Pre-tax NPV7% of C$1.5B and IRR of 46% at Current Commodity
Prices
VANCOUVER, BC, Feb. 28, 2022 /CNW/ - Foran Mining
Corporation (TSXV: FOM) (OTCQX: FMCXF) ("Foran" or the "Company"),
is pleased to announce results from a Feasibility Study ("FS") on
its expanded and re-scoped initial mine plan for its 100%-owned
McIlvenna Bay project in east-central Saskatchewan. All currency figures are shown
in Canadian dollars, unless otherwise noted.
Highlights:
- Robust financial metrics in a world-class
jurisdiction.
-
- At current prices, the FS defines a pre-tax NPV7% of
$1.49B and IRR of 46% with an
after-tax payback period of 2.2 years. Base case economics outline
a pre-tax NPV7% of $678M
and IRR of 26%.
- Compelling economics at lower commodity prices, delivering a
pre-tax IRR of 21% at US$3.00/lb
copper, more than 30% below current prevailing prices.
Table 1 – Pre-Tax NPV7% Sensitivity
Analysis
|
Zinc Price
(US$/lb)
|
Copper Price
(US$/lb)
|
|
$3.00
|
Base
Case¹
|
Current²
|
$5.00
|
$6.00
|
Pre-Tax
NPV7% (C$M)³
|
$1.00
|
$347
|
$550
|
$1,078
|
$1,159
|
$1,565
|
Base Case¹
|
$475
|
$678
|
$1,208
|
$1,287
|
$1,694
|
$1.40
|
$603
|
$806
|
$1,338
|
$1,416
|
$1,822
|
$1.60
|
$732
|
$935
|
$1,467
|
$1,544
|
$1,950
|
Current²
|
$865
|
$1,070
|
$1,493
|
$1,686
|
$2,096
|
$1.80
|
$860
|
$1,063
|
$1,597
|
$1,672
|
$2,079
|
¹ Base case copper
and zinc prices are US$3.50/lb copper and US$1.20/lb
zinc.
|
² Current copper and
zinc prices are US$4.53/lb copper and US$1.64/lb zinc. Under these
scenarios US$1,936/oz gold, US$24.52/oz silver, and 1.27 USD/CAD is
used.
|
³ Excluding current
price scenarios, US$1,600/oz gold, US$22.50/oz silver, and 1.26
USD/CAD is used.
|
- Mineral Reserve tonnes +127%, establishing an initial 18
year reserve life.
-
- Probable Mineral Reserves total 25.7 million tonnes ("Mt") at
2.51% CuEq, a 127% increase in tonnes compared to the prior mineral
reserve estimate and represents a 66% reserve conversion rate from
the existing 39.1Mt of Indicated resources.
- FS outlines an 18.4 year mine life, based on a planned 4,200tpd
throughput rate.
- McIlvenna Bay remains open at depth and long strike, while
immediate exploration focus is on near-mine and regional targets to
drive more immediate value to shareholders.
- Consistent and scalable production profile.
-
- The FS highlights average annual production of 72.8 Mlbs CuEq
(33.0 kt) over the first 15 years of mine life. By individual metal
this equates to 38.8 Mlbs Cu (17.6 kt), 63.6 Mlbs Zn (28.9 kt), 20
koz gold and 486 koz silver.
- Potential for production and throughput expansion as well as
mine life extension exists as the Company potentially discovers and
delineates additional near-mine deposits.
- High margin and focused on maximizing value per
share.
-
- Life-of-mine C1 Copper Cash Costs are expected to average
US$0.26/lb Cu (net of by-product
credits) and All-in Sustaining Costs to average US$0.90/lb (net of by-product credits) at Base
Case prices.
- At current commodity prices, this translates into $4.0B in EBITDA and $2.3B in Free Cash Flow over the current
life-of-mine. These cash flow parameters underpin the robustness of
the project, emphasizing the Company's objective to maximize and
grow shareholder value.
Table 2 – IRR, Payback & Cash Flow Sensitivity
Analysis
|
|
Copper Price
(US$/lb)
|
|
Base
Case¹
|
Current²
|
$3.00
|
$4.00
|
$5.00
|
$6.00
|
Pre-Tax
IRR
|
|
26%
|
46%
|
21%
|
31%
|
40%
|
48%
|
After-Tax
IRR
|
|
22%
|
38%
|
18%
|
26%
|
33%
|
40%
|
After-Tax Payback
(yrs)
|
4.5
|
2.2
|
5.6
|
3.7
|
2.9
|
2.3
|
LOM EBITDA
(C$M)
|
$2,483
|
$4,012
|
$2,097
|
$2,870
|
$3,643
|
$4,415
|
LOM Free Cash Flow
(C$M)
|
$1,179
|
$2,280
|
$906
|
$1,460
|
$2,015
|
$2,565
|
¹ Base case prices
are US$3.50/lb copper, US$1.20/lb zinc, US$1,600/oz gold,
US$22.50/oz silver, and 1.26 USD/CAD.
|
² Current prices are
US$4.53/lb copper, US$1.64/lb zinc, US$1,936/oz gold, US$24.52/oz
silver, and 1.27 USD/CAD.
|
³ Excluding the
current price scenario, US$1.20/lb zinc, US$1,600/oz gold,
US$22.50/oz silver, and 1.26 USD/CAD is used.
|
- Capital-light development project.
-
- Initial capital costs total $368M, translating to an attractive initial
capital intensity of US$0.24/lb CuEq
produced over life-of-mine (~US$535/tonne CuEq). Over 70% of initial capital
cost estimates are based on competitive quotes.
- Sustaining capital is estimated to be at $481M over the LOM, including development of a
shaft and material handling system.
- Delivering McIlvenna Bay with an ESG focus.
-
- Foran will continue to be relentless in intertwining its
pioneering ESG strategy to target carbon neutrality while
emphasizing the development of a sustainable asset for local
communities in a decarbonizing world.
- Along with key partners and industry experts, Foran is
currently developing a number of exciting business initiatives with
updates on these developments expected throughout the year.
Dan Myerson, Foran's Executive
Chairman & CEO commented;
"The completion of the FS is truly an excellent
accomplishment by the entire team at Foran. It is important to be
mindful that the study showcases only a snapshot in time of what
our initial mine and centralized mill will look like, as we
envision scaled expansions and future growth while sequencing in
other deposits across the district.
