We currently do not own any real property.
We currently sub lease on a month to month basis an office space located at Suite 880,
580 Hornby Street, Vancouver, BC Canada V6C 3B6, consisting of approximately 256
square feet at a cost of $1,500 per month.
We own a 100% interest in our lead mineral
project called the Helmer-Bovill Property. Our activities at the Helmer-Bovill
Property are focused on developing the Bovill Kaolin Project and the WBL
Tailings Project, which are located within the Helmer-Bovill Property.
We
acquired the Helmer-Bovill Property from Idaho Industrial Minerals (“IIM”)
pursuant to an Assignment Agreement with Contingent Right of Reverter dated
August 12, 2002, as amended August 10, 2005, August 10, 2008 and January 21,
2010 (as amended, the “IIM Agreement”), between I-Minerals USA (formerly
Alchemy Kaolin Corporation), our wholly owned subsidiary, and IIM. Under the
terms of the IIM Agreement, IIM retained a contingent right of reverter with
respect to the mineral lease applications (or the mineral leases acquired
thereby) underlying the Helmer-Bovill Property if we failed meet our obligation
to issue to IIM a total of 1,800,000 shares of our common stock, in tranches,
based upon the completion of certain deliverables, and subject to such
conditions as imposed by the TSX Venture Exchange. On January 22, 2013, we
delivered the final tranche of the shares issuable to IIM. As such, we believe
that the contingent right of reverter set out in the IIM Agreement has been
extinguished, and that we have fulfilled all of our obligations under the IIM
Agreement.
However,
shortly after our delivery of the final tranche of shares to IIM, two minority
members of IIM attempted to derivatively (and on behalf of IIM) reject our
tender of shares. These minority members of IIM claimed that the deliverables
were not completed and the right of reverter could be exercised. The majority
member of IIM brought suit against the two minority members claiming that no
such derivative right exists, that the minority members had no right or
authority to reject the shares on behalf of IIM, and that we had fully complied
with the terms of the IIM. We have since been brought into that lawsuit.
Court-ordered mediation was held on May 28, 2015, in the lawsuit filed against
the Company by Hoodoo Resources, LLC, and the Brent Thomson Family Trust
(collectively, "the Plaintiffs"). The mediation sought to resolve
the Plaintiffs’ claims against the Company, as well as the Company’s claims
against the Plaintiffs.
Mediation was successful and the Plaintiffs and the Company entered into an agreement in principle to settle the parties’ claims against one another that was documented in a Binding Settlement Term Sheet. Thereafter, on December 2, 2015, we settled all lawsuits relating to the Helmer-Bovill Property pursuant to the terms of the Settlement Agreement. Under the terms of the Settlement Agreement, we paid IIM the aggregate sum of $100,000 (the “I-Minerals Payment”) for the release of any and all claims made against us under the lawsuits by the Ball Entities and the Plaintiffs. In addition, IIM and NWK have expressly acknowledged and agreed that, upon receipt of the I-Minerals Payment, we have fulfilled all of our duties and obligations under the terms of the IIM Agreement relating to our Helmer-Bovill Property, and that any and all rights and claims of IIM and NWK to the mineral leases making up the Helmer-Bovill Property will be released and extinguished. Refer to
“Legal Proceedings”
below for further information.
The
technical information appearing below concerning the Helmer-Bovill Property is
derived from the technical report titled Bovill Kaolin Project, Latah
County, Idaho, USA, NI 43-101 Technical Report - Feasibility Study, Prepared
For I-Minerals USA, Inc. with contributing consultants GBM Engineers LLC, Mine
Development Associates. HDR Engineering Inc., SRK Consulting (U.S.), Inc., Tetra
Tech, Compiled By GBM Project Number: 0530.
The
Helmer-Bovill Property is a development stage open pit mining operation which
will produce quartz sand, K- feldspar sand, kaolinite clay and halloysite
clay. The area has been mined historically for similar products.
The
Helmer-Bovill Property is located at geographical coordinates 46° 52' 43.5" N.
latitude and 116° 25' 47.2" W longitude (State Plane, NAD 83, Zone 1103,
Idaho West: 1 900 717 N, 2 454 671 E) in Latah County, Idaho, USA. The
property currently totals 5,140.6 acres. The mineral leases are not adjoining,
but are situated within three surveyed townships near the town of Bovill, Idaho.
The Helmer-Bovill
Property area is located on endowment lands owned and administered by the IDL.
These and other IDL holdings across the state of Idaho were granted to the
state in 1890 by the federal government on the condition they produce maximum
long-term financial returns for public schools and other beneficiaries.
Therefore, IDL has a mandate for these lands to produce revenue to support the
state’s public school system and other state institutions. To achieve this, IDL
manages these properties primarily for profit through the production of timber,
livestock grazing, and the extraction of mineable materials.
The State of Idaho
endowments lands fall in two categories referred to as Fee Simple (FS) and
Minerals Only (MO). The FS lands are where the State owns both mineral and
surface rights. The MO lands are where the State owns mineral rights but
someone else owns surface rights. The majority of the lands held by us are FS.
All mineral resources and mineral reserves described in this report are located
on FS lands. By way of our mineral leases, we have surface rights and legal
access to the Helmer-Bovill Property provided it meets all permitting and
bonding requirements administered by IDL. In the State of Idaho, mineral leases
are not required to be physically located in the field. The mineral leases are
currently described only on paper by the U.S. Public Land Survey Grid.
In 2002, we acquired
from IIM, through our wholly owned subsidiary Alchemy Kaolin Corporation, 16
State of Idaho mineral lease applications in Latah County, Idaho, to cover
deposits of feldspar, kaolin, and quartz located near Bovill, Idaho. In 2003,
we converted these applications to ten mineral leases and subsequently obtained
two more mineral leases. Renewal applications for all 12 leases were filed on
April 27, 2012 with a US$3,000 application fee. As part of the renewal process,
Idaho converted the 12 mineral leases into 10 revised mineral leases which were
issued on February 28, 2013. Subsequently, during 2013 the State of Idaho
granted one additional mineral lease to us. At this time, we hold 11 mineral
leases totaling 5,140.64 acres. All current leases are valid until 2023. Due
to recent changes in the law, we are exploring various options for renewal. All
leases are subject to rental fees of US$1.00/acre/y and a production royalty of
5 percent of gross proceeds.
The production royalty is prepaid at a rate
of US$500 per lease for the first five years, and increases to US$1,000 per
lease for the second five years of the lease. The surface rights of the 11
mineral leases are owned by both the State of Idaho and some private
landowners. However, the surface right of the mineral leases specific to the
resource estimation contained in this report are all owned and administered by
the State of Idaho. The U.S. Army Corps of Engineers (“USACE”) owns the
surface rights of all waterways located within the mineral lease boundaries.
The
details of the mineral leases that comprise the Helmer-Bovill Property are
summarized below:
Table 4-1: Mineral Leases
Mineral
Lease No.
|
Township
|
Range
|
Section
|
Legal Description
|
Endow-
ment
|
Status
|
Acres
|
E410005
|
41 North
|
1 West
|
16
|
Govt Lots 1-2, N2SE
|
PS
|
FS
|
172
|
E410006
|
41 North
|
1 East
|
18
|
Pt Gov Lot 2, NE, E2NW, W2SE, W2SESE
|
PS
|
FS
|
377.75
|
E410007
|
41 North
|
1 East
|
17
|
W2NE, W2NENE, SESE
|
PS
|
FS
|
140
|
E410007
|
41 North
|
1 East
|
|
NW, N2SW, S2SWSE
|
CI
|
FS
|
260
|
E410008
|
40 North
|
1 West
|
6
|
Govt Lots 9-11, SENW, E2SW, SWNE, W2SE
|
CI
|
FS
|
370.8
|
E410008
|
40 North
|
1 West
|
8
|
SW
|
CI
|
FS
|
160
|
E410008
|
40 North
|
1 West
|
17
|
NWNW and right of way in S2NE and N2SE
|
CI
|
FS
|
53.17
|
E410009
|
40 North
|
1 West
|
6
|
E2SE
|
CI
|
MO
|
80
|
E410009
|
40 North
|
1 West
|
8
|
S2NE, NENE, SE
|
CI
|
MO
|
280
|
E410009
|
40 North
|
1 West
|
17
|
S2NW, NENW, N2NE, SENE, NWSE less right of way
|
CI
|
MO
|
269.5
|
E410010
|
41 North
|
1 West
|
23
|
Govt Lots 5-8, E2SW
|
PS
|
FS
|
242.44
|
E410010
|
41 North
|
1 West
|
23
|
Govt Lots 1-4, W2SE
|
NS
|
FS
|
242.52
|
E410010
|
41 North
|
1 West
|
35
|
NWNW
|
PS
|
FS
|
40
|
E410010
|
41 North
|
1 West
|
36
|
SESW, SWSE
|
PS
|
FS
|
80
|
E410011
|
41 North
|
1 West
|
27
|
Govt Lots 1, 2, and 4
|
PS
|
FS
|
117.19
|
E410011
|
41 North
|
1 West
|
27
|
Gov Lot 3, W2NW, SENW, S2NE, N2S2, NENE
|
NS
|
FS
|
438.73
|
E410012
|
41 North
|
1 West
|
24
|
Govt Lot 3
|
PE
|
MO
|
41.41
|
E410012
|
41 North
|
1 West
|
36
|
NENW, NESW
|
PS
|
MO
|
80
|
E410013
|
41 North
|
1 West
|
20
|
W2NE, NENE, W2SE, SESE
|
NS
|
FS
|
240
|
E410013
|
41 North
|
1 West
|
21
|
N2, S2SW
|
NS
|
FS
|
400
|
E410014
|
41 North
|
1 West
|
16
|
Gov Lots 3 and 4, NW, N2SW, S2NE
|
PS
|
FS
|
413.78
|
E410014
|
41 North
|
1 West
|
24
|
Gov Lot 2, E2NW, NWNE
|
PE
|
FS
|
161.35
|
E410015
|
41 North
|
1 West
|
22
|
N2SE, SESE, N2, NESW
|
NS
|
FS
|
480
|
Total
|
5140.64
|
The
WBL Tailings Project is located on mineral lease E410013 and covers an area of
approximately 650 feet wide by 900 feet long.
Location, Access and Infrastructure
The
Helmer-Bovill Property is accessed by road from the town of Lewiston by
following U.S Highway #12 to State Highway ID-3 N to Deary and then State
Highway ID-8 E for 4 mi, then turning left on Moose Creek Road/National Forest Road
381 and following for 5.5 miles. ID-3 S/ID-8 W is an improved two lane road,
while Moose Creek Road/National Forest Development Road 381 is a dirt/gravel
road that provides access to State and Federal lands. In addition, access to
specific areas to be mined will require either upgrades to former logging roads
or construction of new access roads.
The
nearest, large communities are Moscow, Idaho, which lies about 28 miles
west-southwest of the Property, and Lewiston, Idaho, which lies about 33 miles
to the southwest. Transport to the Helmer-Bovill Property would utilize
standard over-highway vehicles.
Electric
power would be provided by Avista Corp., but we would be required to construct
approximately four miles of power lines.
Natural
gas is available to the Helmer-Bovill Property from a natural gas pipeline that
extends from Moscow to Bovill and is available to be utilized for this
processing facility. Approximately two miles of pipeline would need to be
constructed.
Water
needed for processing would come from new wells located at the process site.
Groundwater from drilled wells is typically used to serve domestic needs within
the vicinity of the Property. Additional water is also available in a small
reservoir north of the Helmer-Bovill Property. We intend to apply for water
rights to this reservoir in the near future.
The
region has a long history of clay production, forestry and farming. A labor
force skilled in heavy equipment operation, trucking, and general labor exists
within the surrounding communities and rural areas.
There
are several suitable locations for potential tailings storage, mining waste
disposal, and potential processing plants.
The
WBL Tailings Project is mined using a loader and/or excavator or backhoe. If
required, on-site power will be supplied by a diesel or gasoline power
generator. Fuel supply will generally be provided by pickup truck fuel
transfer tanks (typically 90 to 150 gallons). If fuel is temporarily stored on
site, secondary containment will be used (either double-walled tanks or a
secondary containment wall), and if fuel storage volume exceeds 1320 gallons, a
Spill Prevention, Control Countermeasure plan will be developed in accordance
with federal regulations. Water will be used only as dust control and will be
taken from the WLB pits. Bottled water will be provided, as necessary for
drinking water for employees and contractors.
20
Royalties, Agreements and Encumbrances
We
have rights to develop the Project through minerals leases issued by the State
of Idaho (Leases). These Leases were acquired from IIM and are held by
I-Minerals, based on an Assignment Agreement with Contingent Right of Reverter
(the Agreement), dated August 12, 2002, between I-Minerals USA (formerly
Alchemy Kaolin Corporation) and IIM. The Agreement has been subject to several
amendments and ratifications between the parties, dated effective August 10,
2005, August 10, 2008, and January 21, 2010. Under the terms of the Agreement,
I-Minerals acquired a 100 percent interest in the property by issuing a total
of 1.75 million shares of our common stock to IIM. These shares were issued on
a staged basis with the final block of shares was delivered on January 23, 2013.
The
State of Idaho retains a 5 percent gross production royalty due upon
commencement of any mineral production.
Environmental Liabilities
The
Leases we hold cover areas of historic open pit mining. These areas include
open pit mines, waste dumps and tailings areas. At this time, there are no
known environmental liabilities associated with the exploration work we have conducted,
and all activities to date are covered under general State and Federal authorizations
for exploratory work. We submitted an original bond of US$750 to the IDL to
cover environmental liabilities associated with its exploration work. This
bond remained in place throughout the work, but it was refunded in December
2012. On November 1, 2010, the State of Idaho revised its bonding program, and
since that time, we have been paying a reclamation bond of US$100 per lease per
year. IDL also requires bonding for each individual Land Use Permit for
exploration work requested. At present, IDL is holding a cash bond of $6,203.
All reclamation bonding is current through October 31, 2016, and the IDL has
approved all reclamation conducted to date.
Permits
We
are currently permitted for the following activities at the Bovill Project site
(IDL mineral leased lands).
Exploration
Activities
We
conducted exploration activities in accordance with Idaho Administrative
Procedure Act (IDAPA) 20.03.02.060 – Exploration Operations and Required
Reclamation. We originally filed a Notification of Exploration (NOE) with the
IDL in 2000, which was later amended for surface exploration and drilling
programs. Exploration disturbances have been reclaimed, and approved by the
IDL.
Mining
Activities
We
are permitted through an approved Mine Plan of Operations and Reclamation Plan
from IDL for the mining of approximately 10 acres of feldspathic sands from
June through October for up to 10 years (2012 through 2022). These feldspathic
sands were deposited as tailings from clay mining operations that occurred on
or near our mineral leases between 1956 and 1974. These activities are
conducted under a National Pollutant Discharge Elimination System’s (NPDES)
2008 Multi-Sector General Permit (MSGP) for Stormwater Discharges Associated
with Industrial Activities (Permit Number IDR05CU73). The stormwater permit
became effective on November 8, 2012, and has been extended until June 4, 2020.
Permits
to be Acquired for the Project
A review of Project plans identified a range
of environmental permits, review processes, and authorizations required for
construction, operation, and closure. Development of the Project will require
approval of a Plan of Operations and Reclamation Plan by IDL (IDAPA 20.03.02), and
an updated NOI for coverage under the NPDES MSGP for industrial activities
(Sector J3: Mineral Mining and Dressing/Clay, Ceramic, and Refractory
Materials). In addition, a State air quality permit will be required for
emission sources, including dryer stacks and fugitive dust. Closure of the
mine requires IDL approval of a detailed Mine Site Reclamation and Tailings
Closure Plan. Also, monitoring of certain resources will likely be mandated
through the State mine permitting process as well as through the Federal NDPES
stormwater general permit.
21
A goal of the Project design is to avoid
disturbances in jurisdictional wetlands or other waters, so that a Clean Water
Act Section 404 permit will not be required, or at most, be limited to Section 404(e)
Nationwide Permit 14 (nationwide permit) for minor fill. No federal lands or federal
permits (except for the stormwater general permits) are anticipated in the
Project plans, and as such, a National Environmental Policy Act (NEPA)
environmental review of the proposed Project is not anticipated (other than
resource information required as part of the stormwater general permits).
Climate
and Physiography
The
climate at the Helmer-Bovill Property is characterized by an estimated average
annual precipitation of 38.82 inches, with the highest values recorded between
October and March (71% of the annual precipitation). The average annual minimum
and maximum temperatures are 30.1°F and 55.7°F, respectively; with average
monthly minimum and maximum temperatures ranging from 18.5°F to 41.7°F and
41.1°F to 83.3°F, respectively.
The
average total snowfall ranges from 0.1 inches in October to 37.3 inches in
January, with an annual average of 100.9 inches. Average snow depth ranges from
1.0 inches in November to 23.0 inches in February, with an annual average snow
depth of 6.0 inches.
The
average elevation is about 3,000 ft. above mean sea level, with a topographic
relief of about 200 ft. The area is largely covered with soil, but old workings
(pits and trenches) and road cuts provide exposure to the underlying bedrock
geology. The Helmer-Bovill Property is located on the west side of the Potlatch
River drainage area.
The
Helmer-Bovill Property area consists of low foothills and ridges alternating
with relatively wide, flat basins. Forested areas occupy the slopes and ridge
tops which are managed primarily for timber production. Conifer forest makes up
approximately 50% of the overall Helmer-Bovill Property area. Forest stands
were observed to be early seral, highly fragmented, and lacking in the
ecological functions and values of older, more contiguous forests. Grasslands
occur in the basins alongside sinuous intermittent and perennial stream
channels. The Helmer-Bovill Property area is currently permitted for livestock
grazing. Most of the Helmer-Bovill Property area has been disturbed by previous
mining, forestry and grazing activities and, as such, contain predominantly
disturbance oriented plant communities. Non-forested meadows or pasture areas
are intensively grazed resulting in a proliferation of non-native vegetation
and soil compaction and erosion.
Surface
waters primarily consist of small, meandering, intermittent stream channels
that flow toward the Potlatch River. These channels are typically located in
the level “flats” between low hills or ridgelines and dry up by mid or late
summer. Most streams are hydrologically altered by high- density road
construction, historic mining, and cattle grazing. Grazing has also eliminated
much of the woody growth along most stream channels resulting in eroded
channels and sedimentation. Other surface waters include several old clay
mining pits and small dams that have developed into water catchment basins as
well as emergent wetlands flanking the stream channels. Groundwater appears in
scattered locations as either springs or seepage discharge along streams or
edges of wetlands. Native soils predominate in the area.
History
U.S. Bureau of Mines (“USBM”) and
United States Geological Survey (“USGS”) (1942-1947)
During
World War II, the clays in eastern Washington and northern Idaho were examined
as a possible source of alumina and a substitute for foreign bauxite ores.
Domestic bauxite reserves were being depleted, and the importation of foreign
bauxites was handicapped by transportation difficulties. Both the USGS and USBM
conducted extensive field studies that were followed by the drilling of 650
holes that totaled about 20,252 ft.
USBM (1953-1963)
In
1953 the USBM continued their search for viable clay deposits. They also
investigated the potential of the contained silica sand for the glass industry.
The USBM tested the Benson and Olsen clay deposits between Troy and Deary, and
then moved on to the Bovill deposits. Ninety-seven samples were collected from
1,325 ft. of drilling over an area covering 750 ft. x 350 ft. that is located
1.5 miles southwest of Bovill near State Highway 8.
A.P.
Green Refractories Company (1956-1993)
In
1956, A.P. Green Refractories Company purchased all the remaining assets of
Troy Brick and Clay and acquired a lease, being located north of Helmer, from
which they produced refractory clay. They processed the clay by air flotation
to produce two grades of refractory clay. Production continued until the early
1990’s when Hammond Engineering purchased one pit from A.P. Green. This pit
produced transported clay for ceramic applications. Total production from the
area during this period is estimated to be 250,000 tons.
22
J.R.
Simplot Company (1956-1974)
In
1956, the J.R. Simplot Company (“Simplot”) of Boise, Idaho, acquired leases
covering the Bovill deposits. In a cooperative program, Simplot and USBM
drilled 240 holes (99 of which were on 50 ft. centers) and conducted washing, pyrometric,
mineralogical, and beneficiation tests. By 1962, Simplot had built a clay
plant, the Miclasil facility, for the production of paper fillers and specialty
ceramics. Production initially came from pits in the Bovill deposit, which are
in transported clay of the Latah formation directly south of the plant. Simplot
shifted production to residual clay deposits in the granodiorite, as this
source proved more satisfactory for paper filler. The pits exploited by Simplot
for residual clays were the WBL north and south pits and the Moose Creek Clay
Mine, and the Stanford pit. Simplot operated their plant until 1974, when it
was sub-leased to Clayburn Industries of British Columbia. Clayburn operated
the property only a few years, calcining clay that was shipped to Canada and
processed into super-duty and 70% alumina bricks. In 1994 the plant was
dismantled and the property partially reclaimed.
Several
Companies (1983-1986)
During
the mid-1980’s, a number of companies began exploration work in the Helmer-Bovill
area to identify clays suitable for use as paper fillers and coaters. The
University of Indiana, Nord Resources, Miles Industrial Mineral Research, and
Cominco American conducted work on the Helmer-Bovill area deposits. In
1985-1986, the Erikson- Nisbet Partnership formed a consortium of companies to
develop new processes for beneficiation of the clays, but the introduction of
precipitated calcium carbonate fillers for paper reduced the demand for kaolin
fillers.
Regional Geology
The
regional geology is dominated by Precambrian sedimentary rocks of the Belt
Supergroup (“Belt”), which have been strongly deformed and intruded with
granitic phases of the Idaho Batholith during the Cretaceous age Sevier
Orogeny.
During
the Middle Proterozoic, the area was dominated by a large intra-cratonic basin
that was subsiding along syn-sedimentary faults. The basin sediments comprise
the Belt which range in age from about 1,470 to 1,400 Ma. The oldest units
consist of the Lower Belt sequence, these are overlain by the Middle Belt
Carbonates and the youngest are the Missoula Group.
The
Belt sediments are believed to have remained relatively stable until
approximately 1,350 Ma when portions of the basin were affected by
compressional tectonics of the East Kootenay Orogeny. This orogeny was followed
by rifting of the basin during the late Proterozoic-early Paleozoic when large
portions of the sediments were transported away and the western margin of North
America was developed.
The
next major tectonic event occurred during the Cretaceous Sevier Orogeny. Early
compressional tectonics dominated the area forming large-scale folds, reverse
and thrust faults. During the late Cretaceous, the Bitterroot Lobe of the Idaho
Batholith was emplaced in the region. The intrusive rocks described below were
formed during this event.
The
most recent, significant, geologic event was the deposition of the Columbia
River Basalts (“CRB”). The CRB consist of a large plateau flow sequence of
Miocene age (6 to 17 Ma). The lavas are distributed over an extensive area
covering portions of Idaho, Oregon, and Washington. Minor extensional block
faulting has resulted in much of the present landscape.
Local
Geology
Belt
Series
The
Precambrian metasediments of the Belt series are the oldest rocks in the
Bovill-Moscow area and form the basement for the entire area. The Belt series
rocks crop out primarily in the northern and eastern sections of the
Helmer-Bovill Property. They form a high-grade metamorphic facies assemblage
that includes gneiss, schist, and minor meta-quartzite, meta-argillite, and
meta-siltite.
Thatuna
Granodiorite
Granitoid
intrusive rocks of Cretaceous age underlie a large portion of the Helmer-Bovill
area and form part of the Thatuna batholith. Thatuna lithologies consist
predominantly of granodiorite with subordinate adamellite, tonalite, and
granite. The principal mineral constituents are quartz, plagioclase feldspar,
K-spar, and biotite with trace to minor amounts of muscovite, garnet, and
epidote. The batholith is medium- to coarse-grained granular, and porphyritic
textures are common. Erosion of the Thatuna batholith developed a mature
topography where it is exposed in Latah County.
23
Recent
geological mapping identified a previously undescribed phase of the Thatuna
batholith, referred to as the Kmcp. The Kmcp is interpreted to be a border zone
of the intrusion that occurs along the interface between the main-stage,
coarse-grained, and porphyritic Thatuna batholith and the Precambrian Belt
series roof rocks. Intrusion into cooler roof rocks resulted in a distinctive
and texturally diverse unit characterized by dominant granular medium-grained
and subordinate coarse-grained and pegmatoid textures, the lack of
well-developed porphyritic textures and the presence of Precambrian xenolithic
paragneiss, paraschist and metasiltite blocks inherited from the roof rocks.
Where unaltered, the Kmcp intrusive rocks contain a primary assemblage of plagioclase,
K-spar, quartz, biotite, and muscovite, and are predominantly of granodioritic
to granitic composition. The porphyritic main body of the Thatuna batholith
does not appear to crop out within the mapped part of the Helmer-Bovill area.
The
Kmcp derives its distinctive character from high-level interaction with the
Precambrian metasedimentary roof rocks. More rapid cooling in the contact zone
produced a dominant medium-grained, non-porphyritic, granodioritic unit in
contrast to the coarser-grained, porphyritic granodiorite lithology that
characterizes the deeper main stage of the batholith. In the roof zone, hydrous
mineral-bearing xenolithic blocks of the Precambrian Belt series metasediments
were entrained by the intruding magma and outgassed of their volatile
component. The outgassing contributes to the creation of pockets of hydrous
granitic liquid proximal to the Precambrian blocks. These pockets crystallized
subsequently into coarse-grained to pegmatoid granite pods that are distributed
within the larger body of medium-grained granodiorite. Owing to the
physicochemical conditions of crystallization within the hydrous pods of
granitic liquid, the resultant solidified rocks show a stronger tendency toward
higher proportions of K-feldspar relative to plagioclase and higher K2O/Na2O
ratios than does the dominant medium-grained granodiorite.
Weathered
Thatuna Granitoid
The
exposed Thatuna batholith was subjected to intense weathering in a tropical or
near-tropical climate during the Miocene epoch, while the Columbia River
basalts were erupted and the Latah formation sediments were deposited. In
response to the strong weathering, much of the feldspar and at least some of
the mica in the igneous body were altered to one or more varieties of clay
minerals. The depth limit of weathering may initially have been fairly
consistent; however, subsequent erosion has left a variable weathering profile
with thickness roughly dependent on topography. At present, the depth of
weathering may exceed 100 ft. along ridges and be less than 3 ft. in some
valleys.
Of
particular importance is the weathering of the feldspar in the granitoids to
halloysitic to kaolinitic clays. It was the presence of kaolinitic clay
deposits that provided the initial impetus for economic mineral development in
north Idaho. Plagioclase feldspar is the least stable phase in the weathering
environment, and it alters to form clay well before K-spar and muscovite.
K-spar and the micas are relatively resistant to alteration during all but the
most intense weathering. Quartz is impervious to alteration throughout the
weathering cycle. In the Helmer-Bovill area, pits that were mined for kaolin in
residual deposits contained mostly quartz, halloysite, kaolinite, and K-spar.
The waste material is primarily quartz and K-feldspar, with plagioclase
accounting for only a minor proportion of the total feldspar.
Potato
Hill Volcanics
The
Potato Hill volcanic rocks contain silicic to intermediate volcanic rocks and
include lava flow and pyroclastic flow units, as well as hypabyssal intrusive
rocks. They form much of the rock along the western edge of the Helmer
embayment at Potato Hill, and along the southern edge of the Thatuna. Many of
the pyroclastic flows contain abundant xenolithic clasts of older granodiorite
and Belt metasediments.
The
individual flows are 3 to 50 ft. thick and the complete sequence exceeds 900
ft. in thickness. The flow units generally contain 3% to 10% phenocrysts of
feldspar and quartz distributed in an aphanitic matrix of devitrified volcanic
glass. Accessory minerals include magnetite, hornblende, apatite, and zircon.
Some lithic-rich pyroclastic flow units carry up to 20% fragments. The
saprolitic weathering that is well-developed in the older rocks has not
appreciably affected the Potato Hill volcanics.
Columbia
River Basalts
The
First Normal member of the Grande Ronde formation, the Priest Rapids member of
the Wanapum formation, and the Onaway member of the Saddle Mountain formation
(oldest to youngest, respectively) are all Columbia River basalt flows mapped
in the Helmer-Bovill area. The Grande Ronde formation flow occurs in the
southern portion of the Helmer-Bovill area and consists of fine-grained to very
fine-grained aphyric basalt. The Priest Rapids flow is a medium to course-grained
basalt with microphenocrysts of plagioclase and olivine in a groundmass of
intergranular pyroxene, ilmenite, and devitrified glass. It crops out in
increasing abundance to the southwest toward Deary. Saddle Mountain basalts are
found much further to the west. The importance of the Columbia River basalts to
the genesis of the Latah formation is that the episodic basaltic extrusion
dammed streams and formed lakes into which kaolin-rich sediments eroded from
weathered granitoid and Precambrian metasediments were deposited.
24
Latah
Formation
The
Latah formation can be described as lake bed sediments that, although local in
origin and distributed in disconnected basins, occur over an area 175 miles
long and 75 miles wide in eastern Washington and northern Idaho. Episodic flows
of the Columbia River basalts blocked streams and formed lakes that collected
sediments eroded from surrounding rocks. In the Helmer-Bovill area, a major
basin termed the Helmer embayment occurs over an area of approximately 25 to 30
square miles. Latah formation sediments are described as clay, silt, sand and
minor gravel deposits that are laterally equivalent with and overlie flows of
Columbia River basalts. The clays are white, yellow, red and brown in color,
kaolinite-rich, and range from a few feet to several tens of feet in thickness.
Palouse
Formation
The
Palouse Formation comprises mixed loess and flood plain sediments of
Pleistocene age. It ranges in thickness from 3 to 35 ft. in thickness and
averages 10 ft. thick in the Helmer embayment. The unconsolidated layers also
include volcanic ash from the eruption of various Cascade Range volcanoes.
Mineralization
The
Helmer-Bovill Property hosts four different deposit types. These include
primary Na-feldspar deposits, residual
K-spar-quartz-kaolinite-halloysite deposits, transported clay deposits and
K-spar-quartz tailings deposits (which are located at the WBL Tailings
Project).
The primary Na-feldspar deposits are hosted
within granitic border phases of the Thatuna granodiorite. The transported clay
deposits are hosted primarily within the Latah formation. This formation was
deposited primarily in shallow lakes dammed by Columbia River Basalts.
Extensive weathering of feldspathic source terrains constitutes the provenance
of these clays. The residual deposits are derived from saprolitic weathering of
the Thatuna granodiorite-granitic phases. In general, Na-feldspar alters to kaolinite
and halloysite. These clays are accompanied by residual K-spar and quartz and are the subject
of this report.
The
WBL Tailings Project hosts K-spar and quartz. The tailings were deposited on a
gently east-northeast sloping hillside and also with an impoundment structure
located at the base of the slope. Exploration trenches indicate the tailings
are in excess of 17 ff. deep in most places. In general, the sloping portions
of the tailings are composed of coarser material and the flat lying portions at
the base of the slope are composed of relatively finder materials. The tailings
appear to be continuous based on observations from test pits.
Feldspars
The
unweathered Thatuna Batholith represents a source carrying a high total
feldspar abundance, of which a significant proportion is Na-feldspar. In the strongly
weathered Thatuna Batholith rocks plagioclase (Na-feldspar) shows nearly
complete alteration to a kaolin mineral, but much of the K-spar survives
alteration.
Quartz
Exploration
and drilling results indicate that the quartz in the Thatuna batholithic rocks
is relatively free of Fe-bearing mica or oxide inclusions. The analytical values
for the trace elements in the quartz are very near or below detection limits
for the electron microprobe and indicate that quartz from the Moose Meadows
area is essentially free of impurities. This data suggests that the area has
excellent potential to produce a glass-grade product that might be processed
further into feed stocks for the high purity quartz market.
Clay
Minerals
The
kaolinite group of clay minerals includes four minerals that are similar
chemically, but differ with regard to crystal structure. Two of these
kaolinite group minerals, kaolinite and halloysite are the major clay minerals in
the Helmer-Bovill area clay deposits. Crystal structure differences are
important and control properties relevant to their commercial applications.
Kaolinite occurs as distinct platelets, whereas halloysite forms tubes and
spheroids. Although halloysite also has a plate-like crystal form,
imperfections in its crystal lattice cause the crystal to “roll up” into the
tubular forms. There are two varieties of halloysite, the four-water variety
and the two-water variety. The two-water variety is a dehydrated version of the
four-water halloysite and is almost impossible to distinguish from poorly
crystallized kaolinite. Both varieties of tubular halloysite and poorly
crystallized kaolinite exhibit poor viscosity.
25
Residual
clays developed on weathered granitoid in the Helmer-Bovill area are a mixture
of halloysite and kaolinite, with the concentration of total clay dependent
upon the degree of weathering. Drilling shows that halloysite content decreases
with depth as the effects of weathering diminish. In tests on two
samples from the WBL north pit, GMT (2005) demonstrated that there is a significant
halloysite fraction in the residual clay. The work done by GMT indicates that
the quality of the residual clay from the WBL pit is high enough to be used in
some high-end specialty paper, paint, and ceramic markets. Work done by
I-Minerals and further continued by GMT show that a wet process using proven
gravity separation equipment can produce a high-quality halloysite product that
will gain attention of halloysite markets.
Deposit
Type
The
mineral deposit consists of residual deposits containing primarily K-spar, quartz
and clays. The mineral deposit is underlain by the Thatuna Batholith, composed
mainly of Na-feldspar, K-spar and quartz.
Weathering has created a residual saprolite horizon which directly overlies the
bedrock from which it was derived. During the natural processes of weathering,
the original plagioclase feldspars (Na-feldspar) have preferentially broken down to
produce the clays kaolinite and halloysite. The K-spars have resisted
weathering to a degree and much of the original component remains as free
grains. Similarly, the quartz component of the host rock remains as free grains
in the weathered material.
Minerals of economic
interest include the following:
-
Halloysite clay, an
aluminosilicate with hollow tubular morphology in the submicron range
-
Kaolinite clay, hydrated aluminum
silicate used in ceramics, rubber, plastics, etc and when calcined becomes a
metakaolin clay, or dehydroxylated kaolin clay, which is reactive (Pozzolan)
and enhances the strength, density and durability of concrete and ceramics
-
K-feldspar, uniquely suited to
ceramic formulations requiring an alumina source
-
Quartz, silicon dioxide (SiO
2
)
a component of various types of glass.
Exploration
, Drilling and Bulk
Sampling/Pilot Testing
Exploration Programs
During the period
from 1999 through the end of 2001, the exploration work included the
acquisition of over 6,000 acres of mineral lease applications, the compilation
of an extensive file on the results of previous operations, and new drilling programs.
During 2002 and 2003,
geologic mapping and petrographic studies were performed. An electron
microprobe analytical study was conducted on field samples, quartz products and
feldspar products from earlier work. Following petrographic and microprobe
studies, select intervals of residual deposits from the 2000-2001 drilling
program were sent to Mineral Resource Laboratory (MRL) for process testing.
Since 2003, all exploration work completed on
the property has involved diamond core drilling. The Mineral Resource estimate
in this study report is based on data and information gathered during these
diamond drilling programs.
The
exploration work we conducted was used to target generalized rock types and
their weathering by-products. The work was successful in defining four target
areas which were subsequently tested by diamond drilling. SRK Consulting (SRK)
reviewed the exploration procedures and sampling methods as part of the
pre-feasibility study completed in 2014 and found that the work was conducted
by trained professionals to industry standards for a deposit of this type. SRK also
stated that the exploration methods were successful in defining their intended
targets and that similar techniques would be appropriate to expand the resource
base if necessary.
Drilling Programs
During 2000-2001, a
41-hole diamond drill program was completed at the Property, focused on both
bedrock feldspar deposits and residual deposits. Approximately 50% of the drill
holes penetrated residual deposits at or very near the surface. A total of
4,063 ft. were drilled during this program. All holes were surveyed by Rim Rock
Surveying.
In 2003, a 12-hole,
diamond drill program was completed at the Project, testing for residual
deposits over a broad area. A total of 1,333 ft. were drilled in this program. The core was split,
sampled, and described in detail within a previous Technical Report and in
petrographic reports prepared for I-Minerals All holes were
surveyed with a hand held GPS with an accuracy of several meters.
26
In 2007, a 28-hole,
diamond drill program was conducted to further evaluate the residual deposits.
Six holes were located in the WBL Pit area on 200 to 600 ft spacing. The
remaining holes were spread over the entire property to test those areas
believed to be underlain by the weathered Thatuna granodiorite, establishing
several new prospective areas. A total of 3,529 ft were drilled during this
program. The six holes located at WBL Pit were surveyed by Jamar and Associates
and all remaining holes were surveyed by handheld GPS with an accuracy of
several meters.
In 2010, a 10-hole,
diamond drilling program was completed in the WBL Pit and Middle Ridge areas.
Five holes were completed in each area, on 400 to 900 ft spacing. A total of
1,195 ft were drilled in this program. All holes were surveyed by Taylor
Engineering with a differential GPS with centimetre accuracy.
In 2011, a 66-hole,
diamond drilling program was conducted in the WBL Pit and Middle Ridge areas. At
Middle Ridge, 45 holes were drilled and at WBL, 21 holes were drilled. These
holes were mostly located on 200 ft spacing with a few on 400 ft. A total of
7,747 ft were drilled during this program. All holes were surveyed by Taylor
Engineering with a differential GPS with centimetre accuracy.
In 2013, a 167-hole,
diamond drilling program was conducted in the Middle Ridge deposit and in two
new areas referred to as Kelly’s Hump North and South. At Middle Ridge, 21
additional holes were completed to provide a drill pattern on 100 ft spacing in
the area hosting higher halloysite grades. In the Kelly’s Hump area, a phase
one program was completed with 17 holes spread though out the elevated area of
the north south trending ridge. These were generally spaced at approximately
400-800 ft with all but one, located in the northern area. A Phase 2 program was
completed with 113 additional holes on 100 ft spacing in the Kelly’s Hump North
area, and 16 holes on 200 ft spacing in the Kelly’s Hump South area.. A total
of 17,811 ft. were drilled during this program. The drill hole locations were
first laid out by Taylor Engineering with a differential GPS and then once the
drill rig was set up any offsets were measured with a tape measure.
The drillhole
database supporting the resource estimation of this report consists of 322
diamond core drillholes totaling 35,909 ft. The shallowest hole is 20 ft, the
deepest is 260 ft, and the average is 112 ft. All drillholes are oriented
vertically and none of the holes have down hole deviation surveys. Since all of
the drilling is relatively shallow the lack of down hole deviation survey has
no material impact on the sample location. Since many of the older drillholes
are located with a hand held GPS their elevations do not match the current,
high resolution topographic surface. For this reason, all drillhole supporting
the resource estimation of this report, are draped onto the high resolution
topography to provide a uniform basis of elevation control. Typically, the
sample recovery was very good ranging from 60 to 100%. The average core
recovery is 87%.
27
Figure
4. Drill Hole Locations
Historical Testing
Various
investigators have undertaken mineralogical, beneficiation, and product
characterization testing programs on material taken from our Helmer-Bovill
property. This testing includes primary material from the Bovill deposit, as
well as secondary material—referred to as WBL Tailings—that was generated from
a previous kaolin clay mining operation at the site during the 1960s and 1970s.
Much
of the process developed to recover the minerals was conducted by two principal
investigators: Ginn Mineral Technology (GMT) and the Mineral Research
Laboratory (MRL) of North Carolina State University. GMT completed the
developmental work on the clay (halloysite and kaolinite) circuit, using
bench-scale (pounds of material) and pilot plant (hundreds of pounds) process
demonstrations. Similarly, MRL carried out the development work on the sand
circuit (k-spar and quartz), also employing bench-scale and pilot plant process
demonstrations. Both service providers produced products of a suitable grade
and quality for detailed characterization, and suitable for commercial
production.
The
bench-scale testwork conducted by GMT demonstrated the responsiveness of the
clay to conventional physical and chemical beneficiation methods. The
bench-scale testing results were further reinforced with five pilot plant
demonstrations. The first two were conducted in July 2008 and July 2010, and
were modest in scale. Subsequently, three additional small-scale pilot tests
were conducted to explore alternative process flowsheet arrangements. The data
generated from these tests confirmed the results of the previous tests, both quantitatively
and qualitatively, including definition of the circuit for the recovery of
halloysite.
28
Additional
testing and development was conducted in 2011 and 2012 on bulk samples and
composites to confirm previous work and generate material for product
development. Process development work focused on assessing alternative physical
separation technologies for the kaolinite/halloysite separation preparation.
The results from this more recent testing confirmed the previous work, which
improves the confidence in the viability of the process to generate saleable
products.
Historical
kaolinite mining activities on the property generated a feldspathic sand
tailings material, which is referred to as WBL Tailings. These tailings are
considered representative of the sand fraction of the material derived from the
Bovill resource. Primary material from the historical WBL pit was also used in
testing. The sand material was prepared from the sand separated from the clay
as part of the clay testwork programs undertaken by GMT.
Initial
testing on the WBL Tailings focused on recovery of K-feldspar from quartz
including unit operations, operating conditions, and general equipment
arrangement. A basic set of parameters for conventional beneficiation methods
was established at the bench test level. Later, a comprehensive pilot plant
campaign was undertaken based on the findings of the bench-scale testing. The
objective was to determine engineering and operating data that would facilitate
the design of a commercial process plant. A 35-ton bulk sample of WBL Tailings
was processed on a continuous basis, facilitating the preparation of a sizable
quantity of product concentrates as well as the optimization of unit
operations. The process employed conventional unit operations and was
successful in achieving the stated objectives.
MRL
was also retained to provide design the quartz purification process. Mirroring
previous development work on the K-feldspar flowsheet, MRL performed
bench-scale testing to provide preliminary data to design and plan a more
comprehensive pilot plant campaign. Pilot campaigns were conducted in late 2011
and again mid-2012, which demonstrated the ability to produce suitable quartz
products from both WBL Tailings and primary material. Due to constraints on
material, budget, and time, the processing regime was not optimised during
these campaigns.
Initial
Clay Testing
GMT
reported on a clay processing pilot plant trial that used material sourced from
the Kelly’s Hump location (Drill Hole RC13-5263). The sample was extracted from
a depth of 10 ft to 15 ft and totalled about 12,000 lbs.
The
primary purpose of the testwork was to optimize the separation of halloysite
from kaolinite. Other stated objectives of the work were to optimize the
brightness of the halloysite by employing physical and chemical beneficiation
methods, and to produce a metakaolin product and assess its pozzolanic
properties. The testing undertaken by GMT was conducted using American Society
for Testing and Materials (ASTM) and Technical Association of the Pulp and
Paper Industry (TAPPI) standards in line with previous testing campaigns and
industry practice.
The
bulk sample was processed to remove the sand component (+325 mesh).
Reconciliation and mass balancing determined that approximately 78% of the feed
mass reports to the +325 mesh sand fraction, with the other 22% reporting
to the fine clay fraction. The sand fraction was then shipped to MRL for
further feldspathic sand testing.
As
shown in Table 0-2, a two-stage beneficiation process employing both
centrifugation and differential flotation yielded the brightest product.
Differential flotation also produced the highest grade halloysite, exceeding
90%. Final product processing then explored cleaning the concentrates with
either acid leaching or magnetic separation, or cleaning them with a combined
magnetic separation with acid leaching step. A single-stage processing route
with magnetic separation alone was the most effective in improving the
brightness of the finished products by removing mica gangue from the
concentrate. Further improvements were realized with the inclusion of an acid
leaching stage for the non-magnetic product. Finally, a coarse kaolinite
product was prepared from the 3” hydrocyclone underflow for conversion into
metakaolin. The sample was prepared by calcining the kaolinite at 850°C for
appraisal as a pozzolanic material.
Table
0-2: Clay Processing Product Recoveries
ID
|
Process flow description
|
Stage yield
(%)
|
Cumulative yield (%)
|
TAPPI brightness (%)
|
1
|
+325 mesh
screened fraction
|
78
|
78
|
NA
|
2
|
-325 mesh
screened fraction
|
22
|
22
|
63.00
|
3
|
3”
hydrocyclone overflow
|
90
|
19.8
|
64.43
|
4
|
50%
classification of overflow (fine)
|
50
|
9.9
|
71.98
|
5
|
50%
classification of overflow (coarse)
|
50
|
9.9
|
52.1
|
6
|
35%/50%
classification of overflow (fine)
|
33
|
6.5
|
73.51
|
7
|
35%/50%
classification of overflow (coarse)
|
67
|
13.3
|
56.07
|
8
|
Differential
flotation of Item 4
|
71
|
7.0
|
75.72
|
The
clay testwork demonstrated the ability to produce varying grades of halloysite
and kaolinite concentrates. The extent of the process to be deployed in the
commercial plant will largely be determined by the size and value of the
halloysite product markets. Market research indicates that there is a market
for both standard-grade and high-purity halloysite, and therefore, differential
flotation is incorporated in the process flowsheet. Market research also shows
that while there is a limited market for the type of kaolin produced from
Bovill ores, there is a robust market for metakaolin. Therefore, all of the
Bovill kaolin will be converted to metakaolin.
29
Current Testing
The
current testwork is mainly focussed on the development of both sand and clay
circuits, further product definition and characterization, and initial OEM
equipment testing in preparation for detailed engineering. Previous testwork on
the feldspathic sands provided engineering definition sufficient for the
completion of engineering and feasibility assessment. However, additional
testing in 2015 confirmed earlier results, optimized the processing scheme, and
added some refinements regarding purification of the products.
Representative
Sample Collection
In
mid-2014, bulk metallurgical samples were collected from 9 trenches using an
excavator. The trench locations were selected based on the local geology and
results from adjacent drill holes. Selection of the sample locations was
reviewed and approved by SRK’s Principal Resource Geologist, Dr. Bart Stryhas.
The
mineral composition of the deposit is relatively homogeneous with the exception
of halloysite content. The selected sample locations are in the expected mining
areas, and either rich in halloysite (6 locations in the Kelly’s Hump area and
two locations in the Middle Ridge area) or void of halloysite (one location in
the Kelly’s Hump South area).
Depth
of the ore-bearing layer, and depth of the overburden were also considered when
selecting the sample locations. The depth to the ore layer (weathered
granodiorite) was determined for each hole, and an excavator dug through the
overburden to the top of the mineralized layer to approximately 5 feet below.
The samples were collected, placed in large bulk bags, and shipped to GMT for
clay and sand separation. The samples were not blended in the field, but were
sent to GMT in three discrete samples; Kelly’s Hump (halloysite rich), Kelly’s
Hump South (halloysite void), and Middle Ridge (halloysite rich). GMT processed
the clay fraction and shipped the sand to MRL for additional bench and pilot
scale testing.
While
these samples cannot be considered statistically representative of the entire
ore body, they are characteristic of the ore that is expected to be encountered
during the mining and processing of the Bovill Project. The sampling
techniques, and the metallurgical samples collected are considered suitable for
bench and pilot plant metallurgical testing to define and confirm the process
recovery scheme and final product quality.
Table 13‑3: Current Testwork
Description
|
Organization
|
Report Title
|
Report Date
|
Halloysite
and Kaolin Processing Trials
|
Ginn
Mineral Technology
|
Production
Trials of the Kelly’s Hump and Middle Ridge Crude Resource Ore
|
January 2015
|
Processing
for brightness improvement
|
Ginn
Mineral Technology
|
Middle
Ridge Differential Flotation Product Brightness Optimization
|
April 2015
|
Ore
characteristics and impact crushing tests
|
Stedman
Machine Company
|
Test
Results for GBM Engineers/I-Minerals
|
May 2015
|
Tailings
thickening and filtration testing
|
Bilfinger
Water Technologies, Inc.
|
Filtration
Test Report No. LAB315090
|
July 20, 2015
|
Slurry
rheology and filtration tests on kaolin, and halloysite products
|
Resource
Development Inc.
|
Bovill
Rheology and Filtration Results
|
September 22, 2015
|
Synopsis
of sand bench and pilot scale testing
|
North
Carolina State University – Mineral Research Laboratory
|
TBD
|
March 2016
|
Clay
Processing
The
samples described in Section 13.2.1 were shipped to GMT in Sandersville,
Georgia, USA. GMT received 26.3 tons of Kelly’s Hump (halloysite-rich)
material, 4.4 tons of Kelly’s Hump (void of halloysite) material, and 6.3 tons
of Middle Ridge (halloysite-rich) material for production scale trials. Results
of the trials were reported in January 2015.
Each
of the three samples was treated individually. The halloysite-rich samples from
Kelly’s Hump and Middle Ridge were treated in a similar manner, whereas the
Kelly’s Hump South sample was treated using an abbreviated program due to its
lack of contained halloysite.
30
Figure
13.3 presents the processing scheme used for the two samples containing
halloysite, and Figure 13.4 presents the processing scheme for the Kelly’s Hump
South sample.
Table
13-4 summarizes the key material balance data of the three samples after
processing according the processing schemes presented above. The most
significant difference in the products is the brightness values. At greater
than 70% brightness, the Middle Ridge products were much higher than the other
two resource products. Product from Kelly’s Hump South had the lowest
brightness, at 47%.
Recovery
of Clay Products
Combined
clay products (halloysite together with kaolinite) in the ore account for
16-18% of the total feed. The clays are separated from the other constituents
in the ore based on particle size and apparent density. Virtually 100% of the
clay is recovered as standard purity halloysite, high purity halloysite or
kaolinite (metakaolin).
