MINCO PLC - HALF-YEAR REPORT JUNE 30, 2016
Dublin, 30 August, 2016- Minco Plc (AIM-"MIO") ("Minco" or the "Company") announces its half year financial results and report on operations for the six months ended June 30, 2016 which have been published today.
This news release should be read in conjunction with Minco's unaudited Financial Statements and Management's Discussion and Analysis for the six months ended June 30, 2016. Copies of these documents are available on the Company's website www.mincoplc.com and are also available on request, free of charge, from the Company's registered office at 27 Lower Hatch Street, Dublin 2, Ireland.
FINANCIAL RESULTS - JUNE 30, 2016
For the six month period ended June 30, 2016, Minco recorded a loss of $513,000 compared to a profit of $79,000 for the same period ended June 30, 2015. The loss for the six month period ended June 30, 2016 included a foreign exchange loss of $98,000 compared to a gain of $550,000 for the period ended June 30, 2015.
During the six month period ended June 30, 2016 Minco invested $264,000 on exploration of its mineral properties, of which the largest amounts were expended on the Buchans zinc lead project in central Newfoundland. Administrative expenses, excluding foreign exchange, for the six month period ended June 30, 2016 amounted to $429,000 compared to $497,000 in the same period in 2015.
At June 30, 2016, Minco held mineral properties with a book value of $13,260,000, cash and cash equivalents of $3,313,000 and had a working capital surplus of $2,959,000, compared to a working capital surplus of $3,628,000 at December 31, 2015.
NEWFOUNDLAND BASE METAL PROJECTS - METALLURGICAL STUDIES
In December 2015, through its wholly owned subsidiary Buchans Minerals Corporation ("Buchans Minerals), Minco entered into a collaboration agreement with Canadian Zinc Corporation (TSX:CZN) ("Canadian Zinc") to undertake a research programme to complete physical and metallurgical bench scale studies on seven volcanogenic massive sulphide ("VMS") deposits located in the Victoria Lake district of central Newfoundland and to share research data on their respective central Newfoundland Cu-Pb-Zn-Ag-Ag deposits.
The total cost of the research project was originally estimated at $735,000 with Buchans Minerals and Canadian Zinc providing up to $100,000 and the remaining $535,000 to be funded through the Research & Development Corporation of Newfoundland and Labrador ("RDC") GeoEXPLORE Industry-led R & D Technology Development and Demonstration Program.
The seven deposits have demonstrated resources of various sizes and quality, are all located near the communities of Millertown and Buchans, NL and within trucking distance (30-90 km) of the recently closed Duck Pond Cu-Zn Mine. Individually at this time, the various deposits are not large enough to support stand-alone operations, but could potentially be developed with improving economic factors and by utilizing a central mill facility.
The intent and objective of the research is to determine the technical and economic viability of developing the companies' deposits into producing operations by utilizing a central milling facility. The concept is based on the potential that collectively, the satellite deposits can be economically mined, pre-concentrated, trucked and then milled simultaneously or sequentially through a central mill.
In July, 2016, the research program was expanded by the inclusion of Minco's Lundberg deposit into the current study and RDC agreed to provide additional research funding of $58,000. The near surface Lundberg deposit is comprised of base metal sulphide enriched stockwork mineralization located in the footwall to the previously mined, high-grade, Lucky Strike massive sulphide ore body. The inclusion of the Lundberg deposit in the study will allow for a comprehensive evaluation of all the known base metal deposits in central Newfoundland and ultimately allow for the determination of the optimal development and economic scenario for the district.
The technical evaluation is focused on conducting a series of metallurgical tests that include mineralogical assessments of the deposits, grindability characterization, acid generation assessment, bench scale Dense Media Separation ("DMS"), pre-concentration testing and bench scale flotation testing.
To date the program has conducted mineralogical assessments, grindability tests, DMS tests and is now conducting bench scale flotation tests. Preliminary results indicate that:
● Preconcentration of the ore by DMS (prior to flotation) has been determined to be technically viable for semi-massive and stringer sulphide samples from the Boomerang-Domino, Lemarchant, Bobbys Pond and Daniels Pond deposits.
● Initial flotation tests indicate the deposits are amenable to a common flotation flowsheet with the sequential Cu-Pb-Zn flotation flowsheet providing the best overall performance for all four deposits tested. Further development of the sequential flotation by bench scale testing is in progress.