As we continue to de-risk McIlvenna Bay with the ongoing
advancement of the exploration decline, permitting, project
financing, and our continued dynamic exploration campaign, I
believe we are still in the early innings of understanding what
this remarkable district has to offer. McIlvenna Bay is expected to
be the centralized mill that could be expanded in phases as we
continue to explore, define and potentially develop near-mine
deposits and more within a 50km radius. Our land package is over
1,450 km², providing us with the canvas to explore in a systematic
way. The neighbouring Flin Flon
district has been operating for close to a century, and it is our
vision to transform the Hanson Lake District into the next
multi-decade mining camp.
Critically, Foran will be resolute in our effort to operate a
mine of the future, targeting carbon neutrality and creating a
sustainable asset for local communities in a decarbonizing world.
Having the opportunity to power our site using renewable energy
(hydropower), we are in a good position to deliver on our targets.
Additionally, Foran will continue and always strive to be grateful,
respectful and ensure a collaborative relationship with local
communities, as this is essential in creating long-term mutually
beneficial success. We are focused on education and training of
local people to provide employment opportunities and build
transferable skills. As the world continues to decarbonize, Foran
will continue to search and evaluate circular economy
opportunities, and pioneer ESG business initiatives to generate
superior investment returns.
As the world hunts for new copper projects to satiate the
urgent necessity to decarbonize our planet, geopolitical risks
globally are impacting direct investment in regions where
government regimes and taxation remain constant uncertainties.
Operating in a global leading mining jurisdiction that is
Saskatchewan further proves the
amazing advantage Foran is fortunate and grateful to have. I am
very proud of our team's accomplishments, and we look forward to
delivering more exciting news throughout 2022 as we work towards
our goals of building the next prolific mining jurisdiction in the
world."
Sensitivity Analysis
At current prices of US$4.53/lb
Cu, US$1.64/lb Zn, US$1,936/oz Au, and US$24.52/oz Ag, the project generates an
after-tax NPV7% of $1,055M, an after-tax IRR of 38%, with a payback
period of 2.2 years from the commencement of production. Outlined
below in Table 3 is a detailed sensitivity analysis across various
commodity prices.
Table 3 – After-Tax NPV7% Sensitivity
Analysis
|
Zinc Price
(US$/lb)
|
Copper Price
(US$/lb)
|
|
$3.00
|
Base
Case¹
|
$4.00
|
Current²
|
$5.00
|
$6.00
|
After-Tax
NPV7% (C$M)³
|
$1.00
|
$226
|
$372
|
$520
|
$756
|
$814
|
$1,106
|
Base Case¹
|
$320
|
$466
|
$613
|
$850
|
$907
|
$1,198
|
$1.40
|
$411
|
$559
|
$706
|
$943
|
$999
|
$1,291
|
$1.60
|
$505
|
$652
|
$799
|
$1,037
|
$1,092
|
$1,384
|
Current²
|
$601
|
$750
|
$899
|
$1,055
|
$1,194
|
$1,489
|
$1.80
|
$597
|
$745
|
$892
|
$1,130
|
$1,185
|
$1,476
|
¹ Base case copper
and zinc prices are US$3.50/lb copper and US$1.20/lb
zinc.
|
² Current copper and
zinc prices are US$4.53/lb copper and US$1.64/lb zinc. Under these
scenarios US$1,936/oz gold, US$24.52/oz silver, and 1.27 USD/CAD is
used.
|
³ Excluding current
price scenarios, US$1,600/oz gold, US$22.50/oz silver, and 1.26
USD/CAD is used.
|
Project Description
The McIlvenna Bay project is located in east-central
Saskatchewan approximately 375km
northeast of Saskatoon, and 85 km
West of Flin Flon Manitoba, and is
accessible year-round via a 18km all-weather road connected to
Saskatchewan Provincial Highway 106.
The FS outlines a project designed to be a decline/shaft
underground mining operation utilizing long-hole mining methods for
ore extraction. Ore is expected to be processed via conventional
single stage crushing circuit with a semi-autogenous grinding
("SAG") mill and ball mill design. Grinding is planned to be
followed by a flotation circuit to produce both a copper and zinc
concentrate for transportation from site to Flin Flon for shipment by rail to Canadian
smelters and/or offshore.
The deposit at McIlvenna Bay includes several zones and two
distinct styles of mineralization, typical of volcanogenic-hosted
massive sulphide ("VHMS") deposits, massive sulphide mineralization
and stockwork-style mineralization in the Copper Stockwork Zone
("CSZ"). The massive sulphide is a continuous mineralized horizon
which averages 3.5m in thickness
while the CSZ averages a thickness of 12.0m. The massive sulphide and the underlying
CSZ are generally in contact with one another throughout the
deposit, giving the bulk of the deposit an average thickness of
15.5m overall.
The capital and operating cost estimates in the FS reflect the
current inflationary pressures being faced by the industry
globally, however the relatively light capital intensity associated
with the project helps mute the overall impact inflation has on
economics, which remain robust.
McIlvenna Bay Project Bankable Feasibility Study
The FS was led and compiled by Stantec Inc. as the lead author.
Stantec completed the detailed mine design and engineering, with
Halyard Inc. completing process plant, paste plant and surface
support infrastructure design. Knight Piésold worked in conjunction
with both Stantec and Halyard on the Dry Stack Tailings Management
Facility Design. RockEng prepared the geotechnical model, working
closely with Stantec and the Foran site team. The McIlvenna Bay
Mineral Resource estimate was prepared by Micon International
Limited, and the Mineral Reserve estimate was completed by
Stantec.
