MMG Limited has approved the updated development plan for the Dugald River Zinc Project in northwest Queensland, Australia. The plan includes an annual mine production rate of 1.5 million tonnes, construction of a concentrator and annual production of approximately 160,000 tonnes of zinc in zinc concentrate, plus by-products, over an estimated 28 year mine life.

Old copper workings on Altona Mining’s Cloncurry project in Queensland’s northwest.

MMG is listed in Hong Kong and its major shareholder is China Minmetals. MMG CEO Andrew Michelmore says, “We are positive about the long-term fundamentals for zinc. This decision reflects our confidence in zinc at a time of shrinking global supply. Dugald River remains one of the world’s highest grade undeveloped zinc deposits.

“Under the updated plan, Dugald River will come online at around a time when significant global zinc supply will disappear through mine closures,” he said. The project will be within the world’s top 10 zinc mines when operational.

Andrew Michelmore said the updated development plan reflected a prudent response to mine geotechnical conditions. “By taking the time to understand the unique characteristics of the ore body, we now have a robust plan that maximizes long-term value.”

The expected remaining cost of the project to first shipment of concentrate is around US$750 million plus interest costs. Discussions to amend funding arrangements have commenced with MMG’s existing lenders. Agreements with key energy, logistics and service providers will be revised based on the updated plan.

Following satisfaction of remaining conditions, construction of remaining surface infrastructure facilities will commence in 2016 with first production expected during the first half of 2018.

Access to the ore body via development declines in 2013 led to identification of geotechnical aspects and ground conditions more challenging than prior assumptions which prompted a review of the proposed development method.

Dugald River was excised from Altona Mining’s Cloncurry project, which includes the Little Eva Copper-Gold Project. Altona has completed a framework agreement with Sichuan Railway Investment Group (SRIG) to fully fund and develop Little Eva, which is permitted with proposed annual production of 38,800 tonnes of copper and 17,200 ounces of gold for a minimum of 11 years.

Altona welcomes MMG’s decision to approve the updated plan. Managing director Alistair Cowden says, “The area is becoming a significant new base metal production hub. The Dugald River project infrastructure will provide a value uplift for Altona and demonstrates the strategic value of the Cloncurry project coming close on the heels of the agreement with SRIG.