Canada NewsWire
Pre-tax NPV 7% of C$1.5B and IRR of 46% at Current Commodity Prices
VANCOUVER, BC , Feb. 28, 2022 /CNW/ - Foran Mining Corporation (TSXV: FOM) (OTCQX: FMCXF) ("Foran" or the "Company"), is pleased to announce results from a Feasibility Study ("FS") on its expanded and re-scoped initial mine plan for its 100%-owned McIlvenna Bay project in east-central Saskatchewan . All currency figures are shown in Canadian dollars, unless otherwise noted.
Highlights:
- Robust financial metrics in a world-class jurisdiction.
- At current prices, the FS defines a pre-tax NPV 7% of $1.49B and IRR of 46% with an after-tax payback period of 2.2 years. Base case economics outline a pre-tax NPV 7% of $678M and IRR of 26%.
- Compelling economics at lower commodity prices, delivering a pre-tax IRR of 21% at US$3.00 /lb copper, more than 30% below current prevailing prices.
Table 1 – Pre-Tax NPV 7% Sensitivity Analysis
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|
Zinc Price
|
Copper Price (US$/lb) |
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|
|
$3.00 |
Base Case¹ |
Current² |
$5.00 |
$6.00 |
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|
Pre-Tax NPV
7%
|
$1.00 |
$347 |
$550 |
$1,078 |
$1,159 |
$1,565 |
|
|
Base Case¹ |
$475 |
$678 |
$1,208 |
$1,287 |
$1,694 |
||
|
$1.40 |
$603 |
$806 |
$1,338 |
$1,416 |
$1,822 |
||
|
$1.60 |
$732 |
$935 |
$1,467 |
$1,544 |
$1,950 |
||
|
Current² |
$865 |
$1,070 |
$1,493 |
$1,686 |
$2,096 |
||
|
$1.80 |
$860 |
$1,063 |
$1,597 |
$1,672 |
$2,079 |
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|
¹ Base case copper and zinc prices are US$3.50/lb copper and US$1.20/lb zinc. |
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² Current copper and zinc prices are US$4.53/lb copper and US$1.64/lb zinc. Under these scenarios US$1,936/oz gold, US$24.52/oz silver, and 1.27 USD/CAD is used. |
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|
³ Excluding current price scenarios, US$1,600/oz gold, US$22.50/oz silver, and 1.26 USD/CAD is used. |
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- Mineral Reserve tonnes +127%, establishing an initial 18 year reserve life.
- Probable Mineral Reserves total 25.7 million tonnes ("Mt") at 2.51% CuEq, a 127% increase in tonnes compared to the prior mineral reserve estimate and represents a 66% reserve conversion rate from the existing 39.1Mt of Indicated resources.
- FS outlines an 18.4 year mine life, based on a planned 4,200tpd throughput rate.
-
McIlvenna Bay remains open at depth and long strike, while immediate exploration focus is on near-mine and regional targets to drive more immediate value to shareholders.
- Consistent and scalable production profile.
- The FS highlights average annual production of 72.8 Mlbs CuEq (33.0 kt) over the first 15 years of mine life. By individual metal this equates to 38.8 Mlbs Cu (17.6 kt), 63.6 Mlbs Zn (28.9 kt), 20 koz gold and 486 koz silver.
-
Potential for production and throughput expansion as well as mine life extension exists as the Company potentially discovers and delineates additional near-mine deposits.
- High margin and focused on maximizing value per share.
- Life-of-mine C1 Copper Cash Costs are expected to average US$0.26 /lb Cu (net of by-product credits) and All-in Sustaining Costs to average US$0.90 /lb (net of by-product credits) at Base Case prices.
- At current commodity prices, this translates into $4.0B in EBITDA and $2.3B in Free Cash Flow over the current life-of-mine. These cash flow parameters underpin the robustness of the project, emphasizing the Company's objective to maximize and grow shareholder value.
Table 2 – IRR, Payback & Cash Flow Sensitivity Analysis
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|
|
Copper Price (US$/lb) |
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|
|
Base Case¹ |
Current² |
$3.00 |
$4.00 |
$5.00 |
$6.00 |
|
|
Pre-Tax IRR |
|
26% |
46% |
21% |
31% |
40% |
48% |
|
After-Tax IRR |
|
22% |
38% |
18% |
26% |
33% |
40% |
|
After-Tax Payback (yrs) |
4.5 |
2.2 |
5.6 |
3.7 |
2.9 |
2.3 |
|
|
LOM EBITDA (C$M) |
$2,483 |
$4,012 |
$2,097 |
$2,870 |
$3,643 |
$4,415 |
|
|
LOM Free Cash Flow (C$M) |
$1,179 |
$2,280 |
$906 |
$1,460 |
$2,015 |
$2,565 |
|
|
¹ Base case prices are US$3.50/lb copper, US$1.20/lb zinc, US$1,600/oz gold, US$22.50/oz silver, and 1.26 USD/CAD. |
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² Current prices are US$4.53/lb copper, US$1.64/lb zinc, US$1,936/oz gold, US$24.52/oz silver, and 1.27 USD/CAD. |
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³ Excluding the current price scenario, US$1.20/lb zinc, US$1,600/oz gold, US$22.50/oz silver, and 1.26 USD/CAD is used. |
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- Capital-light development project.
