Canada Fluorspar Inc. (TSX VENTURE:CFI) ("CFI" or the "Company"), is pleased to
announce the results of a newly completed Preliminary Feasibility Study ("PFS")
for its St. Lawrence fluorspar project in Newfoundland. The St. Lawrence Project
is held by Newspar of which CFI holds a 50% interest. The PFS was prepared by
the independent engineering firm, Roscoe Postle Associates Inc. ("RPA"). The PFS
is based on updated capital and operating costs, and the existing resource
estimate. The PFS contemplates a 131,000 tonne per annum ("TPA") fluorspar
production facility.
All dollar amounts are in Canadian dollars, unless otherwise stated.
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US$550/MT
US$500/MT Base Case
PRELIMINARY FEASIBILITY STUDY HIGHLIGHTS Base Case +10% (i)
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Pre-Tax Net Present Value("NPV") @ 5.0%
Discount Rate $124 million $182 million
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Pre-Tax Internal Rate of Return ("IRR") 16.4% 21.1%
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Cash Operating Costs (per tonne of ore
processed) $78.61 $78.61
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Capital (required to build 131,000 TPA of
Fluorspar Concentrate Production) $154 million
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(i)approximates current market price
MT: Metric Tonne
"The results of this preliminary feasibility study highlight the economics of
the project, which combined with the size, quality, logistical and
infrastructure advantages make this a significant fluorspar asset," stated
Lindsay Gorrill, President and CEO of CFI. Mr. Gorrill added, "the current
fluorspar prices of approx. US$540 per MT (Acid grade fluorspar, filtercake,
less than 5 ppm As, quoted FOB Tampico, Mexico, as reported by Industrial
Minerals on Jan. 22, 2013) adds significant potential upside to the economics of
the project."
Base Case Economic Analysis and Assumptions
The PFS base case pre-tax NPV is $124 million and the pre-tax IRR is 16.4%,
assuming a 5.0% discount rate. Production of fluorspar is estimated to average
131,000 TPA over a fourteen year mine life. The capital costs associated with
the pre-production phase are estimated to be $154 million, while the ongoing
capital costs are estimated to be $72.5 million (which is expected to be paid
from cash flow generated by the project). The table below summarizes the total
initial capital costs and ongoing capital expenditures. The estimated average
annual production has grown from 122,000 to 131,000 MT, capital cost has moved
from $98 million to $154 million and Operating costs from $208 per mt to $231
per mt, when compared to the original PFS dated May 11, 2011.
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Pre- LOM
Summary of Capital Costs (in Millions) Production Ongoing Total
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Mine & Mill 66.2 27.5 93.6
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Infrastructure & Indirect Costs 73.5 9.9 83.4
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Sustaining Capital 25.6 25.6
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Closure 5.8 5.8
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Sub Total 139.7 68.8 208.4
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Contingency 14.0 3.7 17.7
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Total Capital Costs 153.6 72.5 226.1
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The base case assumes that the long term price of fluorspar is US$500.00 per
tonne supported by long term demand and stable prices of Fluorspar Acid Grade,
Filtercake less that 5 ppm As, ex-Tampico, Mexico over the last 18 months at
approximately US$500-$550 per tonne as quoted in Industrial Minerals from July
4, 2011 to January 21, 2013. The base case also assumes that consumption grows
annually and the cash operating cost for producing fluorspar will be $231.69 per
tonne of concentrate produced. The table below summarizes the total average
annual operating costs associated with the anticipated production of 131,000 TPA
of fluorspar concentrate:
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Summary of Annual Operating Costs (in Millions)
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- Mining 17.3
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- Processing 7.2
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- Site Services 3.1
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- General & Administration 2.7
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Total Operating Costs 30.3
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Several factors contribute to the projected low operating cost including:
-- High grade ore
-- High recoveries
-- Existing Infrastructure and historical operations
-- Close proximity to tide water
-- Access to suitable process water
-- Local community and Provincial Government support
The table below summarizes the base case sensitivity analysis:
BASE CASE SENSITIVITY ANALYSIS
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NPV Millions (C$) @ NPV Millions (C$) @
Parameter Price (US$/T Conc.) 7.5% (Pre-Tax) 5% (Pre-Tax)
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+20% 600 175.4 240.4
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+10% 550 128.2 182.4
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Base Case 500 81.1 124.4
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-10% 450 34.0 66.4
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-20% 400 (13.1) 8.5
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Proposed Mining Operations and Processing
The PFS proposes initial production from the Blue Beach North mine which will
provide the first 6 1/2 years of production followed by an additional 7 1/2
years of production from the Tarefare No. 2 mine. The run of mine (ROM)
production over the mine life is anticipated to average approximately 386,000
TPA of ore (412,000 at Blue Beach and 365,000 at Tarefare) providing an average
concentrate production of 131,000 TPA, with a maximum of 136,000 TPA. The Alimak
mining method was selected as the most suitable for the ore body geometry
because it is expected to provide safe, efficient and cost effective extraction.