Table 4 - Key Summary Table
Description
|
Units
|
Feasibility
Study
|
Metal
Prices/FX¹
|
|
Base
Case
|
Current
Prices
|
Copper
|
US$/lb
|
$3.50
|
$4.53
|
Zinc
|
US$/lb
|
$1.20
|
$1.64
|
Gold
|
US$/oz
|
$1,600
|
$1,936
|
Silver
|
US$/oz
|
$22.50
|
$24.52
|
Currency Exchange
Rate
|
USD/CAD
|
1.26
|
1.27
|
Production
Data
|
|
|
|
Reserve
tonnes
|
Mt
|
25.70
|
25.70
|
Copper Equivalent
Grade²
|
%
|
2.51%
|
2.51%
|
Copper
Grade
|
%
|
1.23%
|
1.23%
|
Zinc Grade
|
%
|
2.39%
|
2.39%
|
Gold Grade
|
g/t
|
0.47
|
0.47
|
Silver
Grade
|
g/t
|
15.3
|
15.3
|
Daily
Throughput
|
tpd
|
4,200
|
4,200
|
Annual Processing
Rate
|
Mtpa
|
1.51
|
1.51
|
Mine Life
|
years
|
18.4
|
18.4
|
Blended
Recoveries³
|
|
|
|
Copper
|
%
|
91.1%
|
91.1%
|
Zinc
|
%
|
79.8%
|
79.8%
|
Gold
|
%
|
88.6%
|
88.6%
|
Silver
|
%
|
63.2%
|
63.2%
|
Average annual
production (in concentrate)
|
|
|
Copper Equivalent -
First 15-years²
|
Mlbs CuEq
|
72.8
|
72.9
|
Copper Equivalent -
Life-Of-Mine²
|
Mlbs CuEq
|
65.4
|
65.6
|
Copper
|
Mlbs Cu
|
34.5
|
34.5
|
Zinc
|
Mlbs Zn
|
58.6
|
58.6
|
Gold
|
koz Au
|
17.5
|
17.5
|
Silver
|
koz Ag
|
435.2
|
435.2
|
Life-of-Mine (LOM)
Operating Costs
|
|
|
|
Total Operating
Costs⁴
|
C$t/milled
|
$73.55
|
$73.55
|
Opex + Sustaining
Capex
|
C$/tonne
|
$91.94
|
$91.94
|
C1 Copper Cash Costs
(net of credits)⁵
|
US$/lb
|
$0.26
|
-$0.62
|
All-In Sustaining
Costs (net of credits)⁶
|
US$/lb Cu
|
$0.90
|
$0.01
|
Capital
Costs
|
|
|
|
Initial
Capital⁷
|
C$M
|
$368
|
$351
|
LOM Sustaining
Capital
|
C$M
|
$481
|
$481
|
Financial
Analysis
|
|
|
|
Pre-Tax
NPV7%
|
C$M
|
$678
|
$1,493
|
Pre-Tax
IRR
|
%
|
26%
|
46%
|
After-Tax
NPV7%
|
C$M
|
$466
|
$1,055
|
After-Tax
IRR
|
%
|
22%
|
38%
|
Payback
Period
|
years
|
4.5
|
2.2
|
¹ Current prices and
FX based on Feb 23, 2022 closing values.
|
|
|
² CuEq metrics based
on commodity prices under each scenario.
|
|
|
³ Blended recoveries
detailed in section below.
|
|
|
⁴ Total Operating
costs include mining, processing, G&A and Tailings
costs.
|
|
⁵ C1 Cash costs (net
of credits) = total operating costs, plus treatment charges &
refining costs, less by-product credits, divided by payable copper
production.
|
⁶ All-in Sustaining
Costs = C1 Cash Costs (net of credits), plus LOM sustaining
capital, plus royalties, divided by payable copper
production.
|
⁷ Initial Capital
costs include pre-commercial production credits and costs, please
refer to section below.
|
The planned site layout provides sufficient space for future
expansion opportunities as the Company explores and potentially
delineates additional satellite deposit opportunities. Figure 1
below highlights the surface infrastructure envisioned layout.
Figure 1 – Envisioned Site Layout
Mineral Reserve Estimate
The 2022 Mineral Reserve Estimate was prepared by Stantec Inc.,
with an effective date of February 23,
2022. Reserves total 25.7Mt, a 127% increase from its 2020
Reserve estimate of 11.3Mt. This represents a 66% reserve
conversion rate from the existing 39.1Mt of indicated resources
(vs. 49% reserve conversion from the prior 2019 resource estimate).
The higher conversion rate is attributable to optimized mine
design, which includes a reduction in minimum mining widths from
3.8m to 3.0m, and a lower net smelter return ("NSR")
cut-off value, and higher commodity prices.
Reserves grade of 1.23% Cu, 2.39% Zn, 0.47 g/t Au and 15.3 g/t
Ag use a US$90/t NSR cut-off. These
compare to 2020 reserve grades of 1.14% Cu, 4.01% Zn, 0.54 g.t Au
and 21.0 g/t Ag using a US$100/t NSR
cut-off. The decline in by-product grades are predominantly
attributable to the significant reserve additions for the Copper
Stockwork Zone, which has higher copper grades and lower zinc
grades than the Massive Sulphide Lens. Foran sees the opportunity
for further reserve upside potential given the deposit remains open
at depth and along strike, in addition to higher current commodity
prices.
The Mineral Reserve Estimate is estimated using long-term
consensus metal prices of US$3.50/lb
Cu, US$1.20/lb Zn, US$1,600/oz Au and US$22.50/oz Ag. This compares to the 2019 Reserve
Estimate pricing of US$3.30/lb Cu,
US$1.25/lb Zn, US$1,310/oz Au and US$16.20/oz Ag. The reserve is summarized in
Table 5 below.
Table 5 - McIlvenna Bay 2022 Probable Mineral Reserve
Estimate (US$90/t NSR
cut-off)
Reserves
|
Tonnes
(Mt)
|
Cu
Grade
(% Cu)
|
Zn
Grade
(% Zn)
|
Au
Grade
(g/t Au)
|
Ag
Grade
(g/t Ag)
|
CuEq
Grade (% CuEq)
|
Main Lens – Massive
Sulphide
|
10.1
|
0.99
|
5.43
|
0.51
|
23.8
|
3.41
|
Copper Stockwork
Zone
|
15.6
|
1.39
|
0.41
|
0.45
|
9.9
|
1.92
|
Total
Reserves
|
25.7
|
1.23
|
2.39
|
0.47
|
15.3
|
2.51
|
1
Effective date February 23, 2022; CIM Definition Standards (May 10,
2014) were followed for Mineral Reserves; CuEq = copper equivalent;
NSR = Net Smelter Return. Totals may not add due to
rounding.
|
2 The base
case mineral reserve is estimated based on a NSR cut-off value of
US$90/t. NSR value was calculated using Cu, Zn, Au, Ag and
high-grade caps were applied and include provisions for
metallurgical recovery and estimates of current shipping terms and
smelter rates for similar concentrates. Metal prices used are
US$3.50/lb. Cu, US$1.20/lb. Zn, US$1,600/oz. Au, and US$22.50/oz.
