Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Critical Elements (TSXV: CRE) has delivered a new feasibility study on its wholly owned Rose lithium-tantalum project in the Eeyou-Istchee, James Bay region of Quebec, confirming the potential for a low-risk, reliable producer of high-quality lithium.
The study envisions a 17-year operation that will excavate a total of 26.3 million tonnes of ore grading 0.87% Li2O (lithium oxide) and 138 ppm Ta2O5 (tantalum pentoxide). These mineral reserves, all categorized as probable, are estimated from 17 mineralized zones on the Rose property.
Each year, the proposed mill will process 1.61 million tonnes of ore to produce an annual average of 224,686 tonnes of technical and chemical grade spodumene concentrates and 441 tonnes of tantalite concentrate, according to the study, which assumes that a simple open pit mining and conventional lithium processing technologies is used.
Over the life of mine, the pit will excavate a total of 182.4 million tonnes of waste rock and 10.9 million tonnes of overburden. The average strip ratio is 7.3 tonnes of waste per tonne of ore.
The report pegs the Rose project at an after-tax net present value of over $1.91 billion (at 8% discount rate) with an internal rate of return of 82.4%. The initial capital cost is estimated at $357 million. Variable costs include average operating costs of $74.48/t milled and $540/t concentrate (all concentrate production combined).
To reflect current market conditions, the feasibility used conservative spodumene concentrate prices, as well as capital and operating cost estimates ($4,039/t technical grade lithium concentrate, $1,852/t chemical grade lithium concentrate, and $130/kg tantalum pentoxide).
It is anticipated that construction of the mine will take about 21 months. The Rose property is currently accessible by road via the Route du Nord, usable all year round from Chibougamau, and is surrounded by existing mine operations and infrastructure. The project is located 80 km south of Goldcorp’s Éléonore gold mine and 45 km northwest of Nemaska’s Whabouchi lithium project, and is 20 km south of Hydro Québec’s Eastmain 1 hydroelectricity generating plant.
The entire property covers over 24,600 ha of land, geologically located northeast end of the Archean Lake Superior Province of the Canadian Shield.
