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Amur Minerals Corporation (LON:AMC)

Amur Minerals Corporation (LON:AMC)


Share Price
3.628 p
Change
0.2425 (7.16 %)
Market Cap
£24.62 m
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Amur Minerals Corporation

Amur Minerals Corporation (AMC) is nickel copper sulphide mineral exploration company focused on the far east of Russia. The company's principal asset is the Kun-Manie sulphide nickel, copper project located in Amur Oblast. Drill defined resources have been identified within five deposits wholly contained within a 36 square kilometre production licence. Engineering work confirms that the...

EPIC: AMC
Market: LSE:AMC
OTCMKTS:AMMCF
FRA:A7L
52-week High/Low: 7.900p / 3.000p
Sector: General Mining - Nickel and Cobalt
Market Cap: 24.62M
Website: amurminerals.com

Amur Minerals Corporation

amurminerals.com

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Amur Minerals Corporation Snapshot

Corporate Mission Statement

Amur's Corporate Mission is comprised of three definitive categories:

. Expansion of the Kun-Manie resource and reserves;
. Engineering and designing of the Kun-Manie deposit leading to production; and,
. Identifying available funding opportunities that ultimately lead to mine development.

The Board is focused on resource and reserve expansion of the Kun-Manie project, through low cost drilling attributable to the use of our Company-owned drill rigs. Reserve definition allows for the determination of the ores suitable for assessing the economic potential of the Kun-Manie deposit.

Engineering and design work, which will lead to the final operational configuration, reduces project risk and will lead to the definition of an optimised economic plan. The work is conducted at the highest level of accuracy based on the information available and is intended to lead to the issuance of a Definitive Feasibility Study.

As a resource company in the advanced stages of exploration, funding is imperative to complete the comprehensive work programmes necessary. We will explore all options of funding with careful consideration, in order to source cash for the advancement of the resource expansion, engineering, development and construction of the project.

Amur is listed on the AIM market of the London Stock Exchange. The Company believes that if it successfully executes on all three elements of its mission, creating a high quality project that meets all industry standards, it will also generate significant shareholder value.

Project Background

Project Overview

Mining Rights

The Kun-Manie nickel copper sulphide project is located within the Amur Oblast of the Russian Far East. The “Detailed Exploration and Production Licence” is 700 km northeast of the capital city of Blagoveshchensk located on the Chinese border. The licence and additional key rights to the project consist of and includes the following:

  • A Certificate of Discovery issued in 2009 which grants the Company the first right of refusal for development of the project. This has been issued by the State Committee on Reserves (GKZ).
  • 20 year period production rights ending 1 July 2035. Production rights can be extended on the discovery of additional economic mineralisation. The Company is entitled to recover 100% of the nickel, copper, cobalt, platinum, palladium, gold and silver over the 36 square kilometre “Detailed Exploration and Production Licence” area. Should additional mineralisation be located outside the licence area, the boundaries can be expanded through the State Licensing Agency.
  • Prior to acquisition of the “Detailed Exploration and Production Licence”, the Company held a 940 square kilometer “Exploration Licence”. The area located outside of the “Detailed Exploration and Production Licence” area has been returned to the Russian Federation. The Company maintains no rights to the ceded area and there are no obligations incumbent upon AMC.

Far East District

Geology

  • The dominant geological feature in the area is the Kun-Manie Massif, a metagabbro-anorthosite intrusive of Early Archean age. The area hosts a series of mafic and ultramafic flat lying to steeply dipping sills and dykes, some of which host sulphide nickel, copper, cobalt, platinum, palladium, gold and silver.
  • Within the Kun-Manie Massif, a two kilometre wide and 20 kilometre long structure called the Kurumkon Trend hosts economic grades of sulphide nickel and copper within multiple websterite sills. The primary mineralisation consists of nickel-bearing pentlandite, pyrrhotite and copper-bearing chalcopyrite occurring in both disseminated and veinlet form.
  • The “Detailed Exploration and Production Licence” is located along the axis of the highly prospective Kurumkon Trend where five deposits have been discovered and drilled to date.