Ag.
|
3 Mr. Mark
Hatton, P.Eng., of Stantec Inc., has reviewed and verified this
mineral reserve estimate. Mr. Hatton is independent of Foran and is
a "Qualified Person" within the meaning of NI 43-101.
|
Mining
The FS proposes to mine ore using three different, but similar,
longhole mining methods. Most ore will be mined by way of
transverse stoping, and some longitudinal and Avoca stoping,
depending on the orebody thickness and geometry. These longhole
methods involve developing lateral drifts at 30 metre sublevel
intervals and drilling holes between the levels and blasting the
ore from the upper elevation. The ore will be extracted from the
lower elevation of the stopes and transported to surface in the
early part of the mine life and will be hauled to underground
stations after the shaft is commissioned. Empty stopes will be
filled with either paste backfill or waste rock from development
headings.
Ore will be moved using battery electric vehicles ("BEVs"),
which will help the company achieve its carbon-neutrality goals.
The ramped-up 4,200 tonnes per day ("tpd") operation will require a
fleet of seven haul trucks and six loaders. The use of BEVs will
translate to operating cost efficiencies through reduced fuel
consumption, and reduced ventilation and infrastructure
requirements while improving air quality for all those working in
the mine. Swappable batteries will be charged in special charging
stations located underground. Underground development will be
undertaken with innovative technology and state-of-the-art
computerized development jumbos, which can install ground support,
in addition to face drilling.
The FS assumes the company will be able to take advantage of the
existing infrastructure associated with the previously announced
exploration decline. Given the close proximity of the McIlvenna Bay
reserve to surface, the company expects a relatively short timeline
to initial ore mining and a relatively quick ramp up. As
highlighted in Figure 2 below, the CSZ will constitute
approximately 61% of the ore processed, while roughly 39% will be
sourced from the massive sulphide zone.
Figure 2 - Ore Processing Source
Production Shaft
Included in the FS is the eventual construction of a production
shaft to benefit mine efficiency at depth and to support any
potential future resource and mine expansion down dip of the
existing resource. Under the current plans, the shaft will the
developed in two separate legs. Development of the upper leg is
expected to begin in Year 5 with completion of the (loading pocket)
in Year 7 at a total cost of C$63.9M,
which will lower operating cost in the lower levels of the mine,
support future exploration initiatives and potential mine life
extension.
The production shaft will be rectangular, extending from surface
to a depth of 630m. Lateral
development will precede excavation and furnishing allowing for the
shaft to be developed from the bottom up in two separate sections
resulting in lower cost than a conventional "blind sink" shaft. A
pilot and slash method will be utilized for the excavation portion
with the equipping of the shaft will be done from the top
downwards.
A personnel hoist will also be installed within a separate
compartment of the production shaft for improved effective work
times and to facilitate a second means of egress from the mine.
Figure 3 – Long Section of
Shaft and Underground Workings
Processing & Recovery
The FS proposes ore processing to be conducted using
primary crushing with a semi-autogenous grinding ("SAG") mill
and ball mill design. The processing facility is expected to have a
nameplate capacity of 4,200tpd or 1.51Mtpa. Ore transported from
the mine will be dumped directly into the crusher or temporarily
stockpiled on a lined pad for future processing.
Cyclone overflow from the grinding circuit, at an 80% passing
size of 75 µm, will flow by gravity to the flotation area.
Sequential rougher flotation, followed by regrinding and cleaner
flotation, will produce a copper concentrate with an average grade
of 28% Cu, ~240 g/t Ag and ~10 g/t Au, and a zinc concentrate with
an average grade of 50% Zn, ~45 g/t Ag, <1 g/t Au and
SiO2 of <1.5%. Both concentrates do not contain any
elevated deleterious elements and are considered very clean. The
two products are very similar in physical form, being filtered cake
(nominally 8-10% moisture) that will be transported in bulk by road
to the railhead in Flin Flon, MB.
The flotation circuit will also produce a pyrite concentrate that
will allow the operation to maintain the sulphur content in the
tailings storage facility ("TSF") at a level that prevents acid
generation. Low sulphur tailings from the mineral processing
facility will be thickened and filtered to reduce the moisture
content and trucked to the TSF. The pyrite concentrate and a
portion of the low sulphur tailings will be mixed with cement and
pumped underground as paste backfill to fill mined-out stopes.
Figure 4 – Copper Equivalent ("CuEq") Production
Schedule
Metallurgy
The ore contains chalcopyrite, galena, sphalerite, pyrite and
pyrrhotite almost exclusively, with only very minor occurrences of
other sulphide minerals observed. Pyrite predominated over
pyrrhotite in all ore types. For non–sulphide gangue, copper
stockwork contained mostly quartz, mica, and chlorite, while
massive sulphide ores contained more carbonates, iron oxides and
talc and less quartz. Clay contents were generally low in all ore
types. The testwork demonstrated the ore is amenable to
conventional flotation and that the two ore types can be blended so
that they do not have to be handled separately throughout the
operations.
The mineral processing facility will produce clean copper and
zinc concentrates that will be saleable to smelters. A program of
variability testwork helped to develop head grade vs. recovery
relationships for the FS, and these have been applied to the mine
production schedule to define concentrate production profiles.
Since metallurgical testing commenced in 2012, samples have
displayed solid metallurgical characteristics and life of mine
average copper and zinc recoveries of 91.1% and 79.8% respectively
have been determined. Separate copper and zinc flotation
concentrates with grades of 28% Cu and 50% Zn respectively are
indicated, and the copper concentrate also carries by-product
credits for gold and silver (with recoveries of 88.6% and 63.2%
respectively).
Table 6 – Recovery rates
LOM Recovery
Rates
|
Copper
|
Zinc
|
Gold
|
Silver
|
Massive Sulphide
Ore
|
82.4%
|
84.4%
|
82.9%
|
54.6%
|
Copper Stockwork
Zone
|
95.2%
|
47.0%
|
92.7%
|
76.6%
|
Blended Recovery
Rates
|
91.1%
|
79.8%
|
88.6%
|
63.2%
|
Power
Power will be supplied to the Project site will be provided in
two phases. The first phase, which includes the construction period
and initial production period, will be provided via an existing
distribution line with approximately 1.2 MW in available capacity,
coupled with liquefied natural gas generation. A new 77km dedicated
138 kV transmission line fed from the Island Falls Hydro Generating
Station will be constructed and is anticipated to be in service in
Year 5, at which point the LNG would be decommissioned. Total
connected load power requirements for the mine are expected to be
approximately 18.5 MW.
Filtered Dry-Stack Tailings
Process plant tailings will be split into a sulphur deficient
stream and a sulphur stream. The sulphur deficient stream would be
dewatered to a 15-20% moisture cake and placed within the dry-stack
tailings facility, which is located within the previously disturbed
reclaimed silica sand quarry. The sulphur tailings stream will be
mixed with a Portland cement-based
binder and used underground to provide geotechnical support in
mined-out areas of the mineral deposit. Reusing tailings for
backfill and dry-stacking tailings reduces the mine's environmental
footprint.
Capital Expenditures
The FS outlines an initial pre-production capital cost estimate
of $368.0M, including a contingency
of $38.5 and net of pre-commercial
production credits of $7.9M,
highlighted in Table 7 below. The largest components of the initial
capital cost estimate include $151.5M
for mill development and $132.2M for
underground mine development. Construction is expected to be
completed over a two-year period. Sustaining capital costs
over the life of mine are estimated at $481M, which includes $63.9M for shaft development. Over 70% of initial
capital cost estimates are based on competitive quotes.
The FS excludes pre-project approval expenditures associated
with the previously announced pre-development program (surface
preparation and exploration decline) as well early engineering
costs. Based on latest estimates, Foran expects these pre-project
approval expenditures to total approximately $45M.
Table 7 – Capital Cost Summary
|
|
|
|
Capital Costs
(C$M)
|
Initial
|
Sustaining
|
Total
|
Mine
|
$132.2
|
$418.7
|
$550.9
|
Mill
|
$151.5
|
$8.8
|
$160.2
|
Infrastructure
|
$42.4
|
$15.0
|
$57.4
|
Tailings
|
$11.3
|
$21.3
|
$32.6
|
Closure
|
$0.0
|
$8.2
|
$8.2
|
Sub-total
|
$337.4
|
$472.0
|
$809.4
|
Contingency
|
$38.5
|
$9.0
|
$47.5
|
Total
|
$375.9
|
$481.0
|
$856.9
|
Pre-Commerical
Production Revenue
|
($54.5)
|
-
|
($54.5)
|
Pre-Commerical
Production Costs
|
$46.6
|
-
|
$46.6
|
Net Capital
Cost
|
$368.0
|
$481.0
|
$849.0
|
Operating Costs
Operating costs are summarized in Table 8 below. Mining costs
are estimated at $41.26/tonne mined
based on an average mining rate of approximately 1.51Mtpa. Mining
costs reflect the blend of lower cost sublevel longhole stoping,
and the higher cost associated with longitudinal stoping and Avoca
mining. Processing costs are estimated at $23.96/t, G&A at $6.78/t, and tailings at $1.54/t for total operating costs of $73.55/t. Foran's consultants used a first
principles methodology in establishing operating costs. Over 70% of
material costs are quotes received during H2/21, with
productivities being derived from benchmarking and industry best
practices. On a per pound basis, C1 copper cash costs are estimated
at US$0.26/lb, net of by-product
credits, and US$0.90/lb on an all-in
sustaining cost basis, net of by-product credits.
Table 8 – Life of Mine Operating Cost Summary
|
|
|
LOM Operating
Costs (C$/t milled)
|
|
Amount
|
Mining¹
|
C$/t
milled
|
$41.26
|
Processing
|
C$/t
milled
|
$23.96
|
G&A
|
C$/t
milled
|
$6.78
|
Tailings
|
C$/t
milled
|
$1.54
|
Total Operating
Costs
|
C$/t
milled
|
$73.55
|
Sustaining Capital
Costs
|
C$/t
milled
|
$18.39
|
Operating Costs +
Sustaining Capex
|
C$/t
milled
|
$91.94
|
|
|
|
LOM Unit
Costs
|
|
Amount
|
C1 Copper Cash Costs
(net of credits)²
|
US$/lb
|
$0.26
|
All-in Sustaining
Costs (net of credits)³
|
US$/lb
|
$0.90
|
¹ Mining costs are
inclusive of paste fill costs.
² Mine site operating costs, treatment Charges & refining
Charges, less by-product credits, divided by payable copper
production.
³ C1 Copper Cash Costs (net of credits), plus sustaining capex,
plus royalties divided by payable copper production.
|
Financial Analysis
At US$3.50/lb Cu, US$1.20/lb Zn, US$1,600/oz Au, US$22.50/oz Ag, and a USD/CAD exchange rate of
1.26, the project generates a pre-tax NPV7% of
$678M and IRR of 26%. On an after-tax
basis, the project generates an NPV7% of $466M and IRR of 22% with a 4.5-year payback
period. At current prices, the project generates an after-tax
NPV7% C$1,055M and IRR of
38%.
Table 9 – Financial Metrics
|
|
|
|
Description
|
Units
|
Feasibility
Study
|
Metal
Prices/FX¹
|
|
Base
Case
|
Current
Prices
|
Copper
|
US$/lb
|
$3.50
|
$4.53
|
Zinc
|
US$/lb
|
$1.20
|
$1.64
|
Gold
|
US$/oz
|
$1,600
|
$1,936
|
Silver
|
US$/oz
|
$22.50
|
$24.52
|
Currency Exchange
Rate
|
USD/CAD
|
1.26
|
1.27
|
Financial
Analysis
|
|
|
|
Pre-Tax
NPV7%
|
C$M
|
$678
|
$1,493
|
Pre-Tax
IRR
|
%
|
26%
|
46%
|
After-Tax
NPV7%
|
C$M
|
$466
|
$1,055
|
After-Tax
IRR
|
%
|
22%
|
38%
|
Payback
Period
|
years
|
4.5
|
2.2
|
¹ Current prices and
FX based on Feb 23, 2022 closing values.
|
|
|
Opportunities
Foran has identified various opportunities that have the
potential to further improve project economics:
- Automation – Foran will continue to evaluate emerging
technologies that could increase automation in the operations to
improve efficiency and safety. This could include more autonomous
production equipment, as well as support equipment, such as boom
trucks for transporting materials underground.
- Remote Operations Centre – Foran is considering
installing a control room located offsite, where semi-autonomous
equipment could be operated from. Certain other non-production
functions could also be performed from this site which would reduce
camp and travel costs and potentially help the company to attract
and retain top-tier talent.
- Reduced Backfill Costs – Foran will investigate adding
locally sourced sand (dolomite) in the backfill to reduce binder
cost. While further testwork is required, the geochemical
characteristics of the dolomite, combined with the cement used in
the paste, creates a stronger product compared to using only
tailings. This would result in a lower binder requirement.
- Ore Sorting – Initial testwork conducted on core samples
indicated amenability to the sorting technology. More testwork will
be undertaken, using material from the planned bulk sample, to
investigate sorting in the flowsheet. The benefit would be
upgrading ore before it is milled, reducing costs.
- Exploration Potential – The deposit extends down-plunge
approximately 2km, where it remains open at depth and along strike.
Foran is also turning its exploration focus to advancing regional
targets and deposits.
- Potential Expansions – The processing plant is being
designed as an initial 4,200tpd plant that could accommodate future
potential phased expansions as Foran advances and delineates
additional near-mine deposits across the Hanson Lake District.
Environment, Permitting and Communities
The McIlvenna Bay Project is considered a development and must
obtain Ministerial approval pursuant to The Environmental
Assessment Act (Saskatchewan)
before construction can proceed. Foran has already commenced work
required for EA approval, and as part of the process the Company
must conduct an Environmental Impact Assessment and submit an
Environmental Impact Statement ("EIS") for review to the Ministry
of Environment.
Upon submission of the EIS, a technical review is completed
through the Saskatchewan Environmental Assessment Review Panel, who
are tasked with providing advice on the adequacy, accuracy and
completeness of the EIS. Following the panel's review and response
to comments by Foran, the EIS and final Technical Review Comments
are available for public review and written comment for 30 or
60-calendar days. Once the public review period is complete and the
Government has completed their Duty to Consult, the Minister of
Environment would make a decision on approving the development.
After the EA approval is in hand, the Company is able to obtain all
other required regulatory permits and licenses, including but not
limited to a mine surface lease agreement, construction approvals,
and the operating approval.
Carbon Neutrality and ESG
The Company remains committed on delivering a mine of the
future, with an initial focus on natural capital initiatives (which
includes achieving carbon neutrality) and human capital
initiatives. Hydroelectric power, BEVs, and carbon sequestration
are expected to be notable drivers in reaching our carbon
neutrality goals, while we work closely with local communities that
are critical to operate in an evolving and increasingly
decarbonized world. The Company is looking forward to updating all
stakeholders on our strategy as we move forward with these
initiatives.
Project Finance
Foran has received expressions of interest from a various
potential financing partners to provide project-level debt and
other potential forms of financing to advance the construction of
McIlvenna Bay. The company will continue discussions with select
potential financing partners in order to finalize the financing
package in a timely manner while managing risk and maximizing value
for shareholders. The company believes that McIlvenna Bay's
top-tier jurisdiction, carbon-neutrality targets, low capital
intensity and exposure to strategic commodities makes the project
an attractive proposition for potential financing partners.
Mineral Resource Estimate
The FS is underpinned by the Mineral Resource Estimate announced
October 14, 2021 (News Release Link).
The updated estimate outlined a 70% increase in Indicated resource
tonnes to 39.1 Mt compared to the prior 2019 resource estimate of
23.0Mt and Inferred resources totaled 5.0 Mt. The 2021 Resource
Estimate is summarized in Table 10 below. Mineralization begins
~25m below surface and extends down-plunge approximately 2km, where
it remains open at depth outlining future opportunity to grow the
resource.
The mineral resource estimate was completed by Micon
International Limited ("Micon") and verified by Mr. William J. Lewis, P.Geo. of Micon, independent
of Foran and a Qualified Person as defined within National
Instrument 43-101 ("NI 43-101"). The 2021 Resource Estimate's
effective date is September 6, 2021,
and is estimated using long-term metal price projections of
US$4.25/lb Cu, US$1.35/lb Zn, US$1,800/oz Au and US$25.00/oz Ag. The base case uses a US$60/t NSR cut-off using provisions for
metallurgical recoveries, smelter payables, refining costs,
freight, and applicable royalties, consistent with the cut-off used
for the 2019 Resource.
Table 10. McIlvenna Bay 2021 Mineral Resource Estimate
(US$60/t NSR cut-off)
1-5
Zone
|
Tonnage
(Mt)
|
NSR
($US)
|
Cu
(%)
|
Zn
(%)
|
Pb (%)
|
Au
(g/t)
|
Ag
(g/t)
|
CuEq
(%)
|
INDICATED
|
|
Main
Lens
Massive
Sulphide
|
10.8
|
199
|
1.01
|
6.17
|
0.41
|
0.53
|
27
|
3.13
|
Lens
3
|
2.6
|
113
|
0.82
|
3.07
|
0.14
|
0.25
|
15
|
1.80
|
Stringer
Zone
|
1.2
|
119
|
1.26
|
0.52
|
0.07
|
0.31
|
13
|
1.53
|
Copper Stockwork
Zone
|
22.7
|
127
|
1.31
|
0.38
|
0.02
|
0.37
|
9
|
1.60
|
Copper
Stockwork
Footwall
Zone
|
1.8
|
141
|
1.42
|
0.59
|
0.04
|
0.45
|
9
|
1.79
|
TOTAL
INDICATED
|
39.1
|
146
|
1.20
|
2.16
|
0.14
|
0.41
|
14
|
2.04
|
|
|
INFERRED
|
|
Main
Lens
Massive
Sulphide
|
1.6
|
163
|
0.65
|
6.51
|
0.46
|
0.29
|
28
|
2.66
|
Copper Stockwork
Zone
|
3.5
|
106
|
1.08
|
0.79
|
0.03
|
0.25
|
11
|
1.37
|
TOTAL
INFERRED
|
5.0
|
123
|
0.94
|
2.56
|
0.17
|
0.27
|
16
|
1.77
|
1
Effective date September 6, 2021; CIM definitions were followed for
Mineral Resources; CuEq = copper equivalent; NSR = Net Smelter
Return. Totals may not add due to rounding.
|
2 The base
case mineral resource is estimated based on 240 diamond drill holes
and a NSR cut-off value of US$60/t. NSR value was calculated using
Cu, Zn, Au, Ag and high-grade caps were applied as per the
discussion in Estimation Methodology and Parameters below and
include provisions for metallurgical recovery and estimates of
current shipping terms and smelter rates for similar concentrates.
