Update - Tungsten Mining Operations, Brazil

RNS Number : 8173C

Evocutis PLC

22 January 2015

 

22nd January 2015

 Evocutis Plc

("Evocutis" or the "Company")

 Update - Tungsten Mining Operations, Brazil

Evocutis Plc (AIM: EVO) is pleased to announce the completion of a NI 43-101 Technical Report compiled by Micon International Co Limited and an operations update for the Bodó  Tungsten Mine ("Bodó") in Brazil, which indicates that significant near and long term potential exists to expand mining operations. Evocutis is in the process of acquiring an initial 10% interest.

Micon International Co Limited ("Micon") have completed a NI 43-101 Technical Report on the Bodó Tungsten Project, Rio Grande Do Norte, Brazil for Brazil Tungsten Holdings Limited ("BTHL") that concluded that:

·    High priority potential mineral resources total 112,000 tonnes grading 0.7-1.0% WO₃ for between 82,900-116,400 mtu of contained WO₃.

·    Medium term targets for exploration and development have a potential resource of 239,250 tonnes grading 0.7-1.0% WO₃ for between 167,000-239,000 mtu of contained WO₃.

·    The exploration potential of the Brazil Tungsten mineral licence areas is significant, and has the potential to host an exploration target in the range of two to three million tonnes.

Mining Operations Update:

The Bodó mine is currently operating at approximately 50-60 tonnes of ore per day from the Pajeù incline Shaft on a 6 day per week operation. The last shipment of tungsten concentrate from Bodó was on the 5^th January 2015 with estimated gross proceeds from this shipment of $150,000. At an APT Price of $290/mtu, this translates into a gross sale value per tonne of standard export concentrate containing 68% WO₃ of approximately $15,000/tonne.

The second mining area at Bodó, the Central incline Shaft, located about 400 metres from the current mining operations is currently being re-furbished and first ore is scheduled for delivery from Central Shaft to the mill in mid-February. BTHL envisages that the Central Shaft will quickly double overall Bodóproduction to about 100 tonnes per day of tungsten ore to the mill by the end of March.

Tungsten Resource Potential - Extracted from the Micon NI 43-101 Technical Report:

Potential resource targets are summarised in Table 1.  The potential resource tonnage is based on an assumed bulk density of 2.9 t/m³.

Table 1: High-Priority Potential Mineral Resources

Shaft	Horizon/Zone	Area (m2)	Thickness (m)	Volume (m3)	Tonnage (t)	Grade (% WO3)	Contained WO3 (mtu)
Pajeú NW	3/527 mL West	3,000	0.75	2,250	6,525	0.7-1.0	4,600-6,500
Pajeú NW	4/ South	20,000	1.5	30,000	87,000	0.7-1.0	60,900-87,000
Central	4/497 mL West	1,500	1.0	1,500	4,350	0.60-1.0	2,600-4,400
East	4/East	6,800	0.75	5,100	14,790	1.0-1.25	14,800-18,500
Total	-	-	-	-	112,665	0.7-1.0	82,900-116,400

Medium term targets for exploration and development are summarised in Table 2.  The potential resource tonnage is based on an assumed bulk density of 2.9 t/m³.

Table 2: Medium-Term Exploration Target Areas

Horizon	Area (m2)	Thickness (m)	Volume (m3)	Tonnage (t)	Grade (% WO3)	Contained WO3 (mtu)
4	45,000	1.0	45,000	130,500	0.7-1.0	91,000-130,000
3	50,000	0.75	37,500	108,750	0.7-1.0	76,000-109,000
Total	-	-	-	239,250	0.7-1.0	167,000-239,000

Unexplored exploration targets have been identified during the current work within the area of the mine workings.  Development of these targets should yield tungsten resources for immediate development.  The exploration potential of the Brazil Tungsten mineral licence areas is significant.  The licence boundaries of Bodó and Tarantula include areas of 1.89 km² and 99.65 km², respectively, and have the potential to host an exploration target in the range of two to three million tonnes.  This is considering that marble, calcsilicate and granitic rocks are known to exist at least 350 m down dip of the Bodó workings, combined with the undeveloped mineral potential at Tarantula.  However, the current lack of geological mapping and understanding of the ore controls determines that these represent exploration targets rather than estimated resources.

Above the Bodó underground mine there is potential to develop open pit resources within the area of the former open cut.  Night lamping in this area indicates the presence of coarse-grained scheelite mineralisation in calcsilicate rocks.  The area requires systematic geologic mapping and sampling to confirm tungsten resources.

Note: The lack of systematic sampling data precludes the development of CIM Standards-compliant mineral resources at the Bodó Mine.  Systematic mapping and channel sampling, combined with systematic recording of visual estimates of scheelite mineralisation to develop mineral resources and to provide grade control as production proceeds. 

