Elementos (ASX:ELT) has a clear pathway to production from the Cleveland Mine Redevelopment in Tasmania starting with tailings reprocessing, a fast and inexpensive way towards cash flow.
This will be followed by open pit mining and redevelopment of the Cleveland underground tin, copper and tungsten mine.
The staged development strategy minimises upfront capital and produces cashflow to fund future development. The reprocessing of tailings is a fast way to generate cash for open pit mining, which will in turn provides the cash flow to redevelop the Cleveland underground mine.
It plans to commence construction of the tailings reprocessing facility in 2016, with production to quickly follow.
This will be at a minimum mining rate of 650,000 tonnes of tailings per annum, or 900 tonnes of tin per annum and a mine life of seven years. There is potential to extend mine life beyond 20 years as the addition open pit and underground JORC Resources come into production.
The tailings resource is stored above ground on-site in two tailings dams. These contain a substantial quantity of recoverable tin and copper due in part to operational inefficiencies and technical limitations of tin processing whilst the mine was in operation between 1968 and 1986.
Open Pit Mining
Elementos will then move to open pit mining with the company recently defining a JORC Indicated Resource of 828,000 tonnes at 0.81% tin and 0.27% copper.
This project provides an important link between the tailings project and the underground redevelopment plan.
Scoping and Exploration Target Studies are now planned to investigate the synergies between the three Cleveland projects, and to determine the optimal development pathway.
The Exploration Target Study will build on announced Exploration Targets of 20,000 tonnes to 110,000 tonnes of tin, and 72,000 to 120,000 tonnes of tungsten.
This potential to expand the open pit and underground resources and provide drill ready targets, positions the company to continue to build value for its shareholders.
Cleveland Underground Redevelopment
Both the tailings and open pit mining projects will generate the cash flow Elementos requires to redevelop the Cleveland underground tin, copper and tungsten mine.
Recently, the company lodged the mining lease application that covers areas required for all necessary infrastructure to support mining operations.
During the 18 year life of the Cleveland operation, Aberfoyle mined and processed 5.7 million tonnes of ore and produced approximately 24,000 tonnes of tin and 10,000 tonnes of copper in concentrate.
Elementos has over 6.6 million tonnes of underground defined resources.
The mineralisation in the Cleveland mine is principally of two styles: tin and copper bearing semi-massive sulphide lenses replacing limestone, similar to Renison, and a tungsten bearing porphyry quartz stock-work.
Tin occurs as cassiterite and copper occurs principally as chalcopyrite. The tungsten occurs as wolframite.
Resources have been estimated for tin and copper in the tin and copper bearing lenses, tungsten in the tungsten bearing stock-work, and tin and copper in tailings.
Cleveland's mine geology lent itself to low cost mining techniques, and when in operation, Cleveland was considered 'state of the art', being one of the first tin mines to utilise trackless mining technologies.
Aberfoyle mined ore from open-stopes between levels, which were 15 metres apart vertically. Ground conditions were such that stopes did not require filling, indicating excellent ground conditions.
Mine development extends to 400 metres below the surface with the underground decline and drives still in place. This provides low cost access for the company to the existing tin, copper and tungsten mineralisation.
The Cleveland tin and copper deposit is open at depth and along strike. The tungsten bearing porphyry has only been estimated down to 850 metres, providing considerable scope to increase the tungsten Mineral Resource below this level.
With a clear development strategy defined, Elementos is achieving milestones on the road to production, and is on track to execute its business plan with a focused and experienced management team.
The company's staged development strategy starts with the reprocessing of tailings providing a fast and inexpensive path towards cash flow, before moving to low cost open pit mining.
This will in turn lead to the redevelopment of the Cleveland underground tin, copper and tungsten mine, which requires little capital expenditure.
There is set to be significant news flow given near term price catalysts, providing investors with an inexpensive potential cash flow generating stock.
Upcoming Price Catalysts:
- Completion of Tailings Pre-Feasibility Study May 2015;
- Open Pit Scoping Study May 2015;
- Underground Scoping Study May 2015;
- Mining Lease Approval Process 4Q2015;
- Environmental Approval 1Q2016;
- Tailings Project Feasibility 3Q2016; and
- Tailings Tin, Copper Production 4Q2016.
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