Exploration

To date, the following exploration work has been completed within the “Detailed Exploration and Production Licence” area:

  • Airborne and ground based geophysics including Magnetic and Induced Polarisation surveys.
  • Geological reconnaissance, mapping and surface grab sampling.
  • Soil grid geochemical sampling programme.
  • Trenching of websterite outcrops which host the nickel and copper mineralisation.
  • Diamond core drilling for resource identification.

As at 31 December 2016, the comprehensive exploration programme has resulted in the identification of the following five deposits:

  • Maly Kurumkon / Flangovy
  • Gorny
  • Vodorazdelny
  • Ikenskoe / Sobolevsky
  • Kubuk

Substantial areas of exploration potential remain untested and require drilling.

Additional drilling for metallurgical sample collection and testing of potential additional targets not located within known deposits has been completed. For metallurgical sample collection (7.5 tonnes), a total of 4,652.7 metres of drilling have been completed. The total drill meterage within the “Detailed Exploration and Production Licence” is 58,084.3 metres.

Substantial areas of undefined resource expansion exist within the licence area and include:

  • The potential to link at the deposits of Maly Kurumkon with the low grade Gorny mineralised area. The target length is approximately 1,500 metres.
  • The largest single target is the area between the Ikenskoe / Sobolevsky and Kubuk. Covering a target length totaling 2,800 metres, surface exploration and ground based geophysics indicated the potential of the area to host mineralisation. Successful drilling could result in establishing that the Ikenskoe / Sobolevsky and Kubuk deposits are a single deposit having a length of four to five kilometres.
  • Immediately to the east of Kubuk, a target of 700 metres is present and economic grade mineralisation has been identified in trenches.

Resources

20 March 2018, RPM Global compiled a Mineral Resource Estimates (MRE) for two of the four deposits. Completed to Joint Ore Reserve Committee (JORC) standards (December 2012), the Total MRE based on a 0.4% nickel cutoff grade contains:

  • 155.1 million tonnes of mineralisation.
  • Average of 1.02% nickel equivalent grade (Ni, Cu, Co, Pl +Pd) based on 9 March 2018 metal pricing.
  • 1,581,000 nickel equivalent tonnes.
  • The average nickel grade is 0.75%, copper is 0.21%, cobalt is 0.015%, platinum is 0.16 g/t and palladium is 0.17 g/t. Additional minor amounts of gold and silver will also be recovered but have not been estimated.
  • More than 76% of the resource is identified as Measured and Indicated and is therefore suitable for inclusion in the definition of Mining Ore Reserves (MOR).
  • By sulphide nickel equivalent tonnage, the present MRE places Amur within the 3 largest publically listed greenfield nickel sulphide resource companies in the world and the largest undeveloped nickel sulphide deposit immediately adjacent China, Korea and Japan.

Substantial resource expansion remains to be tested.

JORC Mineral Resource Estimates
March 2018
0.4% Nickel Cutoff Grade

                Contained Metal (t)
Resource Classification Ore
Mt
Ni
%
Cu
%
Co
%
Pt
g/t
Pd
g/t
Eq Ni
(%)
Ni
(1000’s)
Cu
(1000’s)
Co
(1000’s)
Pt
(t)
Pd
(t)
Eq Ni
(1000’s)

TOTAL KUN-MANIE RESOURCE

Measured 11.2 0.71 0.18 0.011 0.23 0.26 0.99 80 20 1.3 2.5 3.0 110.8
Indicated 107.0 0.74 0.20 0.015 0.15 0.15 1.00 787 217 16.2 16.0 16.6 1,075.1
M+I 118.2 0.73 0.20 0.015 0.16 0.17 1.00 867 237 17.5 18.5 19.6 1,185.9
Inferred 37.0 0.79 0.22 0.017 0.17 0.18 1.08 290 81 6.0 6.4 6.6 398.2
TOTAL 155.1 0.75 0.21 0.015 0.16 0.17 1.02 1,157 319 23.5 24.9 26.0 1,581.6

Total resource distribution available at http://amurminerals.com/project-details/resources-and-reserves/
Numbers may not be precise due to rounding.

