Well we all know about the Xmen at Ernest Henry below is a bit of onfo on our other Rail spur J.V partners operation.
The Dugald River project is one of the world’s largest and highest grade known undeveloped lead-zinc-silver deposits with a resource of 53 million tonnes at 12.5% zinc, 1.9% lead and 36g/t silver. At current commodity prices this equates to a combined grade of 16% zinc equivalent. Dugald River is located in north-west Queensland, approximately 65 kilometres north-west of Cloncurry.
Feasibility studies on the project were completed in 2009, 2010 and updated in 2011. These studies showed the viability of a two-million-tonne per annum underground mine with a life of more than 22 years. The ore body is open at depth, assuming the use of conventional underground mining methods. Test work has also confirmed that high metal recovery rates could be achieved with standard crushing, grinding and flotation processing. Dugald River is expected to produce an average of at least 200,000 tonnes of zinc, 25,000 tonnes of lead and 900,000 ounces of silver in concentrate per year.
The project has good access to infrastructure, with a sealed two-lane highway 10 kilometres to the east of the site and water available 11 kilometres to the north. Zinc concentrates are planned to be transported by truck to Cloncurry and then via rail to Townsville.
Dugald River will include a combination of a residential workforce from Cloncurry and a fly-in, fly-out workforce from a range of locations such as Mt Isa, Townsville, Cairns and Brisbane.
The project Environmental Impact Statement (EIS) was submitted during 2010 and the Company is working through the environmental permitting process.
In November 2011 the EIS assessment report advised that the project was suitable to proceed to the next stage of the approval process. Full EIS approval is expected around the middle of 2012.
The Company is undertaking extensive pre-commitment activities including advancing engineering design, refining capital and operating cost estimates, and advancing power, access and infrastructure negotiations.
Early works commenced on site in October 2011 and included the development of two exploration declines, which will intersect the main part of the ore body in late 2012.
In the fourth quarter 2011, the Board approved further expenditure of A$157 million for the next stage of the project, for spend up until the third quarter 2012. The final decision on whether to develop the Dugald River project is expected to be made by the Board in 2012 and, subject to other required approvals, the Company aims to have the mine in operation during 2014.
Project capital costs will be announced with the Board decision and are expected to be in the range of US$1–1.25 billion.
CDU Price at posting:
$3.11 Sentiment: Buy Disclosure: Held
