Sometimes we come across press releases that we feel shouldn’t have been released at all. One good example would be the September press release from IMC Exploration (IMC.L), which provided a maiden JORC-compliant resource estimate on its Wicklow project in Ireland, where it has been sampling the dumps from previous mining operations.

Those type of dumps could always be very interesting as the mining and transportation expenses are generally low, and the main requirement is to find a suitable processing facility to effectively process the rock. But in IMC’s case, it might have been wiser to have waited with the maiden resource estimate as not only is the tonnage (1.87 million tonnes) very low, the average grades are also very disappointing:

Without accounting for recovery rates and payability percentages, the gross rock value of the 1.87 million tonnes is approximately $39/t. And although we fully acknowledge it would be very easy to just ‘mine’ existing dumps, the low grade will only work if there are sufficient economies of scale. Not only is 1.87 million tonnes clearly not enough to generate any economies of scale (IMC is hinting at the potential to further increase the tonnage though), in an ideal world, the processing plant should also have three separate circuits to produce a zinc concentrate, a lead-silver concentrate and a copper-gold concentrate to maximize the payability percentages. $39/t is fine, but after deducting the recovery rates and payability deductions, the recoverable and payable value will very likely be just around $20/t.

IMC Exploration presents its project in the Wicklow are as ‘an environmental clean-up operation’. But with 1.87 million tonnes of low-grade dumps, perhaps the company should focus on other ideas.

Disclosure: The author has no position in IMC Exploration.

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