SORBY HILLS SILVER PROJECT PRE-FEASIBILITY RESULTS
KBL Mining Limited has completed the Pre-Feasibility Study for Stage 1 of the Sorby Hills silver project, located in the north-east Kimberley region of Western Australia.
Post-tax net present value of $88 million
Negative cash cost of $(30.70) per ounce of silver after lead credits
Less than two year payback period with an initial 10 year operating mine life
Approximately 4 million ounces of silver and 100,000 tonnes of lead produced in first five years
Final environmental approval expected by June 2013
Development expected to commence in FY2014
KBL Mining Limited Level 3, 2 Elizabeth Plaza
NORTH SYDNEY NSW 2060 T: +61 2 9927 2006 F: +61 2 9927 2050
ACN 129 954 365 ASX: KBL and KBLGA
www.kblmining.com.au [email protected]
For
per
sona
l use
onl
y
ACN 129 954 365
ASX: KBL, KBLGA Level 3, 2 Elizabeth Plaza, Nth Sydney NSW 2060. PO Box 98, Nth Sydney NSW 2059
6 DECEMBER 2012
KBL Mining Limited (ASX: KBL and KBLGA) is pleased to announce that its Pre-Feasibility Study (PFS)
has confirmed the robust economic viability of its 75%-owned Sorby Hills Silver Project (Sorby Hills
Project), positioning the company to take the project into the next phase of development.
Based on the PFS modelling, the post-tax net present value (NPV) of Sorby Hills is $88 million (all
monetary amounts are in AUD unless otherwise stated).
PFS MODELLING RESULTS
LOM Cash Surplus AUDm 201
Project NPV before Tax AUDm 132
Project NPV after Tax AUDm 86
Project IRR before Tax % 58
Project IRR after Tax % 49
Payback Period years 1.7
CAPEX AUDm 70
C1 Cash Costs $/oz Ag -30.70
C1 Cash Costs $/lb Pb -0.11 Table 1: PFS Results for Stage 1. Inputs and Assumptions are set out in Appendix 1.
Sorby Hills Background
The Sorby Hills Project is located 50 kilometres, by sealed road, north-east
of the Kimberley regional centre of Kununurra in Western Australia.
Figure 1: Location and geological map for the Sorby Hills Silver-Lead Project
Sorby Hills is a major undeveloped, near surface silver-lead deposit which has been well defined by
extensive exploration. The shallow nature of the deposits will allow for the extraction of ore by open
cut mining. The ore will be then be processed by conventional flotation to produce a silver-lead
concentrate, ready for exportation through existing facilities at Wyndham Port, some 160 kilometres
away by sealed road.
“Our confidence in the
potential of the Sorby Hills
project has been both
validated and strengthened
by the results of the Pre-
Feasibility Study.
“The PFS modelling has
demonstrated that the C, D
and E deposits at Sorby
Hills are quality open pit
prospects, with both strong
technical fundamentals and
robust economics over an
initial 10-year mine life.”
Trangie Johnston
Chief Executive Officer
For
per
sona
l use
onl
y
ACN 129 954 365
ASX: KBL, KBLGA Level 3, 2 Elizabeth Plaza, Nth Sydney NSW 2060. PO Box 98, Nth Sydney NSW 2059
6 DECEMBER 2012
KBL holds 75% of the Sorby Hills Project, with 25% held by the Australian subsidiary of Henan
Yuguang Gold & Lead Co. Ltd (HYG). HYG is China’s largest gold, silver and lead group, incorporating
mining and smelting operations.
The Sorby Hills tenements cover a total area of 12,612.4 hectares. Within these tenements, a total of
13 individual mineralised deposits have been delineated by exploration to date. The ore deposits
form a linear belt (trending north-south) over an eight kilometre long and up to one kilometre wide
strike length on the eastern margin of the Pincombe Inlier. The Sorby Hills global Indicated and
Inferred Resource is 16.7 million tonnes at 4.5% lead and 52g/t silver (Resources are presented in
detail in Appendix 2). The tenements flank the eastern boundaries of the Ord River Stage 2 Project
(Ord 2) and the Joint Venture Manager is working closely with the Ord 2 development authorities to
ensure that Ord 2 and the Sorby Hills development can operate in harmony.
