Following this initial engagement Xenith managed further exploration work on the Island, completed a Concept Study and then a Feasibility Study for the project.
The project is a joint venture between the Anindilyakwa Advancement Aboriginal Corporation (AAAC) and AUS China International Mining Pty Ltd.
Project overview
The manganese deposit on Winchelsea Island has been evaluated through several geological exploration programs, environmental studies, geotechnical evaluations, mining studies, logistical modelling, metallurgical testing and associated assessments.
Progressive geological exploration identified a mineral resource that had demonstratable characteristics similar to the nearby GEMCO manganese operation on Groote Eylandt with mineralisation of sizable quantity and quality warranting further technical studies to support a project feasibility and environmental impact study.
The feasibility study was undertaken by our fully integrated team and subcontractors, drawing on all skills of the business including project management, geology, mining, finance, support infrastructure, and environment to provide an end-to-end service for the client.
The full scope of work carried out included a risk assessment, exploration, and extensive civil engineering work – all integrating with ore processing and shipping/transport logistics. Capital and operating cost estimates were also developed.
Multiple site visits to Winchelsea Island were undertaken by our personnel for the purposes of geology and general mining investigation.
Project objective
The study was compiled to support the intended development of the Winchelsea Manganese Deposit into a manganese mine, processing mined manganese ore into exportable manganese product suitable for the international manganese market.
The core vision of the project was to raise enough free cashflow to permanently support the economic sustainability and social future of all Anindilyakwa speaking clans of the Groote Archipelago.
Therefore, the objectives of the study were to develop a plan that demonstrated the Winchelsea Island manganese deposit could be economically mined for the benefit of the Anindilyakwa and allowed the joint venture to make a financial investment decision (FID) on how to proceed and allocate its capital.
Key solutions developed
A robust mine plan and processing solution were initially developed for the project based on the geological modelling and metallurgical test work.
Required project infrastructure for the purpose of providing safe, all-weather access to the island and the mining areas as well as to support mining processing and product export operations was identified. Key logistical – mainly transport/shipping – requirements for the project were addressed.
An economic analysis of the project was also undertaken which saw the project’s sensitivity to various factors including commodity price, foreign exchange rates (FX), capital cost and operating costs, assessed.
The economic analysis focused on confirming a business case for the project to support investment approval and to inform the consideration of necessary project financing.
As part of this capital and operating cost estimates were developed. Capital costs for the project were broken down into initial (pre-production) and production stage costs.
The operating costs were based on an understanding of the project’s requirements for labour, maintenance, supplies, services, fuel and other consumables.
Forecast annual and cumulative revenue for the project was determined from the mining and processing schedule developed for the project.
Also as part of the study, Xenith conducted a three-day project risk assessment where 22 representatives addressed areas of the project relevant to their expertise. Of the 155 risks identified, four were recognised as high risk and had recommended controls identified that would mitigate the risk.
Outcome
The outcome of the study confirmed the project was technically viable. It demonstrated targeted export manganese ore product quantities and grades could be achieved based on the waste removal, ore mining, ore processing and associated support infrastructure and services, including product export facilities.
We concluded the project demonstrated positive economic returns with respect to cashflow, NPV and IRR, however the final determination of the project’s economic feasibility remained subject to financing and certain regulatory approvals in control of, and to be determined by, Winchelsea Mining.
By leveraging the breadth of our experience, insight, and networks we identified and simplified the project’s complex issues to ensure the client was able to make fully informed decisions with confidence.
“We engaged Xenith to evaluate our proposed Winchelsea Island Manganese Project. They completed an initial resource estimate followed by a concept and feasibility study for the project. We were impressed by the breadth and depth of their work.
Their comprehensive risk assessment process identified a range of potential risks and suggested the means to mitigate them.
With Xenith’s guidance, we are now moving forward with confidence, knowing that we have considered all the variables of our planned project.”