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Keras Resources plc / Index: AIM / Epic: KRS / Sector: Mining
6 November 2019
Keras Resources plc ('Keras' or the 'Company')
Update on Nayega Manganese Project
Following the announcement on 21 October, Keras Resources plc, the AIM listed mineral resource company, wishes to update shareholders on progress relating to its 85% owned subsidiary Société Générale de Mines ('SGM'), which currently holds an exploration permit over the Nayega Manganese ('Mn') Project ('Nayega', or the 'Project') in Northern Togo.
The Council of Ministers ('CoM') of the Republic of Togo convened on the 18th October where a decree was adopted and published granting a license for large-scale exploitation of the manganese deposit at Nayega to SGM. Keras and SGM have subsequently met with the Togolese Ministry of Mines and are pleased to announce that the ancillary documentation related to the Exploitation Permit is expected to be concluded by year end allowing commercial production to commence in the first quarter of 2020.
Initial operations will be based upon shipping of ore to smelter end users, however, Keras believe that there is potential to add significant value by the production of manganese sulphate for the fertiliser and battery market as a second stage development. As a result, Keras has appointed Perth based Simulus Engineers to conduct a Scoping Study on the potential to develop such a refinery for the Nayega Project. The decision was taken based on confirmation of the CoM's decree and the excellent leaching results from testwork completed on samples obtained from the Transitional and deeper Saprolitic zones within the Nayega orebody.
· All documentation, including the Mining Convention and Exploitation Permit, expected to be completed by year end
· Exploitation Permit will be a 20-year permit covering the current 15-year life of mine ('LOM') and any potential increase in Ore Reserve
· 10% free carry to be issued to the Togo Government reducing the Company's interest in Société Générale des Mines SARL to 76.5%
· Will require the conversion of SGM to a higher governance SA company
· Operations expected to commence at nameplate capacity of 6,500 tonnes per month ('tpm') of saleable manganese ore in Q1 2020, targeting the detrital and laterite ore horizons
· Construction of an additional 70 tonnes per hour ('tph') scrubbing and screening plant to commence in Q2 2020 with steady state production of 17,200tpm planned for Q3 2020 subject to securing expansion capital
· Expansion capital is expected to be funded through offtake agreements
Refinery Scoping Study
· Initial leaching testwork completed in July 2019 on samples obtained from the transitional and deeper Saprolitic zones within the Nayega orebody
· Leaching results have been encouraging with in excess of 90% recovery being achieved in less than two hours from both ore samples
· Nayega manganese is an oxide ore which leaches more favourably compared with South African carbonate ores
· Solutions produced contained minimal concentrations of impurities, indicating a reduced risk of issues in downstream processing
· Significant growth potential for manganese as a replacement for cobalt in lithium-ion batteries as producers look to secure cost competitive, responsibly mined long term raw material supply
· Potential to de-risk Nayega's exposure to the volatile steel market by diversifying into the growing EV market
· Commissioned Scoping Study expected to take nine weeks
Russel Lamming, CEO of Keras Resources, commented, "The Council of Ministers Decree authorising the grant of the Exploitation Permit for our flagship Nayega Manganese Project is transformational and a major milestone for the Company. Our strategy of proving up the Project through the fully funded 10,000-tonne bulk sample programme has been validated, and without investing any further capital, Keras can transition seamlessly from Explorer to Producer. The installed processing capacity allows us to commence production of beneficiated 38% manganese ore at a rate of 6,500tpm - this is planned for the first quarter of 2020.
"Concurrently, we will look to implement Phase 1 of the expansion programme through the installation of a new 70tph scrubber plant to be constructed in parallel with our existing 25tph plant. This gives us the flexibility to use the existing plant as both a production plant in the short-term, but also as a sampling plant when we start assessing the feasibility of producing battery grade manganese. The Company is currently in discussions with various offtakers to provide finance for the expansion programme.
"In addition, with the inherently volatile nature of the downstream manganese alloy market and the growing demand for a cost effective, responsibly mined replacement for cobalt in the production of lithium-ion batteries, we have commissioned a Scoping Study on the potential to develop a refinery for the Nayega Project to produce fertiliser and battery grade manganese sulphate.