Metal prices used are US$4.25/lb. Cu, US$1.35/lb. Zn, US$1,800/oz.
Au, and US$25.00/oz. Ag, versus US$3.30/lb. Cu, US$1.25/lb. Zn,
US$1,310/oz. Au and US$16.20/oz. Ag, used for the previous resource
estimate in 2019. Specific gravity was interpolated for each block
based on measurements taken from core specimens, with an average
value of 3.59 for the main Massive Sulphide ("MS") lens and 2.87
for the Copper Stockwork Zone ("CSZ")
|
3 Mr.
William J. Lewis, P.Geo., of Micon, has reviewed and verified this
mineral resource estimate. Mr. Lewis is independent of Foran and is
a "Qualified Person" within the meaning of NI 43-101.
|
4 Mineral Resources are inclusive of
mineral reserves. Mineral resources which are not mineral reserves
do not have demonstrated economic viability. The estimate of
mineral resources may be materially affected by environmental,
permitting, legal, marketing or other issues.
|
5 CuEq values were calculated from
the NSR values for each zone using both concentrate and recovery
curves that were developed during Pre-Feasibility level
metallurgical studies.
|
Qualified Person
The 2021 Mineral Resource Estimate were prepared in accordance
with Canadian Institute of Mining Metallurgy, and Petroleum (CIM)
Definition Standards for Mineral Resources and Mineral Reserves
(May 10, 2014), and CIM Estimation of
Mineral Resources and Mineral Reserves Best Practice Guidelines
(November 29, 2019) and was completed
and verified by Micon, a global geological and mining consultancy.
The 2021 Resource Estimate was verified by Mr. William J. Lewis, P.Geo. Mr. Lewis is an
independent Qualified Person as defined in NI 43-101 and has
consented to applicable disclosure contained herein regarding the
2021 Resource Estimate.
The 2022 Mineral Reserve Estimates were prepared in accordance
with Canadian Institute of Mining Metallurgy, and Petroleum (CIM)
Definition Standards for Mineral Resources and Mineral Reserves
(May 10, 2014), and CIM Estimation of
Mineral Resources and Mineral Reserves Best Practice Guidelines
(November 29, 2019) and was completed
and verified by Stantec Inc., a global mining consultancy. The 2022
Mineral Reserve Estimate was verified by Mr. Mark Hatton, P.Eng. Mr. Hatton is an independent
Qualified Person as defined in NI 43-101 and has consented to
applicable disclosure contained herein regarding the 2022 Mineral
Reserve Estimate.
Mr. Denis Flood, P.Eng,
Foran Vice-President of Engineering,
is the Qualified Person for all technical information herein,
excluding the 2022 Mineral Resource and 2022 Reserve estimates. Mr.
Flood has reviewed and approved the technical information in this
release.
About Foran Mining
Foran Mining is a copper-zinc-gold-silver exploration and
development company, committed to supporting a greener future,
empowering communities and creating circular economies which create
value for all our stakeholders, while also safeguarding the
environment. The project is located entirely within the
traditional territory of the Peter Ballantyne Cree Nation. The
company also owns the Bigstone project, a resource-development
stage deposit located 25km southwest of its McIlvenna Bay
project.
McIlvenna Bay is a copper-zinc-gold-silver rich VHMS deposit
intended to be the centre of a new mining camp in a prolific
district that has already been producing for 100 years. McIlvenna
Bay sits just 65km from Flin Flon,
Manitoba and is part of the world class Flin Flon Greenstone
Belt that extends from Snow Lake,
Manitoba, through Flin Flon
to Foran's ground in eastern Saskatchewan, a distance of over 225km.
McIlvenna Bay is the largest undeveloped VHMS deposit in the
region. Our goal is to build the first carbon neutral copper mine
in Canada by design. The Company
announced the results from its Bankable Feasibility Study on
February 28, 2022, outlining an 18
year mine life producing an average of 65 Mlbs CuEq annually. The
Company filed a NI 43-101 Technical Report for the updated mineral
resource estimate for the McIlvenna Bay deposit on February 11, 2022, wherein the indicated mineral
resources increased to 39.1 million tonnes, a 70% increase compared
to the previous resource estimate from 2019. Foran's copper-zinc
Bigstone Deposit is expected to serve as additional feed for the
mill at McIlvenna Bay. The Company filed a NI 43-101 Technical
Report for the Bigstone Deposit's first resource estimate on
February 11, 2021.
Foran trades on the TSX.V under the symbol "FOM" and on the
OTCQX under the symbol "FMCXF".
Neither the TSX-V nor its Regulation Services Provider (as that
term is defined in the policies of the TSX-V) accepts
responsibility for the adequacy of this release. No stock exchange,
securities commission or other regulatory authority has approved or
disapproved the information contained herein.
Technical Disclosure
Data verification by the Qualified Persons programs have
included site visits, review of drill core, review of QA/QC data,
re-sampling and sample analysis programs, and database
verification. Validation checks were performed on data, and
comprise checks on surveys, collar co-ordinates and assay data.
Sufficient verification checks were undertaken on the database to
provide confidence that the database is virtually error free and
appropriate to support Mineral Resource and Reserve estimation.
