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Canada - Shares Up 2% Pre-Bell
2017-01-25 07:42:00 AM ET (MT Newswires)
07:42 AM EST, 01/25/2017 (MT Newswires) -- Shares of Klondex Mines (KLDX) were higher pre-market Wednesdayafter the Canadian mining firm said it made a new discovery at its True North gold mine in Manitoba, Canada.
Brian Morris, vice president of exploration said, "This new discovery continues to suggest that the True North district remains under explored and has the potential to be much larger than what we understand today."
The company said it plans to provide an updated mineral reserve and resource update for the mine in Q2.
Price: 5.18, Change: +0.08, Percent Change: +1.57
Project Inaugural PEA at US$1.037B NPV, and 27% IRR
2017-01-25 08:02:00 AM ET (Marketwired)
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan 25, 2017) - Graphite One Resources Inc. (TSX VENTURE:GPH)(OTCQX:GPHOF) ("Graphite One", "GPH" or the "Company") is pleased to announce the results of its Preliminary Economic Assessment ("PEA") for the development of its 100%-owned Graphite One manufacturing project (the "Project"). The Project is conceived as a vertically integrated manufacturer of high grade Coated Spherical Graphite ("CSG") with mining and processing facilities near Nome, Alaska and advanced material processing done at a dedicated graphite product manufacturing facility. Washington State is a potential site for the product manufacturing facility due to its established maritime links with Alaska, the availability of low-cost power, developed industrial sites and proximity to markets. The PEA was prepared by the independent engineering firm, TRU Group Inc. of Toronto, Ontario, under Canadian Securities Administrators' National Instrument 43-101 - St andards of Disclosure for Mineral Projects ("NI 43-101").
The PEA projects a Net Present Value ("NPV") for the Project of US$1.037 billion using a 10% discount rate, with an Internal Rate of Return ("IRR") of 27%. Annual production of CSG and other graphite specialty materials is projected at 55,350 metric tonnes when full production is reached in Year 6. A minimum of 40 years of indicated and inferred resources grading 7% Cg (graphite) have been identified in the target exploitation zone to sustain full scale operations, notwithstanding additional potential resources immediately outside the target zone or the broader Graphite Creek property.
Financial Highlights
• US$1.037 Billion pre-tax NPV (10% discount)
• 27% pre-tax Internal Rate of Return
• Consolidated Operating Margin (EBDIT) of 63% on sales
• Payback period of 4 years
• Operating Cost Product: US$1,774 per tonne
• Blended Selling Price of Products: US$ 5,054 per tonne
Operational Highlights (Full Production)
• Production of Finished Product: 55,350 tpy
• 41,850 tpy Coated Spherical Graphite
• 13,500 tpy Purified Graphite Powder
• Mineral Processing: 60,000 tpy 95% Cg Concentrate
• Graphite Mineralization Mined: 1 million tpy 7% Cg
• Mine Life: 40 years, using Indicated and Inferred mineral resources
PROJECT PROFITABILITY
NPV of US$1.037 Billion; IRR of 27% At Average Selling Price of US$5,054 Per Tonne
Pending a detailed graphite market study, the PEA has opted for a conservative selling price of US$6,200 per tonne for CSG and an average selling price of US$1,500 per tonne for Purified Graphite Powders. The Project's average blended price of its manufactured products is US$5,054 per tonne, ex plant, on a 2016 constant US dollar basis. The PEA projects the NPV at US$1.037 billion (pre-tax) using a 10% discount rate, with a Project life of 40 years. The IRR is 27%, with payback in Year 4 from the start-up of production. This is expected to generate cash earnings of US$182 million per year on sales of US$280 million at full capacity with a consolidated operating margin ("EBDIT") of 63% on sales. CSG will dominate output, accounting for 75% of sales volume and 93% of sales revenue, or US$260 million, of the total. Purified graphite powders will account for the balance with sales of US$20 million.
In its overview of the graphite industry, Canaccord Genuity (Australia) Ltd. stated that the price of coated spherical graphite was "between US$7,000/t - US$10,000/t" (1). Figure 1 shows the impact of CSG prices on Project NPV with the corresponding IRR. At the PEA's CSG assumed price of US$6,200 per tonne, the Project's NPV is US$1.037 billion and the IRR 27%. Also shown is the increase in Project NPV and IRR at CSG prices in the range of US$7,000 to US$10,000pt based on Canaccord's research.
To view Figure 1: Sensitivity of Project's NPV to CSG Price, please visit the following link: http://media3.marketwire.com/docs/gph0125fig1.pdf.
The PEA's sensitivity analysis, summarized in Table 1, examined the effect on the NPV (10% discount rate) and IRR by running 10% incremental changes in various parameters in the base case financial model. Changing the product selling price had the greatest impact as a 10% change adjusted the NPV by about US$210 million and the IRR by about 2.9%.
Table 1: Impact of 10% Variation in Selected Parameters on Project NPV and IRR
Variable Parameter (10%) NPV Impact (US$) IRR Impact
CSG Selling Price $ 210 million 2.93 %
Operating Cost $ 80 million 1.3 %
Capital Cost $ 35 million 1.3 %
Graphite (Cg) Recovery $ 60 million 1.2 %
Graphite (Cg) Head Grade $ 50 million 1.2 %
As the Project progresses and technical uncertainties are resolved or identified risks are mitigated, the Project NPV could be based on a lower discount rate. Based on the current analysis, the Company has calculated that the Project NPV at an 8% discount rate would be US$1.4 billion.
TRU concluded: "The robust financials for vertically-integrated production of CSG at the projected unit pricing of US$6,200 per tonne merits that the Project proceed to a feasibility study to maintain an accelerated project schedule that would coincide with projected market demand in 2021."
The report titled "Graphite One Resources Inc., NI 43-101 Preliminary Economic Analysis On the Graphite One Project" will be filed on SEDAR and can be viewed at www.sedar.com under the GPH profile or on GPH's website at www.graphiteoneresources.com.
"This PEA shows the strong potential of our project as America's emerging producer of lithium ion battery-grade Coated Spherical Graphite," said Anthony Huston, CEO of Graphite One. "With the prospect of a low-cost, 40-year mine life using half of the identified graphite mineral resources, and given our projected production costs and conservative pricing assumptions, we are confident that Graphite One has the potential to become a reliable provider of graphite materials critical to clean-tech, high-tech and national security applications."
The Graphite Creek deposit has a unique morphology that TRU Group has named STAX, the acronym for graphite that is Spheroidal, Thin, Aggregate and eXpanded. The importance of STAX was identified during exploratory product development test work which achieved high conversion yield to spherical graphite which demonstrated high performance during electrochemical testing. According to TRU: "STAX graphite (subject to study in further extraordinary product development R&D) is projected as being uniquely amenable for use in several applications, including lithium-ion and alkaline batteries, greases and lubricants, friction, motor brushes, crucibles, etc."
The PEA, prepared by the TRU Group, states that in regard to Graphite One's spherical graphite: "Potentially, a significant proportion could be sold domestically, but strategically, Japan and Korea would be considered accessible markets given the advantageous location of the Graphite One Product Manufacturing Plant. ...Graphite One could potentially become the dominant, if not the only, American producer, of high grade CSG that is integrated with a domestic graphite resource."
"It's been a long road to the PEA," Huston continued. "As we move into the next phase of development, we will continue to work closely with Alaska state authorities and the local communities around the deposit, including the Alaska native corporations, to ensure that our Project meets the highest environmental, safety and sustainability standards."
METALLURGICAL TESTING
The PEA summarizes the mineral processing and metallurgical test work programs commissioned to date by the Company. TRU Group Inc has managed the test work conducted at an independent graphite laboratory for the characterization of the graphite in the graphite mineralization from the Graphite Creek deposit and the development of exploratory spherical graphite products. TRU Group has also directed the development of the mineral processing flowsheet at an independent mineral processing laboratory for the target exploitation zones at Graphite Creek. Below is a summary of the key test work findings.
Naturally occurring Spherical, Thin high-aspect ratio, Aggregate and eXpanded structure graphite morphologies were identified by an independent graphite laboratory in graphite mineral drill core samples taken from the Graphite Creek Property. STAX structures were concluded to be inherent attributes to Graphite Creek not found in any other graphite project under development or in commercial operation. Exploratory product development test work at an independent graphite laboratory on select graphite mineral samples from Graphite Creek demonstrated the direct conversion of purified STAX graphite into spherical graphite at much higher yield of 74.6% compared to the normal industry yields of 30-40% when processing conventional flake graphite. Also, in contrast to industry norms, the STAX-derived spherical graphite was produced from a broad particle size distribution in the feed, which required no prior size reduction and was converted to spherical graphite in the spheronizing mill with 1/3 of the energy input typically used with conventional flake graphite. These features of STAX graphite potentially offer Graphite One distinct technical advantages to mass produce high quality spherical graphite at lower cost.
