Sierra Leone – The prefeasibility study (PFS), undertaken by third party DRA Projects and Sierra Rutile, provides further certainty that the Sembehun dry mine is value-enhancing and capital efficient.
The PFS for the Sembehun dry mine was intended to extend the life and scope of operations at its fully-permitted Sembehun group of deposits, which are located 45 km north-west of Sierra Rutile’s existing operations.
The PFS is based on a throughput of 1 000 tph sourced from an open pit dry mining operation consisting of two 500 tph concentrator plants, an owner-operated mining fleet, product haulage vehicles and infrastructure.
[quote] The projected life of mine is expected to be 21 years, dependent on the size and number of units in the final configuration of the operation.
Compared to the previously released scoping study announced on 1 June 2015, the current PFS supports reduced levels of capital expenditure, a shortened lead-time and improved economic returns.
Furthermore, the PFS is in-line with the continued transition of Sierra Rutile to a market-led business model with the flexibility to align production to long-term demand hence focusing the business model on maximising sales profitability.
- Large resource base: The PFS supports economic dry mining of a significant resource base totalling 3.6 Mt of contained rutile at an average in-situ rutile grade of 0.98%.
- Meaningful, flexible production growth: Sembehun dry mine represents another sequential stage in Sierra Rutile’s dry mining operations. The 1 000 tph operation contributes on average 71 000 tpa of rutile over a 21 year mine life. The mine will consist of two, separate 500 tph concentrator plants.
- Lower capital intensity: Upfront estimate of $72 million for the first 500 tph unit. Total capital for a 1 000 tph operation of $99 million has reduced by approximately 22% in comparison to the previous scoping study estimate. The operation retains flexibility to accelerate ramp-up by constructing two 500 tph units concurrently, gaining further capital efficiencies.
- Improved economics: The PFS supports robust economics at consensus pricing with an after-tax IRR of 66% and an after-tax NPV of $224 million for a 1 000 tph operation. This is an improvement over the previous scoping study, which generated an after-tax IRR of 33% and an NPV of $152 million.
- Low cost of production: Sembehun dry mine as a 1 000 tph operation has an average mining cash cost of $343/t of rutile over the life of the mine, comparable to Sierra Rutile’s existing mining operations.
- Low-risk execution: Sembehun dry mine will have an almost identical design and configuration to Gangama and Lanti dry mining operations, enabling Sierra Rutile to leverage its proven experience in constructing dry mining projects on-budget and on-time.
- Production flexibility and optionality: Dependent on market conditions, the PFS confirms the Sembehun group of deposits can support a variety of throughput options. The two 500 tph units can be brought online either simultaneously or in stages in order to respond to prevailing market conditions.
- Next Steps: Sierra Rutile will now focus on further detailed value engineering, specifically focused on operational flexibility, capital cost reductions and operating cost optimisations.
“The PFS for the Sembehun dry mine reaffirms the robust pipeline of value-enhancing organic growth options within Sierra Rutile’s existing project portfolio.
“If commissioned, the Sembehun dry mine would be the third dry mining operation constructed at Sierra Rutile. The experience gained from the Lanti and Gangama dry mines will be leveraged in the construction of the Sembehun dry mine, helping to ensure even greater confidence that the project will be constructed on-time and on-budget,” says Sierra Rutile CEO John Sisay
Moreover, the staged approach to development allows us to continually evaluate and optimise the project.
“As we continue to execute our strategic plan, we will continue to prioritise sensible growth without compromising our balance sheet and sustainable shareholder returns.”