NORTHCLIFF RELEASES POSITIVE FEASIBILITY STUDY FOR SISSON TUNGSTEN‐MOLYBDENUM PROJECT Canada’s bulk‐tonnage Sisson mine could become the largest tungsten producer outside China
January 29, 2013 Vancouver, BC – Northcliff Resources Ltd. (“Northcliff” or the “Company”) (TSX: NCF) announces completion of a positive Feasibility Study for its 100%‐owned Sisson Project (“Sisson”) located in New Brunswick (“NB”), Canada, confirming the long‐life open pit tungsten and molybdenum development as a technically and economically robust project.
Undertaken by Samuel Engineering, Inc. of Denver, Colorado, the Sisson Project Feasibility Study reports a pre‐tax net present value (“NPV”) of $714 million at an 8% discount rate, an internal rate of return (“IRR”) of 20.4% and a 4.1‐year payback on initial capital expenditures of $579 million at long term metal prices of US$350/mtu for ammonium paratungstate (“APT”) and US$15/lb for molybdenum. On a post‐tax basis, Sisson has a $418 million NPV (equal to $5.40 per outstanding Northcliff share based on 77,399,245 current issued and outstanding shares), a 16.3% IRR and a 4.5 year payback on initial capital. All values are expressed in Canadian dollars unless otherwise noted.
“In just two years, Northcliff has advanced Sisson from an exploration and early‐stage development project to achieve this important project milestone. We have significantly de‐risked the project and now have one of the largest tungsten reserves outside China,” said Northcliff President & CEO Chris Zahovskis. “We are confident that Sisson is on track to earn the necessary environmental and construction permits from federal and provincial regulators in 2014, and Northcliff will be pursuing partnerships with global companies interested in the Sisson Project or tungsten off‐take agreements, positioning Northcliff to achieve the financing necessary to initiate project construction in 2014 and commissioning by 2016.”
Feasibility Study Highlights
- Located 100 km by road northwest of Fredericton, NB, the Sisson property hosts a 334 million tonne proven and probable mineral reserve containing 22.2 million metric tonne units (“mtu”) of tungsten trioxide (“WO3“) and 154.8 million pounds of molybdenum (“Mo”) at an $8.83/t Net Smelter Return (“NSR”) cut‐off. The life‐of‐mine (“LOM”) plan, based on this mineral reserve, has an average NSR value of $26.24/t and an average NSR value over the first five years of production of $30.75/t processed.
- Sisson will be developed as an efficient bulk tonnage operation with mine‐site facilities to include: an open pit; ore processing plants; tailings storage facility; and ancillary buildings including offices, shops and warehouses.
- Northcliff will undertake value‐added processing of tungsten concentrates produced at Sisson by constructing and operating an APT plant at the project site which adds significant economic value to the Sisson Project.
- Access to the Sisson Project site will be facilitated via existing highways and roads. Power will be provided by provincial power utility NB Power via a new 138 kiloVolt (“kV”) transmission line alongside an existing 345 kV line at an expected cost of $0.066 per kilowatt‐hour (“kWh”).
- The Sisson Project will directly employ 300 people in New Brunswick and up to 500 during the construction phase. The project workforce will be drawn from surrounding towns and cities; no permanent work camp will be required.
- Initial capital expenditures to construct the Sisson mine, processing facilities, primary and secondary infrastructure are estimated at $579 million (including a 15% contingency). Construction of the Sisson Project facilities is expected to take 24 months to complete.
- Mill throughput at Sisson is expected to average 30,000 tonnes per day (or 10.5 Mt per year) for a total of 281 Mt of ore processed over 27 years of operation. Average effective strip ratio is low at 1:1.
- The average LOM head grade is estimated to be 0.073% WO3 and 220 ppm Mo. Average LOM recoveries are estimated to be 77% for tungsten and 82% for molybdenum. Average head grade over the first five years of
production is estimated to be 0.093% WO3 and 240 ppm Mo. Concentrator recoveries for this five year period are estimated to be 81% for tungsten and 82% for molybdenum after ramp‐up of the facility.
- Based on the Feasibility Study mine plan, Sisson will produce an estimated annual average of 557,000 mtu WO3 contained in APT and 4.1 million pounds Mo contained in concentrates or a total of 15.0 million mtu WO3 and 111.3 million pounds Mo over 27 years of operation. Average annual production in the first five years is forecast at 689,000 mtu WO3 and 4.4 million pounds Mo.
- Average cash costs of APT production are forecast at $8.18 per tonne milled or $153/mtu (net of molybdenum credits).
