Australian Mines on track to become the world's largest producer of scandium oxide from a primary scandium deposit
1 According to expected annual production capacity, as independently observed by Platina Resources Limited: Platina Resources Limited, Owendale scandium project, released 17 March 2015
2 Unless otherwise stated, all figure quoted in this document are in Australian dollars (AUD)
Australian Mines Limited ("Australian Mines" or "the Company") is pleased to announce its strategy to aggressively pursue a dominant position in the global supply of scandium through two separate transactions to acquire advanced projects focused on the production of this emerging technology metal.
The Company has entered into an option agreement with Jervois Mining Limited (ASX: JRV) to acquire 100% of the Flemington Scandium-Cobalt Project near Fifield in New South Wales.
Simultaneously, the Company entered into a separate and independent agreement with Metallica Minerals Limited (ASX: MLM) to earn up to a 75% interest in the advanced Sconi Scandium-Cobalt Project near the historic mining centre of Greenvale in Queensland.
Completion of these transactions will be a significant milestone for Australian Mines, providing the Company with a clear pathway to production through the development of the premium-quality scandium resource at Sconi before expanding to bring the high-grade Flemington Scandium-Cobalt Project on line by 2022 (see Figure 8).
A Pre-Feasibility Study (PFS) recently completed on the scandium ore body at Sconi confirmed it to be an economic and technically viable mining project capable of producing 50 tonnes of high purity scandiumoxide (Sc203)per year over a 20-year mine life, and generating an average EBITDA of
$59 million per annum3.
The Company has, therefore, immediately commenced a Definitive Feasibility Study (DFS) on the Sconi Project, which SRK Consulting expects to take up to 2 years to complete ahead of a Decision to Mine.
A mining operation at Sconi has the potential to become the world's major dependable source of this critical metal from a primary scandium deposit4. For Australian Mines this represents the potential to be the largest dedicated supplier of scandium metal5 into a market where demand is anticipated to grow by at least 800% over the next 10 years6.
Australian Mines has also commissioned SRK Consulting to immediately commence a Scoping Study on the Flemington Scandium-Cobalt Project, which the Company believes represents an attractive development opportunity based on the results of a Feasibility Study completed on the neighbouring Syerston Scandium-Cobalt-Nickel resource7.
Hosting an existing Mineral Resource of 3.14 million tonnes at 434 ppm scandium, including 2.67 million tonnes at 435 ppm scandium in the Measured Resource category8 (see Table 1), the Flemington Scandium-Cobalt Project is arguably one of the highest-grade scandium deposits in the world9.
3 Metallica Minerals Limited, Sconi Scandium Project - Positive Pre-Feasibility Study, released 28 March 2013
4 As independent reported in: Platina Resources Limited, Owendale scandium project, released 17 March 2015
5 Annual average scandium production from Sconi, according the to March 2013 PFS is 51 tonnes; compared to 49 tonnes per annum from Clean TeQ's Syerston project (August 2016), 38 tonnes from Scandium International's Nyngan project (July 2016) and 3o tonnes from Platina Resources' Owendale Project (March 2015).
6 Platina Resources Limited, Owendale Scandium Project presentation, released 22 August 2014
7 See Clean Teq Holdings Limited, Completion of Syerston Scandium Project Feasibility Study, released 30 August 2016
8 Jervois Mining Limited, EL7805 Syerston Updated Mineral Resource Estimate, released 20 August 2015
9 Jervois Mining Limited, Quarterly Report to 31 December 2015, released 29 January 2016
Based on this identified Mineral Resource at Flemington, this project currently includes a total of 2,085 tonnes of scandium oxide (Sc203)10, with 77% of that metal contained within the limonitic laterite, which appears similar in nature to Clean TeQ's adjoining Syerston deposit11.
This similarity between Clean TeQ's Syerston mineralisation and that at the Company's Flemington Project is, of course, not surprising given that Australian Mines' project is the northern continuation of the Syerston ore body - separated only by a tenement boundary (see Figure 3).
Both the Flemington and Sconi projects offer considerable exploration upside for additional high- grade, high-quality scandium deposits as well as complementary mineralisation including cobalt and nickel.
Previous drilling at the Sconi Project, for example, identified a cobalt-rich zone within the scandium ore body where historic intersections included:12
Option 5: non-refundable $500,000 fee upon expiry of Option 4 for a further 6 months.
10 Total contained scandium metal tonnage of 1,363 multiplied by 1.53 to convert to total Sc2O3, being the saleable scandium product
11 Clean Teq Holdings Limited, Syerston Scandium Mineral Resource update, released 17 March 2016
12 Metallica Minerals Limited, Sconi Project - Nickel-Cobalt and Scandium Resource Upgrade, released 21 October 2013
13 Jervois Mining Limited, EL7805 Syerston Drilling Results, released 2 October 2013
14 Jervois Mining Limited, Quarterly Activities Report to 30 June 2014, released 30 July 2014
The total purchase price of the Flemington Project will be $6 million, minus the total of all option fees paid. If the Australian Mines board wishes to exercise this option, the Company will seek any required regulatory approval or consent from its shareholders at that time.
The agreement with Jervois Mining also includes a 1.5% gross sales royalty on all proceeds from the sale of products derived from the Flemington assets.
Under the terms of the agreement entered into with Metallica Minerals, Australian Mines will provide the following consideration to earn up to a 75% joint venture interest in the Sconi Scandium-Cobalt Project: