business plan, concept note on mining of dumps

1. TAILINGS-DUMP RECOVERY
CONCEPT DOCUMENT
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2. Table of Contents
1. EXECUTIVE SUMMARY......................................................................................................3
2. BUSINESS DESCRIPTION...................................................................................................5
3. BUSINESS INFORMATION..................................................................................................6
4. FINANCE REQUIREMENTS.................................................................................................8
5. TECHNICAL REVIEW........................................................................................................10
6. FINANCIAL REVIEW .......................................................................................................13
7. APPENDIX....................................................................................................................... 17
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3. 1.EXECUTIVE SUMMARY
1.1.
Summary
The Organisation aims to establish an entity to exploit opportunities that exist in the
mining industry with particular emphasis on recovering gold and other trace elements
from gold mine dumps or trailing’s which remain after ores have been processed. The
Organisation’s project principal objective will be in identifying potential dumps from gold
mines which have significant gold residue to be recovered; tests will be made on samples
on acquired dumps and movable dump processor equipment will be placed on an
approved dump. Dumps are acquired by entering into agreement with dump owners,
and or bids will be placed to buy the dumps put on sale. Through this business
plan/concept document, the promoters of the tailings recovery project have decided to
apply for funding/partnership to be used towards buying dumps, acquisition of towable
tailings processing equipment and to fund first cycle operational costs.
1.2.
Products and Services
Organisation project will be offering gold recovery operations from mine dumps in rich
gold areas in Africa, locations of dumps have been identified in Zimbabwe were the
concept is relatively new, and very few established companies are in this business
meaning that there is still relatively little competition and limited barriers to entry in the
industry, thus using Zimbabwe as a stepping stone to other gold rich areas across Africa.
Tailings, also called mine dumps, culm dumps, slimes, tails, refuse, leach residue, are the
materials left over after the process of separating the valuable fraction from the
uneconomic fraction of an ore. The composition of tailings is directly dependent on the
composition of the ore and the process of mineral extraction used on the ore.
A feasibility study progresses with samples being submitted to mining consultants for
evaluation. After testing to establish assay, moisture content, recoverability and size, the
Organisation purchases the dump from the mine operator when they become available.
1.3.
Location and Expected Specifications
The Organisation will acquire gold mining dumps on which to set up movable trailing
processing equipment and reprocess the dump to recover gold left out by the mineral
processing technology which was employed to produce the trailing’s. Dumps will be
acquired if they have a turnover of at least 0.5grammes/tonne of trailing’s as a
conservative assumption, industry experience avails that the turnover can fall within a
range of 1gramme- 8gramme/tonne. Dumps are also available in different sizes
depending on the scale of mining operations, or capacity of existing primary mineral ore
processing plant, sizes range from tens of thousands tonnes to millions of tonnes.
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4. 1.4. Viability
The Organisation is in a position of making sustainable excess revenue over expenditure
over a short term period given the stable and relatively high value of gold against low
cost of processing tailings. Continued improvement in processing technology has created
a gap in need to be exploited in the gold recovery sector as the opportunities increase to
re-employ advanced equipment to recover gold from mining dumps. The retreatment
business is high-volume and low-risk. Vast quantities of material are processed through
the plant in order to recover gold from old mine dumps at a recovery rate that varies
depending on the material being treated.
A 10 000 tonne dump with a gold recovery capacity of 1gramme/tonne will produce 10
kg’s of gold. A 50 000 tonne dump with recovery capacity of 0.5grammes/tonne will
produce 25kg’s of gold. Below is a table showing possible conservative outcomes of
recoverable gold output from various sizes of dumps.
Dump Size (Tonnes)
Recoverable Output
grammes/tonne
1 gramme (0.001)
0.5 gramme (0.0005)
0.8 gramme (0.0008)
10000
50000
100000
500000
1000000
10
5
8
50
25
40
100
50
80
500
250
400
1000
500
800
Production in Rands
Dump Size
(Tonnes)
10000
50000
100000
500000
1000000
1g(0.001)
0.5g(0.0005)
0.8g(0.0008)
4 235 100
21 175 500
42 351 000
211 755 000
423 510 000
2 117 550
10 587 750
21 175 500
105 877 500
211 755 000
3 388 080
16 940 400
33 880 800
169 404 000
338 808 000
The average world gold price for the year 2013 according to the New York Times is
reported to be US$ 42.35/gram, US$ 1317.38/ounce and US$ 42351.86/kg. Price/kg Rands
423 510, Price/kg US $42 351, at Exchange Rate 1US $: 10 Rand. The future predictions of
gold prices look positive as the factors which determine demand and supply of the
commodity present a positive outlook of the future.