Reserves (Mining Potential)

The Company has determined:

  • The existing resource at Kun-Manie is projected to support an annual ore production rate of 6.0 million tonnes per year for a period of 15 years.
  • Production will include both open pit and the underground long hole retreat method. The near surface mineralisation will be mined by open pit and deeper continuous high grade mineralisation will be subject to underground extraction.
  • Production is planned to be derived from four deposits.
  Production Resource Drilling
Deposit Open Pit Underground Infill Expansion
Maly Kurumkon / Flangovy X X Complete X
Vodorazdelny X   Complete  
Ikenskoe / Sobolevsky X X Limited X
Kubuk X X Substantial X

In December 2016, the “Mining Potential” for the Maly Kurumkon / Flangovy deposit was defined by Runge, Pincock, Minarco.

  • Maly Kurumkon is the largest of the four deposits and is planned as the start up deposit for production.
  • Production is planned to begin with open pit mining and then transition to underground recovery of ore.
  • Nearly 45 million tonnes of ore averaging 0.75% nickel and 0.19% copper are identified.
  • This is a first stage evaluation of the potential and will be updated to reflect the substantial increase in the resource based on the 2016 resource drill programme which was not available to the determination of the Mining Potential.

Maly Kurumkon / Flangovy Mining Potential
H1 2016 Resource Model
(Excludes 2016 Exploration Upgrade)

Production Parameter Totals
Total mineable potential reserves 44.5 M tonnes
Total tonnes of mineable nickel 332,172 tonnes
Average nickel grade / ore tonne 0.75%
Total tonnes of mineable copper 83,467 tonnes
Average copper grade / ore tonne 0.19%
Underground production 31.7 M tonnes
Ni% Grade 0.79%
Cu% Grade 0.19%
Open pit ore production 12.8 M tonnes
Open pit waste production 43.7 M tonnes
Ni% Grade 0.63%
Cu% Grade 0.18%

Graphic showing mining potential

Graphic showing mining potential

The December 2016 Mining Potential of Maly Kurumkon / Flangovy is considered to be substantially understated:

  • Australian based underground mining costs were used. These are projected to be substantially higher than will be experienced using lower Russian based labour, fuel and explosives costs. Use of Russian based costs will reduce the cutoff grade increasing both the mined ore tonnes and profit per tonne of “mined” ore.
  • Metallurgical recoveries were based on conservative bench scale metallurgical test work and averaged 70.4% for nickel and 78.3% for copper. Metallurgical recoveries derived from a larger scale representative half tonne bulk sample indicated production based recoveries will be in the order of 80.6% for nickel and 83.8% for copper. Nearly 15% more nickel could be recovered resulting in an increase to the profit per tonne. Simultaneously, the mining cutoff grade could be reduced, increasing the tonnage available to mine as ore.
  • By-Product metals of cobalt, platinum and palladium were excluded for the evaluation. Inclusion of the by-product metal could increase the profit per mined tonne of ore and lower the cutoff grade.
  • The evaluation is based on the H1 2016 resource model having a total length of 2,100 metres. The 2016 drill programme substantially increased the Mineral Resource Estimate by extending the mineralisation an additional 900 metres and existing Inferred resource have fully been converted to Indicated resource allowing for use in the determination of a Mining Ore Reserve. At a 0.4% cutoff grade, the new resource has been expanded by 83% to a total of 473,000 tonnes of nickel and by 80% to 131,000 tonnes of copper).

Reserve determination to JORC standards is underway. Using RPM’s newly compiled resource models of 10 February 2017, Mining Ore Reserves using Measured and Indicated resources for Maly Kurumkon / Flangovy (an update to include the 2016 drill results), Vodorazdelny and Ikenskoe / Sobolevsky can be compiled. Kubuk will be reported as Mining Potential due to the high proportion of Inferred resource.

