MDN Receives Positive Economic Indicators for the Niobium and Tantalum (Anita) Project
29 Gennaio 2010 - 12:01PM
Marketwired Canada
(All amounts in Canadian dollars unless otherwise indicated - all tonnage in
metric tonnes)
MDN Inc. (TSX:MDN) reports that it has received a positive Scoping Study
analysis on the niobium (Nb) and tantalum (Ta) resource regarding its projected
mine located north of the Lac St-Jean area, in the Province of Quebec.
MDN and Mineraux Crevier Inc ("MCI") are proceeding to complete the Feasibility
Study with the objective of commercializing the niobium and tantalum resource
identified on the Anita Project (the "Project"). The Board of MDN has reviewed
the Scoping Study and has approved the purchase of a further 10% of the shares
of MCI related to the completion of the First Milestone. MDN will continue with
the Second Milestone Funding Program of $2 million (see press release June 2,
2009).
The Project is expected to create economic activity in this region of Quebec and
the proposed initial open pit operation has a potential mine life of 18 years.
With a proposed production of 4,000 tpd and at an estimated investment of $315.6
million, the Project is expected to generate, at the start of production in
2013, average annual revenues of $125 million and annual net operating cash
flows of $57.5 million, over the 18 year operating period. The Scoping Study
forecasts the project economics to be a NPV (net present value) of $272 million
at a 5% discount, and an IRR (internal rate of return) of 13.9% (pre-tax).
"MDN's Board and management team view the Project as being accretive to MDN
shareholder value as well as being of great benefit to all MCI stakeholders. We
are pleased and enthusiastic to see the progress being made and to initiate the
Feasibility Study", said Jacques Bonneau, interim CEO of MDN.
The Scoping Study was prepared by Met-Chem Canada Inc., ("Met-Chem") for a 2,740
tpd operation and was factored up to 3,500, 4,000 and 4,500 tdp. This will lead
to a report in accordance with National Instrument 43-101 Standards of
Disclosure for Mineral Projects ("NI 43-101"). Highlights for the 4,000 tpd
operation are summarized below.
Assumptions for a 4,000 tpd scenario
Niobium oxide price US$/kg $51.00
Tantalum K salt price US$/kg $150.00
Canadian $ to US$ Rate 1.10
SGS Geostat Mineral Resource (May 2009)
Diluted in-pit mineral resource 25,838,000 t (95%
indicated / 5% inferred)
Mine Parameters Ore milled
Mine plan tonnage tpy 1,435,000
tpd 4,000
Average mill feed grade Nb2O5 (%) 0.170
Ta205 (ppm) 181
Mine life (open pit) 18 years
Bench height 10 meters
Maximum pit slope 55 degrees
Bench face slope 70 degrees
Maximum ramp slope 10 %
Ramp width 15 meters
Catch bench width 14 meters every 3 benches
Waste dump slope 30 degrees
Waste to ore ratio 6.4:1
Pre-production period 2 years
Annual estimated production
Nb2O5 1,683,000 Kg
TaK2F7 178,000 Kg
Annual estimated cashflow approx $57.5 million
Operating costs
Ore mining $2.24 / tonne ore
Waste mining $2.20 /tonne
Overburden $1.94 /tonne
Process and Refinery $27.78 /tonne ore
G&A $2.42 /tonne ore
Environmental $0.50 /tonne ore
Cost per tonne $47.00 / tonne ore
Net value per tonne $40.00 / tonne ore
Metallurgical Operations
Concentrator recovery 72 %
Refinery recovery 96 %
Pre-production capital $315.6 million
Sustaining capital and reclamation $76.6 million
costs
Financial Return
Operating cash flow (before tax) $1,035 million
Payback from start of production 7 years
Internal Rate of Return (before tax) 13.9 %
Net present value at 5% discount, pre tax $272 million
The Scoping Study was prepared as an independent stand-alone project and related
mainly to the indicated mineral resource located on the southern sector of the
MCI mining property, and accordingly does not take into account the inferred
mineral resource contained immediately north of and at depth below the open pit.
A Feasibility Study will be developed at a 4,000 tpd scenario and will confirm
all assumptions such as capital costs, operating costs and metallurgy.
MCI management now expects the Feasibility Study to be completed by the first
half of 2011, with construction starting in the second quarter of 2012 and
construction completion occurring by late 2013.
MCI is currently in the process of selecting the various engineering consulting
firms for the preparation of the Feasibility Study and SGS Lakefield is already
working on metallurgical tests. Discussions with stakeholders will take place in
order to ensure that the Feasibility Study integrates their interests, with a
view to providing economical, environmental and social gains for all concerned
parties.
"We are very pleased to release the Scoping Study on the Project. The
shareholders of the Project, namely MDN, IAMGOLD and private owners are
satisfied with the evolution of the process and our assessment of the
commercialization of this strategic resource" said Mr. Serge Bureau, President
of MCI.
You are encouraged to carefully read the section of this news release entitled
"Forward Looking Statements and Information" below.
OVERVIEW OF THE PROJECT
The Project is a 4,645 hectare area located along the geological belt of the
Mistassini River Basin, in Northern Quebec. Quebec is a pro-mining jurisdiction,
with well defined environmental and social legislation and controls. The Project
is located in a region which is the focus of several Quebec government economic
stimulus initiatives.
Support infrastructure exists, including a road just 9.8 km east of the future
mine site, a deep water port (Saguenay), and access to a source of
hydro-electrical power within a short distance to the Project (88 km). A pool of
experienced workforce and suppliers is also available in the Lac St-Jean area.
ADVANTAGES AND OPPORTUNITIES OF THE PROJECT
The Project has several clear advantages over other similar deposits. It has a
large indicated and inferred resource at good head grades. The Project is in a
politically stable country, and represents a stable northern and western
hemisphere source of niobium and tantalum.
