addendum. hellyer tailings retreatment project tasmania · page i of 75 addendum. hellyer tailings...

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Addendum. Hellyer Tailings Retreatment

Project – Tasmania

Ore Reserve Estimate

By

Dr Rossen Halatchev

PhD, MSc, MAusIMM CP (Min), SME

Dr Deliana Gabeva

PhD, MSc, MAusIMM, MAIChE, MIAH

Prepared for: NQ MINERALS PLC

Contact Name: Mike Barden

Position: Chief Development Officer

Official Address: Finsgate, 5-7 Cranwood St, London, UK

Effective Date: October 2018

Australian Groundwater, Environmental and Mining Consultants

AusGEMCO PTY LTD ACN 614 631 873

AusGEMCO – Environmental Excellence from Mine Optimizations

www.ausgemco.com

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AusGEMCO PTY LTD ACN 614 631 873

Contributing Authors: Angel Halatchev1 – Chapter 1 Peer review of technical work by: Peter Cranfield2 – Report Galen White3 - Report Report reviewed by: Dr Rossen Halatchev4

Dr Deliana Gabeva5

AusGEMCO Pty Ltd has prepared this report on behalf of NQ Minerals Plc. Public disclosure, publication, or presentation of any information contained in this document must be accompanied by written consent from AusGEMCO Pty Ltd. Copyright © AusGEMCO Pty Ltd 30/09/2018 Document information _________________________________________________________________________________ Project reference: P0004 Reporting Standard/s: 2012 JORC Code Effective Date: October 2018 Status: Published Files: P0004_Addendum_Hellyer_Tailings_ Project_Ore_Reserve_Estimate_30092018.pdf

__________________________________________________________________________________ 1 Secretary, AusGEMCO Pty Ltd 2 Associate Mining Engineer, CSA Global Pty Ltd 3 Director Europe-Africa, CSA Global Pty Ltd 4 Director Mining and Principal Consultant, AusGEMCO Pty Ltd 5 Managing Director and Principal Consultant, AusGEMCO Pty Ltd

AusGEMCO Pty Ltd ACN: 614 631 873 ABN: 97 614 631 873

Primary Business Address

7 Cayman Place, Forest Lake

Brisbane,

QLD 4078

AUSTRALIA

Phone: +61 7 3879 7698

Mobile: +61 405 690 627

Email: [email protected]

www.ausgemco.com

Phone: +61 7 3879 7698

Mobile: +61 405 253 653

Email: [email protected]

www.ausgemco.com

AusGEMCO Report № 004-2018 Addendum. Hellyer Tailings Retreatment Project

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Disclaimers Purpose of this document

This Report was prepared exclusively for NQ Minerals Plc (“the Client") by AusGEMCO Pty Ltd (“AusGEMCO”).

The quality of information, conclusions, and estimates contained in this Report are consistent with the level of the

work carried out by AusGEMCO to date on the assignment, in accordance with the assignment specification agreed

between AusGEMCO and the Client.

Notice to third parties

AusGEMCO has prepared this Report having regard to the particular needs and interests of our client, and in

accordance with their instructions. This Report is not designed for any other person’s particular needs or interests.

Third party needs and interests may be distinctly different to the NQ Minerals Plc’s needs and interests, and the

Report may not be sufficient nor fit or appropriate for the purpose of the third party.

AusGEMCO expressly disclaims any representation or warranty to third parties regarding this Report or the

conclusions or opinions set out in this Report (including without limitation any representation or warranty regarding

the standard of care used in preparing this Report, or that any forward-looking statements, forecasts, opinions or

projections contained in the Report will be achieved, will prove to be correct or are based on reasonable

assumptions). If a third party chooses to use or rely on all or part of this Report, then any loss or damage the third

party may suffer in so doing is at the third party’s sole and exclusive risk.

AusGEMCO has created this Report using data and information provided by or on behalf of the Client [and the NQ

Minerals Plc agents and contractors]. Unless specifically stated otherwise, AusGEMCO has not independently

verified that all data and information is reliable or accurate. AusGEMCO accepts no liability for the accuracy or

completeness of that data and information, even if that data and information has been incorporated into or relied

upon in creating this Report.

Results are estimates and subject to change

The interpretations and conclusions reached in this Report are based on current scientific understanding and the

best evidence available to the authors at the time of writing. It is the nature of all scientific conclusions that they

are founded on an assessment of probabilities and, however high these probabilities might be, they make no claim

for absolute certainty.

The ability of any person to achieve forward-looking production and economic targets is dependent on numerous

factors that are beyond AusGEMCO’s control and that AusGEMCO cannot anticipate. These factors include, but

are not limited to, site-specific mining and geological conditions, management and personnel capabilities,

availability of funding to properly operate and capitalize the operation, variations in cost elements and market

conditions, developing and operating the mine in an efficient manner, unforeseen changes in legislation and new

industry developments. Any of these factors may substantially alter the performance of any mining operation.


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TABLE OF CONTENTS 1. PROJECT STATUS UPDATE BY SEPTEMBER 1, 2018 .................................................. 6

1.1. REBUILD OF MINERAL PROCESSING PLANT ........................................................... 6

1.2. REBULD OF THE DREDGE AND ASSOCIATED STRUCTURE ............................. 13

1.3. RE-DREDGING OF SELECTED TAILINGS IMPOUDMENT AREAS ...................... 16

1.4. REFURBISHMENT AND UPGRADE OF SITE AND PLANT INFRASTRUCTURE

....................................................................................................................................... 16

1.5. ENVIRONMENTALAND DAM ENGINEERING WORK FOR OPERATIONAL

PERMITTING .............................................................................................................. 17

1.6. RECRUITMENT OF MANAGEMENT AND OPERATING TEAMS ........................... 20

1.7. BUSINESS AND SUPPORT OPERATING SYSTEMS ............................................... 21

1.8. CONCENTRATE SALE AND LOGISTICS .................................................................... 22

2. CHANGE OF THE PROJECT ASSUMPTIONS ................................................................... 23

2.1. FORECAST OF THE METAL PRICES .......................................................................... 23

2.2. NEW ASSUMPTIONS OF THE PROJECT REALIZATION ....................................... 27

2.2.1. Production scheduling ............................................................................................ 27

2.2.2. Reprocessed tailings storage ................................................................................ 28

2.2.3. OPEX ............................................................................................................................ 29

2.2.4. CAPEX .......................................................................................................................... 31

3. IMPACT OF THE PROJECT CHANGES .............................................................................. 33

3.1. MINE DESIGN AND SEQUENCING ............................................................................... 33

3.1.1. Geological Block Profit Modelling ........................................................................ 33

3.1.2. Dredge path direction .............................................................................................. 41

3.2. MINE PRODUCTION SCHEDULE .................................................................................. 44

3.3. MINERAL PROCESSING PLANT SCHEDULE ........................................................... 49

3.4. TAILINGS RESIDUE STORAGE .................................................................................... 59

3.5. DISCOUNTED CASH FLOW MODEL ............................................................................ 62

3.6. MINING PROJECT RISK ASSESSMENT ..................................................................... 67

4. CONCLUSIONS ......................................................................................................................... 73

5. REFERENCES ........................................................................................................................... 74

6. APPENDICES ............................................................................................................................ 75


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TABLE OF FIGURES

Figure 1. 1. Refurbishment area focus of Hellyer Processing Plant ............................................ 6

Figure 1. 2. The ball mill refurbishment completed ...................................................................... 11

Figure 1. 3. Upper Float floor refurbishment completed .............................................................. 11

Figure 1. 4. Fully refurbished set of Tower Mills ........................................................................... 12

Figure 1. 5. Refurbished concentrate conveyor ............................................................................ 12

Figure 1. 6. One of two new dredge service vessels ................................................................... 13

Figure 1. 7. Refurbished cutter head frame installation .............................................................. 14

Figure 1. 8. Fully refurbished dredge relaunched and ready for work ...................................... 15

Figure 1. 9. New electrical cable installation in PVC conduit and hooked up to PVC floats .. 15

Figure 2. 1. Comparison of Zn prices ............................................................................................. 25

Figure 2. 2. Comparison of Pb prices ............................................................................................. 25

Figure 2. 3. Comparison of Au prices ............................................................................................. 26

Figure 2. 4. Comparison of Ag prices ............................................................................................. 26

Figure 3. 1. Block Unit Profit spatial distribution of Main Dam – Bench 1 ................................ 35

Figure 3. 2. Block Profit spatial distribution of Main Dam – Bench 1 ........................................ 35



Figure 3. 5. Block Unit Profit spatial distribution of Main Dam – Bench 1 & Bench 2 ............. 37

Figure 3. 6. Block Profit spatial distribution of Main Dam – Bench 1 & Bench 2 ..................... 37



Figure 3. 9. Block Unit Profit spatial distribution of Finger Pond Dam ...................................... 39

Figure 3. 10. Block Profit spatial distribution of Finger Pond Dam ............................................ 39

Figure 3. 11. Block Unit Profit spatial distribution of Western Arm Dam .................................. 40

Figure 3. 12. Profit spatial distribution of Western Arm Dam ..................................................... 40

Figure 3. 13. Block Profit spatial distribution of Shale Pit ........................................................... 41

Figure 3. 14. Optimum dredge path direction - combined Bench 1 & Bench 2 of Main Dam 42

Figure 3. 15. Optimum dredge path direction - Bench 3 of Main Dam ..................................... 43

Figure 3. 16. Optimum direction of dredge paths of Western Arm Dam ................................... 43

Figure 3. 17. Schedule of monthly ROM tails production of Hellyer Tailings Project ............. 45

Figure 3. 18. Monthly Pb head grade distribution ........................................................................ 45

Figure 3. 19. Monthly Zn head grade distribution ......................................................................... 46

Figure 3. 20. Monthly Au head grade distribution ........................................................................ 46

Figure 3. 21. Monthly Ag head grade distribution ........................................................................ 47

Figure 3. 22. Monthly As head grade distribution ......................................................................... 47

Figure 3. 23. Schedule of Pb concentrate monthly production .................................................. 51

Figure 3. 24. Schedule of Pb monthly production in concentrate .............................................. 51

Figure 3. 25. Schedule of Zn concentrate monthly production................................................... 52

Figure 3. 26. Schedule of Zn monthly production in concentrate .............................................. 52

Figure 3. 27. Schedule of Pyrite/Au/Ag concentrate monthly production ................................. 53

Figure 3. 28. Schedule of Au monthly production in concentrates ............................................ 53

Figure 3. 29. Schedule of Ag monthly production in concentrates ............................................ 54

Figure 3. 30. Schedule of Pb concentrate annual production .................................................... 55


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Figure 3. 31. Schedule of Pb annual production in concentrate ................................................ 56

Figure 3. 32. Schedule of Zn concentrate annual production..................................................... 56

Figure 3. 33. Schedule of Zn annual production in concentrate ................................................ 57

Figure 3. 34. Schedule of Pyrite/Au/Ag concentrate annual production ................................... 57

Figure 3. 35. Schedule of Au annual production in concentrates .............................................. 58

Figure 3. 36. Schedule of Ag annual production in concentrates .............................................. 58

Figure 3. 37. Hellyer TSF site location (after GHD [2018]) ......................................................... 59

Figure 3. 38. Existing EFB (facing north) ....................................................................................... 60

Figure 3. 39. Schedule of monthly tailings residue over LOM .................................................... 61

Figure 3. 40. Revenue distribution over the LOM ........................................................................ 65

Figure 3. 41. Distribution of operating expenses over the LOM ................................................. 65

Figure 3. 42. Deterministic ODCFs over the LOM ....................................................................... 66

Figure 3. 43. Cumulative DCFs over the LOM .............................................................................. 66

Figure 3. 44. Distribution of stochastic ODCFs over the LOM ................................................... 69

Figure 3. 45. Histogram of NPV generations ................................................................................ 69

Figure 3. 46. Mining Project Risk profile with monthly time step ............................................... 70

Figure 3. 47. Mining Project Risk profile with annual time step ................................................. 70

Figure 3. 48. Mining Project Risk profile with monthly time step [AusGEMCO, 2017] ........... 71

TABLE OF TABLES

Table 2. 1. Forecast Zn, Pb, Au and Ag prices [2017] ................................................................. 24

Table 2. 2. 2018 Forecast of Zn, Pb, Au and Ag prices* [2018] ................................................. 24

Table 2. 3. Summary of predicted hydraulic parameters during the production ...................... 28

Table 2. 4. Hellyer Tailings Project operating expenditure (2017 vs 2018) .............................. 30

Table 2. 5. Hellyer Tailings Project - Capital Expenditure ........................................................... 32

Table 2. 1. Forecast Zn, Pb, Au and Ag prices [2017] ................................................................. 24

Table 2. 2. 2018 Forecast of Zn, Pb, Au and Ag prices* [2018] ................................................. 24

Table 2. 3. Summary of predicted hydraulic parameters during the production ...................... 28

Table 2. 4. Hellyer Tailings Project operating expenditure (2017 vs 2018) .............................. 30

Table 2. 5. Hellyer Tailings Project - Capital Expenditure ........................................................... 32

Table 3. 1. Statistics of the Block Unit Profit estimates ............................................................... 34

Table 3. 2. Optimal dredge path directions .................................................................................... 42

Table 3. 3. Results of the annual ROM production schedule of Hellyer ................................... 48

Table 3. 4. Calendar dbase update of Hellyer TSF production schedule ................................. 48

Table 3. 5. Results of the annual concentrate production schedule of Hellyer ........................ 55

Table 3. 6. Updated schedule of residue storage ......................................................................... 61

Table 3. 7. Summary of the discounted cash flow model results ............................................... 63

Table 3. 8. Discounted Cash Flow Analysis of Hellyer Project based on Ore Reserve

Estimate of 2017 ............................................................................................................ 64

Table 3. 9. Results of the annual Mining Project Risk assessments ......................................... 68


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1. PROJECT STATUS UPDATE BY SEPTEMBER 1, 2018

The objective of the current Addendum is to provide an update of the status of the Hellyer Tailings

Retreatment Project in Tasmania as at September 1st, 2018 in the context of an update to the Ore

Reserve estimate in compliance with the 2012 JORC Code of the Australasian Institution of Mining,

Metallurgy and Exploration. The project status update covers the period from January 2018, when

refurbishment work commenced, until the beginning of September 2018.

