Foran Mining has high hopes for the McIlvenna Bay project, but those hopes are conditional on cutting costs, a growing market for copper and possibly sharing facilities with Hudbay.
Foran Mining president, CEO and director Patrick Soares spoke to business leaders and officials at the April 16 Flin Flon and District Chamber of Commerce meeting, sharing new information about the project, where the company may move next and what may need to happen to make the project viable for mining.
The company’s hope for the McIlvenna Bay project is to produce a fully functioning mine in late 2021, not long before Hudbay’s 777 mine operation is scheduled to wrap up, likely along with the Flin Flon zinc plant and mill sites.
Interest in the McIlvenna Bay site began in 2010, shortly before Foran began infill drilling on the site. In late 2017, Foran signed a deal with Anglo-Swiss mining giants Glencore. Glencore agreed to provide a feasibility study for the McIlvenna Bay project in exchange for the copper and zinc offtake from the site.
“Their technical team had looked at a number of projects before and they felt that McIlvenna Bay was one of the few that actually crossed the threshold that could make it through to production,” said Soares. “We have to believe that because what they’re getting in return for doing the study is the offtake from production. If it doesn’t make it to production, they get nothing.
“There’s an incentive on their side and there’s an incentive on our side to get it there.”
This year, Foran is aiming to get a feasibility study done and try to finance the project, said Soares. In order to keep the project profitable, Foran plans to keep capital spending low and continue progress at the site.
Before a feasibility study can be concluded, however, the company has to know where material from McIlvenna Bay will be processed. Building a mill at the site will take time, money and plenty of government permits, leading to Foran looking at a new, interesting alternative; sharing mill facilities with Hudbay.
“We are initiating discussions with Hudbay. It’s been a slow go, but we’re getting there,” Soares said.
“We hope to have some news from that in the next few months because all that would have to be incorporated in a feasibility study. We need to know what Hudbay will charge us to treat the ore here. That’s going to be a factor on whether we’re going to build our own mill or whether we use processing facilities here.”
The rush to get affairs in order for McIlvenna Bay is due to Foran executives’ insistence that global copper markets are primed for a sizable increase in demand, due in large part to increased forms of energy-intensive technology like electric cars.
“We believe that there’s an upcoming push on the price of copper, that the price of copper is going to take off in the next few years. The reason for that is the electric vehicle push. Every electric vehicle has a lot of copper. You’re going to see copper in demand and there just aren’t enough copper mines in production lately to catch the oncoming demand for copper,” Soares said.
“The thing that’s going to slow it down is not having enough copper. Watch out for a big boom in copper. We think we can catch that. Our objective is, if we can get a feasibility study by the end of this year, if the numbers show that we can actually finance McIlvenna Bay, then we believe it will be two years to get it into production. Some time by the end of 2021, we can actually be in production.”
When asked what price copper would need to reach in order for McIlvenna Bay to become favourable, Soares said about $3.30 per pound would be the benchmark for moving forward. Copper currently sits at about $2.91 per pound, but has approached the $3.30 per pound range for short periods in the past five years, including for a short time last June.
“Frankly, the biggest boost for us has been our weak Canadian dollar. With the federal government doing what they’re doing, we wouldn’t be surprised to see it keep falling.”
If the mine moves into operation, another side benefit may be the enhancement of Highway 106. Material and ore from the mine would be transported along the highway, possibly to Hudbay’s Flin Flon mill facilities if an agreement between Hudbay and Foran can be reached. Soares mentioned that, if a deal is struck, Foran is open to using roads near Hudbay’s Creighton-area tailings facility to get to the mill instead of using local streets.
“We are looking at ways to run the trucks – if we use the mill – into the mill on the Creighton side where the tailings are so they don’t have to go through town,” he said.
“That requires permitting and Hudbay playing nice, but that makes sense to us.”
According to Soares, the McIlvenna Bay project is slated to have an initial mine life of between 10 and 12 years, stepping into a major role once 777 and/or other Hudbay facilities close in Flin Flon.
“We also think it will be a great opportunity for Flin Flon because Flin Flon has been around in the mining world for more than 85 years. We believe that McIlvenna Bay offers an opportunity for at least 10 to 12 years of life initially,” he said. “That is another opportunity for Flin Flon to keep jobs going.”
Meanwhile, a new resource for McIlvenna Bay is set for release within weeks, said Soares, followed at a later date by a potential new reserve before the release of a feasibility study for the site.
“The current resource is about 13 million tonnes, almost 14 million tonnes of indicated and about 11 million tonnes of inferred resources, sitting at around overall, on a weighted basis, about four per cent zinc and about 1.6 per cent copper and half a gram of gold,” he said. “The actual reserve will come out later, but the resource will be out in the next few weeks.”
