Moon River Moly Ltd. Announces Preliminary Economic Assessment Of Potential Restart Of 25% Owned Endako Molybdenum Mine
| MEASURED RESOURCE | INDICATED RESOURCE | MEASURED AND INDICATED | INFERRED RESOURCE | ||||||||||
| ZONE | TONNES | %MoS2 | TONNES | %MoS2 | TONNES | %MoS2 | TONNES | %MoS2 | |||||
| Total | >= | 0.010 | 237,413,000 | 0.0468 | 435,641,000 | 0.049 | 673,054,000 | 0.048 | 164,564,000 | 0.038 | |||
| Total | >= | 0.015 | 206,183,000 | 0.0522 | 409,652,000 | 0.052 | 615,835,000 | 0.052 | 144,091,000 | 0.037 | |||
| Total | >= | 0.020 | 183,642,000 | 0.0565 | 382,707,000 | 0.054 | 566,349,000 | 0.055 | 128,689,000 | 0.040 | |||
| Total | >= | 0.025 | 157,962,000 | 0.0621 | 347,564,000 | 0.057 | 505,526,000 | 0.059 | 112,503,000 | 0.043 | |||
| Total | >= | 0.030 | 138,289,000 | 0.0671 | 311,767,000 | 0.061 | 450,056,000 | 0.063 | 93,871,000 | 0.046 | |||
| Total | >= | 0.035 | 117,593,000 | 0.0733 | 271,696,000 | 0.065 | 389,289,000 | 0.067 | 76,928,000 | 0.050 | |||
| Total | >= | 0.040 | 100,673,000 | 0.0794 | 234,981,000 | 0.069 | 335,654,000 | 0.072 | 60,127,000 | 0.054 | |||
| Total | >= | 0.045 | 85,723,000 | 0.0860 | 187,826,000 | 0.074 | 273,549,000 | 0.078 | 45,770,000 | 0.060 | |||
| Total | >= | 0.050 | 73,121,000 | 0.0927 | 158,985,000 | 0.079 | 232,106,000 | 0.084 | 34,961,000 | 0.066 | |||
| Total | >= | 0.055 | 62,662,000 | 0.0996 | 132,436,000 | 0.085 | 195,098,000 | 0.090 | 27,753,000 | 0.072 | |||
| Total | >= | 0.060 | 54,246,000 | 0.1061 | 112,264,000 | 0.090 | 166,510,000 | 0.095 | 22,864,000 | 0.077 | |||
| Total | >= | 0.065 | 46,871,000 | 0.1131 | 93,091,000 | 0.096 | 139,962,000 | 0.102 | 18,903,000 | 0.083 | |||
| Total | >= | 0.070 | 40,936,000 | 0.1198 | 78,354,000 | 0.101 | 119,290,000 | 0.108 | 15,875,000 | 0.087 | |||
| Total | >= | 0.075 | 35,776,000 | 0.1267 | 64,680,000 | 0.107 | 100,456,000 | 0.114 | 13,276,000 | 0.092 | |||
| Total | >= | 0.080 | 31,269,000 | 0.1339 | 54,004,000 | 0.113 | 85,273,000 | 0.121 | 11,042,000 | 0.097 |
The highlighted resource at a cutoff grade of 0.040%MoS2, (excluding inferred resources) is the long term potentially economic mineralization that could be available for mining. This cutoff grade was used in determining the mining plan which reflects the mining and processing rate of approximately 27 million tonnes per year at an overall LOM operating cost of $11.84. The 0.040% MoS2 cutoff was chosen as it has an in-situ value of $12.14 per tonne, which is slightly above the LOM mining cost. (Grade/100 x 2204 lbs/tonne x conversion to Mo (0.599%) x Mill Recovery (75.7%) x $22.5 (price/lb) x1.35 (US$ Exchange rate) = $12.14/tonne).
There are no mineral reserves for the Endako Mine. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
CAPITAL EXPENDITURES
Pre-production capital expenditures for the Project Base Case are estimated to total $493.7 million. The total capital expenditure includes contingencies from 20% to 30%. The breakdown of capital expenditures is presented in Table 1.2 below.
| Table 1.2 Pre-production Capital Expenditures - Estimates | |
| Component | Total Expenditures ($ million) |
| Mine | $35.1 |
| Equipment Lease Deposit and Purchases | $23.3 |
| Processing Plant | $89.2 |
| | |
| Tailings Management Facilities | $150.1 |
| Surface Infrastructure | $13.2 |
| Non- Mining Mobile Equipment | $5.0 |
| Water Management | $31.5 |
| | |
| Water Treatment | $52.7 |
| Owner's Costs | $10.0 |
| | |
| Contingency | $83.7 |
| | |
| Total | $ 493.7 |
In addition to the capital expenditures, working capital of $57.2 million, based on 3 months of operating costs, has been estimated.
LOM sustaining capital requirements of $3.2 million are estimated. This comprises upgrades to the processing plant and surface infrastructure. Mining equipment is to be leased to own for the LOM. The tailings management facility dam raising costs are included in operating costs as the tailings will be used to increase dam heights as part of the tailings facility management plan.