Coin cells (batteries) containing STAX-derived exploratory spherical graphite and coated spherical graphite anodes were manufactured and tested at the independent graphite laboratory. The reversible discharge capacities recorded in these coin cells were at or near the theoretical values for natural graphite of 372 Ah/kg; in repeat charge-discharge cycles. STAX-derived spherical graphite attained a reversible discharge capacity at 372 Ah/kg while STAX-derived coated spherical graphite reached a reversible capacity of 370.1 Ah/kg. In a unique test, STAX-derived spherical graphite also demonstrated good performance stability over short duration (50 hour) continuous recharge-discharge cycling.
Mineral beneficiation tests on Graphite Creek drill core samples that were representative of the targeted exploitation zone were conducted at a bench scale at an independent mineral processing laboratory to validate process assumptions and performance of the TRU rendered flowsheet that is the basis of the proposed Graphite Creek Mineral Processing Plant. In the proposed flowsheet, crushed graphite mineral, grading 7% Cg, is milled to a pulp and conditioned with reagents. The pulp then passes to preliminary flotation recovery of graphite in a rougher stage followed by a cleaner stage. Both flotation stages are conducted in conventional impeller mixed flotation cells. Subsequent upgrading of the recovered graphite is performed in four cleaning stages using flotation columns. Each cleaning column flotation stage is preceded by a polishing grind (milling) of the feed which effects greater liberation of the graphite from other minerals (gangue). In tests that reproduced prior works and the TRU rendered flowsheet, test results project that a single graphite concentrate will be produced at a grade of 95 % Cg (graphitic carbon) at an overall graphite recovery of 80%.
GRAPHITE ONE's INTEGRATED PROJECT DESCRIPTION
Project Mining and Process Overview
Figure 2 outlines the major integrated functions to convert Graphite Creek's STAX graphite mineralization to electric vehicle ("EV") grade CSG and purified graphite powders.
To view Figure 2: Graphite One Project Mining & Process Overview, please visit the following link: http://media3.marketwire.com/docs/gph0125fig2.pdf.
Graphite Creek Property
The Graphite Creek Property is situated on Alaska's Seward Peninsula, approximately 59 km North of Nome (see Figure 3). It borders the Imuruk Basin to the north and the Kigluaik Mountains to the south. The closest community is the Inupiat village of Teller (2009 population - 269), 42 km to the northwest. There is no road access to the Property at present. The Nome-Teller Highway, a seasonal road, is about 30 km west.
To view Figure 3: Graphite Creek Property Location, Main Roads from Nome (2), please visit the following link: http://media3.marketwire.com/docs/gph125fig3.pdf.
Mineral Resource Estimates
Table 2: Graphite Creek Deposit Indicated and Inferred Mineral Resource*
MINERAL RESOURCE CUT-OFF TONNAGE GRAPHITE CONTAINED
CLASSIFICATION GRADE (MILLION GRADE GRAPHITE
(% Cg) TONNES) (% Cg) (TONNES)
INDICATED 6.0 10.32 7.2 % 744,000
INFERRED 6.0 71.24 7.0 % 4,969,000
*Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no guarantee that all or any part of the indicated or inferred mineral resource will be converted into a mineral reserve. The collective work to date from the Graphite Creek Property indicate that while the project is in early stages of exploration/resource work that indications of the size and grade of the graphite give suggestions that they are of high enough concentration to be of economic interest.
Based on the mineral resources identified to date and reviewed in the PEA, the Graphite Creek deposit contains an estimated 10.3 million tonnes classified as Indicated Resources and 71.2 million tonnes classified as Inferred Resources, both at a 6% graphitic carbon (Cg) mining cut-off grade. See Table 2.
Resource estimates are based on the cumulative drill data from the Company's 2012, 2013, and 2014 drill programs totaling 48 holes and about 7,500 metres of drilling. The yellow rectangle in Figure 4 outlines the Inferred Resource area and the green rectangle, the Indicated Resource area.
To view Figure 4: Map of Mineral Resource Area, please visit the following link: http://media3.marketwire.com/docs/gph0125fig4.pdf.
The Project's economic analysis has been designed based on the 6% mining cut-off grade, producing the desired 7.0% Cg mill-feed head grade. The scale of available material at 7% Cg is estimated to be 43.66 million tonnes using both Indicated and Inferred Resources, sufficient to support over 40 years of mining at full-scale production of 1,018,000 tonnes per year.
Follow-up exploration and development is recommended based on results from: 1) historic and recent (2011-2014) exploration and laboratory work; 2) the lateral continuity of at least nine mineralized graphitic schist zones; 3) high-grade graphite situated at surface or near-surface in Zones 1 and 2; 4) the Indicated Mineral Resource and sizeable Inferred Mineral Resource documented in the PEA; and 5) a potential open pit mining scenario initiated by side-cutting into the northern slopes of the Kigluaik Mountains to reduce the strip ratio and maximize access to the high-grade graphitic schist. The cost to complete the next exploration program is estimated to be US$5.4 million plus a 10% contingency.
Graphite Creek Mine
The Graphite Creek deposit outcrops at the surface, along a significant length of outcrop and maintains a relatively shallow dip below the land surface. The area selected for modelling, and planned for mining is located along a relatively continuous 1500-metre outcrop and appears to be segregated into three separate zones of graphite mineralization. Surface mining is proposed using a truck and shovel operation mining along several contiguous, en-echelon, pits starting at the outcrop and progressing in the down dip direction. The Graphite Creek Mine (the "Mine") has been designed to operate on a 24-hour per day schedule (assuming two 12-hour shifts per day) on a year-round basis. When in full production in Year 6, the mine plan proposes delivering 1,018,000 tpy of graphite mineralized material to a nearby Mineral Processing Plant ("Processing Plant"). The PEA assumes mining would be performed year-round with owner-operated equipment. In due course, GPH will commission geotechni cal studies to better define assumed technical parameters used in the mining cost estimates. Following these studies, alternate mining schedules and scenarios will be the subject of a mine plan study with the objective of reducing capital and operating costs and optimizing the use of resources.
Mineral Processing Plant
The proposed Mineral Processing Plant, to be located at the Graphite Creek Mine ("Mine") when at full production capacity, is to receive from the Mine 1,018,000 tpy of graphite mineralization grading 7% Cg and extract and recover 60,000 tpy of concentrate, grading 95% Cg. Graphite recovery during mineral processing is assumed under optimized conditions to reach 80%. The single concentrate recovered would be packaged in one tonne super sacks, placed in 20 tonne shipping containers and trucked to the Port of Nome. The containers would be loaded onto barges during the seasonal shipping window and delivered to the Product Manufacturing Plant (the "Manufacturing Plant"). In due course, an optimization study would be commissioned to rationalize the Processing Plant resources to effect capital and operating cost reductions.
Product Manufacturing Plant
The Manufacturing Plant is assumed to be situated on a brownfield industrial site in Washington State serviced by public utilities with developed road and rail infrastructure. Criteria relevant to deciding its location include power cost, availability of industrial zoned land, proximity to tidewater and port facilities, and infrastructure that supports both the workforce and delivery logistics for input materials, services and finished products. The Company is identifying suitable locations for the Manufacturing Plant site.
The Manufacturing Plant would receive 60,000 tpy of concentrate grading 95% Cg from the Processing Plant. Upon arrival, the concentrate would be stored in silos. As needed, it would be pneumatically conveyed to pelletizing equipment and then to high temperature, electric furnaces and purified under an inert atmosphere to at least 99.95% Cg. Spherical graphite size fractions suitable for lithium-ion batteries are combined with coating precursor. The 'green' surface coated graphite product is heat treated in kiln type furnaces to harden the coating and into the final spherical graphite product.
Typically, purified natural graphite flake with specific properties suitable for lithium ion battery anode applications is jet milled to a size of about 20 microns, ground, and spheronized to produce spherical graphite. Exploratory product development tests conducted on STAX graphite as part of the PEA indicated that almost 75% of spheronized product was acceptable for EV battery applications. This result was achieved without any prior jet milling, i.e., direct spheronization of the purified graphite, used the entire size distribution of the graphite feed, and required half the residence time with two thirds of the energy input to the spheronizing mill compared to conventional Chinese flake graphite.
The availability of other size fractions suitable for other (non-EV) lithium-ion batteries end-uses are assumed to increase the recovery to 91%. Pilot scale testing with equipment available from vendors will be necessary to define the yield and number of circuits required for the Graphite Creek concentrates. Those size fractions that fall outside the acceptable range for lithium-ion battery applications (8% by weight) will be directed to the fine powders circuit for further micronization and/or classification by end-use application. This fraction would be fed to jet mills with internal classifiers to produce different graphite powders in the size range of about 1 to 20 μm.