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5. 1.5.
Financial Consideration
The promoters through this document and other initiatives seek to raise debt financing
of R 2 382 240 to be applied to cover the capital expenditure worth R 2 320 000, and one
month’s working capital of R 62 240.
2. BUSINESS DESCRIPTION
2.1.
Business Model
The business model has been strategically crafted to strategically initiate the idea
through different phases aimed at setting up the Organisation on a growth projectory.
Phase 1 until financial realization
•
Identification of Historic mine dumps
•
Land use agreements, sampling, assay & lab work
•
Following exploration results, detailed analysis of collected data is undertaken
•
Risk and hazard assessment
•
Failure evaluations
•
Feasibility studies and financial evaluations
•
Water balance development and utilization
•
Pilot scale test work and material characterization
•
Commissioning of operations
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6. 3.BUSINESS INFORMATION
3.1. Particulars of the Managing Member
Name
Physical/ Postal Address
Cell
Table 1: Member’s Details
3.2. Particulars of the Business
Enterprise Name
Enterprise Type
Registration Number
Registration And Start Date
Description of Business
Financial year End
Accounting Officer
Physical / Postal Address
Contact Person
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7. Cell
Table 2: Company Details
3.3. Vision, Mission, Objectives & Values
3.3.1.
Vision Statement
To become an un-hedged gold producer and a leader in surface gold tailings retreatment
in Africa.
3.3.2.
Objectives
We have given ourselves strategic goals and objectives designed to strengthen the
organization’s revenue earning potential. Our main strategic goals are:
•
Become a viable organization allowing us the freedom of taking advantage of
other mining investment opportunities as they become available
•
Realize a positive return on investment within the first 12 months
3.3.3.
Strategies
•
Reducing risk and creating opportunities
•
Controlling costs
•
Maximizing margins
•
Assuming its social and environmental responsibilities
This strategy involves using various capitals – human, financial, intellectual capital – to
extract gold from extensive surface resources in the safest and most efficient manner,
thus ensuring the sustainability of its social and environmental capital.
The Organisation’s long-term strategy is to improve gold recovery so that, in future, zero
gold is returned to tailings deposition facilities; and to grow its reclamation business by:
•
The use of technology and continuing R&D
•
Acquiring additional surface resources (Gold Dumps)
•
Using existing expertise and skills to expand into the reclamation of other
minerals from discarded tailings material
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8. 4.FINANCE REQUIREMENTS
4.1. Sources of Funds
The Organisation requires debt financing of R 2 382 240 mainly to cover the capital
expenditure worth R 2 320 000, and to finance one month’s working capital of R 62 240.
4.2. Funding/ Start up Summary
Sources of funds
Rands
Members contributions
Members loans to the company
Loans/ Investment
2 382 240
2 382 240
Application of funds
Capital Expenditure
One Month Working Capital
2 320 000
62 240
2 382 240
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9. 4.3. Application of Funds
The Organisation will use the required funds to cover for the acquisition of mine dump,
processing equipment and installation expenses; one month’s working capital. The
quotations are shown in appendices. The application of the funds will be as follows:
Application of funds
Capital Expenditure
One Month Working Capital
2 320 000
62 240
2 382 240
4.4. Break down of Capital Expenditure
Asset Required
Towable Dump Processor
Submersible Water Pump 30hp
Generator 28Kv
Excavator
Motor vehicle- Bakkie
Total
Qty
1
2
1
1
1
Price
1 500 000
30 000
90 000
600 000
100 000
2 320 000
4.5. Breakdown of Working Capital
Operating Expenses
Description
Accounting Fees
Bank Charges
Rent, Water and Electricity
Insurance
Office Supplies
Internet/Web Domain & Email Accounts
Marketing
Storage
Contingencies
Salaries and Allowances
Telephone and Faxes
Total
Month 1
300
300
10000
740
800
1200
2000
900
1200
44000
800
62240
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10. 5.TECHNICAL REVIEW
7.1 Hydraulic mining of tailings
The monitor uses high pressure water to erode the tailings in sections, washing the
material downstream which is collected in a sump. Tailings dams are generally
segregated by the coarseness of the material (coarse fraction near the spigot) and if a
particular area of a dam is too coarse for pumping then blending is required. Once the
required density is obtained in the sump and screening has prevented large objects from
passing, the slurry is then pumped to thickeners and the underflow is reprocessed in the
plant. The tailings are then stored in a tailings impoundment.
