(DNI : TSX-Ven)
(DG7 : Frankfurt)
TORONTO, April 9, 2014 /CNW/ - DNI Metals Inc.
(DNI:TSX-Ven)(DG7:FSE) announces that it has concluded an
initial evaluation of recovering Scandium as a co-product of the
polymetallic mining operations contemplated for its Buckton
Deposit, Alberta, outlined in the
Preliminary Economic Assessment for the Deposit announced on
December 5, 2013 (the "Buckton PEA").
Scandium was provisionally omitted from the Buckton PEA.
DNI's recent evaluation concludes that upward to 200,000
kilograms per year of co-product Scandium oxide
(Sc2O3) could be recovered by the
incorporation of a Scandium separation circuit into the
contemplated metal processing flowsheets outlined in the Buckton
PEA. This has the potential to contribute considerable additional
revenues to the Buckton economic model.
Hatch Ltd. was retained to investigate the feasibility of
incorporating a Scandium recovery circuit into the metals recovery
hydrometallurgical flowsheets contemplated by the PEA, to recover
co-product Scandium from the leaching solution once it has been
extracted from the Buckton shales. Hatch formulated conceptual
process engineering design criteria and a flow sheet, and prepared
estimates for related capital and operating costs. Processing
flowsheets presented in the PEA were also previously formulated by
Hatch.
Hatch's work concludes that a solvent extraction Scandium
circuit can conceptually be incorporated into the Buckton metals
recovery flowsheets at a capital cost of US$117 million (incl US$39
million contingency) for the production of approximately
200,000 kilograms per year of 99%+ purity
Sc2O3 at an operating cost of US$500 per kilogram of final
Sc2O3 product produced. The study also
concludes that after allowing for assumed entrainment and
processing circuit losses, an estimated 74% of the
Sc2O3 leached from the Buckton shales may be
ultimately recovered as a final product. The estimated capital and
operating costs would be incremental to costs estimated in the PEA,
as would be the incremental revenues generated from sale of the
Scandium oxide final product.
The Buckton PEA outlined a conceptual mining and metals recovery
scenario relying on the Updated and Expanded Buckton Mineral
Resource announced on August 27, 2013
(the "Buckton Resource Study"), for the production of Ni-U-Zn-Cu-Co
and Rare Earth Elements (REE) including Yttrium from the Deposit
which is hosted in black shales. The contemplated Buckton mining
operations entail open pit mining of 4.5 billion tonnes over a 64
year mine life at 72 million tonnes per year and extracting metals
therefrom by bioheapleaching. The PEA also provided for a
hydrometallurgical facility to recover the various metal products
from the leach solution, and a separation plant to further refine
the mixed Rare Earth Element oxide recovered into individual
saleable final products. Scandium is incidentally leached during
the contemplated leaching process as demonstrated by DNI's
benchscale testwork, and could be added to the final saleable
products contemplated by the PEA provided it is recovered from the
leaching solution.
The Buckton Resource Study estimated that the 4.7 billion tonne
resource contains some 18.7 million kilograms of recoverable
Sc2O3 from an average raw grade of 16.5 ppm
at a 24% leaching recovery. The foregoing resource consists of the
aggregate of Inferred and Indicated resources but, for the purposes
of the PEA and this announcement, the mineral resource is deemed to
consist entirely of an Inferred resource considering that 94% of it
consists of an Inferred class resource. Considering that the
Buckton PEA concluded that 95%+ of the mineral resource is
potentially mineable, the resource study provides a reasonable
first order estimate of the Scandium content of the Buckton
Deposit. In addition, to the extent that Scandium is leached from
the Buckton shales as a co-product of leaching the other metals of
interest, cost of its separation from the leaching solution
represents the only incremental cost for its recovery.
