Wednesday, 29 February 2012

Montero Mining PEA for Duyker Eiland phosphate project shows "robust economics"

Montero Mining and Exploration (CVE:MON) unveiled Tuesday the results of an NI 43-101 compliant preliminary economic assessment (PEA) for its Duyker Eiland phosphate project, showing "robust economics" with a pre-tax net present value of C$150 million at a 10 percent discount rate.
The project is located 30 kilometres north of the Port of Saldanha, in the Western Cape province of South Africa. The company said it is already in discussions with a number of interested parties for commercializing its phosphate assets.
Shares of Montero were up 2.56 percent Tuesday morning at 20 cents on the TSX Venture Exchange.
The PEA report, conducted by Turgis Consulting, is based on an initial inferred mineral resource of 32.8 million tonnes, grading 7.15% P2O5, and shows average production of 490,000 tonnes per year of 33% P2O5 concentrate over an 11-year mine life.

The company said that an average of 4.5 million tonnes of rock would be mined per year at low stripping ratios of 0.57:1.
As reported late last year, preliminary metallurgical test work has indicated that an acid-grade phosphate concentrate of 33%to 35% P2O5 can be produced by flotation.

"We are pleased the results of the PEA on the initial Inferred NI 43-101 Mineral Resource at Duyker Eiland has returned such robust economics with a NPV of CAD$ 150 million with a 10% discount rate," said Montero president and CEO, Dr. Tony Harwood.

"Montero is in discussions with a number of parties interested in commercializing our phosphate assets.

"Montero remains committed to establishing early production on our flagship Wigu Hill Rare-Earth Project in Tanzania while seeking partners to develop our phosphate assets.”

Indeed, the company's Duyker Eiland phosphate project could prove lucrative with a projected internal rate of return (IRR) of 41 percent, pre-tax and before South African royalties. Montero said there are also opportunities to increase the value of the project through the production of fertilizers.

"At a reduction in product revenue per tonne of 15 percent (USD$ 160) the project still demonstrates robust returns with an IRR of 27 percent. Currently, 70% BPL rock phosphate FAS Casablanca is published by the World Bank at USD$ 202 per tonne (January 2012)," Montero said in Tuesday's statement.

Operating cash costs were estimated at C$99 per tonne of concentrate Free alongside Ship (FAS) Port of Saldanha, South Africa, including 20 percent contingency.

Transport and logistics costs, which include transport to port, warehousing at port and transport to wharf alongside ship (FAS), were calculated based on a budget quote received from a local transport company, the company said.

Total capital costs are seen at C$129 million for the project.

The company said the net present value of Duyker does not include expenditures required for exploration and engineering development this year and in 2013. Montero plans to continue to explore the possibility of production of other higher-content phosphate fertilizers and other products to generate additional returns for the asset.

The miner also plans to increase the resource confidence and estimates, and to complete sampling to allow for detailed characterization of the rock phosphate concentrates that may be produced.

An environmental and social scoping study may start, Montero said, in preparation for pre-feasibility studies and additional economic assessment that could be commissioned to examine the viability of a fertilizer plant investment in the area.

Toronto-based Montero Mining is a mineral exploration and development company focused on rare earth elements (REE), phosphates and uranium in Tanzania, South Africa and Quebec, Canada respectively.

Its flagship Wigu Hill REE project in Tanzania is a high-grade, undeveloped light REE deposit, with the company currently focused on updating the initial NI 43-101 resource estimate and advancing the hydro-metallurgical testwork with Mintek.

Rare earth elements, a group of 15 metals, are critical in the development of emerging green technologies and high-tech applications, from electric and hybrid vehicles and wind and hydro power turbines, to LCD screens, MRI, X-ray machines, mobile devices and other computing equipment.

Earlier this month, Montero said it identified measurable amounts of strontium in bastnaesite-bearing carbonatite dikes in the Twiga Zone at its Wigu Hill rare earths project in Tanzania.

The strontium found at the site occurs as strontianite (SrCO3), the company said, which is associated with the rare earth and gangue minerals, and was established during initial mineralogical work that identified bastnaesite and synchisite as the main rare earth-bearing minerals.
The Wigu Hill property was first identified in the 1950s as a high grade deposit, with a large carbonatite complex measuring 6.4 by 3.2 kilometres.  The asset has bastnaesite mineralization and is considered a "look-a-like" to Molycorp's (NYSE:MCP) Mountain Pass project. The rare earth elements at the deposit are hosted in the mineral bastnaesite found in carbonatite dikes, making it similar to Molycorp's Mountain Pass deposit in the USA.
Montero is working to update the initial NI 43-101 compliant resource estimate for the Wigu Hill project this quarter, and is targeting cash flow from a small mining operation at the Twiga Zone.
Last September, the company released a 3.3 million tonne inferred resource on only a fraction of the Wigu Hill complex. Only the Tembo and Twiga deposits on the eastern side were estimated to contain an inferred resource of 3.3 million tonnes at a grade of 2.6% light rare earth oxide (LREO5).
Montero is focused on upgrading the resource, and has hired Turgis Consulting to perform a scoping study on the property, due out in the first half of this year.

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