $3.0M. At
current copper prices this cost would be paid back in about one month. The
expansion will be carried out without compromising the current plant
throughput, with completion expected in early calendar 2009.
Resource and Reserve Upgrade
Breakaway is also pleased to advise that the
objective of increasing the Mineral Resource (including the Ore Reserve) to
3.5M tonnes at 2.5% to 2.8% Cu by mid-2008 has been achieved with further
in-mine exploration success. This represents a substantial change from the
Indicated/Inferred Resource of 2.18M tonnes announced previously in 2007. The
updated Mineral Resource and Ore Reserve statement for the Eloise
Mine as at 30 June 2008 is summarised below:
Category
|
Tonnes
(?000)
|
Cu (%)
|
Ag (g/t)
|
Au (g/t)
|
Mineral
Resource (inclusive of the Ore
Reserve)
|
Indicated
|
3,100
|
3.1
|
9.8
|
0.8
|
Inferred
|
400
|
3.0
|
10.9
|
1.0
|
TOTAL
|
3,500
|
3.1
|
10
|
0.8
|
Ore
Reserve
|
Probable
|
2,400
|
2.6
|
9.3
|
0.7
|
Note: The Mineral Resource and Ore
Reserve are based on estimates carried out by FMR mine staff. The estimates
were reviewed by Breakaway who concluded that they satisfy the 2004 Guidelines
of the Australasian Joint Ore
Resource Committee (JORC, 2004) Code.
The upgraded resource/reserve position
underpins an increased mine life, with the current reserves representing
approximately 3.5 years of future production. The mine life could extend beyond
five years, based on the high conversion of resources to reserves and the fact
that the Indicated and Inferred Resource occurs as extensions directly
down-plunge of the Eloise Deeps Ore
Reserves, which are currently being mined.
Additional in-fill drilling on the Eloise
Deeps depth extensions is planned in the second half of this calendar year to
extend and upgrade the down-plunge Indicated and Inferred Resource. FMR has
also recently commenced underground drilling to evaluate several nearby
geological targets with the objective of delineating new, shallower zones of
mineralisation.
The establishment of the increased Ore
Reserve and production forecast have enabled Breakaway to establish a robust
estimate of the base case for life of mine accumulated royalty earnings of
about A$40 million for its 30% net profit interest, based on an average
copper price of A$3.16 per pound using published forward price trends.
This estimate ignores further additions to
the Mineral Resource/Ore Reserve. It is expected that royalty earnings should
resume in about mid-calendar 2009 after all capital costs have been offset
against operating profits, subject to the mine achieving production and cost
forecasts and the copper price.
Breakaway Regional Exploration Update
Breakaway has recently commenced a 6,000
metre diamond drilling programme on its 100%-owned Eloise
exploration tenements surrounding the Eloise
Copper Mine.
This programme is designed to explore the
strike continuation of the favourable horizon immediately south of the mine
property and will investigate a series of copper targets represented by surface
and downhole TEM conductors and anomalous historical drill results that have
not been followed up. Historical drilling intercepts include 10m @ 1.0% Cu
from 100m, including 0.7 @ 4.6% Cu, 6m @ 0.45% Cu from 140m, 2m @ 1.32g/t Au
from 41m and 12m @ 0.4% Cu from 46m. Other targets have been
identified elsewhere on Breakaway?s tenements and they will be investigated in
the future.
Commenting on the announcement, Breakaway?s
Managing Director, Mr Peter Buck,
said: ?The Eloise Copper Mine has
achieved a number of consolidating milestones which position the operation
extremely well in the current favourable price environment. The commitment to
investment in capital development in 2007-08 has resulted in productivity
improvements, operating economies and improved management of operating and
market risks. As a result of these advances, together with the recent increase
to the Mineral Resource and Ore Reserve, the value of Breakaway?s 30% royalty
interest now has a strong foundation with improved prospects for longevity and
opportunities to take advantage of improvements in the copper price?.
ENDS
For further
information contact:
Mr
Peter Buck
Managing
Director
Breakaway
Resources Limited
Mobile:
0411 554 099
Business:
(08) 9278 6444
|
Mr
David Hutton
Exploration
Manager
Breakaway
Resources Limited
Mobile:
0417 974 843
Business:
(08) 9278 6444
|
Competent Persons Statement:
The information
in this report that relates to Exploration Results and Mineral Resources is
based on information compiled by Mr Peter Buck (Managing Director)
and Mr David Hutton (Exploration
Manager), both full time employees of the Company. Mr Buck and Mr
Hutton are members of the Australasian Institute of Mining and Metallurgy
(AusIMM) and have sufficient experience of relevance to the styles of
mineralisation and the types of deposits under consideration, and to the
activities undertaken, to qualify as a Competent Person as defined in the
2004 Edition of the Joint Ore Reserves Committee (JORC) Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.
READ CORPORATE
Public Relations
Corporate Communications
T: (+61-8) 9388-1474 | F: (+61-8)
9388-1472 | E: info@readcorporate.com.au | Web: www.readcorporate.com.au
PLEASE NOTE:
This
e-mail and any attachments may contain confidential and/or privileged material
and is for the intended addressee(s) only. If you are not an intended
addressee, you must not use, copy, retain, disclose or distribute this
information. Please notify the sender immediately by return e-mail and delete
the message from your system. If you believe that this message constitutes a
Commercial Electronic Message (CEM) under the Spam Act 2003 and you wish to
unsubscribe please contact the originator of this message with the subject line
of unsubscribe.
Note:
Virus scanning is carried out on all incoming and outgoing email, but cannot be
guaranteed to be timely, secure, error or virus-free. To protect against
computer viruses, e-mail programs may prevent sending or receiving certain
types of file attachments. If you are having problems please check your e-mail
security settings to determine how attachments are handled.