Bootu Creek mineral resource and ore reserve update

April 24, 2014 07:05 AM
Press Release

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Bootu Creek Mineral Resource as of Dec. 31, 2013 was 23.5 million tonnes at a grade of 22.3% Mn, a net reduction of 3.6 million tonnes after allowing for the 2.4 million tonnes of ore processed through the Bootu Creek processing plant in 2013

  • Bootu Creek Ore Reserve as of Dec. 31, 2013 was 12.5 million tonnes at an average diluted grade of 20.9% Mn, a net reduction of 0.8 million tonnes after allowing for the 2.4 million tonnes of ore processed through the Bootu Creek processing plant in 2013.
  • The Bootu Creek Mineral Resource and Ore Reserve estimates have been completed in accordance with the JORC Code (2012 Edition). Mineral Resources quoted are reported as inclusive of Ore Reserves.
  • A total of 2.4 million tonnes of ore was processed during 2013. Other significant components contributing to the reduced 31 December 2013 Mineral Resource include a reduction in the long term FOB Darwin Price, exclusion of the remaining Zulu resource model due to poor metallurgical performance and the partial exclusion of the Masai resource model affected by Restricted Work Areas (RWAs) protecting sacred sites. There was no new resource delineation drilling or resource estimation updates during 2013.
  • A total of 1.8 million tonnes of ore was mined from Shekuma, Tourag, Yaka and Zulu pits during 2013, and a further 0.6 million tonnes was depleted from low grade ore stockpiles. 

 

Mineral Resource estimation summary

The Bootu Creek manganese deposits are strata-bound, located at the contact between the underlying dolomite-siltstone Attack Creek Formation and the overlying ridge forming sandstone of the Bootu Formation of the Tomkinson Group, within the Palaeozoic Tennant Creek Inlier. The mineralised manganese bearing sandstone horizon is folded around the gentle NNW plunging Bootu Syncline, can be traced for 24km and dips around 30o towards the fold axis. The manganese is considered hydrothermal in origin and supergene enriched within a deeply weathered profile. The Bootu Creek manganese resource models have a combined strike length of 16 km, with individual models ranging from 0.7 km to 2.9 km.

Mineralisation widths vary from 3 m to 15 m and ore mineralogy consists predominately of Pyrolusite and Cryptomelane in a silica rich gangue.

All Bootu Creek resource models, other than Renner West, are located within Mineral Lease ML24031, located 120 km north of Tennant Creek, Northern Territory, Australia. The Renner West Inferred Mineral Resource is located on EL28041 and located 70 km NW of the Bootu Creek mine site. Both tenements are granted, 100% owned by OMM and have no security of tenure issues at the time of reporting.

Resources at Bootu Creek (BC) are predominantly sampled by vertical 5.5” face sampling Reverse Circulation (RC) drilling (91%), with HQ3 diamond (DD) drilling (2%) and open percussion (PC) drilling (7%), based on a nominal 50 m x 25 m spaced grid. Minor areas at 100 m x 50 m were classified as Inferred Mineral Resources. Hole depths range from 5 m to 164 m and collar locations are picked up by Mine Surveyors using MGA94 co-ordinates. The 31 December 2012 BC resource dataset (no new resource delineation drilling carried out in 2013) comprised 3,055 drill holes for 169,520 m. The Renner West (RW) dataset had 142 drill holes for 6,212 m.

Sampling of RC holes is done on 1 metre downhole intervals and rotary split to produce approximately 3 kg samples. Intervals selected for analysis are generally limited to visible manganese mineralisation and adjacent host rock. Mineralised diamond core is quarter sawn to obtain 1 metre or geological intervals, with half core retained for density determination and metallurgical test work. All drill samples are crushed, dried and pulverised (total prep) to produce a sub sample for XRF analysis. Field quality control procedures involve the use of field duplicates, certified BC standards (approx. 1:130 insertion rate) and use of a number of commercial laboratories for analysis.

The sample preparation of RC samples involve oven drying and full pulverisation before splitting off an XRF assay sub-sample. Diamond core assay samples are quarter sawn, jaw crushed and follow the same sample preparation technique. A pulp sub-sample is collected for analysis by XRF for the following elements: Mn, Fe, Al2O3, SiO2, P, Pb, S, TiO2, MgO, K2O, BaO, CaO, Cu and Zn. LOI (loss on ignition) is assessed by thermo-gravimetric determination. Laboratory QAQC involves the use of internal laboratory standards using certified reference material, blanks, splits and replicates as part of the in house procedures.

