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Northcliff completes positive feasibility study for New Brunswick project

30th January 2013

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Toronto-listed Northcliff Resources on Tuesday announced the results of a feasibility study for the Sisson project, located in Canada’s New Bruswick province, and confirmed the long‐life openpit tungsten and molybdenum development as a technically and economically strong project.

The Vancouver-based company said the project has a pretax net present value (NPV) of C$714-million at an 8% discount rate, an internal rate of return (IRR) of 20.4% and a 4.1-year payback on the initial capital expenditures of C$579-million, at long-term metal prices of $350/t for ammonium paratungstate (APT) and $15/lb for molybdenum.

Sisson would be developed as an efficient bulk-tonnage operation and Northcliff said it intended to undertake value‐added processing of tungsten concentrates by constructing and operating Canada’s first APT plant at the project site, which would add significant economic value to the project.

After tax has been deducted, Sisson has a C$418-million NPV, which is equal to $5.40 per Northcliff share, based on 77.39-million outstanding shares, a 16.3% IRR and a 4.5-year payback on the initial capital expense.

A study undertake by consulting company Roskill Consulting Group found the long‐term tungsten prices are expected to increase irrespective of the supply/demand balance. Tungsten production costs have been rising globally and Chinese producers are now more sensitive to tungsten prices than in the past, owing to rising energy, labour, equipment and reagent costs.

In real price terms, APT prices are forecast to average $383/t in the period 2012 to 2025, reaching $433/t in 2025.

The world’s hardest metal, tungsten is used to make steel-cutting blades and drill bits for oil exploration.

“In just two years, Northcliff has advanced Sisson from an exploration and early stage development project to achieve this important project milestone. We have significantly de-risked the project and now have one of the largest tungsten reserves outside China,” Northcliff president and CEO Chris Zahovskis said.

Located 100 km by road north-west of Fredericton, the Sisson property hosts a 334-million-ton proven and probable mineral reserve containing 22.2-million metric ton units (mtu) of tungsten trioxide (WO3) and 154.8-million pounds of molybdenum at an $8.83/t net smelter return (NSR) cutoff.

The life‐of‐mine (LoM) plan, based on the mineral reserve, has an average NSR value of C$26.24/t and an average NSR value over the first five years of production of C$30.75/t processed.

Access to the Sisson project site would be through existing highways and roads and power would be provided by provincial power utility NB Power through a new 138 kV transmission line alongside an existing 345 kV line at an expected cost of C$0.066/kWh.

Mill throughput is expected to average 30 000 t/d or 10.5-million tons a year, for a total of 281-million tons of ore processed over 27 years of operation. The average effective strip ratio is low at 1:1.

The average LoM head grade is estimated to be 0.073% WO3 and 220 parts per million molybdenum. Average LoM recoveries are expected to be 77% for tungsten and 82% for molybdenum.

Sisson is expected to produce an estimated yearly average of 557 000 mtu WO3 contained in APT and 4.1-million pounds molybdenum contained in concentrates. The average yearly production in the first five years is expected to total 689 000 mtu WO3 and 4.4-million pounds molybdenum.

The average cash costs of APT production were forecast at C$8.18/t milled or C$153/t net of molybdenum credits.

Zahovskis added the company is confident that Sisson is on track to earn the necessary environmental and construction permits from federal and provincial regulators in 2014, and Northcliff would be pursuing partnerships with global companies interested in the Sisson project or tungsten offtake agreements, positioning Northcliff to achieve the financing necessary to initiate project construction in 2014 and commissioning by 2016.

“Since finalising the terms of reference for the Sisson project EIA [environmental impact assessment] report last year, Northcliff’s engineering and environmental teams have worked closely together to optimise the project design in order to minimise the mine footprint, enhance environmental safeguards and ensure that we meet or exceed regulatory standards and permitting requirements in New Brunswick.

“We’ve also consulted broadly to understand communities’ and First Nations’ interests in the Sisson project area, and worked hard to propose a project that we believe respects the natural resources, land uses and traditional ways of life in the region,” Zahovskis said.

Shareholders responded positively to the feasibility study and lifted the share price on the Toronto bourse by a third to 40 Canadian cents apiece on Tuesday afternoon.

Edited by Creamer Media Reporter

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