renison getting close

TASMANIA’S mining revival could be about to get another boost with state government environmental clearance understood to have been given for Metals X Ltd’s Mt Bischoff tin project – effectively providing a green light for the long-awaited revival of the Renison tin mine near Zeehan.

Following on from significant investment by Zinifex Ltd in the Rosebery zinc-lead mine and confirmation earlier this month that Chinese steel producer Jiangsu Shagang Group Co Ltd will pump funds into extending the life of the Savage River iron ore mine, also on the state’s west coast, the receipt of statutory approvals for Mt Bischoff is expected to precede a flurry of preparation activity and a further $A25 million investment by Metals X aimed at getting production restarted at Renison as early as October this year.

The company, which acquired a run-down and waterlogged Renison underground mine after the mine operator was put in the hands of an administrator in 2003, needs output from the historically significant Mt Bischoff mine to supplement ore from Renison while it rebuilds reserves at the latter and keeps the mill running at an optimum level.

The century-old Renison mine, previously Australia’s dominant tin producer and one of the world’s largest underground tin operations, has brought locals, contractors and others linked to the mine more heartache than joy over the past decade. Metals X, formerly Bluestone Tin, has shared in the grief. After pumping $A50 million into Renison’s resurrection it had to shut it down again due to low tin prices. The company has spent about $A350,000 a month to keep Renison on a “high level” of care and maintenance so that operations could resume quickly when prices recovered and it could secure its supplementary ore feed from Mt Bischoff, near Waratah, about 80km north of Renison.

Compounding frustration for Metals X during a period of sustained stronger tin prices (currently around $US14,000 a tonne) over the past 18 months has been apparent dithering at Tasmania’s Department of Tourism, Arts and the Environment (DTAE) – itself in the process of rebirth as a state Environmental Protection Authority – over clearance for development of an historic mining site in one of Australia’s significant mining districts, albeit one in which the needs of industry and protection of valuable natural ecosystems clearly must be balanced.

Metals X managing director Peter Cook said unlike previous operators at Mt Bischoff his company had put forward a comprehensive remediation plan for one of several old Tasmanian mines, and their immediate surrounds, used as posters by green groups worldwide to highlight the mining industry’s poor past environmental management track record. Ironically the last serious mining at Mt Bischoff was conducted by a federal and state government joint venture.

Cook said the site had current reserves of 742,000t grading 1.23% tin within a larger resource of 1.9 million tonnes grading 0.96%. “There is considerable potential for further tin discovery and mining,” he said.

Metals X plans to truck 250,000tpa of ore from Mt Bischoff by sealed road to Renison, where it needs to spend about $A7 million on further plant modifications, and $A8 million on the underground mine to ensure sustainable production at 500,000tpa. The cost of pre-production works at Mt Bischoff is estimated at $A5 million, while Cook is budgeting $A5 million of working capital to fund operations while the company waits for its first revenue cheques and “$A6 million for a mine camp because the West Coast region is grossly underserviced and resourced with housing, accommodation and services”.

“The next challenge for Zeehan will be housing, services and skilled labour,” he said.

“We have seen little investment in the West Coast region by government and the pressure on the few services that are there will dramatically increase as the Renison tin and Allegiance nickel mines come on towards the end of this year.”

Cook said Metals X had about $A40 million in the bank and would receive $A10 million this year from Western Australia nickel royalties and perhaps $A15 million profit from the Collingwood tin mine in north Queensland.

He is not popping the champagne cork yet over Mt Bischoff because the company has not received formal notification of the DTAE approval and the proposal must get final local government and community support, though he maintains “the community have been behind it all the way”.

“We’ve been chaffing at the bit to start there for nine months now and we just haven’t been able to,” Cook said. “It’s [the project] directly and indirectly 300 jobs, and [potentially] 1.5% of Tassie’s GDP.”

Metals X believes it can produce 8500tpa of tin at an operating cost of about $A8500/t.

“Mt Bischoff … is critical to the technical and financial functions of the operation. The most critical part is being able to feed the plant at full capacity because of the complexity of the metallurgical process,” Cook said.

“It is the catalyst for the whole thing restarting again and as soon as we get the final approval on Bischoff we’ll press the button on the whole Tassie tin strategy again.”

Cook is confident of establishing a bigger reserve base at Renison when mining, development and drilling recommence. “There were no reserves when we got it,” he said. “You just can’t afford to put everything on hold while you’re throwing money into the mine … and the time and capital investment involved in being able to build that mine up to a sustainable level is probably five years and a significant amount of capital. Bischoff buys us three years of top-up feed, which enables us to build up our underground mine capability over time.

“We think we’re going to find a lot more at Bischoff too. It’s a big old tin mining area that’s had no exploration for a long time.”

Cook said Renison was “dewatered to the face”. He expects initial ore from the mine to grade 1.7%, rising to more than 2% when mining moved into the Federal ore zone, and deeper.

“Renison is one of those mines that don’t die, they just get deeper,” he said.

“We bought it in a dilapidated state and effectively threw $A25 million at the process plant and infrastructure, and $A25 million into the underground mine to make it serviceable. Having just started producing again the tin price collapsed, which I guess just proves that you don’t have to be dead to be stiff.”