Flinders Resources Limited (“Flinders” or the “Company”) (TSXV:FDR) is pleased to provide an update on its production plan for the Woxna graphite project in Sweden (the “Woxna Project”). If successful the updated plan would permit Flinders to maintain its strategic advantage in becoming the first public company to produce graphite on a commercial scale.
Blair Way, President & CEO states, “After joining the Board and Management, my focus has been to transition Flinders from engineering work to re-establishing production at a capital cost within the Company’s means. This would allow us to develop cash flow in the short term and form strong and lasting relationships with customers. We have reviewed all aspects of the recently published Preliminary Economic Assessment on the Woxna Project (“PEA”) to define a staged implementation of the PEA. There is no material change to the PEA as it defines the path to production. The implementation plan allows for staged production rates and capital cost spending such that the initial startup requires less than half the total capital cost estimated in the PEA. The balance of the PEA capital cost will be invested in stages as sales and subsequent production levels demand. With more than CDN$11M in cash and zero debt, in combination with expected revenue from graphite sales from mid-2014, we believe the Company is well positioned to incrementally increase to production levels outlined in the PEA. Our aim is to be in production by the end of Q2 2014. With stabilized graphite prices, this is an exciting time for the Company and I look forward to providing regular updates on the progress at site.”
The Company advises that it has not based its production decision on a feasibility study of mineral reserves, demonstrating economic and technical viability, and, as a result, there may be an increased uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery, including increased risks associated with developing a commercially mineable deposit. Historically, such projects have a much higher risk of economic and technical failure. There is no guarantee that production will begin as anticipated or at all or that anticipated production costs will be achieved. Failure to commence production would have a material adverse impact on the Company’s ability to generate revenue and cash flow to fund operations. Failure to achieve the anticipated production costs would have a material adverse impact on the Company’s cash flow and future profitability.
The Company further cautions that the PEA is preliminary in nature. No mining study has been completed. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that the PEA will be realized.
The fully-permitted and past-producing Woxna Project remains unique in terms of the low startup capital, a high quality coarse graphite flake product and proximity to Europe, one of the world’s dominant graphite markets. After the finalization of the PEA in October 2013, and deterioration in the capital markets, the challenge has been to initiate production at a capital cost within the Company’s means.
The Flinders Board recently approved the staged production plan for commencing production of graphite from Woxna. This staged plan spreads the PEA capital cost over the next 4 years based as sales contracts are established but permits for lower production levels and costs until the sales warrant capacity expansion.
The open pit mine has been dewatered and is ready to put in service. The front end (grinding) and backend of the plant (drying/sorting/packing) are in serviceable condition, however the middle floatation section requires some additional equipment to enable optimized production according to the improved flow sheet defined in the PEA. Procurement of equipment (new and used) and design work has commenced. The Company currently exceeds all environmental statutory requirements and has established water balance control measures at site that will be upgraded to match the staged production plan to ensure all discharges are within environmental requirements.
The Company believes that the staged production plan will facilitate marketing of its products and allow the Woxna project to re-establish its former position as a key supplier of graphite to Europe. Flinders aims to position itself as the supplier of choice in terms of price, supply security and quality to the European graphite market. The production model being implemented will ensure the Company has developed an adequate customer base before ramping up to larger scale production and that the graphite products consistently meet end user specifications. Through the sale of reprocessed graphite over the last 12 months the Company has made substantial marketing in-roads and is confident the Woxna brand will continue to be well received throughout Europe.
Michael Hudson, FAusIMM, MSEG, MAIG, a director of the Company and a qualified person as defined under NI 43 101, has reviewed the scientific and technical disclosure in this news release.
On behalf of the Board,
Blair Way, President and CEO
For more information contact:
Jim Powell +1 647-478-5806
Certain information in this presentation may constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws (collectively, “Forward-Looking Statements”). All statements, other than statements of historical fact that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future are Forward-Looking Statements. Forward-Looking Statements are often, but not always, identified by the use of words such as “seek,” “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend” and statements that an event or result “may,” “will,” “can,” “should,” “could,” or “might” occur or be achieved and other similar expressions. Forward-Looking Statements are based upon the opinions and expectations of the Company based on information currently available to the Company. Forward-Looking Statements are subject to a number of factors, risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the Forward-Looking Statements including, among other things, the Company has yet to generate a profit from its activities; there can be no guarantee that the estimates of quantities or qualities of minerals disclosed in the Company’s public record will be economically recoverable; uncertainties relating to the availability and costs of financing needed in the future; competition with other companies within the mining industry; the success of the Company is largely dependent upon the performance of its directors and officers and the Company’s ability to attract and train key personnel; changes in world metal markets and equity markets beyond the Company’s control; mineral reserves are, in the large part, estimates and no assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery will be realized; production rates and capital and other costs may vary significantly from estimates; the Company’s decision to restart production at the Woxna graphite project is based on historical production and the Company’s preliminary economic assessment of the project and the Company has no plans to first complete a pre-feasibility or feasibility study on the project, as a result there is an increased risk of technical and economic failure for the Woxna graphite project; unexpected geological conditions; delays in obtaining or failure to obtain necessary permits and approvals from government authorities; all phases of a mining business present environmental and safety risks and hazards and are subject to environmental and safety regulation, and rehabilitation and restitution costs; the Company does not maintain insurance against environmental risks; and management of the Company have experience in mineral exploration but may lack all or some of the necessary technical training and experience to successfully develop and operate a mine. Although the Company believes that the expectations reflected in the Forward-Looking Statements, and the assumptions on which such Forward-Looking Statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on Forward-Looking Statements, as there can be no assurance that the plans, intentions or expectations upon which the Forward-Looking Statements are based will occur. Forward-Looking Statements herein are made as at the date hereof, and unless otherwise required by law, the Company does not intend, or assume any obligation, to update these Forward-Looking Statements.
Cautionary Note to United States Readers Concerning Resource and Reserve Estimates:
This release has been prepared in accordance with the requirements of the securities laws in effect in Canada which differ in certain material respects from the disclosure requirements of United States securities laws.
The terms “mineral resource,” “measured mineral resource,” “indicated mineral resource” and “inferred mineral resource” are Canadian mining terms as defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum’s (the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as may be amended from time to time by the CIM. These terms are not defined terms under the United States Securities and Exchange Commission (the “SEC”) Industry Guide 7 (“SEC Industry Guide 7”) under the Securities Act of 1933 and normally are not permitted to be used in reports and registration statements filed with the SEC.
Readers are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into “reserves” (as defined in SEC Industry Guide 7). “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of an economic analysis, except a preliminary economic assessment provided certain additional disclosure requirements are met. Readers are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.
Accordingly, information contained in this presentation and any documents incorporated by reference herein containing descriptions of our mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.