TORONTO (miningweekly.com) – Exploration junior MGX Minerals has released the results of a preliminary economic assessment (PEA) for its Driftwood Creek magnesium project, located in British Columbia, outlining the project's potential to become a high-margin, low-cost producer of magnesium oxide (MgO).
The early-stage assessment has calculated a pre-tax net present value for the project of C$529.8-million, with an internal rate of return coming in at 24.5%, providing a 3.5-year payback period of the C$235.9-million initial capital component. Total capital costs have been pegged at C$239.8-million over the 19-year mine life.
The PEA was based on a conventional quarry pit operation with a 1 200 t/d process plant, comprising conventional crushing, grinding, flotation upgrading, calcination and sintering, to produce a saleable dead burned MgO powder product.
"We are extremely pleased with results of the PEA, which display Driftwood's ability to become a high-margin, low-cost producer of MgO in a politically secure jurisdiction. We believe this significant milestone outlines a clear path forward and provides numerous opportunities to further enhance the economics of the project with a prefeasibility study," MGX president and CEO Jared Lazerson said in a statement.
MGX noted that the plant will also be able to produce caustic-calcined MgO as a separate saleable product.
The yearly MgO output is expected to average 169 700 t/y. The plant is expected to hit an average recovery of 90% with an MgO purity of 94.6%.
Cash costs are calculated at C$350/t of magnesium oxide, and all-in sustaining costs are expected to average C$351/t of MgO.
The project holds resources totalling 7.84-million tonnes, with 19.17-million tonnes of rock material that includes 60 000 t of capitalised rock.
MGX equity listed in Toronto closed Wednesday down 7% at C$1.34 apiece.