MONTREAL,
April 22, 2013 /CNW/ - Mason Graphite
Inc. ("Mason Graphite" or the "Company") (TSX.V: LLG) reports
strong results of a Preliminary Economic Assessment study ("PEA")
for the development of its 100%-owned Lac Guéret graphite project
in northeastern Quebec.
Financial Highlights |
● Initial direct capital costs of
$89.9M |
● Production costs of $390 per tonne
of finished product |
● $364M pre-tax NPV
(8% discount); $283M pre-tax NPV (10% discount) |
● 33.7% pre-tax Internal Rate of
Return |
● Payback period of 2.5 years |
● 22-year mine life |
● Average sales price of $1,525 per
tonne |
Operational Highlights |
● Annual production of
50,000 tonnes of graphite concentrate |
● 27.4% average LOM graphite content
in the mineralization |
● Graphite recovery above 96% |
● Up to 96.4% Cgr of finished product
purity |
● Stripping ratio of 0.76:1 |
Cautionary Note: A PEA is preliminary in nature
and includes Inferred Mineral Resources, which are considered too
geologically speculative to have mining and economic considerations
applied to them that would enable them to be categorized as mineral
reserves. Mineral resources that are not mineral reserves do not
have demonstrated economic viability. There is no certainty
that the reserves development, production, and economic forecasts
on which the PEA is based will be realized.
Benoît Gascon, CEO of Mason Graphite commented, "We
are very pleased with the excellent results of the PEA, which
demonstrates a low cost project with robust economics. Our senior
management team has decades of cumulative experience producing and
selling graphite, and with our partners, we have delivered a
technically sound, realistic, and highly profitable project. The
completion of the PEA is a significant milestone for the project
and demonstrates that the Lac Guéret mine has the potential of
becoming a reliable and long term global supplier of high quality
graphite. We now intend to proceed with the next phase of
development in order to bring this exceptional asset one step
closer to production."
The PEA was prepared by Met-Chem Canada Inc.
(Montreal, Quebec), with
contributions from SGS Minerals Services ("SGS") (Lakefield, Ontario) for the process
development; both are independent leading firms in the mineral
processing industry. Unless otherwise noted, all monetary figures
presented in this document are in Canadian dollars.
MINERAL RESOURCES
Excellent mineral growth potential expected
The PEA was prepared using data from the
July 2012 mineral resource estimate,
which consists of 0.3 million tonnes at 24.4% Cgr in the Measured
category, 7.3 million tonnes at 20.2% Cgr in the Indicated category
and 2.8 million tonnes at 17.3% Cgr in the Inferred category (see
Technical Report dated July 3, 2012
for details). This mineral resource is hosted on a small portion of
the GC Zone, as shown in figure 1.
July 2012 Mineral Resource
Estimate
|
|
|
|
Categories |
Unit |
Tonnes |
Grade (% Cgr) |
Measured
(M) |
Unit 1 (4 to 10%
Cgr)
Unit 2 (10 to 27% Cgr)
Unit 3 ( > 27 % Cgr) |
31,200
122,800
144,900 |
7.82
14.85
36.72 |
|
All units |
298,900 |
24.39 |
Indicated
(I) |
Unit 1 (4 to 10%
Cgr)
Unit 2 (10 to 27% Cgr)
Unit 3 ( > 27 % Cgr) |
2,672,500
2,089,200
2,535,300 |
8.09
16.83
36.2 |
|
All units |
7,297,000 |
20.24 |
M + I |
Unit 1 (4 to 10%
Cgr)
Unit 2 (10 to 27% Cgr)
Unit 3 ( > 27 % Cgr) |
2,703,700
2,212,000
2,680,200 |
8.67
18.30
36.96 |
|
All units |
7,595,900 |
20.40 |
Inferred |
Unit 1 (4 to 10%
Cgr)
Unit 2 (10 to 27% Cgr)
Unit 3 ( > 27 % Cgr) |
1,272,600
714,200
771,500 |
7.56
17.54
33.1 |
|
All units |
2,758,300 |
17.29 |
Since the completion of the July 2012 mineral resource, the Company has
completed 26,500 metres of additional drilling. This program
consisted of 145 drill holes around the resource envelope in the GC
Zone and 18 drill holes in the GR Zone to test for continuity of
mineralization (see Nov. 21, 2012 and
Feb. 28, 2013 and April 3, 2013 press releases). The program
successfully identified mineralization with similar grades in both
zones.
After the 22-year mine life proposed in the PEA,
5.6 million tonnes of mineralization grading 13.1% of graphite will
still remain as part of the 2012 mineral resource envelope. An
updated mineral resource is currently underway by Roche Ltd.
Consulting Group, which will include 145 new drill holes from the
GC Zone; the Company expects that the addition of the latest GC
Zone results in the upcoming mineral resource will significantly
increase this quantity and grade and, consequently, will further
increase the mine life beyond the one contemplated in the PEA.
