Name and Location
Dugald River zinc/lead/silver project, Queensland, Australia.

Client
MMG Dugald River.

Project Description
The Dugald River project is known to be one of the world’s largest and highest-grade  undeveloped lead/zinc/silver deposits, with a resource of 53-million tonnes at 12.5% zinc, 1.9% lead and 36 g/t silver. It is located in north-west Queensland, about 65 km north-west of Cloncurry.

The project will involve the development of an underground mine accessed by two declines (North and South). Run-of-mine material will be hauled to the surface before treatment by an on-site concentrator using conventional crushing, fine grinding and flotation methods.

The mine is expected to process an average of two-million tonnes of ore to initially produce 200 000 t to 220 000 t of zinc in concentrate, 27 000 t to 30 000 t of lead in concentrate and 900 000 oz of silver in concentrate a year.

The zinc and lead concentrate will be transported by road to Cloncurry, at which a rail load-out facility will be constructed to transport the concentrate by rail to Townsville and shipped or sold to local smelters.

Dugald River has a mine life of more than 20 years, with the orebody open at depth.

Value
$1.5-billion.

Duration
The project will be commissioned in 2015, with first ore feed expected in the third quarter. Based on current estimates, the first concentrate shipment is expected to take place in the fourth quarter of 2015.

Latest Developments
MMG has warned of a delay in the development of the Dugald River zinc/lead/silver mine, as the company has to investigate alternative mining methods.

MMG had planned to ship its first concentrate from Dugald River in the fourth quarter of 2015, but has said in its third-quarter production report that this schedule is unlikely to be met.

The company explains that initial findings of a project review, announced in September, have indicated that alternative mining methods are required for the project. MMG has said that it will undertake additional analysis to further optimise the mining methods.

In September, MMG deferred most of the surface work activities at Dugald River, including bulk earthworks, the construction of a permanent accommodation camp and a A$290-million engineering, procurement and construction (EPC) contract, to project house Forge Group to allow the company to complete the review.

As of June, MMG had sole funded an estimated A$390-million of the Dugald River project, with the miner securing a $1-billion finance facility from the China Development Corporation and the Bank of China.

Key Contracts and Suppliers
Forge Group Minerals and Resources (EPC).

On Budget and on Time?
Not stated.

Contact Details for Project Information
MMG, tel +61 3 9288 0888 or fax +61 3 9288 0800.
Forge Group Minerals and Resources, tel +61 8 6389 8500, fax +61 8 6389 8599 or email info@forgegroup.com.au.