PolyMet Reaffirms Economic and Technical Viability Of NorthMet Project
Business Wire•March 27, 2018
ST. PAUL, Minn.--(BUSINESS WIRE)--
Poly Met Mining Inc., a wholly-owned subsidiary of PolyMet Mining Corp. (together “PolyMet” or the “company”) TSX: POM; NYSE AMERICAN: PLM – reports it has filed an updated technical report with Canadian and U.S. securities agencies that reaffirms the economic and technical viability of the NorthMet copper-nickel-precious metals project located near Hoyt Lakes, Minnesota.
The updated NorthMet Technical Report, NI 43-101, dated March 26, 2018, (“2018 Technical Report”) contains plans and cost estimates for construction and operation of the NorthMet Project. It updates a Definitive Feasibility Study originally published in 2006 and last updated in 2012 and amended in 2013 that details the economics for the mine and processing operation.
The report provides technical and economic details for development of the mining operation in two distinct phases. Phase I involves development of 225 million tons – nearly one-third of NorthMet’s known resource – into an operating mine processing 32,000 tons per day over a 20-year mine life. It also includes rehabilitating the former LTV Steel Mining Company processing plant.
Capital costs for Phase I are estimated at $945 million and include refurbishment of the existing primary crushing circuit and replacing the existing rod and ball mill circuits with a new, modern semi-autogenous grinding (SAG) mill, ball mill and flotation circuit. It also includes rail upgrades, mining equipment and a state-of-the-art wastewater treatment plant.
Phase II involves construction and operation of a hydrometallurgical plant to treat nickel sulfide concentrates into upgraded nickel-cobalt hydroxide and recover additional copper and platinum-group metals. While development of Phase II will be at the company’s discretion, both phases are currently being permitted and are included in the Final Environmental Impact Statement and draft permits. Phase II would increase the project’s capital costs by approximately $259 million.
“This report reaffirms the technical and financial viability of the 32,000 tpd case for which the final EIS and draft permits have been issued. Our focus remains on obtaining final permits under the 32,000 tpd permit case, meeting our environmental and financial assurance obligations under the terms of those permits, and obtaining the necessary financing to build the project,” said Jon Cherry, president and CEO. “We are making significant progress on all of those fronts.”
Technical Report Key Points
Total Proven and Probable mineral reserves for the project are estimated to be 255 million tons within the pit footprint evaluated in the FEIS and draft permits, with recovered copper equivalent grade of 0.584 percent (after dilution and recoveries).Measured and Indicated resources total 649 million tons, with recovered copper equivalent grade of 0.496 percent.Inferred Resources are estimated at 509 million tons, with an estimated recovered copper equivalent grade of 0.489 percent.After tax, net present value of future cash flow discounted at 7 percent is $173 million for Phase I, and $271 million inclusive of Phase II.After tax, internal rate of return is 9.6 percent for Phase I and 10.3 percent inclusive of Phase II.Improvements in metal price assumptions (based on market consensus pricing) has helped offset increases in capital, operating and financial assurance expenses.Under Phase I, which only includes revenues based on concentrate sales, payable metals in the concentrate are estimated at 1.1 billion pounds of copper, 133 million pounds of nickel, a combined 1.1 million ounces of platinum, palladium and gold, 1.0 million ounces of silver and 5.6 million pounds of cobalt.Under Phase II, payable metals in enriched copper concentrates and products from the hydrometallurgical plant are estimated at 1.2 billion pounds of copper, 174 million pounds of nickel, 1.6 million combined ounces of platinum, palladium and gold, 1.0 million ounces of silver and 6.2 million pounds of cobalt. Palladium is the predominant precious metals group (PGM) product, totaling 1.2 million ounces.A summary of PolyMet’s mineral reserves and mineral resources is provided in the tables below. Please refer to the 2018 Technical Report for important disclaimers on the viability or otherwise of reported mineral resources.
Mineral Reserve Statement – January 2018
| | Class | | Tonnage(x 1,000)
| | Grades (Diluted) | | | Copper | | Nickel | | Platinum | | Palladium | | Gold | | Cobalt | | Silver | | NSR | | Cu-Eq | | | | (%) | | (%) | | (ppb) | | (ppb) | | (ppb) | | (ppm) | | (ppm) | | $/ton | | (%) | | Proven | | 121,849 | | 0.308 | | 0.087 | | 82 | | 282 | | 41 | | 74.81 | | 1.11 | | 19.87 | | 0.612 | | Probable | | 132,820 | | 0.281 | | 0.081 | | 78 | | 256 | | 37 | | 74.06 | | 1.02 | | 18.02 | | 0.559 | | Total | | 254,669 | | 0.294 | | 0.084 | | 80 | | 268 | | 39 | | 74.42 | | 1.06 | | 18.90 | | 0.584 |
Notes:
| (1)
| | Mineral reserve tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding.
| (2)
| | All reserves are stated above a $7.98 NSR cutoff and bound within the final pit design.
| (3)
| | Tonnage and grade estimates are in imperial units.
| (4)
| | Total tonnage within the pit is 628,499 ktons; average waste: ore ratio = 1.47.
| (5)
| | Cu-Eq values are based on the metal prices in Table 15-2 and total mill recoveries in Table 15-3 of the 2018 Technical Report and diluted mill feed.