COMMERCIAL SALES & REVENUES
50,000 tonnes of saleable graphite annually; $76.2 million in annual revenues
The Lac Guéret mine will produce an average of
50,000 tonnes of saleable graphite annually. At an average sale
price of $1,525 per tonne, this
represents $76.2 million in annual
revenue. The flake size distribution and associated prices are
summarized in the table.
Graphite flake distribution and price
assumptions
|
|
|
|
Product
Category |
Tonnes of
Product |
Price per
Tonne |
Annual
Revenue |
+50 mesh |
9,200 |
$2,200 |
$20,240,000 |
+80 mesh |
6,095 |
$2,000 |
$12,190,000 |
+150 mesh |
7,136 |
$1,500 |
$10,703,000 |
-150 mesh |
27,569 |
$1,200 |
$33,083,000 |
Total |
50,000 |
$1,525 |
$76,217,000 |
The sale price assumptions used in the PEA were
based on the 24-month average graphite prices published by
Industrial Minerals magazine (''IM''). Applying Mason's product
distribution to IM's 24-month averages, the average selling price
would become $1,974/tonne. In
comparison to the industry's market prices, the graphite prices
used in the PEA are deemed by the Company to be conservative.
Luc Veilleux, CFO
of Mason Graphite, commented, "The conservative price assumptions
used in the PEA could represent a potential opportunity for
improved economics. Integrating the 24-month average IM price of
$1,974/tonne in the financial model
could yield a potential improvement with a pre-tax NPV (8%
discount) of $558M and an IRR of
44.7%."
The commercial scenario used in the PEA
considers realistic assumptions that are based on Mason Graphite's
established relationships with existing markets. Graphite is not an
openly traded mineral, therefore prices are negotiated between
end-users and producers in annual or multi-year contracts. The
Company will continue to build close and continuous relationships
with its potential customers in order to tailor the finished
product to meet their exact needs. The Lac Guéret project does not
rely on yet-to-come technologies and demands; however, it will be
well positioned to work with new applications, technologies,
markets and customers.
MINING
|
Highlights |
Mining costs |
$36/tonne of finished
product; $6/tonne mined |
Average graphite grade |
27.4% Cgr |
Stripping ratio |
0.76:1 |
Average graphite material mined per year |
176,000 tonnes |
Average waste mined per year |
134,000 tonnes |
Total material moved per year |
310,000 tonnes |
The Lac Guéret graphite deposit outcrops on
surface, therefore mining will be carried out using conventional
open pit mining. Due to the hard nature of the mineralization,
drilling and blasting will be required. The high grade graphite in
the mineralization and the low waste stripping ratio will result in
a very low amount of total material movement. Throughout the life
of the mine, only about 6 tonnes of material will have to be mined
for the production of one tonne of finished graphite
concentrate.
The processing plant and waste dump will be
located less than 1,500 metres from the mine to ensure short cycle
times and low production costs.
PROCESSING & RECOVERY
Proven process resulting in exceptionally
high graphite recoveries above 96%
|
Highlights |
Processing costs |
$221/tonne of
finished product;
$63/tonne of material processed |
Annual average processing rate |
176,000 tonnes |
Annual average production |
50,000 tonnes of graphite
concentrate |
Average graphite recovery |
Above 96% |
Finished product purity |
Up to 96.4% Cgr |
The graphite recovery process at Lac Guéret
consists of crushing, followed by multiple steps of grinding and
flotation separation circuits. The processing plant is based on a
flow sheet developed by SGS, using proven technologies to create a
very efficient process resulting in remarkably high graphite
recoveries. Lock cycle tests were performed by SGS and have
demonstrated the robustness of the flow sheet.
Using standard product specifications of the
industry, commercial distribution was calculated based on the
mineral deposit's metallurgical distribution. See the Company's
press release dated February 22, 2013
for further detail on the Lac Guéret metallurgical results.
The processing plant was designed to allow for
capacity increases to satisfy the market demand.
Flake size distribution for annual production
of 50,000 tonnes of concentrate
|
|
|
Flake Size |
Distribution (%) |
Tonnes of Product |
+50 mesh |
18.4% |
9,200 |
+80 mesh |
12.2% |
6,095 |
+150 mesh |
14.3% |
7,136 |
-150 mesh |
55.1% |
27,569 |
Total |
100.0% |
50,000 |
Additional development work is planned with the
goal of further optimizing the flake size distribution as well as
the purity of the final concentrate. These tests will also be
conducted on samples obtained from other areas of the mineral
deposit.