The update of the project status, which is presented in the sections below, is based on the project

monthly reports of NQ Minerals Plc [NQ Minerals, 2018a-g].

1.1. REBUILD OF MINERAL PROCESSING PLANT

The rebuild of Hellyer Mineral Processing Plant is a multi-task activity due to the many areas requiring

refurbishment as shown in Figure 1.1. It was organized and reported into five streams: milling, flotation

and regrind, reagents, filters and dewatering, and tailings. The progress of the work for each of these

streams per month is summarised as follows:

Figure 1. 1. Refurbishment area focus of Hellyer Processing Plant

February, 2018

Work was progressing on the ball mill and included greasing of the pinion bearings, installation of new

trunnion discharge end lube pumps and motor inspection. One of the two mill discharge pumps has

been serviced and is ready for commissioning. The mill trunnion area was cleaned and became

serviceable.


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The majority of work was focussed on the flotation area. All the repairable launders were cleaned and

reinstalled. Work commenced on repairing cell incomers. Grating, steelwork and handrails were

progressively replaced and the focus was placed on the tower mill area. Certification of the overhead

cranes started.

In previous months, several of the reagent pumps were serviced and became ready for replacement.

Replacement parts for the filter-presses were ordered. Work commenced on sourcing poly pipe for tails

and return water pipelines. A poly welder was ordered.

March, 2018 Ball mill clutch plates were ordered. METSO visited the site to replace the trunnion seals. The spare

seals which were ordered by the previous site owners were found to be for the SAG mill, instead of the

ball mill. A replacement gasket was air-freighted from Melbourne, which was also found to be

unsuitable. Metso left site with the obligation to provide an update on the required gasket. The ball mill

trommel was removed. Some rubber panels were ordered to complete the refurbishment of various

minor rubber lined components. Rust in several areas of the trunnion was removed. The mill feed tanks

were sandblasted and painted (first metre from base) and the agitator drives were serviced.

The flotation cell launders were fabricated at TEC. Work continued on the downcomer baffles, dump

valves and water sprays repairs and replacements where required for all the flotation cells. The tower

mill lubrication systems were repaired mechanically. The tower mill motors were electrically tested and

passed. Work on certification of overhead cranes continued.

Pre-work on mechanical and electrical systems continued with a representative of ISHIGAKI. An

updated schedule was received from ISHIGAKI indicating work on the filters to be done by the middle

of July. Enquires commenced for a lead concentrate bagging system. Several items were identified as

missing from the refurbishment scope of work during the risk assessment.

Work commenced on sourcing poly pipe for tails and return water pipelines. A poly welder was delivered

and was used to repair the existing pipework. Commenced work on tails pumps.

April, 2018

Testing of the tower mill motors was completed. The ball mill trommel refurbishment was completed.

Repair work to the cyclone feed pumps was completed. The NER fault resistor failed testing and a new

one was ordered.

Float cell refurbishment progressed including replacement of dump values, water sprays, downcomers

and launders. Modifications to the circuit were underway based on the design flowsheets.


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OUTOTEC visited the site to restart the on-stream analyser (OSA). The visit indicated that both the

PLC and workstation failed and required replacement. Orders were placed for these items. Tower mill

refurbishment continued with oil changes and overhaul. The flotation blowers were serviced and inlet

ducting replacement parts were ordered. All overhead cranes were certified.

An updated schedule was received from ISHIGAKI indicating that the delivery of filters was delayed

until the end of July. Quotes were received for the lead concentrate bagging system. The new stock

tanks were ordered from TEC. Cladding replacement continued with most of the loose sheets removed.

The western wall of the concentrate shed was completed. The slip rings on the second thickener were

tested and passed. The replacement set was delivered.

A solution was found to the switchboard space and manufacture of the necessary parts was underway.

The replacement pipes and other parts were ordered.

May, 2018 Metso replaced the trunnion seals of the ball mill. An oil change in the main transformer was completed

successfully. This transformer was successfully warmed and brought back online. The cyclone

distribution manifold was drafted and fabricated to allow for 10 cyclones. Linings, spigots and vortex

finders were ordered for these cyclones. A final report was provided by Megavar indicating that all

transformers and main motors passed electrical testing. Two protection relays failed testing. After a

second visit by Megavar, it was found only 1 protection relayed failed.

The work at TEC for flotation launders was completed, with all launders delivered to site. Only 1

remaining launder installation was required in the flotation cells. The missing tower mill motor cowling

was drafted and the fabrication commenced at TEC. The high impact torque wrench was repaired, and

work continued on MLL-03 bearing box support springs. The new workstation has been delivered and

installed. The final report for process calculation verification was received from Ausenco. The

recommended changes included 29 pulley size confirmations or changes, 1-line size change and 2

motor size upgrades. Regrind cyclone spigots and vortex finders were ordered for the Weir cyclones.

Work continued on pump repair work and pipeline redirection work. The flocculants mixing station was

moved and electrical repair work was completed. Repair work was completed on the wooden reagent

bridge. Roofing repair work was completed on the main reagent area. Lighting repairs in the main

reagent area commenced. A risk assessment was completed on the reagent area to determine specific

work required prior to first fill deliveries. This work includes requirements outlined by the supplier of

liquid SMBS. Electrical repair work on the four ventilation fans commenced.

ISHIGAKI confirmed delivery for the filters at the end of July. Investigations into expediting the delivery,

including engaging a local freight forwarder and possible air freighting of materials were conducted.

Bulk bags for bagging of the lead concentrate were ordered. A plan was made to utilise some existing

160mm pipe and existing pumps to pump any unsold pyrite to the ‘Polymetals Void’ in the Main Dam.


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TEC commenced refurbishment work on conveyors 8 and 9. Work was progressing quickly in this area.

Cladding replacement continued. Repair work on the thickener structures was completed. Mesh and

chequer plate work was ongoing. Froth crowders for the thickeners were fabricated at TEC, with

installation of one thickener commenced in the month. Fabrication of new thickener feed wells

commenced at TEC. The second set of slip rings passed testing.

June, 2018

A punch list for the ball mill area was created. NDT was completed on the mill girth gear. A number of

issues (alignment and wear) were found and a contractor was engaged to repair these issues. Work

commenced with the replacement of the PLC for the ball mill. This work was scheduled for completion

after the test-run. The cyclone distribution manifold was delayed. The ball mill clutch plates arrived on

site and were installed. Cyclone parts were ordered and some arrived.

At the end of June, the flotation cells were 99% completed, with 2 motors outstanding. The tower mills

for the lead regrind were completed with QC. Several of the flotation cell sub-systems had QC

completed on them and are ready to commence wet commissioning. Pump size changes were

underway. The missing zinc regrind tower mill motor cowling was drafted and the fabrication

commenced at TEC.

The reagent area mechanical refurbishment continued in June. The mix and stock tanks were cleaned

and agitators serviced. Reagent pumps were inspected and parts ordered. Reagent lines were re-routed

and cleaned out. Planning of where to store reagents and what reporting requirements (i.e. statutory

requirements) commenced. The first delivery of frother was delivered to site. Exhaust ducting was

replaced and replacement fans ordered.

A QC inspection of the filters at the factory in Japan was completed. The new stock tanks arrived onsite

and were placed. Good progress was made on the tank install. The lead concentrate bagging system

was ordered, and fabrication was underway. The concentrate shed conveyor sections were replaced,

however the condition of the gravity take-up section was worse than expected condition and additional

fabrication was required. The replacement section was completed. The filter discharge conveyors were

inspected. The feed thickener refurbishment work was almost completed.

Tailings lines were worked on during June. The tailings pumps and box have been inspected. The

160mm pyrite pipe to the ‘Polymetals Void’ in the main TSF was in a process of installation.

July, 2018

The ball mill was successfully test run, after which additional work, including girth gear checks and PLC

replacement, commenced. The girth gear checks confirmed that additional work was not required at

this time, the alignment and contact for the gear was within tolerances. The gear will need to be


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monitored during operations. The cyclone manifold and cyclones were installed. Grinding media

installation commenced into the ball mill and was expected to be completed in early August. The feed

thickener remained uncompleted at the end of the month.

Commissioning commenced in the flotation area. The lead roughers were tested and water testing was

ongoing on the zinc roughers. The three tower mills were completed including motor installation and

alignment checks. The associated cyclone banks were still in refurbishment as parts were still arriving

onsite. The OSA needed to be completely tested. The new industrial PC was installed and tested, but

the X-Ray tube failed.

The majority of mechanical refurbishment of the reagent area was completed in the month. Electrical

work commenced in the area with slow progress due to lack of resources. Exhaust ducting was replaced

and replacement fans were 50% completed (2 installed, 2 on order).

The filter parts arrived in Melbourne and were processed for shipment to Burnie. The pyrite stock tanks

were completed except for punch list items. The lead concentrate bagging system fabrication was

underway. Bulk bags were ready to air-freight, if required, with the remaining shipment to come later.

The conveyor replacement sections were installed. Some rollers were still on order at the end of the

month. Cladding replacement on the concentrate shed was 95% completed, with flashing and vent

installation outstanding. The pyrite thickener feed well was delivered onsite.

The main tailings and water return lines were all completed with cut-ins. The 160mm pyrite pipe to the

‘Polymetals Void’ in the main TSF was still in progress.

August, 2018

The ball mill became fully operational with balls added and represented a key milestone in the

commissioning process (Figure 1.2). Grinding media installation into the ball mill was completed. Spares

for the Mill were on stock and located in the well-stocked Hellyer store warehouse.


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Figure 1. 2. The ball mill refurbishment completed

Commissioning of the base metal flotation circuit started. Mechanical and electrical work in the flotation

area was substantially complete and wet commissioning was commenced (Figure 1.3). The three tower

mills have been fully refurbished, including motor installation and alignment checks (Figure 1.4). The

associated cyclone banks were replaced.

Figure 1. 3. Upper Float floor refurbishment completed

The two concentrate filters were delivered on site and their installation commenced in the Mill with

electrical, air and water services to be added. Major mechanical components were onsite nearing


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complete installation. The pyrite stock tanks were completed except for a few items. The conveyor

replacement sections have been fully installed (Figure 1.5). Cladding replacement on the concentrate

shed was completed. The pyrite thickener feed well was installed. The main tailings and water return

lines were completed.

Figure 1. 4. Fully refurbished set of Tower Mills

Figure 1. 5. Refurbished concentrate conveyor


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1.2. REBULD OF THE DREDGE AND ASSOCIATED STRUCTURE

The process of rebuilding the dredge and associated structure is described for each month of the pre-

production period as follows:

February, 2018

The product line and electrical cable were brought to the surface of the dam. New adapters and teeth

for the dredge cutter head were ordered. The supplier confirmed that spare teeth and adaptors were

available to match the current design. Testing commenced on the dredge electrical components and

control circuits. Sandblasting of the Shore Tanks commenced. Delivery of the replacement dredge

support boats (Figure 1.6) and training of operators were on track.

Figure 1. 6. One of two new dredge service vessels

March, 2018

Blasting and painting on the dredge equipment by TEC commenced on site. The dredge main hydraulic

pump motor was sent to FLUID POWER SERVICES for refurbishment. The main supply cable to the

dredge failed electrical testing and a new cable was ordered. An alternative plan was developed in case

of a delay to the supply of the new cable, this would allow the dredge refurbishment work and initial

operation to continue. The product line was floated. Electrical work commenced at the shore tanks and

substation. This area was in a poor state of repair due to both weather and previous component

scavenging. It was expected that the cost to refurbish this area would be higher than initially budgeted.

April, 2018

The cutter head and ladder extension were delivered on site (Figure 1.7). The GPS and mine grid

system were ordered. The dredge telemetry and communications system was ordered from

CROMARTY. Expected delay in the delivery of the new dredge cable. The dredge floating pipes were

inspected and additional pipes were ordered for replacement. The dredge ladder was returned from

TEC and installed on site. PIRTEK completed the installation of the hydraulic hose/pipes on the dredge

and ladder. The dredge winches were reinstalled.


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Figure 1. 7. Refurbished cutter head frame installation

May, 2018

The dredge was successfully floated and commissioned on the 31st of May. Some activities remained

outstanding including: training on the GPS/mine grid system, the dredge telemetry and communications

system, the new dredge cable, and final maritime certification. Coxswain training was completed. The

bridge located on the TSF access road was repaired after it failed during heavy rains.

June, 2018

A temporary maritime certification was received for the dredge and it started in operations mode with

minor punch list items. Finger Pond dredging commenced with transfer of tails into the Main Dam. All

necessary bridges repairs were completed during May and June. Work on the shore tanks (receiving

and storage tanks for dredge operations) continued in June. The major issues in this area were electrical

due to the poor equipment condition as a result of lack of maintenance following previous dredging

operations.

July, 2018

Finger Pond dredging was underway. At the end of July approximately 100,000 tonnes of material were

pumped into the Main Dam. Maritime certification for the dredge was reviewed with the conclusion that

it maybe not necessary because the dredge is permanently connected to land via cables, pipes and

wire rope. However, the preparatory work done to obtain certification was valuable to ensure HSE

standards were met. Work on the shore tanks continued. The first shore tank was previously used to

store lime for controlling pH in the TSF. It was planned to return this tank to normal service and move

the lime lines in August. The second tank was cleaned out and became ready for water testing including

pumping to the thickener. The gland water tank and pump were installed. Electrical work continued with

an HMI panel being installed to allow manual control of the pumps and valves without entering the MCC

room.

