Galena Mining has reported some outstanding results for its Abra lead/silver project PFS, showing an initial 14 year mine life and a pre-tax NPV of A$528m, $134m more than previously thought. Galena says Abra will churn out an impressive A$97m worth of free cash annually after 2022. The company also reported a maiden ore reserve of 10.2 million tonnes grading 8.1% lead and 20g/t silver this week.
Galena Mining this week put a cherry on top of its bold geological theory at the Abra lead/silver project in WA with the tabling of a lovely set of numbers in the company’s PFS that have added A$134m to the project NPV when compared to the previous scoping study.
The company says the pre-tax NPV for Abra is now expected to be a whopping $528m, an extraordinary 34% increase in value from June’s Scoping Study numbers.
Galena took the project over from a Chinese entity that had spent well over $100m proving it up as a massive tonnage low grade operation that went no where.
The ASX listed junior then set about proving its theory that Galena could in fact be a large tonnage – not massive tonnage, high grade – not low grade play, based on a geological core at the project that is both substantial and high grade.
That theory took a curtsey this week after the company tabled it PFS for the project that now boasts a 10.2m tonne reserve going 8.1% lead and 20g/t silver.
Other key findings from the PFS include an increase in the initial mine life from 11 years to 14 years and an uplift in the annual throughput at the proposed operation by 20%, to 1.2 million tonnes per annum.
The pre-tax IRR is a very healthy 50% and the improved economics have come at no material change to the CAPEX requirements, which still sit at a manageable A$154m.
The average annual net free cash flow position during commercial production will be an impressive A$97m per year.
The project appears to have attractive cash costs amongst its peer group of global primary lead producers too, with an estimated USD$0.48c per pound C1 direct cash costs for lead production. The PFS assumed a lead metal price of USD$0.95 per pound.
Galena’s market cap is currently A$61m.
Galena Mining M.D. Alex Molyneux said: “This PFS confirms Abra is one of the best base metals projects in the world in terms of high investment returns, low country risk and market significance. The overall value of the Project has also just got a whole lot bigger with the NPV rising by 34% to A$528M, and a number of years additional mine life.”
“The work done for the PFS also confirms we have a clear pathway to complete permitting and other pre-development works quickly. Abra is a very ‘executable’ project and it will be the absolute mission of Galena’s team to move it into construction in a timely manner.”
The company said it was on track for mine construction to commence in 2019 and upcoming milestones include a mineral resource upgrade and continuity of off-take and project financing discussions with external parties.
According to management, the enhancements in the PFS have been gained by improvements and optimisation of the underground mining methods, stope designs and mine scheduling since the release of the scoping study back in June.
The company has been completing successful infill and extensional diamond drilling programs at Abra over the last few months, which are likely to increase the existing mineral resource estimate from March, which totalled 36.7 million tonnes grading 7.3% lead and 18g/t silver.
Initial production from Abra is expected in 2021 and the first full year of steady state commercial production is expected in 2022.
When in full production, Abra, which is located north of Meekatharra in the Gascoyne region of WA, will likely be the world’s 5th or 6th largest primary lead producing mine.