MGX Minerals
Announces Positive PEA for Driftwood Creek Magnesium; Pre-Tax NPV
of C$529.8 Million and 24.5% IRR
Vancouver, BC -- March 6,
2018 -- InvestorsHub NewsWire -- MGX Minerals Inc.
(“MGX” or the “Company”) (CSE:
XMG / FKT: 1MG /
OTC: MGXMF) is pleased to report results of an independent
technical report prepared in accordance with CIM guidelines and
National Instrument 43-101 definition of a Preliminary Economic
Assessment ("PEA") on its Driftwood Creek Magnesium Project
(“Driftwood Creek” or the “Project”).
The PEA study was prepared
by AKF Mining Services Inc. (AKF), Tuun Consulting Inc. (Tuun),
Samuel Engineering Inc. (Samuel), and will be filed on the
Company’s SEDAR profile at www.sedar.com as well as available
on the Company’s website at www.mgxminerals.com within 45
days.
The PEA presumes a
conventional quarry pit operation with a process plant and a
furnace/kiln combination to produce a saleable Dead burn magnesium
oxide (DBM) product. The plant will also have the ability to
produce Caustic-calcined magnesium oxide (CCM) as a separate
salable product. All dollar amounts in this release are stated in
Canadian currency.
HIGHLIGHTS
Highlights of the PEA include the following:
- Pre-tax NPV@5% of $529.8
million, IRR of 24.5% with a 3.5-year payback
- Post-tax NPV@5% of
$316.7million, IRR of 19.3% with a 4.0-year
payback
- Initial capital costs of
$235.9 million (Total life-of mine ("LOM") - $239.8 includes
sustaining/closure costs of $3.9 million and contingency costs of
$40.0 million)
- Conventional quarry pit
mine with a 1200 tonne per day ("tpd") process plant using
conventional crushing, grinding, flotation upgrading, calcination,
and sintering to produce a saleable DBM product
- Cash costs of $350/tonne
MgO
- All-in sustaining costs
("AISC") of $351/tonne MgO
- Average annual MgO
production of 169,700 tonnes during an 19 year mine
life
- LOM average head grades of
43.27% MgO
- LOM MgO recoveries of
90%
- LOM strip ratio of 2.4 to
1 of rock to mineralized material
The reader is advised that
the preliminary economic assessment summarized in this press
release is only intended to provide an initial, high-level review
of the project. The PEA mine plan and economic model include the
use of inferred mineral resources which are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves and there is no certainty that the preliminary economic
assessment will be realized.
“We are extremely
pleased with results of the PEA, which display Driftwood’s ability
to become a high-margin, low-cost producer of magnesium oxide in a
politically secure jurisdiction,” stated MGX President and CEO
Jared Lazerson. “We believe this significant milestone outlines a
clear path forward and provides numerous opportunities to further
enhance the economics of the Project with a pre-feasibility
study.”
PEA SUMMARY OF RESULTS
Summary of
Results |
Mine
Life |
|
Years |
18.8 |
Total
Resource |
M
tonnes |
7.8 |
Total
Waste |
M
tonnes |
19.1 |
Total Capitalized
Waste |
M
tonnes |
0.1 |
Total
Mined |
M
tonnes |
27.0 |
Strip
Ratio |
w:o |
2.44 |
Mining
Rate |
tpd |
4,103 |
Plant
Throughput |
tpd |
1,200 |
Pre-Strip/Capitalized
Waste |
M
tonnes |
0.1 |
Average Head
Grades |
|
|
MgO |
|
% |
43.27 |
CaO |
|
% |
1.00 |
Al2O3 |
|
% |
1.00 |
SiO2 |
|
% |
4.88 |
Fe2O3 |
|
% |
1.34 |
LOI |
|
% |
47.92 |
Payable
Metal |
|
|
MgO |
LOM k
tonne |
3,055 |
k
tonne/yr |
169. |
SUMMARY OF
ECONOMICS
Pre-Tax Cash Flow
during Production |
$M |
$1,051 |
Avg Pre-Tax Cash
Flow per Year |
$M |
$72.6 |
Taxes |
|
|
$M |
$391.8 |
Post-Tax Cash Flow
during Production |
$M |
$659.4 |
Avg Post-Tax Cash
Flow per Year |
$M |
$50.9 |
|
|
|
|
|
Discount
Rate |
|
|
5% |
Pre-Tax NPV
($M) |
|
$529.8 |
Pre-Tax
IRR |
|
|
24.5% |
Pre-Tax Payback
(Yrs) |
|
3.5 |
Post-Tax NPV
($M) |
|
$316.7 |
Post-Tax
IRR |
|
|
19.3% |
Post-Tax Payback
(Yrs) |
|
4.0 |
|
|
|
|
|
MgO Cash Cost (CAD
$/tonne) |
|
$350.0 |
MgO Cash Cost
incl. Sustaining Capital (CAD $/tonne) |
$351.3 |
The PEA mine plan and economic model include the use of inferred
resources which are considered to be too speculative to be used in
an economic analysis except as permitted by NI 43-101 for use
in PEA's. There is no guarantee that inferred resources can be
converted to indicated or measured resources and, as such, there is
no guarantee that the project economics described herein will be
achieved. Mineral resources that are not mineral reserves do
not have demonstrated economic viability.
