The Projects | Copper & Silver
On 16 February 2022 Khoemacau Copper Mining announced that construction and commissioning activities at its Copper & Silver Project in the Kalahari Copper Belt North West Botswana are now complete, adding that ramp-up of mining and processing operations are in full force.
This follows the Company’s announcement in July 2021 that first copper-silver concentrate was produced on 30 June 2021, within the original project schedule, set out in 2018.
All Project construction activities on the Company’s Site have now been completed, construction and project teams demobilized and all major construction contracts finalized. The Project Capital cost has been finalized at US$412.4m, which compares very favorably with the 2018 Project Budget of US$397.1m.
The company explained in a statement that there are several factors that contributed positively and negatively to this outcome including direct and indirect costs related to mitigation of extensive Covid-19 related complications and disruptions (not only due to lockdowns but also international travel restrictions and skills availability) and some scope changes. “These negatives were offset by favorable foreign exchange movements and less underground development being completed in the construction period than was originally budgeted”
Apart from Project delivery to plan, the Company has continued to prioritise safety performance through project development and into the transition to ongoing mining and processing operations.
Measured from the commencement of construction at the start of January 2019 through the end of January 2022, the Company has achieved a very pleasing safety performance, with a Total Recordable Injury Frequency Rate (TRIFR) of 0.39 per 200,000-man hours.
Khoemacau says together with its contractors they have actively learning from all incidents, including all high potential incidents, to ensure all possible lessons are learned and repetitions avoided.
Following production of first concentrate, the Company’s upgraded and expanded Boseto process plant has performed exceptionally well, already demonstrating throughput, metallurgical recoveries and concentrate qualities in accordance with design. Concentrate exports and the associated commercial and logistical operations have performed well since first shipments were made in July 2021.
Infrastructure, tailings disposal and services on the Mine have also performed according to expectations. Road haulage of the ores mined at Zone 5 to the Boseto process plant has performed well from a reliability, productivity, and safety point of view.
All processing and mining operations have been powered successfully by electricity sourced from the Botswana National Grid since February 2021. Water sourcing from the Company’s various bore fields has also met design expectation. The Company’s operating cost profiles continue to be within plan, noting however that operations are still in ramp up.
Development of the Zone 5 underground mine commenced in February 2020 with first ore produced from development in August 2020, while ramp up of stoping operations commenced in August 2021. Over this period, the mine design, mining method, geotechnical and geohydrological designs have met expectations and proven to be effective while actual underground conditions have also been within expectation. To date, underground drilling, sampling and achieved grades have indicated that the resource model is robust and reliable. Optimization of stope designs to local conditions is ongoing.
Notwithstanding the above, mining operations have been impacted by the Covid-19 pandemic, with effects from local and international travel restrictions, (in particular affecting the Company’s mining contractor based in Western Australia).
Further, quarantines and lockdowns have complicated underground operator availability and numbers, while delays on mining fleet delivery have also been experienced, as global supply chains have tightened.
While, as noted earlier, Covid-19 constraints impacted underground mine development, the impact on mining was more significant in the latter part of 2021 as stoping operations ramped up. This reflects the fact that stoping operations are more reliant on the availability of certain skilled operators, which was especially limited as was the availability of appropriate and fit for purpose equipment. This coincided too with typical ramp up trouble-shooting related to refining drilling and blasting practices in a new ore body.
Since the beginning of the pandemic, 577 cases of Covid-19 have been confirmed on Site. To date some 8 000 man-shifts have been lost due to Covid-19 with a significant portion of these late in 2021 due to the Omicron variant.
During December 2021 alone, over 1 300 man-shifts were lost and at one point during the month, 25% of the mining workforce members were self-isolating after contracting Covid. As of 31 January 2022, 73% of the Company’s employees have received double vaccinations, and shifts lost to Coivd-19 in the New Year are declining. There is currently only 2% of the mining workforce self-isolating.
The Company has extensive initiatives underway and is working closely with its mining contractor, to ameliorate these constraints to mining ramp up. January 2022 saw an improvement in operator availability, with a strong uptick in the performance of stoping operations, following a decline in Covid-19 impacts after the December 2021 spate of infections, and the benefits of the troubleshooting being seen. Through the end of Q4 2021 and into 2022 mining operations have reached some 40% of design production rates.
Regarding Covid 19 more generally on the Site, management has worked consistently to ensure compliance with precautionary measures such as sanitizing, wearing of masks and social distancing and, since vaccines became available, ensuring rapid uptake among employees and contractors of vaccination opportunities.
Considering progress to date, and considering current operating conditions, the Company expects that the operations will achieve full production by the 4th quarter of 2022. On an annualized basis, full production will comprise between 60 000 and 65 000 tpa copper and 1.8 to 2.0 Mozpa of silver payable in concentrate.
The Company has drawn US$285.0m of Senior Debt and Overrun Facility funding and has US$26.5m of undrawn advanced payments under its US$265.0m Silver Stream. The Company does expect to draw the balance of the advance payments under the Silver Stream in Q1 2022, along with some shareholder equity, for general working capital purposes.
In parallel with developing and commissioning the current operating mine, Khoemacau has been advancing the Pre-Feasibility Study and associated resource drilling for its Expansion Project. This Project is expected to double production to approximately 130ktpa of copper and 5Mozpa of silver in concentrate.
The Expansion would involve expansion of the Zone 5 Mine to operate all 3 declines simultaneously, development of new mines at Zone 5 North, Zeta NE and Mango NE and the construction of a new process plant at the Zone 5 Mine. This new process plant would operate in parallel with the current Boseto Process plant, delivering over 8 Mtpa of total ore throughput. The four ore bodies mentioned above currently host JORC compliant resources of 168Mt at 2.1% Cu and 28g/t Ag. This study is due for completion in H2 2022.
As part of the Company’s development strategies, work has also commenced on options for renewable power generation. The viability of various alternatives is being investigated along with an assessment of the various implementation alternatives and operating models.
With its extensive prospecting license package over the most favorable geological settings in the Kalahari Copper Belt, the Company continues to advance greenfields exploration across this area. There is a particular focus in the Zone 5 to Boseto corridor that to date has delivered the large high-grade resource mentioned above, but exploration also extends to the Banana Zone which is 60 km to the southwest of Zone 5. Exploration activities range from diamond and reverse circulation drilling, to geophysical surveys, and extensive review and remodeling of the vast geological dataset across the license area.