Finished products at full production are projected to include:
41,850 tpy of Coated Spherical Graphite with a minimum purity of 99.95% Cg for the EV Li-ion battery market; and,
13,500 tpy Purified Graphite Powders, 99.8% Cg, <20 microns, suitable for lubricants, friction products, conductive polymers, specialty powder and metallurgical additives.
Project Capital Cost Summary
The order-of-magnitude capital cost for mining operations, the Mineral Processing Plant and the Product Manufacturing Plant and infrastructure is summarized in Table 3 and estimated to be US$363 million. The plant capital expenditures were spread over three years and ramp up to full production at 60,000 tpy of graphite concentrate at the Mineral Processing Plant in Year Six of production. The Product Manufacturing Plant would concurrently reach full capacity of 55,350 tpy of graphite products. No contingency is included for the two plants. Indirect costs were assumed to be 33% of direct costs: 20% for EPCM (engineering, procurement, construction & management), 10% for freight and capital spare parts, and 3% for commissioning and start-up costs.
Table 3: Capital Cost Estimates, Mine and Plants
Operations Category Capital Cost
US$ millions
Graphite Creek Mine & Mineral Processing Plant $ 233
Mining $ 43
Mineral Processing $ 158
Infrastructure $ 32
Product Manufacturing Plant $ 130
Total All Operations $ 363
Project Operating Cost Summary
The order-of-magnitude operating costs at full capacity for the Graphite Creek Mine, Mineral Processing Plant and Infrastructure, and the Product Manufacturing Plant are summarized in Table 4 and estimated to be US$98 million per year. On a plant input/output basis, the total project operating cost equates to US$96 per tonne of Mineral Processing Plant Feed or US$1,774 per tonne of finished graphite product.
Table 4: Operating Cost Estimates, Mine and Plants, US$
MAJOR OPERATING COST ITEM Mining Mineral Product Integrated
Processing Manufacturing Project
Labour $ 21,887,000 $ 12,170,000 $ 7,270,000 $ 41,327,000
Energy (Power and Diesel)(1) $ 9,900,000 $ 14,900,000 $ 24,800,000
Equipment Operation $ 2,799,500 $ 2,799,500
Consumables $ 3,300,000 $ 7,100,000 $ 10,400,000
Maintenance & Supplies $ 1,781,500 $ 2,700,000 $ 3,600,000 $ 8,081,500
Miscellaneous $ 1,272,500 $ 1,272,500
Concentrate Shipping $ 1,800,000 $ 7,698,000 $ 9,498,000
Total Operating Cost (OPEX) $ 27,740,500 $ 29,870,000 $ 40,568,000 $ 98,178,500
OPEX/t Processing Plant Feed $ 27 $ 29 $ 40 $ 96
OPEX/t Concentrate $ 462 $ 498 $ 676 $ 1,636
OPEX/t Graphite Product $ 501 $ 540 $ 733 $ 1,774
Notes: (1) The mining energy cost is included in Mineral Processing Plant cost
RISKS
The PEA notes the Project is subject to risks common to mining and mineral processing projects. It also notes market acceptance of a new graphite material and market penetration in the face of Chinese competition are possible risks. The Company diligently works to mitigate and resolve all identified risks.
The PEA also notes risk associated with the Project's reliance on the EV industry to develop and sustain a significant demand for lithium-ion batteries. TRU states, "It would certainly seem that this risk is currently low as the technology has gained acceptance and share in both the consumer mind and in the automotive manufacturers' plans."
OPPORTUNITIES
The Project is responding to the opportunity created by the adoption of the lithium-ion battery for EVs and the shift in battery production from offshore to the United States where, as noted in the PEA, over 26,000 MWh per year of new capacity is currently under construction. This is three times the capacity existing in 2016.
The PEA identifies, as an opportunity to be explored, the possible market for the Project's potential by-product graphite powders which are expected to have the advantage of being pure with very small variability in sizing and composition.
RECOMMENDATIONS
Numerous recommendations for follow up and additional work and studies are identified in or stem from the PEA to advance the Project:
Infill drilling to expand and upgrade current resources to Measured
Geotechnical, hydrological, hydrogeological and related studies
Continue mine plan development and refinement
Review operations scheduling alternatives and use of contract mining
Refine mining costs with results of recommended studies
Continue graphite sampling and testing during all phases of exploration and processing to understand quality variations, develop process flowsheets and equipment specifications
Continue environmental baseline studies
Commission study of CSG and purified powder markets
Continue to product development program including customer trials
QUALIFIED PERSONS
The independent qualified persons responsible for preparing the Graphite One PEA are R. James Robinson, P.Geo., Ioannis (John) Roumeliotis, Ing., and Maureen Paterson, P. Eng. of TRU Group Inc. They have reviewed and approved the contents of this press release.
David R. Hembree, C. P. Geo., the General Manager of Operations for Graphite One Alaska Inc., is the company's designated qualified person for this press release within the meaning of NI 43-101 and has reviewed and validated that the information contained in the release is consistent with that provided by the independent qualified persons responsible for the PEA.
About TRU Group
TRU Group Inc are engineers, managers, planners and integrators focused on technology intensive industry. The firm has a long standing strong capability in battery materials from resource through to end-products and have completed numerous assignments for several clients. More information is available on the TRU Group website www.trugroup.com.
About Graphite One
GRAPHITE ONE RESOURCES INC. (TSX VENTURE:GPH)(OTCQX:GPHOF) continues to develop its Graphite One Project (the "Project"), whereby the Company could potentially become the dominant American producer of high grade Coated Spherical Graphite ("CSG") that is integrated with a domestic graphite resource. The Project is proposed as a vertically integrated enterprise to mine, process and manufacture high grade CSG primarily for the lithium-ion electric vehicle battery market. Graphite mineralization mined from the Company's Graphite Creek Property would be processed into concentrate at a graphite processing plant. The processing plant would be located on the Graphite Creek Property situated on the Seward Peninsula about 60 kilometers north of Nome, Alaska. CSG and other value-added graphite products, would be manufactured from the concentrate at the Company's proposed graphite product manufacturing facility, the location of which is the subject of further study and analysis.
The Graphite Creek Property contains America's largest known large flake graphite deposit. Resources identified to date include 10.32 million tonnes of indicated resources grading 7.2 percent graphitic carbon ("Cg") and 71.24 million tonnes of inferred resources at 7.0 percent Cg identified, using a 6% Cg mining cut-off grade. Work on the Graphite Creek Property is progressing through the evaluation phase with environmental baseline sampling programs and engineering studies in progress. Mineral processing testing, mine, infrastructure and processing plant design work, and a resource development drilling program are expected to be undertaken in the months ahead.
ON BEHALF OF THE BOARD OF DIRECTORS
"Anthony Huston" (signed)
For more information on Graphite One Resources Inc. please visit the Company's website, www.GraphiteOneResources.com.
CAUTIONARY STATEMENT
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This release includes certain statements that are deemed to be forward-looking statements. All statements in this release, other than statements that are clearly historical in nature, are forward-looking statements. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "proposes", "expects", or "is expected", "scheduled", "estimates", "projects", "intends", "assumes", "believes", "indicates" or variations of such words and phrases that state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
Forward-looking information in this release includes, but is not limited to, statements regarding resource estimates and potential mineralization, the interpretation and actual results of current exploration activities, changes in project parameters as plans continue to be refined, the actual ability to produce spherical graphite, ultimate further and final results of additional test-work, estimated capital and sustaining costs and the availability of equipment, labour and resources required, the anticipated applications of graphite in high-tech, clean tech, energy storage and national security applications and all other anticipated applications, international demand and ability to transport and enter into such markets, the results of the TRU Group's study being accurate regarding the characteristics of the Graphite Creek mineralization, exploration drilling, exploitation activities and events or developments that the Company expects, the sustainability and ultimate environmen tal effects of spherical graphite, future joint ventures and partnerships, future prices of graphite, possible variations in grade or recovery rates, are all forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include: (i) volatile stock price, (ii) the results of the product development test work may not be indicative of the advancement of the project as anticipated, or at all, (iii) market prices, (iv) exploitation and exploration successes, (v) continuity of mineralization, (vi) uncertainties related to the ability to obtain necessary permits, licenses and title and delays due to third party opposition, (vii) changes in government policies regarding mining and natural resource exploration and exploitation, (viii) competition faced in securing experienced personnel, access to adequate infrastructure to support mining, processing, development and exploration activities and continued availability of capital and financing, and (ix) general economic, market or business conditions. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this press release, and the Company undertakes no obligation to update publicly or revise any forward-looking information, except as required by applicable securities laws. For more information on the Company, investors should review the Company's continuous disclosure filings that are available at www.sedar.com.