CAPITAL AND
OPERATING COSTS SUMMARY
Capital
Cost |
Pre-Production
($M) |
Sustaining/Closure
($M) |
LOM
$M |
|
|
|
EA, Permitting, Basic
Engineering |
6.8 |
0.0 |
6.8 |
|
Capitalized Stripping -
Waste |
0.5 |
0.0 |
0.5 |
|
Capitalized Stripping -
Organics |
0.3 |
0.0 |
0.3 |
|
Mine Site &
Development |
1.5 |
0.0 |
1.5 |
|
Plant Site (Cranbrook, BC
Property) |
|
3.8 |
0.0 |
3.8 |
|
Process
Plant |
|
37.7 |
0.4 |
38.1 |
|
MgO
Calcination |
|
108.7 |
0.4 |
109.1 |
|
EPCM |
|
|
14.4 |
0.0 |
14.4 |
|
Indirects |
|
|
15.9 |
0.0 |
15.9 |
|
Reclamation/Closure |
0.0 |
2.5 |
2.5 |
|
Owners
Costs |
|
7.1 |
0.0 |
7.1 |
|
Subtotal |
|
|
196.6 |
3.3 |
199.9 |
|
Contingency |
|
39.3 |
0.7 |
40.0 |
|
Total Capital
Costs |
235.9 |
3.9 |
239.8 |
|
Operating Costs Summary
|
|
|
Cost |
|
|
|
$/t
Processed |
LOM
$M |
$M/a |
Mining‡ |
|
|
30.30 |
237.7 |
13.2 |
Transport from Mine to
Plant |
43.95 |
344.7 |
19.2 |
Processing +
G&A |
|
62.06 |
486.8 |
27.0 |
Total |
|
|
136.31 |
1,069 |
59.4 |
‡Mining Cost is based
on $8.82/t mined |
Project
Description
The Driftwood Creek Project is located in the southern British
Columbia (BC), Canada. The mine site property is located
approximately 210 km northwest of Cranbrook, BC. Infrastructure
currently exists in the form of paved highways and forest service
roads, a CPR spur line (at Brisco, BC), and a major power line
within 15 km of the property. The plant will be located in
Cranbrook, BC, where all mineralize run-of-mine (ROM) material will
be hauled and processed.
Mining is via conventional
quarry pit methods. Mining will be contracted so no capital is
included for mining equipment; instead a contractor mining quote
was used as the basis for mining costs. Mining costs were
calculated from first principles based on equipment required and
include pit and dump operations, supervision and technical
services, and fuel costs.
Processing will be a
conventional crushing, grinding, flotation upgrading, calcination,
and sintering to produce a saleable DBM product.
Transportation of
mineralized run-of-mine (ROM) material will be hauled via a
40-tonne highway truck from the mine to plant site located in
Cranbrook, BC. No capital is included for highway trucks; instead
contractor haul quote was used as the basis for the transportations
costs which includes fuel and ROM loading.
Mineral Resource
Estimate
The Mineral Resource has been prepared by Tuun Consulting Inc.
(Tuun) based upon forty-nine (49) diamond drill holes, the
twenty-five percussion (25) blast holes used for the bulk sample,
and 45 magnesite surface samples. This resource estimation was
completed by Allan Reeves, P. Geo., an independent qualified person
as defined in NI 43-101. The effective date of the resource
statement is December 31st, 2016.
The resources estimated are considered a reasonable representation
of the Driftwood Creek Magnesite Project at the current level of
prospecting and sampling. The estimate follows the CIM Definition
Standards for Mineral Resources and Mineral Reserves (as adopted by
CIM Council on May 10th, 2014).
The tonnage and grades of
the Driftwood Creek Project mineral resource at a 42.5% MgO cut off
are shown in the table below:
Class |
Tonnes
(‘000s) |
MgO
(%) |
Al2O3
(%) |
CaO
(%) |
Fe2O3
(%) |
SiO2
(%) |
LOI
(%) |
Measured |
4,702.7 |
43.31 |
1.01 |
0.95 |
1.29 |
5.06 |
47.83 |
Indicated |
3144.4 |
43.22 |
1.00 |
1.05 |
1.42 |
4.67 |
47.99 |
M&I |
7,847.1 |
43.27 |
1.00 |
0.99 |
1.35 |
4.90 |
47.89 |
Inferred |
55.8 |
42.95 |
0.93 |
0.66 |
1.43 |
6.07 |
47.46 |
Notes and
assumptions:
- Mineral Resources are
not Mineral Reserves and do not have demonstrated economic
viability. There is no certainty that all or any part of the
mineral resources estimated will be converted into Mineral
Reserves.