Sorby Hills Pre-Feasibility Study Overview
An initial mining operation (Stage 1) at Sorby Hills, covering 27% of the global Indicated and Inferred
Resource, is expected to have an operational mine life of at least 10 years. Subject to necessary
government approvals, there is substantial scope to expand the initial mine life and size of the
project.
Stage 1 is contained within an area covering 1,787.27 hectares, and covers 1.5 kilometres of the
eight kilometre strike. Stage 1 comprises three mineralised deposits (C, D and E) with a combined
Indicated and Inferred Resources of 4.432 million tonnes at 4.29% lead and 44g/t silver at a 2.5%
lead cut-off.
Figure 2: Outline of C, D and E Deposits at Sorby Hills overlain on gravity image.
For
per
sona
l use
onl
y
ACN 129 954 365
ASX: KBL, KBLGA Level 3, 2 Elizabeth Plaza, Nth Sydney NSW 2060. PO Box 98, Nth Sydney NSW 2059
6 DECEMBER 2012
The most technically and financially viable mining arrangements for Stage 1 were found to be
400,000 tonnes per annum (tpa) open pit mining operations, with a waste-to-ore (strip) ratio of 3.6,
to a maximum depth of 70 metres. Average production for the first five years is planned to be
800,000oz p.a. of silver (Ag) and 20,000tpa of lead (Pb) in concentrate. Ore Reserves for Stage 1 are
expected to be released before the end of March 2013.
Metallurgical work to test recoveries and concentrate grades achievable from the proposed
concentrator has shown that Pb and Ag recoveries of 91% and 87% respectively are achievable.
The concentrator uses a conventional crushing, grinding and flotation circuit. CAPEX, excluding
mobile plant and equipment, is estimated at $70 million including a 15% contingency.
The PFS has demonstrated the potential to schedule average mine grades of 5.6% Pb and 70 g/t
Ag from these deposits for the first 4.5 years of the initial 10 year operation. Importantly, the
subsequent strong cash flow generated during this period will payback the capital expenditure of
$70 million within the first two years of operation.
After this period, the remainder of the Resource would be upgraded in a heavy media plant to
ensure a constant metal output – this would be subject to regulatory approval. Testwork on this
option has found the Resource to respond well to the heavy media separation method, with high
recovery rates of both Pb and Ag to the sink product and a high rate of non-mineralised waste
rejection. The heavy media plant would function to upgrade the lower grade Resource to provide
a higher grade feed to the concentrator.
It is estimated that 40 construction personnel and 64 on-going mining, processing and
administration personnel will be needed for the project. This workforce will be based in
Kununurra, the regional centre for the East Kimberley region, which is serviced by an airport and
has high quality community facilities and services.
The environmental assessment for the Sorby Hills project is currently progressing through the WA
Environment Protection Agency (EPA) processes. These involve the imminent publication of a
Public Environmental Review and consideration of public comments, leading to a report and
recommendation by the EPA to the WA Minister for the Environment. Final approval is expected
to be received by the final quarter of the 2013 financial year. This should enable development to
commence during the 2014 financial year.
For further information, please contact:
Anthony (Trangie) Johnston Ed Newman Investor Relations and Media
Chief Executive Officer Project Manager Ron Cameron / Tara Prowse
KBL Mining Limited KBL Mining Limited Mercury Consulting
P: +61 2 9927 2000 P: +61 2 9927 2010 P: +61 2 8256 3308
For
per
sona
l use
onl
y
ACN 129 954 365
ASX: KBL, KBLGA Level 3, 2 Elizabeth Plaza, Nth Sydney NSW 2060. PO Box 98, Nth Sydney NSW 2059
6 DECEMBER 2012
About KBL Mining
KBL Mining is an Australian resource company listed on the ASX (KBL and KBLGA) with a focus on
precious and base metals. KBL’s main assets include the Mineral Hill copper-gold-silver-lead-zinc project
near Condobolin in New South Wales and Sorby Hills lead-silver-zinc deposit in Western Australia. The
Company has been operating the refurbished processing plant at Mineral Hill since October 2011 to
produce copper concentrates. Sorby Hills (KBL holds 75% with Henan Yuguang Gold & Lead Co. Ltd
(HYG&L) holding 25%) is one of the world’s largest near surface undeveloped lead deposits, close to port
infrastructure and a short distance from Asian markets. Environmental approvals are currently being
sought for development of the Sorby Hills deposit.
