Geodex sees short payback, long life at Sisson Brook

A 20,000-tonne-per-day open pit mine on the Sisson Brook tungsten-molybdenum project in central New Brunswick is economic, says a study prepared for Geodex Minerals (GXM-V).

The preliminary economic analysis, by Wardrop Engineering, examined production from the resource in Zone III of the Sisson Brook deposit, which has been estimated at 109 million tonnes at average grades of 0.084% tungsten oxide (WO₃) and 0.032% molybdenum, using a cutoff grade of 0.125% WO₃ equivalent (T.N.M., Nov. 19/07). The pit design showed a waste-to-ore ratio slightly over 1.

Mining at 20,000 tonnes per day would produce 1,500 tonnes molybdenum and 3,700 tonnes tungsten annually.

A full metallurgical study is underway, but early-stage testing showed no significant extractive problems, and assumed recoveries were 70% for tungsten and 85% for molybdenum. A plant taking 6.8 million tonnes per year would recover molybdenum by conventional sulphide flotation and tungsten by gravity followed by flotation on the gravity tails.

Wardrop estimated a capital cost of $353 million for the project, including indirect costs. The price for the mill was $105 million of that.

Total costs of production were $9.16 per tonne of ore, with $5.33 of that from processing.

Using assumed prices of US$21.60 per lb. for molybdenum oxide, and US$8 per lb. for tungsten oxide, the project has a net present value of $693 million and an internal rate of return, before tax, of 29.8%. The cash flow model used an 8% discount rate. The model also assumed a Canadian dollar at US85.5. The project would pay back in 33 months, and would have a 31-year mine life based on the existing resource.

An updated resource calculation is scheduled, which is expected to yield a larger estimate, as another zone (the East Flank) could be added to the resource and a significant amount of infill drilling did not make up part of the October resource estimate.

Geodex has a 70% interest in the project, with 70% held by private Champlain Resources.