The Woodstock Project, which contains the Plymouth Mn-Fe deposit, is located in Carleton County, southwestern New Brunswick, Canada, approximately 5 km west of the town of Woodstock, New Brunswick.
The Woodstock Project consists of Mineral Claim 5472 comprising 232 mineral claims that cover approximately 5,800 ha of surface area. The Plymouth Mn-Fe deposit is located in the southwestern area of the northernmost claim block, less than one km north of Highway 95 to Houlton, Maine, and is accessed by the Plymouth Road, which is located just west of the deposit.
The information relating to the Woodstock property and Plymouth deposit in the following sections has been largely extracted from the Woodstock Report dated July 10, 2014 that was prepared by Dharshan Kesavanathan, P.Eng., Laszlo Bodi, P.Eng., Michael Cullen, M.Sc., P.Geo, Mike McLaughlin, P.Eng. and Wenchang Ni, P.Eng. of Tetra Tech WEI Inc., Qualified Persons defined by NI 43-101, as filed on SEDAR on July 22, 2014. Information pertaining to the Mineral Resource Estimate of the Plymouth deposit has been extracted from the Woodstock Resource Report dated May 6, 2013 that was prepared by Michael Cullen, P.Geo. and Andrew Hilchey, P.Geo., Mercator Geological Services Limited and Stephanie Goodine, P.Eng. of Thibault and Associates.
The Woodstock Report (2014) and the Woodstock Resource Report (2013) are intended to be read as a whole documents, and sections should not be read or relied upon out of context. The technical information is subject to the assumptions and qualifications contained in the Woodstock Reports and the Woodstock Resource Report (2013). For readers to understand the technical information on Woodstock in this document, they should read the Woodstock Report (2014) and the Woodstock Resource Report (2013) filed under Minco’s profile on www.sedar.com in its entirety, including all qualifications, assumptions and exclusions that relate to the technical information set out in this document.
The Woodstock Project is easily accessible, with the Trans-Canada Highway being located approximately 4 km to the east and Highway 95 in Canada, which extends westward to the U.S. border, being located less than 1 km north of the Plymouth Road that crosses the property.
The mineral resource estimate described in the Woodstock Resource Report is based on validated results of the 2011 and 2013 drilling programs carried out by BMC, and Minco, plus validated results of five drill holes and two trenches completed by MRR in 1987.
The Mineral Resource estimate for the Plymouth deposit, contained in the Woodstock Resource Report, reflects a 3.5% manganese cut-off value and has an effective date of July 10, 2014. The 3.5% cut-off, updated from the 5% manganese cut-off used in a previous May 6, 2013 Plymouth deposit resource statement (Cullen 2013), is based on parameters established by the Woodstock PEA and reflects a reasonable expectation of economic viability based on market conditions and open pit mining.
Plymouth Manganese-Iron Deposit Resource Estimate – July 10, 2014
- Tonnages have been rounded to the nearest 10,000 t.
- Mineral resources that are not mineral reserves do not have demonstrated economic viability.
- This estimate of mineral resources may be materially affected by environmental permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
Total Contained Manganese at the 3.5% Inferred Resource Statement Cut-off Value
The Plymouth deposit, as currently defined by a 3.5% manganese cut-off value, remains open, both along strike and down dip. Further core drilling to assess deposit extensions along strike and down dip in these areas is warranted. Infill drilling within current resource model limits, at a 50-m intercept spacing, would be necessary to upgrade much of the currently defined Inferred Mineral Resource to the Indicated Mineral Resource category of confidence.
The PEA as contained in the Woodstock Report is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically, on which to apply economic considerations to categorize them as mineral reserves. There is no certainty that this PEA will be realized.
The Woodstock Report is effective as of July 10, 2014 and consequently does not reflect subsequent changes in the economic assumptions used under the heading “Market Studies and Contracts” above. The changes include, but are not limited to, changes in currency exchange rates, changes in world spot prices and production of EMM.
