Berkeley Mineral Resources (BMR), the firm which owns the disused Kabwe mine in Zambia, says it is in discussions to sell on one of the huge residue dumps that it currently owns.
In the mining industry, residue material is known as "tailings". Kabwe mine has three major dumps of tailings and they are a significant part of the asset value of BMR because they contain zinc and lead in significant quantities.
BMR says the 573,458 tonnes of tailings it intends to sell have been certified as containing 10.66% zinc and 7.21% lead. On the open market zinc can sell at $1,915 per ton, lead is hovering around the $2000 a ton mark.
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BMR says it considered processing the tailings itself but the capital costs involved in setting up a flotation plant "would not be the best use of capital" at this stage of its development.
The focus at Kabwe will now be on the other two major stockpiles of mining residue: the Leachplant dump and the Slag dump.
The Leachplant dump is huge: 2,241,961 tonnes and is thought to contain 8.31% lead and 3.74% zinc. The reosurces of the slag stockpile are not yet fully known.
BMR is now trying to work out the best processing route for these two stockpiles.
Taking all its assets together the firm believes it holds "7.14 million tonnes of ore containing various metals, principally high-grade lead and zinc, of which 2.82 million tonnes currently conforms to the JORC Measured classification."
It is also at an "advance stage of negotiations" to buy "all of the residual partly mined or unmined underground ore bodies remaining at the former Kabwe mine". These resources could amount to "22 million tonnes comprising 1.2 million tonnes of zinc, lead, silver, cadmium and other valuable minerals."
Losses for the full year to the end of June were £2.5m, essentially the management and administration costs involved in setting up a mining asset. During the year the firm raised £20.7m in equity which BMR says will substantially fund the planned lead and zinc plants at Kabwe.
In his conclusion to the trading update, BMR's chairman, Masoud Alikhani says: "The outlook for the company is positive. We have acquired the rights to above-ground stockpiles containing substantial amounts of metal. Entering production of our first long-life project at Kabwe, with cash generation scheduled to commence in the first quarter of 2012, will transform BMR into a significant base metal supplier."
Shares in BMR were up 7.69% at 8.37am. In the year to date it has lost 65% of its stock value.
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