AURELIA METALS LIMITED Settlement and Funding agreement reached with Glencore
Record quarterly gold production of 9,432 oz gold
Record zinc recoveries of 93%
Positive Hera EBITDA of $3.4 million for the quarter
HERA OPERATIONSOre processed of 71,703 t, grading 5.5 g/t gold, 2.65% lead and 2.64% zinc
Gold production of 9,432 oz and concentrate production of 6,491 dmt of Pb-Zn concentrate
Reduced throughput with 2.5 day maintenance shutdown and instability in the back end of the process plant
Continued positive gold grade reconciliations for each of month of quarter
Consistent quarterly improvement in gold recoveries to 74.6% for the quarter
Strong base metal recoveries including record zinc recovery of 93.3% and lead recoveries at 90.2%
Site EBITDA of $3.4 million for the quarter
A number of new supplier agreements reached realising significant cost reductions
Operational changes in the gold/Merrill Crowe circuit expected to realize gold recovery benefits in the March 2016 quarter
Work commenced on gravity circuit upgrade
CORPORATEOn 27 November the company announced it had reached a settlement and funding agreement with Glencore, with the agreement highlights including:
All legal disputes with Glencore are settled
All existing debt repayments are deferred for at least two years
All interest is suspended on the current and new senior finance facilities for two years**
Glencore to provide additional funding of a net $21.5 million to support the business through additional loans and credit support
Additional funding includes an advance payment of $5 million which has been received
Aurelia maintains conversion rights to convert up to $77 million of the facilities at the end of the two year deferral period
Formal agreements were executed on 18 December 2015
Completion of the agreements remains subject to a number of Conditions, including shareholder approval, with a general meeting of shareholders expected in early March 2016
Mr Michael Menzies and Mr Rune Symann were appointed to the Board as Glencore nominees
At 31 December 2015 the Company held cash in bank of $9.36 million ($3 million is restricted)
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HERA, NSW (100%)
SUMMARYProduction for the quarter saw further steady improvement in the performance of the Hera Project, with highlights including:
Record zinc recovery of 93.3%
Further improvement in gold recovery for the quarter to 74.6%
Strong positive reconciliation of gold grades
However, project performance for the quarter was hampered by periods of restricted throughput, driven by;
Instability in the back end of the process plant, principally the Merrill Crowe circuit
Batches of high-sulphide ore overcrowding the cleaner flotation circuit
An extended 2.5 day planned maintenance shutdown in November
Aurelia Metals Limited Quarterly Production
Units
Jun Qtr
FY15
Sep Qtr
FY16
Dec Qtr
FY16
YTD
FY16
Ore Mined
t
69,319
75,280
74,946
150,226
Ore Mined Grade - Gold
g/t
2.6
5.2
5.3
5.2
Ore Mined Grade - Silver
g/t
11.6
13.0
14.6
13.8
Ore Mined Grade - Lead Ore Mined Grade - Zinc
2.52%
3.30%
2.75%
2.49%
2.70%
2.71%
2.72%
2.60%
Ore Processed
t
75,660
78,229
71,703
149,932
Ore Processed Grade - Gold Ore Processed Grade - Silver Ore Processed Grade - Lead Ore Processed Grade - Zinc Recovery - Gold
g/t g/t
2.73
12.80
2.50%
3.34%
62.1%
5.03
14.39
2.97%
2.79%
72.7%
5.50
14.32
2.65%
2.64%
74.6%
5.26
14.36
2.82%
2.72%
73.6%
Recovery - Silver
92.0%
79.9%
89.3%
84.4%
Recovery - Lead
86.1%
93.6%
90.2%
92.0%
Recovery - Zinc
65.8%
85.0%
93.3%
88.98%
Gold Production
oz
4,125
9,231
9,432
18,663
Silver Production
oz
2,517
519
6,002
6,521
Concentrate produced
DMT
6,234
7,693
6,491
14,184
Production - Payable Metal - Silver
oz
5,979
7,562
3,843
11,405
Production - Payable Metal - Lead
t
1,462
1,948
1,518
3,466
Production - Payable Metal - Zinc
t
1,178
1,235
1,251
2,485
Gold Sold
oz
4,384
9,592
8,914
18,506
Concentrate shipped
dmt
10,144
5,227
4,914
10,141
Payable Lead Sold
t
2,338
1,210
1,230
2,440
Payable Zinc Sold
t
1,983
874
907
1,781
Payable Silver Sold
oz
10,173
5,225
3,580
8,805
MININGA total of 74,946 t of ore was mined during the quarter at an average grade of 5.3 g/t gold, 2.7% lead and 2.71% zinc. Lateral underground development was restricted to 34m in the quarter as development in 2015 had moved ahead of
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schedule. Stope delineation drilling re-commenced in the quarter, with a focus on the lower levels of Main Lens North and Main Lens South. Drilling results are expected to be finalised in the March 2016 quarter.
