Perth, July 29, 2008 AEST (ABN Newswire) - The Prairie Downs (ASX:PDZ) Base Metal Project is located approximately 100 kilometres southwest of Newman in the Eastern Pilbara region of Western Australia. At the current time the project hosts a total Global Resource of 4.7 million tonnes at a grade of 6.3% zinc, 18g/t silver and 1.8% lead at a nominal lower cut off grade of 1% zinc.
It remains open at depth and along strike. This resource contains 295,000 tonnes of zinc, 2.6 million ounces of silver and 83,000 tonnes of lead. It includes a High Grade Resource of 1.6 million tonnes at a grade of 12.3% zinc, 36g/t silver and 3.7% lead. The silver grade appears to be under reported according to metallurgical testwork which will be confirmed by further analysis.
Abesque Engineering & Construction Ltd was engaged in October 2007 to complete a feasibility study covering the process plant and related supporting surface infrastructure. This study is now complete and the results are summarised below.
The process facilities have been designed to treat 500,000 tonnes per annum of base metal ore, which at a 91.3% availability equates to a throughput rate of 62.5 tonnes per hour. It is designed to allow expansion to a throughput of 1,000,000 tpa. The crushing plant will operate on day shift seven days per week. The milling, flotation and dewatering areas will operate around the clock seven days per week.
Metallurgical testwork indicates that the process plant will produce 113,240 dry tonnes of zinc concentrate per annum and 18,022 dry tonnes of silver concentrate per annum. The overall zinc recovery is 92%, lead 94.8% and silver 96.1%.
The zinc concentrate will grade 50.3% zinc and 121ppm silver for annual production of 57,000 tonnes of zinc metal and 200,000 ounces of silver metal. The silver concentrate will grade 1255ppm silver and 63.6% lead for annual production of 385,500 ounces of silver metal and 11,700 tonnes of lead metal.
The estimated capital expenditure for the process plant and supporting infrastructure is AUD86 million based on the May 2008 dollar, being made up of a cost for the process plant of AUD52 million at +/- 10% and a cost of AUD34 million at +/- 20% for the supporting infrastructure.
Operating costs from the ROM pad to delivery of concentrate to Port Hedland (or an equivalent port) have been calculated at AUD41/tonne milled while processing at 500,000 tpa rate. The largest operating cost component is concentrate transport, followed in order by power supplied from gas generators and personnel.
The mining feasibility has not been completed as resource drilling is about to recommence on the Main and Zed Lodes which is expected to lead to a substantial increase in the resource base. In addition the copper discoveries this year and lead discovery last year have improved the probability of discovering open-pittable mineralization. However, based upon pre-feasibility work completed last ASX RELEASE 29 JULY 2008 year, underground mining by long hole open stope or similar is the preferred mining method. Costs are expected to be of the order of $55 per tonne mined including development costs.
Port storage and handling has not been finalized but is assumed to be USD25 per tonne of concentrate and sea freight is assumed to be USD75 per tonne of concentrate.
The construction schedule assumes all environmental approvals and government licenses are granted by February 2010. On this basis commissioning is expected in December 2010 and handover in February 2011.
RESOURCE DRILLING
Resource drilling of the Main and Zed Lodes is expected to commence by the end of July. The primary objective is to increase the high grade resource to approximately 2.5 million tonnes which would allow for five years of high grade production.
The Gabbro Lode will also be targeted. The mineralisation here is of disseminated or replacement type rather than the vein style of the other lodes and therefore may be indicating the presence of stratiform mineralization at depth. Such mineralisation is likely to much more extensive that the vein style of the other lodes.
The Company has previously reported copper results at Prairie Downs in the footwall to Main Lode.
Nineteen holes have intersected copper at greater than 0.5%, with the best results being: DDH6, 1.2 metres at 6.5% copper, 28g/t silver, DDH9, 1.5 metres at 2.7% copper, and PDD196 which intersected 3.4 metres at 2.8% copper, 12.2g/t silver, including 0.9 metres at 6.4% copper, 28.2g/t silver. This mineralisation will also be targeted with the objective of potentially defining an inaugural copper resource.
EXPLORATION DRILLING
A total of five diamond drill holes have been completed at Costean Seven. The target was copper mineralization outcropping at surface and in costeans and outcropping lead mineralisation. All holes intersected widespread, sporadic copper, zinc, lead and silver mineralisation, in some cases over substantial widths; however the source of the surface mineralisation has not been discovered. Assay results are not yet available.
The geology is complex and drilling intersected rock types that have not been previously observed. Alteration, particularly silicification, is extensive.
Drilling problems saw most holes not making target depths which lead to termination of the program. RC drilling of Costean Seven and other copper prospects is planned for the September quarter in conjunction with resource drilling.
OTHER PROJECTS
No fieldwork was completed on either the Coppermine Bore ,Longreach Well or Perenjori projects during the quarter.
CORPORATE
At this time standard project finance comprising debt and equity is an expensive way for junior companies to develop resource projects. Consequently, Prairie Downs Metals is seeking to use metal contained in its resource to assist in financing development. Alternatives include a joint venture with an end user or corporate partner, pre-payment from end user, off take with end users or traders, premium share issue tied to metal rights.
Initial discussions have already commenced with a number of parties and these are expected to advance once the feasibility study has been circulated to interested parties.
At the end of June the Company had cash of $8.3 million. There are no plans at present to raise further funds except as part of an overall package to finance project development.
Contact
Elissa Samuel
Investor Relations Manager
esamuel@prairiedownsmetals.com.au
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