August, 2018


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The Seabird III Dredge was fully refurbished and had successfully dredged 120,000 wet metric tonnes

from the Finger Pond to the Main Dam (Figure 1.8). Dredge operators fully trained. The dredge

underwent some minor rework to fine tune its effectiveness in the pre-production period. The new

electrical cable was installed in PVC conduit and fastened to floats and connected to the Dredge (Figure

1.9).

Figure 1. 8. Fully refurbished dredge relaunched and ready for work

Figure 1. 9. New electrical cable installation in PVC conduit and hooked up to PVC floats


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1.3. RE-DREDGING OF SELECTED TAILINGS IMPOUDMENT AREAS

The 2017 Ore Reserve estimate of Hellyer Tailings Retreatment Project was made with the assumption

that tailings located in the Finger Pond would be dredged and transferred to the Main Dam

[AusGEMCO, 2017]. This work was defined as a pre-production work. A combined geological block

model was developed in Datamine reflecting the transfer of the tailings from the Finger Pond to the void

of the Main Dam created during previous dredging operations. The reason for making such a decision

was the need of proving additional temporary storage space for the re-processed tailings before the

construction of the new dam TSF2.

As part of the Hellyer Refurbishment Project the re-dredging of the tailings in the Finger Pond Dam was

planned to start in June, 2018 [NQ Minerals, 2018e]. It was anticipated that 165,000 tonnes of material

would be dredged from the Finger Pond and relocated to the Main TSF prior to commencement of

production dredging.

In line with this plan, the dredge was refurbished and became operational in June, 2018 and Finger

Pond dredging commenced. Tailings dredging from the Finger Pond Dam to the Main Dam continued

in July, 2018. Approximately 120,000 tonnes of material were moved from the Finger Pond to the Main

TSF prior to relocation of the dredge to the Main TSF and production start-up in September, 2018.

The dredge operations in Finger Pond Dam were done with fully trained operators. After initial operation

in the Finger Pond, the dredge underwent some minor rework to fine tune its effectiveness prior to

commencing production. The new electrical cable was installed in PVC conduit and fastened to floats

and connected to the dredge. Production dredging work commenced and is progressing well in

September, 2018.

While only 120,000 tonnes of material were dredged form the Finger Pond and relocated to the Main

Dam (compared with the 165,000 tonnes planned) it is not considered that this will compromise future

production as the revised operating plan includes a temporary lift to the Finger Pond Dam which will

create adequate temporary storage capacity.

1.4. REFURBISHMENT AND UPGRADE OF SITE AND PLANT INFRASTRUCTURE

The existing infrastructure on site and processing plant of Hellyer had been kept in a good condition as

described in the 2017 Ore Reserve Report [AusGEMCO, 2017]. However, in order to commence

production operations infrastructure refurbishment and associated capital expenditure was required.

During the period from February until September, 2018, the following activities were performed

regarding the refurbishment and upgrade of the infrastructure:

• All building cladding was replaced or repaired

• Local site roads were graded and encroaching vegetation removed.

• Safety and instruction signs were installed.


Page 17 of 75

• Two new bridges on the roads to the tailings dam were installed.

• Specialised guide posts (light activated) were installed to minimise incidents with local wildlife.

• New Atlas Copco air compressors were ordered and delivered on site.

• The site HV breaker was rebuilt.

• All required transformers were tested and had their oil changed.

• Vegetation was cleared under and around utilities (powerline corridors, entry road, etc.)

• Power poles were inspected and some replaced.

• The old exploration building was refurbishment and converted to accommodation.

• Fire suppression was installed in the MCCs.

• Fire suppression was installed on the mill lube system.

• All fire extinguishers were replaced.

• Overhead cranes were tested and certified.

• All lifting equipment was certified.

• Lighting replacement works (both access and emergency) done.

• New Pipe poly welding equipment has bought for using on the tails lines.

• Tailing dam pipes were checked and tested with minor refurbishment.

• TasRail commenced engineering/upgrade works in the Burnie Port storage building.

• The concentrate loadout shed was refurbished.

• The main entry retaining wall was repaired.

1.5. ENVIRONMENTALAND DAM ENGINEERING WORK FOR OPERATIONAL PERMITTING

Updates concerning environmental and dam engineering work for operational permitting purposes

cover the period from the 1st February 2018 until the 1st September 2018. The summary of the updates

is provided below on a monthly basis.

February, 2018

Permitting activities:

Meeting with Aquatic Science (AS) and Blue Minerals Consulting (BMC) regarding the AMD test work

for operations and closure. EPA meeting regarding AMD and water management. Plan agreed for test

work and draft DPEMP submission based on results as of early April, with final data going into the final

DPEMP.

Meeting with Scott Jordan re EPBC referral and survey and proposed management plans. Tarkine

National Coalition were positive for the EPBC referral. EPBC referral finalized. Site inspection with

Sustainable Timber Tasmania regarding their tree removal requirements. Consultation with Forze

Explosives regarding potential TSF 2 impact on their Que River depot. Discussion with EPA re Finger

Pond Dam wall raise application. EPA positive with ecological survey and await dam detail and timing

of works.


Page 18 of 75

Dam Engineering work:

Geotechnical test work on PRT to confirm storage capacity requirements. Geotechnical drilling and

groundwater assessment to inform dam, design and DPEMP. Delivery of PRT for geochemical test

work to confirm geochemical performance under a deep water cover during operations and closure.

March, 2018


Discussion with EPA and North Barker regarding geo-conservation. DPEMP drafting AMD and

groundwater plus sampling graphics. MRT officer level discussions regarding closure costs for Hellyer.

Additional water and geochemical test work and site discussions regarding potential timing conflicts

with the Finger Pond raise works. Latest AMD test work results showed metals concentrations in KLC’s

dropping to acceptable levels. Additional test work deferred for 12-month closure plan, as unnecessary

for DPEMP. AEMR report for Hellyer PCE compliance finalized and submitted.


Geotechnical test work on PRT to confirm storage capacity requirements. Testing underway at UQ.

DPEMP delayed due to dam engineering and geotechnical data from test work above. Drafting program

upgraded to reduce delays.

April, 2018


DPEMP drafting of AMD updates. EPBC referral: Discussions regarding devil den numbers, liaison

DoEE and NB, additional report on survey and den numbers reviewed for submission. EPA discussions

re Mill Creek clean-up. Amended application submitted. EPA meeting to review latest geochemical data

and conclusions. AEMR report approved by EPA. Discussions / consultation meetings including Chief

of Staff Resources Minister, Environment Minister, Director and Deputy Director EPA. Aquatic Science,

Blue Minerals, GHD and site coordination and discussions re DPEMP requirements and timing.


Geotechnical test work on PRT continued.

May, 2018


DPEMP drafting of AMD updates. Set up draft DPEMP for internal review and 2nd preliminary edit.

Liaison Technical Advice on Water (TAW) for DPEMP peer review. Preliminary draft to TAW. EPBC

referral: Discussions re devil den numbers, liaison DoEE. Additional report on survey and den numbers

submitted. Discussion with TAS EPA to facilitate DoEE appreciation of approval process and ecological

impact. Discussions re proposed field trials to validate lab scale test work for approval, to evaluate cost


Page 19 of 75

effective closure options TSF 1 and TSF 2 and evaluate pyrite concentrate storage impacts. Discussion

with GHD re dam construction, clean water diversions and report timing.


Provision of final engineering reports. DPEMP approval forecast for November/December assuming no

Supplementary Report is required.

June, 2018


Technical Advice on Water (TAW) DPEMP peer review; Aquatic Science and Blue Minerals Consulting

re proposed field trials to validate lab scale test work for approval, cost effective closure options TSF 1

and TSF 2 and evaluate pyrite concentrate storage impacts; GHD clean water diversions and report

timing. DPEMP drafting of peer review updates, dam design and construction, surface and groundwater

updates. Draft DPEMP to EPA for pre-submission review. MRT meeting on site to update pre-opening.

EPA meeting: initial DPEMP review notes and presentation. TAS networks meeting with GHD re

transmission line easement and construction restrictions for TSF2.


External agency DPEMP review delayed.

July, 2018


Discussions with Aquatic Science and Blue Minerals Consulting regarding pyrite concentrate storage

impacts and test work; GHD regarding dam construction and design, clean water diversions and report

acquisition. DPEMP drafting: review update PCAB comments; review EPA comments. Draft DPEMP:

update appendices to EPA for pre submission review. Discussion with EPA Assessment Officer. EPA

meeting: initial DPEMP review notes and presentation


EPA DPEMP comments received. General EPA comment: “The level of detail, particularly for the water

and AMD/ tailings sections is excellent. Although there look to be a lot of comments the majority should

be easily dealt with and a number are really just asking you to state the obvious to provide clarity both

for the Board and for public consultation”. And from EPA AMD specialist “The DPEMP contains a

substantial amount of information and has been prepared to a high standard and I recommend feedback

to this effect is passed back to the proponent and their consultants.”

August, 2018

Clear and concise environmental protocols were implemented in the month. Significant environmental

improvements and initiatives have been implemented. Catchment sumps below Mill completed.


Page 20 of 75

1.6. RECRUITMENT OF MANAGEMENT AND OPERATING TEAMS

The recruitment of the management and operating teams of Hellyer Tailings Retreatment Project was

executed as follows:

February, 2018

Douglas Ralph joined the Project and was appointed the Site Safety Officer (SSO). Matthew Day and

Casey Jarman joined the Project to assist with tracking and forecasting of schedules and budgets.

Recruitment agent, Searson Buck and HR Lawyers, Page Seager were contacted to assist with the

recruitment of the key positions of Commercial Manager, Production Manager and Metallurgist. These

positions needed to be filled in April in order for the incumbents to complete the respective responsibility

area tasks in operational readiness schedule.

March, 2018

An advert for a Commercial Manager was placed with a shortlist of candidates due 2nd April. An advert

for a Production Superintendent was placed with a shortlist of candidates due 9th April. An advert

Metallurgist was due to be placed on 7th April in the newspaper and 5th April online. Sourcing

commenced for temporary assistance for operational readiness including: an operational trainer to

prepare and train the operations staff in association with the Production Superintendent, a logistics co-

ordinator to assist with the initial port and concentrate logistic set-up, and a junior mechanical engineer

to assist with maintenance system set-up and project office assistance. PSW started recruitment for a

temporary QA/QC officer to assist with completing the refurbishment QC requirements.

April, 2018

Commercial Manager: a short list of candidates was received and interviews conducted. A final

candidate was selected and awaiting an offer of employment. Production Superintendent: a short list of

3 candidates was received and interviews scheduled. Metallurgist: a short list of candidates was

expected 1st May. Sourcing of temporary assistance for operational readiness continued including:

operational trainer (this role was merged with the QAQC officer), junior mechanical engineer (a

candidate completed a site visit and commenced on 7th May).

May, 2018

Commercial Manager: final interview was conducted and an employment offer was made. Mark Burton

to commence employment on 4th June, 2018. Production Superintendent: final interviews were

conducted and an employment offer made. Ben Reimers to commence employment on 11th June, 2018.

Metallurgist: two candidates were shortlisted for final interviews, however, these candidates became

unavailable and the position was readvertised.


Page 21 of 75

June, 2018

Plant Metallurgist: new candidates were interviewed with an offer expected in early July. The site team

reviewed short-term personnel to assist in this process. The Commercial Manager and Production

Superintendent joined the team in the month.

July, 2019

The Senior Metallurgy Technician joined the team. The permanent Plant Metallurgist role was not filled

and three temporary metallurgists were sourced to assist with commissioning and start-up on a 24/7

shift basis. The first metallurgist commenced work in late July and the other two were expected in

August.

August, 2018

Management and Technical roles were filled ready to move to production.

1.7. BUSINESS AND SUPPORT OPERATING SYSTEMS

The project management and operational readiness components of Hellyer Project have focused on

those business and support operating systems which are expected to be the drivers for achieving a

profitable start up and exploitation of the tailings. The following monthly activities were performed in this

relation:

February, 2018

A Project Management Office (PMO), comprising Matthew Day and Casey Jarman, was set up to assist

with tracking and forecasting of schedules and budgets. Weekly scheduling meetings were put in place

allowing for more accurate tracking and forecasting of the mechanical and electrical refurbishment

works. In addition to daily toolbox meetings were instituted to track and control day to day project

progress and involved all members of the Project team. The existing purchase order system was

overhauled. The XERO accounting system was updated for use in tracking project expenditure and

payments

March, 2018

Daily and weekly project meetings continued. PSW continued to plan work on a day to day basis.

Commissioning systemisation was completed and integrated into the QC matrix.

April, 2018

An initial analysis of the prior metallurgical accounting system indicated a complete rework, which was

planned to progress over the coming months. A GPS and mine grid system for the dredge was ordered

and expected to be onsite in mid-May. The dredge telemetry and communications system was ordered

from Cromarty.


Page 22 of 75

May, 2018

Initial reviews of the Job Description and Policies and Procedures provided by Page Seager were

conducted. A metallurgical accounting system was created in MS Access in order to store daily data as

well as the data required for the mill operations reporting. Webinars were held for the selection between

4 potential maintenance systems. The MEX cloud-based system was selected with installation onsite

planned for early June.

June, 2018

The PMO were updating the metallurgical accounting system. The Project metallurgist was expected

to complete this task, however delays in recruitment required an alternative plan. The MEX maintenance

system initial uploads and setup commenced in late June.

