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APPENDIX V COMPETENT PERSON’S REPORT AND VALUATION REPORT


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A COMPETENT PERSON’S REPORT
AND VALUATION REPORT ON THE
MINERAL ASSETS OF METOREX
(PTY) LTD IN THE DEMOCRATIC
REPUBLIC OF CONGO AND THE
REPUBLIC OF ZAMBIA







Prepared for

Jinchuan Group International Resources
Co. Ltd




Report Prepared by



SRK Consulting (South Africa) (Pty) Ltd

Project Number 453459

30 August 2013

(Effective date: 30 June 2013)

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APPENDIX V COMPETENT PERSON’S REPORT AND VALUATION REPORT


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EXECUTIVE SUMMARY
[18.05(1), 18.09(2)(3), SV2.1]

ES1 Introduction

SRK Consulting (South Africa) (Pty) Ltd (“SRK”) is an associate company of the international group holding

company, SRK Global Limited (the “SRK Group”). SRK has been commissioned by Jinchuan Group

International Resources Co. Ltd (“Jinchuan”, also referred to as the “Company”) to prepare a Competent

Person’s Report (“CPR”) and Competent Valuation Report (“CVR”) on the operations and projects of Metorex

(Pty) Ltd (“Metorex”) in the Democratic Republic of Congo (“DRC”) and Republic of Zambia (“Zambia”)

according to the requirements of Chapter 18 of the Rules Governing the Listing of Securities on the Stock

Exchange of Hong Kong Limited (respectively the “Listing Rules” and the “HKSE”). Both the CPR and CVR

have been consolidated into this single report (the “CPVR”).

ES2 Mineral Assets and Legal Status

[18.05(3), SV2.3]

Metorex is a private company registered in the Republic of South Africa and is a wholly-owned subsidiary of

Jinchuan Group Company Limited. Metorex’s interests in the operations and projects in the DRC and Zambia

(collectively the “Mineral Assets”) are as follows:

 Through its wholly-owned subsidiary Ruashi Holdings (Pty) Ltd (“Ruashi Holdings”), a 75% shareholding
in Ruashi Mining sprl (“Ruashi Mining”) near Lubumbashi in the DRC, which operates the Ruashi open pit

mine producing Cu and Co (the “Ruashi Mine”);

 An 85% shareholding in Chibuluma Mines plc (“Chibuluma”), near Kitwe in Zambia, which has the
operating Chibuluma South underground mine producing Cu and the nearby Chifupu Project which forms

part of the Chibuluma South licence. Chibuluma also holds a prospecting licence for the Chibuluma

Central property;

 Through its effective stake in Kinsenda Copper Company sarl (“KICC”), a 77% shareholding in the
Kinsenda Copper Project (“Kinsenda”), which is a brownfields underground mine under construction in the

DRC;

 Via Ruashi Holdings and Ruashi Mining, an indirect 75% shareholding in the Musonoi Cu/Co Project
(“Musonoi”, also referred to as the Dilala East Project), near Kolwezi in the DRC, where a feasibility study

is in progress; and

 Through its effective stake in KICC, a 77% shareholding in the Lubembe Copper Project (“Lubembe”),
where a pre-feasibility study is in progress.

The title and rights to the Mineral Assets are summarised in Table ES1.

Table ES1: Metorex – summary of mineral rights

Licence Type of Title
Area
(ha)

Valid from Expiry Date Commodity

Ruashi

PE578 Exploitation Permit 900 26 Sep 2001 25 Sep 2021 Cu, Co, base and precious metals

PE11751 Exploitation Permit 420 11 Dec 2009 10 Dec 2039 Cu, Co, base and precious metals

Chibuluma
7064-HQ-LML
Chibuluma West

Large-scale Mining
Licence

4 895 6 Oct 1997 5 Oct 2022 Cu, Co, base and precious metals

7065-HQ-LML
Chibuluma South

Large-scale Mining
Licence

1 120 6 Oct 1997 5 Oct 2022 Cu, Co, base and precious metals

17314HQ-LPL
Chibuluma
Central

Large scale
Prospecting licence

9 300 1 Feb 2013 31 Jan 2015 Cu, Co, Ni, Zn, Au

Kinsenda

PE101 Exploitation Permit 4 928 6 Oct 2006 5 oct 2021 Cu, Co, Pb, Ni, Pd, W

PE12458 Exploitation Permit 5 695 10 Mar 2012 9 Mar 2042 Cu, Co, Ag, Ni, Pt, Au

Musonoi

PE13083 Exploitation Permit 324 4 Dec 2012 3 Apr 2024 Cu, Co, Ni and Au

Lubembe

PE330 Exploitation Permit 2 338 29 Jan 2002 28 Jan 2017 Cu, Co, Pb, Ni, Pd, W

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Code, the number of check samples compared to the total database is very small (approximately 0.6%) and

was biased towards samples collected in the 1970s and 1980s.