Estimates of mineralization and other technical information included or referenced in this press release have been prepared in accordance with NI 43-101. The definitions of proven and probable reserves used in NI 43-101 differ from the definitions in SEC Industry Guide 7. Under SEC Industry Guide 7 standards, a "final" or "bankable" feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority. As a result, the reserves reported by the Company in accordance with NI 43-101 may not qualify as "reserves" under SEC standards. In addition, the terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource" are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and normally are not permitted to be used in reports and registration statements filed with the SEC. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. "inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities laws, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Additionally, disclosure of "contained ounces" in a resource is permitted disclosure under Canadian securities laws; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves" by SEC standards as in place tonnage and grade without reference to unit measurements. Accordingly, information contained or referenced in this press release containing descriptions of the Company's mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of United States federal securities laws and the rules and regulations thereunder.
(1) Canaccord Genuity (Australia) Ltd.; Specialty Minerals and Metals, Industry Overview; November 20, 2016; page 20.
(2) Source: Alaska Department of Transportation http://dot.alaska.gov/stwdplng/fclass/fclassmaps.shtml
Graphite One Resources Inc. Anthony Huston CEO, President & Director (604) 889-4251AnthonyH@GraphiteOneResources.com www.GraphiteOneResources.com Investor Relations Contact 1-604-684-6730 GPH@kincommunications.com
2017-01-25 06:55:00 AM ET (Marketwire Canada)
VANCOUVER, BC--(Marketwired - January 25, 2017) - Endeavour Silver Corp. (TSX: EDR) (NYSE: EXK) provides 2017 production and cost guidance for its three producing mines in Mexico: the Guanaceví mine in Durango state and the Bolañitos and El Cubo mines in Guanajuato state.
In 2017, the Company's plan is to produce at slightly lower throughput and higher silver grades compared to 2016, resulting in similar silver production and slightly lower gold production forecasts. Endeavour plans to continue investing significantly in exploration and development programs to extend the existing mine lives and build new mines to fuel future growth.
2017 Production Guidance
Silver production is expected to be in the range of 5.2-5.7 million oz and gold production is expected be in the 50,000-53,000 oz range. Silver equivalent production is forecast to be 8.9-9.7 million oz using a 75:1 silver:gold ratio, as shown in the table below.
Mine Silver (M oz) Gold (K oz) Ag Eq (M oz) Tonnes/Day (tpd)
Guanaceví 2.4-2.6 5.3-6.3 2.8-3.1 1,000-1,200
Bolañitos 0.9-1.0 21.5-22.5 2.5-2.7 1,000-1,100
El Cubo 1.9-2.1 23.2-24.2 3.6-3.9 1,300-1,500
Total 5.2-5.7 50.0-53.0 8.9-9.7 3,300-3,800
Bradford Cooke, Endeavour CEO, commented, "We expect 2017 to be a transformative year for Endeavour as our attention turns to growth. The emergence of our exciting new Terronera discovery and the acquisition of two attractive projects last year, El Compas and Parral, have positioned us for significant growth over the next three years which we think could coincide with rising precious metal prices. We believe now is the right time to invest for the future across our portfolio."
In particular, the Company continues to advance the Preliminary Economic Assessment (PEA) and initial resource estimate for the El Compas project in Zacatecas state and the Pre-Feasibility Study (PFS) and updated reserve/resource estimate for the Terronera project in Jalisco state for completion in March, 2017.
The El Compas PEA is somewhat dependent on the outcome of appeals by several industries of the recently amended Revenue Law in the State of Zacatecas. The amendment to the Revenue Law is effectively a new environmental tax on the extraction of rock, sand and similar materials, the pollution of air, soil and water and the disposal of wastes including all mill tailings and heap leach pads. However, mining companies already pay a federal environmental tax and the Company has received legal advice that the amended state Revenue Law is unconstitutional so Endeavour and many other companies plan to file constitutional challenges in the Mexican courts. The amendment went into effect as of January 1, 2017 and could make the El Compas project, and every other mine in the state, uneconomic. High level discussions are now underway between the affected industries in Zacatecas and state and federal government officials to repeal or amend this law.
At Guanaceví, production will be similar to 2016 based on slightly lower grades and higher throughputs of 1,000 to 1,200 tonnes per day (tpd), primarily from the Santa Cruz, Porvenir Norte, and Porvenir Centro orebodies. Underground exploration and mine development in these areas will be funded by mine cash flow. Development of the new SCS and Milache deposits will utilize growth capital funded by the Company's treasury.
At Bolañitos, mine production will continue operating at approximately 1,100 tpd primarily from the LL-Asunción deposit, the Plateros deposit, and historic mine fill. Underground exploration and mine development in these areas will continue to be funded by mine cash flow.
At El Cubo, production will also continue steady state at about 1,400 tpd from the V-Asunción, Dolores, Villalpando, San Nicolas and Santa Cecilia veins. Underground exploration and mine development in these areas will continue to be funded by mine cash flow.
Operating Costs
Cash costs, net of gold by-product credits, are expected to be $6.50-$7.50 per oz of silver produced in 2017, comparable to the first three quarters of 2016. Consolidated cash costs on a co-product basis are anticipated to be $10.25-$11.25 per oz silver and $775-$825 per oz gold.
All-in sustaining costs (AISC), net of gold by-product credits, in accordance with the World Gold Council standard, are estimated to be $14-$15 per oz of silver produced in 2017, higher than the first three quarters of 2016 due to increased investments in exploration and development programs. When non-cash items such as stock-based compensation are excluded, AISC is forecast to be in the $13.50-$14.50 range. On a co-product basis, AISC is anticipated to be $14.50-$15.50 per oz silver and $1,050-$1,150 per oz gold. Direct operating costs are estimated to be in the range of $70-$75 per tonne.
Management has assumed a $17 per oz silver price, $1,190 per oz gold price, and 20:1 Mexican peso per US dollar exchange rate for its 2017 cost forecasts.
2017 Capital Budget
Last year management focused on reducing sustaining exploration and capital investments at low precious metals prices to ensure positive cash flow for the Company. In 2017, Endeavour plans to invest $43.3 million on capital projects at the three operating mines, including $7.7 million of growth capital, all primarily for mine development, in order to access reserves and resources for mining. At today's prices, the investments at operations will be covered by operating cash flow, while exploration and growth capital will be funded by the Company's treasury.
At Guanaceví, 9.2 kilometres (km) of mine development are budgeted at $11.3 million in the North Porvenir and Santa Cruz mines, which have been in production since 2004 and 2012, respectively. An additional $2.2 million will be spent on ventilation, underground electrical and water control throughout the mine. The remaining $3.2 million will be spent on new mobile equipment to aid the significant planned development, site infrastructure and equipment.
Management has also approved an additional 2.5 km of development, budgeted at $7.1 million, to access two new ore bodies currently not in production. The development is expected to commence in the second quarter depending on permitting.
At Bolañitos, 5.0 km of mine development are budgeted at $5.1 million to access reserves and resources in LL-Asunción, Plateros, and mineralized fill from historic stopes not included in resources. An additional $0.5 million is planned to purchase various mine equipment required for the year.
At El Cubo, 7.8 km of mine development are budgeted at $8.4 million, and $2.0 million is budgeted for supporting underground infrastructure mainly in the Villalpando vein. An additional $1.4 million will be spent on mobile mine equipment and $1.4 million on plant equipment and infrastructure.
Mine Mine Development Other Capital Sustaining Capital Growth Capital
Guanaceví $13.5 million $3.2 million $16.7 million $7.1 million
Bolañitos $5.1 million $0.6 million $ 5.7 million -
El Cubo $10.4 million $2.8 million $13.2 million -
Corporate - - - $0.6 million
Total $29.0 million $6.6 million $35.6 million $7.7 million
Exploration Budget
In 2017, the Company plans to drill 64,000 metres (m) and spend $15.2 million on brownfields and greenfields exploration, development engineering, and land payments across its portfolio of properties. At the three existing mines, 20,000 m of core drilling is planned at a cost of $3.0 million. At the exploration and development projects, 44,000 m will be drilled at a cost of $10.5 million.
At El Compas, management has approved a $3.0 million exploration program to drill 8,000 m testing new targets, and collar an 800 m exploration adit (subject to the PEA and the state Revenue Law) to provide underground access to the historical resources in the El Compas and El Orito veins, confirm drill results, and assess geotechnical parameters for mining of the mineralized zones.