The
split of recovery between standard grade halloysite and high purity halloysite
is dictated more by market conditions than any inherent differences in the
products. The market for high purity halloysite will be satisfied first with
the market for standard grade being satisfied on a secondary basis. If
necessary, any remaining halloysite can be blended with kaolinite and calcined
to create metakaolin.
Kaolinite
recovery is 100% of this constituent in the ore with the only loss being in the
calcining step, where the kaolinite is heated to about 850
o
Celsius.
The conversion of kaolinite to metakaolin by calcining removes most of the
water of hydration and results in approximately 10% loss of mass. As a result,
the recovery of kaolinite is effectively 90% of the amount of kaolinite in the
feed.
Sand
Recovery
Feldspathic
sand (k-feldspar together with quartz) makes up approximately 75% of the
material in the ore. Processing of the sand involves separation of the quartz
from the potassium feldspar and purification of the resulting separate streams.
In this process there is removal and rejection of iron bearing minerals
(muscovite and biotite) and losses of fines to the tailings stream. Testwork
results show that the recovery of quartz and potassium feldspar from the ore feed
is approximately 58.5% each which is equivalent to approximately 78% recovery
from the sand component in the feed.
Overall
Product Recovery
The
sum of all products recovered from the feed ore is approximately 61%. The
remaining 39% is lost to tailings as sand fines or impurities removed in the
upgrading of the sand product
Table
13-4: Product Yields
PROCESS FLOW
DESCRIPTION
|
Kelly’s Hump
|
Middle Ridge
|
Kelly’s Hump South
|
Process Recovery / Yield
%
|
Yield from Total Dry Resource
%
|
Process Recovery / Yield
%
|
Yield from Total Dry Resource
%
|
Process Recovery / Yield
%
|
Yield from Total Dry Resource
%
|
+ 325 Screened Fraction + Sand
|
76.8
|
76.8
|
77.9
|
77.9
|
76.2
|
76.2
|
< 325 Screened Fraction (clays and waste)
|
23.2
|
23.2
|
22.1
|
22.1
|
23.8
|
23.8
|
3” Hydrocyclone Overflow (combined clays)
|
88.1
|
20.4
|
83.3
|
18.4
|
83.5
|
19.9
|
50% Classification of Overflow (halloysite)
|
Fine Fraction
|
43.8
|
8.9
|
46.6
|
46.6
|
NA
|
NA
|
50% Classification of Underflow (kaolinite)
|
Coarse Fraction
|
56.2
|
11.5
|
53.4
|
53.4
|
NA
|
NA
|
Differential Flotation from 50% Classification Fine
Fraction Of Overflow (high purity halloysite)
|
58.2
|
5.2
|
58.5
|
5.0
|
NA
|
NA
|
31
As
shown in Table 0-4, regardless of the ore source, the sand portion (+325 mesh),
makes up 76-77% of the sample. This portion reports to the sand processing area
of the plant. In the case of the 2014 bulk sample, the sand portion was shipped
to MRL for further testing.
The
clay fraction of the ore (-325 mesh) contains the kaolinite and halloysite
clays in addition to grit, which is rejected in the 3” cyclone operation. The
cyclone underflow, which contains the grit, reports to tailings and makes up
approximately 4% of the ore (in the case of the 2014 bulk samples). This
material is categorized as waste in the mineral resource and mineral reserve
estimates. The 3” cyclone overflow contains the clays (18-20% of the total
feed) which are further processed using a centrifuge to separate standard-grade
(70%) halloysite (50% classification of overflow) and kaolinite (50%
classification of underflow). The halloysite is further concentrated using
differential flotation to high-purity halloysite (+90%). Recent tests by First
Test Minerals showed 96% halloysite contained in a sample of high purity
halloysite. Because essentially all of the material in the 3” cyclone overflow
is recovered into one of the three final clay products, the process recovery of
the clays from this point is 100%.
Drillhole
Database
The
drillhole database supporting the resource estimation consists of 338 diamond
core drillholes totaling 37,416 ft. The shallowest hole is 20 ft, the deepest
is 260 ft and the average is 111 ft. The block model was subdivided into four
model areas based primarily on the geographic location and somewhat by sample
support represented by the average drill spacing. The WBL area is drilled
mainly on 200 ft centers. The Middle Ridge area has an inner portion drilled on
100 ft spacing which is flanked by drilling on 200 ft spacing. The Kelly’s Hump
North area is mainly drilled on 100 ft spacing with one area drilled on 200 ft
spacing. The Kelly’s Hump South area is all drilled on 200 ft spacing. Each
sample within the drillhole database is characterized by the relative
proportions of sand, kaolinite clay, halloysite clay, and waste. The sum of
these four components equals 100% of each sample. These four variables were
estimated as the resource material of this report.
32
Figure
14-1: Drillhole Locations
(Black Dots), Clay Shell >=10% (Blue), Clay Shell >1-<10% (Teal Mineral
Resources are classified under the categories of Measured, Indicated and
Inferred according to CIM guidelines. Classification of the resources reflects
the relative confidence of the grade estimates and the continuity of the
mineralization. This classification is based on several factors, including
sample spacing relative to geological and geo-statistical observations
regarding the continuity of mineralization; data verification to original
sources; specific gravity determinations; accuracy of drill collar locations;
accuracy of topographic surface; quality of the assay data; and many other
factors that may influence the confidence of the mineral estimation. No single
factor controls the resource classification, but rather each factor influences
the result.
The
Mineral Resources are classified as “Measured” and “Indicated” based on the
drillhole spacing. Measured resources are assigned where the average drillhole
spacing is 100 ft. or less, while all other areas, where drillhole spacing
averages 200 ft, are classified as “Indicated”.
33
Table 0-5:
Indicated Mineral Resource Statement, (as of 26 October 2015)
Classification
|
Location
|
Tons
(M)
|
Qtz & K-feldspar Sand
(%)
|
Kaolinite
(%)
|
Halloysite
(%)
|
Qtz & K-feldspar and Tons
(000s)
|
Kaolinite Tons
(000s)
|
Halloysite Tons
(000s)
|
Measured
|
Kelly’s Hump
|
3.54
|
75.98
|
13.08
|
3.86
|
2,688
|
463
|
137
|
Middle Ridge
|
2.18
|
77.43
|
10.95
|
4.15
|
1,690
|
239
|
91
|
All
|
5.72
|
76.53
|
12.27
|
3.97
|
4,378
|
702
|
226
|
Indicated
|
Kelly’s Hump
|
7.50
|
55.22
|
14.81
|
2.77
|
4,140
|
1,110
|
208
|
Middle Ridge
|
5.14
|
58.85
|
17.91
|
3.61
|
3,023
|
920
|
185
|
WBL Pit
|
2.90
|
58.43
|
13.31
|
1.62
|
1,694
|
386
|
47
|
All
|
15.53
|
57.02
|
15.56
|
2.83
|
8,857
|
2,416
|
440
|
Measured and Indicated
|
Kelly’s Hump
|
11.04
|
61.87
|
14.26
|
3.12
|
6,828
|
1,574
|
344
|
Middle Ridge
|
7.32
|
64.39
|
15.83
|
3.77
|
4,713
|
1,159
|
276
|
WBL Pit
|
2.90
|
58.43
|
13.31
|
1.62
|
1,694
|
386
|
47
|
All
|
21.26
|
62.27
|
14.67
|
3.14
|
13,235
|
3,119
|
667
|
Source:
SRK
MINERAL RESERVE ESTIMATES
Pit
Designs
Detailed
pit designs were completed including three pit designs in the Kelly’s Hump
area, one design in the South Kelly’s Hump area, and two designs in the Middle
Ridge area. The total ultimate pit is considered the combination of the three
designs and is below in the figure titled “Ultimate Pits and Dumps”.
34
Mineral Reserves
Mineral
reserves for the project were developed by applying relevant economic criteria
in order to define the economically extractable portions of the resource. MDA
developed the reserves to meet NI 43-101 standards. The NI 43-101 standards
rely on the CIM Definition Standards on Mineral Resources and Mineral Reserves
adopted by the CIM council. CIM standards define Proven and Probable Mineral
Reserves as follows:
Table
0-1 reports the Proven and Probable reserves based on the pit designs discussed
in previous sections for each case. Table 0-2 shows the reserves and associated
waste by pit phase. The reserves are shown to be economically viable based on
cash flows provided by GBM. MDA has reviewed the cash flows and believes they are
reasonable for the statement of Proven and Probable reserves.
35
Table
0-1: Proven and Probable Reserves
Reserve
|
Proven
|
Probable
|
Total P&P
|
K Tons
|
4,155
|
4,548
|
8,702
|
Halloysite %
|
4.8
|
4.0
|
4.4
|
Halloysite K Tons
|
200
|
182
|
382
|
Kaolinite %
|
11.1
|
12.5
|
11.8
|
Kaolinite K Tons
|
460
|
568
|
1,028
|
Sand %
|
77.8
|
76.8
|
77.3
|
Sand K Tons
|
3,234
|
3,491
|
6,725
|
NSR
|
$165
|
$160
|
$162
|
Notes on Mineral Reserves:
Reserves are based on a $57.00 NSR cutoff grade and
pit designs.
