Moon River Capital Ltd. Announces Robust Positive Preliminary Economic Assessment of Davidson Molybdenum Project
Moon River Capital Ltd. Announces Robust
Positive Preliminary Economic Assessment of
Davidson Molybdenum Project
HIGHLIGHTS:
Pre-tax net present value ("NPV") of $1.04 billion and Internal Rate of Return ("IRR") of 32% and an
after-tax NPV of $602 million and an IRR of 24% at an 8% discount rate and assuming a long-term
molybdenum("Mo") price of $US47.39 per ('kg") or $US21.50 per pound ("lb");
20-year mine life based on 7,000 tonnes of mill throughput per day or 2.5 million tonnes per year;
Initial capital cost of $575 million including $109 million of contingency;
Annual average production of 4,543,000 kg or 10,015,500 pounds of Mo;
Average cash cost of $21.68 per kg or $9.84 per lb and All-In Sustaining Cost ("AISC") of $22.79
per kg or $10.34 per lb of Mo;
Underground mine, with underground processing facilities, using all electric mining equipment
minimizes the surface footprint, resulting in a very low carbon emitting operation;
A measured and indicated mineral resource of 43,896,000 tonnes grading 0.35% MoS
2
(0.21%
Mo);
A 3.3-year payback;
Life-of-mine direct income and mining taxes in excess of $1 billion;
Does not include potential byproduct contributions from tungsten, rare earth elements, gallium and
copper; and
Additional drilling to support metallurgical test work to determine the economic recoverability of
potential byproduct metals is scheduled to commence when applicable First Nations consultations
have been undertaken and drill permits have been obtained.
An updated PEA will follow.
All dollar amounts are stated in Canadian Dollars unless otherwise noted.
Toronto, Ontario--(Newsfile Corp. - February 22, 2024) - Moon River Capital Ltd.
(TSXV: MOO)
("
Moon
River
" or the "
Company
") is pleased to announce that a Preliminary Economic Assessment ('PEA")
has been completed on the Davidson Molybdenum Project (the "Project") located near Smithers, British
Columbia.
Paul Parisotto, President and Chief Executive Officer, says of the PEA results:
"This study presents a
very convincing case for the rapid development of the Davidson Molybdenum Project.
Its location in
British Columbia is near developed infrastructure, including roads, rail, power, and the nearby town of
Smithers. It would be able to take advantage of the province's hydro-electric power grid.
That, together
with the use of an electric mining fleet, will make Davidson one of the lowest carbon-emitting sources of
molybdenum in the world. As an underground mine, with an underground processing plant and with most
of the tailings used as backfill, the surface footprint of this mining operation will be minimal."
Ian McDonald, Chairman, went on to state: "My involvement with this project first began twenty years ago,
and I truly believe that the time for its development has arrived. These compelling robust economics
together with a Tier One jurisdiction in a mining-friendly province, to produce a product that was included
on Canada's 2021 Critical Mineral List by the federal government, make development of the Project very
attractive at this time."
Join Ian McDonald, Chairman and Paul Parisotto, President and CEO for a LIVE virtual event to learn
more about this PEA, receive a broader market update, and ask questions during the interactive Q&A.
Date and time: Week of February 26th, exact date and time TBD.
Click here to register for the event
The PEA was prepared by A-Z Mining Professionals Ltd. ("AMPL") for Moon River.
The Project, located
in west central British Columbia, is approximately 9 kilometres ("km") northwest of the town of Smithers.
On November 15, 2023, Moon River acquired all of the rights, interests and obligations of Generation
Mining Ltd. under a vending agreement dated April 1, 2016, as amended, entered into with Roda
Holdings Inc. and Mr. Donald Davidson (the "Davidson Agreement"), thus granting Moon River the
exclusive right to access, prospect, develop and mine the Davidson Property and to acquire 100% of the
Davidson Property.
The Project comprises development of an underground mine with potentially
economic mineralization processed in an underground, on-site processing facility, with an estimated 20-
year mine life.
PROJECT DESIGN
The Davidson Deposit is located inside Hudson Bay Mountain and does not outcrop on surface.
The
deposit has an existing portal on the east side of the mountain and over 2,100 metres ('m") of
exploration drifting.
The access road and portal can be seen from the town of Smithers.