July, 2018

Updates to the metallurgical accounting system were expected to be finished prior to plant start-up in

August. The MEX system databases were populated and catalogues of spares and equipment built.

Training of staff commenced in late July.

August, 2018

MEX maintenance system training completed. The Site Policies and Procedures are nearing

completion. Updates to the metallurgical accounting system were completed

1.8. CONCENTRATE SALE AND LOGISTICS

The sales and logistics operations incorporate concentrate offtake agreement and the transport of

concentrate to the Burnie port and storage and ship loading arrangements for concentrates. The

following logistics actions were undertaken from February until September 2018:

• Completion of a contract with TasRail for the storage and ship loading of concentrates at the port

of Burnie (August 2018). The agreement commences operations with the receipt of concentrates

by road transport.

• Completion of a multi-year truck haulage contract for the transport of concentrate from Hellyer to

the port of Burnie (August 2018)

• Completion of a 5-year marketing agreement with Traxys for the sales and logistic support for zinc

and lead concentrates (July 2018). End user contracts for 2018 and 2019 production were

concluded in August 2018.

• Multiple marketing trips to China and SE Asia for the sale of precious metal and pyrite concentrate

resulting in a MOU for 2018/2019 sales to a major Chinese metal processor in August 2018.


Page 23 of 75

2. CHANGE OF THE PROJECT ASSUMPTIONS

AusGEMCO produced the Ore Reserve Report of Hellyer Tailings Retreatment Project in September

2017. The ore reserve estimates were based on economic and technological assumptions valid at that

period of time. In February 2018, after securing financing, refurbishment of the Hellyer plant started.

During the period between September 2017 and February 2018 the project plan evolved and market

conditions have changed.

This section about these changes in project assumptions deals with the new forecasts for metal prices,

which are a key factor in determining the economic benefit of the Hellyer Project and achieving

sustainable exploitation from the retreatment of the tailings.

In addition to the change in price assumptions the revised plan anticipates a slower, 24-month, project

ramp-up to full plant capacity utilisation. This ramp-up period is characterised with lower production

rates of the dredging equipment and mineral processing plant. In other words, the available production

equipment for mining and processing is expected to have a low utilization during the ramp-up period

before the achieving the full capacity planned. This new planning assumption requires re-work of the

mine and mineral processing plant schedules.

A further updated assumption relates to the building and utilization of storage for the reprocessed

tailings. Storage of reprocessed tailings is a key technical issue relating to the production of

concentrates and the availability of the storage for reprocessed tailings must be adequate to ensure

continuous processing through the mineral processing plant.

Finally, assumptions have been updated with regard to the estimates of OPEX and CAPEX.

2.1. FORECAST OF THE METAL PRICES

The forecasts of Pb, Zn, Au and Ag prices used in the Ore Reserve study of 2017 are presented in

Table 2.1. These prices are based on input assumptions from NQM using the forecasts of Consensus

Economics (August, 2017). The new forecasts of Pb, Zn, Au and Ag prices for the current study are

presented in Table 2.2. These prices are taken from Consensus Economics (September, 2018). Both

sets of prices are stated in real terms.

The graphs in Figures 2.1-2.4 demonstrate how these forecasts compare over the initial years of the

Hellyer project.

The new prices are used in the Geological Block Profit modelling and Discounted Cash Flow Analysis

in Chapter 3.


Page 24 of 75

Table 2. 1. Forecast Zn, Pb, Au and Ag prices [2017]

Year Zn,

USD/mt

Pb,

USD/mt

Au,

USD/oz

Ag

USD/oz

2018 2800 2300 1250 17.70

2019 2666 2086 1249 17.70

2020 2507 2028 1254 17.99

2021 2433 1944 1251 18.24

2022 2406 1915 1215 18.00

2023 2228 1833 1198 17.87

2024 2228 1833 1198 17.87

2025 2228 1833 1198 17.87

2026 2228 1833 1198 17.87

(*) Source: Consensus Economics, August 2017 (converted to 2017 real USD)

Table 2. 2. 2018 Forecast of Zn, Pb, Au and Ag prices* [2018]

Year Zn,

USD/mt

Pb,

USD/mt

Au,

USD/oz

Ag

USD/oz

2018 2898.18 2292.23 1253.33 16.73

2019 2761.50 2202.00 1279.75 16.90

2020 2585.25 2134.50 1272.00 17.18

2021 2426.00 2064.00 1231.00 17.22

2022 2328.00 1991.00 1222.00 17.42

2023 2340.00 1942.00 1194.00 17.77

2024 2340.00 1942.00 1194.00 17.77

2025 2340.00 1942.00 1194.00 17.77

2026 2340.00 1942.00 1194.00 17.77

2027 2340.00 1942.00 1194.00 17.77

(*) Source: Consensus Economics, August 2018 (converted to 2018 real USD)


Page 25 of 75

Figure 2. 1. Comparison of Zn prices

.

Figure 2. 2. Comparison of Pb prices


Page 26 of 75

Figure 2. 3. Comparison of Au prices

Figure 2. 4. Comparison of Ag prices


Page 27 of 75

2.2. NEW ASSUMPTIONS OF THE PROJECT REALIZATION

2.2.1. Production scheduling

The new assumptions of mine production scheduling are as follows:

• Start of production September 2018

• Progressive increase in plant throughput capacity

o 1st 12 months – 720 ktpa tailings

o 2nd 12 months – 900 ktpa tailings

o Thereafter 1.2 mtpa tailings

• Short term ramp-up

o Month 1 – 50% of available capacity



o Onwards 100% of available capacity

The new scheduling assumptions were used in the development of an updated mine and mineral

processing plant schedules in Chapter 3, Section “Mine production schedule” and Section “Mineral

Processing Plant schedule” of the Addendum.

There are no new assumptions regarding the mining method of using dredging and hydraulic mining as

it was described in the 2017 Ore Reserve Report [AusGEMCO, 2017]. There is, however, a change in

the dredging production rate due to the assumption of producing 1,200,000 dmt tails per annum during

the period of normal exploitation of the TSF. To achieve this production, the dredge has to work with an

average daily production rate of 3,380 dmt/day for an annual working time of 355 days. Given the fact

that the average operating time is 21 hrs/day, which is used in the preparation of the scheduling

calendar in Chapter 3, then the average hourly dredging rate is 161 dmt/hr. The hydraulic parameters

of the dredge slurry pump based on the dredging rate of 161 dmt/hr are recalculated and presented in

Table 2.3. The table includes the old estimates of 2017 Ore Reserve Report and the new estimates of

2018 for comparison. This analysis indicates that the new dredging hourly rate has an impact on the

slurry mass flow rate, slurry volume flow rate and slurry velocity.

New assumptions regarding the arrangement of the mine sequence were also not imposed in the

current study. The mine sequence which was developed in the 2017 Ore Reserve Report remains

unchanged and the motives for that decision are presented in Chapter 3, Section “Mine design and

sequencing” of the Addendum.


Page 28 of 75

Table 2. 3. Summary of predicted hydraulic parameters during the production

Parameter Unit Value-2017 Value-2018

Dredge pump rate dmt/hr 154 161

Specific gravity of tailings t/m3 1.93 1.93

Specific gravity of water t/m3 1.00 1.00

Tailings mass concentration in slurry % 30 30

Pipe diameter mm 300 300

Slurry density t/m3 1.169 1.169

Slurry mass flow rate t/hr 513.3 536.7

Slurry volume flow rate m3/hr 439.1 459.1

l/s 122.0 127.5

Tails volumetric concentration % 18.2 18.2

Slurry velocity m/s 1.7 1.8

2.2.2. Reprocessed tailings storage

The change of the project assumptions also deals with the reprocessed tailings (residue) storage.

What was planned before?

The 2017 Ore Reserve estimation study [AusGEMCO, 2017] assumed a schedule of the residue

storage starting in April 2018 in line with an assumed start of production. The full schedule covered a

production period of 102 months and the total quantity of process residue was estimated at 4,208,482

tonnes. The storage of this residue was achieved with the construction of a new tailings storage facility

(TSF2) in the summer following start up (April, 2019). TheTSF2 design envisaged an initial dam capacity

of 3,000,000 tonnes, which could accept the residue until April 2024. During the same month a lift of

the TSF2 dam wall was planned to be complete to enable further storage of residue until the end of the

processing.

For the starting period from April 2018 until March 2019, a quantity of 493,184 dmt production residue

was planned to be stored in the Finger Pond. These tails would be stored in the existing Finger Pond

void whose capacity would be increased by pre-production dredging. This pre-production dredged

material (approx. 165kt) would be transferred into the Main Dam.

The 493,184 dmt or production residue was expected to be transferred to the new TSF2 later by using

slurry pump before dropping the water levels in the Main Dam and Finger Pond and dredging the lower

benches B3 and B4 of the Main Dam.


Page 29 of 75

What is planned now?

The revised assumptions about the residue storage comprise changes in the initial temporary storage

and the timing of TSF2 construction

.

The start of the storage schedule is September 2018 in line with the updated start of production. The

schedule is spread over 106 months due the ramp-up mentioned above and finishes in June 2027. The

total quantity of residue is estimated at 4,211,782 mt due to the change of the assumptions lower start

up recoveries to saleable concentrate.

The current storage plan still relies on the construction of the new TSF2 as a replacement for the existing

TSF. However, construction of TSF2 dam wall is scheduled to complete 32 months after the start of

production (rather than 8 months) during the summer of 2020/202. In the interim period processing

residue will be stored in the Finger Pond. In addition to pre-dredging the Finger Pond to maximise

existing temporary storage capacity in this area, the Finger Pond Dam wall (separating the Finger Pond

from the Main Dam) will be raised to further increase temporary storage capacity.

2.2.3. OPEX

The new assumptions about the operating expenditure are based on a September 2018 start of

operations and are presented in Table 2.4, column “Value – 2018”. By way of comparison the equivalent

figures from the 2017 Ore Reserve report are presented in column “Value – 2017”. Comparison between

these operating cost estimates indicates that there is a decrease in the dredging variable cost (2.52

AU$/dmt vs.2.84 AU$/dmt) and an increase in processing costs (24.06 AU$/dmt vs. 18.50 AU$/dmt).

The decrease in dredging costs is explained by a reduction in a provision for associated earthworks

which are now specifically included in the estimates for the cost of the Finger Pond Dam raise and

TSF2.The increase in processing costs is explained by an increase of the current prices for

consumables, reagents and direct staffing. Logistics Ex-Works to FOB cost have dropped (16.50

AU$/wmt vs. 18.55 AU$/wmt) based on actual contract prices, while FOB to CIF cost estimates remains

the same (25.00 US$/wmt).

Sales and Marketing costs for 2018 is assigned for Pb and Zn concentrate as 18 US$/mt and 17 US$/mt,

respectively, while the cost for 2017 was assigned as average estimate of 15,152 USD/month.

Consequently the 2018 estimated cost on a monthly basis is higher than the 2017 cost. The increase

in the 2018 cost is due to more specific estimates of the costs for individual elements (insurance,

handling etc).

The annual shutdown maintenance cost of 2018 remains the same as 2017.

The annual General & Administration cost in the 2018 forecast is increased by USD 4.8 M in comparison

with the same cost of 2017. The major reasons behind the change are increases in expected

employment and insurance costs.


Page 30 of 75

Royalty and Mine closure costs remain the same for both years of comparison. The forecast for the top

up payment in relation to the mine closure bond (AU$2.0M) of 2017 is unchanged.

The operating contingency (8,525,951 USD/LOM) in 2018 has decreased in comparison with the 2017

contingency (15,258,817 USD/LOM). This reduction is due to clarification of key project issues and

uncertainties since September 2017.

The operating costs of the Hellyer Tailings Project for the current study were supplied by NQ Minerals.

The 2018 operating expenditure, which is summarized in Table 2.4 is used in the Discounted Cash

Flow Model presented in Chapter 3, Section “Discounted Cash Flow Model”.

Table 2. 4. Hellyer Tailings Project operating expenditure (2017 vs 2018)

Cost Unit Value – 2017 Value - 2018

Dredging (variable cost) AUD/dmt 2.84 2.52

Mining (variable cost) AUD/dmt 2.84 2.52

Processing (variable cost) AUD/dmt 18.50 24.06

Processing (fixed cost) AUD/month 280,833 406,282

Logistics EXW to FOB AUD/wmt 18.55 16.50

Logistics FOB to CIF USD/wmt 25.00 25.00

Sales & Marketing USD/month 15,152 -

Sales & Marketing – Pb USD/mt - 18.00

Sales & Marketing – Zn USD/mt - 17.00

Annual Maintenance AUD/annum 400,000 400,000

General & Administration AUD/LOM 14,053,072 18,805,545

Royalty Percent 5.0 5.0

Mine Closure/Rehabilitation USD/LOM 1,515,152 1,470,588

Operating Contingency USD/LOM 15,258,817 8,549,751


Page 31 of 75

2.2.4. CAPEX

The new assumptions about the capital expenditure by the beginning of the production operations in

September 2018 are presented in Table 2.5. The table has two sections. The top section shows the

capital expenditure estimated on a monthly basis from January till September of 2018. The lower section

shows the project capital expenditure on an annual basis starting from 2018 and ending in 2026.

The total refurbishment expenditure from January to September 2018 is AU$20.7M (US$15.2M), which

includes the remaining contingency of AU$1.4M (US$1,1M). The refurbishment estimate excludes Non-

Project costs and Pre-Operations costs [NQ Minerals, 2018].

The remaining capital expenditure relates to dam construction. The lifts on the Finger Pond dam to

create temporary storage capacity are expected to cost US$2.36M [GHD, 2018a] and the capital

expenditure for the first lift of the new tailings dam (TSF2) is expected to cost US$11M (Dec 2020 –Apr

2021). The second lift of TSF2 is scheduled for 2023/2024 at a cost of US$8.8M. The total amount of

capital expenditure for the dam construction (including demolition of redundant dam walls) is US$22.8M.