OPERATING COSTS
The estimated total average Base Case operating cost (excluding smelting and refining) is approximately $11.84 per tonne of potentially mineable resources or the equivalent (exchange rate of CAD$: US$ =1.35) or US$11.61 per pound of molybdenum. Table 1.3 below, presents a summary of the LOM average operating costs for each department on a cost per tonne of potentially mineable resources basis.
| Table 1.3 Project Operating Costs Summary | |
| Component | Cost/tonne ($) |
| Mining | $5.45 |
| Processing and Tailings | $5.53 |
| Surface Department, Environmental, and G&A | $0.86 |
| | |
| Total Operating Cost per Tonne | $11.84 |
| | |
| Total Operating Cost per Pound of Molybdenum | US$11.61 |
FINANCIAL RESULTS
The financial returns (Table 1.4) from the potentially mineable resources are presented for the expected parameters and costs at a molybdenum long term three-year trailing average price of US$49.73 per kg (US$22.50 per pound lb.) of molybdenum oxide, at an exchange rate of CAD$ 1.00 = US$0.74.
The Endako Mine is forecast to produce approximately 9.3 million kilograms (20.5 million pounds) per year of molybdenum metal in concentrate. Life of Mine total molybdenum metal in concentrate production is 93.3 million kilograms (205.2 million lbs.).
| Table 1.4 Base Case Financial Returns | ||
| | Pre-Tax | After-Tax |
| Pre-production CAPEX ($ millions) | $493.7 | $493.7 |
| | | |
| Undiscounted Net Revenue ($ millions) | $5,854 | $5,854 |
| Undiscounted Total Cash Flow ($ millions) | $2,087 | $1,478 |
| | | |
| NPV (5%) - millions | $1,405 | $996 |
| NPV (8%) - millions | $1,116 | $790 |
| | | |
| IRR | 46% | 40% |
| Payback Period | 2.2 years | 2.2 years |
SENSITIVITY ANALYSIS
Sensitivity analysis was performed for molybdenum price, capital expenditures, operating costs, mined grades and exchange rate for ranges up to ±20%. The Project is sensitive to changes in metals prices and reasonably sensitive to changes in all the other variables.
The sensitivity analysis results are shown in Table 1.5 and 1.6 and Figure 1.1 and 1.2. Financial results are most sensitive to grade, exchange rate and molybdenum price changes and least sensitive to capital expenditures and operating costs.
| Table 1.5 Sensitivity Analysis for After-Tax NPV | |||||||||
| Parameter | After-Tax NPV 8% ($ million) | ||||||||
| -20% | -15% | -10% | -5% | 0% | 5% | 10% | 15% | 20% | |
| Mined Grade | 114 | 313 | 473 | 635 | 790 | 945 | 1100 | 1254 | 1409 |
| Molybdenum Price | -302 | -31 | 265 | 526 | 790 | 1061 | 1344 | 1641 | 1948 |
| Operating Costs | 1071 | 1001 | 931 | 862 | 790 | 719 | 649 | 573 | 502 |
| Capital Costs | 865 | 846 | 828 | 808 | 790 | 771 | 753 | 734 | 716 |
| | | | | | | | | | |
| US$:CAD$ Exchange Rate | 273 | 407 | 536 | 666 | 790 | 915 | 1038 | 1161 | 1284 |
| Table 1.6 Sensitivity Analysis for After-Tax IRR | |||||||||
| Parameter | After-Tax IRR (%) | ||||||||
| -20% | -15% | -10% | -5% | 0% | 5% | 10% | 15% | 20% | |
| Mined Grade | 14 | 21 | 28 | 34 | 40 | 46 | 52 | 58 | 64 |
| Molybdenum Price | -7 | 7 | 19 | 30 | 40 | 51 | 62 | 73 | 84 |
| Operating Costs | 52 | 49 | 46 | 43 | 40 | 37 | 35 | 31 | 28 |
| Capital Costs | 50 | 48 | 45 | 43 | 40 | 38 | 37 | 35 | 33 |
| | | | | | | | | | |
| US$:CAD$ Exchange Rate | 19 | 25 | 30 | 36 | 40 | 45 | 50 | 55 | 59 |
Figure 1.1 Graph of Net Present Value (NPV) at 8% Discount Rate
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Figure 1.2 Graph of IRR Sensitivity Analysis
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POTENTIAL PROJECT ENHANCEMENTS
Preliminary assessment of shovel/excavator whole bucket ore and waste differentiation has been investigated. This would potentially facilitate better in-pit grade control and minimize waste rock sent to the processing plant for beneficiation. In-bucket sensors determine if a loaded bucket of material is ore or waste, for placing in the appropriate truck for transport to the primary crusher or waste storage areas.
OPS technology, whereby rock exiting the primary crushers can be screened for an optimum size, should be further investigated. There is currently a 5-tonne representative sample of rock from the Endako pit undergoing testing at a reputable vendor and manufacturer of OPS equipment.
RECOMMENDATIONS
Based on this PEA, Endako Mine restart recommendations are:
- Complete a Feasibility Study for mine restart using a mining and processing rate of approximately 75,000 tonnes per day (27 million tonnes per year) of potentially economic mineralization.
