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Barruecopardo

Overview

Since initially earning ownership of the Barruecopardo Tungsten Project, Ormonde has successfully defined, designed, permitted and funded, – and is now managing the development and bringing into production of what is one of the world’s premier undeveloped tungsten mining projects outside of China.

This initial nine year open pit mine is fully funded following the completion of a project financing in 2015, comprising US$44.2 million equity and US$55.5 million debt, enabling the project to be developed with mine commissioning targeted by end Q2 2018.

Project Info

Metal:  Tungsten

Location:  Spain – Castilla y Leon

Production Rate:  260,000 mtus WO3 (steady state)

Status:  Permitted. Funded. In Construction

Ownership:  30%

 

  • Large & good grade – 27.39 Mt grading 0.26% WO3 (tungsten trioxide). 17.8 Mt Measured & Indicated and 9.59 Mt Inferred Mineral Resource categories (JORC-compliant)
  • Open pit mining to be based on a pit design containing Measured and Indicated Resources of 8.71Mt grading 0.32% WO3
  • Definitive Feasibility Study completed in 2012
  • Capital costs of €53.5M (including a 10% contingency); estimated cash operating costs are €104 per mtu (USD 114 per mtu)
  • Production rate of 1.1m tonnes per year, to produce 260,000 metric tonne units (mtus) WO3 per year (steady state) during the initially define 9 year mine life (deposit open along strike and at depth – likely long life mine)
  • Plant spare capacity would allow for this rate to be increased by 40% or to circa 360,000 mtu’s (steady state), simply by moving from a 5 day to 7 day a week operation
  • 78% tungsten recovery to a 74.6% WO3 scheelite concentrate (industry standard: 65%) using simple gravity processing
  • Environmental Permitting completed and Mining Concession granted in 2014
  • Offtake signed with Noble for 100% of the tungsten concentrate produced during the Projects initial five years (Mar’14)
  • Comprehensive USD 99.7 million financing package arranged through funds managed by Oaktree Capital Management, split favourably between a large component of equity of USD 44.2 million (circa €40.1 million) and project debt of USD 55.5 million (circa €50.3 million)
  • This Financing secures Barruecopardo’s full funding requirement plus a significant budget to conduct the early evaluation of an underground mining Stage 2 expansion
  • Ormonde acting as manager and receives a €1 million per annum management fee for this service (€0.25 million per annum of which is deferred until two quarters of positive cashflow from the Project)

The capital cost for the proposed 1.1Mtpa operation, based upon the basic engineering design work, is broken down as follows:

ITEM COST (Euro M)
Plant Engineering & Construction 32.5
Project Services (land, powerline, fencing, etc.) 4.5
Water Management Scheme 9.9
Mining Preparation 4.3
Environment (compensating measures) 0.4
Owners Costs (general, admin, communications, PM team) 1.9
TOTAL 53.5

Life of mine cash operating costs are €23.31/tonne of ore processed, broken down as follows:

ITEM Euro/tonne Euro/mtu
Mining (ore) 4.08 17.4
Mining (waste) 15.03 64.0
Processing 3.99 17.0
General & Administration 1.21 5.1
TOTAL COST 24.3 103.5

Note: Stripping ratio of waste to ore = 6.3:1 and ore mining costs include grade control and re-handling costs

Over the life of the open pit operation these costs equate to €104 per mtu processed (US$114/mtu at the current €/US$ exchange rate of  ~ 1.10).

Location: Salamanca Province, Castilla y León Region, Western Spain, approximately 70km west of the city of Salamanca and 350 km west-north west of Madrid.  The central service town in the area is Vitigudino.

Ownership: The mining concession over Barruecopardo is held by Saloro SLU, a wholly owned subsidiary of Barruecopardo JV BV, in which Ormonde has a 30% interest, with a 70% being held by OCM Tungsten Holdings Ltd, a subsidiary company of Oaktree Capital Management. It covers an area of approximately six square kilometres and was granted to Saloro in November 2014. The concession is granted for an initial period of 30 years and may be renewed for two further periods of 30 years each.

