Shares in the developer of the Parys Mountain base and precious metals project soared on Monday, as the company announced that a division of Irish firm QME would carry out design, engineering and optimisation studies for the future development of the project on the island of Anglesey, in north Wales.
London-listed Anglesey Mining rose by as much as 61% to 2.02p a share following the announcement. By 14:30, the stock traded at 1.67p a share.
Anglesey announced that, under a project development and cooperation agreement, QME Mining Technical Services would carry out an agreed programme of studies until the end of June next year, at no cost to the company.
"QME is experienced in underground mine development and has developed and recruited the necessary skills in mine planning to deliver local and relevant underground mining expertise to Parys Mountain that will assist Anglesey to move forward with the development of the Parys Mountain project at no direct cash cost to Anglesey or dilution of its shareholders,” said CEO Bill Hooley.
Anglesey, however, has agreed to grant QME various rights and options relating to the future development of Parys Mountain including exclusive contracts for the development of the decline and underground mine development, including rehabilitation of the shaft. This will be done on terms to be agreed upon at a later stage.
Anglesey also granted QME the right and option, upon completion of a prefeasibility study to undertake the mine development component of the Parys Mountain project, including decline and related underground development and shaft development, with a scope to be agreed, to the point of commencement of production, in consideration of which QME would earn a 30% undivided joint venture interest in the Parys Mountain project.
Anglesey said that the agreement with QME was a major component of the recommendation by Mincon International and Fairport Engineering in their 2017 scoping study that further work be completed, including detailed mine planning and design, more engineering studies, additional metallurgical test work and a review of tailings management and environmental and planning permissions.
The scoping study on envisaged a mining rate of 1 000 t/d, to produce an average output of 14 000 t/y of zinc concentrate at 57% zinc, 7 200 t/y of lead concentrate at 52% lead and 4 000 t/y of copper concentrate at 25% copper, over an initial mine life of eight years.
The study was based on mining only the 2.1-million tonnes of indicated resources. However, Micon has since reported a further 4.1-million tonnes of inferred resources and Anglesey said that the development of even half of these inferred resources would significantly increase the projected life of the Parys Mountain mine.
QME would examine a revised mine model with the objective of incorporating some of the inferred resources, including part of the higher-grade Engine Zone inferred resources, into the earlier years of the mine plan with the intention of bringing forward cashflows and increasing the life of the mine to at least 10 years.
The scoping study was based on the initial development and production from the White Rock zone using a newly developed decline eventually leading to development of the deeper Engine zone and then the rehabilitation and use of the Morris Shaft as a hoisting facility. The QME review would examine whether different approaches to accessing the orebodies, particularly by early dewatering, rehabilitation and recommissioning of the Morris Shaft, could provide early access to the higher-grade Engine zone resources.
It is expected that these optimisation studies will be completed by the middle of 2019 and, subject to financing being available, would then form the basis for commissioning of a preliminary feasibility study to lead to an overall project financing package.