- Initial capital costs total $368M , translating to an attractive initial capital intensity of US$0.24 /lb CuEq produced over life-of-mine ( ~US$535 /tonne CuEq). Over 70% of initial capital cost estimates are based on competitive quotes.
- Sustaining capital is estimated to be at $481M over the LOM, including development of a shaft and material handling system.
- Delivering McIlvenna Bay with an ESG focus.
- Foran will continue to be relentless in intertwining its pioneering ESG strategy to target carbon neutrality while emphasizing the development of a sustainable asset for local communities in a decarbonizing world.
- Along with key partners and industry experts, Foran is currently developing a number of exciting business initiatives with updates on these developments expected throughout the year.
Dan Myerson , Foran's Executive Chairman & CEO commented;
"The completion of the FS is truly an excellent accomplishment by the entire team at Foran. It is important to be mindful that the study showcases only a snapshot in time of what our initial mine and centralized mill will look like, as we envision scaled expansions and future growth while sequencing in other deposits across the district.
As we continue to de-risk McIlvenna Bay with the ongoing advancement of the exploration decline, permitting, project financing, and our continued dynamic exploration campaign, I believe we are still in the early innings of understanding what this remarkable district has to offer. McIlvenna Bay is expected to be the centralized mill that could be expanded in phases as we continue to explore, define and potentially develop near-mine deposits and more within a 50km radius. Our land package is over 1,450 km², providing us with the canvas to explore in a systematic way. The neighbouring Flin Flon district has been operating for close to a century, and it is our vision to transform the Hanson Lake District into the next multi-decade mining camp.
Critically, Foran will be resolute in our effort to operate a mine of the future, targeting carbon neutrality and creating a sustainable asset for local communities in a decarbonizing world. Having the opportunity to power our site using renewable energy (hydropower), we are in a good position to deliver on our targets. Additionally, Foran will continue and always strive to be grateful, respectful and ensure a collaborative relationship with local communities, as this is essential in creating long-term mutually beneficial success. We are focused on education and training of local people to provide employment opportunities and build transferable skills. As the world continues to decarbonize, Foran will continue to search and evaluate circular economy opportunities, and pioneer ESG business initiatives to generate superior investment returns.
As the world hunts for new copper projects to satiate the urgent necessity to decarbonize our planet, geopolitical risks globally are impacting direct investment in regions where government regimes and taxation remain constant uncertainties. Operating in a global leading mining jurisdiction that is Saskatchewan further proves the amazing advantage Foran is fortunate and grateful to have. I am very proud of our team's accomplishments, and we look forward to delivering more exciting news throughout 2022 as we work towards our goals of building the next prolific mining jurisdiction in the world."
Sensitivity Analysis
At current prices of US$4.53 /lb Cu, US$1.64 /lb Zn, US$1,936 /oz Au, and US$24.52 /oz Ag, the project generates an after-tax NPV 7% of $1,055M , an after-tax IRR of 38%, with a payback period of 2.2 years from the commencement of production. Outlined below in Table 3 is a detailed sensitivity analysis across various commodity prices.
Table 3 – After-Tax NPV 7% Sensitivity Analysis
|
|
Zinc Price
|
Copper Price (US$/lb) |
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|
|
$3.00 |
Base Case¹ |
$4.00 |
Current² |
$5.00 |
$6.00 |
|
|
After-Tax NPV
7%
|
$1.00 |
$226 |
$372 |
$520 |
$756 |
$814 |
$1,106 |
|
Base Case¹ |
$320 |
$466 |
$613 |
$850 |
$907 |
$1,198 |
|
|
$1.40 |
$411 |
$559 |
$706 |
$943 |
$999 |
$1,291 |
|
|
$1.60 |
$505 |
$652 |
$799 |
$1,037 |
$1,092 |
$1,384 |
|
|
Current² |
$601 |
$750 |
$899 |
$1,055 |
$1,194 |
$1,489 |
|
|
$1.80 |
$597 |
$745 |
$892 |
$1,130 |
$1,185 |
$1,476 |
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|
¹ Base case copper and zinc prices are US$3.50/lb copper and US$1.20/lb zinc. |
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² Current copper and zinc prices are US$4.53/lb copper and US$1.64/lb zinc. Under these scenarios US$1,936/oz gold, US$24.52/oz silver, and 1.27 USD/CAD is used. |
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³ Excluding current price scenarios, US$1,600/oz gold, US$22.50/oz silver, and 1.26 USD/CAD is used.