A technical report for the McIlvenna Bay Project will be
prepared in accordance with National Instrument 43-101 and will be
filed on SEDAR at www.sedar.com and on the Company's website at
www.foranmining.com within 45 days of this press release. Readers
are encouraged to read the technical report in its entirety,
including all qualifications, assumptions and exclusions that
relate to the details summarized in this press release. The
technical report is intended to be read as a whole, and sections
should not be read or relied upon out of context.
Forward Looking Statements
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This news release contains "forward-looking information" (also
referred to as "forward looking statements"), which relate to
future events or future performance and reflect management's
current expectations and assumptions. Often, but not always,
forward-looking statements can be identified by the use of words
such as "plans", "hopes", "expects", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates", or
"believes" or variations (including negative variations) of such
words and phrases, or state that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved. Such forward-looking statements reflect management's
current beliefs and are based on assumptions made by and
information currently available to the Company. All statements,
other than statements of historical fact, are forward-looking
statements or information. Forward-looking statements or
information in this news release relate to, among other things:
filing of the feasibility study in a timely manner, and the
anticipated capital and operating costs, sustaining costs, net
present value, internal rate of return, payback period, process
capacity, average annual metal production, average process
recoveries, anticipated mining and processing methods, proposed FS
production schedule and metal production profile, anticipated
construction period, anticipated mine life, expected recoveries and
grades, anticipated production rates, infrastructure, social and
environmental impact studies, future financial or operating
performance of the Company, subsidiaries and its projects,
estimation of mineral resources, exploration results, opportunities
for exploration, development and expansion of the McIlvenna Bay
Project, its potential mineralization, the future price of metals,
the realization of mineral reserve estimates, costs and timing of
future exploration, the timing of the development of new deposits,
requirements for additional capital, foreign exchange risk,
government regulation of mining and exploration operations,
environmental risks, reclamation expenses, title disputes or
claims, insurance coverage and regulatory matters. In addition,
these statements involve assumptions made with regard to the
Company's ability to develop the McIlvenna Bay Project and to
achieve the results outlined in the FS, and the ability to raise
capital to fund construction and development of the McIlvenna Bay
Project.
These forward-looking statements and information reflect the
Company's current views with respect to future events and are
necessarily based upon a number of assumptions that, while
considered reasonable by the Company, are inherently subject to
significant operational, business, economic and regulatory
uncertainties and contingencies. These assumptions include: our
mineral reserve and resource estimates and the assumptions upon
which they are based, including geotechnical and metallurgical
characteristics of rock confirming to sampled results and
metallurgical performance; tonnage of ore to be mined and
processed; ore grades and recoveries; assumptions and discount
rates being appropriately applied to the technical studies; success
of the Company's projects, including the McIlvenna Bay Project;
prices for zinc, copper, gold and silver remaining as estimated;
currency exchange rates remaining as estimated; availability of
funds for the Company's projects; capital decommissioning and
reclamation estimates; mineral reserve and resource estimates and
the assumptions upon which they are based; prices for energy
inputs, labour, materials, supplies and services (including
transportation); no labour-related disruptions; no unplanned delays
or interruptions in scheduled construction and production; all
necessary permits, licenses and regulatory approvals are received
in a timely manner; and the ability to comply with environmental,
health and safety laws. The foregoing list of assumptions is not
exhaustive.
The Company cautions the reader that forward-looking statements
and information include known and unknown risks, uncertainties and
other factors that may cause actual results and developments to
differ materially from those expressed or implied by such
forward-looking statements or information contained in this news
release and the Company has made assumptions and estimates based on
or related to many of these factors. Such factors include, without
limitation: the projected and actual effects of the COVID-19
coronavirus on the factors relevant to the business of the
Corporation, including the effect on supply chains, labour market,
currency and commodity prices and global and Canadian capital
markets, fluctuations in zinc, copper, gold and silver prices;
fluctuations in prices for energy inputs, labour, materials,
supplies and services (including transportation); fluctuations in
currency markets (such as the Canadian dollar versus the U.S.
dollar); operational risks and hazards inherent with the business
of mining (including environmental accidents and hazards,
industrial accidents, equipment breakdown, unusual or unexpected
geological or structure formations, cave-ins, flooding and severe
weather); inadequate insurance, or the inability to obtain
insurance, to cover these risks and hazards; our ability to obtain
all necessary permits, licenses and regulatory approvals in a
timely manner; changes in laws, regulations and government
practices in Canada, including
environmental, export and import laws and regulations; legal
restrictions relating to mining; risks relating to expropriation;
increased competition in the mining industry for equipment and
qualified personnel; the availability of additional capital; title
matters and the additional risks identified in our filings with
Canadian securities regulators on SEDAR in Canada (available at www.sedar.com). Although
the Company has attempted to identify important factors that could
cause actual results to differ materially, there may be other
factors that cause results not to be as anticipated, estimated,
described or intended. Investors are cautioned against undue
reliance on forward-looking statements or information.
These forward-looking statements are made as of the date hereof
and, except as required by applicable securities regulations, the
Company does not intend, and does not assume any obligation, to
update the forward-looking information.
Non-GAAP Measures
This press release includes certain terms or performance
measures commonly used in the mining industry that are not defined
under International Financial Reporting Standards ("IFRS"),
including Copper Equivalent, C1 Copper Cash Costs (net of credits)
per pound of payable copper and All-In Sustaining Costs per pound
of payable copper, and operating costs per tonne processed.
Non-GAAP measures do not have any standardized meaning prescribed
under IFRS and, therefore, they may not be comparable to similar
measures employed by other companies. The Company discloses "C1
Copper Cash Costs", "All-in Sustaining Costs", "EBITDA", and "Free
Cash Flow" because it understands that certain investors use this
information to determine the Company's ability to generate earnings
and cash flows for use in investing and other activities. The
Company believes that conventional measures of performance prepared
in accordance with IFRS, do not fully illustrate the ability of
mines to generate cash flows. The measures, as determined under
IFRS, are not necessarily indicative of operating profit or cash
flows from operating activities. The measures cash costs and all-in
sustaining costs are considered to be key indicators of a project's
ability to generate operating earnings and cash flows. Non-GAAP
financial measures should not be considered in isolation as a
substitute for measures of performance prepared in accordance with
IFRS and are not necessarily indicative of operating costs,
operating profit or cash flows presented under IFRS.
SOURCE Foran Mining Corporation