Each of these dam construction cost estimates includes contingency.

The first capital expenditure for the dam (TSF2) construction is US$4,779,412 and it is scheduled for

the year 2020. There are three other expenditures for the dam construction, which are scheduled for

2020, 2023 and 2024.

All capital cost estimates for the project were supplied by NQ Minerals. The total estimate is US$38.9M.

The 2018 capital expenditure, which is summarized in Table 2.5 is used in the Discounted Cash Flow

Model presented in Chapter 3, Section “Discounted Cash Flow Model”.


Page 32 of 75

Table 2. 5. Hellyer Tailings Project - Capital Expenditure

ITEM YEAR 2018 2018 2018 2018 2018 2018 2018 2018 2018

Unit MONTH Total 1 2 3 4 5 6 7 8 9

Refurbishment Expenditure b/f Contingency

USD -14,151,182 -397,864 -484,078 -1,188,938 -832,325 -1,757,030 -1,562,641 -3,211,384 -2,845,136 -1,871,787

Refurbishment Expenditure Contingency

USD -1,061,654 0 0 0 0 0 0 -418,549 -377,576 -265,529

Total Refurbishment Expenditure

USD -15,212,836 -397,864 -484,078 -1,188,938 -832,325 -1,757,030 -1,562,641 -3,629,933 -3,222,712 -2,137,317

ITEM YEAR Total 2018 2019 2020 2021 2022 2023 2024 2025 2026/2017

Refurbishment Expenditure b/f Contingency

USD -14,151,182 -14,151,182 0 0 0 0 0 0 0 0

Refurbishment Expenditure Contingency

USD -1,061,654 -1,061,654 0 0 0 0 0 0 0 0

Dam Construction USD -22,794,118 0 -1,198,655 -4,229,298 -7,720,588 0 -2,647,059 -7,647,059 0 0

Total Capital Expenditure USD -38,897,629 -15,212,836 -1,198,655 -4,229,298 -7,720,588 0 -2,647,059 -7,647,059 0 0


Page 33 of 75

3. IMPACT OF THE PROJECT CHANGES

The changes in the assumptions of Hellyer Tailings Retreatment Project have a logical impact on many

activities, which need timely update in order to re-assess the economic potential of Ore Reserves.

These activities include mine design and sequencing, mine production scheduling, mineral processing

plant scheduling, tailings residue storage, economic evaluation and mining project risk assessment.

3.1. MINE DESIGN AND SEQUENCING

3.1.1. Geological Block Profit Modelling

The impact on mine design is due to the changes in the assumptions about the economic and

technological input data. This is the reason requiring the re-development of the mine design for the

Hellyer Tailings Project. The mine design was re-developed using the author’s approach of modelling

the profit from exploitation of each block in the Mineral Resource model developed by CSA Global

[AusGEMCO, 2017].

The block profit modelling was done for each designed bench of the mine including Main Dam, Western

Arm Dam and Shale Pit. It assesses two criteria such as Block Unit Profit (BUP) measured in USD/dmt

ROM tails for a particular block of the bench and Block Profit (BP) measured in USD per block of the

bench. The revenue is generated from three types of concentrates considered as final products: lead

concentrate, zinc concentrate and pyrite/gold/silver concentrate.

The results of Geological Block Profit Modelling (GBPM) are obtained using computer code written in

Microsoft C++. The economic and technological input data is summarized in Appendix 1 as follows:

1. Appendix 1. Table A-1. Economic input data of geological block profit modelling

2. Appendix 1. Table A-2. Technological input data of GBPM – Lead concentrate

3. Appendix 1. Table A-3. Technological input data of GBPM – Zinc concentrate

4. Appendix 1. Table A-4. Technological input data of GBPM – Pyrite/Gold/Silver concentrate.

It is worth noting that the monthly forecasts of the prices for Pb, Zn, Au and Ag are taken from

Consensus Economics [2018] and the prices used in the GBPM are related only for the first 12 months

starting from September 2018 till August 2019. This approach is rational as it provides an updated and

adequately executed mine design with the option for its future update on an annual basis, which is a

better alternative in comparison with the approach of using weighted average prices over the life-of-

mine (LOM) time horizon. The input data about the operating costs and technological parameters has

been provided by NQ Minerals Plc.

The GBPM has been done for Bench 1, Bench 2, combined Bench 1 and Bench 2, and Bench 3 of the

Main Dam, Finger Pond Dam, Western Arm Dam and Shale Pit. A summary of the statistics of the

calculations are given in Table 3.1. The maximum Block Profit of USD224 M is obtained for the


Page 34 of 75

combined Bench 1 and Bench 2 of the Main Dam, while the minimum estimate of USD 12 M is obtained

for the Western Arm Dam. The maximum average Block Unit Profit of 54.94 USD/ tonne of tails is

obtained for the Bench 3 of the Main Dam, which can be explained with the higher grade tailings

disposed earlier on the bottom of the Main Dam. The average Block Unit Profit of Bench 1 (33.24

USD/tonne) and Bench 2 (45.31USD/tonne) are pretty high and they resulted in a Block Unit Profit of

37.56 USD/tonne for the combined benches. Finger Pond Dam and Western Arm Dam also contained

high grade tailings which are assessed with an average Block Unit Profit of 46.56 USD/tonne and 43.97

USD/tonne, respectively. The average Block Unit Profit for the Shale Pit is 21.59 USD/tonne, which is

the minimum estimate of the GBPM.

Table 3. 1. Statistics of the Block Unit Profit estimates

Tailings Storage Facility Average,

USD/DMT

Std Dev,

USD/DMT

Minimum,

USD/DMT

Maximum,

USD/DMT

Total Profit,

USD M

Main Dam dredging:

10.40m depth from

RL649.40 to RL639 (B1)

33.24 8.77 17.74 49.47 146

Main Dam dredging:

5.0m depth from

RL639 to RL634 (B2)

45.31 9.85 26.71 65.65 78

Main Dam dredging:

15.40m depth from RL

649.40 to RL634 (B1+B2)

37.56 10.33 17.74 65.65 224

Main Dam dredging:

6m depth from RL634 to

RL628 (B3)

54.94 7.68 37.55 70.71 53

Finger Pond Dam 46.56 4.90 27.71 53.44 24

Western Arm Dam 43.97 1.51 38.46 46.84 12

Shale Pit 21.59 0 21.59 21.59 26

The results obtained from the GBPM are graphically interpreted. The interpolation of the Block Unit

Profit/Profit estimates has been done using the Kriging method. Figure 3.1 and Figure 3.2 show the

BUP and BP interpolations over the Bench 1 of the Main Dam. The analysis of Figure 3.2 shows an

empty area due to the old dredging works. Figure 3.3 and Figure 3.4 show the BUP and BP

interpolations over the Bench 2 of the Main Dam. An empty area also can be seen in Figure 3.4 due to

the old dredging works. The BUP and BP interpolations of the combined Bench 1 and Bench 2 are

shown in Figure 3.5 and Figure 3.6. Figure 3.7 and Figure 3.8 show the BUP and BP interpolations over

the Bench 3 of the Main Dam. Figure 3.9 and Figure 3.10 show the BUP and BP interpolations over the

Finger Pond Dam, while Figure 3.11 and Figure 3.12 show the interpolations over the Western Arm

Dam. The Shale Pit is presented only the Block Profit interpolation because of using single estimates

of the grades across the entire dam, which does not allow the calculation of variable Block Unit Profit.


Page 35 of 75

The analysis of all figures indicates that the estimates of the BUP and BP are positive without exception.

The shapes of all figures are identical to the shapes of the relevant figures presented in the 2017 Ore

Reserve Report of Hellyer Project [AusGEMCO, 2017].

Figure 3. 1. Block Unit Profit spatial distribution of Main Dam – Bench 1

Figure 3. 2. Block Profit spatial distribution of Main Dam – Bench 1

3700 3800 3900 4000 4100 4200 4300 4400 4500 4600

X-axis, m

10300

10400

10500

10600

10700

10800

10900

11000

11100

Y-a

xis

,m

18

20

22

24

26

28

30

32

34

36

38

40

42

44

46

48

50

3700 3800 3900 4000 4100 4200 4300 4400 4500 4600

X-axis,m

10300

10400

10500

10600

10700

10800

10900

11000

11100

Y-a

xis

,m

0E+000

2E+004

4E+004

6E+004

8E+004

1E+005

1E+005

1E+005

2E+005

2E+005

2E+005

2E+005

2E+005

3E+005

3E+005

3E+005

3E+005

3E+005

4E+005

4E+005

4E+005

4E+005

4E+005

5E+005


Page 36 of 75



3700 3800 3900 4000 4100 4200 4300 4400 4500 4600

X-axis,m

10300

10400

10500

10600

10700

10800

10900

11000

11100

Y-a

xis

,m

26

28

30

32

34

36

38

40

42

44

46

48

50

52

54

56

58

60

62

64

66

3800 3900 4000 4100 4200 4300 4400 4500 4600

X-axis,m

10300

10400

10500

10600

10700

10800

10900

11000

11100

Y-a

xis

,m

0E+000

2E+004

4E+004

6E+004

8E+004

1E+005

1E+005

1E+005

2E+005

2E+005

2E+005

2E+005

2E+005

3E+005

3E+005

3E+005

3E+005

3E+005


Page 37 of 75

Figure 3. 5. Block Unit Profit spatial distribution of Main Dam – Bench 1 & Bench 2

Figure 3. 6. Block Profit spatial distribution of Main Dam – Bench 1 & Bench 2

3700 3800 3900 4000 4100 4200 4300 4400 4500 4600

X-axis,m

10300

10400

10500

10600

10700

10800

10900

11000

11100

Y-a

xis

,m

18202224262830323436384042444648505254565860626466

Main Dam Wall

Western Arm Dam

Finger Pond

Dredged area

3700 3800 3900 4000 4100 4200 4300 4400 4500 4600

X-axis,m

10300

10400

10500

10600

10700

10800

10900

11000

11100

Y-a

xis

,m

0E+000

5E+004

1E+005

2E+005

2E+005

3E+005

3E+005

4E+005

4E+005

5E+005

5E+005

6E+005

6E+005

7E+005

7E+005


Page 38 of 75



3900 4000 4100 4200 4300 4400 4500

X-axis,m

10300

10400

10500

10600

10700

10800

10900

11000

Y-a

xis

,m

36

38

40

42

44

46

48

50

52

54

56

58

60

62

64

66

68

70

72

Main Dam Wall

3900 4000 4100 4200 4300 4400 4500

X-axis,m

10300

10400

10500

10600

10700

10800

10900

11000

Y-a

xis

,m

0E+000

5E+004

1E+005

2E+005

2E+005

3E+005

3E+005

4E+005

4E+005

5E+005

5E+005


Page 39 of 75

Figure 3. 9. Block Unit Profit spatial distribution of Finger Pond Dam

Figure 3. 10. Block Profit spatial distribution of Finger Pond Dam

4500 4550 4600 4650 4700 4750 4800

X-axis,m

10700

10750

10800

10850

10900

10950

11000

11050

11100

11150

11200

Y-a

xis

,m

35.00

36.00

37.00

38.00

39.00

40.00

41.00

42.00

43.00

44.00

45.00

46.00

47.00

48.00

49.00

50.00

51.00

52.00

53.00

54.00

4500 4550 4600 4650 4700 4750 4800

X-axis,m

10800

10850

10900

10950

11000

11050

11100

11150

11200

Y-a

xis

,m

5.0E+004

1.0E+005

1.5E+005

2.0E+005

2.5E+005

3.0E+005

3.5E+005

4.0E+005

4.5E+005

5.0E+005

5.5E+005

6.0E+005

6.5E+005

7.0E+005


Page 40 of 75

Figure 3. 11. Block Unit Profit spatial distribution of Western Arm Dam

Figure 3. 12. Profit spatial distribution of Western Arm Dam

3550 3600 3650 3700 3750 3800 3850 3900

X-axis,m

10750

10800

10850

10900

10950

11000

11050

Y-a

xis

,m

38.50

39.00

39.50

40.00

40.50

41.00

41.50

42.00

42.50

43.00

43.50

44.00

44.50

45.00

45.50

46.00

46.50

47.00

3550 3600 3650 3700 3750 3800 3850 3900

X-axis,m

10750

10800

10850

10900

10950

11000

11050

Y-a

xis

,m

2.0E+004

4.0E+004

6.0E+004

8.0E+004

1.0E+005

1.2E+005

1.4E+005

1.6E+005

1.8E+005

2.0E+005

2.2E+005

2.4E+005

2.6E+005

2.8E+005

3.0E+005

3.2E+005

3.4E+005


Page 41 of 75

Figure 3. 13. Block Profit spatial distribution of Shale Pit

The results of the calculations of the Block Profit models described above are presented in Appendix

2 as follows:

1. Appendix 2. Table A-1. Block Profit model of Main Dam-Benches B1& B2

2. Appendix 2. Table A-2. Block Profit model of Main Dam Bench B3

3. Appendix 2. Table A-3. Block Profit model of Western Arm Dam

4. Appendix 2. Table A-4. Block Profit model of Shale Pit.

3.1.2. Dredge path direction

The results derived for the Block Unit Profit estimates for the Benches B1&B2 and Bench B3 of the

Main Dam and Western Arm Dam were used for the optimization of the optimal dredge path direction,

which is a requirement of the mine design. The Finger Pond Dam is not studied because it has been in

a process of transferring its tailings into the Main Dam. The Shale Pit doesn’t allow the execution of

such as optimization because of not allowing the development of the Block Unit Profit model due to the

reasons explained in the previous section of the Addendum.