At Terronera, management has approved a $2.3 million, 10,000 m drill program to test other mineralized veins, complete the PFS, and advance the site infrastructure. In 2016, the Terronera vein discovery was deepened and expanded by drilling. Additionally, a number of parallel structures were discovered by mapping and sampling. In December 2016, high-grade drill results were announced from the La Luz vein located 2,200 m northeast of the Terronera vein.
At Parral, management plans to spend $3.0 million on drilling 18,000 m to confirm a portion of the historical resource, testing multiple greenfields high-grade and bulk tonnage silver targets, and completing a PEA. The potential for near-term, small scale contract mining and toll milling will also be evaluated.
Additionally, the Company will conduct a 5,000 m drill program at the Guadalupe y Calvo property in Chihuahua, Mexico and a 3,000 m drill program in Chile. Both properties are highly prospective: Guadalupe y Calvo for high-grade vein mineralization near the existing resource, and for bulk tonnage silver-lead-zinc manto mineralization in Chile.
Project 2017 Activity Drill Metres Expenditures (millions)
Guanaceví Drilling 8,000 $1.2
Bolanitos Drilling 6,000 $0.9
El Cubo Drilling 6,000 $0.9
Terronera Drilling/PFS/Infrastructure 10,000 $2.3
El Compas Drilling/PEA/Infrastructure 8,000 $3.0
Parral Drilling/PEA 18,000 $3.0
Guadalupe y Calvo Drilling 5,000 $0.9
Chile Drilling 3,000 $1.3
Mexico Holding Costs/Land Payments - $1.7
Total 64,000 $15.2
About Endeavour Silver - Endeavour Silver is a mid-tier precious metals mining company that owns three high grade, underground, silver-gold mines in Mexico. Since start-up in 2004, Endeavour has grown its mining operations organically to produce 9.7 million ounces of silver and equivalents in 2016. We find, build and operate quality silver mines in a sustainable way to create real value for all stakeholders. Endeavour Silver's shares trade on the TSX (EDR) and the NYSE (EXK).
Cautionary Note Regarding Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of the United States private securities litigation reform act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation. Such forward-looking statements and information herein include but are not limited to statements regarding Endeavour's anticipated performance in 2017 including changes in mining and operations and the timing and results of various activities. The Company does not intend to, and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law.
Forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Endeavour and its operations to be materially different from those expressed or implied by such statements. Such factors include, among others, changes in national and local governments, legislation, taxation, controls, regulations and political or economic developments in Canada and Mexico; financial risks due to precious metals prices, operating or technical difficulties in mineral exploration, development and mining activities; risks and hazards of mineral exploration, development and mining; the speculative nature of mineral exploration and development, risks in obtaining necessary licenses and permits, and challenges to the Company's title to properties; as well as those factors described in the section "risk factors" contained in the Company's most recent form 40F/Annual Information Form filed with the S.E.C. and Canadian securities regulatory authorities.
Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to: the continued operation of the Company's mining operations, no material adverse change in the market price of commodities, mining operations will operate and the mining products will be completed in accordance with management's expectations and achieve their stated production outcomes, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or information, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There can be no assurance that any forward-looking statements or information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statem ents or information. Accordingly, readers should not place undue reliance on forward-looking statements or information.
Contact Information - For more information, please contact: Meghan Brown Director Investor Relations Toll free: (877) 685-9775 Tel: (604) 640-4804 Fax: (604) 685-9744 Email: mbrown@edrsilver.com Website: www.edrsilver.com
Drilling Continues to Extend Known Mineralization
2017-01-24 07:49:00 PM ET (Marketwire Canada)
VANCOUVER, BC--(Marketwired - January 24, 2017) - Klondex Mines Ltd. (TSX: KDX) (NYSE MKT: KLDX) ("Klondex" or the "Company") is pleased to provide an update on underground drilling at its True North Gold Mine ("True North") in Manitoba, Canada. The following drill results are not included in the mineral reserve and mineral resource estimates released on September 12, 2016. The Company expects to provide an updated mineral reserve and mineral resource update for True North in the second quarter of 2017.
True North Drilling Highlights: (see TABLE 1 for complete results)
26-16-001: 0.36 opt Au over 15.0 ft, or 12.3 g/t over 4.6 m (007 - 26 Level)Including 1.75 opt Au over 3.0 ft or 60.0 g/t over 0.9 m
Including 1.75 opt Au over 3.0 ft or 60.0 g/t over 0.9 m
32-16-003A: 1.13 opt Au over 2.3 ft, or 38.8 g/t over 0.7m (710 - 32 Level)
32-16-006: 0.20 opt Au over 16.5 ft, or 7.0g/t over 5.0 m (710 - 32 Level)Including 0.63 opt Au over 2.6 ft, or 21.5 g/t over 0.8 m
Including 0.63 opt Au over 2.6 ft, or 21.5 g/t over 0.8 m
32-16-006: 0.33 opt Au over 9.7 ft, or 11.3 g/t over 3.0 m (New 710 HW- 32 Level)
645-16-002: 0.95 opt Au over 5.9 ft, or 32.5 g/t over 1.8 m (711 FW New - 24 Level)
645-16-003: 0.67 opt Au over 2.4 ft, or 23 g/t over 0.7 m (711 FW New 24 Level)
645-16-004: 0.53 opt Au over 12 ft, or 18.2 g/t, 3.7 m (711 - 24 Level)Including 1.83 opt Au over 2.5 ft, or 62.8 g/t over 0.8 m
Including 1.83 opt Au over 2.5 ft, or 62.8 g/t over 0.8 m
True North Gold Mine Drilling Summary: (FIGURE 1) Assay results have been received for 18 underground drill holes totaling 16,660 ft (5,078 m). These holes targeted a significant down dip extension of the 007 zone, the down dip extension of the 710 zone at the 32 Level, the up and down dip extensions of the 711 zone at the 24 Level and the down dip extension of Cohiba.
007: (FIGURES 2 and 3) Four exploration holes were drilled from the 26 Level targeting the down dip extension of the 007 zone into the historic San Antonio Mine (SAM) unit. The SAM unit produced approximately 1.5 million ounces of gold throughout its history. This target was generated by projecting the 007 structure so that it extended out of the Shoreline Basalt into the historically most productive SAM unit. The first drill hole, 26-16-001 successfully intersected the down dip extension of the 007 structure approximately 1,775 ft (541 m) east of the current 26 Level workings and 2,135 ft (651 m) below the 007 decline. Assays from the remaining three holes are pending.
Down Dip Extension of 710: Assay results were received for the first six holes testing the down dip extension of the 710 vein on the 32 Level. All six holes successfully intersected the mineralized structure in the targeted area confirming continuity of the 710 zone over 600 ft (183 m) down dip, which remains open at depth. Additionally, drill hole 32-16-006 intersected a new mineralized structure in the hanging wall. Drilling is ongoing and subsequent assays are pending.
Up and Down Dip Extension of 711: Assay results were received for the final two holes of the 711 down dip exploration program as well as the first six holes from the 711 up dip exploration program. Results from both programs suggest that the mineralization of the 711 zone extends both up and down dip and remains open in both directions.
Cohiba: The Company is reporting the final three holes of the 2016 Cohiba down dip extension drill program. All three holes intersected mineralized material in the Cohiba structure suggesting the Cohiba zone remains open at depth and along strike.
Mr. Brian Morris, Vice President, Exploration said, "These results from True North's exploration drilling program are extremely important; the team's exploration model and understanding of local vein systems have already lead Klondex to a significant new discovery which has the potential to add substantial resource growth at True North. This new discovery continues to suggest that the True North district remains under explored and has the potential to be much larger than what we understand today." Mr. Morris continued, "Moreover, not only are we continuing to extend the mineralization up and down dip in the 710 and 711 zones, we are consistently identifying new targets in close proximity to existing infrastructure."
Assays were performed by TSL Laboratories, an ISO 17025 accredited independent laboratory, and samples were collected and shipped under the supervision of Klondex staff.
A description of the data verification methods, quality assurance program and quality control measures applied can be found in the technical reports titled "Technical Report and Pre-Feasibility Study on the True North Gold Mine, Bissett, Manitoba, Canada", dated October 27, 2016 and with an effective date of June 30, 2016 which is available under the Company's issuer profile on SEDAR at www.sedar.com.
About Klondex Mines Ltd. (www.klondexmines.com) Klondex is a well-capitalized, junior-tier gold and silver mining company focused on exploration, development, and production in a safe, environmentally responsible, and cost-effective manner. The Company has 100% interests in three producing mineral properties: the Fire Creek Mine and the Midas Mine and ore milling facility, both of which are located in the state of Nevada, USA, and the True North Gold Mine (formerly the Rice Lake Mine) and mill in Manitoba, Canada. The Company also has 100% interests in two recently acquired projects, the Hollister mine and the Aurora mine and ore milling facility (formerly known as Esmeralda), also located in Nevada, USA.