CAPITAL & OPERATING COSTS
Low capital intensity and cash operating costs
|
Capital Cost Breakdown |
Mining |
$8,026,000 |
Plant |
$55,264,000 |
Tailings and water management |
$4,271,000 |
Infrastructure and
Services |
$17,074,000 |
Total direct costs |
$89,935,000 |
Contingency (20 % of
direct costs) |
$17,987,000 |
|
$107,922,000 |
Indirect costs |
$21,768,000 |
Sustaining capital |
$6,281,000 |
Mine closure and rehabilitation |
$4,493,000 |
|
Cash
Operating Cost Breakdown (per tonne of finished
product) |
Mining |
$36/tonne |
Plant |
$221/tonne |
Support &
Infrastructure |
$133/tonne |
Total |
$390/tonne |
PROJECT LOCATION & INFRASTRUCTURE
Excellent accessibility in a stable and
mining-friendly jurisdiction
The Lac Guéret property covers approximately
11,630 ha (116 km2) in northeastern Quebec, and is located about 300 km north of
the main service centre of Baie-Comeau. The mine site is accessible from
the main public highway, Hwy 389, via approximately 80 km of good
quality logging roads throughout the property. The Company plans to
build a mining and operations camp that will consist of
accommodations for the personnel, offices and a fully equipped
maintenance facility for the fleet of vehicles. Power for the
project will be produced onsite using diesel generators.
The Technical Report will be posted on Mason
Graphite's website at www.masongraphite.com and on SEDAR at
www.sedar.com, within 45 days following this news release.
Quality Control and Assurance
Mary-Jean Buchanan, Eng. M.Env., of Met-Chem
Canada Inc. independent Qualified Person as defined by National
Instrument 43-101, for the purposes of the PEA has reviewed the
technical content of this press release. Jean L'Heureux, Eng.,
Senior Director of Process Development for Mason Graphite, and a
Qualified Person for Mason Graphite has read and approved this
press release.
About Mason Graphite
Mason Graphite is a Canadian mining company
focused on the exploration and development of its 100% owned Lac
Guéret graphite property, which is located in northeastern Québec
near the main service center of Baie-Comeau. The Lac Guéret graphite property
currently hosts a National Instrument 43-101 compliant Mineral
Resource (see news release issued on July
16, 2012), which considers the exploration of only 17% of
one well defined zone. Excellent potential exists for mineral
growth. The Company's senior management team possesses significant
graphite expertise from their experience at Timcal/Imerys;
including Benoit Gascon, CPA, CA,
who held 20 years of executive positions, including over 6 years as
President and CEO; Jean L'Heureux, Eng., Senior Director of Process
Development, with over 20 years of experience; and Luc Veilleux, CPA, CA, with 8 years of
experience. Timcal, now owned by Imerys, is one of the largest
graphite producers in the world.
Cautionary Statements Regarding Forward Looking
Information
This press release contains "forward-looking
information" within the meaning of Canadian securities legislation.
All information contained herein that is not clearly historical in
nature may constitute forward-looking information. Generally, such
forward-looking information can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or 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". Forward-looking
information is subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of
activity, performance or achievements of the Company to be
materially different from those expressed or implied by such
forward-looking information, including but not limited to: (i)
volatile stock price; (ii) the general global markets and economic
conditions; (iii) the possibility of write-downs and impairments;
(iv) the risk associated with exploration, development and
operations of mineral deposits; (v) the risk associated with
establishing title to mineral properties and assets; (vi) the risks
associated with entering into joint ventures; (vii) fluctuations in
commodity prices; (viii) the risks associated with uninsurable
risks arising during the course of exploration, development and
production; (ix) competition faced by the resulting issuer in
securing experienced personnel and financing; * access to adequate
infrastructure to support mining, processing, development and
exploration activities; (xi) the risks associated with changes in
the mining regulatory regime governing the resulting issuer; (xii)
the risks associated with the various environmental regulations the
resulting issuer is subject to; (xiii) risks related to regulatory
and permitting delays; (xiv) risks related to potential conflicts
of interest; (xv) the reliance on key personnel; (xvi) liquidity
risks; (xvii) the risk of potential dilution through the issue of
common shares; (xviii) the Company does not anticipate declaring
dividends in the near term; (xix) the risk of litigation; and **
risk management.
Forward-looking information is based on
assumptions management believes to be reasonable at the time such
statements are made, including but not limited to, continued
exploration activities, no material adverse change in metal prices,
exploration and development plans proceeding in accordance with
plans and such plans achieving their stated expected outcomes,
receipt of required regulatory approvals, and such other
assumptions and factors as set out herein. Although the Company has
attempted to identify important factors that could cause actual
results to differ materially from those contained in the
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such forward-looking information will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such forward-looking
information. Such forward-looking information has been provided for
the purpose of assisting investors in understanding the Company's
business, operations and exploration plans and may not be
appropriate for other purposes. Accordingly, readers should not
place undue reliance on forward-looking information.
Forward-looking information is made as of the date of this press
release, and the Company does not undertake to update such
forward-looking information except in accordance with applicable
securities laws.
SOURCE Mason Graphite Inc.
Image with caption: "Figure 1 - GR Zone & GC Zone showing
July 2012 mineral resource area (CNW
Group/Mason Graphite Inc.)". Image available at:
http://photos.newswire.ca/images/download/20130422_C7293_PHOTO_EN_25822.jpg
Image with caption: "Figure 2 - Lac Guéret property location and
infrastructure (CNW Group/Mason Graphite Inc.)". Image available
at:
http://photos.newswire.ca/images/download/20130422_C7293_PHOTO_EN_25821.jpg