Eurasia Mining plc (AIM: EUA)
('Eurasia' or the 'Company')
Projects Update and Semenovsky Metallurgical Study Results.
Update on West Kytlim and Monchetundra Projects
West Kytlim
Eurasia commenced mining operations at its 75% owned West Kytlim Alluvial Platinum Mine in the Ural Mountains this year (See RNS dated 1 September 2016). Shipments of raw platinum concentrate to a refinery in Ekaterinburg continued through the mining season with a final shipment in the second week of December. A final statement on revenue from Platinum, Gold, Palladium, Iridium and Rhodium revenues is expected from the refinery in January 2017. The project is performing well, while the deferred payment basis from the refinery (which is a high credit rating company) required the use of a debt facility from Sanderson Capital Partners (See RNS dated 21 December 2016), partly as a temporary interim financing.
Monchetundra
A Feasibility Study 'TEO' (Technico Economicheskiye Obosnovaniyeor Technical and Economic Feasibility) was officially submitted today (22 December 2016) for approvals at the State Commission on Mineral Reserves ('GKZ'). This document, considered equivalent to a 'Western' feasibility study, documents the economic extraction of the reserves already identified at two open pit targets on Eurasia's 80% owned Monchetundra License. The reserves, when approved, will represent the maiden reserves defined for the license. In addition, an Engineering Procurement and Construction (See RNS dated 10 October 2016) contract ('EPC Contract') is already in place with Sinosteel, a Chinese state owned group operating primarily in mining, trading, equipment manufacturing and engineering. The signed EPC Contract has an obligation for Sinosteel to provide $150m financing, subject to certain conditions, with production to commence on a turn-key basis by Sinosteel.
Further updates on both the West Kytlim and Monchetundra Projects will be provided as and when information becomes available.
Semenovsky Tailings ('STP') Metallurgical Study Update
Eurasia, working in partnership with Metal Tiger plc ('MTR'), is pleased to report that the Company has received results from the latest phase of metallurgical testing undertaken on STP samples by the Chita branch of SGS Laboratories.
Further to our update of 4 July 2016, which reported fire assayed gold and silver results from Eurasia's 2016 sampling program to be in-line with previous workers' estimates, we are pleased to report results from cyanide bottle roll test-work and an optimization study for each of cyanide concentration, retention time, fine grinding and oxygen/ air sparging.
In addition, a further extension to the Memorandum of Understanding with the projects owners has also been agreed, to allow continued due diligence and follow up metallurgical analysis. The period of exclusivity agreed now extends to end of February 2017.
Background to the Semenovsky project and metallurgy
As set out in the announcement of 16 November 2015, Eurasia signed a Heads of Terms agreement with OOO Metallurg Complect, a Russian minerals company, guaranteeing an exclusive option to acquire up to 67% of STP. Simultaneously, an option agreement was executed with Metal Tiger PLC('MTR') allowing MTR to participate equally with Eurasia in the STP. Both agreements have subsequently been extended (see RNS dated 12 February 2016, 4 May 2016 and 31 August 2016) to allow completion of project assessment. During the period a TEO was written and submitted for approval at the Bashkirian Ministry of Mines. Subsequently, a Reserves Report incorporating a new reserves calculation was commissioned and lodged for approval. Both documents were approved by the expert mining team at the Bashkirian Ministry of Mines (See RNS dated 26 April 2016 and 31 August 2016) The TEO demonstrated the economic extraction of the Reserves approved as Russian standard C2; 2.99 million tonnes at 1.18 g/t gold and 16.44 g/t silver (metal contained calculated as 3.5 tonnes (123k ounces) of gold and 49.3 tonnes (1.7m ounces) of silver.
