By Mark Mentiplay – RESOURCESTOCKS*.
Wednesday, 30 August 2006
WHILE Intec’s first commercial product sale of a minor parcel of low-grade bulk concentrate from the defunct Hellyer Mine went barely noticed, it heralded a major step forward for the company’s three-stage development of the Hellyer Metals Project in Tasmania.
When Intec acquired the Hellyer assets from the receivers of Western Metals in January 2004, they included 2000 tonnes of then unsaleable, low-grade bulk concentrate.
This was the last concentrate produced before the exhausted Hellyer polymetallic mine was shut down in 2000. Having been rejected as ‘off-spec’ at the port of Burnie by the prospective buyer, the concentrate had since taken up space at the Hellyer concentrates storage shed.
The bulk concentrate parcel graded a bare 21.5% zinc, 17.7% lead, 375 grams per tonne silver and 2.3gpt gold. It also contained appreciable contaminants.
Remarkably, Intec sold the parcel earlier this year into northern Asia for $A250,000.
“The bottom line is that if we could sell that parcel, we can sell a lot more of a much higher quality product from Hellyer in the current zinc concentrates market conditions,” Intec managing director and chief executive Phil Wood told RESOURCESTOCKS.
“Importantly, the parcel was Hellyer material with the same mineralogy as the much-better zinc bulk concentrate we will begin mass producing later this year from Stage 1 of our Hellyer Metals Project,” he said.
The deal, therefore, augurs well for future sales from Stage 1 of the Hellyer Zinc Concentrate Project (HZCP) 50:50 joint venture with unlisted Polymetals Mining Services.
Polymetals, which operates the Mt Boppy gold mine near Cobar in New South Wales and the Nimbus silver mine near Kalgoorlie, is providing all the start-up capital costs and operator services for Stage-1 HZCP.
Two dredges will be operating on the huge Hellyer tailings dam, pumping the already finely ground zinc-bearing tails to the existing 1.5 million tonne per annum mill, where it will be reground and floated.
“The result is a rather average-quality zinc bulk concentrate, but readily saleable in the prevailing market and very cheap to produce,” Wood said.
The HZCP JV has already concluded and signed attractive terms on frame offtake agreements, to be announced shortly, he said.
These sales will come from initial production forecasts of 70,000tpa of bulk concentrate grading 40-43% zinc, 9.5% lead and 170gpt silver scheduled to begin before the end of September, with the first concentrate shipment out of Burnie expected before the end of this year.
Production at that level should be worth pre-tax cash flow to the Stage 1 HZCP JV of about $A40 million a year at the current zinc price.
However, Wood said Intec and Polymetals were crunching the numbers and conducting technical work to increase that production level via greater mill throughput, the possible processing of ore from the nearby Que River mine – being re-opened this year by Bass Metals, of which Intec owns 22% – and potential beneficiation and blending of electric arc furnace dust (EAFD).
This is just the first of Intec’s intended three-stage Hellyer reincarnation as a long life residue retreatment facility, with cash flow from each stage expected to fund the next.
“We need firstly to walk, then jog, then run,” Wood said, “particularly in this commercial environment of generally escalating project costs.”
Thus Stage 2, the Hellyer Zinc Oxide Project, is scheduled to begin later this year with refurbishment of Intec’s polymetallic demonstration plant at Burnie to produce saleable quantities of zinc oxide from Intec’s 20,000t EAFD stockpile in western Melbourne, acquired earlier this year from Smorgon Steel.
Following success at Burnie, it is expected work will begin around mid-2007 on a commercial Intec zinc oxide plant at Hellyer, to treat 100,000tpa of oxidised zinc-bearing secondary residues, such as EAFD, lead smelter slag from nearby Zeehan, primary leach residues, para-goethites and even higher grade zinc oxide ore itself.
Intec has an agreement to acquire the 450,000t slag dumps near Zeehan, 90km away, which have $A300 million of contained metals value.
These feed materials are expected to average 20% zinc grade and enable high zinc recoveries into over 20,000tpa of saleable zinc oxide.
Stage 3, the originally conceived production of five saleable metals using the patented Intec Polymetallic Process, will see long-term production by combining both the tailings and zinc oxide residues of the previous two stages.
The Stage 3 polymetallic plant at Hellyer will incorporate the Stage 2 zinc oxide plant within it, as well as being able to treat all base metals concentrates produced through the Stage-1 tailings dredging recovery and Intec Hellyer mill capabilities.
The 11 million tonne Hellyer tailings resource alone contains just under a million ounces of gold, 305,000t of zinc, 330,000t of lead, 30.8Moz of silver and 17,400t of copper, worth about $A3 billion at current prices.
As an indication of how prices for commodities have risen in the last year or so and how they have enhanced the Hellyer Metals Project, when RESOURCESTOCKS spoke to Intec in May last year, the same Hellyer tailings resource was worth about $1.6 billion.
Philip Wood
Wood said the newly staged development of the Hellyer Metals Project was aimed at securing the earliest possible cash flow to fund ongoing project development, thereby minimising necessary recourse to external financing and hastening returns to shareholders.
“The major difference between Intec and other similar companies is that we already have existing, proven, above-ground resources and the processing facilities and technologies to treat them. We can therefore provide nearer term metals products in response to current high prices,” he said.
“This is why we are opting for the three-stage development model for the Hellyer Metals Project, which brings forward much earlier and significant cash flow, with lower upfront capital expenditures and perceived technical risks, without losing sight of our unique metallurgical vision.”
Intec listed on the Australian Stock Exchange in May 2002 and on the Deutsche Boerse earlier this year, to further develop and enhance its patented chloride hydrometallurgical Intec Process that produces high purity base and precious metals from sulphide ore concentrates.
The process has substantial cost and environmental advantages over both conventional smelting and sulphate-based hydrometallurgical processes.
Originally developed for copper resources, it can economically unlock valuable base and precious metals from a wide range of sulphide and oxide deposits and improve the economics of operating mines and downstream processing facilities.
Intec’s pilot plant for the Hellyer Metals Project was built in Sydney in 2004 and ran successfully on tailings from Hellyer, the base metals mine operated by Aberfoyle and then Western Metals between 1989 and 2000.
The Hellyer ore had a complex refractory nature, which led to a significant part of the valuable metals being lost to the tailings dam.
Beginning in 2005, Intec designed, constructed, commissioned and now operates continuously a demonstration plant at Burnie, 80km north of Hellyer, which was officially opened by Tasmanian Resources Minister Bryan Green in September 2005.
The Burnie demonstration plant is now treating a blend of Hellyer polymetallic tailings, EAFD from Smorgon Steel and OneSteel, and will shortly treat Zeehan lead smelter slag.
The demonstration plant is running in close parallel with WorleyParsons’ bankable feasibility study for the overall Hellyer Metals Project.
WorleyParsons’ recent merger with Canadian firm H.G. Engineering, with which Intec has had a long-standing partnership, will conveniently see a lot of the engineering work on the Hellyer Metals Project brought back to Australia.
Wood acknowledged there had been delays of quite a few months on the BFS due to the inevitable frustrations of running a demonstration plant, “but we are finally getting good data from it in steady state and should have all the information we need by the time we close it down in mid-August”.
Macquarie Bank has been appointed as lead manager for financing of the staged Hellyer Metals Project.
this is close to the latest update of where INL are at not sure if there are holders here. but good luck if thetre are, Cheers. Vince
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