Feasibility Study – Key Measures
| Metal Price Assumptions ($US dollars) | ||
|---|---|---|
| Tungsten ( APT) | $ 350 / mtu | |
| Molybdenum | $ 15 / lb |
| Financial Results* | Pre‐Tax | Post‐Tax | |||
|---|---|---|---|---|---|
| Net Present Value (8%) | $ 714 M | $ 418 M | |||
| Internal Rate of Return (IRR) | 20.4 % | 16.3% | |||
| Payback | 4.1 years | 4.5 years | |||
| Total Capital Costs | $ 579 M |
| Production Results | Amount | ||||||
|---|---|---|---|---|---|---|---|
| Milling Rate (tonnes/day) ‐ nominal | 30,000 | ||||||
| Strip Ratio | 1 : 1 | ||||||
| Life of Mine | 27 years | ||||||
| Annual Average | Life of Mine | Years 1 to 5 | |||||
| Tonnes Milled | 10.5 M / a | 281 M | 10.2 M /a | ||||
| Tungsten (WO ) Production 3 | 557,000 mtu / a | 15.0 M mtu | 689,000 mtu / a | ||||
| Mo Production | 4.1 M lbs / a | 111.3 M lbs | 4.4 M lbs / a | ||||
| Avg. WO Grade / Recovery 3 | 0.073% / 77% | 0.073% / 77% | 0.093% / 81%** | ||||
| Avg. Mo Grade / Recovery | 220 ppm / 82% | 220 ppm / 82% | 240 ppm / 82% |
*financial results are as at commencement of construction. Exchange rate assumptions for US$:C$ are:
Capital cost 1.0:1; Years 1‐4 0.98‐0.92:1; Years 5+ 0.90:1 **after ramp‐up of the concentrator facility
| 3 3 | |||||
|---|---|---|---|---|---|
| Average Annual Operating Costs | $ / tonne | $ / mtu | |||
| Mining (per tonne milled) | 4.15** | 77.7 | |||
| Milling | 7.11 | 133.2 | |||
| Waste Management | 0.59 | 11.1 | |||
| G&A | 0.47 | 8.8 | |||
| Total Operating Costs to Concentration | 12.32 | 230.8 | |||
| Moly By‐Product Credits | (5.76) | (107.8) | |||
| Total Operating Costs | 6.56 | 123.0 | |||
| APT Costs (including offsite costs) | 1.62 | 30.3 | |||
| Total APT Cash Costs | 8.18 | 153.3 |
**Mining cost per tonne mined is $2.09/t
| Capital Cost Summary | $ M | ||
|---|---|---|---|
| Mine | 34.1 | ||
| Concentrator & APT Plant | 247.9 | ||
| Site Infrastructure & Ancillary | 55.4 | ||
| Owner’s Costs & Indirects | 168.4 | ||
| Contingency ( 15% ) | 73.0 | ||
| Total | 578.8 |
Mineral Resource and Reserve Information
The Sisson deposit is one of the largest undeveloped tungsten reserves in the world, containing 22.2 million mtu of WO3 and 154.8 million lbs of Mo. The LOM plan based on this mineral reserve has an average NSR (net smelter return) value of $26.24/t milled and an average NSR value over the first five years of production of $30.75/t milled.
Mineral reserves cited in the Sisson Project Feasibility Study are summarized in the table below.
| Cut‐off Grade | Tonnes Above | Average Grade Above CoG | Contained Metal above CoG | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ("CoG") | CoG | |||||||||||||
| NSR | Tonnes x 1000 | NSR | WO3 | Mo | Tungsten | Molybdenum | ||||||||
| Categories | ($/t) | ($/t) | (%) | (%) | (M mtu) | (M lbs) | ||||||||
| Proven | 8.83 | 105,415 | 25.48 | 0.069 | 0.023 | 7.3 | 53.0 | |||||||
| Probable | 8.83 | 228,948 | 23.54 | 0.065 | 0.020 | 14.9 | 101.7 | |||||||
| Total | 8.83 | 334,363 | 24.15 | 0.066 | 0.021 | 22.2 | 154.8 |
Contained within Ultimate Pit Limit Metal Prices: WO3 – US$350/mtu, Mo – US$15/lb; Assumed Concentrator Recoveries: WO3 – variable with feed grade, Mo – 82%;
APT Plant Recovery of WO3 – 97%; US$:C$0.9:1; NSR = (WO3% * NSP WO3*Recovery WO3*22.046) + (Mo%*NSP Mo Recovery Mo*22.046);
Net Smelter Price (NSP) WO3 = CDN$17.46/lb; Mo = C$14.50/lb.
