Crowflight gets positive economic study on Bucko

A feasibility study on the Bucko nickel deposit in the Thompson belt of Manitoba shows favourable economics, putting a $22.6-million net present value on the project.

Project operator Crowflight Minerals (CML-V) expects to have a revised study, sufficient to seek financing, by the second quarter of next year. At the same time, it has renegotiated its agreement with optionor Falconbridge (FAL.LV-T, FAL-N) to earn its interest in the project in a more manageable bite.

Bucko has an indicated resource of 1.8 million tonnes grading 2.1% nickel, based on a 1.5% cutoff grade. For the purposes of the study, Crowflight’s consultants pared the resource down to a reserve of 1.7 million tonnes grading 1.92% nickel. That resource would be mined at 1,000 tonnes per day, with production of a concentrate on-site.

The mine would have a capital cost of $21 million and a mill $35.2 million, with production beginning part-way through 2007. The study identified mining and milling costs of $1.74 per lb. nickel, and smelting, refining and transport charges of $2.56 per lb., for a total cash cost of $4.40 per lb. including a 2.5% net smelter return to Falconbridge.

The study’s economic models, using US$11,000 per tonne (US$5 per lb.) as the nickel price, put the net present value of Bucko at $22.6 million, based on a 10% discount rate. The internal rate of return is 23.9%. Bumping nickel prices to US$13,200 per tonne (US$6 per lb.) brings the discounted value to $53.1 million.

Under the revised option agreement with Falconbridge, still to be finalized, Crowflight will earn a 33% interest in the mining lease surrounding Bucko by funding a bankable feasibility study on Bucko and by spending $1.5 million on exploration on the “TNB South” land package — a land package of five properties in the Wabowden area, including Bucko. Crowflight brings its interest to 50% by delivering the feasibility study by the end of 2006 and by spending $6 million on TNB South by the end of April 2009.

Crowflights commitments on regional exploration have been rescheduled under the revised agreement.