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REGIONAL NEWS - AUSTRALIA/OCEANIA Nyrstar Pursuing Transformation of Port Pirie Smelter Dugald River Project Gets Development Go-ahead Owner Nyrstar will move ahead on plans to transform the Port Pirie primary lead smelter into a poly-metallic processing plant capable of handling a wide range of feed materials Nyrstar announced in early December 2012 that it has reached an agreement-inprinciple with the Australian federal government and the government of South Australia with respect to funding for a project to transform the company's Port Pirie, South Australia primary lead smelter into an advanced poly-metallic processing and recovery center capable of processing a wider range of high-margin metal-bearing feed materials. These feeds would include internal residues from Nyrstar's global network of zinc smelters as well as external waste streams containing precious and other non-ferrous metals. Nyrstar had previously reported in July 2012 that it was in the early stages of investigating the technical and commercial merits of such redevelopment at Port Pirie (See E&MJ;, August 2012, p.18) Key elements of the Port Pirie transformation project now include replacing the existing sinter plant with an oxygenenriched bath smelting furnace, coupled to an electricity cogeneration facility and a new sulphuric acid plant. The project would be completed with only limited disruption to existing operations and is expected to deliver a significantly improved environmental footprint through reduced airborne metal and dust emissions. The Port Pirie transformation project is subject to completion of a final investment 16 E&MJ; • JANUARY 2013 case, including detailed engineering studies and final project documentation. Nyrstar anticipates that a decision to proceed will be made in early 2014, with project commissioning currently planned for early 2016. Capital investment to develop the Port Pirie transformation project is estimated at A$350 million, which would include A$150 million via a structured investment by thirdparty investors guaranteed by the federal government; A$100 million via forward sale of some of the incremental free metal units to be produced at Port Pirie as a consequence of the transformation; and A$100 million in direct investment from Nyrstar. Nyrstar expects the project to deliver returns that meet or exceed its investment criteria for mining acquisitions and comparable to margins generated in the advanced-materials processing sector. Independent of the transformation project, Nyrstar will also investigate the technological and financial feasibility of a series of small, incremental investments to capture additional metal streams by installing additional metallurgical circuits. Metals under consideration for such recovery include selenium, platinum, palladium, rhodium, antimony, germanium, indium and gallium. These potential investments would be driven by specific market opportunities and would be assessed on a case-by-case basis. The board of directors of MMG Ltd. has endorsed the development and construction of the Dugald River zinc, lead and silver mine 65 km northwest of Cloncurry, Queensland, subject to final financing arrangements. Interim funding has been approved to carry the project through early 2013, at which time full project financing is expected to be concluded. The MMG board also gave the company or its subsidiaries approval to enter into major contracts for gas supply, power generation, and rail haulage, to advance the project. Expenditures at Dugald River through mid-December totaled A$293 million, with an estimated A$1.2 billion in additional funding required, excluding working capital, to take the project to first shipment of concentrate. Dugald River is located about 235 km southeast of MMG's Century zinc-lead-silver mine, which currently produces about 500,000 mt/y of zinc in concentrate. Century mine life is currently expected to end in 2016. Dugald River will process an average of 2 million mt/y of ore to produce 200,000 to 220,000 mt/y of zinc in concentrate, 27,000 to 30,000 mt/y of lead in concentrate, and 0.9 million oz/y of silver in concentrate. The project will be developed as an underground mine accessed by two declines. Run-of-mine ore will be hauled to the surface for treatment through an onsite concentrator. Zinc and lead concentrate will be transported by road to Cloncurry. A rail load-out facility will be constructed at Cloncurry, from which concentrate will be transported via rail to Townsville, Queensland, where it will be shipped or sold to local smelters. The Dugald River project is scheduled for commissioning in 2015, with first ore feed expected in the third quarter of that year. Based on MMG's current estimates, first concentrate is expected to be shipped in the fourth quarter of 2015. The Dugald River project has a resource of 53 million mt, grading 12.5% zinc, 1.9% lead, and 36 g/mt silver. (Continued on p. 27) www.e-mj.com