Metorex
Scatter and HARD plots for referee samples - %TCo

Project No.
453459

Figure 3.12: Scatter and HARD plots for referee samples - %TCo



Metorex has accepted the historical data as suitable for mineral resources estimation work on the basis of this

limited check sampling, and the results of the 2005/6 and 2009 drilling, even though the majority of the

database is not supported by adequate QA/QC. However, Ruashi mine is a mature producing entity and the

copper production over the years has shown consistency with the predictions of the drill hole database. This

consistency in copper production largely mitigates the insufficient QA/QC so that the quality of the resources as

classified can be accepted.

The areas where mining is being done at present are supported by drilling on a 25m x 25m drill spacing with

good QA/QC. These resources/reserves should be sufficient for the next 4-5 years. The IGS comments remain

a concern and Ruashi would be advised to conduct regular reconciliations between planned and actual metal

content.

It is essential that the assay quality control programme instituted at the Ruashi Mine laboratory be strictly

adhered to as a means of improving the confidence in all new assay results received. The Ruashi Mine

geological and analytical laboratory staff have received training in this respect, and a procedure is in place to

ensure all drill hole samples to be used for estimation purposes, are accompanied by the appropriate level of

blanks, CRM and repeat samples to ensure compliance.

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3.6.5 Bulk density and bulk tonnage data
[SR2.4]

Bulk density measurements were taken on 1 168 samples from the 2009 drilling programme across lithological

domains and across a range of depths, and were measured on air dried samples. Because some black ore

mineral zone (“BOMZ”) core samples would actually float on water, a dry medium (sugar) was used to

calculate the volume with weight measured using a digital scale. During 2010, a standard SNOWRIX model

NHV-3 digital density scale was used for all the “non-floating” rock density measurements.

Plots of grade versus SG and depth versus SG were created for the different domains but no discernible trend

was evident. An average density was used for each domain and the mixed zone was assigned a value midway

between the oxide and sulphide values. The dolomitic units generally have a higher density than shale, and the

BOMZ shows low to very low density. The sulphide densities average 2.5 t/m3. Table 3.4 shows 2009 and 2010

densities.

Table 3.4: Average specific gravity by geological domain and weathering characteristics

Ore Type
Oxide Mixed Sulphide

2009 2010 2009 2010 2009 2010

CMN 2.03 2.06 2.25 2.11 2.5 2.28

Mineralised CMN 2.03 2.06 2.25 2.11 2.5 2.28

BOMZ 1.78 1.81

SD 1.92 2.03 2.25 2.21 2.57 2.39

Mineralised SD 1.92 2.03 2.25 2.21 2.57 2.39

DSTRAT / RSF 2.17 2.07 2.35 2.37 2.52 2.67

RSC 2.12 2.15 2.32 2.43 2.51 2.5

MV 2.13 2.23 2.34 2.45 2.54 2.66



The waste rock density was based on the data from 2006 drilling. A relationship established between density

and depth was applied in the definition of waste densities in the model, subject to a maximum value of 2.7 t/m3.

3.6.6 Geological Modelling and Zones of Mineralisation
[SR4.1A(ii)(iv), SR4.1A/B, SR4.2A, SR4.2B]

The geological model for the Ruashi Mine was constructed on the basis of identification of major lithological

units and the merger of thinner and discontinuous units to ensure continuity across the drill holes consistent with

the major structural features including geological discontinuities.

The main geological features identified are a recumbent fold with flat lying and vertical faults causing stretching

and fragmentation into three parts resulting in the Ruashi I, II and III ore bodies. Depth of oxidation and

weathering intensity vary depending on the rock types. Depth of weathering varies from 50 m to 300 m below

surface.

The lithological units modelled are listed in Table 3.5.

Table 3.5: Summary of modelled lithological units (IGS report)

Unit Description Thickness, m

MV Modelled as a singular unit at the base of the ore body 3 to 8

RSF/DSTRAT Modelled as a combined unit 5 to 20

RSC Modelled as singular unit 12 to 25

SDS and SDB Modelled as a singular unit called the SD unit 60 to 95

BOMZ Modelled as a singular unit called the BOMZ 3 to 20

Mineralised CMN
Modelled as a mineralised zone on the footwall side of the unit within the
broader CMN envelope – not clear 2 to 30

Breccias Modelled as distinct units around Ruashi II N/a

3.6.7 Mineral Resources estimation
[SR4.2]

Mineralised zones were defined within the lithological units on the basis of a 0.5% TCu or 0.1% TCo cut-off.

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The availability (or lack) of skilled personnel required to implement and operate sophisticated procedures is of

concern.

3.19.6 Mineral Processing
Metorex has provided for the installation of 15 MW of diesel-generated power to supplement the power supplied

by SNEL. The Caterpillar diesel generators will be commissioned in August 2013. The Agrekko generators

with a capacity of 13 MW that were on lease will be purchased during H2-F2013 and this will further decrease

the dependence on SNEL. Nevertheless, the forecast production levels may be optimistic as these production

levels have not been previously achieved.

Co recovery in H1-F2013 was only 67.7%. If the poor Co recovery in March 2013 is excluded, the Ruashi Mine

exceeded the target 71% Co recovery in H1-F2013.

