Underground mine key to Boseto project growth
Staff Writer | Tuesday September 16, 2014 15:08
The open pit Boseto Mine will soon go underground at Zeta pit as Discovery Metals Limited (DML) looks to boost ore production and grade at its flagship mine, near Maun.
According to Discovery CEO Bob Fulker, the Zeta underground mine will be a model for more extensive underground mining developments at the Boseto copper project, creating value from the significant mineral resource at the Boseto project. “The Zeta underground mine has been a key strategic component of the Boseto development plans since inception in August 2010. This was reaffirmed during our life-of-mine planning that was completed in early 2014.
“The future of the Boseto operation lies in the development of underground mining. We envisage having a minimum of three distinct mines with potentially five declines within the Boseto mineral,” he said.
Fulker further said the mines would have the potential to bring copper production to a sustainable 30,000 tonne per year, for a 15-year mine life or more. In a statement, Discovery Metals says it believes that it is still viable to establish the Zeta underground mine, even though the costs of undertaking have increased.
A review of the project’s viability has revealed that not only have costs gone up, but its return along with its ore recovery will also take a knock.
A 2012 definitive feasibility study (DFS) estimated that the project would require a capital investment of $26.8-million (P235.9 million) to first ore production and would operate at a cash cost of $1.82 per pound. Under that study, the project was estimated to have a net present value (NPV) of $131-million and an internal rate of return (IRR) of 42%.
However, a review of the DFS has estimated that the project would have an NPV of $97-million and an IRR of 45%, while cash costs were estimated at $2.12 per pound.
Despite the higher cash costs, the total capital expenditure to first stop ore production had decreased to only $5.9-million.
The 2012 DFS was based on a 1.5-million-tonne-a-year operation, with the Zeta mine expected to deliver 18,000 tonnes per year of copper and 800,000 ounces per year of silver, over an 11-year mine life. The revised DFS has slightly downgraded production to about 16,600 tonnes per year of copper and 720,000 ounces per year of silver, over an 11-year mine life.
The revision of the original DFS included changes to the sequence of the mine development, deepening of the Zeta open pit mine, developing portals for underground access from within the established open pit mine, and accessing upper production levels directly from the open pit area.
Since commissioning it in 2012, the company has been plagued by operational and financial challenges as low copper prices coupled with low ore grade recovery pulled the company finances into the red. Two attempts to recapitalise the company in the past two years have also fallen through, throwing DML further into debt. Early this year, the company axed 85 jobs as part of a restructuring exercise to reduce costs.
Discovery Metals has announced plans to raise up to P213 million from shareholders to fund Boseto mine’s transition into an underground operation. The company yesterday revealed its intention to undertake a two for one renounceable rights issue at A$0.02 per new DML share issued, and one option for every new DML share issued under the rights issue. This means every DML shareholder will be granted an uncompelled chance to buy one new share for every two already held.
The Australian based copper miner was in April granted approval for the development of the Zeta mine, by the Botswana government, following the amendment of the Boseto mining licence to include the underground mine.