Barruecopardo JV BV, through both Saloro and Saloro Exploration (another wholly owned subsidiary), also holds seven investigation permits in Salamanca Province, totalling some 281 square kilometres, surrounding the proximal to Barruecopardo. Investigation permits are issued for an initial period of  3 years, renewable for further periods of 3 years upon submission of work programmes to the regional authority, the Junta de Castilla y Leon.

The Barruecopardo deposit is contained within a major granite-hosted, sheeted vein system with a known length in excess of 1.6 kilometres, striking NNE and dipping steeply to the east.  Tungsten mineralisation occurs dominantly in narrow quartz veins, usually less than 10 centimetres in thickness, as coarse grained scheelite,with minor to trace wolframite and minor quantities of sulphides.  The zones of more intense veining can be up to 40 metres wide.

The deposit is open at depth, with drilling to date having tested only the top 150-250m.

The current JORC Mineral Resource Estimate stands at 27.39 Mt grading 0.26% WO3 equating to 7.1 million metric tonne units (mtus) or 71,000 tonnes of contained WO3. Of this total, 17.8 Mt grading 0.29% WO3 (equating to 5.06 million mtus or 50,600 tonnes of contained WO3) is in the Measured & Indicated Resource categories, with an additional Inferred Resource of 9.59 million tonnes grading 0.23% WO3(equating to a further 2.2 million mtus or 2,200 tonnes of contained WO3).The Mineral Resource Estimate was prepared by CSA Global (Dec ’11) and reported according to the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code 2004 edition). The Mineral Resource Estimate includes all mineral resources at Barruecopardo, both within and outside of the optimised open pit shell.

CSA has classified the Mineral Resources in the Measured, Indicated and Inferred categories as follows:

Classification Tonnes (million) Grade (WO3%) Contained mtus (WO3)
Measured 5.47 0.34 1.86 million
Indicated 12.33 0.26 3.20 million
Inferred 9.59 0.23 2.20 million
GLOBAL 27.39 0.26 7.12 million

A total of 77 holes totalling 15,241 metres of drilling were used in the resource estimation. Grade compositing, used to define the mineralised volume, has been carried out using a minimum horizontal width of 4 metres at a minimum grade of >=0.06% WO3, allowing for internal dilution. This process defined areas of mineralisation that constitute potentially mineable widths at an economic grade. These resources are effectively diluted to mineable grade by this estimation procedure.

The resource is presently drilled to an average depth of 200m and is open at depth along its presently defined 1.6km strike length, drilling to date yielding more than 10Mt per 100m of vertical depth. As such it is expected that the resource will expand considerably with deeper drilling and a long life mining operation is anticipated.

The Project is a brownfield site, the deposit having previously being worked to shallow depths by a series of small open pit workings (30m depth) and one larger open pit (80m depth), from the early 1900s until 1982.

Initial production will be by mechanised open pit (9 year open pit life; Definitive Feasibility Study Feb’12) & subsequently by intended underground mining. Mining both facilitated by the:

  • steeply dipping nature of the deposit
  • regular geometry
  • competent ground conditions.

Open pit optimisation on the mineral resource utilising a tungsten APT price of US$275/mtu was carried out leading to the preparation of a practical open pit mine design based upon the optimum shell and subsequent development of a life-of-mine (LoM) plan. The resulting mine design is for an open pit some 1,100 metres long, 390 metres wide and 185 metres deep.

The mineral resources captured within the open pit are as follows:

Classification Tonnes (million) Grade (WO3%) Contained mtus (WO3)
Measured 4.97 0.35 1.72 million
Indicated 3.74 0.28 1.03 million
Inferred 0.82 0.22 0.18 million

From the Measured and Indicated Resources, a Proven and Probable Mining Reserve has been defined (allowing for 5% losses and 5% dilution) totalling 8.69Mt, grading 0.30% WO3, broken down as follows:

Classification Tonnes (million) Grade (WO3%) Contained mtus (WO3)
Proven 4.96 0.33 1.64 million
Probable 3.73 0.26 0.98 million
TOTAL 8.69 0.30 2.61 million

These reserves have been scheduled over a nine year mine life and the averaged stripping ratio of waste to ore from the open pit is 6.3:1.

