PEA overviewHere is my version of the PEA coles notes. These are things that have not explicitly been noted or that may have a positive or negative impact on the project. Some of them may be duplicates of what our good friend Eodway posted previously:
GOOD!
The main mineralized zone on the Property lies between an elevation of 1,250 m and 1,700 m on a moderate to steep south-facing slope.
CONCERN?
The Property is comprised of 345 mineral claims in four groups totaling 5,933 hectares (ha). The claims were staked as early as 1952. Each claim is a Quartz Mining Claim with expiry dates that range from February 2015 to February 2032. The claims cover the known Wellgreen deposit as well as the Quill, Burwash and Arch properties. The Wellgreen deposit is located on 13 Quartz Mining Leases which all have an expiry date of December 5, 2020. The additional Wellgreen Platinum claims are located contiguous to the known deposit. The Wellgreen Platinum claims are 100% owned, directly or indirectly, by Wellgreen Platinum. Wellgreen Platinum’s interest in the Property also consists of two surface leases covering 91.4 ha, which expire between 2022 and 2034.
GOOD!
Laboratory scale testing in 2013 and 2014 was performed by SGS Lakefield Research Limited (SGS) and XPS Consulting & Testwork Services (XPS), a Glencore company,
GOOD!
Testing has shown that the material from each domain can be processed in the same circuit with variances related to grind size, conditioning time, pH and the use of magnetic separation with the majority of reagent selection applied across all the domains.
Testing was conducted to evaluate the benefit of adding a magnetic separation process to the flowsheet. Magnetic separation is a proven technology utilized in many operating Ni-PGM mines. The magnetic separation process was successful in capturing additional PGMs, nickel and copper through regrinding of a modest volume of magnetic material followed by conventional flotation, particularly in the Clinopyroxenite/Pyroxenite and Peridotite domains
GOOD/NEEDS WORK
Measured, Indicated and Inferred resources were used in the life-of-mine (LOM) plan and Inferred mineral resources represent approximately 50% of the material planned for processing.
GOOD TO KNOW
The pre-stripping period is scheduled to be one year in duration and provides the necessary construction materials for the tailings dam and other surface infrastructure facilities.
The pre-production period is scheduled to last for one year, mining 8.1Mt of material for construction of the tailings management facility (TMF).
There are three tailings streams in the flowsheet; the magnetic tailings, the magnetic flotation tailings and the sulphide flotation tailings. There is potential for further processing of the latter two streams.
GOOD TO KNOW
Baseline environmental studies have been commissioned to fulfill the requirements of an Executive Committee Screening of YESAB.
Completion of the baseline studies is anticipated to take one field season for the purposes of the YESAB submission.
GOOD!
The most significant potential opportunities associated with the Wellgreen project are improved metallurgical recoveries by secondary processing and additional metallurgical & process testing, exotic PGM and silver credits, reduced waste mined with steeper pit walls, expansion of the mine life and production levels pit and block caving as an alternative to a phase 5 pit expansion or block caving, and possible connection to grid power.
JDS recommends that the project progress to a Pre-feasibility Study (PFS) with the necessary work conducted in two phases, and with Phase 2 contingent on the success of Phase 1.
The key areas for follow up work of Phase 1 of the pre-feasibility program in 2015 that JDS recommends Wellgreen Platinum pursue are listed below:
Conduct initial drilling within the pit models designed to further upgrade Inferred Mineral Resources to Measured & Indicated Mineral Resources and test extensions of mineralization within the pit where it is unclassified, with the cost of such activities estimated to be $[3.5 million]
Implement additional metallurgical test programs in order to optimize recoveries from the main geo-metallurgical domains and conduct more detailed testing and assessment of potential secondary processing options, with the cost of such activities estimated to be $[200,000]
Commence evaluation of the cost and benefits of bringing the exotic PGMs such as rhodium, osmium, iridium and ruthenium into the mineral resource estimate, with the cost associated with such an evaluation estimated to be $[100,000]
Conduct additional geotechnical work to improve understanding of pit slopes and mine infrastructure, with the cost of such work estimated to be $[200,000]
Conduct open pit trade-off studies, with the cost of such work estimated to be $[100,000]
CONCERN? (involved with Imperial Metals)
The tailings management facility sub-section 18.22 was provided by Knight Piésold (KP).