The proposed
underground mine access and surface facilities will be located on the west side of the mountain (out of
sight of the town of Smithers) with the existing eastern portal used only for initial development.
To minimise the surface footprint of the whole operation, the processing plant will be located
underground in specially designed and excavated openings at the top elevation of the mining zones.
This
eliminates having to move mineralized material from the underground to a surface processing plant 8 km
away.
This also eliminates material for processing being trucked on surface and the need for a source of
backfill material from surface as well.
The mill tailings will provide a ready source of material for
backfilling mined areas and significantly reduces the size of the tailings management facility on surface.
The mine will utilise already proven rubber-tired, battery-powered and automated mining equipment
wherever possible to minimize manpower requirements, underground ventilation volumes, mine air
heating costs and CO
2
emissions.
Surface infrastructure required would include:
Upgrading of access road
Powerline construction
Electrical substations and distribution
Site roads and materials handling area
Maintenance shop/offices/dry/warehouse complex (temporary)
Two cement storage silos
Water supply system and water treatment plant
Dry stack tailings impoundment area
Development waste storage
Landfill site
Sewage disposal site
The mine will employ 207 persons in the operation.
During pre-production, a contractor workforce will be
employed, most on a fly-in/fly-out work rotation with major population centres in Canada.
During
production no fly-in/fly-out personnel are included in the plan.
There is a history of mining in the region
and many skilled workers in the area currently work from Smithers that has a population of 5,400 people
and many support services.
MINE PLAN
Underground mining methods will be utilised to extract the potentially economic mineralization of the
deposit. An underground internal ramp from the bottom to the top of the mining zone will access mining
areas and the underground processing plant facility. In total, some 34,000 m of development will be
required to bring the deposit into production.
The mining method to be employed would be Longhole Open Stoping with cemented paste (densified
tailings) backfill to maximise recovery of potentially economic mineralization.
Dilution of 5% has been
included in the mined potentially economic mineralization at a grade of 0.18% MoS
2
.
The mineralized zone is large and irregular shaped, with higher grade concentrations towards the centre
of the mineralized zones being mined. The mine would produce 7,000 tonnes per day of potentially
economic mineralization.
The mineralized zone geometry is highly amenable to bulk mining of large
tonnage stopes with inherent economies of scale and low mining costs.
The stopes will be approximately
160,000 tonnes each.
Figure 1 Underground Mine Design
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/7009/198827_e1a1afec84bd8880_001full.jpg
Potentially economic mineralization removed from stopes by load-haul-dump (LHD) units will be sent by
ore passes to jaw crushers at the bottom of the mine and then to a secondary cone crusher.
The crushed
potentially economic mineralisation will be conveyed to a vertical lift conveyor system which feeds the
fine ore bin connected to the underground processing facility.
Other underground facilities will include:
Paste backfill plant
Equipment maintenance shops and underground warehouses
Explosives storage magazines
Refuge stations
Fuel bays
Materials storage areas
Main dewatering sumps
Offices
Warehousing facilities
PROCESSING
The processing plant, located completely underground, will be a conventional flotation plant producing a
molybdenum concentrate for shipment to smelters.
The potentially economic mineralization from the mine vertical lift conveyor system would feed the
grinding circuit consisting of two ball mills operating in parallel.
Flotation of the molybdenum concentrate
will comprise a rougher/scavenger circuit followed by two stages of concentrate cleaning, with regrind.
The concentrate stream from flotation will be filtered and dried for shipment to a smelter. The processing
plant is expected to have a recovery rate of 92% molybdenum into concentrate.
Large processing equipment (crushers and grinding mills) will be located in individual opening rooms
and interconnected with piping.
Other smaller equipment will be installed in groupings in other opening
rooms.
The construction cost of an underground plant is not significantly different from that for a plant
located on surface.
The tailings will be primarily made into paste backfill for backfilling of stopes with the balance pumped to
a dry stack tailings facility where the water is removed, and tailings stacked in a near dry form in a
permanent storage facility.
MINERAL RESOURCES
Mineral Resources used for the PEA were based on the latest resource estimates calculated and
reported in a study completed by AMPL and presented in an NI 43-101 Technical Report entitled
"National Instrument NI 43-101 Technical Report for the Davidson Project Resources Update" dated
September 13, 2023 and filed on Sedar+.
Category
Cut-off
Grade MoS
2
Tonnes
Grade
MoS
2
Grade
Mo
Contained
Mo kg.
