VANCOUVER, Feb. 16, 2016 /CNW/ - Search Minerals Inc.
("Search" or the "Company") (TSX Venture: SMY) is pleased to
announce the results of an updated Preliminary Economic Assessment
("PEA") on its Foxtrot Rare Earth Element Project ("Foxtrot
Project") located in SE Labrador.
This PEA evaluates an open pit-underground scenario with lower
capital costs, a lower mining rate and higher grade processing
facility feed. The revised PEA was prepared by Roscoe Postle
Associates Inc. ("RPA") and the results are being disclosed in
accordance with National Instrument 43-101 ("NI 43-101"). It
reconfirms the Foxtrot Project has robust economics and the
potential to become a profitable producer of Rare Earth Elements
("REE"), particularly Dy, Nd, Pr and Tb. The PEA's objective was to
incorporate the Mineral Processing Engineering Study ("Study")
prepared by SNC-Lavalin for the Company in June 2015. (See the Company's News
Release dated June 16, 2015 - Search
Minerals Receives Independent Engineering Study For Processing
Facility In SE Labrador).
As previously disclosed the Study reports the estimated
construction and operating costs for a REE mineralization treatment
facility in SE Labrador which
applies Search's proprietary process for treatment of REE
mineralization from the Company's Foxtrot Deposit. The
proprietary process is a direct leach on crushed material, thereby,
eliminating grinding, flotation, gravity and magnetic separation,
and as a result produces waste which is a dry stackable inert
residue, thereby eliminating the need for wet tailing
ponds.
Highlights of the PEA Include: (all amounts in Canadian
Dollars)
ECONOMIC AND FINANCIAL:
- $152 million initial capital cost
– includes $33 million
contingency)
- $57 million underground mining
capital (Year 8);
- $23 million sustaining and
closure capital;
- $1.713 billion total net
revenue
|
Pre-tax
|
After-tax
|
Net Present Value
(NPV) (10% discount rate)
|
$93M
|
$ 48M
|
Internal Rate of
Return (IRR)
|
22.2%
|
16.7%
|
Payback
period
|
3.5 years
|
4.4 years
|
Undiscounted Cash
flow
|
$327M
|
$226M
|
Note: The PEA is preliminary in nature. It includes inferred
mineral resources, which are considered too speculative
geologically to have the economic considerations applied to them
that would enable their categorization as Mineral Reserves. There
is no certainty that the PEA forecast will be realized. Mineral
Resources that are not Mineral Reserves do not have demonstrated
economic viability.
OPERATIONAL:
- 1,000 tonnes per day processing rate
- Mine life: 14 years: 8 years open pit, 6 years
underground
- $353 per tonne processing
facility average unit revenue, net of pay factors and third party
separation charges
- $238 per tonne processing
facility average unit operating cost
- Feed grade-weighted average REE recovery of 76.8%;
- Total Life-of-Mine production of 44,129 tonnes of TREO, or
3,300 tonnes per year at peak production;
- Life-of-Mine production includes 7.095 million kg of neodymium
oxide (Nd2O3), and 0.836 million kg of
dysprosium oxide (Dy2O3).
- Revenue is recognized at the time of production
- Metallurgical process produces a dry stackable residue, for
ease of disposal and eliminates risk associated with wet tailings
pond.
Greg Andrews, President and CEO
of Search Minerals, stated: "Search continues to advance the
Foxtrot project with this updated PEA. The Mineral Processing
Engineering Study from SNC-Lavalin (June
2015) along with the updated Foxtrot Mineral Resource
(December 2015) was the basis of the
PEA to ensure Search's proprietary metallurgy process would lead to
significant cost savings in capital and operating costs. Search has
been able to reduce the initial capital costs as a smaller, yet
profitable, scale operation. The Foxtrot project supports low
initial capital costs, a good IRR, a short payback period, and is
scalable. A feature of the Foxtrot deposit geology allows
Search to commence mining in mineralized material for early cash
flow. The Processing Facility for this PEA would be located at the
proposed Foxtrot mine site, however, further development in the
District may determine that an alternative location may be more
beneficial. Advancement in separation technology continues
which could provide the same or lower separation pricing as current
proven solvent extraction pricing. The PEA outlines our
current business model as Search continues to seek potential
strategic and off take partners"
RPA updated the Mineral Resource estimate using the same drill
hole database, and some new surface channel samples. Table 1
summarizes the estimated mineral resources potentially mineable by
open pit and underground methods. Indicated Mineral
Resources total 7.4 Mt, at a grade of 1.09% TREO, and Inferred
Mineral Resources total 2.0 Mt, at a grade of 1.17% TREO.
Although the underlying data set is similar, Mineral Resources are
generally lower tonnage and higher grade than previously reported,
due to increased cut-off grades and a tighter geological
interpretation.
