Vancouver —
Based on an initial capital cost of US$140 million, annual throughput of 3.5 million tonnes per year and a mine life of 16 years, Nui Phao would have a 21% internal rate of return. The payback period would be 3.8 years and the average annual production of concentrates is estimated at 6,000 tonnes tungsten trioxide, 196,000 tonnes fluorite, 5,600 tonnes copper, 5,000 oz. gold and 360 tonnes bismuth.
The net present value (NPV) of the project, after tax, is US$338 million, based on a 0% discount rate. At a 10% discount rate, the NPV falls to US$88 million.
Commodity prices for the study are based on long-term historical prices of US$5,475 per tonne for tungsten trioxide, US$140 per tonne for fluorite, US85 per lb. for copper, US$325 per oz. for gold, and US$3.20 per lb. for bismuth. No allowance was made for inflation of commodity prices or costs. The financial model also assumed equipment was purchased new, with no salvage value of replaced equipment during operations and no salvage value of project-related infrastructure and equipment at the end of the mine’s life.
The measured resource at Nui Phao stands at 27.1 million tonnes averaging 0.68% tungsten trioxide-equivalent, or 0.25% tungsten trioxide, 0.25 gram gold per tonne, 0.23% copper, 0.11% bismuth and 8.2% fluorite. The calculation was based on a cutoff grade of 0.2% tungsten trioxide-equivalent.
The indicated resource is pegged at 22.3 million tonnes averaging 0.6% tungsten trioxide-equivalent, or 0.19% tungsten trioxide, 0.22 gram gold, 0.21% copper, 0.104% bismuth and 7.9% fluorite. The inferred resource is pegged at 24 million tonnes averaging 0.55% tungsten trioxide-equivalent, or 0.18% tungsten trioxide, 0.16 gram gold, 0.16% copper, 0.081% bismuth and 8.1% fluorite. The resource estimates included all drill holes up to and including no. 110.
Tiberon reports that only measured and indicated resources were used to form the basis of the mine design and production schedule. Inferred resources were added to the minable tonnage and scheduled only after the mine design shell was completed.
The prefeasibility study calls for the project to be operated as a conventional truck-and-loader open-pit mine. The mine is would operate at 10,000 tonnes per day over a life of 16 years. The single open pit is expected to have an overall stripping ratio of 1.6 tonnes of waste to 1 tonne of ore.
The process plant would employ a conventional “gravity plus flotation” tungsten concentrator. Preliminary metallurgical tests indicate recoveries of 80% tungsten, 70% fluorite, 75% copper, 20% gold and 10% bismuth.
The plant would consist of a conventional 3-stage crushing circuit, ore storage, grinding, sulphide and copper flotation, gravity concentration of tungsten, tungsten and fluorite flotation, and storage of concentrates.
Anticipated direct costs are as follows: US$12.7 million for the mine; US$51.2 million for the process plant; US$6.5 million for utilities; US$4.4 million for site preparation and roads; US$3.6 million for tailings; and US$3.4 million for ancillary facilities. Indirect costs are pegged at US$39 million, and contingency costs add US$18.9 million the bill.
Equipment costs were based on purchases of new equipment without escalation or inflation. The presence of a highway, national grid power and active rail line that connect the mine site to the port has had a significant impact on the capital cost.
Results of a financial analysis indicate that the project has a potential after-tax internal rate of return of 20.9% and an after-tax NPV of US$125.6 million at a discount rate of 7.5%.
Tiberon says there are opportunities for enhancing the economics of the Nui Phao project, such as additional resources and pit expansion, improved fluorite recovery, bismuth recovery for a sulphide concentrate, gold recovery from gossan material, and an all-flotation alternative, which would result in a simpler concentrator with a lower capital cost.
The study was performed by AMEC E & C Services in conjunction with Knight Piesold Consulting and Laurion Consulting.
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