Note that the mine plan employs a variable cut‐off grade strategy to maximize financial returns. Of the 334 Mt in reserves, 281 Mt are in the feasibility study LOM plan.
Long‐term Metal Prices
The Sisson Project Feasibility Study utilizes average long‐term metal prices of $350/mtu for APT and $15/lb for Mo, and concludes that Sisson will be a stable and profitable producer of tungsten and molybdenum concentrate, as well as ammonium paratungstate, at both current and long‐term forecast metal prices. The selected tungsten price falls in the low‐ to‐medium range of estimates provided in a marketing study completed for Northcliff by the Roskill Consulting Group of London, U.K. (“Roskill”).
According to Roskill, “based on forecasts for demand, the tungsten market should fluctuate around an equilibrium level in both the base‐case and pessimistic demand scenarios assuming that the majority of planned projects reach production and current output at existing operations is maintained. Long‐term, tungsten prices are expected to increase irrespective of the supply/demand balance. Tungsten production costs have been rising globally and Chinese producers are now more sensitive to tungsten prices than in the past because of rising energy, labour, equipment and reagent costs. In real price terms, APT prices are forecast to average $383/mtu in the period 2012 to 2025, reaching $433/mtu in 2025.”
Mine Operations and Facilities
Infrastructure and facilities at the Sisson mine site will include an open pit, crushing, conveying, ore stockpile, ore concentrator, APT plant, tailings storage facility, and ancillary buildings including offices, shops and warehouses.
Conventional, modern mining equipment will be used, including 16.5 m3 electric‐hydraulic shovels, 136 tonne capacity haul trucks and 165 mm diameter hydraulic drills. The mine will deliver 10.5 Mt of mill feed annually to the primary crusher located adjacent to the pit, which will then be conveyed approximately 1 km to the concentrator. Lower grade and non‐ mineralized material will be stored within the tailings storage facility. The low strip ratio, bulk‐tonnage style mining and consolidated footprint of the mine design all contribute to low unit operating costs for the Sisson Project.
Metallurgy and Processing
Mineral processing will consist of crushing and grinding for the liberation of the molybdenum and tungsten rich minerals, followed by industry standard flotation to recover the metals into their respective concentrates. The crushing circuit includes a primary gyratory crusher, secondary cone crushing and tertiary high pressure grinding rolls (HPGR), followed by single stage two‐line ball mill grinding. Ground ore will feed the molybdenum and tungsten flotation circuits. The respective flotation concentrates for molybdenum and tungsten will be dewatered. The molybdenum concentrate will be sold to other parties for further processing, while the tungsten concentrate will be further processed on site into ammonium paratungstate (see APT Plant below).
All processing steps described are conventional processes widely used in the global mining industry. Process design is based on an extensive testing program undertaken by SGS Mineral Services Canada, at their well‐known and highly regarded Lakefield, Ontario facility using representative core samples obtained from a metallurgical drill program.
APT Plant
The Sisson Project will include construction and operation of a value‐added processing plant to produce APT. The APT plant will be the first of its kind in Canada, and will substantially enhance local employment and economic activity associated with operation of the Sisson Project.
“We believe that investing in value‐added tungsten processing in New Brunswick is not only a net economic gain for the Sisson Project and the regional and provincial economy, but it also has the potential to generate value well beyond the Sisson mine’s operating life and encourage further private sector investment in exploration and development of New Brunswick’s tungsten resources,” Zahovskis added.
Secondary Infrastructure
Located 100 km by road northwest of the City of Fredericton in the Canadian province of New Brunswick, the Sisson Project enjoys ready access to modern transportation and power infrastructure and a skilled labour force. Situated in an area of rolling topography, the site is readily accessible by road from Fredericton, with local access provided by numerous secondary and forestry roads. Power lines from the provincial grid cross the property. A rail line is located 15 km east of the deposit and connects to deep‐sea ports at Saint John and Belledune. Road access to these ports is also readily available.
The Project’s power requirements will be satisfied by tying into the existing New Brunswick electrical grid. Although an existing 345 kV line crosses the Sisson claim block, a new 42 km, 138 kV transmission line will be constructed by NB Power alongside the existing line. NB Power will own the line and switchgear but Northcliff will own the mine site terminal station. Power costs are estimated at $0.066 per kWh in the Feasibility Study.
“Northcliff has been working with a broad range of government, public, First Nation and institutional stakeholders in New Brunswick over the past two years, including power and transportation interests, in order to forge the support and partnerships necessary to successfully execute the Sisson Project,” Zahovskis said. “We’re pleased with the progress made to date, and are confident that the business, social and political support necessary to move this project forward will be achieved in the year ahead.”
