Aeris Resources (ASX: AIS) has increased copper production to 5,952 tonnes in the June quarter, up by 18% on the previous three-month period. The Company’s quarterly activities put FY17 copper production at 23,404 tonnes with guidance of 27,000 tonnes for FY18. Aeris confirmed the Tritton Ventilation Shaft was on track to be operational by the end of the September quarter. The shaft will enable Tritton to be extended to at least RL4000m at production rates of 1mtpa or better.
JUNE QUARTER HIGHLIGHTS
- June Qtr Copper Production of 5,952 tonnes (18% increase from previous Qtr)
- FY17 Copper Production of 23,404 tonnes
- FY18 Copper Production guidance of 27,000 tonnes
- Tritton Ventilation Shaft on track to be operational by end of September Qtr
- Grade control drilling at the Murrawombie underground mine identifies higher grade zones, allowing modification of the mining plan
- EM survey continued over the Tritton and Kurrajong corridors (50% completed)
- Multiple new anomalies have been identified from the EM Surveys, including two within five kilometers of the Tritton Processing Plant
- Cash and receivables of $13.9M at the end of the quarter
- Completion of the Sale of the Blayney Exploration Project
Managing Director’s Commentary on FY2017 During FY2017
- we commenced three major capital projects which sets-up the Tritton Copper Operations for the coming years:
- Construction of a Ventilation Shaft at Tritton;
- · Commissioning of Murrawombie Underground Mine; and
- · A strategic 2 year, $7.5M greenfields exploration program on our Tritton tenement package.
The ventilation shaft will enable Tritton to be extended to at least RL4000m, at production rates of 1mtpa or better. The raisebore for the Tritton Vent Shaft broke through on 20 April. Civil works on the surface have been completed, the vent fans are currently being installed and are targeted to be operational by the end of the September quarter. The 864 metres deep, 5 metre diameter shaft is a world record (length and diameter) for the Atlas Copco 91R raisebore rig and also one of the largest single-pass ventilation shafts in Australia. Originally budgeted to cost more than $11 million, current estimates are now less than $10 million. The success of this project is a testament to all involved.
At the Murrawombie Underground Mine (Murrawombie), we encountered more difficult than expected ground conditions in the upper levels, which was impacting on stope production. The solution has been to change to a bottomup mining method. This resulted in lower production than planned during the year whilst we developed deeper into the mine. One benefit of the delay in production ramp-up has been the opportunity to undertake additional grade control drilling. This has resulted in some exciting results. The grade control drilling has identified a large high grade zone in the 102 stopes, which has enabled a change in mining extraction from the originally planned bulk mining method through the whole orebody to a combination of low dilution, open stopes in the high grade zone and lower cost, sub-level caving (SLC) for the lower grade areas of the orebody. The first stopes under the new mining method were commenced during the fourth quarter and the mine will ramp-up to full production during FY2018.
In July 2016 the Aeris Board approved a two year, $7.5 million strategic greenfields exploration program, focusing on discovering “Tritton” sized orebodies (+10Mt) (see ASX Announcement dated 28 July 2016). The first stages of this strategic greenfields exploration program involves using high power electromagnetic (EM) geophysics technology. This has involved using moving loop EM technology which is able to “see” 400m-500m below surface, compared to the 200m depth of the equipment previously used on the tenement package, and airborne EM survey, which is able to cover large areas but not “see” as deep. The moving loop EM program commenced in December 2016 and was 50% completed by the end of the financial year. So far three new anomalies have been identified, including two which are within 5km of our Tritton processing infrastructure.
The airborne EM survey was completed in the March 2017 quarter on the northern and southern extremities of the Tritton tenement package, with the latest results also identifying numerous new anomalies which now require further investigation.
Whilst it is early stages in our revitalised greenfields exploration program and more work is required, we are highly encouraged by the results to date and we hope to build on this success in the coming year.
In South Australia, Aeris holds a 70% interest in the Torrens Project (EL5614), an exploration tenement encompassing the Torrens anomaly. The Torrens anomaly is a coincident magnetic and gravity anomaly with a footprint larger than that of Olympic Dam. In April 2017, the South Australian Environment, Resources and Development Court granted native title authority to access and undertake exploration within the area of EL5614. The Joint Venture is now seeking the reissue of two government approvals to finalise access provisions to enable exploration activities on the tenement to recommence. This is another very exciting exploration opportunity for the company in a highly prospective area which has already yielded multiple world-class IOCG deposits.
Copper production at the Tritton Copper Operations for FY2017 was 23,404 tonnes, which disappointingly was lower than our initial guidance. The production challenges related to two key issues: 1) blockages of the paste fill lines at the Tritton Underground Mine, which continued for a number of months during the second and third quarters; and 2) difficult ground conditions in the upper levels of Murrawombie. Both of these issues resulted in lower volumes of ore being produced in the third and fourth quarters, with a corresponding impact on copper production. Rectification plans for both of these issues were initiated and led to ore production levels improving during the fourth quarter. We expect production rates to be back to normal levels by the end of Quarter 1 FY2018, with a copper production target of 27,000 tonnes for FY2018.
The work undertaken in the previous year on the restructuring of our debt facilities paid benefits during the year. The reduced operating cashflows from our lower than planned copper production did not impact on our ability to reinvest capital into the business during the year, particularly on the three major projects mentioned earlier, as we were able to access our US$25M Working Capital Facility. At the end of FY2017, US$15.5M had been drawn down.
During the first half of the year we saw a substantial upward re-rating in the copper price as the broader market became much more positive on the supply/demand fundamentals for copper. Regular market commentary continues to support this position with many forecasting the copper market to move into a deficit position before the end of the decade. With the fundamentals for copper looking very positive it continues to be our commodity of choice as we explore opportunities to grow the company, both organically and through M&A.