Preliminary bench scale rougher flotation tests at varying primary grind sizes were conducted in order to select the primary grind size to use for subsequent rougher flotation testing. The grind size was selected for each deposit by considering flotation selectivity and recovery of each of the payable base metals into their respective concentrates. All grind sizes were within the range of grinds used commercially for complex base metal sulphide flotation, with the Boomerang grind size being similar to the finest grinds currently being used commercially.
With the flowsheet and primary grind sizes selected, sequential rougher flotation tests for the reagent scheme assessment were completed on metallurgical samples from Daniels Pond (9 tests), Bobbys Pond (7 tests), Boomerang (14 tests), Lemarchant MS (10 tests) and Lemarchant FW (4 tests). Results of the rougher flotation program show good to very good copper, lead and zinc recoveries to the respective rougher flotation concentrates but with some tests reporting elevated levels of arsenic and antimony, which may necessitate further cleaning or reduction test work.
Subsequent to June 30, 2016, the metallurgical test work is continuing and is focused on the development of the flotation flowsheet using the sequential flotation of copper, lead, and zinc. The bench scale batch cleaner flotation test program on the copper, lead and zinc concentrates is underway and expected to be completed in September.
Once the bench scale testing program is completed, a process simulation and order of magnitude cost assessment model will be developed to evaluate and identify the key factors impacting the operating economics of a centralized milling concept for processing of the base metal deposits. Results from the modeling will be used to help optimize the exploration and development programmes and budgets, by focusing on the key factors that are critical to assessing the economic potential and viability of developing some of the deposits through a central milling facility.
The expanded programme is now budgeted at $840,000 of which Minco has agreed to fund $130,000. The programme, including the addition of research work on the Lundberg deposit, is scheduled to be completed by November 2016.
BUCHANS BASE METAL EXPLORATION PROJECTS
Since 2015, Minco has focused its exploration efforts near the former Lucky Strike mine to explore for high-grade resources that may positively impact open pit and underground development of the Company's Lundberg deposit. At Lucky Strike, previous operator, Asarco, mined 5.6 million tonnes averaging 18.4% Zn, 8.6% Pb, 1.6% Cu, 112 g/t Ag & 1.7 g/t Au. This deposit was the largest orebody mined at Buchans, where Asarco mined 16.2 million tonnes averaging 14.51% Zn, 1.33% Cu, 7.56% Pb, 126 g/t Ag & 1.37 g/t Au from 5 deposits before mining ceased in 1984.
The Lucky Strike mine exploited high-grade massive sulphides located immediately above a large, lower grade, stockwork mineralised zone that comprises the Company's undeveloped Lundberg deposit. The Lundberg deposit hosts Indicated resources of 23.4 million tonnes grading 1.41% Zn, 0.60% Pb, 0.35% Cu, 5.31 g/t Ag and 0.07 g/t Au, plus Inferred resources of 4.3 million tonnes averaging 1.29% Zn, 0.54% Pb, 0.27% Cu, 4.47 g/t Ag and 0.08 g/t Au (see Minco press release dated March 4, 2013 for more complete disclosure). The Lundberg deposit was initially assessed by a positive Preliminary Economic Assessment (PEA) in 2011 (see Buchans Minerals press release dated August 12, 2011), and has since been the subject of further work including resource drilling, environmental assessment and ongoing metallurgical test work.
During the second half of 2015, Minco initiated a program of relogging to assess potential for the discovery of additional high-grade resources near the Lundberg deposit. This program resumed in spring 2016 and to date has relogged 258 historic surface and underground drill holes (29,382 m) within 2 kilometres of the former Lucky Strike mine. While the program is ongoing and expected to dominate field activities in Buchans for the remainder of 2016, several specific target areas have been identified and are under review.
One of these areas is located approximately 200 metres southwest of the former Lucky Strike mine and covers a satellite deposit to the Lucky Strike orebody known as the West Orebody. The West Orebody deposit was discovered in 1940 at 300 metres depth and consists of a cluster of small but high-grade massive sulphide lenses. The deposit was accessed during the mid-1940's as an extension to the Lucky Strike orebody and is believed to have produced less than 100,000 tonnes of high-grade ore. The West Orebody deposit was only explored by short, historic underground drilling and a few widely-spaced surface holes. Minco believes this mineralization may be associated with a controlling structure or mineralized trend that was active during formation of the Lucky Strike and West Orebody deposits, and that this trend represents a priority exploration target for the discovery of new high-grade massive sulphides. Minco has permitted a drilling and borehole geophysical program to explore this target in early 2017, as winter ground conditions are required to access this area.