CONCERN?
Northern Platinum held a similar but larger (62.7 ha) lease parcel from November 1, 2001 until October 31, 2011. This lease included the historic Hudson Yukon Mining mill site used in the 1970s as part of the Wellgreen project underground mining operation. Since the late 1990s, Northern Platinum used the old mill site for its core shack and as access to the Property. Pursuant to the requirements of the previous surface lease, which included the old mill site, Northern Platinum finalized a Reclamation Plan for the Mill Site, which was approved by the Government of Yukon in early 2010. Final accepted closure of the Reclamation Plan remains outstanding and is in discussion with the Government of Yukon.
CONCERN? DRILL QUILL?
In the Yukon, the Quartz Mining Land Use Regulation and the Placer Mining Land Use Regulation consist of a classification system based on varying levels of specific activities. These threshold levels categorize exploration activities into four classes of operation. Classes 1 through 4 represent activities with increasing potential to cause adverse environmental impacts.
Wellgreen Platinum currently holds two Class 3 Operating Plan permits through the Yukon Government Mining Land Use Division (see Figure 4.4).
Permit LQ00323b covers the claims on which the current mineral resource has been delineated as well as the upper camp of the Property located on surface Lease 115G05-001. This permit expires July 20, 2021.
Permit LQ00259a covers the majority of the Burwash Property claims. This permit expires May 14, 2017.
In addition, exploration at the Quill claims is currently taking place under a Class 1 threshold i.e. in the Yukon a written Class I permit is not issued.
GOOD TO KNOW
One small patch of hydrocarbon contamination remains underneath a site maintenance building. It was left during the initial clean up as it is being utilized. Once the structure is demolished, delineation and remediation will take place.
Some additional reclamation activities remain outstanding associated with the historic HudBay Mill Site and 1970s tailings impoundments which are not on Wellgreen Platinum controlled lands. The Government of Yukon, the Federal Government of Canada and HudBay, with technical support from Wellgreen Platinum, are in discussions concerning the final reclamation and restoration of these historic sites. The outstanding amount with respect to these additional reclamation activities is estimated to be approximately C$1.5 million.
GOOD TO KNOW
Wellgreen Platinum has installed a UV filtration system that the surface water must filter through prior to being dispensed for drinking as per the Yukon Public Health and Safety Act regulations. All local creeks freeze solid during the winter months, therefore in order to maintain a year round camp or mining operation, drilling of water wells will be required.
It has been assumed that sufficient water supplies from pit dewatering will be available for the mill processing needs of the project.
GOOD!
Based on drill information the northernmost sill, called the North Arm, and the main Wellgreen project sill appear to be contiguous at depth.
The North Arm Zone was tested in 1988 and 2005 by limited drilling and was determined to have a sub- vertical dip. The information collected to date suggests that the North Arm Zone is relatively narrow in comparison with the main Wellgreen project body at surface, but it does represent a prospective area of nickel-copper mineralization that warrants further work and may be contiguous with the main Wellgreen project Intrusion at depth.
A small, undocumented program was conducted in 2005. This program focused on the North Arm, specifically on a showing with very high PGE concentrations named the BSB zone. A total of four holes were completed totaling 67.05 m. All drilling was run at 5 ft intervals (1.52 m).
Four holes drilled in 2005 were not sampled and lay outside of the present resource limits.
GOOD!
Where possible, LCT results were used to estimate the concentrate grade- recovery relationship. To date, there have been no LCTs on the Peridotite/Dunite domain; however, this will change during the next stage of testing.
