AMX - Metwork confirms life of mine recoveries of 84% Trading Indicator : positive Posted by Steuart McIntyre on Sunday, January 29 2012, 9:42 PM ET Ampella Mining Limited (ASX:AMX, A$1.61
Outperform, Speculative Risk; A$3.00 target)
Ampella today released positive results for its metallurgy results at its Konkera gold project in Burkina Faso.
The metallurgy testwork confirmed:
• Overall life of mine recoveries of 84% (RBCe 85% long term) • Albion Process Could Increase Recoveries to 95%: Preliminary results from a process of sulphide oxidation followed by cyanide leeching known as the Albion process, suggests that sulphide recoveries could potentially be improved to 95% • A conventional gravity/CIL flow sheet is suitable for treating all oxide and transitional ores as well as the Kouglaga sulphide ore, at modest a grind size of P80 of 106µm, including 30-50% recovery from gravity: o Oxide Ore: 94-98% recovery o Transitional Ore: 88-95% recovery o Kouglaga Sulphide Ore: 98% recovery • For the sulphide ores at Konkera North and Konkera Main/East, assuming a sulphide float and ultra-fine grinding, the metwork confirmed: o Konkera North Sulphide Ore: 91% recovery, at grind size of P80 of 10µm o Konkera Main / East Sulphide Ore: 71% recovery, at grind size of P80 of 8µm • A breakdown of the component recoveries for the sulphide ores at Konkera North and Konkera Main/East is provided in Exhibit 3 below.
RBC Comment: We regard the confirmation of a life of mine recoveries of 84% at Konkera, as a positive development Ampella. While the ultra-fine grind size of 8-10µm required for the sulphide ores at Konkera North and Konkera Main/East will likely mean higher costs, it is important to note that this ultra-fine grind is only required for the 5-6% of the ore which is floated to a sulphide concentrate – i.e. we expect the overall impact on cash costs will be relatively modest.
In addition, while testing remains at an early stage, the potential to increase recoveries to 95% via the Albion process represents significant potential upside.
Ampella is due to release the results of its PFS at Konkera in the next few months – a key de-risking milestone for the company, in our view. Our key assumptions for Konkera are a US$200m project, producing ~200kozpa at cash costs of ~US$600/oz, over an initial ~10 year life.
AMX Price at posting:
$1.49 Sentiment: Buy Disclosure: Held
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