  Tonnes of Nickel Equivalent
Deposit Measured Indicated Inferred
Maly Kurumkon / Flangovy 0 602,500 36,200
Vodorazdelny 7,100 35,800 11,100
Ikenskoe / Sobolevsky 94,600 54,700 53,900
Kubuk 0 41,600 109,500

The following graphic presents the relative locations of the deposits within the production licence boundary, the potential ore haulage roads between the deposits and the mill as well as the currently selected plant site facility.

Area of Interest

Metallurgy

Metallurgical test work completed by Sibsvetmetniproyect, SGS Minerals and Gipronickel Institute confirms substantial portions of all metals will be recovered into a sulphide concentrate. Results indicate:

  • A single simple sulphide concentrate can be generated using historically proven flotation methods. The concentrate can be can be successfully smelted.
  • Based on whole core analysis, Sibsvetmetniproyect confirms nickel recoveries at Ikenskoe / Sobolevsky and Vodorazdelny in the order of 80% can be obtained at a nickel cutoff grade of 0.5%.
  • Based on a representative half tonne sample averaging 0.71% nickel and 0.17% copper processed by Gipronickel Institute, the metal recoveries for the Maly Kurumkon / Flangovy ores are 80.6% for nickel, 83.8% for copper, 61.4% for cobalt, 59.4% for platinum, 82.3% for Palladium, 70.5% for silver and 63.7% for gold.
  • The Kubuk ores contain a higher nickel silicate content (unrecoverable nickel). SGS Minerals grade recovery curve indicate recoveries of 68.6% for nickel (at 0.8% grade), 71.7% for copper (at 0.20% grade), 52.9% for cobalt (at 0.015% grade), 55.8% for platinum (at 0.17 g/t grade) and 65.9% for palladium (at 0.18 g/t).

Gipronickel Institute’s evaluation for the ores of Maly Kurumkon / Flangovy (representing up to seven years of potential production based on the Mining Potential) indicates the concentrate will contain an average of 8.6% nickel, 2.1% copper, 0.15% cobalt, 1.9 g/t palladium, 1.3 g/t platinum, 0.6 g/t gold and 7.8 g/t silver. From the annual six million tonnes of ore planned for processing, it is projected that a total of 394,000 tonnes of concentrate will be generated.

A large scale (7.5 tonne representative sample) production run of the Maly Kurumkon / Flangovy deposit is planned allowing for the final design of the planned flowsheet and mill design. Additional drill hole metallurgical samples are planned for collection to fully define the metallurgical responses of the ore for deposits that will likely be mined during later stages of the mine life.

Ore Processing

Six million tonnes of ore per annum (18,000 tonnes per day) are planned for processing. Initially designed by Sibsvetmetniproyect, verified by SGS Minerals and modified by Gipronickel Institute, the plant design will allow for the crushing ore the ore, two stage grinding followed by classic sulphide flotation. Approximately 394,000 tonnes of concentrate per year is projected. Tailings will be placed in an impoundment area which has been determined to hold approximately 90 million tonnes of waste covering a 15 year mine life.

Proposed Process Plant Flowsheet

Proposed Process Plant Flowsheet

Ancillary Site Requirements

At the mine site, additional facilities will require the following:

  • A total of 40 megawatts of power will be generated using diesel fueled generators, typical of remote Russian operations. A fuel tank farm with a 60 day inventory is planned for the power plant and all mobile equipment fleets including mining, concentrate transport and resupply of consumables for the operation.
  • Maintenance facilities for the mine, plant, tailing impoundment and all other site activities.
  • Housing, cafeteria’s and ablution facilities for approximately 1,000 site personnel.
  • Administration and engineering offices.
  • Concentrate transport from the mine to the Ulak rail station.

Access Road

A 320 kilometre long access road will be designed and constructed to handle two-way traffic on a year round basis.

Preliminary Access Road Route

Preliminary Access Road Route

The concentrate generated at the mine will be truck transported to the Baikal Amur rail line (“BAM”) where supplies and fuel will be delivered by rail for backhaul to the mine.

