Celamin Holdings receives PFS, targeting 1.5mtpa rock phosphate production at Bir El Afou

Celamin Holdings (ASX: CNL) has received the results from a Prefeasibility Study (PFS) conducted over the Bir El Afou Project in Northern Tunisia.

The project is located within the 84 square kilometres Bir El Afou Exploration Permit held by Celamin (80%) and Tunisian Mining Services SARL (TMS: 20%).

Of note, resource delineation drilling progress during the PFS was limited. This led to an un-optimised resource. In fact, a positive is that less than 5% of the permit area has been drilled or explored.

The company said the PFS showed no ‘fatal-flaws’ to the development potential at the project which is targeting 1.5 million tonnes per annum phosphate rock production for export sales.

Kevin Nichol, executive chairman of Celamin Holdings, said “this is a very significant result for our company and places us in the forefront of phosphate rock developers.

"This PFS confirms that we have a robust and attractive Project. We have identified a number of areas where further work will enhance the returns on the Project and these will be the focus during the next phase."

Celamin is now focused on the accelerated results from the planned Interim Delineation Phase in the coming months, which will lead the company to a final Project scope for the Feasibility Study.

The project has positive Government and community support at all levels and encouraging investment terms comprising a 5-year tax holiday.

Importantly, there is access to existing well located infrastructure and services.

The high grade phosphate rock concentrate of 30% P2O5 at 150 micron grind is achievable.

The project has an Inferred Resource of 29 million tonnes at 11.1% P2O5 at 7.5% P2O5 cutoff grade.

What is particularly significant though is that less than 5% of the permit area has been drilled or explored and there is potential to increase grade, tonnage and improve mining factors during Interim Delineation Phase.

Another plus for the project is that the local community is well educated and there is a strong social imperative to create jobs.


Key Findings

Celamin and TMS have benefitted from co-operation from the Tunisian Government authorities, especially with respect to infrastructure and services.

Rail

Societe Nationale Chemin de Fer Tunisie (SNCFT) the national rail operator has confirmed the availability of locomotives and rolling stock to enable the transportation of the product to Port over existing rail track.

Port

The Office de la Marine Marchande et des Ports (OMMC), the Tunisian Port Authority, has confirmed availability of a suitable site at Rades port, at Tunis covering about 24,000 square metres.

This site contains an existing rail spur and shed for unloading and storage as well as access to a shared berth and the space for construction of another dedicated berth as required. The berth is suitable for loading of vessels up to 30,000 dwt.

Energy Supply

Societe Tunisienne de Electicite du Gaz (STEG), the national electricity and gas supplier, has confirmed the availability of power and gas supplies to the site under existing gazetted pricing arrangements for Industrial usage.

High voltage transmission lines are located close to the BEA Exploration Permit and gas is supplied to a nearby cement works.

Water
Celamin and TMS have received permission from the responsible Government Authority for water supply from a site about 25 kilometres from the proposed plant site.

This site is capable of delivering as much as ten times the water supply estimated for the process plant consumption (~60 litres per second).

Environmental Aspects

The initial study by Tunisian consultancy EAM has confirmed there are no ‘fatal flaws’ to the proposed development of a phosphate rock mining and processing operation in the Bir El Afou exploration permit.

Mine Planning

The delays in resource estimate led to delays in the mine plan, with a consequence that this could not be optimised during the currency of the PFS. At this stage the current pits have unacceptably high waste: ore ratios. This will be optimised during the next phase.

Capital Costs

Stage 1 capital costs have been confirmed within the range of expectations when the Project was first scoped and total US$366,306,000.

The mining costs are higher than anticipated because of the necessary pre-strip and size of mining fleet required for the waste in the un-optimised open pits, and will be reviewed to align then to a Tunisian base during the next phase.

Operating costs have been confirmed within the range of expectations when the Project was first scoped. The mining costs are higher for the same reasons as above.

Financial analysis

Financial analysis of a base case and two upside cases has been undertaken. Because of the drilling progress during the PFS the resource delineation drilling was limited.

This has led to an un-optimised resource and mine plan with the consequence that the base case financial analysis has produced results that are also less than optimal. The base case NPV is negative.

The two upside cases were undertaken to determine if after examination of the sensitivity of the project to its primary inputs the characteristics of realistic targets for the ID phase and feasibility study can be identified.

Upside case 1 modelled increasing tonnage throughput, mining at a lower strip ratio and assuming a similar process recovery. Case 1 produced a breakeven NPV at 10% discount rate.

Case 2 modelled lower tonnes at a slightly higher grade, with a similar strip ratio and process recovery to case 1. Case 2 produced a positive NPV at 10% discount rate with a 25.7% IRR. Case 2 demonstrates a target for the ID phase of 40 million tonnes at 14% P2O5 with an 8:1 waste to ore ratio producing 15 M tonnes of phosphate rock over 10-years.

Exploration and drilling

A multi-purpose drill rig with reverse circulation and diamond core drilling capability has been specified by the JV partners to speed up the drill program.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/21550/celamin-holdings-receives-pfs-targeting-15mtpa-rock-phosphate-production-at-bir-el-afou--21550.html