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Project Description
The McIlvenna Bay project is located in east-central Saskatchewan approximately 375km northeast of Saskatoon , and 85 km West of Flin Flon Manitoba , and is accessible year-round via a 18km all-weather road connected to Saskatchewan Provincial Highway 106.
The FS outlines a project designed to be a decline/shaft underground mining operation utilizing long-hole mining methods for ore extraction. Ore is expected to be processed via conventional single stage crushing circuit with a semi-autogenous grinding ("SAG") mill and ball mill design. Grinding is planned to be followed by a flotation circuit to produce both a copper and zinc concentrate for transportation from site to Flin Flon for shipment by rail to Canadian smelters and/or offshore.
The deposit at McIlvenna Bay includes several zones and two distinct styles of mineralization, typical of volcanogenic-hosted massive sulphide ("VHMS") deposits, massive sulphide mineralization and stockwork-style mineralization in the Copper Stockwork Zone ("CSZ"). The massive sulphide is a continuous mineralized horizon which averages 3.5m in thickness while the CSZ averages a thickness of 12.0m . The massive sulphide and the underlying CSZ are generally in contact with one another throughout the deposit, giving the bulk of the deposit an average thickness of 15.5m overall.
The capital and operating cost estimates in the FS reflect the current inflationary pressures being faced by the industry globally, however the relatively light capital intensity associated with the project helps mute the overall impact inflation has on economics, which remain robust.
McIlvenna Bay Project Bankable Feasibility Study
The FS was led and compiled by Stantec Inc. as the lead author. Stantec completed the detailed mine design and engineering, with Halyard Inc. completing process plant, paste plant and surface support infrastructure design. Knight Piésold worked in conjunction with both Stantec and Halyard on the Dry Stack Tailings Management Facility Design. RockEng prepared the geotechnical model, working closely with Stantec and the Foran site team. The McIlvenna Bay Mineral Resource estimate was prepared by Micon International Limited, and the Mineral Reserve estimate was completed by Stantec.
Table 4 - Key Summary Table
|
Description |
Units |
Feasibility Study |
|
|
Metal Prices/FX¹ |
|
Base Case |
Current Prices |
|
Copper |
US$/lb |
$3.50 |
$4.53 |
|
Zinc |
US$/lb |
$1.20 |
$1.64 |
|
Gold |
US$/oz |
$1,600 |
$1,936 |
|
Silver |
US$/oz |
$22.50 |
$24.52 |
|
Currency Exchange Rate |
USD/CAD |
1.26 |
1.27 |
|
Production Data |
|
|
|
|
Reserve tonnes |
Mt |
25.70 |
25.70 |
|
Copper Equivalent Grade² |
% |
2.51% |
2.51% |
|
Copper Grade |
% |
1.23% |
1.23% |
|
Zinc Grade |
% |
2.39% |
2.39% |
|
Gold Grade |
g/t |
0.47 |
0.47 |
|
Silver Grade |
g/t |
15.3 |
15.3 |
|
Daily Throughput |
tpd |
4,200 |
4,200 |
|
Annual Processing Rate |
Mtpa |
1.51 |
1.51 |
|
Mine Life |
years |
18.4 |
18.4 |
|
Blended Recoveries³ |
|
|
|
|
Copper |
% |
91.1% |
91.1% |
|
Zinc |
% |
79.8% |
79.8% |
|
Gold |
% |
88.6% |
88.6% |
|
Silver |
% |
63.2% |
63.2% |
|
Average annual production (in concentrate) |
|
|
|
|
Copper Equivalent - First 15-years² |
Mlbs CuEq |
72.8 |
72.9 |
|
Copper Equivalent - Life-Of-Mine² |
Mlbs CuEq |
65.4 |
65.6 |
|
Copper |
Mlbs Cu |
34.5 |
34.5 |
|
Zinc |
Mlbs Zn |
58.6 |
58.6 |
|
Gold |
koz Au |
17.5 |
17.5 |
|
Silver |
koz Ag |
435.2 |
435.2 |
|
Life-of-Mine (LOM) Operating Costs |
|
|
|
|
Total Operating Costs⁴ |
C$t/milled |
$73.55 |
$73.55 |
|
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