- The Lerchs-Grossman
(LG) constrained shell economics used a mining cost of US$8.82/t,
processing+ g&a costs of US$106/t, and a commodity price of
US$600.00/t 95%MgO DBM.
- Mineral resources are
reported within the constrained shell, using a cutoff grade of
42.5% MgO (based on a 20-year LOM) to determine “reasonable
prospects for eventual economic
extraction.”
- Mineral Resources are
reported as undiluted
- Mineral Resources were
developed in accordance with CIM (2010)
guidelines
- Tonnages are reported
to the nearest kilotonne (kt), and grades are rounded to the
nearest two decimal places
- Rounding as required
by reporting guidelines may result in apparent summation
differences between tonnes, grade, and contained metal.
M&I = Measured and Indicated.
Mine Development and Operations
The proposed project concept is to develop a green-fields DBM
deposit with conventional quarry mine with 1200 tonne per day
("tpd") ROM hauled to the plant site, located in Cranbrook,
BC.
All mining operations
(drill, blast, load and haul) will be done by contractors. Also,
the mineralized ROM haul and loading will be completed by
contractors.
The PEA forecasts a 19
year mine life and a LOM strip ratio (the ratio of rock to
mineralized material) of 2.4 to 1. A total of 7.84 million tonnes
of mineralized resource could be mined and processed with 19.174
million tonnes of rock material which includes 60,000 tonnes of
capitalized rock.
Metallurgy and
Processing
Mineralized material will undergo crushing, grinding, flotation
upgrading, calcination, and sintering to produce a saleable dead
burned magnesium (DBM) product. The plant will also have the
ability to produce caustic calcined magnesia (CCM) as a separate
product.
Mill throughput is
designed at 1200 tonnes per day. The plant is expected to achieve
an average recovery of 90 percent with a magnesium oxide (MgO)
purity of 94.6 percent. The DBM product will be bagged and
transported to market for sale as a powder.
Dewatered tails will be
trucked back to the mine site quarry for dry stacking in a tailings
storage facility.
Environment,
Permitting and Corporate Social Responsibility
The project area is not within a known environmental protection
area. Formal environmental baseline and social impacts studies
have not been initiated but will be required to obtain the
environmental permits for future mining
operations.
PEA
Contributors
The technical information in this news release has been prepared in
accordance with Canadian regulatory requirements set out in NI
43-101 and reviewed by the following Qualified
Persons:
Allan Reeves
P.Geo., Tuun - Geology and Mineral Resource
Estimation
Antonio
Loschiavo, P.Eng., AKF – Mining, Infrastructure, Environmental
Studies, Permitting, Social & Economics
Matt R. Bender,
P.E., Samuel Engineering – Metallurgical and Recovery
Methods
The authors of the PEA
have approved the disclosure of the scientific or technical
information contained in this news release.
Qualified
Persons
The technical portions of
this press release were reviewed by Andris Kikauka (P. Geo.), Vice
President of Exploration for MGX Minerals. Mr. Kikauka is a
non-independent Qualified Person within the meaning of National
Instrument 43-101 Standards.
About MGX
Minerals
MGX Minerals is a diversified Canadian resource company with
interests in advanced material and energy assets throughout North
America. Learn more at www.mgxminerals.com.
Contact
Information
Jared Lazerson
President and CEO
Telephone: 1.604.681.7735
Web: www.mgxminerals.com
Neither the Canadian
Securities Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the Canadian Securities
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Forward-Looking
Statements
This press release
contains forward-looking information or forward-looking statements
(collectively "forward-looking information") within the meaning of
applicable securities laws. Forward-looking information is
typically identified by words such as: "believe", "expect",
"anticipate", "intend", "estimate", "potentially" and similar
expressions, or are those, which, by their nature, refer to future
events. The Company cautions investors that any forward-looking
information provided by the Company is not a guarantee of future
results or performance, and that actual results may differ
materially from those in forward-looking information as a result of
various factors. The reader is referred to the Company's public
filings for a more complete discussion of such risk factors and
their potential effects which may be accessed through the Company's
profile on SEDAR at www.sedar.com.
MGX Minerals (CSE:XMG)
Historical Stock Chart
From Mar 2024 to Apr 2024
MGX Minerals (CSE:XMG)
Historical Stock Chart
From Apr 2023 to Apr 2024