OMM (OM Manganese Ltd) developed 6 reference standards in 2007 and 2010 for a range of grade values, using blends of Mn, Fe and quartz material. These were sent to 10 commercial laboratories with returned values in the +-2% range against the expected value. BC standards are submitted with each assay batch and results monitored to maintain an independent check on laboratory assays.

There is a high degree of confidence in the geological interpretation of the Bootu Creek manganese deposits gained through extensive close spaced drill testing, a relatively planar strata-bound geological setting and several years of active mining at this mature mining operation. Ore mineralogy was determined by XRD analysis and optical petrology on selected drill core, RC chip and mineral product (gravity concentrate) samples. Resource models were digitised and wire-framed from interpreted geological and assay drill cross sections provided by OMM. These wireframes were used to select resource intersections and composite data was extracted for Mn, Fe, SiO2, Al2O3, BaO and P based on one metre sample increments.

The nugget effect from variography was found to represent only 20 - 30% of the total variability, suggesting a low inherent random behaviour for the manganese mineralisation and no grade capping was warranted.

The models were estimated using the Ordinary Kriging (OK) estimation technique with Surpac resource estimation software, and coded with attributes for material type, resource classification, model domain and against OMM survey pit pickups. Block Model Parent Cells are 25 m (Y) by 10 m (X) by 5 m (Z) and compare favourably with maximum drill spacing of 50 m by 25 m or 40 m by 20 m. The along strike search radius varied from 130 m in the shorter or faulted models through to 290 m for the highly continuous Chugga-Gogo. The number of samples was set at a minimum of 15 and a maximum of 32 for passes 1 & 2. Pass 3 used a minimum of 2 samples to fill model extents. Search ranges varied from 130 m up to 290 m in the deposits of up to 3 km strike length. The search ellipsoids were flattened disc shapes in the plane of the mineralisation with varying anisotropic ratios designed to model shallowly plunging manganese trends within the domains.

Current bulk density regression formulae are based on 366 waxed (or waxed equivalent) HQ3 core samples selected from 52 metallurgical composites distributed through all deposits included in the Ore Reserve. The bulk density measurements were determined in 2009 by Amdel (Perth) using the wet and dry methodology. Six density regressions were determined for Chugga/Gogo, Shekuma, Xhosa, Masai/Tourag, Yaka and Zulu deposits. Bulk density regressions for Foldnose and Zulu South deposits (not in Ore Reserve) are assumed as for Yaka, the nearest equivalent. Renner West also uses the Yaka (most conservative) regression option.

The mineralised domains have demonstrated sufficient continuity in both geological and grade continuity to support the definition of Mineral Resource and Ore Reserves, and the classifications applied under the JORC Code (2012 Edition). The nominal drillhole spacing of 50 m by 25 m was considered to provide adequate geological and grade continuity definition to assign an Indicated Mineral Resource classification to the majority of the deposits at Bootu Creek. Measured Mineral Resources were restricted to well drilled resource blocks within 15m vertically of a mined pit floor, reflecting the high level of geological and grade confidence.

Inferred Mineral Resources were classified for extensions to resources on a 100m by 50m spacing and for lower confidence deposit models such as Renner West.

Metallurgical assumptions are based on test work conducted on 93 composites selected from 79 diamond holes drilled into all deposits included in Ore Reserves. The test work consists largely of individual particle pyknometry (IPP) on lump ore and Heavy Liquid Separation (HLS) test work on fines. The heavy media treatment plant reconciliation factors, product yield regressions and recovery are updated annually.

The input data is comprehensive in its coverage of the mineralisation and does not favour or misrepresent in-situ mineralisation. Bootu Creek consists of a well-defined geological setting and this allows definition of mineralised zones based on a high level of geological understanding. The Mineral Resource models have been confirmed by open pit mining since 2006 which reconciles well against the resource estimates.

The Dec. 31, 2013 Ore Reserve estimate was 12.5 million tonnes at an average diluted grade of 20.9% Mn, a decrease of 3.2 million tonnes when compared to the 31 December 2012 estimate. This equates to a net loss of 0.8 million tonnes after allowing for the 2.4 million tonnes of ore processed through the Bootu Creek processing plant in 2013.

Exclusion of the Zulu resource model and partial exclusion of the Masai resource model resulted in a net loss of 0.8 million tonnes to the 31 December 2013 Ore Reserve. A net increase of 0.5 million tonnes in the optimised pit shells for Shekuma, Chugga-Gogo and Tourag pits was balanced by a net decrease of 0.5 million tonnes in optimised pit shells for Masai and Yaka pits. The main driver for changes in optimised pit shells results from the remodelled plant yield and recovery formula favouring higher grade resource blocks at the expense of lower grade resource blocks.