To estimate the silver content by geologic domain, the assay data from samples selected for metallurgical testing beginning in late 2012 were analyzed. In total, 156 samples from six drill holes (i.e., WS12-203, WS12-204, WS12-208, WS12-210, WS12-213 and WS12-214) across the Wellgreen project were analyzed for silver content. As a conservative measure, the silver content was assumed to be zero where results were below the detection limit for silver (0.5 g/t); this resulted in a global average of 1.10 g/t silver.
There is very limited data available regarding silver recoveries to concentrate; historical information provided only silver grades in concentrate without head grades. One data point from LCT-80 conducted by SGS in 1988 indicates that silver recovery was 81.7% based on a concentrate grade of 30.7 g/t and a calculated head grade of 3.22 g/t. Therefore, it is estimated that silver recoveries, to a PEA level, would be approximately 75-80% after detailed locked cycle tests were optimized.
Therefore, the best silver grade data by geologic domain is from the 2012 drill core samples used for metallurgical testing. Based on these samples, it is predicted that continued optimization during the locked cycle tests for specific metallurgical domains followed by batch test programs could produce the following estimated average silver grades:
2.256 g/t for gabbro;
0.675 g/t for clinopyroxenite/pyroxenite; and
0.595 g/t for peridotite.
Although there is minimal data for silver recoveries to concentrate, it is predicted that recovery would be approximately 80% for Gabbro/Massive Sulphide, 75% for Clinopyroxenite/Pyroxenite and 65% for Peridotite/Dunite. It is anticipated that this will result in a blended recovery of approximately 77% in the 2015 PEA LOMP.
The combination of silver grades and assumed recoveries is expected to generate silver in concentrate grades that range between 15 g/t and 24 g/t; this is within the range of concentrates demonstrated in past metallurgical testing.
No economic value was attributed to the silver in this PEA. Additional testing will be conducted in the next round of studies to better quantify the grade and economic contribution of silver to the project.
GOOD!
A strong correlation exists between the grade of nickel and the content of exotic PGMs. As shown in Table 13.33, the exotic PGMs can increase the PGM content by more than 40% in higher grade material (i.e., nickel greater than 0.89%, based on data from HudBay and Dr. Hulbert), and between 16% and 25% in material that has an average nickel grade of between 0.28% to 0.36%. The 2015 PEA base case shows nickel grades in the first 16 years of production ranging from 0.25% to 0.36%, and, based on these grades, the data suggests that exotic PGMs could increase Pt+Pd grades by an estimated 15% or more.
On average, rhodium accounts for 26% of the exotic PGMs, ruthenium 31%, iridium 21% and osmium 22%. At current metal prices, approximately 60% of the value of exotic PGMs would be from rhodium, which is comparable in value to platinum.
The Property drill database was analyzed to determine the exotic PGM-content by rock type; the results are shown in Table 13.34. As expected, exotic PGMs have the largest impact on total PGM grades in Gabbro/Massive Sulphide domain, where they increase the Pt+Pd grade by an average of 54%. Pt+Pd grades are increased by 15% in the Clinopyroxenite/Pyroxenite domain and 17% in the Peridotite/Dunite domain.
The strongest correlation was found between nickel and exotic PGMs (Figure 13.21), followed by palladium and exotic PGMs.
4E = 0.0381e(3.0782 x Ni grade)
This formula predicts total exotic PGMs of 0.098 g/t when the nickel grade is 0.30%. Applied to the 2015 PEA model, it suggests an increase in the grade of total PGMs by approximately 15%, compared to Pt+Pd alone.
There has been limited testing of exotic PGMs recoveries to concentrate. In early 2014, XPS conducted Test 13 on peridotite; it indicated that the bulk third cleaner concentrate contained 0.27 ppm rhodium, 0.43 ppm ruthenium, 0.26 ppm iridium and 0.11 ppm osmium (total = 1.07 g/t). Results are shown in Table 13.36. Head grades were not given for the exotic PGMs, but predicted 4E content was 0.105 g/t based on the 0.33% nickel grade. Recoveries would need to be approximately 22% to achieve 1.07 g/t in the total cleaner concentrate; this is very close to the platinum recovery in this peridotite sample of 21.6%.
