Photo by: Reuters
TORONTO (miningweekly.com) – TSX-V-listed True North Gems on Tuesday announced that it had given orders to its joint venture (JV) partner Leonhard Nilsen & Sonner Greenland (LNSG) to allow equipment to be mobilised and to inaugurate construction at the Aappaluttoq ruby and pink sapphire project, located in south-west Greenland.
"This exciting announcement marks the continuation of a very successful transition year for True North. It is anticipated that the construction will progress very quickly and will be a testament to the experience of our partners LNSG and all their investment in planning in anticipation of the commencement notice,” True North president and CEO Nicholas Houghton said.
Key construction objectives included to transport and install a prefabricated loading dock that would enable equipment to be moved to site; moving rolling stock required to start road construction; setting up and establishing living quarters and accommodation for the construction crew, with the facilities remaining for future operations; and completing all infrastructure, which would enable planned production to start next year.
True North said that under terms of the JV agreements with LNSG, it was able to issue the ‘commencement notice’ after securing a C$11-million financing package from LNSG earlier this month.
"The news of True North's successful financing and the anticipated commencement of construction was well received in Greenland by all. Jens-Erik Kirkegaard, the government Minister responsible for industry and mineral resources, hailed the financial news as ‘a strong signal to the world and investors that mining in Greenland is certainly possible’," True North Gems Greenland MD Bent Olsvig Jensen said.
"We are pleased to say we have received a large number of applications from people who are looking forward to the upcoming employment opportunities."
PRECIOUS PROJECT
According to a 2011 prefeasibility report, the project contemplated an openpit mine, which would produce up to 25 000 t/y of ore and 430 000 t/y of waste, on a seasonal basis.
A rough corundum concentrate would be produced at the mine site and shipped 160 north for further processing at the company’s facility in Nuuk. The final product would be a mix of rough ruby/sapphire, along with cut and polished ruby and sapphires.
The Aappaluttoq project returned a positive pre-tax net present value (NPV) of $25.7-million at an 8% discount rate and an internal rate of return (IRR) of 19.1%. The after-tax NPV was $17.5-million at 8% discount and the IRR was 16.5% with an after-tax payback period of five years.
Despite the prices of gemstones varying greatly depending on quality, independent valuations had valued a 0.69 ct ruby from Aappaluttoq at $3 220/ct and a 0.96 ct pink sapphire from Aappaluttoq at $460/ct.