Contained
Mo lbs.
Measured
>0.25
24,269,000
0.37
0.22
53,800,000
118,609,000
Indicated
>0.25
19,627,000
0.32
0.19
37,600,000
82,894,000
M&I
>0.25
43,896,000
0.35
0.21
92,100,000
201,503,000
Inferred
>0.25
11,907,000
0.30
0.18
21,400,000
47,179,000
1
.
Mineral Resources were estimated using the CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the
CIM Standing Committee on Reserve Definitions and adopted by the CIM Council.
2
.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability."
3
.
The PEA mine plan and economic model include numerous assumptions and the use of Inferred Resources.
Inferred Resources are
considered to be too speculative geologically to have the economic considerations applied to them that would enable them to be categorized
as mineral reserves and to be used in an economic analysis except as allowed for by NI 43-101 in PEA studies. There is no guarantee that
Inferred Resources can be converted to Indicated or Measured Resources, and as such, there is no guarantee the economics described
herein will be achieved.
4
.
The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, marketing, or other relevant issues.
5
.
The approximate 2-year trailing average (to January 31, 2024) metal price for molybdenum US$47.40 per ('kg") or US$21.50 per pound ("lb")
was used in estimating the Mineral Resources and a CAD:US Dollar exchange rate of $0.74 was used.
6
.
A description of the key assumptions, parameters, and methods used to estimate the resources, and any known risks, as well as the data
verification processes, are contained in the technical report entitled "National Instrument NI 43-101 Technical Report for the Davidson Project
Resources Update" dated September 13, 2023 and filed on SEDAR+.
CAPITAL EXPENDITURES
The estimated project total pre-production capital expenditure, inclusive of contingencies and working
capital, is approximately $575 million.
A summary of project pre-production capital expenditures is
presented in the following table.
Pre-Production Capital Expenditure
Component
Year -3
($'000)
Year -2
($'000)
Year -1
($'000)
Year 1
($'000)
Total
($'000)
Exploration
$
1,000
$
1,000
$
1,000
$
3,000
Mine
$
34,377
$
52,739
$
50,440
$
24,124
$
161,680
Equipment Leasing
$
9,441
$
8,952
$
8,462
$
26,855
Processing Plant
$
70,000
$
50,125
$
35,000
$
155,125
Underground Infrastructure
$
4,886
$
1,815
$
23,375
$
30,077
Surface Infrastructure & Mobile Equipment
$
23,636
$
1,463
$
13,361
$
38,461
Tailings Management Facilities
$
9,150
$
9,150
Owner's Costs
$
3,700
$
3,700
$
3,700
$
11,099
Contingency
$
18,039
$
35,685
$
34,513
$
20,625
$
108,862
Working Capital
$
20,679
$
20,679
Mine Closure
$
10,000
$
10,000
Total Pre-Production Capital Expenditures
$
90,193
$
178,425
$
182567
$
123,803
$
574,987
OPERATING COSTS
The estimated total average operating cost (excluding smelting and refining) for the mine is
approximately $38.24 per tonne of potentially economic mineralization. This equates to $21.68 per kg of
Mo ($9.84 per lb).
The following table presents a summary of life of mine average operating costs per
tonne.
Life of Mine Average Operating Costs
Co
mponent
C
ost
Diamond Drilling - Infill
$
0.50
Underground Mining
$
21.07
Processing
$
10.94
Tailings Management Facility
$
1.34
Mine Indirects
$
1.29
Surface Department
$
0.90
General & Administration
$
2.20
Total Minesite Operating Cost
$
38.24
ECONOMIC ANALYSIS
The expected cash flow estimates are calculated using the forecast mine plan, operating costs, and
capital expenditures incorporating expected long-term metal prices based on the two-year trailing
average of molybdenum on the London Metals Exchange of US $47.39 per kg or US$21.50 per pound.
A summary of the expected parameters used for the financial analysis is presented below.
Parameters Used in Financial Analysis
Parameter
Long term Metal Price
$US47.39/kg or $US21.50/lb.
