The Panda Hill Project (Figure 1) is located in the Mbeya District in south-western Tanzania approximately 650km west of the capital Dar es Salam. Tanzania itself is a stable democracy with a well-established mining industry. The industrial city of Mbeya is situated only 35km from the Project area and will be a significant service and logistics center for the Project. Mbeya has a population of approximately 280,000 people, located on the main highway to the capital Dar es Salam and is completing the construction of a new international airport.
The Project is covered by three granted Mining Licenses totaling 22.1km2 which will enable a quick transition to the study and development phases. It has excellent access to infrastructure with existing roads, rail, airports and 220kV power available in close proximity to the Project area. The three granted Mining Licenses are due for renewal in November 2016 and under Tanzanian mining legislation can be renewed for a further 10 year period on completion of the approved work programs on the Project.
Cradle announced the results of the Pre-Feasibility Study PFS) on 31 March 2015. Based upon the PFS, a Definitive Feasibility Study (DFS) has commenced focusing on a 1Mtpa processing plant with expansion to at least 2Mtpa to optimise market penetration and funding solution. The DFS will incorporate a resource update which is underway and includes the results of 9,300m of additional drilling.
Key financial results:
- NPV10 post tax and royalties US$470M
- IRR 56%
- Initial capital expenditure of US$158M
- Payback period 1.5 year
- Working capital US$37M
- LOM of 30 years
- LOM average EBITDA US$103M per annum
- First 10 year average EBITDA US$133M per annum
Key mining results:
- First 10 years average grade: 0.68% Nb2O5
- First 10 years average recovery: 63%
- LOM average grade: 0.54% Nb2O5
- LOM average recovery: 62%
The “Base Case” for the PFS is centered upon an open pit mining operation providing 2Mtpa mill feed over a 30 year life of mine (“LOM”). This is the same scale of operation that was considered in the Scoping Study and is the current size of Magris Resources’ Niobec operation in Canada, thus allowing useful comparative analysis. With the success achieved in the PFS in both mill feed grade and metallurgical recoveries the initial ferroniobium production from a 2Mtpa plant now approximates 8 to 10% of world production. For this reason, and to simplify financing arrangements, the Definitive Feasibility Study (“DFS”) will be scoped so as to achieve a more modest entry into the market (i.e. throughput commencing at 1Mtpa). The DFS will allow for expansion of production as demand grows.
With the planned completion of the DFS in Q4 2015 and the conclusion of the financing arrangements it is expected that the detailed design work can start in 2016 with construction etc. leading to a completion date of Q4 2017 for the plant start-up in Q1 2018.
JORC Required Cautionary Statement concerning Production Target Results including Inferred Resources
Cradle advises that the PFS results and production targets reflected in this announcement are preliminary in nature as conclusions are drawn partly from Indicated Mineral Resources and partly from Inferred Mineral Resources. There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Indicated or Measured Mineral Resources or that the production target itself will be realised.
As the Panda Hill mineralisation is a relatively clean material with low levels of impurities (particularly uranium, tantalum and titanium), and well liberated mineralisation at coarse grind, a single-stage flotation method can be used to process the niobium ore. The Panda Hill mineralisation is unique amongst Niobium projects currently under study in that this simple flotation, and non-complex hydrometallurgical process, can be used to upgrade the materials. Recovery in the first 10 years is estimated to be 63% with a 62% LOM recovery.
Standard grade ferroniobium (“FeNb”) makes up some 90% of world niobium consumption; the Panda Hill Niobium Project will produce standard grade ferroniobium, with the converter product (FeNb) being crushed, screened and packaged onsite to meet the specific customer demands. In general the sized product will be packaged in 1 tonne super-bags or 250kg steel drums, with some packaging into smaller 10lb or 25lb pails.
The Project is fairly unique in that it has excellent nearby infrastructure including: TAZARA Rail line (2km away), a dry port located in Mbeya (26km away), the Dar es Salaam – Tunduma Highway (5km away), Songwe Airport (8km away), the La Farge Songwe Cement Factory (6km away) and a major fuel depot in Mbeya. Access to water and power is also relatively simple with the Songwe River, a major water course, running next to the mining tenements and TANESCO planning a new 400kV power line that will run past the licence area.
The Mbeya region is also a developing mining area with the established Shanta goldmine less than 100km away and Peak Resources developing a rare earths mine nearby. Mbeya city is a growing city with good educational and medical facilities, including technical colleges that are expected to be a source of personnel for the operations.
Panda Hill Niobium Resource
Cradle announced a significant Resource update in January 2015 (Table 1 and Figures 3, 3a and 4). The new Resource incorporated the results of 21 diamond and 51 RC holes drilled in June to October 2014 with 5,171 samples taken for the 9,365 metres drilled.
Additionally, in November and December of 2014 Cradle undertook 9,324m of RC and Diamond drilling targeting the delineation of a Measured JORC Resource and minor extensional drilling; as the assay information for this drilling was not available for the December resource update, this information will inform a new resource estimate expected in Q2 2015.