The results obtained are summarized in Table 3.2, which also shows the results of the previous

analogous study in 2017 [AusGEMCO, 2017]. The optimum path angle is measured in degrees in

Cartesian coordinate system with regard to the X-axis and as azimuth estimate with regard to the North.

5300 5350 5400 5450 5500 5550 5600

X-axis,m

10500

10550

10600

10650

10700

10750

10800

Y-a

xis

,m

0.0E+000

5.0E+004

1.0E+005

1.5E+005

2.0E+005

2.5E+005

3.0E+005

3.5E+005

4.0E+005

4.5E+005

5.0E+005

5.5E+005

6.0E+005

6.5E+005

7.0E+005

7.5E+005

8.0E+005

8.5E+005

9.0E+005

9.5E+005


Page 42 of 75

The comparison of the current results with the previous results indicate that there is an insignificant

difference. This is especially valid for the Main Dam Bench1 & Bench 2, which is the currently operating

area of tails dredging.

Table 3. 2. Optimal dredge path directions

Angle, degrees

Mine Body Cartesian system Azimut

2017 2018 2017 2018

Main Dam Bench1 & Bench 2 167° 56' 165° 55' 282° 4' 284° 4'

Main Dam Bench 3 43° 2' 34° 11' 46° 57' 55° 48'

Western Arm Dam 82° 1' 72° 11' 7° 58' 17° 48'

The optimum directions of the dredge paths for the combined Bench 1 & Bench 2 and Bench 3 of the

Main Dam are shown in Figure 3.14 and Figure 3.15. The optimum path direction of the Western Arm

Dam is illustrated in Figure 3.16.

The conclusion which can be made on the basis of the results obtained for the optimum dredge path

direction is that the mine design presented in the 2017 Ore Reserve Report of Hellyer Tailings project

[AusGEMCO, 2017] doesn’t need an update. The same conclusion is valid for the mine sequence

developed in the 2017 Ore Reserve Report and the same sequence was used for the mine production

scheduling described in the next section of the Addendum.

Figure 3. 14. Optimum dredge path direction - combined Bench 1 & Bench 2 of Main Dam

3700 3800 3900 4000 4100 4200 4300 4400 4500 4600

X-axis,m

10300

10400

10500

10600

10700

10800

10900

11000

11100

Y-a

xis

,m

20.00

22.00

24.00

26.00

28.00

30.00

32.00

34.00

36.00

38.00

40.00

42.00

44.00

46.00

48.00

50.00

52.00

54.00

56.00


Page 43 of 75

Figure 3. 15. Optimum dredge path direction - Bench 3 of Main Dam

Figure 3. 16. Optimum direction of dredge paths of Western Arm Dam

3900 4000 4100 4200 4300 4400 4500

X-axis,m

10300

10400

10500

10600

10700

10800

10900

11000

Y-a

xis

,m

34.00

36.00

38.00

40.00

42.00

44.00

46.00

48.00

50.00

52.00

54.00

56.00

58.00

60.00

62.00

64.00

66.00

68.00

70.00

72.00

74.00

76.00

78.00

3550 3600 3650 3700 3750 3800 3850 3900

X-axis,m

10750

10800

10850

10900

10950

11000

11050

Y-a

xis

,m

43.10

43.20

43.30

43.40

43.50

43.60

43.70

43.80

43.90

44.00

44.10

44.20

44.30

44.40

44.50

44.60

44.70

44.80


Page 44 of 75

3.2. MINE PRODUCTION SCHEDULE

The update of the mine production schedule is developed by accounting for the new assumptions of

production rates presented in Chapter 2. The assumptions are focused on the development period of

the exploitation of Hellyer tailings, which is a logical approach aiming to predict achievable production

rates of the dredge after the period of its full refurbishment.

The results for the schedule of monthly ROM tails production are graphically illustrated in Figure 3.17.

Its analysis indicates three periods: development period, period of stable production and period of

production attenuation. The schedule starts from September 1, 2018 and finishes in June 30, 2027.

The schedule has insignificant fluctuations because of the monthly operating time scheduled.

The graphs of the monthly head grade schedules are presented in the following figures:

1. Figure 3.18 – Pb head grade

2. Figure 3.19 – Zn head grade

3. Figure 3.20 – Au head grade

4. Figure 3.21 – Ag head grade

5. Figure 3.22 – As head grade

All schedules are developed with the updated Calendar dbase as shown in Table 3.4 based on

aforementioned start date.

The results of the production scheduling calculations are presented in Appendix 3 as follows:

1. Appendix 3. Table A-1. Block production schedule of Hellyer project

2. Appendix 3. Table A-2. Monthly production schedule of Hellyer project

3. Appendix 3. Table A-3. Mixed block-monthly production schedule of Hellyer

The production schedule of Hellyer for ROM quantities of tailings are presented with annual time step

in Table 3.3. The first year commencing from September 1, 2018 till August 30, 2019 is planned to

achieve a production rate of 720,000 dmt of ROM tailings in accordance with the new project

assumptions (Chapter 2). The production rate from September 1, 2019 till August 30, 2020 is 900,000

dmt. The period from September 1, 2020 till August 30, 2026 will have a constant production rate of

1,200,000 dmt, which corresponds to the full capacity of the Mineral Processing Plant at Hellyer. This

production rate is accepted for the remaining years of normal exploitation. The analysis of Table 3.3

indicates that the annual production of Zn, Pb, Au, and Ag in ROM tailings is stable for the entire period

of working with the full capacity of 1,200,000 dmt. The content of arsenic (As) in ROM tailings is

insignificant.


Page 45 of 75

Figure 3. 17. Schedule of monthly ROM tails production of Hellyer Tailings Project

Figure 3. 18. Monthly Pb head grade distribution


Page 46 of 75

Figure 3. 19. Monthly Zn head grade distribution

Figure 3. 20. Monthly Au head grade distribution


Page 47 of 75

Figure 3. 21. Monthly Ag head grade distribution

Figure 3. 22. Monthly As head grade distribution


Page 48 of 75

Table 3. 3. Results of the annual ROM production schedule of Hellyer

Year

from to

ROM Tails,

mt

Zn,

Mt

Pb,

Mt

Au,

Oz

Ag,

Oz

As,

mt

09/2018 08/2019 720,000 17,566 23,707 61,043 2,166,531 11,359

09/2019 08/2020 900,000 23,601 28,194 74,899 2,769,431 13,358

09/2020 08/2021 1,200,000 28,607 35,460 96,585 3,508,898 16,441

09/2021 08/2022 1,200,000 23,973 29,334 94,611 3,399,268 16,562

09/2022 08/2023 1,200,000 35,079 39,507 102,457 3,625,897 17,038

09/2023 08/2024 1,200,000 25,732 30,592 90,843 3,042,513 12,885

09/2024 08/2025 1,200,000 29,350 29,814 90,167 2,999,944 15,504

09/2025 08/2026 1,200,000 30,071 41,205 103,249 3,969,218 12,865

09/2026 06/2027 880,362 8,804 22,889 72,742 2,434,169 0

Table 3. 4. Calendar dbase update of Hellyer TSF production schedule

Scheduling Month No

Quarter Year Month Days Scheduling Month No

Quarter Year Month Days

1 Q3 2018 9 29 54 Q1 2023 2 28

2 Q4 2018 10 31 55 Q1 2023 3 31

3 Q4 2018 11 30 56 Q2 2023 4 29

4 Q4 2018 12 30 57 Q2 2023 5 31

5 Q1 2019 1 30 58 Q2 2023 6 30

6 Q1 2019 2 28 59 Q3 2023 7 25

7 Q1 2019 3 31 60 Q3 2023 8 31

8 Q2 2019 4 29 61 Q3 2023 9 29

9 Q2 2019 5 31 62 Q4 2023 10 31

10 Q2 2019 6 30 63 Q4 2023 11 30

11 Q3 2019 7 25 64 Q4 2023 12 30

12 Q3 2019 8 31 65 Q1 2024 1 30

13 Q3 2019 9 29 66 Q1 2024 2 29

14 Q4 2019 10 31 67 Q1 2024 3 31

15 Q4 2019 11 30 68 Q2 2024 4 29

16 Q4 2019 12 30 69 Q2 2024 5 31

17 Q1 2020 1 30 70 Q2 2024 6 30

18 Q1 2020 2 29 71 Q3 2024 7 25

19 Q1 2020 3 31 72 Q3 2024 8 31

20 Q2 2020 4 29 73 Q3 2024 9 29

21 Q2 2020 5 31 74 Q4 2024 10 31

22 Q2 2020 6 30 75 Q4 2024 11 30


Page 49 of 75

23 Q3 2020 7 25 76 Q4 2024 12 30

24 Q3 2020 8 31 77 Q1 2025 1 30

25 Q3 2020 9 29 78 Q1 2025 2 28

26 Q4 2020 10 31 79 Q1 2025 3 31

27 Q4 2020 11 30 80 Q2 2025 4 29

28 Q4 2020 12 30 81 Q2 2025 5 31

29 Q1 2021 1 30 82 Q2 2025 6 30

30 Q1 2021 2 28 83 Q3 2025 7 25

31 Q1 2021 3 31 84 Q3 2025 8 31

32 Q2 2021 4 29 85 Q3 2025 9 29

33 Q2 2021 5 31 86 Q4 2025 10 31

34 Q2 2021 6 30 87 Q4 2025 11 30

35 Q3 2021 7 25 88 Q4 2025 12 30

36 Q3 2021 8 31 89 Q1 2026 1 30

37 Q3 2021 9 29 90 Q1 2026 2 28

38 Q4 2021 10 31 91 Q1 2026 3 31

39 Q4 2021 11 30 92 Q2 2026 4 29

40 Q4 2021 12 30 93 Q2 2026 5 31

41 Q1 2022 1 30 94 Q2 2026 6 30

42 Q1 2022 2 28 95 Q3 2026 7 25

43 Q1 2022 3 31 96 Q3 2026 8 31

44 Q2 2022 4 29 97 Q3 2026 9 29

45 Q2 2022 5 31 98 Q4 2026 10 31

46 Q2 2022 6 30 99 Q4 2026 11 30

47 Q3 2022 7 25 100 Q4 2026 12 30

48 Q3 2022 8 31 101 Q1 2017 1 30

49 Q3 2022 9 29 102 Q1 2017 2 28

50 Q4 2022 10 31 103 Q1 2017 3 31

51 Q4 2022 11 30 104 Q2 2017 4 29

52 Q4 2022 12 30 105 Q2 2017 5 31

53 Q1 2023 1 30 106 Q2 2017 6 30

3.3. MINERAL PROCESSING PLANT SCHEDULE

The mineral processing schedule is based on the mine production schedule and it is developed for the

following three concentrates: combined Lead/Silver/Copper concentrate grading 37% lead and

maximizing silver content; Zinc concentrate grading 45% zinc; and Gold/Silver/Pyrite concentrate with

a 48% sulphur content.

The results of the schedule of the lead concentrate production over the life-of-mine are shown in Figure

3.23. They reflect the performance of the lead circuit. The analysis of the figure indicates that the lead

concentrate production has a general trend of getting increase over the life-of-mine. There are


Page 50 of 75

fluctuations within the range of 2000 – 5000 mt per month. The schedule of the lead production in the

concentrate is graphically illustrated in Figure 3.24. Its analysis indicates that it follows the shape of the

concentrate production and the tailings head grade and the fluctuations are within the range of 400-

1800 mt. The last period of the schedule reflects the lead production from the tailings of the Shale Pit,

which are characterized with a low Pb grade.

The results of the schedule of the zinc concentrate production are shown in Figure 3.25. They reflect

the performance of the zinc circuit of the processing plant. The analysis of the figure shows that the

concentrate production has a general trend of increasing with the exception of the last period of the

schedule where tailings from the Shale Pit have to be processed. There are fluctuations within a wide

range. The schedule of the zinc production in the concentrate is shown in Figure 3.26 and it follows the

shape of the schedule of the concentrate production and the tailings head grade. Its fluctuations are

within the range of 250-2000 mt. There is a period after the 80th month where the production gets a

significant increase because of the high-grade tailings of Bench B3 and Bench B4 of the Main Dam.

The results of the schedule of pyrite/gold/silver concentrate are illustrated in Figure 3.27. Their analysis

shows the typical periods of production such as development period, period of stable production and

period of attenuation. There are insignificant fluctuations due to the monthly operating time scheduled.

Gold production is scheduled for all three float circuits and the results are shown in Figure 3.28. Analysis

indicates that the gold/silver/pyrite circuit has the highest production of gold. The lead concentrate

contains less gold, while the zinc concentrate contains the least gold due to a low gold grade.

The results obtained for the scheduled production of silver for all three circuits are also graphically

interpreted in Figure 3.29. Analysis indicates that the highest production of silver will be achieved from

the Au/Ag/pyrite circuit and Pb circuit. The Pb circuit has a silver production at some periods, which is

higher than the production of the Au/Ag/pyrite circuit. The production of the Pb circuit, however, has a

greater variability over the life-of-mine in comparison with the production of the Au/Ag/pyrite circuit,

which is almost stationary for a very long period of time. The minimum silver production is expected

from the Zn circuit, which is pretty stable over the life-of-mine.