| (6)
| | Copper equivalent (CuEq) = ((Cu head grade x recovery x Cu Price) + (Ni head grade x recovery x Ni Price) + (Pt head grade x recovery x Pt Price) + (Pd head grade x recovery x Pd Price) + (Au head grade x recovery x Au Price) + (Co head grade x recovery x Co Price) + (Ag head grade x recovery x Ag Price)) / (Cu head grade x recovery x Cu Price).
| (8)
| | NSR values include post property concentrate transportation, smelting and refining costs and payable metal calculations.
| | | |
Summary Mineral Resource Statement for the NorthMet Project Inclusive of Mineral Reserves
| | Class | | Tonnage(Mt)
| | Grades (Undiluted) | | | Copper | | Nickel | | Platinum | | Palladium | | Gold | | Cobalt | | Silver | | NSR | | Cu-EQ | | | | (%) | | (%) | | (ppb) | | (ppb) | | (ppb) | | (ppm) | | (ppm) | | $/ton | | (%) | | Measured | | 237.2 | | 0.270 | | 0.080 | | 69 | | 241 | | 35 | | 72 | | 0.97 | | 19.67 | | 0.541 | | Indicated | | 412.2 | | 0.230 | | 0.070 | | 63 | | 210 | | 32 | | 70 | | 0.87 | | 16.95 | | 0.470 | | M&I | | 649.3 | | 0.245 | | 0.074 | | 65 | | 221 | | 33 | | 71 | | 0.91 | | 17.94 | | 0.496 | | Inferred | | 508.9 | | 0.240 | | 0.070 | | 72 | | 234 | | 37 | | 66 | | 0.93 | | 17.66 | | 0.489 |
| Source: Hard Rock Consulting, LLC, January 2018 | Notes:
| (1)
| | Mineral resources are not mineral reserves and do not have demonstrated economic viability.
| (2)
| | All resources are stated above a $7.35 NSR cut-off. Cut-off is based on estimated mining, processing and G&A costs. Metal Prices and metallurgical recoveries used for the development of cut-off grade are presented in Table 14-33 of the 2018 Technical Report.
| (3)
| | Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding.
| (4)
| | Cu-Eq (copper equivalent grade) is based on the mill recovery to concentrates and metal prices presented in Table 14-33 of the 2018 Technical Report.
| (5)
| | The Measured and Indicated mineral resources are inclusive of the mineral reserves.
| | | |
In addition to updating the economics of the 225 million ton, 32,000 tpd case for which draft permits have been released, the report evaluates preliminary economic assessments of mining an intermediate case of 290 million tons of classified resources (96.5 percent Measured and Indicated and 3.5 percent Inferred) at a rate of 59,000 tpd, and a full-scale case that would mine 730 million tons (65.4 percent M&I and 34.6 percent Inferred) at a production rate of 118,000 tpd.
The 59,000 tpd and 118,000 tpd upside cases suggest potential valuations that range from $750 million to more than $2 billion (NPV) and IRRs that range from 18 percent to 24 percent (including both Phase I and II). The 59,000 tpd and 118,000 tpd upside cases, however, would be subject to additional engineering and environmental review and permitting. Any such opportunities would be subject to various regulatory requirements and would require additional capital investment. The included Inferred Resources would have to be successfully converted to Measured and Indicated before any prefeasibility studies could commence.
“We felt it important to quantify at a preliminary level what the potential economics of the entire NorthMet resource could be as we move forward with plans for the 32,000 tpd case,” Cherry said.
“We have already invested 13 years and more than $300 million in this project – most of that spent in Minnesota – and we are now poised to bring nearly $1 billion in new investment, hundreds of new jobs, and generate hundreds of millions of dollars in annual economic benefits for the region,” Cherry said. “We know how important this project is to the Iron Range and we have to do it right.”
For greater certainty, the preliminary economic assessments for the two upside cases referred to herein are preliminary in nature, include inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the results of these preliminary economic assessments will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability and there is no certainty that mineral resources will become mineral reserves.
The NorthMet Technical Report, NI 43-101, dated March 26, 2018, was produced by Tucson, Arizona-based M3 Engineering & Technology Corporation. The report is based on detailed engineering studies as well as the Final Environmental Impact Statement and recently released draft environmental permits for NorthMet. PolyMet also retained Independent Mining Consultants, SENET, Hard Rock Consulting and Barr Engineering to contribute to the study. The report has been filed on SEDAR and EDGAR and is on the company’s website at www.polymetmining.com.
This release has been reviewed and approved by: Zachary Black, SME-RM, Hard Rock Consulting, Jennifer Brown, P.G., Hard Rock Consulting; Nicholas Dempers, Pr.Eng., SAIMM, SENET; Thomas Drielick, P.E., M3 Engineering; Art Ibrado, P.E., M3 Engineering; Erin Patterson, P.E., M3 Engineering; Thomas Radue, P.E., Barr Engineering Co.; and, Herbert Welhener, SME registered member, Independent Mining Consultants; who are all Independent Qualified Persons within the meaning of NI 43-101.
Investor call
PolyMet will host an investor call and webcast to discuss the updated feasibility study at 10 a.m. Central on Wednesday, March 28, 2018.
To join the call, please dial 1.877.705.6003 (U.S.) or 1.201.493.6725 (international) approximately 15 minutes prior to start time. The earnings call and slide presentation also will be broadcast live over the internet and can be accessed on the Investor Relations page of the company’s website at www.polymetmining.com.
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