More information can be found on KBL’s website at www.kblmining.com.au.
Competent Persons Statement
The information in this report that relates to Exploration Results and Mineral Resources is based on
information compiled by Anthony Johnston, MSc (Hons), who is a Member of the Australasian Institute
of Mining and Metallurgy and is a full-time employee of the Company. Anthony Johnston has sufficient
experience which is relevant to the style of mineralisation and type of deposit under consideration and to
the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of
the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Mr
Johnston consents to the inclusion in the announcement of the matters based on his information in the
form and context that the information appears
For
per
sona
l use
onl
y
ACN 129 954 365
ASX: KBL, KBLGA Level 3, 2 Elizabeth Plaza, Nth Sydney NSW 2060. PO Box 98, Nth Sydney NSW 2059
6 DECEMBER 2012
Appendix 1: Pre-Feasibility Study Parameters
Table 2: PFS modelling inputs and parameters
Table 3: Assumptions for PFS modelling
YRS 1-5 LOM
Mining Inventory mt 2.2 6.2
Strip Ratio x 3.6 3.7
Throughput tpa 400,000 625,000
Initial Mine Life years 5 10
Average Ag Grade g/t 70 50
Average Pb Grade % 5.30 4.20
Average Ag Recovery % 87 80
Average Pb Recovery % 91 86
Average Silver Produced ozpa 830,000 715,000
Average Lead Produced tpa 20,000 20,500
Mining Costs $/t mined 11.50 11.50
Processing Costs $/t mined 20.00 18.00
Capital Costs AUDm 70 80
STAGE 1 INPUTS
Lead Price USD/t 2,094
Silver Price USD/oz 30
Exchange Rate AUDUSD 0.90
Discount Rate % 10
ASSUMPTIONS
For
per
sona
l use
onl
y
ACN 129 954 365
ASX: KBL, KBLGA Level 3, 2 Elizabeth Plaza, Nth Sydney NSW 2060. PO Box 98, Nth Sydney NSW 2059
6 DECEMBER 2012
Appendix 2: Mineral Resources as released on 22 December 2011
Table 4: Indicated and Inferred Resource estimate for D & E Deposit at Sorby Hills at 2.5% Pb cut-off
Table 5: Indicated and Inferred Resource estimate for the C deposit at Sorby Hills at 2.5% Pb cut off
Table 6: Indicated and Inferred global Resource estimate for Sorby Hills at 2.5% Pb or Zn cut off.
Classification Ore Type Tonnes (kT) Ag g/t Pb % Zn % Pb+Zn%
Oxidised 311 40 4.3 0.3 4.5
Fresh 1,893 66 5.3 0.5 5.9
Total Indicated 2,204 62 5.1 0.5 5.6
Oxidised 105 41 4.6 0.3 4.9
Fresh 603 32 3.7 0.4 4
Total Inferred 708 33 3.8 0.4 4.2
Total Indicated & Inferred 2,912 56 4.8 0.5 5.3
Indicated
Inferred
Classification Ore Type Tonnes (kT) Ag g/t Pb % Zn % Pb+Zn%
Oxidised 140 22 3.3 0.2 3.5
Fresh 540 18 3.4 0.5 3.9
Total Indicated 680 18 3.4 0.4 3.8
Oxidised 80 19 3.1 0.3 3.4
Fresh 750 23 3.2 0.4 3.6
Total Inferred 840 22 3.2 0.4 3.6
Total Indicated & Inferred 1,520 21 3.3 0.4 3.7
Indicated
Inferred
Classification Tonnes (kT) Ag g/t Pb % Zn % Pb+Zn%
Indicated 4,674 63 4.7 0.4 5.1
Inferred 11,988 48 4.5 0.9 5.3
Total Indicated & Inferred 16,662 52 4.5 0.7 5.3
For
per
sona
l use
onl
y