resourcer journal article

Some very nice quotes from the boss.
Income: $100 million per annum + another $40 million!!!
TOTAL: $140 million per annum... BRING IT ON!
Now I'm really getting excited.
(LME closed due to bank holiday)


Risen to the challenge

Australian explorer Consolidated Tin Mines has overcome challenging metallurgy to develop a major tin project in Northern Queensland, with production scheduled for next year.

Mining companies rarely come as literally named or as single-minded as Consolidated Tin Mines Limited (ASX: CSD, ‘CSD’). Ralph De Lacey and John Sainsbury, both mining veterans, established the company in July 2007 with the sole object of developing a number of tin deposits on the lower Herberton Tinfield of Northern Queensland, Australia, into a consolidated tin mine. Six years later, this object remains unchanged and tantalisingly close to fruition.

The Pre-Feasibility Study (PFS) for the Mt Garnet Tin Project is due in September 2013. Set to become a significant hard-rock, open-pit tin mine, first production is scheduled for 2014. The project comprises two pits: one at the Gillian deposit, with 3.6Mt at 0.65% Sn for 23,400t of tin metal; and the other at the Pinnacles deposit, with 7Mt at 0.3% Sn for 21,000t of tin metal. A third deposit, Windermere, contains 2.5Mt at 0.3% Sn for 7,500t of tin metal; this is the lower priority deposit and a pit design has not yet been drafted.

These are all tin-bearing skarn deposits with fine cassiterite, in addition to one or two different acid-soluble tins. From the beginning, De Lacey and Sainsbury recognised that this metallurgy was challenging and would require an unconventional separation method. “The real challenge was not just to establish sufficient ore reserves, but also to develop a viable mineral extraction circuit,” says Managing Director De Lacey. “We overcame it with the help of experienced tin metallurgist Bob Shelley, who we brought on as a staff metallurgist in 2009. He assisted us with a great deal of test work and research and development, through which we eventually solved the problem.”

The Mt Garnet operation

CSD couldn’t use gravity separation to extract the tin, as the cassiterite had a very close gravity to the iron stone. Magnetic separation was not wholly effective, due to the very fine grain of the cassiterite. “We had no real problem recovering around 40% from magnetic separation, but 40% doesn’t make a project – we had to recover 70% plus,” says De Lacey.

“Roasting and tin fuming were successful from the beginning. High silica in the ore caused problems with sintering in the early roasting trials, and the challenge shifted to developing a suitable feed to the roaster. After going down many paths to hit many dead ends, we tried using reverse silica floatation – quite unlike the tin floatation used by other tin producers.

“We remove the silica from the ore, and then the remainder of the concentrate goes into a kiln where the tin is fumed off. It’s a simple process, but the roasting adds a bit extra to the recovery cost. This is offset, however, by our very low mining costs; plus with this method, we produce a by-product of about 400,000t of high-grade magnetite that will more than offset additional costs.”

The mine has several advantages in terms of both cost and ease of development. As mentioned, the ore is close to the surface and this makes for a simple, relatively inexpensive, open-cut mine.

Mt Garnet sits within an existing mineral field, to which there are several benefits. The area’s history means the local community is in favour of mining and contains an existing workforce. There is also plentiful existing infrastructure, including transport links and a processing plant with power and water connections.

CSD convinced its main investor, Snow Peak Mining Pty Ltd (SPM), to purchase this processing plant so that it could be modified for CSD’s mineral extraction circuit, which De Lacey says will result in “major cost savings”.

Furthermore, transporting material to and from the processing plant will be easy. “National Highway 1 runs right through the project, so step outside the door and we’re on the highway,” says De Lacey. “The highway is suitable for road trains, so hauling the ore will be very straightforward.”

Travelling along the highway, the processing plant is just 9km from the Gillian pit and 140km to the port. Transporting 5,000t of tin concentrate – and even 400,000t of iron ore by-product – to port over the space of a year should be no problem.

Path to production

CSD made its IPO in 2008 – “the wrong time,” says De Lacey. “It was the beginning of the global financial crisis, which made it difficult to raise funds.”

Instead, the company had to find a supportive cornerstone investor, and was fortunate to achieve this with a wealthy Chinese businessman called Mr Tong and his China-based company Snow Peak International Investments (SPII ). SPII now owns 18.35% of CSD. In 2012, the existing 1Mtpa Mt Garnet copper/base metals processing plant was placed into administration and later put up for sale. De Lacey convinced Mr Tong this was a great opportunity for CSD to obtain an existing plant and convert to tin processing . Snow Peak Mining Pty Ltd (SPM) was established and successfully acquired the plant and a portfolio of copper/base metal projects in early 2013. CSD has 10% carried interest in SPM, meaning it receives 10% of SPM’s copper/base metals profits with no costs payable.

Once CSD completes the Mt Garnet Tin Project PFS in September, it will be able to begin negotiations with SPM on how to bring the companies together. “Once we have the economics of the project, we can start serious discussions with Snow Peak on a commercial arrangement where both sides are treated fairly,” explains De Lacey. He doesn’t yet know what the result of these negotiations will be.

He mentions talks about a “grand plan” to develop other projects in the area, but stresses that bringing the Mt Garnet Tin Project into production is CSD’s entire focus right now.

“We’re totally committed to bringing Mt Garnet into production,” says De Lacey. “It’s been a long, bumpy road to get to this point. We knew that once we’d worked out a way of recovering the tin from the skarn, we would have a major project that could go on for at least 25 years.”

Boxes ticked

With regards to the global tin market, De Lacey observes that the number of existing tin producers is decreasing while several developers, including CSD, are trying to move tin projects towards production. “I believe CSD is at the forefront of those,” he says.

“I honestly see a lot of challenges for other companies currently advancing tin projects, whereas CSD has gradually cleared all those challenges,” he adds, suggesting that Mt Garnet’s initial difficulties have since created an advantage. “We have a clear path to production, an abundance of resource at surface and an ideally placed processing plant, so we’re a long way ahead of anyone else globally.”

CSD forecasts that an annual production of 5,000t of tin will generate an income of US$100 million per annum, with the additional 400,000tpa of high-grade magnetite by-product bringing in an extra $40 million per annum. Only then, De Lacey jokes, will CSD begin to look further afield. “Once we’ve got this company generating $140 million per annum and we have accrued some surplus, we’ll start looking at taking over the world.”