Power dips affect the availability of SO2 and the supply of steam to the dryers. Metorex reports that the SO2 and

acid plant is connected to the back-up power supply therefore the risk in non-production due to power dips is

mitigated.

The forecast production levels are based on successful debottlenecking of the plant, sustaining a 92% running

time, and the successful operation of the SO2 plant.

Sale of acid is dependent on the continuation of the off-take agreements.

The inventory of diesel will need to be carefully managed, given the delays through the border and the

increased demand for power generation. Metorex has entered into a 12-month diesel supply agreement.

Metorex has received written confirmation that the suppliers will be able to meet the increased diesel demand

due to running 20 diesel-powered generators.

The commissioning of the diesel-generator sets in F2013 will effectively make Ruashi self-sufficient in terms of

power supply, thereby minimising the effects of the power interruptions that plagued production in F2012. As

SNEL power becomes more reliable with the interventions by mining companies in the DRC, Ruashi’s reliance

on diesel-generated power will reduce with accompanying reduction in operating costs.

3.19.7 Engineering and Surface Infrastructure
The main issue faced by Ruashi mine has been the poor availability of electricity in the region, coupled with an

unstable supply when it is available. This is compounded further by the premature failures to electrical

equipment such as motors, VSD drives, control and instrumentation equipment. The internet communications

and IT-based equipment also suffers with damage due to the power supply issues. The mine has increased the

installed diesel generation capacity on site to around 23 MW, which has drastically reduced the mine’s reliance

on SNEL and ZESCO for power. The introduction of the Agrekko diesel generators has drastically improved

electrical power availability to the site.

The planned maintenance system needs to be refined to improve the engineering department’s ability to report

on equipment costs and work history. Presently unplanned job cards are not religiously completed, but the

CMMS upgrade plans are in place and work is underway by Metorex to include unplanned job cards in the

reporting structure going forward.

3.19.8 Logistics
Possibly the highest logistics risk that Ruashi Mine faces is the extended periods that road vehicles have to

endure at the DRC-Zambia border crossing point, especially the fuel (diesel) vehicles, necessary to power the

mining fleet and the diesel powered generators. Metorex had initiated a tender process to secure sufficient

diesel for the generators. Metorex has received written confirmation that the suppliers will be able to meet the

increased diesel demand due to running 20 diesel-powered generators.

Diesel supply and inventory control have been demonstrated during Q2 2013.

3.19.9 Human Resources
There is a risk that the termination benefit at closure which has been set equal to a 6 month obligation may be

understated. Metorex reports that the termination benefits are reviewed on an annual basis to ensure that

adequate provision and funding are in place. Any annual adjustment will not be material to the overall group.

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3.19.10 Occupational Health and Safety
The safety statistics reflect the standards of safety, maintenance, repairs and operations seen on site at the

Ruashi Mine operations. Given the observations made by SRK during its visit to the EW section, it does tend to

suggest that there is a worker behavioural issue that is impacting on safety performance. Metorex referred to

this as the “cultural tolerance to risk”.

The risk is that if the work based auditing and planned task observation processes carried out by management

and supervisors are not maintained, safety standards may slip. Metorex has advised SRK that management

continues to concentrate its efforts on employees’ behavioural attitude towards safety and health in the work

place.

3.19.11 Environmental
The Equator Principles audit undertaken in 2011 identified the management of ground and surface water

resources as the key environmental challenge facing the Ruashi Mine. The audit was repeated in 2012 but this

conclusion remains applicable, although it is noted that significant progress has been made in addressing

issues from the 2011 audit.

The risks associated with the closure cost estimate include:

 The possibility of ongoing long term water treatment post closure;

 Unexpected social costs due to community expectations being enforced.

 Closure related environmental, social and economic risk identification; and

 Provision for aftercare, maintenance and monitoring. (There is provision for this in the closure cost estimate
by Steadman but it is possible, especially in the light of the fact that a contaminated ground water plume

potentially represents the single biggest environmental risk, that the provision is inadequate.)

The Ruashi Mine is faced with several social challenges / issues related inter alia to poverty in the area, poor
basic infrastructure in communities, high community expectations and government scrutiny. The mine is

involved in several Corporate Social Responsibility projects in the areas of education, health, infrastructure,

potable water and power. These projects, which are co-ordinated by a committee on which the mine, the

mayoral office, the water and electricity utilities and local chiefs are represented, are continuing.

Metorex has been alerted to the potential shortcomings of its current closure planning and an action plan has

been developed to mitigate their effects.

Metorex has a group-wide provision for post-closure water treatment of around USD5 million. In SRK’s

experience, this figure is likely to be considerably more. SRK has in agreement with Metorex increased this

provision for post closure water treatment to USD25 million for the group for evaluation purposes, of which

USD10 million is allocated to Ruashi. The additional provision does not eliminate this risk, but it reduces the

potential financial impact on the company significantly.

Interpretation of on-going water monitoring results will assist in the investigative work required to assess the

likelihood and extent of the post closure water treatment being required.

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