Recovery data from LCT-1 by SGS in 2012 indicated exotic PGM recoveries of 23.1% for Rh, 17.3% for Ru, 20.5% for Ir and 22.4% for Os (average of 20.8%). These recoveries are similar to the combined platinum recovery of 24.6%
GOOD TO KNOW
The wide variation in work indices between domains indicates that it might be possible, when blending mineralized material from different domains, to achieve the higher recoveries tested for the lower grade domains. The lower grade domains are easier to grind and will, therefore, be finer than the higher grade domains. Testing the lower grade domains has shown that the finer the grind, the better the recovery; although this hypothesis needs to be confirmed with additional work.
The tests performed by SGS and XPS in 2014 focused on peridotite material, and additional testing is required to further refine recovery of this lower grade domain. The recent peridotite results were incorporated into the plant design parameters.
GOOD TO KNOW
The optimized pit shells were reviewed, whereupon it was determined that a four stage approach would be developed for the economic analysis. The four stages (pit shell 25, pit shell 28, pit shell 29 and the ultimate pit shell 32) utilized in the 2015 PEA base case cash flow as well as the fifth stage (pit shell 33), which is considered to be an opportunity and is not part of the 2015 PEA economic analysis,
GOOD?
The ultimate design (Stage 4, Figure 16.3) and pushbacks are preliminary and, therefore, do not include ramp access in the design. During pre-feasibility, trade off studies for extraction and location of the ramp will be completed. Due to the orientation of the deposit relative to the topography the amount of waste development required to access the bottom of the pit is considerably less than a comparable open pit mine in flat topography.
CONCERN?
In addition to the mafic-ultramafic intrusives and metasediments, andesite and gabbro dykes also exist within the pit area. The dykes are expected to be of generally good rock quality but, given their low percentage of the overall rock mass, they cannot be relied upon for strength at this stage of investigation.
Hydrogeological conditions are not well known for the site; however, SRK understands that the exploration decline located within the central portion of the pit is flooded below the portal elevation (approximate elevation 1280 m) suggesting pit slopes will be at least partially saturated. The orientation and extents of major structures and jointing are also unknown at this time and may have significant impacts on achievable slope angles at later stages of project development.
SRK believes the estimates of suitable pit slope angles are reasonable for the anticipated rock mass conditions based on available information and compared to other operating open pit mines. As with all PEA level assessments, recommendations for pit slope angles could change once actual geotechnical drilling and testing have been completed and dominant structural conditions are known.
WHAT PRICES?
In addition, Caterpillar has conducted research with LNG fueled haulage trucks that indicated there is potential to attain a 16% savings on fuel expenditures by using LNG. For the purpose of this study, SNC-Lavalin reduced haul truck fuel consumption costs by 16%.
GOOD TO KNOW
From visual observations provided by Wellgreen Platinum personnel it was determined that both the vertical and the horizontal stresses continue to be at a low level. Therefore, as part of the 2015 PEA, the ground support system of bolting, mesh and shotcrete has been provided to prevent unravelling and support wedges. In 1970, the mine had used timber sets to maintain access to the lateral access drifts.
More information is required determine the complete ground support design to manage the stress regime as mine development to depth continues.
GOOD TO KNOW
LNG, for the purposes of the 2015 PEA, is considered to be delivered from Fort Nelson, British Columbia. In addition, there is potential to obtain LNG supply from Prudhoe Bay or Cook Inlet, Alaska (Figure 18.2). There are also several LNG suppliers that have expressed an interest to ship LNG from the lower main land, British Columbia, via ocean freight.
Standalone diesel generators will supply 2 MW of power during site construction. These will be rented to reduce project capital costs.
For the purposes of the 2015 PEA, the cost of the power is $0.14/kWh, which includes maintenance expenditures of $0.015/kWh.
GOOD TO KNOW
This PEA assumes the smelter terms shown in Table 19.1 for a bulk concentrate from the Wellgreen project (in US dollars) & based on smelting at a non-Chinese smelter.
