Galena Mining Ltd (ASX:G1A) is updating and optimising its pre-feasibility study (PFS) after receiving a key Western Australian Government approval to build processing plant and tailings storage facilities at its Abra Base Metals Project.
The WA company views the Department of Water and Environmental Regulation (DWER) approval as the last major approval it needs to develop its wholly-owned project.
Galena’s optimisation of its PFS is expected early this year.
The Subiaco-based company’s original September 2018 PFS had a pre-development capital expenditure estimate of $154 million, putting pre-tax net present value (NPV8) for Abra at $528 million at an 8% discount rate.
Abra project’s internal rate of return was 50%.
Galena managing director Alex Molyneux reported the company believed the approval was the final ‘gating’ permit to having Abra fully permitted.
Abra deposit sits entirely within a granted mining lease.
Molyneux said on January 3, 2019: “It is very pleasing to have it accepted as it confirms we’re on track to have permitting completed in Q2.”
Sensitivity analysis for Abra’s pre-tax NPV, in the September 2018 PFS
The prediction of a June 2019 quarter finish-up to permitting came after the company received acceptances of its mining proposal, mine closure plan and environmental management system applications in October 2018.
Abra is northeast of Geraldton port in the Mid-West region and south by road from Port Hedland in the Pilbara.
Several other leases have been granted for plant and infrastructure.
The updated PFS will feature the December 2018 updated JORC resource and ore reserve.
Molyneux spoke to Proactive Investors’ Stocktube video channel this month about the updated resource and reserve, and the optimisation work the company is making to its PFS after the inventory updates.
He noted: “The new resource is 37.4 million tonnes at 7.5% lead and 18 grams per tonne silver.
“The resource (also has) a bit higher grade than the old resource, and it contains about 200,000 tonnes more lead overall.”
The updated resource statement was prepared independently by Optiro Pty Ltd after Galena finished its 2018 resource infill and development drilling program.
Optiro based its estimate on geological assay data from 102 diamond core drill holes for 59,751 cumulative linear metres completed up to the end of October 2018.
In 2018, Galena drilled 21 diamond core drill-holes for about 12,900 cumulative linear metres.
Galena’s December 2018 resource and reserve estimate for Abra project in WA
Last month, Galena reported about 12 months would be added to the 14-year mine life of the company’s September 2018 PFS, putting mine life at 15 years.
Molyneux told Proactive this month: “At our throughput rate for Abra, we’re basically talking about the potential for an extra year of mine life.
“The grades of the material in the mine model have gone up, so there is 6% more lead, there is 20% more silver in terms of the feed grades going through.
“And so there is great potential for increased revenue and margins in comparison to the data that was used to form the PFS back in September.”
The storage area for Abra drill core
While the optimisation work will be considered in the company’s definitive feasibility study (DFS) it will not delay the study which and remains on track to be finalised in mid-2019.
This work includes plant design, capital cost and operating cost estimation, process and non-process infrastructure evaluation.
A 3D oblique view of Abra’s December 2018 resource, looking southeast
GR Engineering was involved in the Abra PFS published last September, with GRE managing director Geoff Jones saying the company planned to “assist Galena (to) realise the significant potential of the Abra Base Metals Project.”
Galena’s timetable for Abra development, last updated in December 2018
The company hopes to obtain financing for Abra this year so it can start infrastructure and underground mine development and processing plant construction in the December 2019 half-year.
Galena hopes to open its Abra mine in 2020 and be processing ore the same year.
Quarterly results and major shareholders
The company has a market capitalisation of $61.2 million and held $4.8 million cash on September 30, 2018, after spending $3.7 million in the September 2018 quarter.
Bloomgold Resources Pty Ltd was Galena’s largest shareholder on September 6, 2018, holding a 24.44% stake.
JP Morgan Nominees Australia Ltd was second largest shareholder, with a 5.51% holding.
The company’s top 20 shareholders held 67.39% of the company and also included Citicorp Nominees Pty Ltd (4.13%) and HSBC Custody Nominees Australia Ltd (3.56%).
There were 336,564,520 fully paid shares on issue held by 730 shareholders.
— with Danielle Doporto, John Miller and Tharun George