Micon was retained by LLC Pravourmiyskoe to conduct an audit review of the Pravourmiyskoe tin deposit in the Khabarovsk region of eastern Russia and to complete the necessary analysis required to prepare a mineral resource and ore reserve estimate.

Pravourmiyskoe is one of the largest tin deposits in the world, containing some 110,000 t of metal at a grade of around 0.4% Sn. Rusolovo OAO, majority owner of LLC Pravourmiyskoe, commenced production in 2011 and, through continued underground development, is working towards full production in 2017 when the project will produce around 3,000 tonnes per year of tin in concentrate, as well as a tungsten and coppersilver concentrates, from 400,000 tonnes of ore. Capital cost during this period is expected to be in the order of US$100 million.

The Pravourmiyskoe deposit is located some 6,000 kilometres east of Moscow and 230 kilometres north of Khabarovsk. The area is relatively poorly-developed. The nearest railhead is at Suluk, a distance of 120 kilometres via gravel roads, and electricity is brought in via a power line that runs along the railroad. One of the main destinations for the tin concentrate is the Novosibirsk smelter, some 3,500 kilometres to the west. The nearest settlement is Suluk, 60 kilometres to the northwest, with a population of around 2,000, mainly involved in logging and railroad maintenance.

The topography of the area is rugged with elevations between 1,500 and 2,000 metres. The steep slopes are often covered with scree up to 10 metres thick. Dense forest, suitable for harvesting, occurs up to elevations of around 1,500 metres, with mountain tundra at higher altitudes. The climate is affected by monsoons, with typically cold dry winters and relatively warm, rainy summers. Rivers are prone to frequent flooding during the spring. The average annual temperature is around -4°C with winter temperatures averaging around -30°C and summer temperatures around 15°C.

Mineralization and Exploration

The Pravourmiyskoye deposit occupies the central part of the Khingano-Okhotsky volcanic belt in the Badzhalsky district. The mineralization is low-sulphide, primarily with coarse-grained disseminated crystalline cassiterite. Sedimentary rocks of Paleozoic-Mesozoic age and late Cretaceous magmatic formations also occur in the Badzhalsky district. Extensive faulting in the deposit area controlsthe structure of the mineralized zone which is located in a shear zone in a low-amplitude thrust fault striking eastwest. The shear-hosted mineralization within acidic igneous units is accompanied by intense metasomatic alteration composed of quartzmuscovite, quartzbiotite, quartz-topaz, quartz – tourmaline and chlorite-sericite metasomatites (greisens). Two extensive ore-hosting zones have been identified plus a number of secondary smaller zones within the deposit. Distribution of tin within the mineralized zones can be irregular, varying from fractions of a percent to over 30% Sn. Bismuth and indium are also present, as well as tungsten, copper, and silver.

The area was first covered with aerial surveying in 1935 but the deposit was not discovered until detailed prospecting was carried out in 1974. Accelerated exploration from 1978 to 1989 included over 16 kilometres of underground exploration, along with trenching, channel sampling and around 48,000 metres of diamond drilling. Over 180,000 chemical analyses were completed. In 1990 the Amgun Mining Partnership commenced a pilot production operation that ran intermittently for several years, and subsequently reprocessed the tailings. LLC Pravourmiyskoe has held the development licence since 2008.

Mineral Resources

The first ‘reserve’ estimate was completed towards the end of 1989 and approved by the State Committee with 36 million tonnes at 0.41% Sn. At that time, the Soviet tin industry was supported by artificially high tin prices and a low cut-off grade of 0.14% Sn was adopted for the mineralized envelopes.

In 2011, Micon prepared a mineral resource estimate in accordance with the guidelines of the JORC Code, at a cut-off grade of 0.5% Sn. Indicated resources totalled 7.22 million tonnes at 1.03% Sn and inferred resources totalled 3.30 million tonnes at 0.96% Sn.

Mining and Processing

The mineralized lodes range in thickness from 1 metre to more than 10 metres but are typically around 6 metres thick. The dip generally averages 30°, which precludes the use of low-cost bulk mining methods. As a consequence, mechanised room and pillar mining is used where the dip averages less than 25°, (equivalent to 85 % of the deposit), and modified long-hole mining is used for the thicker, more steeply dipping portions (over 7 metres and 25°).

The mine is being developed on four principal levels at 80-metre vertical intervals with access to the levels, initially via adits and ultimately via an inclined ramp system. A decline from the 1,440-metre level will be driven up to a portal at the plant site to facilitate year-round production. Almost all development is in the footwall, greatly reducing waste and volume of development whilst increasing productivity. The introduction of conveyors has greatly reduced mining costs.

Processing is by gravity-flotation to produce separate tin, tungsten and copper concentrates, with the silver predominantly recovered with the copper. Tin recovery is projected at 71% in a concentrate grading 60% Sn and tungsten recovery at 30% at a grade of 60% WO₃. The copper concentrate does, however, contain a relatively high level of arsenic (up to 0.35 % As), which will likely incur smelter penalties.

Development and trial production began in earnest in 2011 with some 2,000 metres of underground development and 46,000 tonnes of ore mined. This development has been sustained with production expected to increase in 2014 to 60,000 tonnes ore and then to 150,000 tonnes next year and 320,000 tonnes in 2016. Part of the production is accounted for by the reprocessing of historical tailings. At full production in 2017, Pravourmiyskoe will account for almost 1% of current global tin output.

Outlook

Pravourmiyskoe is one of the largest tin operations in Russia and has a robust and ‘approved’ mineral resource/reserve base with a mine life in excess of 20 years at proposed production levels. The company believes that there is potential for a 25% increase in resources.

Tin supply is constrained and global production is declining with producers facing lower grades, operating and/or logistical difficulties, and increased costs. The metal is a vital ingredient in a wide range of products and new applications include the replacement of lead in electronic solders, extension to the life of lithium batteries, substitution for chromium in some stainless steels and solar cells, among others. The International Tin Research Institute anticipates that tin will be in short supply over the next five years as a result of lack of investment in new production, particularly for greenfield projects owned by junior mining companies.

Pravourmiyskoe is one of the largest tin operations in Russia and has a robust state-approved mineral resource/reserve base with a mine life in excess of 20 years at proposed production levels. In addition, the company believes that there is potential for a 25% increase in mineral resources.

There are few large tin projects currently identified and most have associated logistical (lack of infrastructure and distance to markets), political and environmental concerns. The geological and metallurgical aspects are often complex, the grades are relatively low, and the overall size of the deposits often does not justify the capital required for development. Over the short term, stronger prices are expected to elicit increased output from existing producers. As economic conditions improve over the medium term, new tin projects are likely to be brought forward.

Typical Topography of the Pravourmiyskoe Area