Future work will also continue to look at producing a separate copper concentrate to confirm that the bulk concentrate output flowsheet is the optimum approach and in case better concentrate terms are available for two concentrates instead of a single bulk concentrate.
There is currently a strong trend to use smelter terms based on the Chinese model. This model has the unique feature of not having treatment or refining charges, however, it has much lower payables than the model used in the 2015 PEA economics. Potential Chinese model values are shown in Table 19.2.
Chinese nickel smelters generally are not designed to treat Cu and PGMs in their concentrates and, as a result, give reduced credit for these metals. Smelters in North America and Europe are better set up to recover these by-products.
GOOD TO KNOW
In order to monitor potential changes related to the development of this project, water, sediment quality and aquatic biology baseline studies will be conducted in 2015. Monthly Water Quality sampling has been undertaken since 2012 at 14 locations in the project area. A total of 19 monthly datasets, from October 2012 to May 2014, of sample data have been gathered from locations on and tributaries to the Nickel, Quill, Swede Johnson and Arch Creeks representing the watershed catchments potentially affected by the Project.
These studies will continue and may be expanded upon in 2015 toward the development of a project proposal.
The wildlife monitoring program will need to be expanded in 2015 to include breeding bird surveys, raptor surveys, carnivore/den surveys, vegetation and habitat mapping, and any additional ungulate surveys identified.
Wellgreen Platinum will be developing a number of management plans as part of Mine Licensing application process as the Wellgreen project moves toward development. These management plans include but are not limited to:
Spill Response;
Emergency Response;
Reclamation and Closure;
Wildlife;
Environmental Monitoring;
Explosives Management;
Fuel Storage;
Water Quality, Erosion and Sediment Control;
Hazardous Materials and Waste Management;
Heritage and Archaeological Sites Protection;
Access Management.
CONCERN?
The project requires an Executive Committee screening because it is a quartz mining program that involves the movement of 250,000 t or more of rock. Projects assessed by the Executive Committee of YESAB generally require between one and three years (not more than 918 days, including time required for a government decision).
OK
In 2015, Wellgreen Platinum will undertake data collection towards a socio-economic assessment.
GOOD OR BAD?
For the purpose of this PEA all future rock development has been considered an operating cost. In future detailed technical reports this will be split between capital expenditures and operating expenditures.
CONCERN?
All CAPEX costs are expressed in Q4 2014 CDN dollars. There are no allowances for escalation in Phase 1 or 2 of the project. The estimated costs include mine pre-stripping, mine development, site preparation, process plant, first fills, buildings, ancillary facilities, road works, power plant and utilities. The estimates are considered to have an overall accuracy of +/-30% and assume the project would be developed on an EPCM basis.
The estimates of CAPEX and OPEX have been developed specifically for this project and are summarized in Section 21 of this report (presented in 2014 dollars). The economic analysis has been run with no inflation (constant dollar basis).
GOOD AND BAD?
Results are presented on a 100% equity basis; and no management fees or financing costs have been considered.
YUKON WANTS $2.2 BILLION!
Total taxes for the life of the project amount to $2,265.4M for the Base Case scenario.
CONCERNS
The most significant potential risks associated with the Wellgreen project are the ability to convert inferred resources to indicated and measured, geotechnical stability of pit walls and tailings facility, lower metal recoveries than those projected, the ability to produce a marketable concentrate, waste storage capacity, operating and capital cost escalation, permitting and environmental compliance, unforeseen schedule delays, changes in regulatory requirements, ability to raise financing and metal prices.
GOOD
Based on the encouraging recovery results from the initial Platsol hydrometallurgical testing, additional material from each of the three geo-metallurgical domains will be tested using hydrometallurgical processes. Work will also be completed on projected capital and operating costs to determine whether the use of hydrometallurgical processing as a secondary processing approach will improve the economics of the Wellgreen project. This work will compare the benefits of increasing the total PGM and base metal recoveries to the production of a concentrate.