DFS - Executive Summary

  • Bosnian Definitive Feasibility Study

  • 18 September 2021

Following the completion of the 2020 Pre-Feasibility Study (“2020 PFS”), an internal review was undertaken with Ausenco and the Company’s team of Subject Matter Experts (“SMEs”), to determine options for further optimisation during the Definitive Feasibility Study (“2021 DFS”).

The principal considerations at the outset of the 2021 DFS were as follows;

  • Optimise the mine plan to maintain consistent high-grade feed for as long as possible
  • Take into consideration the prevailing market conditions 
  • Maximise revenue received from concentrate sales
  • Optimise operational efficiency and reduce costs
  • Reduce potentially adverse environmental, social, and economic impacts
  • Minimise project execution risks

These considerations generated the following operational changes:

Modified Underground Mine Plan

The 2021 DFS mine plan is focused on mining the high-grade sections of the Rupice deposit as early as possible and delivering consistent high-grade feed to the Vares Processing Plant for as long as possible. As a result, the mine plan was modified to accommodate new lower (ingress) and upper (egress) declines for optimised access, which also improves operational flexibility and safety.

The Ore Reserve tonnage of Rupice has decreased from 8.4 Mt to 7.3 Mt, while the Ore Reserve grade increased from 463g/t AgEq to 485g/t AgEq. This was due to the application of updated Net Smelter Return (“NSR”) cut-offs by ore type determined during geo-metallurgical domaining and metallurgical testwork. The average dilution factor increased from 10% to 13%, taking into account the potential spalling of backfill from adjacent primary stopes when mining secondary stopes.  

An additional third decline will be built, replacing the previously considered raisebore, dedicated solely for ventilation. Use of a ventilation decline rather than the vent-raisebore removes the risks associated in the near-surface ground conditions and provides an improved emergency egress. The third decline can also provide additional access for ore-haulage later in the mine life by relocating the ventilation fans.

Removal of Veovaca open pit from the mine plan

The Vares Processing Plant has been designed around the ore from the Rupice Underground Mine, as this is the highest value ore. Processing of ore from the Veovaca open pit, without modifying this process design, is anticipated to produce concentrates with marginal project economics. Further metallurgical test work and engineering will be undertaken to better understand how a higher value concentrate can be produced. Therefore, it was decided to defer the Veovaca open pit from the 2021 DFS mine plan until further work has been completed.

As the 2021 DFS does not include the mining of the Veovaca open pit, this reduces the tonnage of tailings that will require storage in the TSF by 1.91 Mt over life of mine. Additionally, mining the Veovaca open pit would have also required stripping waste rock to access the ore, which would also require a dump area with a capacity to store 8.64 Mt of waste rock. Total tailings and waste from mining Veovaca would have been 10.6 Mt.

Removal of the barite concentrate circuit

Market research conducted by an independent barite marketing expert concluded that, while the barite concentrate produced by the Vares Processing Plant had a suitable end-market, the current weak demand for and prices of barite and the high shipping rates negatively affected its contribution to the project. The price for barite is correlated in oil and gas exploration activity, due to its primary use as a drilling mud.

By not recovering the barite concentrate, reduces the project execution risk by removing 200kt of concentrate movement in the first year of Commercial Production and in excess of 1.1Mt over first 5 years.

Removal of the sulphide (pyrite) concentrate circuit

The sulphide (pyrite) concentrate was developed and introduced as a process to remove sulphide minerals from the barite concentrate to improve the quality of the barite. It was a preceding flotation stage to the barite flotation, and it followed the silver-lead and zinc flotation stages. The sulphide (pyrite) concentrate produced was found to contain reasonable quantities of gold and silver and the marketing team found potential buyers. Further validation of the detailed market during the 2021 DFS, resulted in a lack of confidence in the marketability of the sulphide (pyrite) concentrate. Therefore, the Company took the decision to remove the sulphide (pyrite) concentrate from the 2021 DFS taking into account that the barite was also not going to be included at this time.

Optimised comminution design

The process flow sheet was optimised with the introduction of a three-stage crushing plant processing ore for the Vares Processing Plant, as well as waste rock for aggregates for the backfill plant. This eliminated the need for the Semi-autogenous Grinding (“SAG”) Mill in the Vares Processing Plant saving US$1.8 million and further reducing project execution risk.  

This has contributed to a decrease in Initial Capital Costs of US$5 million.

Cumulative Impact

The cumulative impact of the principal design considerations used in the 2021 DFS are:

  • To significantly de-risk project execution through simplifying the process flowsheet, with negligible impact on Project economics
  • To simplify Project logistics considerations by removing 1.1 Mt of barite handling costs in the first five years
  • The reduction of Initial Capital Costs of US$5 million to US$168 million, an improvement in NPV8 of US$22 million to US$1,062 million and IRR from 113% to 134%
  • The removal of 10.6 Mt in the tailings and waste rock associated with not mining the Veovaca open pit 
  • Comparatively low Green House Gas (“GHG”) emissions on a per unit of metal recovered, relative to industry peers