Monument Mining will delay the start-up of producing iron and copper metal at the Mengapur Polymetallic Project in Pahang State until further notice due to depressed and volatile commodity prices. The main plant at the Mengapur site will be put on care and maintenance while some work will continue at a reduced level.
The company has been refurbishing and upgrading its 1000 tonnes/day pilot plant at Mengapur and has made considerable progress in this regard. The plant, including the ball mills, has been overhauled and successfully run, all lines have either been cleaned out or replaced and both mills are in satisfactory operational condition to run as a pilot operation, which is the first stage of the project.
A tailings storage dam for copper and iron process tailings has been emptied, cleaned up, lined, and compacted with impervious clay ready for use. A new pyrrhotite storage dam has been constructed, lined and compacted ready to store this material, a bi-product from producing saleable iron.
There has been no change in the situation regarding the issue of the Star Destiny mining lease application and no communication from the Pahang State Government as to the official situation surrounding the matter has been received. The company is waiting for news from the State Government to enable it to make decisions on which way to develop the main project.
When the company acquired the project, saleable grade of 62.5% iron was selling at prices far in excess of the price today. At the time the price was in the range of US$140 per tonne or higher. Due to the recent and sustained fall in iron prices globally last year the company changed course and commenced re-engineering its 1000 tonnes/day pilot plant to be able to accommodate production of both iron and copper. The purpose was forward planning based on the main hard rock sulphide ore body containing both iron and copper among other metals. The hard rock ore requires a more complex flow sheet and recovery circuit than the iron contained in free digging soils some of which is overburden waste.
However, following a number of adverse events including the dramatic drop in the global iron ore price, the falling copper price, the build-up of global inventories in these two metals and general resource market price pressure together with price volatility, Monument has been working to try and off-set these events. These events create great uncertainty, especially so when extensive capital investment is required to build a large mining project.
The risk profile of the project increases considerably under these conditions. These conditions include the ability to raise project finance funds due to increased risk, volatile and declining metal prices, in an environment of increasing metal inventories. In addition, the company observes that the major suppliers of iron ore to China have been investing large amounts of capital toward increasing production capacity. They offset reduced market selling price and return per unit of production with increased production volume to maintain total gross revenue. The large companies produce and ship many millions of tonnes per year.
As a result of this interruption in the iron ore market, Monument has been focusing on copper which whilst suffering declines in market price, maintains a reasonable price and margin for many producers. Furthermore, demand is predicted to exceed supply by 2018.
Therefore, the company will maintain its SGS operated site analytical laboratory that performs 2000 assays per month. It will maintain site security, site maintenance including maintaining all environmental obligations, mining regulatory reporting and compliance, accommodation and messing for key staff to enable them to operate site maintenance functions and allow this important work to continue as well as the laboratory continuing to turn out assays for the Selinsing exploration program, the Selinsing process plant control assays as well as provide assay and R&D support to both the Selinsing and Mengapur Research and Development laboratories.
In parallel, the company is looking at the best way to introduce programs using Intec technology recently acquired by way of a licence for South East Asia to use the technology to produce close to LME grade copper metal and a range of other base metals from Mengapur material. The technology can potentially produce a copper metal product on site without having to export a copper concentrate. This has a considerable cost saving advantage in producing copper metal including storage shipping and handling, insurance and other soft costs (Including application for a tax exemption opportunity).
Monument will also investigate the local demand for copper metal within Malaysia in applications that manufacture copper pipes, wires and other copper value added products. The company believes this could potentially improve the economics of the project.