The December 2014 Resource was estimated by Coffey Mining using Multiple Indicator Kriging on 2m composites with a 25m x 25m by 5m (X x Y x Z) panel to generate a recoverable estimate emulating an SMU of 6.25m x 12.5m x 5m. Significantly, this resource is based predominantly on new RC and diamond drilling undertaken by Cradle in 2014, and no longer relies upon historical data for the bulk of the deposit.
Highlights of the Resource update include:
- The Primary Carbonatite Resource is increased to 88Mt at 0.52% Nb2O5 (Indicated and Inferred).
- Representing a 10% increase in grade and a 37% increase in metal in the Primary Carbonatite Resource.
- And includes a JORC Indicated Resource Primary Carbonatite component of 36Mt at 0.54% Nb2O5.
- Representing a substantial improvement in Resource confidence through additional data and modelling.
- The new Resource is based on the Multiple Indicated Kriging (MIK) method which incorporates increased mining selectivity and internal dilution for a planned Selective Mining Unit (SMU).
- Initial mine scheduling will focus on the Angel Zone comprising a higher grade sub-zone of the Indicated Resource.
- Infill Drilling for a Measured Resource in the Angel Zone is complete, with results due in January.
Competent Person’s Statement
The information in this document that relates to Exploration Results and Resources is based on information compiled or reviewed by Mr Neil Inwood who is a Fellow of The Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Mr Inwood is a full time employee of Verona. Mr Inwood has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Inwood consents to the inclusion in this document of the matters based on his information in the form and context in which it appears.
Since 2013, Cradle has undertaken some 20,000m of diamond (46 holes for 6,390m) and RC (98 holes for 13,752m) drilling over the southern and eastern portion of the Panda Hill Carbonatite. This drilling (Figure 5) has successfully replaced and improved upon the historical drilling information that was previously relied upon. Drilling by Cradle, averages 148m deep and has only tested some 40% of the area of the carbonatite intrusion (Figures 5 and 6).
Additionally Cradle has undertaken an aerial magnetic survey over the deposit and has remapped the entire deposit outcrop. This work has identified multiple high-priority targets for further drilling, allowing significant scope for future increases in the deposit endowment.
Previously, the Panda Hill Carbonatite intrusion has been subject to multiple phases of exploration work since the 1950s. This work targeted both the niobium and phosphate endowment of the deposit. From 1953 to 1965, the Geological Survey of Tanzania (GST) undertook mapping, diamond drilling and trenching (17 diamond holes for 1,405m) to assess the niobium and phosphate potential. From 1954 to 1963 the MBEXCO joint venture was formed between N. V. Billiton Maatschapij (Billiton) and the Colonial Development Corporation, London. MBEXCO drilled 66 diamond holes for 3,708m, excavated numerous pits, sunk two shafts and undertook trial mining and constructed a trial gravity and flotation plant on site. Concentrate from site was sent to Holland for further processing, with positive early metallurgical test-work results noted.
From 1978 to 1980 a Yugoslavian State Enterprise (RUDIS) undertook a joint study in collaboration with the Tanzanian Mining Industrial Association and State Mining Corporation (STAMICO). This work included mapping, diamond drilling and pitting (13 diamond holes for 1,306m) to test the niobium endowment of the deposit.
Panda Hill Geology
The Panda Hill carbonatite is a mid-Cretaceous volcanic intrusion which has intruded into gneisses and amphibolites of the NE-SE trending mobile belt. It forms a steeply dipping, near-circular plug of approximately 1.5 km diameter and is partly covered by fenitised country rocks and residual soil material. The Fenite forms a “cap” or roof over the south of the carbonatite complex, and is in tum overlain by residual and transported soils. Volcanic ash over part of the complex suggests a later stage of volcanic activity. It is apparent that portions of fenite, ash and soil cover are underlain by carbonatite and these areas are only lightly explored.
In the main exposed potion of the carbonatite evidence supports three stages of carbonatite activity outwards from the center of the plug. An early-stage calcite carbonatite forms the core, while intermediate and late-stage carbonatites, composed of more magnesian-rich and iron-rich carbonates, form the outer parts of the plug. Later stage apatite-magnetite rich rocks and ferro-carbonatite dykes are also found in the complex. Fenitisation of the pre-existing gneisses led to the development of potassium-rich rocks containing K-feldspar and phlogopite.
The ‘Sovite’ carbonatite from Panda Hill is composed mainly of calcite, which forms an average of 60-75% by volume. The fresh Sovite carbonatite may contain up to 5% Apatite, with pyrochlore, magnetite, phlogopite and quartz. Dolomite-rich carbonate (Rauhaugite) and ankerite/siderite-rich carbonatites (Beforesite) are also present and can be mineralised.
The bulk of the Panda Hill niobium mineralisation is found within pyrochlore and lesser columbite. The bulk of the known mineralisation is within fresh, un-weathered carbonatite lithologies, with Nb2O5 grades typically ranging from 0.1% to 1%. Higher-grade material is noted within flow-banding (schlieren) within the carbonatite and within magnetite-rich bands. The fenetised-cap material is noted to contain elevated grades of up to 2% Nb2O5.