Comparison to the 2012 Mineral Resource Estimate
The previous Mineral Resource estimate on the Foxtrot Project in
2012 included 9.3 million tonnes classified as Indicated at an
average TREO grade of 1.06% and 5.2 million tonnes classified as
Inferred at an average TREO grade of 0.93%. The increase in
TREO grade and the decrease in tonnage for the Foxtrot Mineral
Resource are partly due to reinterpretation of wireframes
models. The use of block cut-off NSR values of $165/t for open pit and $260/t for underground mining methods also
contributed to the increase in grade and decrease in tonnage, as
does the constraint of Mineral Resources within a design pit
shell.
TABLE 1 –
ESTIMATED MINERAL RESOURCES
Foxtrot Project as of December 31, 2015
|
|
Classification
|
Cut-off
|
Tonnage
|
Pr
|
Nd
|
Dy
|
LREE
|
HREE
|
TREE
|
$NSR
|
000s
|
ppm
|
ppm
|
ppm
|
%
|
%
|
%
|
Open Pit
|
|
|
|
|
|
|
|
|
|
Indicated
|
$165
|
4,129
|
372
|
1,393
|
177
|
0.69
|
0.17
|
0.86
|
|
Inferred
|
$165
|
228
|
368
|
1,378
|
179
|
0.68
|
0.17
|
0.85
|
|
|
|
|
|
|
|
|
|
Underground
|
|
|
|
|
|
|
|
|
|
Indicated
|
$260
|
3,263
|
429
|
1,602
|
209
|
0.78
|
0.19
|
0.97
|
|
Inferred
|
$260
|
1,730
|
430
|
1,602
|
201
|
0.80
|
0.19
|
0.99
|
Total
Indicated
|
7,392
|
397
|
1,485
|
191
|
0.73
|
0.18
|
0.91
|
|
|
|
|
|
|
|
|
|
Total
Inferred
|
|
1,958
|
423
|
1,576
|
199
|
0.79
|
0.18
|
0.97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Classification
|
Cut-off
|
Tonnage
|
Pr6O11
|
Nd2O3
|
Dy2O3
|
LREO
|
HREO
|
TREO
|
$NSR
|
000s
|
ppm
|
ppm
|
ppm
|
%
|
%
|
%
|
Open Pit
|
|
|
|
|
|
|
|
|
|
Indicated
|
$165
|
4,129
|
449
|
1,625
|
203
|
0.83
|
0.20
|
1.03
|
|
Inferred
|
$165
|
228
|
445
|
1,607
|
206
|
0.82
|
0.20
|
1.02
|
|
|
|
|
|
|
|
|
|
Underground
|
|
|
|
|
|
|
|
|
|
Indicated
|
$260
|
3,263
|
518
|
1,868
|
240
|
0.94
|
0.23
|
1.17
|
|
Inferred
|
$260
|
1,730
|
520
|
1,868
|
231
|
0.96
|
0.23
|
1.19
|
Total
Indicated
|
7,392
|
480
|
1,732
|
219
|
0.88
|
0.21
|
1.09
|
|
|
|
|
|
|
|
|
Total
Inferred
|
|
1,958
|
511
|
1,838
|
228
|
0.94
|
0.22
|
1.17
|
Notes:
- CIM definitions were followed for Mineral Resources.
- Open Pit Resources were reported inside the design pit at a pit
discard NSR cut-off of $165/t. Underground Resources were reported
as material outside the design pit at a break-even NSR cut-off of
$260/t.
- NSR values were assigned to blocks using metal prices and
metallurgical recoveries for each of the individual elements and
accounting for separation and transportation charges and royalties
for the mixed REO product.
- A minimum mining width of approximately 2.0 m was used for both
open pit and underground.
- Heavy Rare Earth Elements (HREE) =
Eu+Gd+Tb+Dy+Ho+Er+Tm+Yb+Lu+Y
- Light Rare Earth Elements (LREE) = La+Ce+Pr+Nd+Sm
- Total Rare Earth Elements (TREE) = sum of HREE and LREE
- HREO, LREO refer to oxides of heavy and light rare earth
elements respectively, and TREO is the sum of HREO and LREO.
- The estimate is of Mineral Resources only and, because these do
not constitute Mineral Reserves, they do not have demonstrated
economic viability.
- Totals may not add or multiply accurately due to rounding.
CAPITAL AND OPERATING COST ESTIMATES
CAPITAL COSTS
The mine, mill, and site
infrastructure costs are summarized in Table 2
TABLE 2 CAPITAL
COST SUMMARY
|
|
Area
|
Capital
|
|
($M)
|
|
OP & Surface
Infrastructure
|
19.5
|
|
Processing
|
72.0
|
|
Indirects/Owners
|
28.1
|
|
Contingency
|
32.7
|
|
Total Initial
Capital
|
152.2
|
|
Sustaining
Capital
|
8.8
|
|
Underground Capital
(Year 8)
|
56.7
|
|
Reclamation and
Closure
|
14.0
|
|
Total Capital
Cost
|
231.7
|
OPERATING COSTS
Mine life average operating
unit costs for the Project are shown in Table 3.