Environmental Assessment and Permitting
In addition to completion of a positive Feasibility Study for the Sisson Project, Northcliff is working toward the completion of an Environmental Impact Assessment (“EIA”) to facilitate regulatory/public review and permitting. The Company expects to submit an EIA Report to federal and provincial regulatory agencies in early 2013. Following regulatory and public review of the Sisson Project EIA report, Northcliff will apply for the broad range of construction and environmental permits necessary to take the Sisson Project into production.
“Since finalizing the ‘Terms of Reference’ for the Sisson Project EIA report last year, Northcliff’s engineering and environmental teams have worked closely together to optimize the project design in order to minimize the mine footprint, enhance environmental safeguards and ensure that we meet or exceed regulatory standards and permitting requirements in New Brunswick,” Zahovskis said. “We’ve also consulted broadly to understand communities’ and First Nations’ interests in the Sisson Project area, and worked hard to propose a project that we believe respects the natural resources, land uses and traditional ways of life in the region.”
As an example of project design improvements achieved in recent months, Zahovskis noted that Northcliff succeeded in consolidating the Sisson Project’s footprint by constraining the tailings storage facility and by storing barren rock within it. He said the change will further enhance water quality protection and simplify an environmentally sustainable closure of the project.
Zahovskis added: “We look forward to continued engagement with government, local communities and First Nations to discuss the environmental and social dimensions of our project. Ultimately, we are confident that Sisson will deliver substantive benefits to the people of the region and the province, while protecting water quality, fisheries, wildlife and other key environmental and social values.”
Closure and Bonding
A detailed assessment of closure costs for the Sisson mine has been undertaken as part of the Feasibility Study. These costs have been used to estimate the bond amount that is required to be set aside at the onset of mine operations for closure of the project. This assessment includes careful consideration of long‐term costs associated with managing water quality at the project site post‐closure. The estimated closure costs and the associated bond contributions have been included in the assessment of the project.
“I’m extremely proud of the work our project engineers and environmental team have done to refine the Sisson Project design to ensure that we not only meet or exceed the high environmental standards and permitting requirements enforced by federal and provincial regulatory agencies, but that we protect the values most important to New Brunswickers,” Zahovskis said. “In particular, we are very confident that the Sisson Project will protect regional water quality and the fish and wildlife resources of central New Brunswick.”
Feasibility Project Management and Contributions
The Sisson Project Feasibility Study was prepared under the direction of Mr. Ivor Alexander of Samuel Engineering, Inc., with contributions from the following Northcliff independent consultants and “Qualified Persons” for the purposes of National Instrument 43‐101, who have reviewed and approved this release.
| Consultant | Contribution | Qualified Person | |||
| Roscoe Postle Associates, Inc. | Resource Estimate | David W. Rennie, PEng | |||
| Moose Mountain Technical Services | Mine Design and Production Planning | Jim Gray, PEng | |||
| Knight Piésold Consulting | Geotechnical, Water and Waste Management | Daniel Friedman, PEng | |||
| Bolu Consulting Engineering, Inc. | Concentrator Design including: Metallurgy, Process, Layout and Mechanical Design | Matt Bolu, M.Sc., PEng | |||
| Gene Greskovich | APT Design including: Metallurgy, Process, Layout and Mechanical Design | Gene Greskovich, PE | |||
| Samuel Engineering, Inc. | Infrastructure, Civil and Electrical Design, Mechanical Costing and, Financial Analysis | Steven Pozder, PE |
Mr. Terrence Smith, PEng. is a Qualified Person and has approved the content of the news release that summarizes the results of the feasibility study.
To fully understand the summary information above, the associated NI 43‐101 technical report, which will be filed on Sedar within 45 days, should be read in its entirety.
About the Sisson Project
The Sisson Project has excellent potential for near‐term production of tungsten and molybdenum. It is well‐located near roads, rail and tidewater on the eastern seaboard of North America, which provides the project with key logistical advantages over other greenfield tungsten projects. New Brunswick is a stable jurisdiction with a long tradition of mineral and resource development, and a well‐established regulatory system. By advancing Sisson, Northcliff will become one of North America's major tungsten producers, greatly increasing supply for the large North American, Asian and European markets where demand is forecast to outstrip supply.
Northcliff has completed a positive Feasibility Study for the Sisson Project and is advancing toward completion of an Environmental Impact Assessment (EIA), to be submitted to federal and provincial regulatory agencies in early 2013. Following regulatory and public review of the Sisson Project EIA report, Northcliff will apply for the broad range of operating and environmental permits necessary to take the Sisson Project into production.
