The Federation deposit hosts high-grade zinc, lead, and gold mineralisation and is located approximately 10km south of our Hera Mine. Project development will involve the underground mining of the Federation deposit for treatment through processing circuits at our Peak and Hera sites.
The Federation deposit was discovered in April 2019. We moved swiftly to progress exploration and infill drilling, in conjunction with project evaluation and permitting applications, to enable production from this exceptional mineral deposit.
We released a Mineral Resource estimate for the Federation deposit in February 2021 and continued an extensive diamond drilling campaign, results of which underpinned a further Mineral Resource estimate update in July 2021. Further drilling provided greater confidence in the Mineral Resource classification which underpinned reporting of a Mineral Resource at 30 June 2022 containing 5.0Mt at 9.2% Zn, 5.4% Pb, 0.3% Cu, 0.9g/t Au and 6g/t Ag.
We expanded the Hera accommodation camp in late 2021 to accommodate the additional workforce required for initial project development activities and commenced surface civil works in March 2022 for an underground exploration decline that commenced in September 2022.
A Scoping Study completed in March 2021 examined possible project development pathways and informed the submission of an Environmental Impact Statement (EIS) for full-scale production in early 2022. In mid-2022, the Federation Mine Feasibility Study (FS) confirmed a compelling development with investment highlights including:
- A maiden Ore Reserve estimate of 2.2Mt at 8.9% Zn, 5.3% Pb, 0.3% Cu, 1.4g/t Au and 6g/t Ag at 30 June 2022.
- Capital-light development leveraging existing mills at the Peak and Hera mines.
- One of the highest grade base metals development projects in Australia. Precious metals credits add further value to the deposit and lower costs.
- A strong initial development platform having a high potential to expand the deposit from additional underground and surface drilling.
- Expected delivery of early cashflow and rapid payback from prioritisation of higher value ore production and reduced capital spend.
Engagement with Registered Aboriginal Parties, who represent the Traditional Owners and other Indigenous stakeholders, identified the opportunity to change the project name to a more culturally sensitive identifier. Following a consultation process, we expect to announce a new project name when the mine is commissioned.
Federation long section
- Zn-Pb-Cu-Au-Ag underground long-hole stoping with rock and paste backfill.
Mine life (2)
- Approximately eight years with 600ktpa maximum mining rate.
- Significant opportunities for multi-year extensions.
- A$108M (mine development and infrastructure A$65M) with a March 2022 cost estimate.
Maiden Reserve (June 2022)
- 2.2Mt at 8.9% Zn, 5.3% Pb, 0.3% Cu, 1.4g/t Au and 6g/t Ag.
Mineral Resource (June 2022)
- 5.0Mt at 9.2% Zn, 5.4% Pb, 0.3% Cu, 0.9g/t Au and 6g/t Ag.
Significant potential to improve financial performance beyond Feasibility Study metrics
- Site opex (including processing) of A$192/t (1)
- Steady state EBITDA of ~A$126Mpa (5)
|Payback period||3.2 years||1.6 years|
1.Refer to ASX release 10 October, “Federation Mine Feasibility Study” for further details. This study was prepared by the Company which has concluded that it has a reasonable basis for providing the forward-looking statements and the forecast financial information included in that ASX release and reproduced in this presentation. Valuation date as at 1 October 2022. The Feasibility Study uses a discount rate of 7% (Real). Consensus NPV has been calculated using Bloomberg consensus metal prices as at 29 August 2022 (see footnote 4 for a detailed breakdown of the metal prices used) while spot NPV has been calculated using metal prices as at 5 August 2022 (see footnote 5 for a detailed breakdown of the metal prices used). Aurelia expects that all necessary regulatory consents for Federation will be received by mid CY23, including approval to transport ore from Federation to Peak at a maximum rate of 200ktpa over the first four production years.
2.Indicated mine life and any potential future life extensions are subject to receipt of approvals.
3.Financial metrics are pre-tax, ungeared; consensus scenario assumes Bloomberg consensus metals pricing and Bloomberg consensus FX; spot scenario assumes spot metals pricing and spot FX.
4.Bloomberg consensus metal and A$/US$ price forecasts (as at 29 August 2022) with Zinc = A$3,921/t, Copper = A$12,235/t, Lead = A$2,664/t, Gold = A$2,197/oz and Silver = A$28/oz. NPV figure is shown on a pre-tax and ungeared basis.
5.Spot prices as at 5 August 2022 with Zinc = A$5,039/t, Copper= A$11,023/t, Lead = A$2,834/t, Gold = A$2,571/oz and Silver = A$29/oz. NPV figure is shown on a pre-tax and ungeared basis.
6.Valuation assumes exploration decline is completed in FY23.