The summary economic analysis results for the base case and alternate case nominal resource processing rates of 3,000 t/d and 1,500 t/d with an integrated sulphuric acid plant, indicate a pre-tax net present value (8% discount) of approximately $845.8 million and $463.3 million, respectively, ($461.1 million and $242.2 million, respectively, post tax) and a pre-tax internal rate of return of 17.97% and 15.13%, respectively (14.40% and 12.40%, respectively, post tax). The pre-tax payback period for the base case 3,000 t/d processing rate is 5.6 years and 6.6 years for the alternate case 1,500 t/d processing rate (6.9 years and 8.1 years, respectively, post-tax).
The summary economic analysis results for the base case and alternate case nominal resource processing rates of 3,000 t/d and 1,500 t/d with direct purchase of sulphuric acid, indicate a pre-tax net present value (8% discount) of approximately $818.1 million and $500.6 million, respectively, ($447.5 million and $269.8 million, respectively, post tax) and a pre-tax internal rate of return of 19.06% and 16.82%, respectively (15.11% and 13.64%, respectively, post tax). The pre-tax payback period for the base case 3,000 t/d processing rate is 5.3 years and 5.9 years for the alternate case 1,500 t/d processing rate (6.6 years and 7.3 years, respectively, post-tax). Details of the basis for economic evaluation of the Project and economic sensitivity analysis and the basis for product market pricing is described in greater detail in the Woodstock Report.
The Woodstock Project is expected to have a major positive socio-economic impact on the surrounding communities and on the Province of New Brunswick. The Project is expected to create employment for 223 people during the mining period and 110 people thereafter, for a total project life to 40 years. During the construction phase, levels of employment will be considerably higher. Life-of-project federal taxes are estimated at CDN$594 million in the base case while provincial taxes and royalties are estimated at CDN$932 million in the base case.
Since the date of the Woodstock Report (2014), Buchans has undertaken further evaluation work on the Plymouth property. The results from these programs conducted since the date of the Woodstock Report are not considered material to the previous resource estimate contained in the Woodstock Resource Report.
Given the large capital investment required to build an EMM plant at Woodstock, Buchans has focused its efforts on attracting a development partner from one of the existing EMM producers in China. Despite the benefits highlighted in the PEA for the Woodstock manganese project, the continued problem of excess production capacity within the electrolytic manganese metal (“EMM”) market and the large initial capital commitment required to develop the Woodstock project has hindered Buchans ability to attract potential development partners that have experience in producing and marketing EMM.
The global economic crisis has forced EMM producers, principally in China, to confront a host of difficulties that include a significant decrease in EMM prices, production over-capacity and rising costs of raw materials, electricity and labor. These strained economic conditions have reportedly resulted in the closure of a significant number of Chinese EMM plants.
Despite the closure in a significant number of EMM plants, the industry is still faced with excess production capacity that is anticipated to continue exerting downward pressure on the EMM price until a balance is reached between production capacity and market demand.
Metallurgy & Processing:
An extensive bench scale metallurgical test program completed by Thibault over the last three years (July 2011 to present) has defined a technically viable hydrometallurgical process technology for the production of commercial grade EMM containing between 99.70% to 99.76% Mn. The process development program was focused on the assessment of competitive processing methods with measures to minimize the environmental impact based on commercially proven processing technologies.
The fully integrated process for pre-concentration of the mill feed, hydrometallurgical processing of the concentrate and treatment of the waste streams includes: magnetic separation, leaching of concentrate, purification of leach solutions, electrowinning of manganese metal, iron precipitate and solid waste stabilization and wastewater treatment.
The process technology defined for processing of the mill feed is based on the technology to achieve an ultra-pure solution of manganese sulfate. Manganese occurs in the Plymouth mineral resource predominately as a manganese carbonate (Rhodochrosite) as a reduced form of manganese (Mn with an oxidation state of II) and provides a competitive edge for EMM production relative to high grade manganese oxide feed material (Mn with an oxidation state of III or IV). Many manganese resources around the world are of the oxide type and are not readily soluble in acid, thus requiring high cost roasting, reduction and environmental processing technologies to reduce manganese and form manganese sulphate in solution as is required for EMM production. The Plymouth deposit material is readily soluble in sulphuric acid forming a solution containing manganese sulphate with a minimal amount of heavy metal impurities.
