A new study of the McIlvenna Bay deposit is being hailed as a milestone in the ambitious effort to open another mine in the Flin Flon region.
Foran Mining Corp. on Wednesday announced what it called “positive results” from an independent preliminary economic assessment (PEA) of its highly touted ore body.
“This PEA is a significant step in moving the company towards its strategy of developing and building a new base metal mining camp in the Flin Flon region,” said Darren Morcombe, chair of Foran.
No certainty
Though Foran stressed the results will not necessarily be realized, the PEA envisioned a 14-year mine life and daily production of 5,000 tonnes of ore.
A standalone concentrator is proposed to be built near the potential mine. It is envisioned that concentrate would be trucked out weekly and that no long-term storage facility would be required on-site.
The estimated capital cost over the life of the mine, including closure expenses, is estimated at $332.5 million, with a $66.5 million contingency, for a total of $399.1 million.
That’s a significant charge for a junior miner like Foran, so while optimism is growing around McIlvenna Bay, a formal announcement of a mine is no guarantee.
Still, Patrick Soares, president and CEO of the Vancouver-based company, argues that McIlvenna Bay stands out as a “robust” deposit containing zinc, copper, lead, gold and silver.
He pointed to the ore body’s “positive metallurgy,” year-round accessibility, electrical access and proximity to “an established mining centre home base in Flin Flon” 65 kilometres down the Hanson Lake Road.
For Soares, the PEA results are confirmation that McIlvenna Bay should advance to an all-out feasibility study.
Morcombe, the company chair, said a tightening zinc market bolsters the strength of McIlvenna Bay.
He is also optimistic about Foran’s capacity to come up with cash.
“Foran’s competitive advantage in generating shareholder wealth includes management’s proven track record, along with its major shareholders’ ability to leverage the use of debt successfully, incorporate partners into assets and use their contact base to introduce potential partners to the company,” Morcombe said. “Major investors in mining projects look for unquestionable security of title, proven and pragmatic management focused on shareholder wealth creation, solid risk-adjusted economics, a proven technical approach to mining, significant exploration optionality, existing infrastructure which reduces capital costs and favourable commodity prices. Applying these criteria to McIlvenna Bay make Foran a standout company.”
Reviewing
Morcombe said he and his fellow board members are now reviewing management’s recommendations for 2015 work programs and will provide an update in due course.
The PEA is based on a conventional underground mine similar to existing mining operations in the region, with a ramp and shaft designed to optimize resource extraction.
Zinc and copper would not necessarily go to the nearest smelters, the study stated, but to a North American smelter for zinc and an Asian smelter for copper.
According to the PEA, most of the mine construction would be expected to take 18 months, with underground mine development adding another six months to the build-out period.
Though the study estimates a mine lifespan of 14 years, Foran said there is the potential to extend that time frame through resource expansion at depth or delineation of nearby satellite deposits.
The PEA was completed by JDS Energy & Mining Inc. of Kelowna, BC.
(All figures mentioned in this article are in Canadian dollars).