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11. The use of hydraulic mining for tailings can be to either reprocess the waste, mine the
waste as a product, or for moving of the tailings to a more suitable location. Some
tailings impoundments are hydraulically mined to not just process the tailings but to resite them for environmental reasons. This is an effective method and can take a shorter
time than mechanical excavation, depending on the density and particle sizes of the
tailings. Gold is recovered by Carbon-in-Circuit (CIC) and Carbon-in-Pulp (CIP) leach and
absorption circuits.
7.2 Commercially viable recovery processes
The major categories of commercially viable recovery processes include the following:
•
Gravity separation
•
Flotation
•
Cyanidation - processes may include the following operations:
o Agitated tank leaching
o Heap leaching
o Carbon adsorption recovery
o Zinc precipitation recovery
•
Refractory ore processing
•
Alternative lixiviants
•
Amalgamation
7.3 Carbon adsorption process
There are several variations to the carbon adsorption process including:
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12. Carbon-In-Pulp (CIP):
Carbon-in-pulp operation is a variation of the conventional cyanidation process. Ore is
crushed, finely ground, and cyanide leached in a series of agitated tanks to solubilize the
gold values. Instead of separating solids from the pregnant solution, as in the traditional
cyanidation process, granular activated carbon is added to the leached slurry.
The carbon adsorbs the gold from the slurry solution and is removed from the slurry by
coarse screening. In practice, this is accomplished by a series of five or six agitated tanks
where carbon and ore slurry are contacted in a staged counter-current manner. This
greatly increases the possible gold loading onto the carbon while maintaining a high
recovery percentage. Carbon is retained within the individual CIP tanks by CIP tank
screens.
Carbon-In-Leach (CIL):
The carbon-in-leach process integrates leaching and carbon-in-pulp into a single unit
process operation. Leach tanks are fitted with carbon retention screens and the CIP
tanks are eliminated. Carbon is added in leach so that the gold is adsorbed onto carbon
almost as soon as it is dissolved by the cyanide solution. The CIL process will frequently
be used in small cyanide mills to reduce the complexity and cost of the circuit.
7.4 Capital Equipment to be employed
Tailings processing systems
Tailings processing systems that are 98%+ efficient in capturing the remaining gold and
other precious metals from processing existing tailings piles left over from previous
processing operations will be employed.