Another target currently being assessed by the ongoing relogging program is located immediately north of the former Lucky Strike orebody where the down dip extension of the mine's host rocks remain poorly tested by widely-spaced historic drilling and significant gaps remain between drill holes that could host significant tonnages of high-grade massive sulphides.
In April 2016, the Company received $100,000 in grants from the government of Newfoundland and Labrador's Junior Exploration Assistance (JEA) program in support of its Lucky Strike South drilling undertaken in 2015. In June Minco submitted additional proposals for grant funding to support additional exploration drilling in 2016 as additional drilling may be undertaken during the second half of 2016 to assess target areas being investigated by the current relogging program.
WOODSTOCK MANGANESE PROJECT
Despite the benefits highlighted in the preliminary economic assessment for the Woodstock manganese project, the continued problem of excess production capacity within the EMM market and the large initial capital commitment required to develop the Woodstock project has hindered Minco's ability to attract potential development partners that have experience in producing and marketing EMM.
The electrolytic manganese metal (EMM) market is still struggling with the problem of excess production capacity in China that continues to place downward pressure on the EMM price. Although the number of EMM plants in China has dropped significantly from approximately 200 plants in 2011 to the current estimate of 30 plants, their combined production capacity of approximately 1.5 million tonnes per year still far exceeds the market consumption of approximately 1.0 million tonnes per year. This ongoing problem of over capacity has continued to apply downward pressure on the EMM price such that it currently trades at approximately US$0.79 / lb EMM, a price that is only marginally higher than the current estimated average EMM plant operating cost of US$ 0.75 / lb EMM.
MINERAL EXPLORATION AT NORTHERN PENNINES, ENGLAND
Minco's exploration project in the northern Pennines is centered on a 3.5 by 2.5 kilometre area in the vicinity of the village of Nenthead, the most prolific area of past production within the Pennines orefield which covers a total area of approximately 350 square miles.
Minco's 2012-2015 drill programme has established a significant stratiform component to the mineralisation within the Great Limestone which had not been previously recognised. Intersections within the Great Limestone has demonstrated the potential for significant stratiform mineralisation adjacent to historic workings. The presence of small "flats" (stratiform stopes) on historic mine plans has proven indicative of laterally extensive stratiform replacement within the Great Limestone, with perhaps eighty percent remaining in place. Fifteen kilometres of these mineralised structures have been outlined by previous mining with flats recorded adjacent to 5.5 kilometres, all of which has potential for stratiform mineralisation.
The intersections of reasonable widths of lead and zinc mineralization at three different levels in two holes drilled on the Whitewood-Barneycraig-Williams fault/vein structure in Northumberland, are considered very positive results and indicate the mineral potential of this large Whitewood-Barneycraig-Williams fault/vein structure which was previously demonstrated by historic mining to be mineralized over a strike length of 3.5 kilometres.
Minco is currently negotiating extensions or amendments to certain of the exploration licences and option agreements, and expects to conclude the various Option Agreements in due course.
LEAD-ZINC EXPLORATION, MOATE, COUNTY WESTMEATH, IRELAND
In November 2015 Minco was granted three new Prospecting Licences by the Minister of Communications, Energy and Natural Resources. The new licences, PLs 1228, 1229 and 3981, at Moate in County Westmeath, are centered on a specific geological target identified by Minco, with potential for zinc-lead mineralization of Tynagh Mine type.
Minco's new Moate licences are located along the northwestern margin of the Irish Midland Orefield on the "Tynagh-Ballinalack Trend". All but one of the major Irish zinc-lead deposits of the Irish Midland Orefield lie along the margins of the Orefield. The Moate target lies mid-way between the former Tynagh Mine, located 50 kilometres to the southwest, and the similar styled Ballinalack deposit, situated 35 kilometres to the northeast.
The Tynagh Mine operated successfully from 1965 to 1981 producing 9,000,000 tonnes of ore, from both open pit and underground, at average grades of approximately 7% lead, 5.5% zinc, 0.5% copper and 2.6 ounces of silver per tonne.
Minco's studies of previous drilling have outlined a geological setting that Minco believes mirrors that at the former Tynagh Mine, where zinc-lead mineralization was hosted by breccias developed at the margin between the reef and off-reef limestone facies. The geology at Moate is also comparable to that at the smaller Ballinalack deposit.