The Buckton Resource Study is based on a
Sc2O3 price of US$4,195/kg (trailing two-year average to
May/2013) although Sc2O3 price was quoted at
$7,000/kg as recently as March 2014. The resource study estimated that
Sc2O3 contained in the shale represents
US$16.6 of gross recoverable value
per tonne of shale resource. This value is equivalent to
approximately US$10.8 of net
operating revenues per tonne of shale resource after providing for
processing circuit losses and refining/separation costs presented
above (CDN$11.4 per tonne at exchange
rate of US$1=CDN$1.05). The foregoing figures represent
additional potential revenues previously omitted from the Buckton
PEA and are predicated on sale of the entire projected annual
Sc2O3 production of 200,000 kilograms. The
foregoing figures would be proportionately lower in the event only
a portion of the annual Sc2O3 production is
saleable, as would also be the capital cost of the smaller Scandium
separation circuit required.
The above figures represent incremental potential revenues which
can have a significant affect on the economics of the Buckton
Deposit, especially if Scandium markets continue to expand
sufficiently enough to absorb bulk of the projected annual Scandium
production. As an initial guide, sensitivity of NPV, IRR and
Payback to changes in incremental recoverable value per tonne of
shale mined/processed from the Buckton Deposit is shown below for
incremental revenues ranging $1 to $3
per tonne of shale mined/processed (table reiterated from the
Buckton PEA). Considering the 72 million tonnes per year
mining/processing rate contemplated by the Buckton PEA, capturing
full value of the entire projected annual Scandium production would
have a significant and material positive impact on economics of the
Deposit.
Pre-tax
NPV-IRR-Payback Sensitivity to Changes in Recoverable $/tonne
Value
|
|
NPV0%
($000,000)
|
NPV6%
($000,000)
|
IRR
(%)
|
payback
(yrs)
|
Baseline Recoverable
Value + $3/t
|
30,973
|
4,324
|
12.9%
|
7.3
|
Baseline Recoverable
Value + $2/t
|
26,917
|
3,405
|
11.5%
|
8.1
|
Baseline Recoverable
Value + $1/t
|
22,914
|
2,514
|
10.1%
|
9.1
|
PEA Baseline
In-Situ Recoverable Value $16.52/t
|
18,900
|
1,616
|
8.7%
|
10.5
|
Baseline Recoverable
Value - $1/t
|
14,892
|
718
|
7.2%
|
12.5
|
Baseline Recoverable
Value - $2/t
|
10,911
|
174
|
5.7%
|
14.9
|
Baseline Recoverable
Value - $3/t
|
6,894
|
(1,087)
|
3.9%
|
19.2
|
Notes: NPV on
pre-tax basis; IRR on pre-tax basis and assumes 100% equity
financing; $ are CDN$; Table reiterated from Buckton PEA previously
announced on December 5, 2013.
|
Scandium is one of the seventeen Rare Earth Elements and is
typically used in solid oxide fuel cells and to alloy aluminum to
strengthen it for applications in aircraft, automotive and frames
requiring structural strength and light weight. Consumption in the
foregoing sectors is fast expanding offering an expanding demand
for Scandium though it is generally accepted that Scandium
consumption is constrained by unreliable and scarce supply. Current
global supply is estimated to range 10,000-20,000 kilograms a year
with capacity for growth toward an unfulfilled demand estimated to
be upward to 100,000 kilograms a year. There are no primary sources
for Scandium and current supplies are a byproduct from other mining
operations which are augmented by dwindling historic
stockpiles.
DNI's recent evaluation demonstrates that the Buckton Deposit
represents a significant future source of Scandium, and that even
if only a portion of the projected annual production is saleable it
can have a significant impact on the economics of the Deposit.
Scandium was provisionally omitted from the Buckton PEA considering
that its markets are not sufficiently transparent to definitively
capture its potential value in the cash flow models of the Buckton
PEA. A more rigorous analysis of the economic impact of recovering
co-product Scandium from the Buckton Deposit will be incorporated
into a future update of the Buckton PEA.
DNI continues to make progress toward identifying other
incremental enhancements to the economics of the Buckton Deposit
previously announced in the Buckton PEA. These will be announced as
review of recent supporting underlying testwork data is
concluded.
DNI's Qualified Person in respect of its Alberta polymetallic black shale projects, and
this announcement, is Mr. Shahé F.Sabag
P.Geo., President and CEO of DNI.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
DNI - TSX Venture
DG7 - Frankfurt
Issued: 74,857,022
SOURCE DNI Metals Inc.