Gold reconciliations continued to be strongly positive for gold, with gold grades running at approximately 150% of the predicted mine grades. Lead and zinc reconciliations were variable, running at 89% and 78% of predicted mine grades.
In response, a complete review of the geological block model has been completed. Recommendations arising from this review will transfer to a recalculated block model and resource which will include results from the underground drilling once received.
This process is expected to be completed during the June quarter of 2016.
PROCESSINGA total of 71,703 t of ore was processed grading 5.5 g/t gold, 2.65% lead and 2.64% zinc. Plant utilisation improved to a record 88.9%; however average processing rates were lower than the previous quarter at 36.5 tonnes per hour.
Throughput rates were restricted in response to a number of throughput constraints in the back end of the process plant, principally:
Instability in the Merrill Crowe circuit, which recovers gold from the leach circuit to doré
batches of high-sulphide ore overcrowding the cleaner flotation circuit
an extended 2.5 day planned maintenance shutdown in November
Significant progress has been made in addressing these issues, in particular the stability of the Merrill Crowe circuit. These improvements are expected to be reflected in the March quarter production. Preliminary production statistics for January to date indicate a substantial improvement in Merrill Crowe performance and hence gold recoveries and gold production.
Further improvements are expected through staged modifications of the gravity gold circuit.
Metal recoveries for gold and zinc each improved through the quarter, as displayed in the charts below, with zinc recovery reaching a record 93.3%. Gold recovery improved from 72.7% in the September quarter to 74.6% in the December quarter.
Lead recovery for the quarter remained strong at 90.2%.
85%
Hera Project Gold recovery
100%
Hera Project Zinc recovery
80%
75%
70%
65%
60%
55%
50%
Jun 15 Qtr Sep 15 Qtr Dec 15 Qtr
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
Jun 15 Qtr Sep 15 Qtr Dec 15 Qtr
During the quarter defects in the foundations of the primary and secondary crushers were identified that will require further investigation and remediation. A suitable contract crushing operator has been sourced and will be utilised during this period, with tendered rates indicating no material increase on current crushing costs. In addition, the contractor is capable
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of delivering a finer product than the existing circuit, which may result in reduced wear rates and increased throughput in the tertiary crushing circuit.
A number of process capital projects were initiated or completed during the quarter, including:
Commencement of the design and procurement for the gravity circuit upgrade, including the purchase and delivery of a suitable second hand tower mill. This project is expected to complete early in the June quarter
Installation of a thickener to clarify mine water to allow for more efficient usage of underground water. This project is expected to complete in January
Purchase of additional water licensing and installation of additional water bores within the existing borefield. This is designed to build additional contingency and provide sufficient water capacity for the Hera expansion once progressed
Site unit costs increased to $189/t processed from $176/t in the previous quarter. The increase in mining costs was primarily driven by the restart of stope delineation drilling. Process unit costs were driven by lower tonnes processed and an increase in process consumables in the month of December. Reducing costs in the processing department (operating and maintenance) remains a key focus.
Aurelia Metals Limited Quarterly Unit Cost Summary | |||||
Gold Production - unit costs/t processed | Units | Jun Qtr FY15 | Sep Qtr FY16 | Dec Qtr FY16 | YTD FY16 |
Mining | $/t | 72 | 72 | 83 | 77 |
Processing | $/t | 83 | 75 | 79 | 77 |
Site Administration | $/t | 17 | 11 | 13 | 12 |
Concentrate Transport | $/t | 18 | 17 | 14 | 16 |
Total Site Unit Costs | $/t | 191 | 176 | 189 | 182 |
Royalties | $/t | 1 | 8 | 6 | 7 |
Net Inventory adjustments | $/t | 72 | (21) | (11) | (16) |
Total By-Product Credits | $/t | (151) | (66) | (74) | (69) |
Third party smelting, refining | $/t | 54 | 28 | 34 | 31 |
Total Unit Costs | $/t | 167 | 126 | 144 | 135 |
A number of key logistics and supplier contracts were re-negotiated during December that will realise cost savings from January 2016.
CORPORATE
GLENCORE SETTLEMENT AND FUNDING AGREEMENTBackground and Settlement
At the start of the quarter, the Company had drawn funding facilities provided by Glencore of approximately $120 million (including capitalised interest as detailed in the table below). Prior to quarter end, as part of a settlement agreement with Glencore, detailed below, the Company drew a further $5 million of debt as an early advance.
Since 26 June 2015, Aurelia has been in dispute with Glencore, with the dispute being heard by the NSW Supreme Court on the 4th and 5th November 2015. Following the court hearing the court reserved judgment.
During and after the court proceedings, Aurelia and Glencore maintained discussions with a view to reaching a negotiated outcome to the dispute.
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Aurelia Metals Ltd. issued this content on 2016-01-22 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2016-01-21 23:27:05 UTC
Original Document: http://www.aureliametals.com/uploads/5/8/Quarterly Activities Report - December 2015.pdf