Minco has planned an initial exploration programme consisting of six inclined drill holes for a total of 1400 metres of drilling.
Minco holds approximately 30 million shares in Xtierra Inc. ("Xtierra"), a company listed on the TSX Venture Exchange under the symbol "XAG", representing an approximate 26% interest.
Xtierra holds mineral properties located in the State of Zacatecas in the Central Mineral Belt of Mexico. The Bilbao Project is a polymetallic sulphide and oxide replacement silver-lead-zinc-copper deposit located approximately 500km northwest of Mexico City in the southeastern part of the State of Zacatecas. Xtierra also holds an extraction licence for the silver-rich La Laguna Pedernalillo ("Laguna") tailings deposit located near the city of Zacatecas in Mexico.
In December 2013, the Company agreed to provide working capital financing to Xtierra, and agreed to purchase $250,000 principal amount of 5% working capital notes due June 30, 2014. In April 2014, the Company agreed to provide a further working capital advance to Xtierra of $125,000 which together with the $254,000 working capital Notes, including $4,000 interest, were rolled into new non-convertible 5% secured notes (total $379,000) due April 30, 2015, secured, pari-passu with Pacific Road Group of Funds ("Pacific Road"), (another significant shareholder of Xtierra), by a pledge by Xtierra of its shares of Orca Minerals Limited.
On April 29, 2015, Pacific Road and Minco plc, both agreed to extend the due dates of the non-convertible 5% secured notes in the amount of $965,000 from April 30, 2015 to August 31, 2015, and to provide further advances up to $15,000 each. On August 24, 2015, Pacific Road and Minco both agreed to further extend the due dates of the Notes from August 31, 2015 to January 31, 2016 and to provide further advances of up to $17,500 each to fund Xtierra's property maintenance costs and working capital. Xtierra agreed to a fee of $29,000 to obtain the extension, which amount was added to the principal amount of the Notes. On January 31, 2016, Pacific Road and Minco both agreed to an extension of the maturity dates of the secured notes to April 30, 2016. The purpose of the various extensions of the maturity dates of the secured notes was to provide Xtierra additional time to assess its strategic alternatives.
The Notes matured and became due and payable on April 30, 2016. Pacific Road and Minco have not made demands for payment and are discussing possible solutions with Xtierra on a without prejudice basis. Xtierra has made certain settlement or restructuring proposals to each of Pacific Road and Minco. Pacific Road has advised Xtierra that Pacific Road desires to see this process come to a conclusion in the near term and, in the absence of an acceptable outcome, Pacific Road reserves all its rights to demand repayment of the Notes and if necessary to initiate foreclosure actions. On July 26, 2016, the Company made a further advance in the amount of $50,000 to fund Xtierra's working capital and maintain its mineral properties.
Benjamin Batson, P. Geo. is Minco's Non-independent Qualified Person for the purposes of National Instrument 43-101, Standards of Disclosure for Mineral Projects and has approved the technical disclosures in this announcement.
ABOUT MINCO PLC
Minco Plc, incorporated in the Republic of Ireland and listed on the AIM Market of the London Stock Exchange ("MIO"), is an exploration and development company currently engaged in zinc-lead exploration in Canada, the United Kingdom and Ireland, and is also evaluating its Woodstock manganese project in New Brunswick, Canada.
Minco also holds an approximate 26% shareholding in Xtierra Inc., (TSXV- "XAG"), which holds mineral properties in Mexico, and a 2% NSR royalty on the Curraghinalt gold property in Northern Ireland, currently being explored by Dalradian Resources Inc. (TSX-"DNA").
Danesh Varma: CFO & Company Secretary +44 (0) 8452 606 034
Peter McParland: Director - Ireland +353 (0) 46 907 3709
Peter Tyler: Chief Geologist - Ireland and UK +44 (0) 78 5432 3056
Warren MacLeod: Director, President Buchans Minerals +1 709 725 0555
John Frain: Davy (NOMAD) +353 (0)1 6796363
Saif Janjua: (Corporate Advisor) (Broker, Beaufort Securities) +44 (0) 20 7382 8415
Copies of this announcement together with copies of Minco's unaudited interim financial statements and related management's discussion and analysis for the six month period ended June 30, 2016 are posted on the Company's website at www.mincoplc.com and on SEDAR at www.sedar.com and are available for inspection at the Company's registered office at 27 Hatch Street Lower, Dublin 2, Ireland
This information is provided by RNS