Iron is also present in the Plymouth deposit as both iron oxides (hematite, magnetite and ilmenite) and as an iron carbonate (siderite). In addition to silicates, other gangue (waste) mineralization such as dolomite and apatite are defined as acid consumers.
The development of pre-concentration process technologies has focused on the ability to selectively remove a portion of the acid consuming minerals prior to hydrometallurgical operations to reduce the demand for sulphuric acid. Low intensity magnetic separation (LIMS) to remove magnetic iron followed by high gradient magnetic separation (HGMS) has been identified as the best available technology for pre-concentration of the mill feed with an overall mass rejection of 34% of the mill feed to achieve a concentrate containing 15.65% Mn at 85.7% recovery (results based on bench scale testing completed to date).
The rejection of acid consuming metals such as iron, aluminum and magnesium (which are present in the deposit as carbonate or silicates minerals) and the co-production of magnetic iron concentrate at 54.6% Fe have improved on the economic viability of the proposed hydrometallurgical process.
Hydrometallurgical recovery of concentrate
The hydrometallurgical bench scale test program has identified reagent consumption rates, electrical power consumption rates and the operating parameters for each unit operation based on extensive testing to optimize manganese recovery and purity of the advance electrolyte solution relative to target market specifications for EMM. The operating parameters were used to simulate the hydrometallurgical flowsheet and produce a high purity manganese sulphate electrolyte for extensive bench scale electrowinning tests (using a 1.2 liter electrowinning cell – a prototype to a commercial EMM production cell). Based on quantifying the optimum economic parameters relative to acid consumption, the hydrometallurgical process was operated at reduced acid demand to achieve a 90.0% recovery of manganese (up to 99% of the manganese can be leached using aggressive sulphuric acid leach conditions).
The unique features of the hydrometallurgical process technology include:
- sulphuric acid leaching of the high gradient magnetic separation concentrate is controlled at certain temperature in the range of 60 to 80 degrees Celsius to optimize on acid consumption;
- dual-stage precipitation of iron to form an environmentally stable iron complex for conventional solids disposal, using a combination of pulverized limestone and on-site production of calcined lime for each stage. Iron residues and tailings produced by the process are defined as non-acid generating and are in general compliance with environmental guidelines for leachate quality;
- the removal of trace heavy metals from the leach solution as an environmentally stable metal sulphide followed by the removal of solution phase sulphides by activated carbon absorption prior to electrowinning;
- electrolysis of the high purity manganese sulphate solution to produce EMM using commercially proven electrowinning – membrane cell technology without the addition of toxic heavy metals such as selenium to optimize on the electrowinning efficiency;
- heat recovery (for leaching and iron precipitation unit operations) and co-generation of electricity from the acid plant operations;
- use of compressed natural gas for boiler steam production, and;
- the use of tailor-designed wastewater systems to eliminate residual ammonium sulphate (used as a buffering agent in electrowinning) and trace heavy metals in compliance with final effluent environmental guidelines.
The overall recovery of manganese based on the optimum economic parameters for the hydrometallurgical process was defined as 77.1% for the PEA, based on the recovery of manganese in both the magnetic separation and hydrometallurgical circuits.
With various tests to optimize the electrowinning cell performance relative to current efficiency and metal quality, the electrowinning tests consistently produced EMM with a metallic manganese content (based on trace metal analysis) of greater than 99.99% and a total manganese content (base on trace metals and non-metallic trace elements such as oxygen, nitrogen and hydrogen) ranging from 99.70% to 99.76% Mn. The resultant manganese metal complies with end-user EMM product specifications for steel production.
Although, the metallurgical development programs for Woodstock have focused on the production of high grade EMM, the intermediate production of purified manganese sulphate solution may be regarded as an interim step enabling the add-on production of manganese chemicals, manganese catalyst, battery grade manganese dioxide and high purity metal for electronics.
The full PEA technical report, including details of the updated mineral resource estimate, can be found under the Company’s profile on SEDAR at www.sedar.com. The technical report was prepared by Tetra Tech in compliance with NI 43-101 with specific focus on mine design, infrastructure (including TSF) and environmental parameters. The geological resource sections were completed by Mercator Geological Services. The metallurgy and process design sections were completed by Thibault and Associates Inc.