Qualified Person Scientific and technical information in this press release has been reviewed and approved by Brian Morris (AIPG CPG-11786), a "qualified person" within the meaning of NI 43-101.
Cautionary Note Regarding Forward-looking Information This news release contains certain information that may constitute forward-looking information or forward-looking statements under applicable Canadian and United States securities legislation (collectively, "forward-looking information"), including but not limited to the exploration potential at the True North Gold Mine, the timing of an updated mineral reserve and mineral resource update for True North and future exploration and production plans of Klondex. This forward-looking information entails various risks and uncertainties that are based on current expectations, and actual results may differ materially from those contained in such information. These uncertainties and risks include, but are not limited to, the strength of the global economy; the price of gold; operational, funding and liquidity risks; the degree to which mineral resource estimates are reflective of actual mineral resources; the degree to which mineral reserve estimates are reflective of actual mineral reserves; the degree to which factors which would make a mineral deposit commercially viable are present; the risks and hazards associated with underground operations; and the ability of Klondex to fund its substantial capital requirements and operations. Risks and uncertainties about the Company's business are more fully discussed in the Company's disclosure materials filed with the securities regulatory authorities in Canada and United States available at www.sedar.com and www.sec.gov, respectively. Readers are urged to read these materials. Klondex assumes no obligation to update any forward-looking information or to update the reasons why actual results could differ from such information unless required by law.
Cautionary Note to U.S. Investors Regarding the Use of Mining Terms This news release has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of U.S. securities laws. All resource and reserve estimates included or referred to in this news release have been prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. These standards differ significantly from the mineral reserve disclosure requirements of the U.S. Securities and Exchange Commission (the SEC") set out in Industry Guide 7. Consequently, reserve and resource information contained in this news release is not comparable to similar information that would generally be disclosed by U.S. companies in accordance with the rules of the SEC.
For More Information John Seaberg Senior Vice President, Investor Relations and Corporate Development O: 775-284-5757 M: 303-668-7991 jseaberg@klondexmines.com
Gem International Resources Inc.:
2017-01-24 09:10:00 PM ET (Marketwired)
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan 24, 2017) - Gem International Resources Inc. (the "Company") (TSX VENTURE:GI) is pleased to announce that subsequent to its news release dated January 9, 2017, it has entered into an agreement (the "Amendment Agreement") with Global Gems International Limited ("Global Gems") to amend its existing arrangement for the earn-in of an interest in the Dala diamond exploration Project in the Lunda Sul Province in Angola.
As announced earlier, Global Gems holds a 45% interest in the Dala Project. The Amendment Agreement provides that the Dala Project would be enlarged to include exploration and exploitation rights for kimberlites within the Dala License including the 6 known kimberlite pipes located by previous operators. These only received very limited exploration and have not been fully evaluated. Numerous magnetic kimberlite targets remain untested at Dala and an extensive data base exists.
Under the Amendment Agreement the Company may acquire 88% of Global's 45% interest in the restructured Dala Project by paying to Global Gems the amounts of US$300,000 on or before each of the 3rd and 4th anniversaries of TSX Venture approval and US$400,000 on or before the 5th anniversary of such approval. The Company would also be required to incur US$13,000,000 in exploration and development expenditures over 5 years (US$3,000,000 for each of year 1 (which must be raised and paid by May 31, 2017) and year 2, US$2,000,000 for year 3, and US$2,500,000 for each of years 4 and 5). The US$300,000 already provided to Global Gems as start-up capital would be credited against year 1 expenditures. The Company shall be entitled to a share of any revenues generated from saleable products, if any, from the property prorated to the proportion of expenditures spent to the total expenditures to be spent under the Amendment Agreement.
The Company will also be required issue to the principals of Global Gems 30,000,000 shares (10,000,000 shares on each of the 3rd, 4th and 5th anniversaries of TSX Venture approval). After completing the private placement of not less than CDN$500,000, the Company will pay to Global Gems the amount of US$150,000 (the "Payment"), which also will be credited against year 1 expenditures.
Accordingly, the Company intends to carry out a private placement (the "Financing") to raise proceeds of up to CDN$500,000 from the sale of up to 10,000,000 units at a price of CDN$0.05 per unit. Each unit will consist of one common share and one non-transferable share purchase warrant for the purchase of one further common share of the Company within two years of the date of grant at the price of $0.15 per such common share.
The funds raised will be used for Company working capital, the Payment, and the preparation of legal documents and regulatory approval costs related to the closing of the Amending Agreement.
The Financing is subject to regulatory approval and customary resale restrictions.
A maximum allowable finder's fee for funds raised may be payable in cash, shares or warrants in accordance with the policies of the TSX Venture Exchange.
On behalf of the Board of GEM INTERNATIONAL RESOURCES INC.
Denis Hayes, CEO / Director
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
Gem International Resources Inc. Denis Hayes CEO / Director (604) 871-9916 (604) 871-9926
Indicated Mineral Resources at its Lac Knife Flake Graphite Project, Quebec
2017-01-24 01:51:00 PM ET (Marketwire Canada)
OTTAWA, ONTARIO--(Marketwired - Jan 24, 2017) -
Editor's note: There is a figure associated with this release.
Focus Graphite Inc. (TSX VENTURE:FMS)(OTCQX:FCSMF)(FRANKFURT:FKC) ("Focus" or the "Company") is pleased to announce an updated Mineral Resource Estimate for its 100%-owned Lac Knife flake graphite project, located 27 km south of Fermont, in the Côte-Nord administrative region of northeastern Québec. The updated Mineral Resource Estimate is based on 231 drill holes totalling 22,505 metres of historic and recent drilling and has been prepared by AGP Mining Consultants Inc. in accordance with Canadian Securities Administrators' National Instrument 43-101 "Standards of Disclosure for Mineral Projects" (NI 43-101).
Highlights:
Measured and Indicated Mineral Resources increased by 26% when reported at a cut-off of 3.0% Graphitic carbon (Cg) to 12.1 million tonnes grading 14.64% Cg (Table 1) compared to the previous estimate of 9.6 million tonnes grading 14.77% Cg1 at the same cut-off (Table 2).
Upgraded 2.5 million tonnes of Inferred resources to the Indicated category.
Delineated an additional 2.3 million tonnes of Inferred resources that are located within the southern extension of the Lac Knife deposit.
The updated Mineral Resource Estimate increased the in-situ graphite content by 25% to 1.771 million tonnes in the Measured and Indicated category.
At the 3% Cg cut-off grade, Measured and Indicated Mineral Resources are now estimated at 12.1 million tonnes grading 14.64% Cg (Table 1). Additionally, there are 2.3 million tonnes of Inferred resources at 16.20 % Cg (Tables 1 and 2).
Table 1. Lac Knife Mineral Resource Estimate @ 3.0 % Cg cut-off
Tonnage Cg In Situ Graphite
(t) (%) (t)
Measured 447,000 21.45 96,000
Indicated 11,654,000 14.38 1,675,000
Measured + Indicated 12,101,000 14.64 1,771,000
Inferred 2,299,000 16.20 372,000
Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
There is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves.
The rounding of tonnes as required by NI 43-101 reporting guidelines may result in apparent differences between tonnes, grade and contained graphite.
1 Refer to Focus news release dated January 28th, 2014 available at www.focusgraphite.com and at www.sedar.com.
Focus Graphite President and CEO Gary Economo stated: "This second increase in Measured and Indicated resources since 2014 continues to reflect the quality our Lac Knife flake graphite deposit and is another positive step supporting the development of the Lac Knife project."
The update to the Mineral Resource Estimate is based on the addition of the 2014 exploration and definition drilling programs that added 65 new drill holes of which 41 targeted the Lac Knife deposit's southern extension. The additional 4,871 metres of drilling successfully achieved the objectives of delineating the expansion of the mineralized zones to the south and to upgrade the quality of existing Inferred resources to the Indicated category. This resource update is now supported by a total of 231 drill holes totalling 22,505 metres of historic and recent drilling.
As shown in Table 2 below, the resource tonnage increased by 26% in the Measured and Indicated category from 9.6 million tonnes grading 14.77% Cg in the Lac Knife project Feasibility Study2 ("FEAS") to 12.1 million tonnes grading 14.64% Cg in this new update. This translated to an increase of 25% of in-situ graphite from 1.414 million tonnes to 1.771 million tonnes.
