Discovery Metals' Boseto Copper project economics improved by Zeta results

Discovery Metals (AIM: DME; ASX/BSE: DML) has received Scoping Study results from Snowden for an underground mine based on a portion of the currently defined Zeta Mineral Resource and deposit at the Boseto Copper Project on a standalone basis, that confirms the economic viability of underground mining operations at Zeta.

The underground mine Scoping Study has been progressed in parallel with the Boseto Copper Project Bankable Feasibility Study. The completion and commencement of the progressive release of the results of this BFS are imminent.

The BFS is based on commencing production at Boseto solely via open cut mining methods with the vast majority of exploration, engineering and expenditure on Boseto to date has been undertaken to support the open cut project.

DML plans to add significant additional tonnages of ore to the production mix by adopting conventional underground mining methods, the Zeta deposit was chosen as the focus for the study because it was the only deposit at Boseto for which Discovery Metals had sufficient information available at the time the study commenced.

The scoping study highlighted the robust economics of an underground mine at Zeta, with an average base case ore production of 1.2Mtpa at 1.4% Cu and 19.2 g/t Ag over an 8 year underground mine life, for average annual production (contained metal in concentrate basis) of 15,300t copper and 480,000oz silver.

Further, the mine is estimated to have a low capital cost of US$10 million as incremental outlay to currently proposed Boseto project scope.

The project would have an NPV of US$61 million using a US$3.00/lb Cu price.

“The study shows that a Zeta underground mine has the potential to add significant value to shareholders through increased operational flexibility and optionality in relation to the copper price, production volumes and extensions to mine life," Discovery Metals’ Managing Director, Brad Sampson said today.

He said the scoping study has shown that the mine has a very low incremental development capital cost with very rapid payback.

"We envisage that the Zeta underground proposal will improve in the future because at this stage the scoping study manager (Snowden) has used conservative estimates throughout. We will refine the grade and cost information as we proceed further with underground studies at Zeta and other areas at Boseto”.

The Company believes that the study results may be applied to other portions of the mineralisation in the greater Boseto area where exploration may confirm mineralization and resources at depth, similar to the Zeta deposit, for example at the nearby Plutus Prospect.

The area of Zeta on which the current study is based is only a small portion of the overall Zeta mineralisation.

For example, the maximum vertical depth scheduled for production in the study is 360m. The Zeta deposit is open below this depth, however, and exploration of this deeper portion is currently under way to over 500m vertical depth.

A Prefeasibility Study for the Zeta Underground has commenced and is scheduled for completion during September 2010.  It will involve scenarios for integrating the open cut mining operations.

http://www.proactiveinvestors.co.uk/companies/news/14960/discovery-metals-boseto-copper-project-economics-improved-by-zeta-results-14960.html