Approvals and DFS to resume at Elementos’ Oropesa Tin Project


Elementos Limited (ASX:ELT) Managing Director Joe David discusses the recommencement of DFS and licensing activities following discussions with the Andalusian government.

Paul Sanger: I am Paul Sanger for the Finance News Network, and today we're talking with Elementos (ASX:ELT). Elementos, trading under the ASX code “ELT” with a market capitalisation of approximately $35 million, is committed to the safe and environmentally conscious exploration, development and production of high-grade tin projects. Elementos owns two world-class tin projects with large mineral resource bases and significant exploration potential in mining-friendly jurisdictions. Today we're pleased to have Elementos MD Joe David with us. Welcome, Joe.

Joe David: Thanks, Paul. Great to be with you.

Paul Sanger: Now, Joe, I want to delve into the recent development surrounding the company's flagship Oropesa Tin Project in Spain. You've recently announced the restart of the DFS and licensing activities at Oropesa. What factors prompted this decision?

Joe David: Yeah. So, as the people who have followed our stock for a while would realise, we went into negotiations with the Andalusian authorities in about June last year, and because those negotiations were going to result in some modifications to our project layout, to the footprint and the disturbance footprint of the project, we decided to pause the DFS. So, this morning, we're very, very happy to finally be able to update shareholders with what those modifications will look like. These modifications are in agreement with the Andalusian authorities. We will now move through to resubmitting the modifications to our key primary licences, which is our environmental and mining licence applications, as well as kicking off the DFS.

Paul Sanger: And, Joe, could you just outline the key modifications made to the project to facilitate this approval?

Joe David: Yes, so we flagged to the market previously the discussions with the regulator really being related to minimising the disturbance to the natural environment of the mine. Obviously, we've got an open pit mine and the minerals are where the minerals are, so we really can't change the location of that open pit. But what we can do is redesign — and we have done — is redesign a number of the infrastructure elements that sit outside the pit.

So, going through them, you've got your external waste dumps. We do have internal waste dumps within the pit, but for those that are external, we've shifted their locations going from one very large dump into four smaller dumps. Those dumps and the change of their design does materially reduce the amount of trees that we're impacting. So, that was one of the drivers of the administration, to make sure we minimise disturbing as many trees as possible, which we're certainly very happy to do.

The tailings dam location as well. If the guys go through our announcement, they'll see it's moved from the eastern side of our pit over to the western side. We're fortunate to have been able to really use some natural topography against the hill, which should not only put the tailings dam in a very user-friendly location, but also reduce the waste volumes required to build the wall, so that's another win for us.

The other major change was we had about a 400m section of access row, which was overlapping a stock cattle route of all things, so we've just adjusted that by about 50m and solve that issue.

So, going from quite the major one, reducing impacts on trees and wildlife through to shifting a road 50m. So, got the full gamut there, but basically because of those changes that we negotiated with the government, there are some, I guess, subsequent follow-on changes. We are going to move the location of where our process plant is to make it more efficient to where the waste and ore will be now be coming out of the pit. Some of the ramps in the pit will be redesigned and changed. And then we've got some changes to our rehabilitation obligations of the open pit, which have actually got less onerous on us through negotiation with the administration. So, for us, we are very happy with these layout changes and certainly look forward to taking through to the end of the DFS and really being able to come out to the market with a feasible project, but technically and with some very nice economic returns.

Paul Sanger: And what you just described there, it clearly demonstrates that you've obviously got… open fluid dialogues have been going on with the Andalusian government for some time. It seems to me that they're obviously keen for this project to get up and you’ve come to a nice compromise, that's great to hear.

Joe David: Yeah, absolutely. There’s support from all levels, from the local government through to the regional government, which is the Andalusian government, and all the way through the multiple levels of government there. It is an economically depressed location. Unemployment is very high and they’re certainly on all levels of government looking to back major projects – mining, energy and infrastructure — in the region. So, for us, I think we're the right project at the right time for the administration.

Paul Sanger: And the support of the Andalusian government is crucial for this project. How do you foresee this support influencing the next stages of development?

Joe David: We have the support from the environmental department, the mining department. We're also a member of the government's project accelerator unit, so the Australian equivalent is a state significant project in Andalusia. The combinations of all those different factors of the government, we certainly feel like they're right behind us now and in really good position to take this project through to get its two primary licences and then obviously take the project into construction and operations.

Paul Sanger: Got you. And I've got to ask this question. Can you provide an estimate for the refiling of the primary licence submissions and the anticipated approval timeframe?

Joe David: In the announcement put out this morning, we've given some indicative dates there. We'll be resubmitting our licence documents within about three months, so by the end of Q3, this calendar year, we'll have the submissions back in. That'll formally kick off the approvals process again. But we're well matured. Obviously, we've been working with the government for a lot of this. A lot of the layouts, the waste dumps, the tailings dump facility are already designed to a level quite mature, so it's just finishing off the documentation, now we have agreement and submitting them. So, Q3 for the resubmission of the documents. In parallel to that, we need to make the adjustments to the basis of design for the DFS, and we're currently targeting an end of calendar year 2024, so some time in Q4 those two streams will be working in parallel.

Paul Sanger: Fantastic. And, Joe, I understand that you're actually in Malaysia this week. There's a tin conference going on there. Love to get some thoughts or views and insights of what's been going on up in Malaysia at the conference.

Joe David: It’s quite an exciting conference right now. The tin price is absolutely hammering again. So the tin price on the LME is back over $33,000 overnight, which is a price that exceeds the revenue assumption we've put in to our studies. So, certainly having the tin price significantly above the base case assumption is fantastic. And then also the Shanghai, the Chinese tin price is also substantially above, in about the $37,500 range. So, certainly there's a bit of, I guess, a good feeling at the conference. It is the entire industry, so the conference does have the project owners and the developers like ourselves, but it also goes through, we've got everyone here. You've got the traders, you've got the bankers, and you've got downstream manufacturers as well. A lot of guys in solder, tin plates, tin chemicals, etc. So for us to be able to put out this announcement while I'm here and actually be able to really engage with the industry and again put Oropesa on the development map for the industry is fantastic. The other major message coming out of the industry right now is the pending shortages of tin, the shortfall. The industry is very aware of how constrained it is on any of the current producers to continue to supply into the future growth. So, there's certainly a lot of support and a lot of interest in what us project developers are doing at the conference. So, having this announcement out public now is really going to facilitate some extra conversations throughout the rest of the week.

Paul Sanger: Well, it's a significant piece of news I'm sure shareholders will appreciate. Joe David, as always, many thanks for your time today.

Joe David: Great, Paul. Thank you for having me.


About Paul Sanger

Investment Banking Executive with over 30 years of experience focused on global capital markets. He is the former Managing Director and Head of Distribution and Corporate access (Asia) for Citi, where he managed and maintained a team of over 350 financial market professionals across 10 countries in public capital markets. Paul has a long background dealing with the senior management of listed and unlisted corporations on public market strategy and has extensive experience in the entire lifespan of a publicly listed entity, including IPOs, mergers and acquisitions, asset purchases and sales, restructures and capital raises. He is a proven leader and business strategist with an intimate knowledge of financial markets and corporate governance issues.

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