Table 2: Sensitivity to cut-off change and comparison to previous estimate (2014)
Updated 2014 Percent Change
Mineral Resource Estimate Mineral Resource Estimate
(3.0% Cg Cut-off base case) (3.0% Cg Cut-off base case)
Cut-off Tonnes CG (%) Cg Tonnes Tonnes CG (%) Cg Tonnes Tonnage Graphite
Measured > 10.0 447,000 21.45 96,000 428,000 23.81 102,000 4% -6%
> 5.0 447,000 21.45 96,000 432,000 23.66 102,000 3% -6%
> 3.0 447,000 21.45 96,000 432,000 23.66 102,000 3% -6%
> 2.0 447,000 21.45 96,000 432,000 23.66 102,000 3% -6%
Indicated > 10.0 9,832,000 15.56 1,530,000 7,466,000 15.77 1,177,000 32% 30%
> 5.0 11,571,000 14.45 1,672,000 9,065,000 14.44 1,309,000 28% 28%
> 3.0 11,654,000 14.38 1,675,000 9,144,000 14.35 1,312,000 27% 28%
> 2.0 11,656,000 14.38 1,675,000 9,146,000 14.35 1,312,000 27% 28%
Measured + Indicated > 10.0 10,272,000 15.82 1,625,000 7,894,000 16.21 1,279,000 30% 27%
> 5.0 12,018,000 14.71 1,768,000 9,497,000 14.86 1,411,000 27% 25%
> 3.0 12,101,000 14.64 1,771,000 9,576,000 14.77 1,414,000 26% 25%
> 2.0 12,103,000 14.64 1,771,000 9,578,000 14.77 1,415,000 26% 25%
Inferred > 10.0 2,093,000 17.02 356,000 2,196,000 15.81 347,000 -5% 3%
> 5.0 2,282,000 16.28 372,000 2,941,000 13.75 404,000 -22% -8%
> 3.0 2,299,000 16.20 372,000 3,102,000 13.25 411,000 -26% -9%
> 2.0 2,299,000 16.20 372,000 3,116,000 13.20 411,000 -26% -9%
Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
There is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves.
The rounding of tonnes as required by NI43-101 reporting guidelines may result in apparent differences between tonnes, grade and contained graphite.
2 Refer to Focus news release dated June 25th, 2014 available at www.focusgraphite.com and at www.sedar.com.
In the Inferred resource category, the tonnage decreased by 26% from 3.1 million tonnes in the FEAS to 2.3 million tonnes in this resource update. The Inferred resource category average grade increased from 13.25% Cg to 16.20% Cg. This resulted in a reduction of 9% of in-situ graphite in this category from 411,000 tonnes down to 372,000 tonnes. These overall changes in the resources resulted from converting most of the 2.5 million tonnes of Inferred resources in the FEAS resource constraining shell to the Measured and Indicated categories, and also by extending the deposit to the south adding an additional 2.3 million tonnes of Inferred resources in the revised South Central Zone. (See Figure 1).
Figure 1. Isometric representation of the major mineralized zones with resource constraining shell : http://file.marketwire.com/release/fig1_fms.jpg
The updated Mineral Resource Estimate is based on 231 core drill holes totalling 22,505 metres of historic and recent drilling. This includes 149 surface drill holes totalling 12,041 metres completed since 2010.
Mineral Resources have been reported within a constraining pit shell at a cut-off grade of 3.0% graphitic carbon ("Cg").
This update is not deemed material by the Company. Details on the Mineral Resource Estimation methodology are given in the notes below.
Notes on Mineral Resource Estimation Methodology
Mineral resources are estimated in conformance with the CIM Mineral Resource definitions referred to in NI 43-101 "Standards of Disclosure for Mineral Projects". Pierre Desautels, P.Geo., Principal Resource Geologist of AGP Mining Consultants Inc. and Qualified Person under NI 43-101 who is an independent of the Company, has prepared and authorized the release of the mineral resource estimates presented herein. Willie Hamilton, Eng., Senior Mining Engineer of AGP Mining Consultants Inc. and Qualified Person under NI 43-101, has reviewed the technical content of the Press Release. This mineral resource estimate is an update of the January 28th, 2014 estimate conducted by AGP Mining Consultants that supported the Lac Knife FEAS effective June 25, 2014 authored by Met-Chem.
The updated mineral resource is based on 231 core drill holes totalling 22,505 metres of historic and recent drilling. This includes 149 surface drill holes totalling 12,041 metres completed since 2010.
All drill holes are diamond drill core and were sampled and assayed over their entire length in the mineralized section of the core of mostly 1.31 metre sample intervals. A QA/QC program was introduced during the 2010 drill program and expanded during the 2012, 2013 and 2014 programs to include the insertion of standards, duplicates, and blanks and check assays at a secondary laboratory.
Specific gravities were determined by IOS Services Géoscientifiques ("IOS") of Saguenay, Québec. A total of 5,183 determinations exist in the database that were collected by IOS since the 2010 drill program. Due to the strong correlation between the sulphur and bulk density, the model was interpolated with the same parameters used for the sulphur model. The density in the mineralized zone ranges from 2.60 to 3.08 g/cm3.
A detailed review of the geological logs and grade distribution led to the development of three-dimensional (3D) domain model based lithology and grade boundaries. The "wireframing" or outlining of mineralization resulted in three major mineralized zones with eight minor accessory zones. The grade is typically above 3% Cg within the wireframes but was allowed to be as low as 1% in the occasional lower grade zones internal to the high grade material and also on the edge of the wireframe. These domains were utilized to perform variography studies and to develop grade interpolation constraints.
For the treatment of outliers, each statistical domain was evaluated separately and no top cut was necessary. However, a search restriction of 30 x 30 x 30 metres was imposed on threshold values of 38% Cg in order to restrict the influence of the highest values during the interpolation.
The composite intervals selected were 3.0 metres nominal length. Shorter composites that were generated at the intersection with wireframes were distributed over the lengths of the other composites within the same domain.
A 3D geological block model was generated using GEMS© software. The block model matrix size is 6 x 6 x 5 metres. Ordinary kriging was used for all domains with inverse distance and nearest neighbour check models. The interpolation was carried out in multiple passes with increasing search ellipsoid dimensions. Classification for all models was based primarily on the pass number, distance to the closest composite and the krige variance. The Measured classification was only retained in the area in proximity to the bulk sample pits. No adjustment to the classification was made for blocks interpolated primarily with historical holes since these were found to be adequate for resource modelling.
The reported mineral resources are considered to have reasonable prospects of economic extraction. AGP created a pit shell using the Lerchs-Grossman pit optimization algorithm and costs, sales price and pit and plant operating parameters that were derived from the Lac Knife FEAS (June 25th, 2016) as well as from typical regional costs; Selling Price - 2,000 $/t (FOB Sept-Iles);
Selling Price - 2,000 $/t (FOB Sept-Iles);
Mill Recovery - 91%;
Concentrate Grade - 97.8%;
Pit Slope - 40 and 48 degrees;
Overburden Mining Cost - 4.00 $/t mined;
Rock Mining Cost - 5.50 $/t mined;
Processing Cost - 42.50 $/t milled;
Transportation Cost - 25.00 $/t of concentrate;
General Administration Cost - 2.50 $/t milled.
The resulting pit shell encompasses most of the estimated Measured, Indicated and Inferred Resources. The rounding of tonnes as required by NI 43-101 reporting guidelines may result in apparent differences between tonnes, grade and contained graphite.
Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
The quantity and grade of reported Inferred mineral resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred mineral resources as Indicated or Measured mineral resources and it is uncertain if further exploration will result in upgrading them to Indicated or Measured mineral resources.
Lac Knife Project
The Lac Knife project comprises 57 map-designated claims covering 2,986.31 ha located in Esmanville Township (NTS map sheet 23B/11), 27 km south-southwest of the iron-mining town of Fermont, in the Côte-Nord administrative region of Québec. Focus acquired a 100% interest in the project in October 2010. A map showing the location of the Lac Knife project is available on the company's website at www.focusgraphite.com.
The mineralization at Lac Knife is hosted in biotite-quartz-feldspar paragneiss and schist of the Nault Formation, in association with iron formations of the Wabush Formation. These are equivalent to the lower Proterozoic Labrador Trough rocks affected by the late Proterozoic Grenvillian orogeny. High grade metamorphism and folding associated with the Grenvillian orogeny has resulted in the formation of important concentrations of graphite dominated by value-enhanced large flakes.
Sampling, Assaying and QA/QC
The entire drill cores were logged at the Lac Knife camp and shipped to IOS' facilities in Saguenay, Québec for sample preparation. Two slabs of about 1/4 of the 4-inch diameter PQ core were sawed parallel on each side of the central axis of the core. One of the slabs was earmarked for geochemical analysis while the other slab was kept as a witness sample. Center parts of the core are kept for possible subsequent uses. The samples are mostly 1.5 metres in length with variances from 0.5 m to 1.8 m. Slab samples were dried before processing for density measurement, crushing and grinding at the IOS sample preparation laboratory.
