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Metals X's Renison success provides confidence over troublesome Nifty ramp-up

Metals X Ltd. believes its experience bringing the Tasmanian Renison tin operation up to scratch and now performing well gives it confidence in doing the same with the troublesome Nifty copper project in Western Australia, whose ramp-up task has been "grossly underestimated" according to financial services firm Hartleys, albeit with rising grades.

Nifty's September quarter production of 4,678 tonnes of copper in concentrate was again short of Metals X's circa 7,000-tonne objective at the start of the quarter, and compared to Hartleys' more conservative 6,000-tonne target, though it was still better than the previous two months.

A third long hole production drill rig and a fifth development drill rig will be working at Nifty by the end of October, with the end goal to transform it into a large scale, long-life mine with an annualized production rate of more than 40,000 tonnes of contained copper in concentrate.

Though Metals X remains confident that the ongoing development efforts will deliver the strategic objective of 10,000 tonnes per quarter, Hartleys has adjusted forecasts to reflect a longer ramp-up period.

"The task of ramping up the mine to its previous output level has been grossly underestimated," the firm's note said.

"Conditions in the 'checkerboard' [mining area] are worse than anticipated, but more tellingly, securing and martialling the necessary skills for a bulk underground mine in a remote location has been more difficult than planned."

Metals X Executive Director Steve Robinson said Russell Cole had already made a significant difference since being appointed as general manager of Nifty in early September, along with numerous other appointments, with prior-quarter issues of grade dilution and production gradually being addressed via bolstered management, planning and productivity.

In fact, confidence in Nifty’s geology is improving, with drilling down-plunge intersecting mineralization in the mine sequence, including 44.9 meters at 2.3% copper and 33.7 meters at 2.34% copper, and Hartleys is modelling a gradual improvement in mined grades from the September quarter's 1.3% copper to a reserve grade of 1.7% copper by January 2020.

Robinson told S&P Global Market Intelligence that the grade is not the issue so much as mining that grade in and next to the remnant areas, and controlling the grade of that mining.

While Renison is "not exactly the same," Robinson said it was picked up while in "a lot worse state — flooded and being handed back over to the government, and that also took a long time because it was harder, but that now is operating very well. It's a very good asset and has a massive amount of ore."

"So we know we can do it [at Nifty] because we've done it with Renison," he added.

Having paused mining at Renison until 2008 due to high maintenance costs and low tin prices, Bluestone Tin was then renamed Metals X, which then sold half of its Tasmanian assets, including the Renison tin mine, to China's Yunnan Tin Group (Holding) Co. Ltd. in 2009 and formed the Bluestone Mines Tasmania Pty. Ltd. Joint Venture.

In terms of staffing, Robinson said the company swaps people between the sites "wherever we can," while Metals X is also bringing systems and processes from Renison into Nifty, to leverage off the former's effective ramp-up for the ore shoulder, and is now at the desired rate.

Tin issues to be sorted

Renison's September quarter tin production of 1,616 tonnes of tin contained in concentrate at an all-in sustaining cost of A$18,899 per tonne of tin beat the prior quarter's 1,418 tonnes at A$19,366/tonne, although commissioning of the ore sorters is still nearing completion.

The sorters are designed to reject 45% of the material fed to them, with an average reject grade of 0.09% tin, and Metals X said in its Sept. 30 quarterly that expected ejection rates and grades were being achieved subsequent to the end of the quarter.

Hartleys models the sorters running at 360,000 tonnes per annum — 70% of design capacity — from December and will adjust that as performance data comes through.

Meanwhile, Rentails' environmental studies and modelling continued to advance the statutory approvals process, Metals X said in its quarterly.