Heron Signs Off-take Agreement for Woodlawn Project

In separate announcements in early May, Heron Resources reported it has awarded an engineering, procurement and construction (EPC) contract for its wholly-owned Woodlawn project near Tarago, New South Wales, and signed an off-take agreement for 100% of the zinc, copper and lead concentrates to be produced by the project. The EPC contract went to Sedgman. The off-take agreement was signed with Louis Dreyfus Co. Metals and covers the period of about 3.25 years from the start of production through to the end of 2021.

Heron’s Woodlawn project is located about 250 kilometers (km) southwest of Sydney on the site of the former Woodlawn mine, which operated from 1978 to 1998 and processed 13.8 million metric tons (mt) of ore from open-pit, underground, and satellite deposits at average grades of 9.1% zinc, 1.6% copper, 3.6% lead, 0.5 g/mt gold, and 74 grams (g)/ mt silver. The mine was closed in March 1998 due to prevailing low metal prices and external corporate issues.

The scope of Sedgman’s EPC contract is for a 1.5-million-mt/year mineral processing plant to enable the reprocessing of tailings from previous operations and of ore produced from an underground mine that Heron will develop on the property, plus a paste backfill plant and supporting infrastructure. The EPC contract includes a guaranteed maximum price of A$107 million, with cost underrun and performance incentives to support early completion and an under-budget result.

Initial capital to develop the Woodlawn project is estimated at A$151.6 million, including A$105.8 million for plant and infrastructure, A$13.2 million to establish the underground mine, A$20.2 million for engineering and owners’ costs, and A$12.4 million of contingency. More than 250 personnel will be employed on the construction project at its peak, with acceptance testing scheduled for late 2018.

The processing plant will be delivered in stages that align with project development. Plant feed will initially be from tailings and will switch over to underground ore when it becomes available. At steadystate production, the Woodlawn project is expected to produce approximately 70,000 dry mt/y of zinc concentrates, 30,000 dry mt/y of copper concentrates, and 25,000 dry mt/y of lead concentrates. Byproduct revenue will be generated from the gold and silver content in the lead and copper concentrates.

The Woodlawn project feasibility study is based on 2.8 million mt of underground ore, grading 14% zinc-equivalent (5.5% zinc, 1.6% copper, 1.9% lead, 0.45 g/mt gold and 42 g/mt silver) and 9.5 million mt of tailings grading 6% zinc equivalent (2.2% zinc, 0.5% copper, 1.3% lead, 0.31 g/mt gold and 31 g/t silver).

Regarding the off-take agreement, Heron’s Managing Director and CEO Wayne Taylor said, “Zinc concentrates are particularly in short supply in the global marketplace, which is expected to remain tight for the next few years, and this has resulted in the company agreeing to attractive commercial terms for 100% of mine output during the critical first few years of production at Woodlawn.”

As featured in Womp 2017 Vol 06 - www.womp-int.com