Page 51 of 75

Figure 3. 23. Schedule of Pb concentrate monthly production

Figure 3. 24. Schedule of Pb monthly production in concentrate


Page 52 of 75

Figure 3. 25. Schedule of Zn concentrate monthly production

Figure 3. 26. Schedule of Zn monthly production in concentrate


Page 53 of 75

Figure 3. 27. Schedule of Pyrite/Au/Ag concentrate monthly production

Figure 3. 28. Schedule of Au monthly production in concentrates


Page 54 of 75

Figure 3. 29. Schedule of Ag monthly production in concentrates

The results of scheduling calculations are presented in Appendix 4 as follows:

1. Appendix 4. Table A-1. Monthly schedule of lead concentrate production

2. Appendix 4. Table A-2. Monthly schedule of zinc concentrate production

3. Appendix 4. Table A-3. Monthly schedule of pyrite/gold/silver concentrate production

The integrated Mine Production Plan of Hellyer Tailings Retreatment Project is presented in:

1. Appendix 5. Table A-1.

The results obtained from the production scheduling of Hellyer concentrates are also presented with an

annual time step in Table 3.5. They are graphically interpreted as follows:

1. Figure 3.30 – schedule of Lead concentrate production

2. Figure 3.31 – schedule of Pb production in Lead concentrate

3. Figure 3.32 – schedule of Zinc concentrate production

4. Figure 3.33 – schedule of Zn production in Zinc concentrate

5. Figure 3.34 – schedule of Pyrite/Gold/Silver concentrate production


Page 55 of 75

6. Figure 3.35 – schedule of Au production in Pyrite/Gold/Silver concentrate

7. Figure 3.36 – schedule of Ag production in Pyrite/Gold/Silver concentrate

Table 3. 5. Results of the annual concentrate production schedule of Hellyer

Year

End

Pb conc,

mt

Pb,

Mt

Zn conc,

mt

Zn,

mt

Py conc,

mt

Au,

oz

Ag,

oz

2019 27,904 10,324 13,745 6,185 233,732 897 42,250

2020 35,814 13,251 19,930 8,968 459,000 1,611 65,125

2021 45,044 16,666 24,157 10,871 612,000 2,123 84,055

2022 37,262 13,787 20,244 9,110 612,000 2,060 76,570

2023 50,184 18,568 29,623 13,330 612,000 2,171 89,474

2024 38,860 14,378 21,729 9,778 612,000 2,074 78,220

2025 37,872 14,013 24,784 11,153 612,000 2,074 77,857

2026 52,342 19,366 25,393 11,427 612,000 2,178 90,671

2027 29,076 10,758 7,434 3,345 448,985 1,508 56,476

Figure 3. 30. Schedule of Pb concentrate annual production


Page 56 of 75

Figure 3. 31. Schedule of Pb annual production in concentrate

Figure 3. 32. Schedule of Zn concentrate annual production


Page 57 of 75

Figure 3. 33. Schedule of Zn annual production in concentrate

Figure 3. 34. Schedule of Pyrite/Au/Ag concentrate annual production


Page 58 of 75

Figure 3. 35. Schedule of Au annual production in concentrates

Figure 3. 36. Schedule of Ag annual production in concentrates


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3.4. TAILINGS RESIDUE STORAGE

The storage plan for re-processed tailings (residue) of Hellyer requires the construction of TSF2

Embankment as an extension of the Main Dam next to its wall (Figure 3.37), which was stated in the

2017 Ore Reserve Report [AusGEMCO, 2017]. The commencement of the construction of TSF2 is

scheduled for the summer of 2019/2020. The design and approval of TSF2 are still in progress and

Hellyer made a decision to use the Eastern Finger Bund (EFB) for a preliminary storage of the re-

processed tailings. At present, there are dredging works in EFB for transferring the remaining tailings

into the Main Dam and ensuring a maximum possible space for the re-processed tailings. The EFB

storage has been used previously as a lime-dosing pond to improve the quality entering upstream from

the Eastern Arm and Mill Creek, prior to flowing to the Main Dam as part of the site water management

plan (Figure 3.38).

GHD has developed a design of raising the level of the EFB wall with 5.3m up to RL 655.8m [GHD,

2018b]. The EFB is approximately 10 m high with a 280 m long crest and varied crest width of 10 m at

the southern abutment to 14 m at the northern abutment. The upstream and downstream batters range

from 2H:1V to 3H:1V based on the bathymetric survey that was undertaken in late 2017. The EFB also

features an on-embankment spillway of 5m wide and 1 m deep near the southern abutment. The

concept of raising the level of EFB by 5.3m is to create the capacity for temporary tailings storage until

the new dam is constructed.

Figure 3. 37. Hellyer TSF site location (after GHD [2018])


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Having taken into account the updated production schedule of Hellyer Tailings Retreatment Project, it

is planned to achieve a residue storage of 1.1 mt until the TSF2 is commissioned. The updated schedule

of residue storage is given in Table 3.6 and graphically interpreted in Figure 3.39. The total quantity of

residue storage over the Life-of-Mine is 4,211,782 dmt.

Hellyer have committed to transfer the re-processed tailings discharged to EFB to TSF2 during the first

few years of operation and removal of the EFB wall such that there is no dam nor environmental liability.

Ultimately on completion of dredging the full storage this leaves the Hellyer Main Dam empty with a

water level equal to TSF2. The intent is to possibly use the Main Dam storage for tailings storage from

future resources.

Figure 3. 38. Existing EFB (facing north)


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Figure 3. 39. Schedule of monthly tailings residue over LOM

Table 3. 6. Updated schedule of residue storage

Schedule Schedule

Month Year Month Residue, Month Year Month Residue,

No dmt No dmt

1 2018 9 12,763 54 2023 2 37,817

2 2018 10 19,866 55 2023 3 42,406

3 2018 11 23,082 56 2023 4 40,512

4 2018 12 26,455 57 2023 5 43,240

5 2019 1 26,333 58 2023 6 42,354

6 2019 2 23,840 59 2023 7 43,561

7 2019 3 26,360 60 2023 8 43,679

8 2019 4 25,640 61 2023 9 42,389

9 2019 5 26,356 62 2023 10 43,900

10 2019 6 25,435 63 2023 11 41,967

11 2019 7 26,419 64 2023 12 44,348

12 2019 8 26,514 65 2024 1 44,987

13 2019 9 31,891 66 2024 2 42,116

14 2019 10 32,969 67 2024 3 45,021

15 2019 11 32,009 68 2024 4 43,569

16 2019 12 33,225 69 2024 5 45,414

17 2020 1 33,101 70 2024 6 43,883

18 2020 2 30,996 71 2024 7 45,198

19 2020 3 33,011 72 2024 8 45,268

20 2020 4 31,890 73 2024 9 43,700


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21 2020 5 32,306 74 2024 10 44,957

22 2020 6 31,127 75 2024 11 43,513

23 2020 7 32,197 76 2024 12 44,963

24 2020 8 32,099 77 2025 1 44,963

25 2020 9 41,451 78 2025 2 40,612

26 2020 10 42,894 79 2025 3 44,963

27 2020 11 42,172 80 2025 4 43,513

28 2020 12 43,803 81 2025 5 44,963

29 2021 1 43,798 82 2025 6 43,513

30 2021 2 39,816 83 2025 7 44,963

31 2021 3 43,555 84 2025 8 42,685

32 2021 4 42,164 85 2025 9 39,605

33 2021 5 44,262 86 2025 10 41,862

34 2021 6 43,250 87 2025 11 41,149

35 2021 7 45,053 88 2025 12 42,283

36 2021 8 45,352 89 2026 1 42,996

37 2021 9 43,864 90 2026 2 38,892

38 2021 10 44,481 91 2026 3 43,021

39 2021 11 43,287 92 2026 4 41,634

40 2021 12 45,065 93 2026 5 41,875

41 2022 1 45,371 94 2026 6 43,406

42 2022 2 41,103 95 2026 7 45,713

43 2022 3 45,552 96 2026 8 45,713

44 2022 4 43,118 97 2026 9 44,238

45 2022 5 44,450 98 2026 10 45,713

46 2022 6 43,671 99 2026 11 44,238

47 2022 7 45,234 100 2026 12 45,713

48 2022 8 45,281 101 2027 1 45,713

49 2022 9 43,947 102 2027 2 41,289

50 2022 10 45,172 103 2027 3 45,713

51 2022 11 40,588 104 2027 4 44,238

52 2022 12 43,205 105 2027 5 45,713

53 2023 1 42,564 106 2027 6 12,500

3.5. DISCOUNTED CASH FLOW MODEL

The discounted cash flow model of Hellyer Project is based on the 2012 JORC Code Ore Reserve

estimates presented in the AusGEMCO Report of 2017. The reserve includes the tailings of the Main

Dam, Western Arm Dam and Shale Pit. The reserve of Main Dam includes the tailings of Finger Pond

Dam, which have been dredging successfully into the Main Dam since the commencement of the pre-

production period in Hellyer in 2018. The reserve of Western Arm Dam includes the tailings of Fossey

mine as the last ones were deposited initially in the dam.

The basic metrics of the discounted cash flow model are summarized in Table 3.7. They are calculated

using real dollars and the financial assumptions described in Chapter 2. The NPV is positive

(USD135.5M) for the case of excluding the acquisition cost of the project. The Discounted Cash Flow


Page 63 of 75

Internal Rate of Return (DCFIRR) is 250.00% which is much higher than the project discount rate of

10%. The Discounted Cash Flow Payback Period (DCFPBP) is 10 months. This confirms the economic

efficiency of the Hellyer Tailings Project, which is a precondition for confirmation of the validity of the

2017 Ore Reserves estimates by the current period of time.

Table 3. 7. Summary of the discounted cash flow model results

Parameters Unit Value

Net revenue USD M 706

Operating expenses USD M 427

Cash flows before tax USD M 279

Cash flows after tax USD M 232

Excluding acquisition cost

NPV USD M 136

DCFIRR % 250

DCFPBP Months 10

A summary of the discounted cash flow model for this variant of the Project is presented on an annual

basis in Table 3.8. The discounted cash flow model with a monthly time step is presented as an Excel

file, which is an integral part of this Addendum.

The results of the discounted cash flow analysis with a monthly time step are graphically interpreted in

Figure 3.40 regarding the revenue distribution over the LOM. Figure 3.41 shows the distribution of the

operating expenses. The distribution of the operating discounted cash flows (ODCFs) over the LOM is

shown in Figure 3.42. These cash flows are defined as deterministic ones. The cumulative discounted

cash flows (CDCFs) are illustrated in Figure 3.43, which shows also the Payback period of 10 months

starting from September 1, 2018.


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Table 3. 8. Discounted Cash Flow Analysis of Hellyer Project based on Ore Reserve Estimate of 2017

YEAR 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

ITEM unit TOTALS 1 2 3 4 5 6 7 8 9 10

Net Revenue

Lead silver concentrate sales USD 395,395,878 8,944,465 36,772,897 47,816,488 47,613,927 43,473,962 55,091,161 38,342,790 47,495,187 51,124,745 18,720,257

Zink concentrate sales USD 133,413,734 3,330,721 12,523,730 18,545,697 15,987,278 14,869,505 19,130,619 14,569,008 19,597,646 11,866,865 2,992,665

Gold silver concentrate sales USD 177,309,363 1,779,966 11,835,616 18,801,370 22,500,000 22,500,000 22,500,000 22,561,644 22,500,000 22,500,000 9,830,767

Total Revenue USD 706,118,975 14,055,152 61,132,243 85,163,555 86,101,205 80,843,467 96,721,780 75,473,441 89,592,833 85,491,610 31,543,689

Direct Operating expenses

Project/Preproduction Costs USD -482,897 -211,610 -271,287 0 0 0 0 0 0 0 0

Dredging USD -20,343,764 -351,572 -1,444,643 -1,856,789 -2,585,496 -2,841,940 -2,841,940 -2,823,153 -2,351,121 -2,276,241 -970,869

Processing USD -203,272,262 -4,553,756 -17,386,493 -21,324,005 -24,813,677 -24,813,677 -24,813,677 -24,871,838 -24,813,677 -24,813,677 -11,067,787

Logistics USD -87,359,448 -1,101,000 -6,208,253 -9,546,558 -10,892,739 -10,779,460 -11,520,217 -10,625,198 -11,258,831 -10,925,469 -4,501,724

Sales and marketing USD -9,561,950 -191,965 -800,519 -1,133,566 -1,130,880 -1,081,430 -1,398,418 -1,004,830 -1,283,691 -1,149,690 -386,961

General and administration USD -18,805,545 -709,771 -2,128,890 -2,129,313 -2,128,890 -2,128,890 -2,128,890 -2,129,313 -2,128,890 -2,128,890 -1,063,810

Annual & Major R&M USD -2,647,059 0 -294,118 -294,118 -294,118 -294,118 -294,118 -294,118 -294,118 -294,118 -294,118

Operating Contingency USD -8,549,751 -172,702 -706,573 -907,109 -1,046,145 -1,048,488 -1,074,931 -1,043,711 -1,053,258 -1,039,702 -457,132

Other Operating expenses

Royalty USD -35,305,949 -111,474 -2,734,205 -3,893,662 -4,540,280 -3,893,664 -4,889,845 -3,941,462 -4,101,077 -4,713,239 -2,487,041

Capital Expenditure USD -38,897,629 -15,454,970 -1,198,655 -4,229,298 -7,720,588 0 -2,647,059 -7,647,059 0 0 0

Closure / rehabilitation costs USD -1,470,588 0 -1,470,588 0 0 0 0 0 0 0 0

Total Operating expenses USD -426,696,841 -22,858,821 -34,644,222 -45,314,417 -55,152,813 -46,881,666 -51,609,095 -54,380,681 -47,284,662 -47,341,024 -21,229,441

Operating Cashflow b/f Tax USD 279,422,134 -8,803,669 26,488,021 39,849,137 30,948,392 33,961,800 45,112,685 21,092,760 42,308,171 38,150,586 10,314,249

Tax USD -47,421,379 0 0 0 -6,990,104 -5,399,444 -11,018,593 -5,756,736 -6,331,100 -9,297,230 -2,628,173

Net Cashflow after Tax USD 232,000,754 -8,803,669 26,488,021 39,849,137 23,958,288 28,562,357 34,094,092 15,336,024 35,977,071 28,853,356 7,686,076

Project Discount Rate % 10.00

Project NPV (pre Tax; excl Acquisition) USD 160,914,707 -8,175,976 21,707,294 29,697,232 20,924,958 20,854,448 25,468,051 10,681,449 19,475,146 16,209,318 4,072,787

Project NPV (post Tax, excl Acquisition) USD 135,536,096 -8,175,976 21,707,294 29,697,232 16,109,327 17,490,221 19,222,186 7,692,513 16,532,632 12,219,645 3,041,023

DCFIRR % 250.00

DCFPBP months 10


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Figure 3. 40. Revenue distribution over the LOM

Figure 3. 41. Distribution of operating expenses over the LOM


Page 66 of 75

Figure 3. 42. Deterministic ODCFs over the LOM

Figure 3. 43. Cumulative DCFs over the LOM


Page 67 of 75

3.6. MINING PROJECT RISK ASSESSMENT

The Mining Project Risk profile is also impacted due to the changes of the economic assumption at this

stage. Its assessment is done with the utilization of the Discounted Cash Flow model described in the

previous section. The risk is defined as the risk of not achieving positive discounted operating cash

flows at each time step of the Discounted Cash Flow Analysis (DCFA), which is a logical requirement

of mining business. The generation of stochastic discounted cash flows is achieved with the

implementation of Monte Carlo simulation of all parameters participating in the model.

