Trilogy Metals Inc. (TSX: TMQ) (NYSE American: TMQ) is pleased to announce the positive results of its Feasibility Study for the Arctic Copper-Zinc-Lead-Silver-Gold Project in the Ambler mining district of Northwestern Alaska. The Arctic Project is held by Ambler Metals LLC, the joint venture operating company equally owned by Trilogy and South32 Limited. The FS was prepared on a 100% ownership basis, of which Trilogy’s share is 50%. All amounts are in U.S. dollars unless otherwise stated.
Highlights of the Arctic Feasibility Study
The FS describes the technical and economic viability of establishing a conventional open-pit copper-zinc-lead-silver-gold mine-and-mill complex for a 10,000 tonne-per-day operation for a minimum 12-year mine life. The base case scenario utilizes long-term metal prices of $3.00/lb for copper, $1.10/lb for zinc, $1.00/lb for lead, $1,300/oz for gold and $18.00/oz for silver.
Tony Giardini, President and Chief Executive Officer of Trilogy Metals comments, “Arctic is a special project due to its unique high-grade polymetallic nature. The only other time that I’ve seen a project of this quality where the grades were similar was in an underground mining scenario. However, Arctic is mineable in an open pit scenario. I also want to highlight that Arctic contains a significant amount of gold and silver. At current spot metal prices, the precious metals output represents almost 20% of its revenue. The annual gold equivalent (gold and silver) payable output is about 80,000 ounces per year.”
Jim Gowans, Director of Trilogy Metals and the Company’s representative on the Board of Ambler Metals comments, “Arctic is located in the extremely prospective Ambler Mining District, in a mining friendly jurisdiction, in Alaska, USA, where solid environmental regulations and a balanced permitting process is established. I am also very pleased that we are working with NANA Regional Corporation, Inc., who understand mining and have an established record of working at the Red Dog Mine.”
The salient details of the FS are displayed in Tables 1, 2 and 3 below.
Table 1. Metal Production and Assumed Metal Prices
|Annual Payable Metals Production|
Table 2. Operating and Capital Costs
|On-Site Operating Costs|
|Mining ($/t milled)||18.48|
|Processing ($/t milled)||18.31|
|G&A ($/t milled)||5.15|
|Surface Service ($/t milled)||0.68|
|Road Toll ($/t milled)||8.04|
|Total Operating Cost ($/t milled)||50.65|
|Initial Capital ($ million)||905.6|
|Sustaining Capital ($ million)||113.8|
|Mine Closure & Reclamation ($ million)||205.4|
|Total Capex ($ million)||1,224.7|
Table 3. Financial Results
|Pre-tax NPV ($ million) at 8%||1,550.9|
|After-tax Cash Flow ($ million)||2,843.4|
|After-tax NPV ($ million) at 8%||1,134.7|
|Cash Costs, Net of By-product Credits ($/lb Cu payable)||0.32|
|All-in Cost, Net of By-product Credits ($/lb Cu payable)||0.98|
|Pre-tax IRR (%)||30.8|
|Pre-tax Payback Period (years)||2.4|
|Post-tax IRR (%)||27.1|
|Post-tax Payback Period (years)||2.6|
The FS was prepared on a 100% ownership basis, under National Instrument 43-101 standards by independent consultant, Ausenco Engineering Canada Inc. of Vancouver, British Columbia, Canada and the full technical report will be filed on SEDAR and EDGAR within 45 days of this news release. The Company also engaged Wood Canada Limited to complete mine planning and SRK Consulting (Canada) Inc. to complete tailings and waste design, hydrology and water management studies.
The FS forecasts an average annual payable production to be more than 155 million pounds of copper, 192 million pounds of zinc, 32 million pounds of lead, 32,165 ounces of gold and 3.4 million ounces of silver. Total life of mine 12-year production is projected at 1.9 billion pounds of copper, 2.3 billion pounds of zinc, 388 million pounds of lead, 386 thousand ounces of gold and 40.6 million ounces of silver.
The Company’s current mineral reserve and mineral resources tables can be found on the Company’s website at the following link https://trilogy tables. There has been no material change to the mineral reserve and mineral resource estimates for the Arctic Project as reported in the Company’s previous technical report entitled “Arctic Project, Northwest Alaska, USA, NI 43-101 Technical Report on Pre-Feasibility Study” with an effective date of February 20, 2018. However, there is a slight decrease in contained metal due to additional mining dilution.
The FS is based on a 10,000 tonne-per-day open-pit mining with a conventional milling and flotation process that results in the production of copper, zinc and lead concentrates. Based on the feasibility level metallurgical work on the sulphide mineralization, the average recoveries are projected to be 89.9% for copper, 90.6% for zinc and 79.0% for lead, in their respective concentrates. Over 60% of the recovered payable silver and gold report to the lead concentrate at 95% payable. Life of mine strip ratio is approximately 6.9 to 1.
Initial capital expenditure of $906 million and sustaining capital of $114 million for total estimated capital expenditures of $1,020 million. In addition, closure and reclamation costs are estimated at $205 million. The Arctic FS offers a favourable capital intensity ratio on initial capital of approximately $6,432 per tonne of average annual copper equivalent produced. Estimated pre-tax and after-tax payback of initial capital of 2.4 years and 2.6 years respectively. Estimated cash costs of $0.32/lb of payable copper (C1 cash costs include on-site mining and processing costs, road tolls and maintenance, transport, royalties, and is net of by-product credits). Total “all-in” cash costs (initial/sustaining capital, operating, closure costs and is net of by-product metal credits) estimated at $0.98/lb of payable copper.
