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Galena Mining delivers “excellent” PFS which confirms potential of Abra Base Metals Project

The PFS outcomes have confirmed or exceeded the previously completed scoping study for the project in Western Australia.

Lead concentrate from Abra
Concentrate produced in Galena’s test work of lead-silver from Abra

Galena Mining Ltd (ASX:G1A) has confirmed the world-class potential of its Abra Base Metals Project in Western Australia by way of an “excellent” pre-feasibility study (PFS).

The company stated: “The excellent PFS confirms the technical and economic robustness of developing an integrated mining and processing operation to produce a high-value, high-grade lead-silver concentrate."

In most respects the PFS outcomes “confirm or exceed the previously completed scoping study”.

READ: Galena Mining celebrates a year amid increased equity

Transformational improvements have been delivered in terms of project scale and value with a pre-tax NPV of $528 million and an IRR of 50%.

Managing director Alex Molyneux said, “This PFS confirms Abra is one of the best base metals projects in the world in terms of high investment returns, low country risk and market significance.

“The overall value of the project has also just got a whole lot bigger with the NPV rising by 34% million and a number of years additional mine life.”

“Work done for the PFS also confirms we have a clear pathway to complete permitting and other pre-development works quickly,” Molyneux said.

“Abra is a very ‘executable’ project and it will be the absolute mission of Galena’s team to move it into construction in a timely manner.”

Shares up 11%

Investors responded positively with shares up 11% in early trade to 19.5 cents.

The PFS outlines a 14-year mine life producing a high-value, high-grade lead-silver concentrate containing 91,000 tonnes of lead and 760,000 ounces of silver annually after ramp-up.

These enhancements have been gained by improvements and optimisation of mining methods, stope designs and scheduling since the scoping study.

Improvements have been made with no material increase in pre-development capital expenditure or direct cash operating costs.

“As a result, the value of Abra in NPV terms has transformationally increased whilst underlying investment returns remain extremely strong,” Galena stated.

The average annual net free cash flow during commercial production has been estimated at $97 million.

READ: Galena Mining confirms high-grade mineralisation outside Abra resource

Abra’s cash costs are estimated to be attractive compared to other global primary lead producers with the PFS  putting the C1 direct cash cost of production at US$0.48 per pound of lead.

Maiden ore reserve

Completion of the PFS has also allowed the company to declare a maiden JORC ore reserve of 10.5 million tonnes at 8.1% lead and 20 g/t silver in the probable category.

Galena has established a clear pathway for rapid completion of permitting and other pre-development works and remains on track for the commencement of construction in 2019.

Abra PFS pre-tax NPV sensitivity analysis.

A number of key work areas included in the PFS have been completed to definitive feasibility study (DFS) level.

READ: Galena Mining appoints Alex Molyneux as MD as it transitions to base metal producer

These include geotechnical drilling; metallurgical test work; environmental studies and reports; water supply analysis; hydrogeology; underground mine designs and monthly mining schedule; and infrastructure design. Galena, therefore, aims to focus on a number of parallel workstreams over the next few months to move towards a construction decision as soon as possible.

Isometric view of PFS mine design looking west.

Upcoming milestones

Upcoming value-adding milestone workstreams include:

- Preparation of an updated mineral resource estimate once the current ongoing drilling program completes, all assays are received, and data processed.
- A review of the ore reserve and underground mine designs/schedule following the updated resource estimate for a potential reserve update and optimisation of the PFS.
- Permitting works – Galena has already concluded, based on completed base line environmental studies that the project does not require EPA approval. Furthermore, it has already lodged various applications for minor permits allowing for infrastructure works approvals. It aims to lodge its final mining proposal in three to four months.
 
 
- Ongoing discussions with potential customers – Galena commenced engagement with a number of potential customers as part of the PFS process, receiving a very positive response. The company plans to continue engagement over coming months with a view to considering formal offtake arrangements.
- Advancing discussions with project financiers – The company has initiated preliminary discussions with a number of parties regarding project financing. Such parties include traditional project financing banks and strategic counterparties.
- Completion of a DFS.

Initial production targeted for 2021

Galena continues to target commencement of construction at Abra in 2019, initial production in 2021 and the first full-year of steady-state commercial production in 2022.

Quick facts: Galena Mining Ltd

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Full interview: Galena Mining ramps up surface infrastructure development at...

Galena Mining Ltd (ASX:G1A) managing director Alex Molyneux updates Proactive on increased surface infrastructure development activities at the Abra Base Metals Project in the Gascoyne region of WA. This forms part of a $15 million development works program. The work is being done prior to...

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