Processing will consist of initial upgrading of the mill feed via a dense media
separation (DMS plant), followed by grinding and flotation, to produce a high
quality concentrate grading 97.5% CaF2 and less than 1% SiO2. The close
proximity to tide water, (within two kilometres of the mill site), provides a
significant cost advantage for the project.
Mineral Resource Estimate
The PFS was based on the mineral resource estimate completed by RPA in April,
2009 (See Technical Report on the St. Lawrence Fluorspar Project, St. Lawrence,
Newfoundland & Labrador filed under the companies profile on SEDAR on May 21,
2009) is set out in the following table:
Fluorspar Mineral Resources Estimate
(April, 2009)
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Property Category Tonnes (000) Grade (%CaF2)
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Blue Beach North Indicated 4,390 39.0
Tarefare No. 2 Indicated 4,700 44.8
TOTAL Indicated 9,090 42.0
Blue Beach North Inferred 355 30.0
Blowout Veins Inferred 595 31.8
TOTAL Inferred 950 31.1
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Notes:
1. CIM definitions were followed for the resource estimate.
2. Mineral Resources are estimated at a cut-off grade of 20% CaF2 and a
minimum horizontal width of 2.0 m.
3. Average density of mineralized rock is 2.9 t/m3.
4. Tonnage and average grade numbers are rounded.
5. Mineral Resources exclude mined out areas from historical mining.
The PFS was based on the mineral reserve estimate completed by RPA in April,
2011 (See Technical Report on the St. Lawrence Fluorspar Project, St. Lawrence,
Newfoundland & Labrador filed under the companies profile on SEDAR on May 11,
2011) is set out in the following table:
Probable Mineral Reserves Estimate
(April, 2011)
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DESCRIPTION Tarefare Blue Beach Total
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Tonnes Grade Tonnes Grade Tonnes Grade
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('000 t) (% CaF2) ('000 t) (% CaF2) ('000 t) (% CaF2)
----------------------======================================================
Main Vein at 30%
CaF2(i) 3,788 52.05 3,319 44.70 7,107 48.62
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Undiluted Stoping
Quantity (Excluding
Pillar Recovery) 2,400 48.55 2,164 42.45 4,564 45.66
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In Pillars 2,207 44.25 1,837 39.10 4,044 41.91
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Dilution % 17% 20% 18%
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Extraction 90% 90% 90%
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Total Reserves 2,742 43.05 2,641 36.54 5,383 39.86
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Notes:
1. CIM definitions were followed for the reserve estimate.
2. Mineral Reserves are estimated at a cut-off grade of 30% CaF2.
3. Tonnage and average grade numbers may not total due to rounding.
4. Mineral reserves are part of mineral resources.
Given the size of the resource estimate, the project is expected to have a mine
life of approximately 14 years. There are significant resources in addition to
currently defined mineral reserves which provide opportunity to extend the mine
life.
Update
In addition to the PFS, as previously announced, an additional review is being
undertaken by Newspar, CFI's 50/50 joint venture, in order to establish a more
precise understanding of the St. Lawrence Project's anticipated cost and scope.
That review process is considering a range of mining, milling, and
infrastructure options that may be applicable to the project. As a result, no
final decision on the project's cost and scope has been made as yet, nor will it
be made until this review process has concluded. Accordingly, the Company can
provide no assurance at this time that the project will proceed.