Rounding
of numbers in mineral reserves listed above may cause apparent inconsistencies
Table
0-2: Proven and Probable Reserves by Phase with
Associated Waste
Pit Phase
|
Proven and Probable Reserves
|
Waste K Tons
|
Total K Tons
|
Strip Ratio
|
K Tons
|
Halloy %
|
Halloy
K Tons
|
Kaolin %
|
Kaolin
K Tons
|
Sand %
|
Sand
K Tons
|
NSR $/ton
|
North Kelly's Hump Phase 1
|
525
|
7.8
|
41
|
11.4
|
60
|
73.6
|
386
|
$ 181
|
386
|
911
|
0.73
|
North Kelly's Hump Phase 2
|
1,949
|
4.9
|
96
|
10.6
|
208
|
78.4
|
1,528
|
$ 165
|
1,017
|
2,967
|
0.52
|
North Kelly's Hump Phase 3
|
1,036
|
3.8
|
39
|
12.4
|
129
|
77.8
|
806
|
$ 160
|
580
|
1,616
|
0.56
|
South Kelly's Hump Phase 1
|
1,326
|
2.7
|
36
|
14.7
|
195
|
75.9
|
1,006
|
$ 154
|
750
|
2,076
|
0.57
|
Middle Ridge Phase 1
|
3,713
|
4.5
|
168
|
11.4
|
425
|
77.3
|
2,870
|
$ 163
|
1,831
|
5,544
|
0.49
|
Middle Ridge Phase 2
|
153
|
1.7
|
3
|
8.1
|
12
|
85.1
|
130
|
$ 147
|
160
|
313
|
1.04
|
Total
|
8,702
|
4.4
|
382
|
11.8
|
1,028
|
77.3
|
6,725
|
$ 162
|
4,724
|
13,426
|
0.54
|
Cautionary Note to U.S. Investors
:
This section and other sections of this document contain the terms “measured mineral resources,” “indicated mineral resources,” “inferred mineral resources,” “proven mineral reserves,” and “probable mineral reserves” as defined in accordance with NI 43-101. Please note the following regarding these terms:
-
“Measured mineral resources” and “indicated mineral resources”
. We advise U.S. investors that although these terms are recognized and required by Canadian regulations, these terms are not defined in SEC Industry Guide 7 and the SEC does not normally permit such terms to be used in reports and registration statements filed with the SEC. U.S. investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves.
-
“Inferred mineral resources”
. We advise U.S. investors that although this term is recognized by Canadian regulations, the SEC does not recognize it. “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 a feasibility study or pre-feasibility study, except in rare cases. The SEC normally only permits an issuer to report mineralization that does not constitute “reserves” as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of an inferred mineral resource exists or is economically or legally minable.
-
“Proven mineral reserves” and “probable mineral reserves”
. The definitions of proven and probable mineral reserves used in NI 43-101 differ from the definitions for “proven reserves” and “probable reserves” as found in SEC Industry Guide 7. Accordingly, our disclosures of mineral reserves herein may not be comparable to information from U.S. companies subject to reporting and disclosure requirements of the SEC.
36
Cautionary Note To All Investors Concerning Economic Assessments That Include Mineral Resources:
Mineral resources that are not mineral reserves have no demonstrated economic viability.
Material
Types
Material
was broken into ore and waste categories for the purpose of scheduling. The
waste consists of material inside of pit designs that is not included in Proven
and Probable reserves
Ore
definition used a $57.00 cut-off grade to be consistent with Proven and
Probable reserves. In addition, ore was further defined into Low-Sand (below
75% sands), Med-Sand (above 75% sands), and High-Sand (above 80% sands). These
cut-off grades were chosen because they provided reasonable amounts of
halloysite, kaolinite, and sand products within the pit designs. This was
important to provide some variability for blending of materials to maintain a
generally consistent blend of the three different products.
Mining Method
The
Project is planned as an open-pit, truck and excavator operation. The truck and
excavator method provides reasonable cost benefits and selectivity for this
type of deposit. Only open-pit mining methods are considered for mining at
Bovill.
The
material to be mined consists of clays and soils, and as such, no drilling or
blasting is anticipated. Most sampling will be done from mining faces, however
some auger drilling will be done where additional ore control data is required.
Product Markets
Products
to be recovered by the Bovill Kaolin Project operation include:
-
Quartz
-
Potassium feldspar (K-feldspar)
-
Metakaolin
-
Halloysite
Information
for this marketing study has been taken from landscaping studies carried out by
Charles River Associates; independent studies carried out by DURTEC and First
Test Minerals Ltd; the Roskill database; and trade analysis, combined with our
internal marketing data including interviews, meetings and background
information from clients. Our customer marketing program has been ongoing for
over five years, refining the products offered and markets to be served.
Quartz
All
three grades of quartz are high-purity and low iron, and comparable to existing
quartz products currently available in the marketplace from U.S.-based
competitors. The grades all range from 99.86% to 99.97% silica (SiO
2
).
The purest silica grade is aimed at high value markets, including chemicals
manufacturing, solar glass, LCD, and lighting glass; while the other grades are
potentially aimed at higher volume markets such as ceramics and container
glass.
Through
extensive market research, I-Minerals identified a potential market of 234,500
t/y, which more than covers the proposed production levels of 108,000 t/y. The
majority of interest is for I-Minerals’ TrueQ™1 product, outlined at 126,000
t/y, which reflects the volume consumed by the glass industry. However, the
focus of production will be on higher value applications, and interest has also
been demonstrated for significant volumes of TrueQ™3.
The
high-purity quartz market is very competitive, and I-Minerals will face
aggressive competition from existing suppliers in the quartz markets,
particularly to supply the high-purity quartz product, TrueQ™3. For sales into
container glass and ceramics markets, transportation and logistics to volume
quartz purchasers will be critical and form a significant portion of costs,
especially to those located in eastern U.S.
Potassium
Feldspar
The
Project will produce high-grade K-feldspar, which gives it advantages over
other feldspathic minerals in specialist ceramic and glass applications.
Sources of K-feldspar are far less common than other feldspars, and it can
therefore command a price premium. There is only one main supplier of
high-grade K-feldspar in the U.S. (Pacer), although this material has a lower
potassium oxide (K
2
O) content (minimum 9.5% K
2
O) than the
proposed production from I-Minerals (minimum 13% K
2
O). Additional
domestic demand for K-feldspar is met by imports.
37
Customer
interest is varied, and includes a range of companies from major tableware and
glass producers to smaller ceramic mineral suppliers, as well as more
specialist applications. I-Minerals identified markets for 39,200 t/y of its
K-feldspar products, Fortispar™, in the U.S. domestic market, representing over
83% of proposed production. There has also been interest in this product from
export markets.
Metakaolin
Metakaolin,
produced by calcining kaolin at 650-800°C, is a highly reactive pozzolan
suitable for use as a cementing material in concrete. I-Minerals’ metakaolin
grade meets the specifications and standards for the U.S. concrete industry.
Metakaolin particles are nearly ten times smaller than cement particles, which
enables the production of a denser, more impervious concrete that is more
durable and also has superior mechanical properties than concrete produced with
conventional cement. The addition of metakaolin also reduces the setting time
for the concrete and the alkali-sulfate reaction. Metakaolin with a lower
brightness, as will be produced by I-Minerals, is used in larger volume
industrial applications in construction, and in structural concrete, such as
bridge decks, tunnels, and cooling towers.
The
metakaolin will compete with other pozzolans, such as fumed silica and flyash.
Fumed silica is a much more expensive product, while flyash is cheaper but has
limitations. Metakaolin is also produced in the State of Georgia, but this is
a much whiter product, and finds applications in more decorative markets such
as swimming pools and kitchen work surfaces. However, additional freight costs
to the northwestern U.S. will make Georgia metakaolin a more expensive pozzolan
in that region.
There
has been significant interest in the proposed production from the Project, and
a potential market has been identified that more than covers production,
particularly in the northwestern U.S. The market identified is 71,451 t/y,
although current production is forecast at 45,000 t/y. Prospective customers in
Colorado, Montana, and Wyoming have expressed interest in metakaolin,
particularly for use in mitigating the effects of acid-erosion. One of the main
causes of concrete deterioration in the U.S. is from de-icing salt and marine
salt.
Halloysite
Halloysite
is derived from the weathering of feldspar to kaolinite, and subsequent
additional weathering to halloysite. Halloysite is an alumina-silicate clay
mineral, which occurs in a number of different colors. Commercial high-quality
deposits are relatively rare and are currently mined in China, Turkey, New
Zealand and the U.S.
The
principal market for halloysite is in the production of porcelain and bone
china, but more recently it has been used in technical ceramics for use in
molecular sieves and in the manufacture of honeycomb catalysts.
Our
halloysite has a unique structure which could be advantageous in securing new
markets. It can be used as a carrier for active ingredients in cosmetics,
personal care products, and pharmaceuticals; and has applications in
nanotechnology, clean technologies, and environmental protection. Halloysite can
also be used as a filler in polymers, and in trials, benefits have been
demonstrated with its use in compounded polymers (for example nylon-6 and
polypropylene). Its addition could be used to enhance flexural and impact
strength. Our halloysite can also be used in volume market applications, such
as animal feed and tile production. In tile production, halloysite produces a
tough filter-cake, illustrative of its high green strength that imparts
benefits in fast-fired tile production.
The
market for our halloysite is one area where there could be significant upside
potential when these developments in the life sciences, clean technologies, and
nanotechnology are realized. However, many of these markets are currently in
research and development, and are still unproven. Therefore, pricing levels and
market sizes are speculative for the most part, and are not included as
identified markets or for input into pricing models.
We
have identified markets of 8,566 t for its halloysite grades, accounting for
around 70% of its proposed production. Of this, 4,442 t are in North America,
with larger volumes identified for fast-fired tiles and animal feed. Another
4,742 t are overseas, mainly in Europe, for higher value sales into polymer
compounding. There are other potential market opportunities in South Korea,
Taiwan, China, South America, and Europe, but these were not included in the
total identified markets.
Commodity Prices
Unlike
many other commodities, such as metals, grain, or oil, there are no fixed
terminal or future exchanges, nor price indices, specifically for industrial
minerals. Typically, the prices obtained from commodity exchanges can provide a
bench-mark or reference point for the industry. However, in the industrial
minerals industry, prices are dictated by confidential contracts between buyers
and sellers, and are based on a number of factors including grades, quality,
quantity, geographical location, and transportation mode (bulk, containers,
bagged), and therefore, prices can vary widely with each transaction.
38
Due
to the highly competitive nature of the industrial minerals industry, contract
prices are highly confidential and not presented in public documents.
Indicated
prices for quartz range widely and depend on a number of factors including both
chemical and physical specification, volumes, and transportation mode (bulk,
containers, bagged), amongst others. Based on indications from suppliers,
prices range from US$120/t to over US$800/t. To achieve an average high-grade
quartz price, a composite price was compiled from known data and weighted by
the volumes and prices from various end use applications. These include solar
glass, LCD, decorative and optical glass, borosilicate glass, and lighting
glass. This average value excludes the flat glass volume market, which is our
main sales focus, and the identified tonnage for this sector exceeds proposed
production levels when cumulatively added to other market sectors. The
incremental average value for the high-purity quartz grades is placed at
US$295/t, ex-works. These identified markets cover 75% of proposed production
assuming that I-Minerals will meet all the necessary specifications for these
higher value markets.