Eurasia's internal economic calculations show the project to have robust economics for a simple cyanide leach circuit at gold recoveries greater than 25%. Internal calculations undertaken by Eurasia on the STP now indicate a potential 8.5-year mine life, producing an average of 4,938 ounces of gold and 682,000 ounces of silver per annum and generating total revenues of $57 million at a projected gold price of $1,135 per ounce and projected silver price of $16 per ounce (gold and silver prices as at 20 December 2016). After allowing for processing costs, land rehabilitation and relevant taxation, Eurasia has estimated that free cashflow would total $33m or $3.8 million per annum. Utilizing a 10% discount rate Eurasia has estimated that the project Net Present Value would be approximately $15m with a project Internal Rate of Return of approximately 54%.
The figures above are given for guidance only and are subject to updating, correction and verification. The figures will be reviewed and updated when Eurasia has undertaken its own more detailed work on the site.
Metallurgical study
A metallurgical sample was collected in April 2016 by drilling 5 drill holes evenly spaced within the tailings dam. 1 metre sample intervals were dried and split before shipment to SGS Chita for a series of tests including assay and recovery by cyanide dissolution. Further quantitative and qualitative mineralogy was performed including gold phase analysis and XRF mineralogy on some samples.
All drilling metre intervals were initially assayed and tested for recovery to cyanide by the standard bottle roll test method. Composites were then formed from specific drill intervals, chosen for having similar lithological and gold recovery characteristics. Forming composites allows for a larger homogenized sample for optimization studies which by their repetitive nature require larger quantities of sample. Known stratification in the tailings dam has created ore types which have been classified by Eurasia; the composites formed reflect this stratification. A total of 5 composites were formed for tests to optimize cyanide concentration, liquid to solid ratio within the cyanide testing column, retention time, and the effect of air and oxygen sparging. These tests are essential to the work of project metallurgists but are considered beyond the scope of this press release.
Highlights of the Metallurgical study
· Cyanide bottle roll tests on unground material at a cyanide concentration of 0.05 mg/l recovered on average 38% of gold and 48% silver (average of all samples tested)
· Grinding liberates further metals for leaching - Up to 55% gold and 57% silver (tests conducted on composite samples)
· Specific ore types with differing recovery characteristics and mineralogy now better defined within the tailings dam
· Gold phase analysis and qualitative and quantitative mineralogy allow for more specific gold recovery testwork
Future testwork under consideration consists of several ore pre-treatment options, and the application of modern gravity recovery techniques.
Christian Schaffalitzky MD at Eurasia Mining commented:'We appreciate that the information regarding Semenovsky Tailings is of a technical nature and may contain terminology unfamiliar to most of our shareholders. To summarise, this testwork is designed to find the most sensible and cost effective means of recovering gold using the most widely used method in the industry, that of cyanide leaching. Gold is soluble in fluids containing low concentrations of cyanide and can later be won again from the cyanide solution.
Ores are often put through a series of iterative tests to arrive at the most economic processing scheme of the many available. Our approach thus far has been to not overcomplicate matters with sophisticated circuits such as floatation cells and or fine grinding, as previous metallurgical studies demonstrated economic gold recovery from straight-forward cyanide leaching of the material as is. The results of this testwork prove that to be true, however further work is still required to make a commercial decision. Extending the MOU to Q1 2017 protects our work to date and will allow for more conclusive testwork and a well-defined and a costed processing route.
We look forward to updating shareholders on further developments at our Monchetundra and West Kytlim Projects and thank our shareholders for their support through what has been an exciting and meritable year for the company. 2016 has also been a pivotal year in that the company made the transition from exploration to production of platinum and gold at West Kytlim and with regard to a successful award of an EPC Contract and associated financing from Sinosteel. We are grateful to our shareholders for their commitment and support in our exciting journey'.
Consent for release
EurGeol Christian Schaffalitzky, FIMMM, PGeo, MIEI, CEng, is a director of the Company. He has reviewed the update and consents to the inclusion of the exploration information in the form and context in which it appears here. He is a Competent Person for the purposes of the reporting of these results.
Enquiries:
Eurasia Mining Plc
Christian Schaffalitzky/Michael de Villiers
+44 (0)207 932 0418
WH Ireland Limited
Katy Mitchell/Nick Prowting
+44 (0)161 832 2174
Beaufort Securities
Elliot Hance
+44 (0)207 382 8300