Alcyone Resources - Starts early silver production at Texas with re-irrigation of existing heaps underway Friday , 08 Apr 2011
? Re-irrigation of existing silver-rich heaps at the Twin Hills mine, SE Queensland now underway following completion of Storm Water Dam (SWD) remediation works.
? ~400,000t of leachable material available on the heaps with an average estimated grade of 45g/t Ag - metallurgical test work indicates that ~45% of the remaining silver can be extracted.
? First silver bars expected May 2011, with first revenue expected in the June 2011 Quarter.
? Twin Hills construction programme on schedule with commissioning for full-scale commercial silver extraction scheduled to commence in the September Quarter of 2011.
? Strengthening silver price prompts decision to re-optimise Mineral Resource inventory ahead of final Ore Reserve calculations.
Alcyone Resources Limited (ASX: AYN; ?Alcyone' or ?the Company') is pleased to advise that first silver production from the Twin Hills Mine, part of its 100%-owned Texas Silver and Polymetallic Project in south-east Queensland, has commenced with a program of re-irrigation of the existing silver-rich heaps.
The re-irrigation of the heaps follows completion of the Storm Water Dam (SWD), with cyanidation of the heaps commencing this week. It is expected that it will take approximately one month to build up a circulating load within the heaps, which should see first silver production in May, with first revenue expected to be received in the June Quarter 2011.
The leach pads at Twin Hills contain an estimated 400,000 tonnes of material from the previous operation which has only been partially leached. The re-irrigation of this material will enable Alcyone to clearly demonstrate the viability of the leaching process before moving to full-scale commercial silver production later this year.
This silver production will enable the Company to take advantage of the continuing strength of the silver price and generate an early cash flow.
Preliminary testwork indicates the average grade of the material on the heaps ranges from 30g/t Ag to 100g/t Ag. The Company estimates an average grade of 45g/t Ag. Testing of composite auger samples taken from the stockpiled material has demonstrated that approximately 45% of the remaining silver is still available to be leached. This initial production will utilise the pilot scale Merrill Crowe circuit already on site, further confirming the viability of the proposed long-term process flow sheet.
The continuing strength of the silver price over the last three months has provided the Company with the opportunity to reconsider the various economic parameters that have been previously used as the basis for optimisation and economic studies of the Twin Hills Mine. For the past three months, the silver price has been trading in the range of A$34-36/oz - more than 70% above the conservative price of A$19.85 used in earlier studies.
During March, the Company's consultants have been commissioned to re-optimise the Twin Hills Mineral Resource Base and review potential Ore Reserve scenarios at varying silver prices. These will then form the basis for a new set of economic parameters for the operations which will maximise the Mineral Resource at the Company's disposal. It is anticipated that these studies will be completed during April, after which they will be released to the market following a detailed internal review.
Alcyone Resources' Managing Director, Mr Andrew King, said the early commencement of silver production represented a landmark event for the Company, positioning it to capitalise on strong silver prices.
"We have made rapid progress at Texas - acquiring the mine in late 2009 and completing a broad-based economic and technical review by late 2010. It is a credit to our team that we are now positioned to commence early silver production from re irrigation of the heaps only 18 months after first hitting the ground," he said.
"It is also pleasing to be starting production at a time when silver prices are exceptionally strong, which I expect to be reflected in the results of the new resource and reserve studies currently underway. With our unit cash operating costs forecast at approximately A$14/oz, the Twin Hills operation should be capable of generating an exceptionally strong cash margin," Mr King added.
AYN Price at posting:
6.4¢ Sentiment: Buy Disclosure: Held
