Net Present Value – NPV(8) of $2.23 B (pre-tax) and NPV(8) of $1.31 B (after-tax)
Internal Rate of Return (IRR) – 55.3% (pre-tax) and 41.5% (after-tax)
Capital Payback Period – 1.5 Years (pre-tax) and 1.8 Years (after-tax)
Initial Capital Costs – $ 422M
Approx. Annual production- 1437t – Magnet Rare Earths Oxides (Nd+Pr:1291t Dy:125t Tb:21t)
Search Minerals Inc. (TSX-V: SMY) (OTCQB: SHCMF) is pleased to announce the results of its Preliminary Economic Assessment for the development of its Deep Fox and Foxtrot Rare Earth Element deposits located in Labrador, Canada and the establishment of a Direct Extraction Hydrometallurgical processing facility on the Island of Newfoundland. The PEA was prepared by SLR Consulting (Canada) Inc. The technical report relating to the PEA will be filed on SEDAR within 45 days of this news release.
Key Financial Metrics (Unless otherwise indicated all values expressed in CDN$, Exchange rate CDN$1 = US$0.80):
Cautionary Note: The preliminary economic assessment is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them to enable them to be categorized as mineral reserves and there is no certainty that the preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have a demonstrated economic viability.
Greg Andrews, President and CEO of Search Minerals states: “This PEA marks the achievement of a significant milestone in Search’s pursuit of establishing a secure and reliable REE mining and process industry in the province of Newfoundland and Labrador. The strong economic case supports the development of mining and primary production of the Deep Fox and Foxtrot deposits in Labrador and further refining of concentrate into REE mixed oxides and carbonates on the Island of Newfoundland.”
Andrews added: “We believe Search is well positioned to attract strategic partners and investment as we move forward with the next steps of development including completing a bankable feasibly study and initiating the approvals process for this project. Our goal is to be in production by 2025. The existence of other highly prospective targets within our District provides flexibility to ramp up future development to respond to increasing market demands for our permanent magnet material.”
Mineral Resource Estimate
Search has completed an updated Mineral Resource estimate on Deep Fox and Foxtrot. (April 11, 2022 – Search Minerals Announces Increased Deep Fox and Foxtrot Mineral Resource Estimates).
Summary of Mineral Resources as of December 31, 2021
Search Minerals Inc. – Deep Fox and Foxtrot Project
Mining will be carried out using open pit and underground methods at a rate of 2,000 tpd starting at Deep Fox and followed by Foxtrot. Deep Fox will be mined over an 11 year period (7 years open pit and 4 years underground) and Foxtrot will be mined over a 16 year period (7 years open pit and 9 years underground) for a total mine life of 26 years (Foxtrot open pit and Deep Fox underground will both be mined in year 11).
A total of 18.137 million tonnes of mineral will be mined at average grades of 1,416 ppm Nd, 379 ppm Pr, 188 ppm Dy, and 32 ppm Tb.
The open pit mines are planned to be mined using conventional truck and shovel operations.
The underground mines are planned to be mined with conventional longhole mining methods.
Primary Production Plant
Mineralized material from the Deep Fox and Foxtrot deposits will be processed through a grinding and magnetic separation primary processing operation. The operation will take place in a facility constructed near the deposits in Labrador.
Primary processing will produce a REE concentrate, by-product iron concentrate, and dry stackable tailings.
The REE concentrate will be stockpiled in Labrador and seasonally transported to a secondary hydrometallurgical processing plant on the Island of Newfoundland for further processing.
Hydrometallurgical Processing Plant
The hydrometallurgical Direct Extraction Process facility will be sited on the Island of Newfoundland and will produce a mixed carbonate precipitate as the final purified mixed rare earth product.
Rare Earth Separation Processing
Operating costs for the separation of the mixed rare earth product to final saleable individual rare earth oxides are based on a tolling fee for REE separation by a third party.
Ongoing laboratory and pilot plant test work are being conducted to optimize separation processing with the goal of decreasing separation operating costs. Search will complete an engineering study to determine the feasibility of building a separation facility on the Island of Newfoundland.
Environment, Social and Governance
Search has increased its internal capacity and is enhancing its corporate policies, procedures and practices to ensure compliance with industry Corporate Social Responsibility (CSR) best practices.
Improvements to the process flow sheet have resulted in design changes which reduce both the footprint of the operations and the potential adverse effects of processing.
Search has initiated environmental baseline studies over both deposit areas and continues to expand its baseline data set. Discussions with the NunatuKavut Community Council department of Environment and Natural Resources have identified opportunities to collaborate on further regional study initiatives. It is anticipated that joint environmental studies, Traditional Knowledge studies and monitoring programs will be undertaken during the 2022 field season and carry on throughout the life of the project.
All exploration permits are in place. Search continues to work directly with the St. Lewis Town Council, Port Hope Simpson Town Council and the Mary’s Harbour Town Council to ensure that residents are informed of activities and that their concerns are addressed in a timely manner.