TABLE 3 UNIT
OPERATING COSTS SUMMARY
|
|
|
Area
|
Unit
|
OP
|
UG
|
OP Mining by
Contractor
|
$/t
processed
|
55.11
|
|
UG Mining by
Owner
|
$/t
processed
|
|
87.91
|
Crushing
|
$/t
processed
|
5.00
|
5.00
|
Processing –
Concentration
|
$/t
processed
|
141.35
|
141.35
|
G&A
|
$/t
processed
|
19.52
|
25.02
|
Total Operating
Costs
|
$/t
processed
|
220.98
|
259.28
|
Note: OP mining by contractor based on $5.50/t moved and $4.50/t moved for ore and waste,
respectively.
Qualified Person:
Dr. Randy Miller, Ph.D., P.Geo,
is the Company's Vice President, Exploration, and is the Qualified
Person (as defined by National Instrument 43-101) who has
supervised the preparation of and approved the technical
information reported herein. The Company will endeavour to meet
high standards of integrity, transparency, and consistency in
reporting technical content, including geological and assay (e.g.,
REE) data.
This News Release describes a PEA study based upon geological,
engineering, technical, and cost inputs developed by RPA. A
National Instrument 43-101 PEA technical report will be filed on
SEDAR and made available on the Company's website within 45
days. Ian Weir, P.Eng. Senior Mining Engineer of RPA,
Katharine Masun, P.Geo., Senior
Geologist of RPA, and John Goode,
P.Eng., Associate Principal Metallurgist of RPA are the Qualified
Persons under National Instrument 43-101. Ian Weir, Katharine
Masun, and John Goode have
supervised, approved, and read the scientific and technical
information that forms the basis for the disclosure contained in
this news release.
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 of the adequacy or
accuracy of this release.
About Search Minerals
Search is a TSX Venture Exchange listed company focused on
creating value through finding and developing "critical rare earth
element ("CREE")" mineral assets in Labrador. CREEs (Nd, Eu, Tb, Dy, Y) have
growing demand, constrained or restricted supply and are commonly
used in innovative technologies.
Search is the discoverer of the Port Hope Simpson CREE District,
a highly prospective CREE belt located in southeast Labrador, where the Company controls a belt 70
km long and up to 8 km wide. Search owns 100% of the advanced CREE
resource called the Foxtrot Project ("Foxtrot"), and a
recently announced Foxtrot-like prospect called "Deepwater Fox". In
addition, the Company has identified more than 20 other
Foxtrot-like prospects in the District. The primary focus of Search
is to continue to advance the Foxtrot resource, while evaluating
other Foxtrot-like prospects. Several of the Foxtrot-like prospects
require exploration drilling programs and may provide additional
resources to a central processing facility that would be situated
within the District.
In addition, Search holds a number of other CREE mineral
prospects in Labrador in its
portfolio, including claims in the Red Wine Complex and in the
Henley Harbour area.
Search is led by a management team and board of directors with
proven track records in the mining industry. The Company also has
experienced geological and metallurgical teams led by Dr.
Randy Miller and Dr. David Dreisinger, respectively.
All material information on the Company may be found on its
website at www.searchminerals.ca and on SEDAR at www.sedar.com.
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.
Cautionary Statements
This news release contains forward-looking statements that are
not historical facts, including future plans and objectives of the
Company, potential mineralization, reserve and resource
determination, price assumptions, cash flow forecasts, projected
capital and operating costs, metal or mineral recoveries, mine life
and production rates, and other assumptions used in preliminary
economic assessments. The preliminary economic assessment study was
prepared to broadly quantify the Foxtrot Project's capital and
operating cost parameters and to provide guidance on the type and
scale of future project engineering and development work that will
be needed to ultimately define the project's likelihood of a
positive feasibility determination and optimal production rate. It
was not prepared to be used as a valuation of the Foxtrot Project
nor should it be considered to be a final feasibility study on
which a commercial production decision could be made. The capital
and operating cost estimates which were used have been developed
only to an approximate order of magnitude based on generally
understood capital cost to production level relationships, and
although they are based on engineering studies, these are
preliminary so the ultimate costs may vary widely from the amounts
set out in the preliminary economic assessment. This could
materially adversely impact the projected economics of the Foxtrot
Project. As is normal at this stage of a project, data in some
areas was incomplete and estimates were developed based solely on
the expertise of the Company's employees and consultants. At this
level of engineering, the criteria, methods and estimates are
preliminary and result in a high level of subjective judgment being
employed. There can be no assurance that the potential results
contained in the preliminary economic assessment will be realized.
Forward-looking statements involve risks, uncertainties and other
factors that could cause actual results, performance, prospects,
and opportunities to differ materially from those expressed or
implied by such forward- looking statements. Factors that could
cause actual results to differ materially from these
forward-looking statements include those risks set out in Search's
public documents filed on SEDAR at www.sedar.com. Although Search
believes that the assumptions and factors used in preparing the
forward-looking statements are reasonable, undue reliance should
not be placed on these statements, which only apply as of the date
of this news release, and no assurance can be given that such
events will occur in the disclosed time frames or at all. Except
where required by law, Search disclaims any intention or obligation
to update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.
SOURCE Search Minerals Inc.