There is good exploration potential within MCI's land position and permits
surrounding the deposit which may increase the mine and operating life of the
Project. In addition, the land position can fully support all mining and milling
operations and the necessary infrastructure.
UPSIDE POTENTIAL TO BE CONSIDERED IN THE FEASIBILITY STUDY
The Scoping Study is a preliminary economic assessment of the initial start-up
and operating plan for the Project and is based only on the southern portion of
the Crevier deposit which contains an indicated diluted in pit resource of 25.8
million tonnes (see news release of June 2, 2009), which can be converted into
an end product of 30,300,000 kg of niobium oxide and 3,200,000 kg of tantalum
Ksalt.
In order to better define the commercial potential of the property, MCI
completed an infill drilling program on the property during 2009. A total of
5,500 meters of drill results are expected to be announced before the next phase
of the Feasibility Study. Additionally, an exploration program completed on the
northern portion of the property confirmed the existence of niobium and tantalum
mineralization. The data from the 2009 drilling program was not included in the
current Scoping Study and the following are expected to be included in the
Feasibility Study:
-- Infill drilling will support the conversion of indicated resource to a
measured resource;
-- The resource is still open to the south of and at depth below the
proposed open pit;
-- The 2009 exploration drilling holes intersected niobium and tantalum and
confirmed the findings of the previous Soquem drill holes in the
northern sector of MCI's permits. A new 43-101 resource calculation
based on these additional drill results is being prepared by SGS-Geostat
and will be announced during the first half of 2010.
The Project's mineralized ore zone is generally formed of nepheline syenite, and
additional potential revenue from this by-product was not included in this
Scoping Study but will be considered in the Feasibility Study.
The Scoping Study provides for the acquisition of new equipment, while MCI
intends to secure the purchase of used equipment prior to the completion of the
Feasibility Study.
UPSIDE POTENTIAL OF A RISING PRICE ENVIRONMENT
Roskill Consulting Group Ltd, a renowned metals industry consultant states that:
"There are mounting fears in the tantalum market that serious shortages are
looming. Weak demand in consuming industries, particularly capacitors, coupled
with large inventories in the supply chain, has kept tantalum prices low.
Primary output has been slashed and processors are increasingly relying on stock
draw downs to make up the shortfall. If there is even a modest recovery in
demand for tantalum in the near future, the market faces a difficult period."
"There is a strong possibility there could be a supply crunch of primary
tantalum in 2012 and possibly as early as 2011...a supply crunch resulted in a
severe shortage of tantalum capacitors in 2001."
(www.roskill.com/reports/tantalum)
THE FUNDING OF THE PROJECT
While the full structure of the project financing is still under consideration,
MCI considers the following items as potential pre construction objectives, and
positive developments.
MDN has committed up to $13.5 million to the Project to successfully complete
the Feasibility Study and provide MDN with up to 75% ownership in the Project as
announced on June 2, 2009.
The First Milestone Funding of $2 million has been completed. The MDN Board
approved the funding for the $2 million Second Milestone Funding, and as a
result, MDN will have committed $4 million toward the $7.5 million cost of the
Feasibility Study.
MDN's current equity investment in MCI totals $2.4 million which represents a
28.75% ownership interest. Completion of the First Milestone Option provides MDN
with an option to buy a further 10% of MCI's equity. The MDN Board approved the
exercise of this option at a cost of $950,000.
ADDITIONAL INFORMATION
The Scoping Study was prepared by Met-Chem Canada Inc., a leading independent
industry consultant. The Qualified Persons, Mr Serge Bureau, P.Eng, President of
MCI and Mr Marc Boisvert, P.Eng, Vice President of MDN, have reviewed and
approved the content of this news release. Data from the following consultants
was also used to prepare the Scoping Study: SGS Lakefield, SGS Geostat, Roskill
Consulting Group Limited.
The Scoping Study will be posted on MDN's website at www.mdn-mines.com and on
SEDAR at www.sedar.com within a 45 day period following this news release. All
other material information previously released on the Project is also available
on the MDN website.
About MDN
MDN is a mining exploration and development company having adequate financial
resources to develop its promising projects in Quebec and in Tanzania and to
search for new business opportunities that can raise shareholder value. In
addition to its 30% participation in the Tulawaka Gold Mine, MDN is the operator
and owner of a majority interest in mineral licenses totaling 621 sq km around
the Tulawaka gold mine in Tanzania, and owns a 28.75% interest in Mineraux
Crevier, which owns a property with a NI 43-101 niobium and tantalum resource
located in the Lac St-Jean area of Quebec. MDN has an option to increase its
equity participation in Mineraux Crevier up to 75%. Additional information is
available on MDN's website at www.mdn-mines.com.
Forward looking statements
All statements in this release, other than statements of historical fact, that
address events or developments that the Company expects to occur, are forward
looking statements. Although the Company believes the expectations expressed in
such forward-looking statements are based on reasonable assumptions, such
statements are not guarantees of future performance and actual results may
differ materially from those in forward looking statements. Factors that could
cause the actual results to differ materially from those in forward-looking
statements are discussed in greater detail in the Company's most recent Annual
Information Form filed on SEDAR, which also provides additional general
assumptions in connection with these statements. Investors and others who base
themselves on the Company's forward-looking statements should carefully consider
the factors mentioned in the Annual Information Form as well as the
uncertainties they represent and the risk they entail. The Company believes that
the expectations reflected in those forward-looking statements are reasonable,
but no assurance can be given that these expectations will prove to be correct
and such forward-looking statements included in this press release should not be
unduly relied upon. These statements speak only as of the date of this press
release.
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