Search entered into a Mining Exploration Activities Agreement with the NCC on August 27, 2012 which remains in good standing. Additional social uplift initiatives include providing scholarships to local students, donating to community projects, and working with the NCC to provide local employment opportunities.
Search is also collaborating with government agencies to seek opportunities to provide renewable energy alternatives in the communities where we work.
After-Tax Cash Flow, Capital and Operating Costs Summary
After-Tax Cash Flow Summary
Deep Fox and Foxtrot
|Design Feed to Mill Rate||ktpa||720|
|Feed to Mill, Total||Mt||18.1|
|Revenue, after fees||$M||13,719|
|Total Operating Costs||$M||6,250|
|Total Initial Capital||$M||422|
|Reclamation and Closure||$M||20|
|Total Capital Cost||$M||753|
|Undiscounted Net Cash Flow, pre-tax||$M||6,716|
|Undiscounted Net Cash Flow, after-tax||$M||4,097|
Overall Capital Cost Summary
Deep Fox and Foxtrot Project
|Open Pit Mining||4.8|
|Primary Production Plant||108.5|
|Hydrometallurgical Processing Plant||131.7|
|Total Initial Capital||421.8|
|Open Pit Sustaining Capital||5.7|
|UG Sustaining Capital (starting year 7)||134.2|
|UG Development Capital (starting year 7)||44.3|
|Process and Infrastructure Sustaining Capital||127.4|
|Reclamation and Closure||20.0|
|Total Capital Cost||753.4|
LOM Operating Costs
Deep Fox and Foxtrot Project
|OP Mining (Mineralization)||$/t mined||6.50|
|OP Mining (Waste)||$/t mined||5.00|
|UG Mining||$/t mined||63.69|
|Mining (overall)||$/t processed||61.75|
|Additional Haulage to Plant (Foxtrot Only)||$/t processed||2.00|
|Primary Production Plant||$/t processed||38.90|
|G&A (Primary Production Plant)||$/t processed||10.97|
|Transport to Hydrometallurgical Processing Plant||$/t processed||5.07|
|Hydrometallurgical Processing||$/t processed||90.60|
|G&A (Hydrometallurgical Processing Plant)||$/t processed||2.74|
|Separation Charges||$/t processed||148.27|
|Separation Charges||$/kg TREO||13.72|
|Total Operating Costs||$/t processed||344.59|
Pre-Tax Sensitivity Analyses
Pre-Tax Sensitivity Analyses
Deep Fox and Foxtrot
|TREE Head Grade||%||0.69%||0.78%||0.87%||0.95%||1.04%|
|Net Value ($/t)||$/t||605||681||756||832||908|
|Operating Cost ($M)||$M||5,000||5,625||6,250||6875||7,500|
|Capital Cost ($M)||$M||603||678||753||829||904|
|NPV at 8%||$M||-20%||-10%||Base||10%||20%|
|TREE Head Grade||$M||1,437||1,834||2,231||2,627||3,024|
|Net Value ($/t)||$M||1,245||1,738||2,231||2,723||3,216|
|Operating Cost ($M)||$M||2,672||2,451||2,231||2,010||1,789|
|Capital Cost ($M)||$M||2,328||2,279||2,231||2,182||2,133|
Ian Weir, P.Eng., SLR Technical Manager – Mining, is a “qualified person” (as defined by NI 43-101) and has supervised the preparation of and approved all scientific and technical information herein and has conducted appropriate verification on the underlying data. Tudorel Ciuculescu, M. Sc., P. Geo. is a “qualified person” (as defined by NI 43-101) and has reviewed and verified all scientific and technical information herein relating to the Mineral Resource estimates.
About Search Minerals Inc.
Led by a proven management team and board of directors, Search is focused on finding and developing Critical Rare Earths Elements (CREE), Zirconium (Zr) and Hafnium (Hf) resources within the emerging Port Hope Simpson – St. Lewis CREE District of southeast Labrador. The Company controls a belt 63 km long and 2 km wide and is road accessible, on tidewater, and located within 3 local communities. Search has completed a preliminary economic assessment report for FOXTROT, and a resource estimate for DEEP FOX. Search is also working on three exploration prospects along the belt which include: FOX MEADOW, SILVER FOX and AWESOME FOX.
Search has continued to optimize our patented Direct Extraction Process technology with support from the Department of Industry, Energy and Technology, Government of Newfoundland and Labrador, and from the Atlantic Canada Opportunity Agency. We have completed two pilot plant operations and produced highly purified mixed rare earth carbonate concentrate and mixed rare earth concentrate for separation and refining. We also recognize the continued support by the Government of Newfoundland and Labrador for its Junior Exploration Program.
Search Minerals was selected to participate in the Government of Canada Accelerated Growth Service initiative, which supports high growth companies. AGS, as a ‘one-stop shop’ model, provides Search with coordinated access to Government of Canada resources as Search continues to move quickly to production and contribute to the establishment of a stable and secure rare earth element North American and European supply chain.
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