Once prepared, the samples were sent to the Consortium de Recherche Appliquée en Traitement et Transformation des Substances Minérales ("COREM"), an ISO/IEC 17025:2005 certified facility located in Québec-City, for graphitic carbon (Cg) analysis using LECO high frequency combustion method with infrared measurement (internal analytical code LSA-M-B10 for graphitic carbon; ISO 9686:2004). For the measurement of graphitic carbon, the sample is pre-treated with nitric acid, placed in a LECO capsule and introduced in the furnace (1,380ºC) in an oxygen atmosphere. Carbon is oxidized to CO2. After the removal of moisture, gas (CO2) is measured by an infrared detector and a computerized system calculates the concentration of graphitic carbon (% Cg). Total sulphur was also analyzed by LECO (code LSA-M-B41). For sulphur determinations, the sample is placed in a LECO capsule and introduced in the furnace (1,380ºC) until sulphur is oxidized to SO2. After the removal of moisture, gas (SO2) is measured by an infrared detector and a computerized system calculates the concentration of total sulphur (% S).
Under the QA/QC program, about 10% of the samples were analyzed by COREM for total (code LSA-M-B45), organic (code LSA-M-B58), inorganic (code LSA-M-B11) and graphitic (code LSA-M-B10) carbon as well as for total sulphur. Duplicates of these samples were also sent to ACTLABS Laboratories in Ancaster, Ontario (ISO/IEC 17025:2005 with CAN-P-1579) for graphitic carbon (code 5D - C Graphitic) and total sulphur (code 4F - S Combustion infrared detection) determinations and for 35 multi-element analysis using ICP methods (code 1E2 - Aqua Regia). IOS introduced standards, duplicates (sawing, crushing or grinding duplicates) and blank samples into each batch of core samples as part of the QA/QC program.
Qualified Persons
Pierre Desautels, P.Geo. Principal Resource Geologist of AGP Mining Consultants Inc. Qualified Person under NI 43-101 who is independent of the Company, has prepared and authorized the release of the mineral resource estimates presented herein. Willie Hamilton, Eng., Senior Mining Engineer of AGP Mining Consultants Inc. and Qualified Person under NI 43-101 guidelines has reviewed the technical content of the News Release.
Mr. Marc-André Bernier, M.Sc, P.Geo (Québec and Ontario), a Director of the Company and a Qualified Person under National Instrument 43-101 - Standards of Disclosure for Mineral Projects, has reviewed and approved the technical content of this news release.
About Focus Graphite
Focus Graphite Inc. is an advanced exploration and mining company with an objective of producing graphite concentrate at its wholly-owned Lac Knife flake graphite deposit located 27 km south of Fermont, Québec. In a second stage, to meet Quebec stakeholder interests of transformation within the province and to add shareholder value, Focus is evaluating the feasibility of producing value added graphite products including battery-grade spherical graphite.
The Lac Knife project hosts a Measured and Indicated Mineral Resource* of 12.1 million tonnes grading 14.64% Cg (447,000 tonnes Measured @ 21.45% Cg and 11,654,000 tonnes Indicated @ 14.38% Cg) as natural flake graphite with an additional Inferred Mineral Resource* of 2.3 million tonnes grading 16.20% Cg. Focus' goal is to assume an industry leadership position by becoming a low-cost producer of technology-grade graphite concentrate.
The Feasibility Study filed with SEDAR (www.sedar.com) on August 8, 2014 for the Lac Knife Project indicates the project is economically viable and has the potential to become a low cost graphite concentrate producer based on 7.86 million tonnes of Proven and Probable Mineral Reserves** grading 15.13% Cg included in the Mineral Resource (429,000 tonnes Proven @ 23.61% Cg and 7,428,000 tonnes Probable @ 14.64% Cg).
On May 27, 2014, the Company announced the potential for high value added sales in the Li-ion battery sector following battery coin cell tests performed on Spherical Graphite ("SPG") produced from the Lac Knife graphite concentrate. Testing measured the performance metrics and confirmed Focus' capability to tailor lithium ion battery-anode-grade graphite and value added products to meet the most stringent customer specifications.
On February 26, 2015, the Company announced the results from independent laboratory testing that indicated Coated Spherical Graphite ("CSPG") produced from Lac Knife concentrate outperformed synthetic graphite anodes for use in lithium-ion batteries.
On November 25, 2015, the Company announced results from independent laboratory testing that reported "zero loss" in long-term battery anode cycle testing of high purity CSPG produced from Lac Knife concentrate.
On March 31, 2016, the Company announced the introduction of a high conductivity graphite cathode material produced from expanded Lac Knife graphite and exhibiting twice the conductivity of cathodes versus standard grades of synthetic and natural flake graphite used in commercially available lithium-ion batteries.
On August 8, 2016, the Company announced it has successfully purified fine flake graphite - sourced at its wholly owned Lac Knife, Québec deposit - from 95% to 99.99% purity using a proprietary energy efficient purification process. Attaining a 99.99% purity level from fine graphite flake is significant. Focus now has the technology to economically purify low value fine flake graphite or, "fines" to a high value material needed for the production of lithium-ion batteries.
On August 17, 2016, the Company reported that the maiden core drilling program conducted at its wholly-owned Lac Tétépisca graphite project in 2014 intersected significant subsurface graphitic mineralisation along the trend of the Manicouagan-Ouest Graphitic Corridor including in hole LT-14-04 which intersected 103.9 m (true thickness) grading 10.25% Cg.
On August 24, 2016, the Company released channel sampling results from its wholly-owned Lac Tétépisca Nord graphite project. An 86.8 m long trench crosscut 67.2 m grading 6.75% Cg.
On November 21, 2016, the Company and Joint-Venture partner SOQUEM Inc. reported high hydrometallurgical recoveries of rare earth elements (REE) from the Kwyjibo REE project. The extraction rate from rare earth concentrate is approximately 90% for all REE within the Magnetitite Mineralization Type (MM1). The relatively simple metallurgical flowsheet is a distinctive feature of the Kwyjibo project among peer rare earth elements projects.
On January 20, 2017, the Company released the results of its 2016 infill and extension drilling program at its wholly-owned Lac Tétépisca graphite project including in Hole LT-16-32 which intersected 102.1 m (true thickness) grading 10.7% Cg.
Focus Graphite is a technology-oriented graphite mining development company with a vision for building long-term, sustainable shareholder value. Focus also holds a significant equity position in graphene applications developer Grafoid Inc.
* Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
** The Measured and Indicated Mineral Resources are inclusive of those Mineral Resources modified to produce Mineral Reserves. The reference point for the Mineral Reserve Estimate is the mill feed.
For more information about Focus Graphite, please visit www.focusgraphite.com.
Forward Looking Statement
This News Release contains "forward-looking information" within the meaning of Canadian securities legislation. All information contained herein that is not clearly historical in nature may constitute forward-looking information. Generally, such forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: (i) volatile stock price; (ii) the general global markets and economic conditions; (iii) the possibility of write-downs and impairments; (iv) the risk associated with exploration, development and operations of mineral deposits; (v) the risk associated with establishing title to mineral properties and assets; (vi) the risks associated with entering into joint ventures; (vii) fluctuations in commodity prices; (viii) the risks associated with uninsurable risks arising during the course of exploration, development and production; (ix) competition faced by the Company in securing experienced personnel and financing; (x) access to adequate infrastructure to support mining, processing, development and exploration activities; (xi) the risks associated with changes in the mining regulatory regime governing the Company; (xii) the risks associated with the various environmental regulations the Company is subject to; (xiii) risks related to regulatory and permitting delays; (xiv) risks related to potential conflicts of interest; (xv) the reliance on key personnel; (xvi) liquidity risks; and (xvii) the risk of potential dilution through the issue of common shares. Forward-looking information is based on assumptions management believes to be reasonable at the time such statements are made, including but not limited to, continued exploration activities, no material adverse change in metal prices, exploration and development plans proceeding in accordance with plans and such plans achieving their stated expected outcomes, receipt of required regulatory approvals, and such other assumptions and factors as set out herein. Although the Company has attempte d to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Such forward-looking information has been provided for the purpose of assisting investors in understanding the Company's business, operations and exploration plans and may not be appropriate for other purposes. Accordingly, readers should not place undue reliance on forward-looking information. Forward-looking information is made as of the date of this News Release, and the Company does not undertake to update such forward-looking information except in accordance with applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the accuracy of this release.
Focus Graphite Inc. Mr. Gary Economo Chief Executive Officer +1 613-241-4040 geconomo@focusgraphite.comwww.focusgraphite.com