Print article
Ivernia Inc. announced the restart of processing operations at the Magellan Mine in Western Australia during the week commencing February 22, 2010. Magellan currently has approximately 7 weeks of stockpiled ore available for processing through the plant, and mining operations are scheduled to recommence in March. Magellan estimates it will produce approximately 60,000 tonnes of contained lead in concentrates during 2010 following the restart of operations. Magellan has substantially completed the shipment of approximately 22,700 wet metric tonnes (approximately 13,500 tonnes of contained lead) of stockpiled lead carbonate concentrates. There will now be a smooth transition into shipping new production from the restarted Magellan operation.
In August 2009, following extensive community and Government consultation, Magellan was granted the final approvals to commence sealed shipments of lead carbonate concentrates through the Port of Fremantle. Shipments of the mine-site concentrate stockpiles commenced in September 2009 with a continuous flow of filled containers delivered to the Port of Fremantle for export to international lead smelters. In parallel with shipping the stockpiled material, during the second half of 2009 Magellan embarked on the detailed restart planning process as reported in the November 12, 2009 news release.
Significant additions to the Magellan management team were made during the second half of 2009 and recruitment of the mine-site workforce commenced in the fourth quarter of 2009 ahead of restart. At full complement the Magellan workforce will be about 160 including contractors.
The Magellan processing plant has been on care and maintenance for nearly 3 years. The staged restart of the processing plant commenced on February 22, 2010. The major maintenance and re-commissioning projects required ahead of restart were substantially completed during January and February 2010. One of the key objectives was to ensure major maintenance projects were completed ahead of restart to ensure a high level of plant availability during 2010 and 2011. Major projects included the refurbishment of the run of mine ore bin and apron feeder, mill linings and re-alignment, refurbishment of the surge tank, repairs to the floatation circuit, re-commissioning of the pressure filter, upgrades to the process control systems, refurbishment of the lead concentrate storage shed, re-commissioning of the power station, construction of a wastewater treatment plant and maintenance on the process water dam.
Following this week's restart Magellan will be ramping-up production over the course of 2010 and Ivernia provides the following quarterly guidance.
----------------------------------------------------------------------------
1Q 2010 2Q 2010 3Q 2010 4Q 2010 2010
----------------------------------------------------------------------------
Ore Mined ('000 Tonnes) 0 225 415 525 1,165
----------------------------------------------------------------------------
Ore Milled ('000 Tonnes) 70 340 410 450 1,270
----------------------------------------------------------------------------
Contained Lead in Concentrate
('000 Tonnes) 3 17 19 21 60
----------------------------------------------------------------------------
There will be a staged ramp-up of production during the second and third quarters of 2010 with planned full production levels being reached towards the end of the third quarter of 2010. From 2011 onwards Magellan plans to process 1.9 million tonnes per annum of ore producing on average approximately 85,000 tonnes per annum of contained lead in concentrate for the mine life.
Further guidance and resource and reserve statements will be published in the Annual Management Discussion and Analysis and Annual Information Form documents to be published at the end of March, 2010.
Shipments of concentrate stockpiles are nearing completion and a smooth transition into new production is expected. All stockpiles have now been substantially bagged and loaded into containers, with 20,700 wet metric tonnes of the 22,700 wet metric tonne stockpile having left site and 20,100 wet metric tonnes having been shipped through the Port of Fremantle without incident and in full compliance with the stringent conditions imposed by the Western Australian Minister for Environment.
The monetization of stockpiles to date has increased the Company's cash balances to approximately US$19 million as at February 23, 2010. In addition, assuming a US$2,200 per tonne lead price on unpriced metal from these stockpiles, the Company expects to realize a further US$3.8 million in net proceeds from the remaining stockpile sales and shipments including net receivables from customers and brokers relating to prior shipments.
On February 4, 2010 Magellan Metals met its commitment under the terms of the Esperance Agreement and made a A$3 million payment to the Western Australian Government (refer to note 15a to the September 30, 2009 Financial Statements).
Ivernia anticipates that at current US$2,200 per tonne lead price levels Magellan will require approximately $6 million of funding from Ivernia treasury to fund the ramp-up of operations at the Magellan Mine from now until the end of May 2010, with the Magellan operation turning cash flow positive from then onwards. For each US$100 per tonne increase or decrease in the lead price for unpriced lead production above and below US$2,200 per tonne, the Magellan funding requirement until the end of May will increase or decrease by $1.6 million respectively.
Alan De'ath, Ivernia President and Chief Executive Officer said, "This week's restart of Magellan operations is a significant milestone for Ivernia and Magellan and the culmination of a tremendous effort by the entire team. We have successfully recruited a strong Magellan management team and workforce that is fully committed to achieving all of our objectives and are delivering on the restart according to plan. It is exciting to see Magellan returning to production at a time in the market where we are seeing higher prices and strong lead market fundamentals."
Ivernia is an international base metals mining, exploration and development company. The Company is the sole owner and operator of the Magellan lead mine in Western Australia. When operations resume and target production levels are achieved the mine is expected to be a significant pure lead producer accounting for approximately 2% of the total world lead mine production.