Concentrate Treatment

There are two options available to the Company for treatment of the sulphide concentrate:

  • Toll smelting of the concentrate by an external company where substantial payments and deductions are included, decreasing the profit per tonne to the Company. Often, an off take agreement is required as a part of a construction loan repayment guarantee. The concentrate will be loaded into rail cars at the Ulak rail station on the Baikal Amur rail line for shipment to a smelter.
  • Constructing a furnace allowing for the generation of a Low Grade Matte for sale on the international market. Recoveries at the furnace are typically 97.5% of the metal. The furnace is likely be located at the Ulak rail station for processing. This location has been selected as coal and limestone will be needed to process the concentrate. This option represents the better of the two alternatives allowing for the Company to recovery a much greater value for the metal delivered into the Low Grade Matte. External smelting specialists have confirmed this represents a technically viable option to the Company.
  • A staged approach would encompass a combination of toll smelting and construction of furnace where the furnace is phased into production whilst toll smelting is undertaken for a limited period.
Example of a Furnace

Example of a Furnace

Projected Capital Costs

The projected initial capital cost for the operational design is based on public information, which has been calculated by staff and sourced by external organisations. Presently, the initial capital expenditure for a fully Toll Smelt operation and the Owner Operated furnace facility ranges from approximately $US 550 million to $US 700 million. A summary of the initial capital requirements follow:

Capital Cost Category Toll Smelt Only LGM Option*
Total Capital Expenditure $561.7 $688.2
Infrastructure & Permanent Facilities
Total Fixed Asset $467.4 $593.9
Mobile Equipment
Total Mobile $94.3 $94.3

Note: LGM Option does not require converter smelter or refinery.

Further detailed information on projected capital costs can be found in the RNS announcements “Operational Blueprint Defined for Kun-Manie” dated 29 June 2015 and “Access Road Update” dated 14 November 2016.

Project Support – Russian Initiatives

Being located in the Russian Far East, the Company has been identified as a project of interest. The Far East Development Agenda is intended to draw foreign investment for the completion of key projects such as Kun-Manie. The eligible areas include:

  • Net Profits Tax reduction of 0% for five years, 10% for the following five years.
  • Metals Royalties Taxes of 8% are reduced to 0% for the first two years of production and then in

Board of Directors

Robert Schafer, Non-Executive Chairman

Mr. Schafer has nearly 40 years of experience in the mineral industry, working in the international sector with both major and junior mining companies. He is founder and Managing Director of Eagle Mines Management, a globally active private natural resources corporation. He has held executive and senior management positions with Hunter Dickinson Inc., Kinross Gold Corp., and BHP Minerals over the past 20 years. Throughout his career Mr Schafer has worked internationally, with notable experience in the far east of Russia, Southern Africa, South America and Australia.

His work has included the structuring and implementation of successful exploration strategies, project reviews and valuations leading to acquisitions, and the management of local and expatriate exploration teams operating in a wide variety of geologic environments. In addition, he is the Past-President of the PDAC and Past-President of the Canadian Institute of Mining and Metallurgy (CIM) in Canada, and a Past President of the Mining and Metallurgical Society of America and the Geological Society of Nevada in the USA.

Mr. Schafer is the recipient of the William Lawrence Saunders Gold Medal from AIME (2002) and the Daniel C. Jackling Award from SME (2017) for career achievements.

 

Robin Young, Chief Executive Officer

Mr. Young is a geological engineer who has worked extensively in the CIS since 1991. He has 39 years of experience in the mineral resources industry overall, which has included large scale projects in remote areas as well as significant work with junior mining companies. He has held positions of increasing responsibility within the exploration, development and production sectors including operations design and construction. Since 1980, he has been involved in the international sector and has been the Chief Executive Officer of two geological and mining consultancy companies. He has been CEO of the Company since October 2004. Mr. Young is a licensed Professional Geologist and holds a Bachelor of Science degree in Geological Engineering.

