NQ Minerals Hellyer production rates better than originally forecast

NQ Minerals Plc (AQSE:NQMI) the base and precious metals producer from its 100% owned flagship Hellyer Mine and the 100% owner of the Beaconsfield Gold Mine, both in northern Tasmania, Australia, has announced its 2020 year-end operations update from the Company’s 100% owned Hellyer Mine in Tasmania, Australia, to the 31 December and an update on its Beaconsfield Gold Mine.

Hellyer Operations Update:

Hellyer Production Results by Quarter for 2020 and Full Year

Reconciled ProductionQ42020Q32020Q22020Q12020Full Year2020
Lead Concentrate (tonnes)9,56511,8658,7628,12738,319
Zinc Concentrate (tonnes)5,5834,5854,2414,60919,019

2020 saw consistently improving production output at Hellyer, driven by a systematic plan that increased capacity at the plant to around 1.4 million tonnes per annum (mtpa) by year end. This throughput compares to the initial project steady state forecast of 1.2 mtpa and a revised throughput target of 1.5 mtpa planned for the end of Q1 2021. In addition, the Company completed its US$55 million debt refinancing package for the asset in December and secured Hellyer’s concentrate off-take until end of mine-life for the tailings reprocessing operations.

Overall production for the 2020 comprised:

· Lead concentrates of 38,319 tonnes – up 53% from the previous year (2019 FY: 24,980 tonnes).

· Zinc concentrates of 19,019 tonnes – up 22% from the previous year (2019 FY: 15,646 tonnes).

Payable gross gold production for 2020 was 5,452 ounces and payable gross silver production was 1,106,440 ounces. These saleable precious metals reported to the lead and zinc concentrates.

Major New Hellyer Tailings Construction Project:

The long-term mining and processing plan called for the construction of a new tailings dam at the Hellyer operations. This new tailings dam (TSF2) will service the existing life-of-mine operations from the tailings retreatment project. In addition, this new dam will provide for additional tailings storage capacity in the emptied TSF1 dam for a potential re-opening of the Hellyer underground mining operations, where significant high-grade mineralisation still exists, as previously reported.

Construction of TSF2 commenced at Hellyer in Q4. Tailings deposition into Stage 1 of the new TSF2 is scheduled to start around the end of Q1 2021.The capital cost of Stage 1 TSF2, when completed, will be around Australian $16.7 million. This stage comprises both the earthworks of the first lift as well as the foundations and water management infrastructure for the fully completed dam. The completed TSF2 to final stage is estimated to cost around Australian $30 million in total and this has been budgeted for in Hellyer’s financial model.

Figure 1: The new TSF2 tailings storage area under construction at Hellyer may be viewed via the following link: http://www.rns-pdf.londonstockexchange.com/rns/4445L_1-2021-1-12.pdf

Hellyer Reserves and Resources Update:

Independent consultants CSA Global (UK) Limited have completed a revised competent person’s report (CPR) about Hellyer, dated 19/11/2020. The revised CPR includes an updated Mineral Resource and Ore Reserve estimate taking into account the depletion by way of mining and processing of 1,679,676 tonnes since the publication of the previous CPR dated 20 November 2017.

CSA Global, as part of their CPR and Ore Reserve estimate, also calculated that the NPV10 of Hellyer’s tailings reprocessing activity is US$137.8 million before tax (using metal prices based on input assumptions from Consensus Economics (www.consensuseconomics.com) and current as of 21st September 2020). These prices comprised:

Market Assumptions used in Hellyer Reserve NPV (CSA Global Aug 2020)

YearGold
(US$/oz)
Silver
(US$/oz)
Zinc
(US$/mt)
Lead
(US$/mt)
20201,92924.212,2591,861
20211,97724.492,2601,894
20221,84721.332,2761,930
20231,76220.262,3111,937
20241,67219.752,3711,926
20251,73321.022,5752,078
20261,73321.022,5752,078
20271,73321.022,5752,078

Note: Source Consensus Economics (www.consensuseconomics.com)

The revised CPR is available on the Company’s website and can be accessed at: https://www.nqminerals.com/important-documents/  

Beaconsfield Gold Mine Update:

NQ has commissioned independent consultants Pitt & Sherry in Tasmania, who are very familiar with the Beaconsfield mine when it was in operation up to the mine’s closure in 2012, to calculate the gold reserves and provide an economic model from the previously reported JORC (2012) compliant Mineral Resource Estimate of 1.454 Mt at 10.3 g/t Au for 483,000 ounces. This work is expected to be completed by the end of this quarter.

On the metallurgical front, detailed carbon loading analysis for the gold stripping circuit are awaited to finalise the full plant refurbishment and start-up costs and schedule.

Now that the Hellyer debt refinancing has been completed; the Company’s focus will switch to getting Beaconsfield into gold production.

NQ Minerals’ Chairman, Mr David Lenigas, said:

“2020 was a highly successful and pivotal year for the Company, having seen our flagship Hellyer operations finally achieve production rates better than originally forecast from the original mine start-up plan. Hellyer’s year end performance, and the revenue boosts associated with production rates of around 1.4 million tonnes per annum, were instrumental in securing a major US$55m debt refinancing package for Hellyer. Efforts to improve Hellyer’s output will continue through 2021 and work there will move towards evaluating the potential of re-opening the underground operations. At our Beaconsfield Gold Mine, we await the receipt of the independent reserve assessment report and the economic model. Getting Beaconsfield operational is seen as an important driver for future revenues and profits.”

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