Under the Exploration Agreement and Option to Lease (“NANA Agreement”) with NANA Regional Corporation, Inc. NANA has the right, following a construction decision, to elect to purchase a 16% to 25% direct interest in the Arctic Project or, alternatively, to receive a 15% Net Proceeds Royalty. This FS was carried out on a 100% ownership basis and does not include the impact on Trilogy Metals if NANA elects to purchase an interest in the Arctic Project under the NANA Agreement or, alternatively, the impact on Trilogy Metals and the Arctic Project if the NPR becomes applicable. The FS does include the 1.0% Net Smelter Royalty to be granted to NANA under the NANA Agreement in exchange for a surface use agreement.
Joint Venture with South32 Limited
The Company commenced work on the Arctic FS in 2019 and subsequently, on December 19, 2019, South32 exercised the right to form a 50/50 Joint Venture with respect to the Company’s Alaskan assets, including the Company’s Arctic Project. In February 2020, the Company transferred its Alaskan assets, including the Arctic Project, and South32 contributed $145 million, to a newly formed 50/50 joint venture named Ambler Metals LLC. This FS was carried out on a 100% ownership basis and does not take into account South32’s interest in the Arctic Project. The information generated from this FS will be provided to Ambler Metals for its use as it carries forward advancing the Arctic Project. For more information on the Trilogy Metals and South32 Joint Venture see the Company’s press releases on December 19, 2019 and February 11, 2020 at www.trilogymetals.com/news.
Additional information on the NANA Agreement and the joint venture with South32 is included in the Company’s 2019 Annual Report on Form 10-K, which is available on SEDAR and EDGAR.
Qualified Persons and NI 43-101 Technical Report
The FS for the Arctic Project was prepared by Ausenco and the contributors listed below each of whom is a Qualified Person under National Instrument 43-101 (“NI 43-101”)
A technical report containing the FS and prepared in accordance with NI 43-101 will be available on SEDAR and Edgar within the time frames prescribed under applicable securities laws.
|Qualified Person||Scope of Responsibility|
|L. Paul Staples, VP and GlobalPractice Lead, Minerals and Metals
|Plant and infrastructure design and consolidation of the capital costs and operating costs and the overall financial model|
|Dr. Antonio Peralta, PhD, P.Eng, Principal Mining Engineer
|Mine design and mineral reserve estimates|
|Calvin Boese, P.Eng, M.Sc., Principal Consultant
|Tailings and waste design|
|Bruce Murphy, P.Eng., Principal Consultant, Rock Mechanics
|Pit slope design|
|Dr. Tom Sharp, PhD, P.Eng,
Principal Consultant, Water Management and Treatment Engineering
|Hydrology and water management|
|Bruce Davis, FAusIMM, President
BD Resource Consulting, Inc. and
Robert Sim, P.Geo,
SIM Geological Inc.
|Mineral resource estimates|
|Jeffrey B. Austin, P.Eng, President
International Metallurgical & Environmental Inc.
|Metallurgy and recoveries|
|AJ MacDonald, P.Eng, Vice President, Operations Integrated Sustainability Consultants||Selenium water treatment plant design|
Messrs. Staples, Peralta, Boese, Murphy and Davis have visited the site of the Arctic Project. The FS Contributors have had discussions with relevant site personnel and Company management and have reviewed supporting documentation. Additional information can be found in the technical report.
The FS Contributors prepared or supervised the preparation of the information that forms the basis of the FS disclosure in this press release and have reviewed and approved the disclosure regarding the FS contained herein.
Andrew W. West, Certified Professional Geologist, Exploration Manager for Trilogy Metals Inc., is a Qualified Person as defined by National Instrument 43-101. Mr. West has reviewed and approves the disclosure contained herein.
About Trilogy Metals
Trilogy Metals Inc. is a metals exploration and development company which holds a 50 percent interest in Ambler Metals which has a 100 percent interest in the Upper Kobuk Mineral Projects in north-western Alaska. On December 19, 2020, South32, which is a globally diversified mining and metals company, exercised its option to form a 50/50 joint venture with Trilogy. The UKMP is located within the Ambler Mining District which is one of the richest and most-prospective known copper-dominant districts located in one of the safest geopolitical jurisdictions in the world. It hosts world-class polymetallic volcanogenic massive sulphide deposits that contain copper, zinc, lead, gold and silver, and carbonate replacement deposits which have been found to host high-grade copper and cobalt mineralization. Exploration efforts have been focused on two deposits in the Ambler mining district – the Arctic VMS deposit and the Bornite carbonate replacement deposit. Both deposits are located within land package that spans approximately 172,636 hectares. Ambler Metals has an agreement with NANA Regional Corporation, Inc., a Regional Alaska Native Corporation that provides a framework for the exploration and potential development of the Ambler mining district in cooperation with local communities. Our vision is to develop the Ambler mining district into a premier North American copper producer.
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We acknowledge the [financial] support of the Government of Canada.