A pre-feasibility study has shown the Mt Garnet tin project to be technically and economically viable, with the utilisation of existing Mt Garnet concentrator infrastructure.
The Consolidated Tin Mines project, near Cairns in Northern Queensland, is on track to reach production by the end of 2014.
The project area contains the Gillian, Pinnacles and Windermere projects, with a combined resource of 7.3 million tonnes grading 0.60 per cent tin.
Consolidated Tin managing director and chairman Ralph De Lacey said the study “demonstrates the economics of a robust and significant tin project”.
“Unlike other projects, Mt Garnet boasts existing infrastructure and near surface ore, which are the drivers of low capital and operating costs,” he said.
“The [pre-feasibility study] has confirmed that we have the opportunity to develop a substantial and profitable tin mining project.”
The study was based on a 1 million tonne per annum open cut mine, producing an average of 2944t per annum of tin in concentrate.
The mine would have a nine year life and a capital cost (to first production) of $76 million, with capital payback to be achieved within two years. The average annual revenue generated from the mine was expected to be $127.4 million and the annual average cash flow $29.7 million.
However, the company reported that it expected to be able to reduce the capital and operating cost base through further review and optimisation of the mine design and processing.
Based on these results, Consolidate Tin would undertake a Definitive Feasibility Study (DFS) for the project.
“Another important outcome of the [pre-feasibility study] was the identification of a number of opportunities for financial improvement with further design optimisation of mining and processing stages, and we have our sights clearly set on realising these opportunities through the Definitive Feasibility Study process,” Mr De Lacey said.
“The board has approved the initiation of the DFS for the Mt Garnet tin project, commencing with Gillian with further evaluation work to follow at Pinnacles and later at Windermere.
“It is anticipated that Gillian will provide the mill feed for the first three years of mining.
“Discussions are well advanced with our major shareholder, Snow Peak, to finalise a binding agreement to ensure that full asset value is realised for all stakeholders, with the aim of achieving tin production by end 2014.”
Completion of the pre-feasibility study marked the finalisation of a formal agreement with Snow Peak investors to incorporate the Mt Garnet concentrator into Consolidated Tin’s Mt Garnet project.
Consolidate Tin’s share price jumped 30 per cent following announcement of the study results.