In addition to these mining reserves, the open pit design contains a further 0.82Mt of Inferred Resources at a grade of 0.22% WO3, totalling 184,000 mtus of WO3. Some or all of this Inferred Resource may convert to feed for the process plant during the course of mine production.

Mining will be carried out by conventional open pit methods using local contractors, adopting traditional “drill and blast” mining with shovel and truck operations. The new pit will comprise extensions to the historic main pit excavation to the north and south and at depth. Full mine production of 1.1Mtpa will be achieved following a one year ramp up period (0.7Mt in Year-1).

It is planned that mineral resources below the open pit will be further evaluated for subsequent exploitation by underground mining, with underground development planned to commence in the latter years of the open pit operation.

Previous operations at Barruecopardo produced a clean, high grade, tungsten concentrate which was sold to tungsten metal processors. The mineralisation is very coarse and is amenable to low cost gravity concentration.

Metallurgical testwork has been carried out using composited drill core intercepts. This showed that crushing of feed to 5mm was sufficient to achieve effective liberation of the tungsten minerals for gravity pre-concentration. Further testwork on the pre-concentrate showed that upgrading by gravity, followed by flotation to remove any sulphides, produced a final tungsten concentrate assaying 74.6% WO3 (industry standard = 65%) with an open-circuit tungsten recovery of 71.8%. Analysis of the results indicates that a process plant recovery of at least 78% can be expected when treating a plant feed of 0.30% WO3. Tungsten recovery will in practice vary depending on the concentrate specification and pricing as required by different offtakers.

Additional confirmatory testwork was completed for details of the crushing and de-watering circuits (to finalise equipment sizing and configuration) and on possible refinements to the concentrate circuit.

All other testwork and environmental characterisation tests necessary for the Feasibility Study were completed.

The design of the gravity processing plant and associated infrastructure has been completed based upon the results of the metallurgical testwork programmes and a “trade-off study” which assessed the economics of various process plant capacities. The final process plant design allows for a throughput of 1.1 million tonnes per annum (“Mtpa”) operating five days per week, to produce an averaged 227,000 mtus of WO3 per annum over the nine year life of the open pit.

The gravity processing plant comprises three main components or stages:

  1. A four-stage 1.1 Mtpa crushing circuit to yield a 5mm crush size which WAI determined will achieve liberation of the tungsten mineral (scheelite) – as such no grinding circuit is required
  2. Screening of the crushed product at 1mm ahead of a gravity pre-concentration circuit consisting of jigs and spirals which treat the -5 to +1mm and -1mm size fractions, respectively, to produce a nominal 8,400 tonnes per annum of pre-concentrate
  3. A very small clean-up and tabling circuit, principally to remove the sulphides

Stages 1 and 2 in the processing are predicted to result in some 98% of the initial feed to the plant being discarded prior to Stage 3 and stored as a dry stockpile with the mixed waste rock, with no tailings dam required.

It should be noted that this proposed processing circuit is essentially very similar to that which was employed at the old Barruecopardo mining operation in the 1960 to 1980s. At that time, the Barruecopardo Mine sold a premium tungsten concentrate to European offtakers.

The water management system involves a Main Water Dam with a capacity of 760 million litres and smaller collection dams, which will be progressively constructed during the early years of mine production. The historical pit excavation will be de-watered by pumping to a Water Treatment Plant, in this way the project would be making use of a resource which is currently of little practical value, and ensuring that the project is self-sufficient in its water requirements and it is not a burden on other water supply sources in the area. Treatment costs will be minimal as metal concentrations in this water are very low.

Having previously operated as a mine, the project benefits from significant infrastructure already being in place, including roads and power lines close to the site. Upgrades to several of these will be required and have been included in the capital costs.

Access to provincial, regional and International infrastructure is excellent, with good road and rail links to mainland Europe and various ports on the northern coast for overseas shipments.