For the Feasibility Study, develop a new geology block model for use in resources estimation, using geological data owned by the joint venture company. A new model should be constructed using metric measures consistent with present Canadian practice and to avoid potential errors with conversions using a mix of Metric and Imperial measures. Undertake diamond drilling on nearby known targets of potential resources to expand potentially mineable resources and increase the LOM.
Develop an updated or new detailed water management model which would include hydrology and tailings management facility leachate seepage data and forecasts. Investigate the use of excavator/shovel bucket ore sensing technology and OPS technology for inclusion in the Feasibility Study.
Non-IFRS Financial Measures
The Company has included in this news release certain terms or performance measures commonly used in the mining industry that are not defined under International Financial Reporting Standards as issued by the International Accounting Board ("IFRS"). These include Operating Costs, Cash Cost, AISC, Pre-Production Capital Expenditures, Sustaining Capital Expenditures, and Life of Mine Average Operating Costs. Non-IFRS measures do not have any standardized meaning prescribed under IFRS, and therefore, they may not be comparable to similar measures employed by other companies. The data presented are intended to provide additional information and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Non-IFRS financial measures used in this news release and common to the mining industry are defined.
Operating Costs include mining, processing, general and administrative, concentrate transportation costs, treatment and refining charges, etc.
Cash costs include on-site mining costs plus on-site G&A, royalties/production taxes and permitting/community costs related to current operations.
AISC includes total cash costs plus reclamation costs, exploration and study costs, sustaining capital exploration/development and sustaining capital expenditure.
Technical Report & Qualified Persons
A Technical Report in respect of the PEA (the "Technical Report") prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (" NI 43-101 ") will be filed on SEDAR+ under the Company's issuer profile within 45 days of the date of this news release. Readers are encouraged to read the Technical Report in its entirety, including all qualifications, assumptions and exclusions that relate to the mineral resource estimate and the PEA. The Technical Report is intended to be read as a whole, and sections should not be read or relied upon out of context.
Qualified Persons
The scientific and technical content of this news release was reviewed, verified, and approved by Mr. Brian LeBlanc, P. Eng., President of AMPL, an independent "qualified person" as defined by NI 43-101 ( "QP" ). Mr. LeBlanc is the QP responsible for the scientific and technical information contained in this news release.
About Moon River
Moon River is a Canadian-based resource company focused on the acquisition, exploration and development of mineral projects. Moon River is focused on the development of the Davidson Property which hosts a large molybdenum-copper-tungsten deposit and is located near Smithers, British Columbia. The Company also holds 25% of one of the largest molybdenum mines in North America, the Endako Mine Complex also located in British Columbia.
For further information please contact:
Paul Parisotto, President, Chief Executive Officer and Director, at (416) 800-1753 or ....
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
Forward-looking Statements:
This press release contains forward-looking statements and forward-looking information (collectively, " forward-looking statements ") within the meaning of applicable securities laws. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "will", "estimates", "believes", "intends", "expects", "plans" and similar expressions, which are intended to identify forward-looking statements. More particularly and without limitation, this press release contains forward-looking statements concerning metal price assumptions, cash flow forecasts, projected capital and operating costs, metal recoveries, mine life, production rates, infrastructure, permitting, potential enhancements to the Project, that OPS will be incorporated into future plans and will prove beneficial, and future plans and other assumptions to be set out in the Technical Report in respect of the PEA. These forward-looking statements reflect the current views of the Company, represent the expectations of the Company as of the date of this news release, and are based on certain assumptions that the Company and its consultants have made in preparing the PEA and Technical Report that will be filed in respect thereto within 45 days of this news release. There can be no assurance that the results of the PEA particularly the expected Project returns will be achieved or that the Mineral Resources that are not Mineral Reserves will be economically viability. Readers are encouraged to read the Technical Report in its entirety, including all qualifications, assumptions and exclusions that relate to the Mineral Resources. The Technical Report is intended to be read as a whole, and sections should not be read or relied upon out of context.
Although the Company believes the expectations and material factors and assumptions reflected in these forward-looking statements are reasonable as of the date hereof, there can be no assurance that these expectations, factors and assumptions will prove to be correct. These forward-looking statements are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties including risks detailed in the PEA and continuous disclosure including the Technical Report, which are or will be available on SEDAR+ at . Accordingly, readers should not place undue reliance on the forward-looking statements contained in this press release.
These risk factors should not be construed as exhaustive. Readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected in the PEA and the Technical Report in respect thereof. The forward-looking statements contained in this press release speak only as of the date of this press release.
These forward-looking statements reflect the current views of the Company, represent the expectations of the Company as of the date of this press release, and are based on certain assumptions that the Company has made in respect thereof as at the date of this press release.
The forward-looking statements are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties including risks detailed in the Company's continuous disclosure, which are available on SEDAR+ at . Accordingly, readers should not place undue reliance on the forward-looking statements contained in this press release.
The Company does not undertake any obligation to publicly update or revise any forward-looking statements or information, except as required by applicable laws. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.
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SOURCE: Moon River Moly Ltd.
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