Ore Reserve Summary

The Bootu Creek mine has been operating since 2006 and Ore Reserve statements have been previously reported under JORC (2004 Edition). OMM has upgraded the reporting standard to JORC (2012 Edition) and a summary of the information used in the Ore Reserve estimation are as follows: The Optiro Pty Ltd December 2012 Mineral Resource estimates were optimised by Independent Mining Consultants as of 31st December 2013 utilising Whittle mining software to optimise economic open pit extents utilising revenue, mining, processing and logistical parameters provided by OMM. Mineral Resources quoted are reported as inclusive of Ore Reserves.

Conversion of Mineral Resources to Ore Reserves is based on optimisation parameters derived from analysis of current operating practices, technical studies, and ongoing mine and processing performance and reconciliations. Optimised pit shells are then used to revise open pit mine designs and update the mine plan.

The current 15% Mn cut-off grade has been affirmed after several years of mining and processing Bootu Creek ore. Manganese product derived from the DMS (Dense Media Separation) plant feed is not linear in relation to the plant head grade, and product yield either decreases rapidly or fails to produce an acceptable product grade below the 15% Mn cut-off grade.

All current and planned mining is by open pit mining methods. Open pit slope angles, determined by an Independent Geotechnical Consultant, are at an overall angle, including berms, of 45o for hanging wall and end walls and 31.6o for footwall with batter angles not exceeding the bedding planes.

Diluted Grade is reviewed each year by reconciliation of the previous year’s mine production.

The Ore Reserve grade is quoted as a ‘diluted’ grade and is currently set at 90% of the contributing ‘undiluted’ Mineral Resource block grades. Mining Recovery is also reviewed each year with a reconciliation of the previous year’s mine production. The Mining Recovery Factor is currently estimated at 100% (inclusive of dilution) of the contributing ‘undiluted’ Mineral Resource block tonnes.

The minimum mining unit is effectively 2.5 m vertically by 5 m across and 5 m along strike.

The minimum drill intersection length applied in the Mineral Resource and Ore Reserve estimation is generally 4 m and is close to true width. Inferred Mineral Resources have not been utilised nor included in the Ore Reserves. The only significant deleterious element is Fe and that is managed by blending ore sources or product stockpiles.

There are no significant environmental impacts arising from mining or processing. Waste rock and processing tails are stored on site and are not acid generating. The only additive used in ore processing is ferrosilicon. Bootu Creek is an operating open pit mine site and processing plant. Waste Management Plans for waste rock and tailings storage have been submitted to, and have been approved by the Northern Territory Department of Mines and Energy.

Operating costs and sustaining capital are derived from analysis of the current Bootu Creek mining and processing operation and budget. Deleterious elements are managed within specified maximum limits and no specific pricing allowance is used. Price discounts are applied for a specified range of lower grade manganese products. Road and rail transportation charges are based on current contracted terms and rates. Refining charges are not relevant and product specification penalties are rare and have not been applied.

Production based royalties are payable to the original project vendor and the Northern Land Council (on behalf of Traditional Owners). These royalty charges are allowed for in project costing and applied in the pit optimisation process.

Factors effecting revenue include contained dtmu (dry metric tonne units) of manganese, and discounts for lower than benchmark manganese content. Manganese products are sold on an FOB basis from the Port of Darwin. Commodity price assumptions are based on Independent Analyst 5 year forecasts (Nov 2013) for Mn Price assumptions - CIF China GEMCO 44% of US$5.60/dtmu with adjustments for selling and shipping costs, and for discounts specific to product specification. Exchange rate (AUD:USD) assumption is based on the current trading rate of 0.90 (Dec 2013). There are no saleable by-products. NPV ranges and sensitivity to variations are not included in the Ore Reserve estimation process.

All necessary agreements and authorities are in place with the Traditional Owners for mining and royalties (via the Northern Land Council) and for heritage clearance and sacred sites (via the Aboriginal Areas Protection Authority).

The Ore Reserve classifications are as follows: Proven Ore Reserves are restricted to in-situ Measured Resources contained within pit shells optimised at the current budget cost and revenue assumptions, plus surface Ore Stocks. Probable Ore Reserves are restricted to Indicated Resources contained within pit shells optimised at the current budget cost and revenue assumptions. No Probable Ore Reserves are derived from Measured Resources.

The Ore Reserve classification appropriately reflects the Competent Person’s view of the deposit.