 

Brian Savage, Non-Executive Director

Mr. Savage has more than 35 years of experience in all aspects of the mining industry. Brian is currently Chairman of Sage Management LLC, a privately held company he founded to advise and invest in natural resource projects and companies. Brian is Chairman and CEO of Technology Metals Corporation, a privately held company he formed to focus on tin, tantalum, tungsten, lithium, cobalt, and manganese projects in the Democratic Republic of the Congo. He is Chairman and CEO of Avellana Gold Ltd., a mineral exploration and development company dedicated to the acquisition, exploration, and development of mineral resources, primarily in Ukraine and the surrounding countries of eastern Europe.

Brian was previously Chairman and CEO of Frontier Mining Ltd., an AIM listed company, was a founder of two other AIM listed companies, has served on the board of public and private companies, and has a wealth of experience operating in challenging jurisdictions. Brian earned his Bachelor of Science degree in Mining Engineering and his Master of Science degree in Minerals Economics from the Colorado School of Mines.

 

Paul Gazzard, Non-Executive Director

Mr. Gazzard, who has acted as an external adviser to Amur for four years, joins the Board with over 10 years of experience working across large institutions in the City of London in his role as a Fund Manager.

Working with the Panmure Gordon Asset Management team until August 2002, he then transitioned into the commercial financing sector. Between August 2002 and May 2010, Paul participated in the listing of three Australian technology companies on the AIM market of the London Stock Exchange (“AIM”), operating at the senior Executive level within each of the companies. Paul subsequently worked as Chief Operating Officer of Litebulb Group, which was admitted to AIM in May 2010, overseeing multiple funding rounds and acquisitions for the company over a period of two years.

Since then, Paul has worked as a consultant across various AIM listed companies, advising on corporate and financing related matters, in addition to working as an adviser to a number of high net worth individuals on specific corporate and management issues related to their investment portfolios.

 

Ljupco Naumovski, Non-Executive Director

Mr. Naumovski has more than three decades of experience working in Russia, most recently as Vice President and General Director of the Moscow office for Kinross Gold Corporation, the largest Canadian investor in Russia. He also developed the business of Visa International, serving as Senior Vice President and General Manager Visa International Service Organisation (VISA), CEMEA region. Additionally, he served as Senior Banker and Head of Mission for the Russian Team of the European Bank of Reconstruction and Development in Moscow and as Commercial Secretary for the Canadian Embassy in Moscow and later Deputy Director for USSR and Eastern Europe for the Canadian Department of External Affairs and International Trade.

 

Senior Management

Paul McKay, Chief Financial Officer

Mr. McKay is a fellow of the Association of Chartered Accountants (ACCA) and has over 25 years of experience providing financial expertise to a number of industries in areas of banking, accounting, taxation, corporate structuring and corporate finance. Having been involved with mining companies since 1997, overseeing financial and legal issues for exploration and production projects in Africa and the CIS, Mr. McKay joined Amur Minerals in 2011.

 

Randolph Lewis, President of Russian Operations

Mr. Lewis has led Western businesses in Russia and the CIS for much of the past two decades. He graduated with a degree in Russian Studies from Washington and Lee University in Virginia in 1995 and also studied international business at St Louis University. His experience in Russia dates to 1993. Mr Lewis speaks Russian, and has developed strategy, operations, and government relations in the mining, construction and finance sectors. Prior to Amur Minerals, he served as Managing Director of Silver Bear Resources from 2007-2014.

 

Amur Minerals Corporation
14 Gaidar Street, Office 9
Khabarovsk 680063
Russia

Nominated Adviser and Broker
S. P. Angel Corporate Finance LLP
Prince Fredrick House
35 – 39 Maddox Street
London W1S 2PP

Auditors
BDO LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London W1U 7EU

Public Relations
Blythe Weigh
4-5 Castle Court
London EC3V 9DL

Solicitors to the Company
(England and Wales)
Fieldfisher LLP
Riverbank House
2 Swan Lane
London EC4R 3TT

Legal Advisers to the Company
(British Virgin Islands)
Maples and Calder
PO Box 173
Sea Meadow House
Road Town
Tortola
British Virgin Islands

Legal Advisers to the Company
(Russian Federation)
Norton Rose Fulbright LLP
White Square Office Center
Butyrsky Val St. 10, Bldg. A
Moscow 125047
Russian Federation

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