From Today's IDSM Quarterly Report:The 2010 Technical Report was prepared by Gilbert Rousseau, P.Eng. and Claude Duplessis, P.Eng. of SGS, who are the Qualified Persons responsible for the technical information contained in this press release. A summary of the 2010 Technical Report is as follows:
| | ? | SGS estimated that using a 1.5% graphitic carbon cut-off and 10% mining dilution, the Bissett Creek graphite deposit contains 14,641,000 tonnes of indicated resources grading 2.24% graphitic carbon and 18,027,000 tonnes of inferred resources grading 2.21% graphitic carbon. The deposit remains open along strike to the north and south and down dip to the east. Drill holes north of the current resources, which were not used in the estimate, intersected the same style and tenor mineralization. |
| | ? | The preliminary economic assessment contemplates a conventional open pit mining operation and flotation concentrator processing 2,500 tonnes of graphite bearing rock per day to produce an average of 18,500 tonnes of large flake, high purity (+92%C) graphite concentrate per year. Recoveries are expected to average 94% and the waste to potentially economic mineralized rock ratio averages .66 to 1 over the 45 year project life. |
| | ? | Capital costs are estimated at $62.9 million assuming contract mining. Based on an average selling price of CDN $1,700 per tonne and using a 10% discount rate, the project has a pre-tax net present value of $77.6 million and an internal rate of return of 24%. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There are no mineral reserves on the Bissett Creek Property. |
| | ? | The project is very sensitive to changes in prices. With a 25% increase in prices the project has a pre-tax NPV of $154.6 million and an IRR of 37%. At 25% lower prices the project has a pre-tax NPV of less than $1M but still has a 10% IRR. |
| | ? | 75% of resources expected to be processed during the first 19 years of operation are in the indicated category and Bissett Creek would have a project life of approximately 17 years based on indicated resources alone. |
| | ? | The preliminary economic assessment includes inferred mineral resources which are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. Furthermore, there is no certainty that the results projected in the preliminary economic assessment will be realized and actual results may vary substantially. |
| | ? | A feasibility study on the Bissett Creek deposit was completed by Kilborn Engineering Ltd., KHD, Bacon Donaldson and Associates Ltd. and Cominco Engineering Services during the 1980s including metallurgical test work, pilot plant testing and bulk sampling. Historical information is presented for informational purposes only. It was not completed in accordance with NI 43-101 and in accordance with NI 43-101, it should not be relied upon. |
| | ? | While past work predated NI 43-101, it is the opinion of SGS that it has significant value, and in conjunction with the results of the preliminary economic assessment, enabled SGS to recommend that the Company proceed with a prefeasibility study. As part of the prefeasibility study, past metallurgical testing should be validated, an optimized flowsheet developed and infill drilling carried out to verify the block model and increase the quality of the resource. |
| | ? | There is no guarantee that additional drilling will upgrade inferred mineral resources to a higher category and there is no guarantee that the results of the prefeasibility study will be positive or will support a decision to initiate construction. |
| | ? | The 2010 Technical Report recommends a $1.25 million work program including $250,000 for a prefeasibility study, $500,000 for permitting and $100,000 for bench scale pilot plant testing. The Company and SGS decided not to construct an on-site pilot plant due to the extensive metallurgical work done on the Bissett Creek Property in the past. |
The proposed development plan at Bissett Creek relies on standard mining and processing technologies. Because there are no major or unusual technical or engineering challenges the Company intends to make a production decision based on the results of the prefeasibility study. If the results of the prefeasibility study are positive, the Company will begin detailed engineering and design work, order long lead time equipment and begin site preparation work, all subject to the availability of financing. However, as part of the detailed engineering and design process the Company plans to produce an engineered cost estimate, similar in accuracy to a full feasibility study, which will enable the Company to confirm capital costs to a greater degree of precision before proceeding with full construction.
Northern began to implement the recommended work program in July, 2010 and has completed the drilling program at a cost of approximately $450,000 and has spent approximately $65,000 on metallurgical testing, $190,000 on the prefeasibility study and $300,000 on environmental and permitting. In addition, Northern has spent in excess of $100,000 on hydrogeological drilling and $40,000 on an airborne topographical survey and its consultants have advised that the costs to complete the prefeasibility study and the environmental and permitting work are $250,000 and $220,000 respectively. In addition, Northern plans to spend $250,000 on a pilot plant test in September of 2011 and $250,000 on a follow up drilling program.
Since the original completion of the Technical Report in July 2010 (and prior to its revision in February 2011), the Corporation has completed the exploration and infill diamond drilling program which consisted of approximately 2,900 meters of drilling in 51 holes. 22 holes were infill holes designed to confirm the existing resource model and to upgrade inferred resources to the indicated category. 29 holes were expansion holes which were drilled with the objectives of increasing the size of the resource and demonstrating the potential for further expansion in the future with more drilling. All 51 holes were fairly consistently mineralized with graphite. Potentially economic mineralization was intersected in 50 holes with widths and grades similar to historical drilling on the Bissett Creek Property. Northern has not yet received all assays from the QA/QC program which are required before the actual drilling results can be verified by an independent QP and released. This summary of drilling results is provided by the Corporation and has been approved by Don Baxter, President who is the QP responsible for its technical content.
Once the new drill results have been compiled and analysed, the Corporation intends to carry out a small infill drill program to better define any new higher grade areas that have been identified so that they can be incorporated into the mine plan in the early years of operation. It is expected that this program will consist of approximately 30 holes with an average depth of 50 meters for a total program of 1,500 meters. The budget for this program is $225,000.
Metallurgical testing is underway at SGS Lakefield which is designed to confirm the results of extensive testing done in the past and to develop a flowsheet for a pilot plant that will be used as a basis for confirming and optimizing the flow sheet for a commercial scale mill on the Bissett Creek Property. Initial results from the metallurgical testing have confirmed the historical high, 90 to 95% recoveries of graphite that have been reported from the Bissett Creek Property but final testing is not yet complete. Northern has booked space in the pilot plant at the SGS Lakefield facility in September and the product from the pilot plant will be supplied to potential customers for testing. The budget for the pilot plant program is $250,000.
Northern has engaged Knight Piesold Consulting to initiate the process of amending the current Mine Closure Plan for the Bissett Creek Property and obtain the necessary approvals to begin development of the Bissett Creek Property, subject to the prefeasibility study being completed and reaching a positive conclusion. The Company and Northern anticipate receiving such approvals by the end of 2011 or early in 2012. SGS has been retained to perform additional metallurgical testing and complete the prefeasibility study which are scheduled for completion in the second quarter of 2011. The objective of the Company and Northern is to be able to make a construction decision in late 2011 or early 2012, subject to financing and the receipt of all regulatory approvals.