Surface Exploration on Director Vein
CFI has carried out surface trenching of the Director Vein during the 2012
exploration program, and to date has uncovered fluorspar mineralization at eight
locations. The trenches are located over an area that extends more than 1,050 m
to the south of the old workings of the Director Vein, and indicate surface
mineralization with widths varying from 3.4 m to 23 m, with grades ranging from
10.32% CaF2 over 3.4 m to 91.44% CaF2 over a vein width of 9.4 m. The
exploration results from the Director Vein are described in the Company's press
releases filed on SEDAR in the second and third quarter of 2012. Based on the
positive results from the nine trenches the Company has commenced its winter
2013 drilling program on the southern extension of the Director Vein.
Report Filing
A NI-43-101 Technical Report will be filed on SEDAR (www.sedar.com) and the
Company's website (http://www.canadafluorspar.com) within 45 days.
Qualified Persons
The PFS was prepared by Hrayr Agnerian, M.Sc.(A), P.Geo, (formerly with RPA and
presently with Agnerian Consulting Ltd.), Holger Krutzelmann, P.Eng. and Normand
Lecuyer, P. Eng. of RPA in conjunction with SNC-Lavalin. Cost updates were
provided by CFI and SNC for the mine site infrastructure, some capital cost and
environmental and mine closure costs. Each of these individuals is an
independent qualified person for the purposes of NI 43-101, and has reviewed and
verified the data disclosed in this news release.
About the Company
The Company is a specialty mineral resource company engaged in the development
fluorspar deposits at its property located in St. Lawrence, Newfoundland,
Canada, and is proposing, through Newspar, the Company's a 50/50 joint venture
with Arkema, to reactivate the existing Blue Beach North and Tarefare
underground fluorspar mines, by expanding the existing mill and constructing a
new, environmentally-sound Tailings Management Facility.
For more information please see: www.canadafluorspar.com.
Cautionary Note and Forward-looking statements
This press release contains forward-looking statements which include, but are
not limited to: statements regarding the results and projections contained in
the preliminary feasibility study of the project at St. Lawrence, resource
estimates, expected mine life, anticipated production, commencement of
construction and production, projected pre-tax net present values and internal
rate of returns, projected operating costs and capital costs, proposed mining
techniques, required to construct and produce at expected levels, projected
market prices of fluorspar, anticipated timing for completion of metallurgical
testing, the commencement of the drilling program, current development and
operating objectives and outlook, expectations, opinions, forecasts,
projections, guidance or other statements that are not statements of fact.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it cannot give any assurance that
such expectations will prove to be correct. Results of the Company may be
affected by a variety of variables and risks associated with mining development
including: loss of market, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks, competition
from other producers, ability to access sufficient debt and equity capital from
internal and external sources, ability to generate sufficient cash flow to meet
its current and future obligations, regulatory approvals affecting construction
and mining operations. Such forward-looking statements are also based on a
number of assumptions which may prove to be incorrect, including, but not
limited to, assumptions about the following: the availability of financing for
exploration and development activities; the estimated timeline for the
development of the project at St. Lawrence, the supply and demand for, and the
level and volatility of the price of fluorspar, the assumptions on which
resource estimates are based, the receipt of necessary permit, market
competition, ongoing relations with employees and impacted communities, and
general business and economic conditions. In addition, the operating and capital
costs in the preliminary feasibility study were developed to be reasonable
estimates within industry benchmarks. There is no certainty that the results of
the preliminary feasibility study will ever be realized. Should one or more of
the risks or uncertainties involved in forward-looking statements relating to
the preliminary feasibility study materialize, or should the assumptions
underlying the preliminary feasibility study prove incorrect, actual results of
the preliminary feasibility study may vary materially from those anticipated,
believed, estimated or expected. Accordingly, readers should not place undue
reliance on forward-looking statements.
Forward-looking statements are qualified entirely by this cautionary statement
and are given only as at the date of this press release. The Company disclaims
any obligation to update or revise any forward looking statements, whether as a
result of new information, future events or otherwise, except as required by
law.
FOR FURTHER INFORMATION PLEASE CONTACT:
Canada Fluorspar Inc.
Lindsay Gorrill
President and CEO
1-800-823-8095
lgorrill@canadafluorspar.com
www.canadafluorspar.com
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