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Butcherbird expansion on the cards

3rd December 2020

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – ASX-listed Element 25 has updated the economics of its Butcherbird manganese project, in Western Australia, highlighting the project’s expansion potential.

A May prefeasibility study (PFS) estimated that the project would produce 312 000 t/y of medium-grade lump manganese concentrate, grading between 30% to 35% manganese, over a mine life of 42 years, for an initial capital investment of A$14.5-million, along with A$9.2-million in working capital.

The initial PFS estimated a pay-back period of six months from the start of the operation, with the pre-tax net present value (NPV) estimated at A$441-million and the internal rate of return (IRR) at 255%.

Element 25 on Thursday told shareholders that the updated PFS had included silica and other mineral credits, revised the process recovery from 82% to 83%, increased plant throughput from 1.2-million tonnes a year to 1.3-million tonnes a year, and revised the capital expenditure to include a mining camp.

Mining costs have also been revised, along with exchange rates.

Based on the updated metrics, the base case Butcherbird operation is now expected to produce 341 000 t/y of manganese concentrate, at a grade of 33% manganese, over a mine life of 40 years.

The updated study estimated a capital cost of A$15.1-million to develop the project, with the NPV now estimated at A$583-million pre-tax, and the internal rate of return at 387%.

Expanding the throughput to 2.6-million tonnes a year would require a further capital investment of A$13.4-million, but would increase the NPV to A$926-million and the IRR to 342%, while annual production would reach 682 000 t/y of manganese over a mine life of 20 years.

The updated PFS also investigated further expanding the throughput to 3.9-million tonnes, at an additional capital cost of A$18-million, to increase annual concentrate production to just over one-million tonnes a year, with the mine-life declining to 15 years.

The expanded operation is expected to have a pre-tax NPV of over A$1.1-million and an IRR of 359%.

The expansion scenarios both assumed that operations would start in the first quarter of 2021, with the first six months of the operation used to review the marketing, plant performance and geological performance of the project before an expansion decision is made.

Element 25 said that should a decision on expansion be taken, construction activities would likely start in the fourth quarter of 2021, with expanded production reached in the first quarter of 2022.

The company told shareholders that it was currently approaching the build phase for the Stage 1 project, with all major plant ordered, while mining and other tenders have been let.

Site works is expected to start in December, once a final approval has been obtained.

Edited by Creamer Media Reporter

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