High Production Gold Tailings Processing Equipment Technology
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13. * Process from 18-20 tons per hour, * 98% efficient capture rate, * easy to transport
from site to site
6.FINANCIAL REVIEW
9.1 Projections and Assumptions
Full financial projections that comprise a balance sheet, income statement cash flow
statements and supporting schedules are attached to this document. The financials have
been prepared under the following assumptions:
•
R 2 382 240 in combination of debt finance will be available in the short term;
•
Business will grow at an annual rate of 10% per annum,
•
Inflation is forecasted at 7% per annum
•
Income tax is forecasted at 28% for the five years
•
All transactions are assumed to be Cash
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14. 9.2 Projected Monthly Income Statement
TD Recovery
INCOME STATEMENT
Month 1
Month 2
Month
3
Month
4
Month
5
Month
6
Month
7
Month
8
Month
9
Month
10
Month
11
Month
12
Revenue
882 313
889 666
897 079
904 555
912 093
919 694
927 358
935 086
942 878
950 736
958 658
966 647
Gross Profit
882 313
889 666
897 079
904 555
912 093
919 694
927 358
935 086
942 878
950 736
958 658
966 647
Expenses
62 240
61 240
61 240
61 240
61 240
61 240
61 240
61 240
61 240
61 240
61 240
61 240
Accounting Fees
Bank Charges
Rent, Water and Electricity
Insurance
Office Supplies
Internet/Web Domain & Email
Marketing
Storage
Contingencies
Salaries and Allowances
Telephone and Faxes
300
300
10 000
740
800
1 200
2 000
900
1 200
44 000
800
300
300
10 000
740
800
1 200
1 000
900
1 200
44 000
800
300
300
10 000
740
800
1 200
1 000
900
1 200
44 000
800
300
300
10 000
740
800
1 200
1 000
900
1 200
44 000
800
300
300
10 000
740
800
1 200
1 000
900
1 200
44 000
800
300
300
10 000
740
800
1 200
1 000
900
1 200
44 000
800
300
300
10 000
740
800
1 200
1 000
900
1 200
44 000
800
300
300
10 000
740
800
1 200
1 000
900
1 200
44 000
800
300
300
10 000
740
800
1 200
1 000
900
1 200
44 000
800
300
300
10 000
740
800
1 200
1 000
900
1 200
44 000
800
300
300
10 000
740
800
1 200
1 000
900
1 200
44 000
800
300
300
10 000
740
800
1 200
1 000
900
1 200
44 000
800
EBITDA
820 073
828 426
835 839
843 315
850 853
858 454
866 118
873 846
881 638
889 496
897 418
905 407
Net interest (paid)/received
Interest received
Interest paid
Depreciation
(9 926)
(9 926)
(9 926)
(9 926)
(9 926)
(9 926)
(9 926)
(9 926)
(9 926)
(9 926)
(9 926)
(9 926)
9 926
38 667
9 926
38 667
9 926
38 667
9 926
38 667
9 926
38 667
9 926
38 667
9 926
38 667
9 926
38 667
9 926
38 667
9 926
38 667
9 926
38 667
9 926
38 667
Earnings before tax
771 480
779 833
787 247
794 722
802 260
809 861
817 525
825 253
833 046
840 903
848 826
856 815
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15. Taxation
223 729
226 152
228 302
230 470
232 656
234 860
237 082
239 323
241 583
243 862
246 159
248 476
Retained income for the month /
year
547 751
553 681
558 945
564 253
569 605
575 001
580 443
585 930
591 462
597 041
602 666
608 338
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16. 9.3 Projected Annual Income Statement
TD Recovery
FY-End
2014
FY-End
2015
FY-End
2016
FY-End
2017
FY-End
2018
Revenue
11 086 764
12 195 440
13 414 985
14 756 483
16 232 131
Gross Profit
11 086 764
12 195 440
13 414 985
14 756 483
16 232 131
Expenses
735 880
783 712
834 653
888 906
946 685
Accounting Fees
Bank Charges
Rent, Water and Electricity
Insurance
Office Supplies
Internet/Web Domain & Email
Marketing
Storage
Contingencies
Salaries and Allowances
Telephone and Faxes
3 600
3 600
120 000
8 880
9 600
14 400
13 000
10 800
14 400
528 000
9 600
3 834
3 834
127 800
9 457
10 224
15 336
13 845
11 502
15 336
562 320
10 224
4 083
4 083
136 107
10 072
10 889
16 333
14 745
12 250
16 333
598 871
10 889
4 349
4 349
144 954
10 727
11 596
17 394
15 703
13 046
17 394
637 797
11 596
4 631
4 631
154 376
11 424
12 350
18 525
16 724
13 894
18 525
679 254
12 350
10 350 884
11 411 728
12 580 331
13 867 577
15 285 446
(119 112)
(97 556)
(74 922)
(51 156)
(26 202)
119 112
464 000
97 556
464 000
74 922
464 000
51 156
464 000
26 202
464 000
Earnings before tax
9 767 772
10 850 173
12 041 409
13 352 421
14 795 245
Taxation
2 832 654
3 146 550
3 492 009
3 872 202
4 290 621
6 935 118
7 703 623
8 549 401
9 480 219
10 504 624
INCOME STATEMENT
EBITDA
Net interest (paid)/received
Interest received
Interest paid
Depreciation
Retained income for the
month / year
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17. 7.APPENDIX
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