Northcliff Resources (NCF-T) has shone a spotlight on its Sisson tungsten-molybdenum project in New Brunswick with a recent feasibility study confirming it could economically mine the deposit for 27 years, sending its shares climbing.
Northcliff gained 33% or 10¢ on the news to end at 40¢. It added another 12.5% in the following day to close at 45¢.
The study, prepared by Denver-based Samuel Engineering, demonstrates Sisson could annually produce 557,000 metric tonne units of tungsten trioxide (WO3) in ammonium paratungstate (APT) and 4.1 million lbs. molybdenum in concentrate for 27 years, with output for both metals trending higher in the initial years.
Annual production for the first five years should average 698,000 mtu WO3 and 4.1 million lbs. molybdenum, the company says, noting Sisson could potentially become the largest tungsten producer outside China.
The large-scale project comes with a $579-million price tag, which Northcliff estimates will take four and half years to recoup on an after-tax basis. It has a post-tax net present value of $418 million and an internal rate of rate of 16.3%.
Depending on financing as well as environmental and construction permits, the construction of the project should begin next year with commissioning slated for 2016.
The company’s president and CEO Chris Zahovskis said he’s “confident” that Sisson will receive the green light from regulators to start construction in 2014, adding the company is actively seeking partners or offtake tungsten buyers for Sisson to help fund the project.
According to a recent corporate presentation, Sisson based on expected annual throughput is the biggest tungsten development project in the pipeline, with Masan Resources’ Nui Phao project in Vietnam in second, followed by Woulfe Mining’s (WOF-V) Sangdong deposit in South Korea, says Northcliff.
Sisson boasts 334 million tonnes of reserves containing 22 million mtu WO3 and 155 million lbs. molybdenum at a net smelter return cutoff grade of $8.83 per tonne. The mine plan incorporates only 281 million tonnes of total reserves, which should be processed at a milling rate of 30,000 tonnes per day throughout the mine life. The proposed open-pit mine has a waste-to-ore strip ratio of 1-to-1. Average recoveries of 77% and 82% are expected respectively for tungsten and molybdenum.
The study assumes long-term average metal prices of US$350 per mtu for ATP and US$15 per lb. for molybdenum, which falls in the “low-to-medium range” of estimates provided by the London-based Roskill Consulting Group.
Long-term tungsten prices are forecast to increase “irrespective of the supply/demand balance,” Northcliff writes quoting a report by Roskill, explaining tungsten production costs have been climbing globally causing Chinese producers to be more sensitive than before to higher prices for labour, equipment and consumables.
China, which has dominated the tungsten market as the world’s top producer and supplier, is restricting its exports to serve its domestic market as its tungsten mines reach exhaustion, says Northcliff.
“Analogous to rare earths, there is significant potential for new non-Chinese supply to fill a growing ROW (rest of world) tungsten supply-demand gap,” it states in the presentation.
“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.”
Sisson, located 100 km northwest of Fredericton, is well-positioned near roads, rail and tidewater and in a stable mining-friendly province. The Fraser Institute ranked New Brunswick as the top global mining jurisdiction last year.
Tungsten is often used as an alloy in steel to increase hardness, elasticity and strength. It is extremely heat resistant, boasting the highest melting point of any metal.
Molybdenum, expected to generate up to a quarter of Sisson’s revenue, is also employed as a stainless steel and steel alloy.
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