Ownership of Brazil Tungsten Holdings:

Evocutis signed a Binding Term Sheet ("BTS") on 18th December 2014 to acquire an initial 10% interest in Brazil Tungsten Holdings Limited ("BTHL") which owns a 25 year lease over (with the option to extend) the producing Bodó Tungsten Mine in Rio Grande do Norte, Brazil, by investing US$1m in new capital in BTHL for the specific purposes of mine expansion.

Evocutis will acquire the 10% interest by subscribing for new shares  ("Subscription Shares") that represent a 10% shareholding in BTHL. Evocutis has paid BTHL US$250,000 on signing of the BTS. This sum is a deposit for the Subscription Shares.

Evocutis will make a further payment of US$750,000 to BTHL towards the costs of expanding the operations at the Bodó Mine on signing of a formal Investment Agreement, which is expected to be completed over the next few weeks.  On payment of this sum (and taking account of the deposit paid), the Subscription Shares will be issued as fully paid up Shares in BTHL, which represents a 10% shareholding of BTHL.

Evocutis also has an exclusive option to increase its holding in BTHL to 20% within 60 days by investing a further US$1million towards mine expansion, subject to certain conditions.

David Lenigas, the Company's Chairman, commented:

"Evocutis is pleased with the rapid progress being made by the operators and management of the Bodó Tungsten Mine in Brazil, and we look forward to closing the final contracts shortly that will enable the Company to provide the necessary additional funding required to ramp up production over the coming year."

About the Bodó Tungsten Mine, Brazil:

BTHL is headed up by mining specialists Stephen Fabian, Paul Berndt and Mark Burridge. BTHL owns, through its wholly-owned subsidiary, Bodó Mineraçao Ltda, the Bodó Tungsten Project ("Bodó"), which is located in Brazil's Seridó Tungsten Province in the State of Rio Grande do Norte. The Seridó Tungsten Province is Brazil's most important tungsten producing region and hosts the majority of Brazil's tungsten reserves. The project is located adjacent to highway RN203 and is 200 km west of the State capital of Natal.

Bodó is a high-grade tungsten operation employing 96 people, and is currently operating at the rate of about 50-60 tonnes of ore production per day from underground operations.  The ore is being processed through an onsite treatment plant with a current capacity of about 200 tonnes per day. Tungsten concentrates are sold to the global export market under an existing sales agency agreement with Wogen Pacific Limited.

It is intended that the funds provided by Evocutis will be specifically used to provide the necessary working capital to expand and improve the existing operations. For the mine, funds will be utilised to refurbish an existing incline shaft and advance underground development so that daily ore production can be tripled. For the mill, funds will be utilised to modify the plant, which is expected to improve tungsten recoveries from approximately 65% to an anticipated recoveries of over 80%, by adding grinding equipment to fully liberate the tungsten mineral.

Beyond this, the directors of Evocutis believe significant further growth potential exists from both continued underground development and several potential open pit mining areas already identified which have the potential to support continued cost-effective growth to levels of production a multiple above current levels.

BTHL's holdings consist of one mining lease and two exploration licenses totalling 189.6 hectares. The Bodó mining lease 000.894/1944 is surrounded by the adjacent exploration licence areas; 848.129/2006 (9,965 ha) and 848.129/2006 (281.75 ha).

The Departmento Nacional de Produção Mineral (DNPM) Mining Licence 000.849/1944 was
first issued on 2nd April 1948. The current lease was issued to Metais do Seridó S.A. on 3rd November 2009, it will expire on 3rd November 2039, but there is a right to extend the licence for a further 30 years. The neighbouring exploration licences of Tarantula and Area Sul were also issued on the 3rd November 2009.

The Bodó Mine when acquired by Brazil Tungsten Holdings Limited had a Simplified Environmental Licence (Licença Simplificada), which allows extraction of 4,500 t/m (approximately 185 t/d). This Simplified Licence was granted on the 26th March 2012 and is valid until 22nd September 2016. Brazil Tungsten, after consultation with the local authorities, intends to convert this to an unlimited operating licence (Licença de Operação) when production is ramped up in the future.

Glossary:

mtu                  metric tonne unit                     the unit by which tungsten raw materials are                                                                         bought and sold, equivalent to 10 kg.

WO₃                tungsten tri-oxide                    the chemical entity by which the grade  
                                                                        of tungsten products and their mass is usually measured

APT                ammonium paratungstate         an intermediate chemical product that most tungsten concentrate is turned into, and that is freely traded around the world and is therefore used as the price reference material for tungsten concentrates.

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For further information, please contact:

Evocutis Plc
Donald Strang, Executive Director	[phone]
	www.evocutis.com
Cairn Financial Advisers LLP
James Caithie/Paul Trendell/Carolyn Sansom	[phone]
	www.cairnfin.com

 

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