Max mill options25 Interpretations and Conclusions
There are three primary opportunities to realize revenue from the MAX Mine Project:
1. Re-start the MAX Molybdenum Mine and processing plant,
2. Refurbish the MAX processing plant and use it for toll milling, or
3. Sell the assets in the used equipment market.
25.1 Restart the MAX Molybdenum Mine and Processing Plant The re-opening of the Max Mine and processing plant is a viable option given favorable metal prices. The sunk capital of the concentrator, tailings dam, underground development and other existing infrastructure, would reduce the capital required to restart the project, and the existing infrastructure would provide flexibility to re-start quickly to take advantage of high molybdenum prices. However, additional is needed prior to completing a resource estimate and, should a resource be declared on the property, a mine plan needs to be prepared to properly assess the economics. The best way to generate a resource estimate would be through re-establishing access to the underground mine for new sampling and diamond drilling. However, this would be made difficult and costly due to the 830-850 mL pillar failure, the details of which are not known, nor is the extent of remediation (rehab) work to re-establish access or resume mining below the 830 mL. Preparing a resource estimate would also be made more difficult by the destruction of drill core by Newmont. It is possible that resuming mine operations would require the installation of amine backfill plant and the backfilling of extensive voids to enhance ground stability prior to the resumption of any mining activities. The deposit has the potential for expansion to the northwest, southwest, and east. Thus, it may be possible to not only define a resource within the known deposit area, but to also expand it in multiple directions. The site was placed in care and maintenance in 2017, which resulted in the mining permit being suspended. The Environmental Management Act permit (PE 18167) was amended in November 2017 to allow for water discharge from the underground workings and tailings facility while under a care and maintenance condition. Prior to resuming operations, it is anticipated that a mining permit and amendments to existing permits would be required. It is recommended that a dam safety inspection be undertaken immediately to ensure the overall stability of the tailing facility. It is also anticipated that an increase of $583,403 in the reclamation security bond may be requested be consistent with the BC Chief Inspector 2017 Annual report. While possible, restarting the MAX Mine and Mill would require favourable molybdenum prices. The trigger for suspending prior Roca operation was the collapse of the 830-850 mL pillar, but the cause was a weakening molybdenum market. Molybdenum prices tend to be a volatile in comparison to other metals.
25.2 Refurbish the MAX Processing Plant for Custom Milling It is possible to refurbish the MAX processing plant for continued operations without reopening the MAX Mine and use it for custom milling. Many of the considerations, actions, and costs discussed in Section 24.1 would still apply, but the mine would not have to be re-opened. MAX MINE PROJECT TECHNICAL REPORT Prepared by JDS ENERGY & MINING INC. For CAMEO INDUSTRIES CORP. Page 25-2 Historical work has suggested that there is potential for other styles of mineralization on the property, including porphyry mineralization as well as polymetallic veins. This should be investigated, as the processing plant is in good condition and could be adapted for the recovery of an alternate deposit type.
25.3 Sale of Assets Pursuing a sale of the plant and equipment assets is not likely to produce a satisfactory return for the owners (estimated at approximately $1 M by JDS report), and the timeline associated with such a process could be protracted.