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New Age Exploration Ltd: THE INVESTMENT CASE

New Age Exploration upgrades tin-tungsten resource and demonstrates coking coal viability

The Redmoor project's inferred resource has 45,000 tonnes of contained tin equivalent.
Checking a Redmoor core sample
INVESTMENT OVERVIEW: NAE The Big Picture
Redmoor is in the world’s top five highest grade tin-tungsten projects on a tin equivalent basis

New Age Exploration Limited (ASX:NAE) is a diversified mining group with an advanced tin-tungsten project, a potentially large coking coal project and a gold project.

The most advanced and active of these is the 50%-owned Redmoor tin-tungsten project where the mineral resource estimate was recently updated.

This project is being undertaken through 50%-owned joint-venture vehicle Cornwall Resources Limited, which also recently updated the exploration target.

High-grade inferred mineral resource

The recently completed inferred mineral resource is nearly double the inferred resource established in 2015.

It features 4.5 million tonnes at 0.37 tungsten, 0.25% tin and 0.57% copper.

The high-grade zones were identified within a sheeted vein system (SVS) and the company has identified a continuation of this trend.

New Age has confirmed that the high-grade zones extend over a strike length of more than 1000 metres and 450 metres down dip.

Exploration target

The exploration target extends down-dip below the resource and contains a drill hole with three of the best high-grade zone intersections achieved in 2017 drilling.

Importantly, mineralisation from these intersections have not yet been incorporated in the mineral resource, suggesting there is more promising news to come.

Further high-grade exploration potential was identified below and to the west of the exploration target and to the north in Kelly Bray lode.

A high definition geophysics survey has been undertaken at the western opportunity.

Assumption of high grades at depth

The exploration target has been determined by assuming a continuation of SVS mineralisation containing high-grade zones in similar frequency and thickness to those within the inferred resource.

These are anticipated to extend down-dip beyond the delineated resource, 250 metres beyond the deepest drill holes to intersect the SVS.

The exploration target is between 4 million tonnes and 6 million tonnes of mineralisation grading between 0.9% and 1.3% tin equivalent.

Drillhole CRD019, as shown below, provides significant support for the exploration target.

This hole intersected over 20 metres (true thickness) of high-grade mineralisation within the exploration target area, at grades significantly in excess of those of the reported resource above it.

Redmoor in top five

Management underlined that the Redmoor high-grade resource has recently been benchmarked against the tin and tungsten projects of competitors.

Redmoor is in the world’s top five highest grade tin-tungsten projects on a tin equivalent basis and the world’s top three new projects.

The Redmoor inferred resource has 45,000 tonnes of contained tin equivalent.

Furthermore, the exploration target has the potential to increase this to 100,000 tonnes via further drilling planned for 2018, enhancing its chances of becoming a sizeable world-class project.

Lochinvar Coking Coal Project

The Lochinvar Coking Coal Project is on the border between Scotland and England.

In March 2017, New Age announced the results of an update of a scoping study which showed a substantial improvement in the project economics.

The Lochinvar project now has a base-case NPV, determined to an accuracy of plus or minus 40%, of about US$410 million.

Its metrics also include an internal rate of return of about 27% and a payback period of around four years.

Break even at US$100 per tonne

The scoping study update demonstrates that the Lochinvar project is resilient to changes in coking coal price and other key assumptions.

Based on the study metrics, the project can deliver a break-even result at a hard coking coal price of US$100 per tonne.

The economic evaluation is based on a US$160 per tonne hard coking coal benchmark price/US$150 per tonne Lochinvar realised price.

Management noted that hard coking coal benchmark prices are stabilising at the US$170 per tonne to US$200 per tonne FOB Australian price levels.

This represents a material improvement in prices from 2014-2016 cyclical low levels.

Lochinvar sits comfortably in the lowest quartile of the 2017 Wood Mackenzie Global Seaborne Coking Coal FOB cost curve as indicated below.

With a total FOB operating cost of US$58 per tonne, Lochinvar has the potential to deliver a low-cost, long-life operation which is ideally located to supply the European steel industry.

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