Northcliff expects to achieve EIA approvals for the Sisson Project in 2014 and shortly thereafter initiate a two year construction phase subject to securing sufficient financing on acceptable terms. Full commissioning is currently expected to commence in 2016.
About Northcliff
Northcliff is a mineral resource company associated with Hunter Dickinson Inc. (HDI), and focused on progressing the feasibility‐stage Sisson Tungsten‐Molybdenum Project located in New Brunswick, Canada, to production.
For further details on Northcliff and the Sisson Project, please visit www.northcliffresources.com or contact Investor Services at (604) 684‐6365 or within North America at 1‐800‐667‐2114
Christopher Zahovskis President & CEO
No regulatory authority accepts responsibility for the adequacy or accuracy of this release.
CAUTION REGARDING FORWARD‐LOOKING INFORMATION
This document contains “forward‐looking statements” that are based on Northcliff’s expectations, estimates and projections as of the dates as of which those statements were made. Generally, these forward‐looking statements can be identified by the use of forward‐looking terminology such as “outlook”, “anticipate”, “project”, “target”, “believe”, “estimate”, “expect”, “intend”, “should” and similar expressions.
Forward‐looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward‐looking statements. These include but are not limited to:
- uncertainties and costs related to the Company’s exploration and development activities, such as those associated with determining whether mineral resources or reserves exist on a property;
- uncertainties related to feasibility studies that provide estimates of expected or anticipated costs, expenditures and economic returns from a mining project; uncertainties related to expected production rates, timing of production and the cash and total costs of production and milling;
- uncertainties related to the ability to obtain necessary licenses, permits, electricity, surface rights and title for development projects;
- operating and technical difficulties in connection with mining development activities;
- uncertainties related to the accuracy of our mineral reserve and mineral resource estimates and our estimates of future production and future cash and total costs of production, and the geotechnical or hydrogeological nature of ore deposits, and diminishing quantities or grades of mineral reserves;
- uncertainties related to unexpected judicial or regulatory proceedings;
- changes in, and the effects of, the laws, regulations and government policies affecting our mining operations, particularly laws, regulations and policies relating to
- mine expansions, environmental protection and associated compliance costs arising from exploration, mine development, mine operations and mine closures;
- expected effective future tax rates in jurisdictions in which our operations are located;
- the protection of the health and safety of mine workers; and
- mineral rights ownership in countries where our mineral deposits are located;
- changes in general economic conditions, the financial markets and in the demand and market price for gold, silver and other minerals and commodities, such as diesel fuel, coal, petroleum coke, steel, concrete, electricity and other forms of energy, mining equipment, and fluctuations in exchange rates, particularly with respect to the value of the U.S. dollar and Canadian dollar;
- unusual or unexpected formation, cave‐ins, flooding, pressures, and precious metals losses, or other similar events (and the risk of inadequate insurance or inability to obtain insurance to cover these risks);
- changes in accounting policies and methods we use to report our financial condition, including uncertainties associated with critical accounting assumptions and estimates;
- environmental issues and liabilities associated with mining including processing and stock piling ore;
- geopolitical uncertainty and political and economic instability in countries which we operate; and
- labour strikes, work stoppages, or other interruptions to, or difficulties in, the employment of labour in markets in which we operate mineral projects or mines, or environmental hazards, industrial accidents or other events or occurrences, including third party interference that interrupt the production of minerals in our mines.
For further information, investors should review the Company’s filings that are available at www.sedar.com.
Cautionary Note to U.S. Investors Concerning Reserve Estimates
The mineral reserves disclosed in this news release have been estimated in accordance with Canadian National Instrument 43‐101 ‐ Standards of Disclosure for Mineral Projects (“NI 43‐101”), as required by Canadian securities regulatory authorities. The Company is not subject to the reporting requirements of section 13(a) of section 15(d) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, the Company’s U.S. investors are cautioned that SEC Industry Guide 7 under the Exchange Act, as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve. As a result, the definitions of proven and probable reserves used in NI 43‐101 differ from the definitions in the SEC Industry Guide 7. Under SEC standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards. Accordingly, mineral reserve estimates contained in this news release may not qualify as “reserves” under SEC standards. In addition, disclosure of “contained ounces” is permitted disclosure under Canadian regulations; however, the SEC only permits Exchange Act reporting companies to report reserves in ounces, and requires reporting of mineralization that does not qualify as reserves as in place tonnage and grade without reference to unit measures.