Engineering & Mining Journal

JUN 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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REGIONAL NEWS - U.S. & CANADA 14 E&MJ • JUNE 2018 www.e-mj.com tion is estimated at more than 159 million pounds (lb) of copper, 199 million lb of zinc, 33 million lb of lead, 30,600 ounces (oz) of gold, and 3.3 million oz of silver in separate copper, zinc, and lead concen- trates, with the majority of the silver and gold reporting to the lead concentrate. Initial capital expenditures to develop the Arctic project are estimated at $779.6 million. Sustaining capital over a 12-year mine life is estimated at $65.9 million, for total estimated capital expenditures of $845.5 million. In addition, closure and reclamation costs are estimated at $65.3 million. The remote Arctic project area is not accessible by road. Access is proposed via a road approximately 340 km (211 miles) long, extending west from the Dal- ton highway. Capital cost estimates for the road are not yet final; however, an es- timate of approximately $300 million is used in the Arctic project PFS. The Alas- ka Industrial Development and Export Au- thority (AIDEA) is currently permitting the proposed project access. The working assumption of the PFS is that AIDEA would arrange financing in the form of a public-private partnership and arrange for construction and maintenance of the access road. AIDEA would charge a toll to multiple mining and industrial us- ers, including the Arctic project, to recover the costs of financing. The PFS assumes that Trilogy would pay tolls of about $9.7 million per year for the 12-year mine life. Arctic project planning is based on a 10-million-metric-ton-per-year open-pit mine and concentrator. C1 cash costs for copper are estimated at $0.15/lb, in- clusive of credits for all other metals. C1 cash costs include on-site mining and processing costs, road tolls and mainte- nance, transport costs, and royalties. Total all-in cash costs (including initial and sus- taining capital, operating and transporta- tion costs, treatment and refining charges, road toll, and byproduct metal credits) are estimated at $0.63/lb of payable copper. Probable mineral reserves at the Arc- tic project are estimated at 43 million mt, grading 2.32% copper, 3.24% zinc, 0.57% lead, 0.49 g/mt gold, and 36 g/mt silver. The life-of-mine strip ratio is 6.9 to 1. The Arctic project PFS was prepared by Ausenco Engineering Canada. Amec Foster Wheeler contributed the mine planning, and SRK Consulting contribut- ed the tailings and waste design, hydrolo- gy, and water management studies. Trilogy President and CEO Rick Van Nieuwenhuyse said, "The Arctic project is now set to advance to the next stages of development: permitting and feasibility. With the average grade currently mined in open-pit copper mines approaching 0.5% worldwide, we are blessed with a truly high-grade copper project in Arctic, with grades of 5% copper equivalent. Based on the foregoing, I expect Arctic could be among the highest-grade open-pit cop- per mines in the world if and when it is placed into production. "Meanwhile, we will continue to ex- plore our Bornite project in the Ambler district, with a $10 million program funded by South32, which we hope to advance toward a development decision." Gensource Executes Strategic Off-take Agreement Gensource Potash Corp. has entered into a definitive, binding off-take agreement with a senior North American agriculture in- dustry leader. The agreement includes the purchase of 100% of the production from one "module" of 250,000 metric-ton-per- year (mt/y) capacity; a preliminary market- ing plan that facilitates Gensource's goal of creating a direct link between a potash producing facility in Saskatchewan and the end user; 10-year term with an option to renew for the life of the project; right of first refusal for the off-taker to purchase any additional product that may be pro- duced at the project either through de-bot- tlenecking or expansion of the productive capacity of the facility; and right of first refusal to purchase the project should Gensource elect to sell any portion of it. With the formal definitive off-take agreement now completed, Gensource is moving to complete its project financing plans, which will allow for the construc- tion of the first of a new breed of potash production plants, the company said. The Vanguard One project is estimat- ed to cost $C279 million ($216 million) to construct over an 18- to 22-month period. The facility is designed for low cash operating costs at less than $C53/ mt ($40/mt), even at its small production capacity of 250,000 mt/y. Further, it is designed to be more efficient in its use of water, energy and personnel as well as to have a low environmental impact due to its lack of salt tailings and brine ponds on surface, the company said. The facility will employ 46 full-time staff. "This agreement represents a true milestone in the development of Gen- source's potash business strategy," Gen- source President and CEO Mike Ferguson said. "We are so pleased that our off-take partner shares our confidence in striving toward this new approach to potash pro- duction — a confidence that is on display through the completion and execution of this definitive agreement. "We are also pleased to bring our unique business model to the North Amer- ican agriculture industry and specifically to the markets served by our off-take partner." He added that combining a modern production facility with the vast resourc- es of the off-taker company will represent the new face of the potash supply chain in the agriculture industry. Mineral reserves at the Arctic project are estimated at 43 million mt, grading 2.32% copper and 3.24% zinc.

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