Projects

Bovill Kaolin


Bovill Kaolin

The Project geology is characterized by the Thatuna Batholith, a granitic intrusive of Cretaceous age, composed mainly of Na-feldspar, K-feldspar and quartz. The mineral deposit is the overprinting of the intrusive rock by a weathered saprolite horizon which directly overlies the bedrock from which it was derived. During the natural processes of weathering, the original plagioclase feldspars have preferentially broken down to produce the clays kaolinite and halloysite. The K-feldspars have resisted weathering to a degree and much of the original component remains as free grains. Similarly, the quartz component of the host rock remains as free grains in the weathered material. The mineral resource products include kaolinite, halloysite, K-feldspar and quartz.

The exploration programs supporting the mineral resource estimate consists primarily of diamond core drilling, sampling, chemical analysis and material characterization studies. The drillhole database supporting the resource estimation of this report consists of 322 diamond core drillholes totaling 35,909 ft. The drillholes average 112 ft in length, all are oriented vertical and spaced on 100 to 200 ft centers. The original assay sample lengths generally range from 5 to 10 ft with an average of 5.8 ft. Analytical testing consists primarily of material characterization studies used to support the resource estimation of this report. This work involved two general areas of study including particle size analysis and clay characterization.

Resources and Reserves

The mineral resource statement completed by SRK Consultants (USA) Inc. of Denver, CO is presented below. The resource is confined within a Whittle™ pit design. No cut-off grade (CoG) isapplied to the resource because all recovered material in the resource estimation contains sufficient sand, kaolinite, or halloysite to be mined for a profit.

Measured andIndicated Mineral Resource Statement (as of April 20, 2014)*
Classification Location Tons
(Ml
Qtz & K-Spar Sand
(%)
Kaolinite
(%)
Halloysite
(%)
Qtz & K-Spar Sand Tons
(OOO’s)
Kaolinite Tons
(OOO’s)
Halloysite Tons
(OOO’s)
Measured Kellys Hump 2.3 76.7 13.0 3.9 1,761 297 90
Middle Ridge 1.0 74.8 12.0 5.9 745 120 58
All 3.3 76.1 12.7 4.5 2,505 417 148
Indicated Kellys Hump 3.8 72.2 18.0 2.8 2,721 680 107
Middle Ridqe 2.9 77.0 12.4 3.0 2,208 355 86
WBL Pit 1.3 75.0 15.8 1.7 973 204 22
All 7.9 74.4 15.6 2.7 5,902 1,239 215
M & I Kellys Hump 6.1 73.9 16.1 3.2 4,482 978 196
Middle Ridge 3.9 76.4 12.3 3.7 2,952 474 144
WBL Pit 1.3 75.0 15.8 1.7 973 204 22
All 11.2 74.9 14.8 3.2 8,407 1,656 362
• Note that values presented here have been rounded to reflect the levelof accuracy.
Source: SRK Consulting,2014

Portions of this resource were then upgraded to proven and probable reserves as part of the a June 2014 Prefeasibility Study.

Mineral Reserve Statement, (as of June 14, 2014)
Reserve Mt Halloysite
Grade
Kaolin Grade Qtz & K-Spar
Sand (%)
Halloysite
Tons
Kaolinite
Tons
Qtz & K-Spar
Sand (t)
Kelly Hump
Proven 1.7 4.8% 13.5% 81.7% 82,000 229,000 1,389,000
Probable 1.0 6.0% 15.4% 78.6% 60,000 154,000 782,000
Kelly South              
Proven 0 0 0 0 0 0 0
Probable 1.3 1.6% 23.2% 75.3% 20,000 296,000 959,000
Middle Ridge              
Proven 0.7 6.9% 12.8% 80.3% 48 ,000 90,000 563,000
Probable 1.4 4.6% 13.1% 82.3% 66,000 187,000 1,179,000
WBL              
Proven 0 0 0 0 0 0 0
Probable 0.8 2.4% 16.5% 81.1% 18,000 128,000 629,000

Source:SRK

Notes:

  1. Some numbers may not add up as a function of rounding.
  2. Reserves are based on 100% mine recovery and 0% dilution. This is due to the small equipment being utilized and th selectivity of the material being mined.This will require further review as part of additional studies.
  3. Halloysite processing recovery is 90%.
  4. Kaolinite processing recovery is 90%.
  5. Quartz and K-Spar processing recovery is 68%.
  6. Variable selling prices were used depending on supply.
  7. There is an overall strip ratio of 0.69:1 (waste:ore). 

Economic Analysis

As part of the June 2014 PFS, SRK estimated the initial capital required to be US$72.7 million with an additional US$18.2 million in sustaining capital yielding total Life of Mine capital estimated at US$90.8 million.

Operating costs are estimated on preliminary mine and process design criteria, engineering, as well as budgetary quotes. Over the LoM, operating costs will be about US$70.72/t of product.

The financial analysis results, shown in Table 1.12.1, indicate a NPV 6% of US$212.7 million with an IRR of 30.5% (after estimated taxes). Payback will be in 3 years from the start of production. The following provides the basis of the SRK LoM plan and economics:

  • A mine life of 25 years;
  • Product yields include, 3.8% halloysite, 6.9% kaolin, 7.3% metakaolin, 16.6% K-Spar, and 37.9% quartz, over the LoM;
  • An average operating cost of US$70.68/t-product;
  • Capital costs of US$90.8 million, consisting of initial capital costs of US$72.7 million and sustaining capital over the LoM of US$18.2 million
  • Mine closure cost, included in the above estimates is US$5.1 million; and
  • The analysis does not include provision for salvage value.