CAD:US Dollar Exchange Rate
$0.74
Diluted Potentially Economic Resource
49,125,000 tonnes
Dilution
5% (with adjacent mineralization grade)
Average Millhead Grade
0.34% MoS
2
Recovery
92%
Payability
97%
Pre-Production Capital Expenditures
$575 million
Total Sustaining Capital Expenditures
$79 million
Working Capital included in Pre-Production Capex
$21 million
Reclamation & Closure Costs
$10 million
Estimated Operating Costs
$38.24/tonne
Life of Project
20 years
The overall level of accuracy of this study is approximately ±40%.
The Project's expected investment and returns based on the base case cashflow parameters for the
project are shown below.
Expected Project Returns
Pre-Tax
After Tax
Undiscounted Net Revenue
$
5.8 billion
$
5.8 billion
Undiscounted Total Cash Flow
$
3.0 billion
$
1.9 billion
NPV at 5%
$
1.5 billion
$
931 million
NPV at 8%
$
1.0 billion
$
602 million
NPV at 10%
$
815 million
$
447 million
IRR
32%
24%
Payback Period
3.3 Years
SENSITIVITY ANALYSIS
Sensitivity analyses were performed for capital expenditures, operating costs, mined grades, metal
prices and currency exchange rates using 25% positive and negative variations. The Project is most
sensitive to the mined grade, metal price and the exchange rate and less sensitive to capital and
operating costs.
The results of the sensitivity analysis for positive and negative changes of 25% in key
project parameters are presented in the following tables and graphs.
Sensitivity Analysis Net Present Values ($CAD million)
Parameter
After Tax NPV 8%
-25%
Base Case
25%
Capital Cost
705
602
498
Operating Cost
732
602
471
Mined Grade
219
602
984
Metal Price
217
602
986
Exchange Rate
219
602
984
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/7009/198827_davidson.jpg
Note:
The lines for Grade, Metal price and Exchange Rate are virtually the same and overlay each other.
Sensitivity Analysis IRR
Parameter
After Tax IRR
-25%
Base Case
25%
Capital Cost
31%
24%
19%
Operating Cost
26%
24%
21%
Mined Grade
15%
24%
31%
Metal Price
14%
24%
31%
Exchange Rate
15%
24%
31%
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/7009/198827_davidsonirr.jpg
Note:
The lines for Grade and Metal Price are virtually the same and overlay each other.
Non-IFRS Financial Measures
The Company has included certain terms or performance measures commonly used in the mining
industry that are not defined under International Financial Reporting Standards ("IFRS") in this news
release.
These include Operating Costs, Cash Cost, AISC, Pre-Production Capital Expenditures,
Sustaining Capital Expenditures, 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, less by-product credits, if any.
AISC include total cash costs plus reclamation costs, exploration and study costs, sustaining capital
exploration/development and sustaining capital expenditure."
POTENTIAL BY-PRODUCT OPPORTUNITY
As disclosed in the Company's press release dated January 24, 2024, the Company plans to undertake
preliminary metallurgical studies and obtain fresh samples from drill core to begin detailed metallurgical
testing, when applicable First Nations consultations are undertaken and drill permits obtained, to
determine whether the Rare Earth Elements, ("REEs"), tungsten, gallium and copper contained in the
Project are economically recoverable and can contribute to the economics of the Project.
REEs comprise 17 nearly indistinguishable silvery-white soft heavy metals. Compounds containing
REEs have diverse applications in electrical and electronic components, lasers, glass, magnetic
materials, and industrial processes.
They are deemed important for the world energy transition, being
used in wind turbines, electric vehicles, photovoltaic cells and fluorescent lighting.
They are also used in
LED lights, colour monitors and medical equipment. REEs were included on the Government of
Canada's Critical Mineral List released in 2021, and more recently were listed along with five other
metals as potentially qualifying for the draft Critical Minerals Tax Credit for new mine construction.
Several of the REEs are on the U.S. Department of Energy's and European Union's critical mineral lists.
Most of the world's REEs are produced in China, with the United States and Australia each supplying
smaller amounts.
Tungsten has a wide variety of uses, mainly in the production of hard materials - namely tungsten
carbide, in steel alloys and as a lubricant.
Gallium is a key component of semi-conductors and LED
lights. Both metals are on the critical mineral lists in the United States, Canada and the European Union.
Next Steps
The Company will commence additional metallurgical test work when applicable First Nations
consultations are undertaken and drill permits are obtained, to determine the economic recoverability of
potential byproduct contributions, followed by an updated PEA.
Technical Report & Qualified Persons