Pricing
of feldspar is also opaque, reflecting the varying specifications of the
material (including alumina, sodium and potassium contents), and their physical
characteristics and impurities. K-feldspar prices range from US$200/t to
US$350/t. To achieve an average price, a composite price was compiled from
known data and weighted by the volumes and prices from various end use
applications. The incremental average value for the K-feldspar grades is placed
at US$251/t, ex-works.
Historically,
metakaolin prices in the U.S. have been based on the high-brightness, white
kaolin produced in Georgia. However, we will produce a different product which
is reflected in its price of US$225/t ex-works, and is based on an acceptance
price by all those who committed to a letter of intent.
Pricing
of halloysite is also complex, as many of the applications are developing, and
there is a wide differential in price level depending on the amount of
processing, specification, volume, and end-use industry. For volume applications,
such as animal feed, average pricing is US$700-$720/t. For polymer pricing, the
indications range between US$2,000-$6,000/t, illustrating the wide variation.
For the purposes of pricing the halloysite, a weighted average is used, which
would include bulk volumes at lower prices and include allowances for some much
lower volume sales at higher values into the identified markets. This method
gives an average price of US$1,054/t for the halloysite into potential
identified markets across the board.
Capital
Cost Summary
The
total initial capital investment for the Project is estimated to be
US$108,123,204. Sustaining capital of US$11,775,070 is required, bringing the
total LoM capital investment to US$120,033,272.
The
total LoM capital for the Project is reported in Table 0-3. The total
expenditure shown accounts for sustaining capital planned to be spent over the
26 years of operation.
Table 0-3 Capital Cost Estimate
Total Capital
Investment
|
Initial Capital
(US$ 000s)
|
Sustaining
Capital (US$000s)
|
Total LoM Capital
(US$ 000s)
|
Total Capital Investment
|
108,258
|
11,775
|
120,033
|
FIXED CAPITAL TOTAL
|
97,773
|
11,230
|
109,548
|
DIRECT TOTAL
|
65,054
|
11,230
|
76,284
|
General
|
4,059
|
6,001
|
10,059
|
Mining
|
1,334
|
84
|
1,418
|
Process
|
50,764
|
0
|
50,764
|
Waste Management
|
3,167
|
5,145
|
8,312
|
Infrastructure and Utilities
|
5,731
|
0
|
5,731
|
INDIRECT TOTAL
|
32,718
|
546
|
33,264
|
Engineering & Procurement
|
10,200
|
0
|
10,200
|
Construction Management
|
5,204
|
0
|
5,204
|
Field Indirect
|
5,314
|
0
|
5,314
|
Contingency
|
12,000
|
546
|
12,546
|
WORKING CAPITAL TOTAL
|
10,485
|
0
|
10,485
|
Cash Reserve
|
9,687
|
0
|
9,687
|
Inventory
|
798
|
0
|
798
|
39
Operating Cost
Estimate
The
total operating cost for the Project is summarized in Table 0-4 and graphically
presented in Figure 21-1.
Table
0-4 OPEX Summary
Area
|
|
Avg US$/yr
(000s)
|
Avg. US$/t ROM
|
Avg. US$/t Product
|
%
|
000
|
General – Subtotal
|
3,888
|
11.62
|
19.01
|
20.69
|
000
|
General and Administration
|
2,615
|
7.81
|
12.78
|
13.92
|
000
|
General - Utilities - Gas
|
3
|
0.01
|
0.02
|
0.02
|
000
|
General - Utilities - Power
|
124
|
0.37
|
0.61
|
0.66
|
000
|
General - Mobile Equipment lease
|
168
|
0.50
|
0.82
|
0.89
|
000
|
General - Consumables - Raw Water Pumping
|
3
|
0.01
|
0.02
|
0.02
|
000
|
General - Consumables - Diesel
|
161
|
0.09
|
0.15
|
0.17
|
000
|
General - Mobile Equip. Maintenance.
|
161
|
0.48
|
0.79
|
0.86
|
000
|
General - Labor
|
782
|
2.34
|
3.82
|
4.16
|
100
|
Mining – Subtotal
|
2,960
|
8.84
|
14.47
|
15.75
|
100
|
Contract Mining Cost
|
2,616
|
7.82
|
12.79
|
13.92
|
100
|
Owners Mining Cost
|
344
|
1.03
|
1.68
|
1.83
|
200
|
Processing Plant – Subtotal
|
10,652
|
31.83
|
52.07
|
56.70
|
200
|
Processing - Reagents
|
1,165
|
3.48
|
5.69
|
6.20
|
200
|
Processing - Maint. & Operating spares
|
798
|
2.39
|
3.90
|
4.25
|
200
|
Processing - Utilities
|
3,869
|
11.56
|
18.91
|
20.59
|
200
|
Processing - Consumables
|
1,071
|
3.20
|
5.24
|
5.70
|
200
|
Processing - Labor
|
3,749
|
11.20
|
18.33
|
19.95
|
300
|
Waste Management - Tailings
|
449
|
1.34
|
2.19
|
2.39
|
400
|
Product Handling – Bulk Bags
|
840
|
2.51
|
4.11
|
4.47
|
TOTAL OPERATING COST
|
18,789
|
56.14
|
91.84
|
100.00
|
Note: Based on nameplate 346,000 tpa throughput
The
economic analysis was conducted over a range of discount rates, and results are
presented in Table 0-5. Sensitivity analyses were conducted on the base case to
demonstrate the sensitivity of the Project’s NPV to increases or decreases in
the operating income, OPEX, CAPEX, recovery, and/or average product price.
Table 0-5 DCF Model Results
Discount Rate (%)
|
Post Tax NPV
(US$ millions)
|
Pre Tax NPV
(US$ millions)
|
4
|
300.6
|
460.8
|
6
|
249.8
|
385.8
|
8
|
208.1
|
324.4
|
At
a 6% discount rate, the model shows a post-tax NPV of US$249.8 million with an
IRR of 25.8%, and payback period of 3.7 years. This result reflects an
economically feasible project, and justifies advancing to the next step of
development
GBM
considers that the Bovill Kaolin Project has demonstrated, to within ±15%
accuracy, the potential to profitably mine and process the various ore
deposits. A variety of end markets have been identified for the quartz,
K-feldspar, metakaolin, and halloysite products produced by the proposed
operation, with product pricing typical within the industrial minerals
industry.
Of
particular note is that all recovered material in the resource estimation
contains sufficient sand, kaolinite, or halloysite to be profitably mined. In addition,
the current mineral reserve estimate reflects limitations to existing, yet
potentially expanding, markets as the mineral resource has the ability to
support a larger operation.
Based
on the mineral reserves and mine plan, approximately 5.3 million tons of
mineral product will be produced over the anticipated mine life of 26 years.
The economic analysis returned a post-tax NPV of US$249.8 million and an IRR of
25.8%.
The
Project is most sensitive to product recovery rate and the average product
price. The project is less sensitive to capital expenditure, process operating
cost, and mining operating cost.
40
This
result reflects a technically and economically feasible project, which GBM
recommends to move to further investment and development.
Current Activities
Bovill Kaolin Project
Based on the results of the 2016 FS, which
demonstrate that the Project is both technically and economically feasible, it
is recommended that I-Minerals pursue a program of further investment and
development to complete the engineering, procurement and construction of the
Project. The following activities are recommended to be undertaken as early as
possible in the next phase of development, as both have schedule and completion
impacts:
-
Confirmation testwork needs to be
completed for final equipment selection, as well as to finalize the process
plant water balance and utilities consumptions. The confirmation testwork is expected
to cost about US$100,000 and take approximately 4 months to complete.
-
Activities required to bring
electricity and gas to the site should be expedited, as this currently impacts
the overall project completion.
Pilot
plant work is ongoing at MRL in North Carolina to confirm product quality
characteristics and generate additional samples for our continued product
marketing efforts. We have also initiated preliminary contact with
institutional investors that may have an interest in participating in the debt
or equity components of the Capital Costs. The detailed engineering and
construction time is forecast to be a minimum of 18 months and a maximum of 30
months from the completion of the production financing to raise the capital
costs as set out in the 2016 FS. The estimated cost for the completion of
longer lead time engineering work, utilities surveys, marketing work and
financing activities (general and admin) set forth below:
Study Items
|
Project Costs
|
Project
Management
|
$340,000
|
Marketing
|
540,000
|
Conceptual
Engineering
|
100,000
|
Environmental
and Permitting
|
120,000
|
Electrical
and Gas Studies
|
100,000
|
Hydrogeological
Work
|
60,000
|
Metallurgical
Testwork
|
260,000
|
General
& Admin
|
920,000
|
Total Cost
|
$2,440,000
|
In
addition to the above expenditures, we are reviewing the potential of
undertaking a land swap with the IDL wherein we would buy a property within
Latah County of equal value to our Helmer Bovill property and trade this
property for the surface rights at Helmer Bovill. Owning the surface rights at
Helmer Bovill may reduce the bonding requirements and strengthen our land
tenure. The estimated cost of such land swap would be $3 to $4 million of
which about 25% would need to be paid as earnest money in the next 12 months.
WBL Tailings Project
We plan to continue production of the sand tailings at the WBL
Tailings Project. In April 2014, we entered into a new contract with Pre-Mix
for the sale of up to 30,000 tons per annum of screened K-spar / quartz sand.
Under the terms of the contract, Pre-Mix is solely responsible for the
operating costs to process and remove the K-spar / quartz sand.
In
order to excavate the sand tailings at the WBL Tailings Project, Pre-Mix uses
its own backhoe, trucks and screen to remove the sand tailings. As a result,
production facilities are not required to excavate the sand tailings from the
WB Tailings Project.
41
To
date, we have sold a total of 1,456 tons of sand tailings to Pre-Mix for total
revenues of $1,456.