The Mining Project Risk assessment in this study has been performed with regards to the following

parameters:

1. Geological parameters – grades of Pb, Zn, Au, Ag and density of the tailings.

2. Mineral processing parameters- recoveries of Pb in the Pb concentrate, Zn in the Zn

concentrate, and pyrite in the pyrite concentrates; grades of Pb, Zn, Au and Ag in the Pb, Zn

and pyrite concentrates;

3. Economic parameters – prices of Pb, Zn, Au, Ag and pyrite; operating costs for mining

(dredging and water cannon washing), mineral processing, logistics, sales and marketing,

general and administration, maintenance, contingency, royalty, and mine closure as well as

capex.

4. Royalty also participates is the stochastic cash flows model and is calculated as a percent of

the stochastic revenue generated for each time step over the LOM.

The standard deviations of the geological parameters are assessed using the data of the production

scheduling model developed on a monthly basis. The standard deviations of the mineral processing

and economic parameters are assessed as 5% of the mean estimates and implementing the famous 6

sigma rule of Statistics, which postulates that the range between the minimum and maximum estimates

of a histogram is measured with 6 standard deviations. This approach is reasonable at this stage of the

project’s development before the commencement of the normal exploitation of the Hellyer TSF and

accumulating historical data.

In order to assess the Mining Project Risk, 400 Monte Carlo simulations were run. Table A-1 of

Appendix 6 summarizes the results of this analysis obtained with monthly time step. The table

presented assessments of the parameters (mean and standard deviation) of stochastic ODCF and

cumulative discounted cash flows (CDCF). These stochastic discounted cash flows are illustrated in

Figure 3.44. The time step “0” (zero) reflects the sum of the ODCFs of the pre-production period from

January till August 2018. Negative estimates of the ODCF-mean are obtained for the time steps 0, 1,

32, 35, 41, 47, 59, 65, 68, 71, 74, 95, 101, 104 and 107. The CDCFs get negative estimates for pre-

production period (1-8) then they become positive till the last month of the Hellyer TSF LOM. The

Payback Period (PBP) for this simulation is 10 months.


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The sample of 400 simulations of the NPV is graphically illustrated as a histogram in Figure 3.45. The

risk of getting negative NPV is calculated as 0 (zero) because of the significant positive mean of the

NPV (140,237,869 USD) obtained from the simulation. The histogram shows a good fit with the normal

distribution.

The results of the monthly Mining Project Risk assessments are shown in Figure 3.46, which indicates

that the risk is 100 percent for the time step 0. The risk for the time step 1 is 97.81% because of the

negative ODCF (-1,051,365 USD). For the period from time step 2 till time step 28 the risk drops

significantly due to positive ODCFs. At time steps 29, 32 and 35 the risk jumps sharply up to 78.33%,

55.34% and 88.23% respectively because of the negative estimate of the ODCF. For the remaining

period the risk drops down with some exceptions at the time steps 41, 47, 59 , 65, 68, 71, 74, and 95,

The last time step 107 has abnormal monthly risk estimate because of the assumptions made in the

deterministic Discounted Cash Flows model regarding the payments of royalty and tax. The last month

doesn’t have production and revenue.

The Mining Project Risk is also assessed with an annual time step. The results obtained are

summarized in Table 3.9 and graphically illustrated in Figure 3.47. The analysis of the results indicates

a smooth variation without sharp fluctuations. The time step 0 has a 99.81% risk, which drops around

5.00-8.00% for the period of normal exploitation of the Hellyer TSF. In the year 2024 the risk estimates

gets an increase (21.07%), which is insignificant. The last year (2027) the risk is up to 14.03% because

of the economic assumptions of the determinist discounted cash flows model. Generally, the low annual

estimates of the Mining Project Risk confirms the attractiveness and economic efficiency of the Hellyer

Tailings Retreatment Project.

Table 3. 9. Results of the annual Mining Project Risk assessments

NEW Year

Time step ODCF mean, USD

ODCF std

USD

CDCF mean USD

Risk

%

2018 0 -8688182 3007990 -8688182 99.81

2019 1 25074290 12417092 16386108 2.17

2020 2 30147376 13777648 46533484 1.43

2021 3 16161128 11691623 62694612 8.34

2022 4 18816105 11763716 81510717 5.49

2023 5 18816105 11763716 100326822 5.49

2024 6 7305017 9084449 107631839 21.07

2025 7 18760170 9290967 126392009 2.17

2026 8 10602532 7475062 136994541 7.8

2027 9 3273667 3033930 140268208 14.03


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Figure 3. 44. Distribution of stochastic ODCFs over the LOM

Figure 3. 45. Histogram of NPV generations

NPV,USD

Frequency

1650

0000

0

1575

0000

0

1500

0000

0

1425

0000

0

1350

0000

0

1275

0000

0

1200

0000

0

1125

0000

0

50

40

30

20

10

0

Mean 140237869

StDev 9477498

N 400

Normal

Histogram


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Figure 3. 46. Mining Project Risk profile with monthly time step

Figure 3. 47. Mining Project Risk profile with annual time step


Page 71 of 75

Figure 3. 48. Mining Project Risk profile with monthly time step [AusGEMCO, 2017]

The comparison of the 2017 and 2018 profiles of the Mining Project Risk in Figure 3.46 and Figure 3.48

shows that:

1. The 2018 risk profile commences from September 1, 2018 while the 2017 risk profile

commences on January 2017.

2. The 2018 risk profile is built with the accumulation of all costs made before September 1, 2018

and their presentation as a single estimate related to August, 2018.

3. The first large fluctuation (78.33%) of the 2018 risk profile takes place at the month 29 (January,

2021) due to a tax payment of USD 2.02M, royalty payment of USD1.3M and capital

expenditure USD2.21M for downstream dam construction. The tax and royalty payments as

well as the capital expenditure also affect strongly the mining project risk for time steps 32, 35,

41, 47, 59, 65, 68, 74, and 95.

4. The capital expenditure is distributed over the time horizon into a few periods: USD 1,210,671

for Eastern Finger Pond Dam construction (Phase 1) from Nov 2018 to April 2019; USD

1,150,593 for Eastern Finger Pond Dam construction (Phase 2) from Nov 2019 to April 2020;

USD 11,029,412 for Downstream Dam construction (Phase 3) from Dec 2020 to April 2021;


Page 72 of 75

USD 8,823,529 for Downstream Dam construction (Phase 4) from Dec 2023 to May 2024; USD

1,470,588 for other dam related capital expenditure from Sep 2024 to Nov 2024. The

distribution of capital expenditure is planned well as it doesn’t have a sharp impact on the profile

of mining project risk. Only the high risk estimate of 91.12% at time step 65 has a visible impact

of the capital expenditure planned for the period from Dec 2013 to May 2024.

5. The maximum estimate (95.02%) of mining project risk is related to time step 95 and is impacted

by royalty (USD 1.2M) and tax (USD 2.5M) payments as well as a lower revenue.

6. The last month (107) of the 2018 risk profile has a risk estimate of 100% because of the

assumptions made in the deterministic Discounted Cash Flows model.

7. The 2017 risk profile has also 2 large fluctuation. The first fluctuation (61%) takes place at the

month 83 (November, 2023) and it is due to a capital expenditure of USD 1.7M for the dam

construction.

8. The 2018 risk profile is tending to have frequent monthly fluctuations greater than the ones of

the 2017 risk profile.

Generally, the 2018 predicted profile of the Mining Project Risk of the Hellyer Project is attractive for

investment and useful for the decision-making process. This is confirmed by the annual risk estimates

in Figure 3.47, which are around a lower and acceptable risk range with the exception of the year 2018

which represents a risk estimate based on the sum of all costs made in the pre-production period before

September 2018.


Page 73 of 75

4. CONCLUSIONS

The Addendum to the 2017 Ore Reserves Estimate Report of Hellyer Tailings Retreatment Project has

been prepared under the guidelines of the JORC Code, 2012 Edition. It provides evidence about the

confirmation of the Ore Reserve estimate without any change as presented in the 2017 Ore Reserve

Report.

The major factors contributing to the conclusion for the validity of the 2017 Ore Reserve estimate are

as follows:

1. This evidence is based on the results of the economic model which incorporates the new

assumptions of the Hellyer project realization from September 2018. The results show the

commercial value of the extraction and processing of the tailings from the Main Dam, Finger

Pond Dam, Western Arm Dam and Shale Pit.

2. The new assumptions are associated with the change of the metals prices, variation in the

operating and capital expenditure as well as changes of some technological parameters such

as dredging rates during the development period and schedule of the construction of a new

residue storage dam.

3. There is no new information about the resources and this doesn’t have an impact on the ore

reserve estimate.

4. The mining and mineral processing technologies remain unchangeable.


Page 74 of 75

5. REFERENCES

Chapter 1: Project status update by September 1, 2018 NQ Minerals, 2018a. Project Monthly Report. February, 2018. NQ Minerals, 2018b. Project Monthly Report. March, 2018. NQ Minerals, 2018c. Project Monthly Report. April, 2018. NQ Minerals, 2018d. Project Monthly Report. May, 2018. NQ Minerals, 2018e. Project Monthly Report. June, 2018. NQ Minerals, 2018f. Project Monthly Report. July, 2018. NQ Minerals, 2018g. Project Monthly Report. August

Chapter 2: Change of the project assumptions Consensus Economics, August 2017. www.consensuseconomics.com. Consensus Economics, August 2018. www.consensuseconomics.com. NQ Minerals, 2018. Hellyer financial model August_2018_8_26.xlsx. GHD, 2018a. Hellyer Tailings Reprocessing Project Eastern Finger Bund Author: Rob Longey, GHD-

Hobart Letter to NQ Minerals, 12 November 2018.

Chapter 3: Impact of the project changes AusGEMCO, 2017. Hellyer Tailings Retreatment Project – Tasmania. Report № 001-2017. Consensus Economics, September 2018. www.consensuseconomics.com. Joint Ore Reserves Committee, 2012. Australasian Code for Reporting of Exploration Results, Mineral

Resources and Ore Reserves. The JORC Code 2012 Edition. CSA Global, 2010. Resource estimate and mining study. Hellyer Tailings Retreatment Project-

Tasmania. Authors: Davis P., Cranfield P. and D. Williams. COMO Engineers Pty Ltd. Report R159.20.

CSA Global, 2017. Hellyer Tailings Retreatment Project-Tasmania. Competent Persons Report, August 2017. Report No. Nº R301 2017.

NQ Minerals, 2018. Hellyer financial model August_2018_8_26.xlsx. GHD, 2018b. Hellyer Tailings Reprocessing New TSF Eastern Finger Bund Raise Concept to RL 652.5

m. Author: Rob Longey, GHD-Hobart Report, 22 May 2018.

http://www.consensuseconomics.com/

http://www.consensuseconomics.com/


Page 75 of 75

6. APPENDICES

Appendix 1. Economic and technological input data of Block Profit Modelling

Table A-1. Economic input data of geological block profit modelling Table A-2. Technological input data of GBPM – Lead concentrate Table A-3. Technological input data of GBPM - Zinc concentrate Table A-4. Technological input data of GBPM – Pyrite/Gold/Silver concentrate

Appendix 2. Geological Block Profit Models

Table A-1. Block Profit model of Main Dam-Benches B1& B2 Table A-2. Block Profit model of Main Dam Bench B3 Table A-3. Block Profit model of Western Arm Dam Table A-4. Block Profit model of Shale Pit

Appendix 3. Mine Production Schedules

Table A-1. Block production schedule of Hellyer Tailings Retreatment project Table A-2. Monthly production schedule of Hellyer Tailings Retreatment project Table A-3. Mixed block - monthly production schedule of Hellyer Tailings Retreatment project

Appendix 4. Mineral Processing Plant Production Schedules

Table A-1. Monthly schedule of lead concentrate production Table A-2. Monthly schedule of zinc concentrate production Table A-3. Monthly schedule of pyrite/gold/silver concentrate production

Appendix 5. Mine Production Plan of Hellyer Project

Table A-1. Production plan of Hellyer Tailings Projects 2018

Appendix 6. Mining Project Risk Model

Table A-1. Results of the monthly Mining Project Risk assessments

addendum. hellyer tailings retreatment project tasmania · page i of 75 addendum. hellyer tailings...

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