In May 2016, SML entered financial arrangements with New Age Exploration Limited (“NAE”) to acquire up to 50% of the Redmoor tin/tungsten exploration project through subscribing for shares in its wholly owned special purpose company Cornwall Resources Limited (“Redmoor”), formerly known as NAE Resources (UK) Limited. In February 2017, SML completed the subscription for shares taking it, and NAE, to equal partners.
In October 2012, NAE acquired the rights, through an exploration licence and mining lease option arrangement, over a 23km2 area surrounding the Redmoor deposit in the Cornish tin-tungsten-copper mining district in the UK. The exploration licence provides the rights to explore over the entire licence area for a period of 15 years and the mining lease option provides the right for Redmoor to enter into a 25-year mining lease (renewable for a further 25 years) over any part of the licence area. During the exploration licence period, a modest annual licence fee is payable to the vendor which reverts to a 3% net smelter return vendor royalty on mining commencement. The licence area had previously supported a number of historic tin-tungsten-copper mines and there are a number of operating open cut mines (china clay and tungsten) located in the region.
There is excellent local infrastructure for roads and ports and it is less than 40km by road to the recently commissioned Drakelands tungsten mine and processing plant.
In December 2015, NAE undertook, in conjunction with SRK Consulting (UK) Limited (“SRK”), a detailed review of the historical drilling, mining and geological data. This resulted in the:
- Definition of an updated Mineral Resource, as defined by the JORC code, of 0.56% tin equivalent (SnEq1) (13.3Mt @ 0.37% tungsten equivalent (WO3Eq2)) ).
- Identification of a number of high grade lodes at Redmoor and definition of a high grade sub-set of the above Inferred Mineral Resource
- Identification of an additional high grade Exploration Target, also defined by the JORC code, of 4Mt to 6Mt with an estimated grade of between 0.6% and 1.0% WO3Eq (0.9% to 1.5% SnEq) – two to three times the size of the above High Grade Resource noted in 2) above (at a similar expected grade).
It should be noted that the above Exploration Target is conceptual in nature and there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource.
|1 SnEq (Tin equivalent)||Converts the tungsten trioxide and copper content into an equivalent tin content on an equivalent metal value basis after adjustment for recovery and smelter payable factors in accordance with the following formulae: Sn(Eq)% = Sn%*1 + WO3%*1.50 + Cu%*0.36. Commodity price assumptions: WO3 US$ 37,000/t, Sn US$ 23,500/t, Cu US$ 6,700/t. Recovery assumptions: total WO3 recovery 72%, total Sn recovery 68% & total Cu recovery 85% and payability assumptions of 79%, 87% and 87% respectively.|
2 WO3Eq (Tungsten trioxide equivalent)
Converts the tin and copper content into an equivalent tungsten trioxide content on an equivalent metal value basis after adjustment for recovery and smelter payable factors in accordance with the following formulae: WO3(Eq)% = WO3%*1 + Sn%*0.67 + Cu%*0.24. Commodity price assumptions: WO3 US$ 37,000/t, Sn US$ 23,500/t, Cu US$ 6,700/t. Recovery assumptions: total WO3 recovery 72%, total Sn recovery 68% & total Cu recovery 85% and payability assumptions of 79%, 87% and 87% respectively.
In March 2016, NAE completed a preliminary mining study which showed encouraging results for both bulk mining and high grade mining options for mining Redmoor via a bench stoping and backfill underground mining method.
- The bulk mining option was based on the Redmoor Inferred Mineral Resource defined by SRK after the application of a 0.40% SnEq cut-off grade, targeting 8.1Mt at 0.67% SnEq before stope optimisation and application of mining dilution and recovery factors. The bulk option has an average stope width of 6 metres.
- The high-grade mining option was based on the Redmoor Inferred Mineral Resource defined by SRK after the application of a 0.50% SnEq cut-off grade, targeting 3.5Mt at 0.99% SnEq before stope optimisation and application of mining dilution and recovery factors. The high grade option has an average stope width of 3 metres.
In March 2016, NAE also completed a preliminary mineral processing review, which showed that Redmoor is a coarse grained, simple to process ore with expected high recoveries and low processing costs.
An evaluation of the Redmoor project has recently been undertaken by NAE based on the results of the mining and processing studies. The results of both stand-alone Redmoor development and toll processing options have been encouraging.
As NAE is an ASX listed company, further information on NAE and in particular Redmoor can be found on its website, http://nae.net.au.
An initial drilling programme has been planned, aiming primarily at converting the significant Exploration Target to an Inferred Resource and also at upgrading a portion of the resource from Inferred to Indicated Mineral Resource status. The initial drilling plan is being reviewed by both NAE and the Company to ensure that the maximum benefit can be obtained for Redmoor in utilising the funds provided from the Company’s investment into Redmoor.