"These are exciting times for our shareholders. In tandem with the expected start of full-time production at Nayega in 2020 over a current mine life of 15 years and resultant defined cashflow, we are also in the process of distributing our 33.8% interest in ASX listed gold focused Calidus Resources Limited, resulting in a distribution of approximately £9.9m. Post the distribution shareholders will have direct exposure to a cash generative manganese focussed company."
Keras' key focus has been on advancing its Nayega Manganese Project in Togo, West Africa, to commercial production. Post the award of the Exploitation Permit, the Company will hold an 76.5% interest in Société Générale des Mines SARL, which holds the 1,385-hectare ("ha") Exploitation Permit and the 9,427ha Borgou Research Permit. The Project hosts a current JORC Compliant Mineral Resource of 13.5Mt @ 11.1% Mn and an Ore Reserve of 8.48Mt @ 14.0% Mn with additional upside identified through exploration work. The known deposit at Nayega covers 2.2km by 500m and averages 3.3 metres in thickness. An internal Definitive Feasibility Study demonstrated the current LOM of 15 years, however, with ongoing exploration on the Ogaro anomaly, located approximately 5.5km east of the Nayega Resource, the Company is confident that there is the potential for the LOM to increase.
Commercial operations at Nayega are expected to commence in Q1 2020 with production ramping up to the installed bulk sample operational capacity of approximately 6,500tpm of saleable manganese ore. The beneficiation process has already been proven up following a 10,000-tonne bulk sampling metallurgical testwork programme successfully concluded earlier this year, which was tested by an end user with positive saleable results announced in Q3 2019. Crucially, the Company has established and proven up the logistics network required to transport bulk manganese to Lomé, the only deep-water port in the region and the gateway to the "Togo Corridor" seen as the main artery for imports into Burkina Faso, Niger and Mali. Importantly, cheaper backloading rates reduce logistics costs significantly.
Concurrently with initial production, Phase 1 of the expansion programme is anticipated to be implemented with the procurement and fabrication of a new 70tph scrubbing and screening plant planned for Q1 2020, subject to financing, with steady state production of 17,200tpm expected in Q2 2020. This will also include ancillary water, power and logistics infrastructure comprising additional generator capacity, new water supply boreholes with associated overland piping, tailings dam with water reclamation system, and weighbridge. To ensure that grade control is efficiently managed, an onsite laboratory with sample preparation equipment and bench-top X-ray fluorescence ('XRF') analyser will also be installed.
The objective of the leach test programme in July 2019 was to assess whether the manganese in the ore could be extracted by sulphur dioxide leaching. Samples of the underlying Transitional and Saprolitic geological horizons were tested in Perth, Australia by Simulus (Pty) Ltd in Welshpool, with the exception of mineralogical analysis by X-Ray Diffusion ('XRD'), which was performed by ALS Metallurgy Services. Analysis indicated that the dominant manganese minerals detected were in oxide materials in the form of Cryptomelane and Birnessite (with Quartz and Kaolinite being the two major gangue minerals), suggesting that the samples are likely amenable to sulphur dioxide leaching. Sulphur dioxide leaching of the samples achieved extractions of 96% and >99% for the Transitional and Saprolitic samples respectively within two hours. A longer leach time and/or more efficient residue washing would likely lead to further manganese extraction from the Transitional ore.
The Company has now commissioned Simulus Engineers to complete a Scoping Study on the potential to develop a refinery for the Nayega Project to produce fertiliser and battery grade manganese sulphate.
Links to the relevant documents on the Republic of Togo's website as follows:-
· Council of Ministers Meeting
· Project Explanation
For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of Russell Lamming, Chief Executive Officer. This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
For further information please visit www.kerasplc.com, follow us on Twitter @kerasplc or contact the following:
Keras Resources plc
Nominated Adviser & Broker
Ewan Leggat / Charlie Bouverat
SP Angel Corporate Finance LLP
+44 (0) 20 3470 0470
Isabel de Salis / Cosima Akerman
St Brides Partners Ltd
+44 (0) 20 7236 1177
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